Venezuela’s Recovery from Austerity: The Successful Outcomes of the Bolivarian Revolution

by Kurt B.

The war against global capitalism and American imperialism has been a long and bloody struggle for those feeling the oppression and exploitation in the developing world.  For those countries which share a close proximity to the United States, the creation or adoption of counter-ideologies has sometimes become the inevitable result of combating existing inequalities and injustices due to neo-colonialism.

Throughout the 20th century, many Central and South American nations have undertaken this course of action, including the Bolivarian Republic of Venezuela, which has embarked on the most revolutionary transition in the entire region in recent times.

The Bolivarian Revolution was instigated in 1997 by the Fifth Republic Movement; a left-wing political party led by Hugo Chavez (renamed the United Socialist Party of Venezuela in 2007).  After winning democratic elections in 1998 and being formally inaugurated as President of Venezuela, Chavez fully dedicated his incumbency to fighting poverty, illiteracy and the vast inequalities that engulfed his country.  He strived to achieve these goals by reforming every realm of societal existence and the policy-making process to ensure that any positive changes made would stay intact.

A most notable success of Chavez was channeling oil revenues from international trade and commerce to various needed social welfare programs and government services for his people.  Being a part of the Organization of Petroleum Exporting Countries (OPEC), Venezuela had always contained a profusion of crude oil which Chavez and his administration utilized to combat the impoverishment faced by the majority of Venezuelans.

Another success of the Bolivarian Revolution, more social than economic, was the enactment of equality and full integration of minorities including women, African and indigenous Venezuelans, which had never before existed in the country.  The last achievement of Chavez and his administration and probably the most difficult was the political resistance against American neo-colonialism (i.e., the Yankee Empire).  This includes the rhetoric and numerous threats posed by American politicians and right-wing opposition parties within Venezuela.  For these reasons, the Bolivarian Revolution has improved the economic, social and political atmosphere of the country by producing successful outcomes and raising the standard of living for Venezuelans.

The significant reforms and positive results accomplished by Chavez and his United Socialist Party all stem from the broader revolutionary movement still ongoing in the Bolivarian Republic.  Due to the hardships faced by the majority of the Venezuelan population before Chavez’ presidency, many Venezuelans now feel inspired by their leadership and have gained hope in their country and its future.

This article is divided into four different sections to coherently demonstrate the vast changes and developments pursued in the last 13 years.  The first three sections explain the economic, social and political dimensions of contemporary Venezuela and their historical significance, respectively.  The last segment delivers counter-arguments against Chavez and his leadership’s ability to rule the country.  These, however, are easily disproven by further information in support of this essay’s thesis.

Economic Transformation to Fight Poverty

To start off the discussion, the economic situation behind Venezuela’s socialist transformation must be addressed first.  Despite Chavez’ claims of instituting 21st Century socialism in all spheres of Venezuelan society, the economy is the most fundamental indicator of this transition.  His government has achieved remarkable results in redistributing wealth through successful social policies, land reform programs and the provision of numerous government services.

Another important success of the government’s economic policy has been to attain economic sovereignty for Venezuela, predominantly via taking control of the state-owned oil industry and combating the US pursuit of free trade by instead fostering the economic integration of Latin America.  The country’s oil industry is by far the clearest indicator of the leadership’s attempt to acquire economic sovereignty.

Historically speaking, the 1990s were characterized by the so-called “Oil Opening”, which included strategic partnerships and operating agreements (mostly with American transnational companies such as Shell and Esso) aimed at privatizing Venezuela’s oil industry, PDVSA, which triggered big losses for Venezuela and its people.

To review and correct the bad deals that were instigated within the framework of the Oil Opening, a new oil policy was adopted in 2004 to strive for “full oil sovereignty”.  During the last decade, this process of gaining economic autonomy has produced outstanding results for the social integration of the Venezuelan people.  Billions of dollars from oil revenues were used for social investment which greatly helped all sectors of the population, especially the most vulnerable and disadvantaged.

