8 January 2008 Chávez's U-turn on socialism Venezuela-based economic advisor and analyst, Stephanie Blankenburg, on what could be Chávez's fight By Stephanie Blankenburg On 2 January, a month on from his defeat in a referendum about a socialist reform of the county’s constitution, President Hugo Chávez Frías of Venezuela performed a stunning political U-turn. In typically flamboyant style, he made a surprise call to Venezolana de Televisión, the country’s main state-owned TV channel, “to drop a ‘bombita’ (small bomb)” on an unsuspecting public: He had decided to abandon his socialist agenda “for now” in order to form stronger alliances with the country’s middle classes, its private sector and the national bourgeoisie instead. To dispel any doubts about his seriousness in adopting this new political course, he replaced vice-president, Dr Jorge Rodríguez – the public face of his campaign for “21st century socialism” in Venezuela – with Ramón Carrizales, a military officer and technocrat, known for his good relationships with the country’s business sector. Perhaps more significantly still, Chávez had already signed an end-of-the year amnesty for imprisoned perpetrators of a right-wing coup attempt against him in 2002. The President’s version of events Two days later, on his Sunday TV show “Aló Presidente” (Hallo, President), Chávez presented his fully reshuffled new cabinet and set out to explain the rationale for his action. His socialist project had been defeated, because the country had not been ready for such a radical approach. The only democratic response was to acknowledge defeat and to adopt a more gradual and inclusive way forward. Apart from broadening alliances to bring private business and the middle classes back into the fold, this would also mean a more careful focus on mass education and communal self-organisation. Socialism had not been abandoned, but postponed, although, by the sound of things, for quite some time to come. Chávez’ analysis of the current situation certainly has the pleasant ring of reasonableness to it. There also is little doubt, even amongst the most fervent socialists in Venezuela, that the agenda for “21st socialism”, adopted in January 2007 as abruptly as it has now been abandoned, had been rushed in with too much haste, limiting space and time for public consultation and debate of often complex issues. Yet, the solidity of this analysis stands and falls with the correctness of its main premise – that the failure of voters to approve the constitutional reform project in the referendum of 2 December was a vote against socialism. This is much less clear. What is clear is that the defeat of Chávez’ reform project at the polls is down to the abstention of roughly three million voters, who only a year earlier had voted for him as their president on the same socialist platform. Compared to the December 2006 presidential elections, the opposition did not gain any votes. It seems unlikely such a substantial bloc of Chávez supporters should have been deterred merely by deficient campaigning a year after enthusiastically endorsing him. In fact, a closer look at electoral patterns reveals a clear protest vote, not against a socialist agenda, but against corrupt administrations, at the national and the regional level. Chavismo and the ‘oil curse’ To understand, where this protest vote came from and why it outweighed the pro-Chavez and pro-socialism vote, it helps to remember that Venezuela is defined by only one thing – oil. For almost a century, the state has been a gigantic machine to distribute oil rent. In this context, left and right have a rather different meaning from their usual connotations. On one side of a profound societal divide, there are those who benefit from oil from the very rich elites down to middle-rank state employees with comfortable pension arrangements. On the other side, there are those who are excluded from a share in this bounty, the poor and the lower middle classes. Not surprisingly, the main objective of the “insiders” is to defend and expand their share in the country’s oil wealth. Those on the outside divide into the small group with some chance of eventually making it to the inside, and the much larger group of people without any realistic chance of ever getting there. The latter are, or used to be, core Chávez supporters: Their only hope is structural reform that dismantles the distributive rent state and replaces it by a productive developmental state. Until now, they had set their hopes on Chávez. That these hopes have been rattled, is only marginally to do with a hasty referendum campaign, or with the people’s ideological immaturity. On the contrary, one of the most impressive achievements of Chavismo is precisely the very high degree of political awareness and education amongst the poor. No, the vote outcome has everything to do with the accession of many a Chavista to the rank of “insider” over the past eight years. This process has been gradual, and perhaps inevitable in a society in which institutionalised rentier-mechanisms have been endemic for decades. But the contradiction between a radical socialist government agenda and the “Chavista elite”, bent on defending its share in the oil rent, effectively came to a head last year. Far from being a left-wing administration, the bulk of ministerial positions in the old cabinet, as well as many governorships, remained in the hands of the “Chavista right”, or “new insiders”. For example, the new vice-president, Ramón Carrizales, is also ex-minister of Housing, a core social policy ministry. All through 2007, the battle between this “Chavista elite” and the “Chavista street” was fought out within government, with the so-called left-wingers, led by Jorge Rodríguez, in the minority. It is an open secret in Venezuela that many governors, while publicly campaigning for a 'yes' vote in the referendum, used their resources to mobilise for the no-vote behind the scenes. Equally an open secret is the sudden destabilisation of the economy through food shortages and an escalating black market dollar exchange rate which was at least allowed to linger on for longer than necessary. A ‘soft coup’ or a return to electoral glory? So the Chávez U-turn looks a lot less radical. For one, the new cabinet resembles its predecessor more than it differs from it. More importantly, it is not at all obvious the strategy of a shift to the “right” will help to pacify the country and stabilize the economy. Why? Well if it is correct that the result of 2 December was essentially a protest vote by the “Chavista street” against the “Chavista elite”, then giving the latter free range is unlikely to boost Chávez with the popular base. Yet, this popular base is all that stands between him and a ‘soft coup’ by an emboldened middle class, made up of the “Chavista elite”, the largely a-political state bureaucracy and moderate such as ex-General Raúl Baduel, a former ally and defence minister who joined the opposition ranks in November 2007. After all, with the control over the country's state apparatus and economic resources firmly in the hands of these groups, and a weakened popular base for Chávez, perhaps unable to deliver election future victories, why would the middle classes and their allies in the new and old elites still need Chávez? Chávez is too much of a seasoned politician not to know this. If he still has chosen this course, it is not necessarily because it is of his liking or even of his making alone. It simply reflects the real distribution of power on the ground. His most important response is not the much publicized government reshuffle, but his decision to accelerate the organisation of a Chavista mass party, the United Socialist Party of Venezuela (PSUV). The task of getting this new mass party up to speed is an uphill one, especially with a “Chavista” government in place that has no interest in promoting such a move, and the popular base alienated. But unless Chávez – and the PSUV – win the regional and municipal elections scheduled for November 2008, Venezuela might well have a new president before the year is out. In charge of the unenviable task to built a mass party in a few months and to win elections by the end of the year is none other than Jorge Rodríguez. Dr Stephanie Blankenburg is Lecturer in International Political Economy in the Economics Department at the School of Oriental and Social Studies (SOAS), London. She is currently on secondment to Venezuela as an economic advisor and analyst. This article reflects her personal analysis and is unrelated to any government views or policies.