Chávez's U-turn on socialism

Venezuela-based economic advisor and analyst, Stephanie Blankenburg, on what could be Chávez's fight

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.

GARY WATERS
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After Brexit, should the Eurozone pursue full political union?

Is full political union of the eurozone the only way to stop the disintegration of Europe after Brexit?

The chaotic scenes in the Conservative and Labour Parties, widespread expressions of “Bregret”, confusion about what the future relationship between the European Union and United Kingdom will or should be, discussion of a second EU referendum or a “Brexit election” – all give the impression that the vote was somehow an accident. It is true there was a strong element of contingency to the outcome, which some have called “an establishment cock-up”. When in January 2013 he needlessly promised the referendum, David Cameron did not foresee that Boris Johnson would oppose him or that he would lose it. He could not have foreseen that a Labour leader would fail to mobilise the left-wing vote, and fail probably intentionally. The result was also determined by the unexpectedly brutal nature of the campaign, with wild claims on both sides, though those of some Leavers were by far the most egregious.

It is time, however, for those who wanted the UK to remain in the EU at least for now, of whom I was one, to accept reality. Britain did not decide to leave the EU in a fit of pique or absence of mind. Its departure reflects the deeper pattern of British history in Europe over the past few hundred years. It would certainly have left the EU at a later date, if the EU had not collapsed first.

The relationship between Britain and Europe can be summed up in two simple geopolitical propositions. First, that the EU was designed to deal with the German problem and the European Question, or, if one prefers, the German Question and the European problem, for they are two sides of the same coin. Second, the EU was not designed to deal with the British problem. Nobody claimed after 1945 that the UK had been such a danger to European peace that it required a supranational structure to embed and contain it. Nor did anyone argue that the UK, unlike most of the rest of continental Europe, had been so weak in the face of a threat from others that it needed the protection of a supranational body.

Britain and mainland Europe have thus been on quite separate paths for a long time. The central geopolitical fact on the continent was German power or potential power: demographic, economic and military. In the period before German unification this led to a system of conditional sovereignty in central Europe, designed to prevent another state – usually France – from using its resources to achieve hegemony, and to stop the Germans from developing such ambitions for themselves. It was based on the diffusion, not concentration of power. Things changed after German unification in 1871, which eventually unbalanced the European and global system. With great difficulty, Germany was subdued and a system of conditional sovereignty was reimposed on central Europe, the difference being that this time it was to be extended to the whole western half of the continent, which was also in mortal peril from Soviet communism.

The European integration project was thus a project of “dual containment”, designed to “embed” Germany and deter ­Stalin. It was also a strategy of “dual mobilisation”, in that it sought to draw on the energies of not only the western Europeans but also the Germans to fight communism, and certainly to stop fighting each other. This supranational project was strongly supported by the Americans and by parts of the British establishment, including Winston Churchill. The vision of a complete political union has not been realised, but the European Union has embarked on important supranational projects such as the euro, the Schengen travel area and common foreign and security policies.

In Britain, things developed very differently. Europe was at all times critically important. The question of England’s relationship to the continent dominated policy and politics for hundreds of years, from France in the 15th century through to the Westminster crisis in both of Britain’s leading parties today, which is primarily the product of disagreements over Europe. The main strategic and ideological threats have come from Europe.

In the 16th and 17th centuries there was the threat to Protestantism and parliamentary liberties from Philip II and Louis XIV’s absolutism and from Counter-Reformation Catholicism. In the 19th century, there was the challenge of Napoleon, followed by the confrontation between British liberalism and tsarist autocracy. In the 20th century, Britain saw off Germany in the First World War, resisted Nazism in the Second World War, and made a substantial contribution to Western measures to deter the Soviet Union during the Cold War.

***

Like many European states, Britain responded to these challenges by pursuing a policy of maintaining the “balance of power” across the continent, through alliances and payment of subsidies, to ensure that no single actor would be able to threaten Europe’s security. In constitutional terms, however, the British response to the European problem was very different. Faced with the danger from Louis XIV during the War of the Spanish Succession, in which the long-standing enmity between England and Scotland threatened to undermine the war effort against a common foe, the two countries entered into a complete political union in 1707. The state debts were merged, there would henceforth be only one army and foreign policy, and the new polity would be anchored in a common parliamentary representation at Westminster. This link between debt, defence and what then passed for democracy proved to be so powerful that it served as the basis for the American union in the late 18th century.

On the continent, in short, Europe was the problem and the European Union was the solution. In Britain, Europe was also the problem, but the United Kingdom was the solution. For this reason, the British have never seen the need to sacrifice their sov­ereignty in a supranational project. They have therefore co-operated with Europe on a largely intergovernmental, and not a supranational, basis.