As stated by the Energy and Oil Minister and President of Petróleos de Venezuela, S.A. (Petroleum of Venezuela), Rafael Ramirez, the income generated from the sale of crude oil/ oil by-products and the contributions to the industry’s social development have totalled over US $125 billion since 2001.  On this note, social investment increased significantly from approximately US$ 21 billion in the 2011 budget to more than US$ 26 billion in 2012.  There is absolutely no denying that Chavez and his administration have gradually gained more control over PDVSA and produced substantial wealth for the Venezuelan population in the process.

Another historical event worth highlighting that clearly demonstrates the differences between Chavez and previous administrations was the neo-liberal reforms implemented in 1989.  When Carlos Andres Perez became president in that year, Venezuela had close to $35 billion in foreign debt and consequently, a massive portion of the country’s revenue was used to finance that debt.

President Perez seemingly had no choice but to borrow money from the International Monetary Fund (IMF), which mandated structural adjustment policies, most notably in neo-liberal economic restructuring and the reduction of government spending.  This resulted in huge price increases and decreased state subsidies for public transportation among many other austerity measures.  Perez’ Economic Adjustment Plan was simply referred to as the “Economic Package”.  As it affected and hurt almost all Venezuelans, especially the poor, it provoked civil unrest in the form of protests, street violence and crime in massive proportions.

In contrast to Perez’ presidency, Chavez has attempted to abrogate all neo-liberal reforms and unequal market allocations by implementing various intensive redistribution mechanisms as stated earlier.  One interesting form of redistribution worth discussing is the extensive micro-credit program which allows the poorest elements of the county to start their own micro-enterprises (given to one person or one family).

To do this, the government has created several micro-credit banks including the Banco del Pueblo (People’s Bank), Fondo de Desarrollo Microfinanciero (Fund for Micro-Fianance Development) and Banco de la Mujer (Women’s Bank).  All banks, according to the 2001 banking law, must appropriate at least 3% of their total credit portfolio for micro-credit projects.

The rise in micro-finance projects has been astounding as demonstrated between 2004 and 2005 when private banks offered 140% more micro-credits having an aggregate value of $500 million in 2005.  This figure is separate from those given out by state banks, such as the ones mentioned previously.  Out of the numerous redistribution mechanisms enacted by Chavez’ administration, the micro-credit program is one of the most successful in alleviating the poverty faced by millions of Venezuelans.

The achievements outlined in this section clearly exemplify the progress and prosperity created by Chavez for all Venezuelans, especially the poorest and most vulnerable segments of society.  As a result, the Bolivarian Revolution has improved the economic atmosphere of the country by significantly redistributing wealth and raising its standard of living.

Having improved the economy significantly since assuming office in 1999, Chavez has been able to transfer the wealth generated into highly needed social programs and government services for the Venezuelan people.  These particular forms of social investment have aimed to fully integrate and help the least well off segments of the population, predominantly minority groups such as women and Afro-Indigenous Venezuelans.

Before moving on to these achievements, a historical account of social policy (pre-1999) must be given for comparative purposes.  The economic downturn in Venezuela which began in the early 1980s posed numerous ramifications for the country’s poor.  Measures and policies which originally intended to aid the worst off ended up benefiting the middle class.

However, as the country became more impoverished in the economic turmoil it was facing, the middle class could no longer pay for private education and health care.  The middle class therefore gradually dominated the country’s public education and public health system in the process.

A reason to explain this gradual shift was that government services and programs were no longer free.  Public health care, for example, required patients to buy all treatment supplies while public education imposed registration fees for students and soaring costs for school supplies.  There is no question that the neo-liberal economic policies implemented by the Carlos Andres Perez administration (1989-1993) and also near the end of Rafael Caldera’s administration (1996-1998) had substantially contributed to the impoverishment in Venezuela due to the various privatization measures, decreases in social spending and increases in public service costs.

Poverty itself had changed for the worse, as it started affecting more and more of the middle class, never mind the poor.  Thus poverty became more generalized and diversified as it encompassed more ethnically diverse groups.  With the historical background provided, the inequalities and social injustices before Chavez’ incumbency had grown rampant due to the lack of effective and affordable public services and social safety net programs.

Social Changes in Bolivarian Venezuela

Ever since the leftist president Chavez assumed power, the economic downturn faced by millions of Venezuelans has changed for the better.  Women, for example, have greatly benefited by government-sponsored programs like the Madres del Barrio (Mothers of the Neighborhood) which fosters social inclusion and community development.  Madres del Barrio offers women the tools and expertise to attain success personally and also economically by giving training, education and interest-free loans.  Programs like these have become extremely useful for women, especially those who have always worked inside the home.

Chavez’ creation of programs such as Mision Ribas and Barrio Adentro have greatly related to the concerns of women, especially in regards to health and education.  Ordinary women from the barrios of Caracas have also engaged more in politics at the municipal or grassroots level.  With these various programs and the general politicization of the female population in this all-encompassing movement, women from the barrios have become a major component in the current Venezuelan urban social movements.

The limitations, however, of the engagement of women in grassroots politics is that most community leaders in the barrios still continue to be men.  Male-dominated bureaucracies govern Chavez’ programs and many women activists still refer to the president himself for guidance and inspiration.  Although the female population represent a significant minority in these movements, their participation is completely unprecedented since they have never really been involved in political action to this extent.

In regards to the social inclusion of the Afro-Indigenous population of Venezuela, Chavez had recently signed a decree last December to allow the enactment of the Organic Law against Racial Discrimination which stipulates conditions to address, stop, and punish all forms of racial discrimination.  Chavez himself states that Venezuelans are fighting for equality among all races of people:

“We are all the same. There cannot be and we do not accept any kind of discrimination in socialist Venezuela.”

Having given all this information, it is evident that Chavez and his administration have made social policy and restoration a pivotal tenet of their progressive and socialist platform.  This is exactly how they have managed to significantly improve the social sphere of their country, especially for those minority groups who have been the most neglected and disenfranchised in the past.

The Popular and Progressive Politics of Caracas

The last dimension of Venezuelan society worth discussing is the political sphere.  Politics under Chavez’ government has clearly become a zero-sum game as discourse has reflected the urgent need of helping the poor as opposed to other segments of the population.  Government expenditures on health and education have dramatically increased (as a percentage of the national budget) and income tax collection has facilitated the redistribution of wealth more than ever before.

Historically, in the 1960s, 70s and 80s, the liberal democratic governments pursued several infrastructural improvements but the majority of Venezuelans were completely disengaged from political and state affairs.  After 1989, due to the growing social and economic problems and the resulting civil disorder, politics was no longer restricted to mainstream parties and special interest groups as their partisan influence over the population had largely disintegrated.  Traditional political discourse was disconnected from the majority of Venezuelans as the ability of ruling parties to provide effective leadership completely evaporated.  This would all change after Chavez and the Fifth Republic Movement’s landslide victory in the 1998 national election.

The Bolivarian Revolution has politically mobilized the poorest elements of Venezuelan society resulting in an overwhelmingly popular and empowering political vision for the country.  Chavez has continuously advocated national sovereignty and Latin American solidarity against neo-liberal interference, predominantly from the US.  In doing this, he has involved and activated previously disjointed and poverty stricken segments of society which most notably include women, indigenous people and small farmers.  Currently, Chavez has garnered the support of the majority of Venezuelans as he has successfully politicized and incorporated them into political life.

Politically speaking, the Venezuelan government’s foreign policy has probably generated the most attention from international media and analysts, especially when speaking of the United States.  Since the previous Bush administration had strong interests that completely contradicted those of Chavez and his government, a growing antagonism has resulted between the two countries.  As Bush strongly favoured the promotion of the Free Trade Area of the Americas (FTAA) and required allies in his rhetorical “war on terrorism”, Chavez opposed all those policy initiatives by seeking to establish a Bolivarian Alternative for the Americans and promote a multi-polar world.

This policy agenda posed a serious threat to US hegemony and stood in opposition to everything that the Bush administration stood for.  The resulting disagreements between the two countries had convinced both administrations to acquire support from leaders in Latin America as well as the rest of the world.

The two approaches, however, of garnering support from world leaders strongly differed from one another.  Chavez had used more peaceful and acceptable methods to counteract Bush such as lobbying and initiating “microphone diplomacy”.  In contrast, the Bush administration had violently attempted to subvert Chavez when it engaged in terrorist acts by supporting the April 2002 coup d’état and recklessly financed the right-wing opposition in Venezuela.  There is absolutely no doubt that the US had and still continues to promote psychological warfare domestically as it despicably fabricates negative rumours in the American media about Chavez and his socialist leadership.