That said, the modern European order – understood as the totality of economic, political and military relationships – that developed after 1945 was primarily an ­Anglo-American order. It was built on the Allied victory during the Second World War, which enabled the re-establishment of democracy on the continent. It depended wholly on the protective carapace provided by Nato, in which the UK was the second most important actor after the US, and by far the most powerful European one.

Since 1973, the United Kingdom has been part of the European integration project, and even though the relationship has often been turbulent, the British contribution there has been substantial. London was the principal sponsor of the single market and eastward enlargement of the EU.

To be sure, the United Kingdom stayed aloof from the crucial European projects: the euro, Schengen and any planned European army. It did so on two very cogent grounds. First, because involvement would have been incompatible with the independence of the UK, hard won over history with blood and treasure. Here, the conditional sovereignty of continental Europe clashed with the absolute sovereignty of the Westminster parliament.

Second, because the British government believed quite rightly that these federal projects required a political union. It was not, however, opposed to such an arrangement on the continent. It is true that London has long tried to keep the political bonds to Europe loose enough to enable continued UK membership without losing her sovereignty. But more recently, in an abandonment of the long-held principle of the balance of power, Chancellor Osborne, recognising the need to keep the eurozone stable, constantly pressed for closer fiscal and political integration across that area.

This gives the lie to the idea that Britain has been blocking progress in Europe. This is a firmly entrenched view in Brussels, expressed vehemently by the president of the European Commission, Jean-Claude Juncker. It was also expressed hilariously in the popular 1980s television series Yes Minister when Sir Humphrey told the minister, James Hacker, that Britain had only joined the European Economic Community to make a “pig’s breakfast of it from the inside”. The sad truth is that the EU does not need British help to do this. The continental Europeans have shown in the euro crisis, which has nothing to do with London, and in many other disasters, that they are quite capable of making a pig’s breakfast of it for themselves, unaided.

The problem, in other words, is not the United Kingdom, but the long-term weakness of continental Europe, which Brexit has brought home in the most painful way, and aggravated. Without the euro and migration crises, there would never have been a majority for Leave a fortnight ago, though there would probably have been a separation further down the line. The peoples of Europe sense this and so do the elites. They all know that whereas Grexit would be a judgement on Greece, Brexit was a judgement on the EU.

***

Unfortunately, the hope that the shock of Brexit will provoke profound reform in the European Union is based on a misunderstanding of the nature of national governments represented in the European Council and among Brussels elites. They need help but, like alcoholics, they also need to realise the utter wretchedness of their condition before they ask for it. Continental Europe, unfortunately, has much further to fall before it can rise again. At the moment, it is still in denial.

That should not stop Washington and London from trying to persuade the European Union, or at least the eurozone, to achieve a full political union on the model of Anglo-America. This could be an asymmetric union of “core Europe”, in which Germany took on the role played by England in the United Kingdom. Alternatively, it could be a more symmetric, larger union of the entire eurozone along American lines. Only by linking debt, defence and democracy as pioneered in the United States will Europe be able to stabilise the currency, deter Russia and address the democratic deficit against which electorates are rebelling. The alternative is either continued chaos, or a return to the nation state and the untethering of Germany from the continental order.

Whatever the solution in mainland Europe, the future attitude of the UK to the EU will determine the survival of this union, after Brexit even more than before it.

In this context, we urgently need to know the Brexit mainstream’s attitude to the ­European project. Farage, who resigned on 4 July as the leader of the UK Independence Party, may be containable but the full force of a new Brexit government will be a very different proposition. Theresa May hasn’t said much yet but, as a soft Remainer, she is unlikely to seek confrontation with the EU. In recent days, the once sulphurous Boris Johnson has been more conciliatory, even saying that the EU “was a noble idea for its time”, but he is no longer a candidate for the Tory leadership. Since the referendum result, Michael Gove has spoken of his hope that “we can build a new, stronger and more positive relationship with our European neighbours, based on free trade and friendly co-operation”. He has also, however, expressed a desire that Brexit should spark a “democratic liberation” of the continent. Gove now needs to explain what that means. If he has a Farage-style return to the national states and currencies in mind, the EU will resist him tooth and nail, and rightly so, as the European project is still the continent’s last, best hope on Earth. If, however, he means the establishment of a full parliamentary union of the eurozone to provide democratic legitimation for its decisions, then he is pointing the way out of the crisis. Of all people in British politics, Gove, a Scot who believes passionately in the UK, is perhaps best placed to make the argument for a multinational political union of the continent (without Britain). Yet he is unlikely to get the chance to do so, trailing as he is behind May and Andrea Leadsom, a hard Brexiteer, in the leadership contest.

***

Against this background, the big geopolitical question will be whether the UK and the EU, former partners hopeful of separating amicably, eventually become enemies. Right now, the two sides are at the ready but not in combat. Much will depend on who fires first, or is perceived to have done so. In this heated ­atmosphere, even a political sneeze could set off a massacre.

It goes without saying that both sides will lose from a confrontation. Critical to avoiding that is an understanding of the actual balance of forces. These are much less unfavourable to the UK than Brussels hawks and many British pessimists imagine. The claim by the Dutch prime minister, Mark Rutte, that “England has collapsed, politically, monetarily, constitutionally and economically” is wide of the mark. It is true that London is dwarfed by the economic might of the eurozone and the rest of the EU, and that it faces a period of considerable short-to-medium-term economic pressure. It is also true that the UK faces grave threats to its integrity in Scotland and, to a certain extent, in Northern Ireland.

That said, once a new government is formed, a highly coherent actor – the United Kingdom – will be facing a fatally divided ­coalition, which is already showing cracks not merely between the Commission and the European Council, but within the Council itself. Moreover, once started, the struggle will be won not by those who can inflict the most, but by those who can endure the most. The UK has repeatedly demonstrated a capacity to defend her sovereignty against all comers. Her political fundamentals are strong. Mainland Europe, by contrast, has repeatedly demonstrated its propensity to fragment. Its political fundamentals (sadly) are weak.

The threat to the unity of the United Kingdom is greatly exaggerated. Wales remains fully committed, and voted Leave by a similar margin to England. In Northern Ireland the divisions are principally between the two faith communities, and only in the second instance between one of those communities and the British state. There is no chance whatsoever of the province leaving the UK.

It is true that in Scotland the vote for Brexit has created a material change of circumstances, entitling the Scottish National Party-led government to demand a fresh referendum on independence. That said, independence only ever made sense in the benign European environment before the 2008 crash, the onset of the migration crisis and the Russian threat. At that time, the Irish “tiger” economy served as a model. Since the euro crisis, this is no longer the case. Even as late as the failed 2014 referendum, there would still have been EU members on both sides of the border. Now all is utterly changed. If it left the UK now, Scotland would immediately have a “hard” border with England, the country with which it does most of its trade. It is currently a net beneficiary of the Union economically; it would lose that money with independence, but, as a rich state within the rest of the EU, it would be required to contribute more to Brussels. The oil price is low. A Scottish vote for independence would therefore pose a much greater risk than Brexit does to England and, indeed, to Scotland, if the Scots choose remain part of the UK. Given that Scotland joined the UK in order to guard against European dangers, how likely is she to throw in her lot with a European Union in possibly terminal crisis by leaving the most successful union project Europe has produced so far: the United Kingdom?

Moreover, once fully engaged against a hostile continent, the full apparatus of the Foreign Office would be turned to making a (bigger still) “pig’s breakfast” of the EU. It would find allies on the mainland, pouring salt into Europe’s self-inflicted wounds and inflicting new ones. London would revert to devising an old “balance of power” policy for the continent.

Besides, one should not assume that Britain will be sent, as President Barack Obama threatened, “to the back of the queue”; his administration has since rowed back rapidly on those threats. Britain may be more dependent on the single market than vice versa, but many sectors, such as Germany’s car manufacturing industry, would be destroyed by a trade war. The Irish government, which is obliged by EU law to erect a hard border with any non-member-state that is not part of Schengen, will feel sharper and quicker pain than the UK. Eastern European governments, which look to Britain as a bulwark against Russia, will want to bury the hatchet quickly. Spain has already indicated that it will block Scotland’s admission in order not to create a precedent for Catalonia. None of these states, which together make up a majority in the EU, is likely to pursue a prolonged vendetta against London. In short, though there is widespread dismay, sadness and anger at the British decision, it would be wrong to deduce from that a willingness to place a long-term bet on victory by the EU over the UK.

Naturally, with the exception of a few Brussels blowhards, there is hardly anybody in the EU who is insane enough to want to add a struggle with the UK to the Union’s many other problems, none of which has gone away, and all of which are likely to escalate. The worry is that, given its well-documented incompetence, the EU will “sleepwalk” into such a confrontation. This would turn the UK into a positive Russia on the western flank of Europe, destabilising it from the outside and sucking it dry of its most positive and dynamic elements, even more than the UK already does now. It does not have to be this way.

Today, almost everything is up in the air, most obviously in mainland Europe. The only fixed point we have is that the UK has reasserted its complete sovereignty by leaving the EU. Everything else will have to be ordered around that fact.

Brendan Simms’s latest book is “Britain’s Europe: a Thousand Years of Conflict and Co-operation” (Allen Lane)

This article first appeared in the 07 July 2016 issue of the New Statesman, The Brexit bunglers