When speaking of the political changes that have occurred in Venezuela, both domestically and internationally, the United Socialist Party has engaged all sectors of the population against the global neo-liberal menace that is desperately and violently being pushed by the US.  Despite this growing antagonism, however, the Bolivarian Revolution has achieved great success in the political atmosphere of the country, since so many Venezuelans are now actively engaged in both municipal and national politics.

Addressing Anti-Socialist Claims Against Venezuela

Having already discussed all three spheres of societal existence in Venezuela, it is time to move on to the last section of this article.  The final section delivers counter-arguments that oppose and question the progress and achievements made by Chavez and his governing United Socialist Party.  These, however, will be effectively disproven in order to defend the main argument being conveyed in this essay.

The first counter-argument pertains to Venezuela’s economic development and its extremely lucrative state-owned oil industry.  It states that the various achievements already made are susceptible to the power of domestic big business and transnational oil companies in Venezuela, the lack of unanimity of how to control the market and its contradictions and the inability of the Chavez administration to manage the “Dutch Disease” effects of the profitable oil economy that may curtail other agricultural and non-oil industrial economic activity.  Since Venezuela is one of the biggest exporters of crude oil in the world, the prevalence of Dutch Disease is becoming an ever growing concern.

In response to this reasonably stated counter-argument, the obvious and most fundamental effort to overcoming Venezuela’s Dutch Disease is through the diversification of the economy.  An important way the Chavez administration has attempted to do this is by fostering the integration of economies in Latin America and by shielding itself from other economies which may pose a threat to its economic sovereignty.

To explain this in more detail, Venezuela would only compete with economies that are similar to its own while protecting itself from much bigger, imperialist-driven economies that could possible exploit its resources, such as the US.  This initiative could simply be regarded as a rational pursuit of international competition.

Another way the Chavez administration has attempted greater diversification of the state-owned oil industry is the effort to produce its very own refinery pipes.  Traditionally, it has simply imported refinery pipes from developed countries in the north. However, given Venezuela’s large iron and steel production, it could merely produce these just as well by itself.

A third example of this was in mid-2006 when the governing Fifth Republic Movement (changed its name to the United Socialist Party a year later) declared that it would instigate its own ship-building industry to service the many tankers it buys from Argentina, Brazil and China.  This particular method of diversification makes regional economic integration look more realistic.  For these reasons, there are many ways in which the Venezuelan government can combat and deal with the effects of Dutch Disease.

The second counter-argument offered concerns the state of democracy in Venezuela since Chavez assumed the presidency.  According to his opponents, which include the right-wing domestic opposition and many congressmen in Washington, Chavez is an authoritarian dictator who disrespects the democratic process, most notably the rule of law.  He is seeking to extend state control over every aspect of Venezuela’s economy, severely punishing dissent, militarizing politics and teaming up with rogue states that are hostile to the US.

These right-wing neo-liberal critics conclude that Chavez is an authoritarian whose vision and policies depend heavily on the military and are a dreadful menace to the Venezuelan people, his South and Central American neighbours and American interests.  This perspective clearly depicts a very formidable and gruesome picture of Hugo Chavez and his benevolent policies.

To argue in favour of Chavez’ incumbency, one must point out the undemocratic and repugnant coup that was launched by the right-wing opposition in Venezuela and financed by no other than the US.  The confrontation began on April 11, 2002 with several strikes being carried out by the Venezuelan Workers’ Confederation (CTV), a moderate right-wing opposition group, who were backed by the hardliner neo-liberal and business organization FEDECAMARAS.  It resulted in a military coup in which FEDECAMARAS president Pedro Carmona led a provisional government that abrogated democratic institutions (many created by Chavez himself) and promised to hold elections within a year.

However, many generals and tens of thousands of poor Venezuelans demanded the release of Chavez who was being held captive by the ruthless right-wing forces.  Fortunately, the socialist leader’s concept of a “civilian-military alliance” took place in support of his release and on April 13, Chavez gained back his presidency.

With this information provided, it seems that whether or not Chavez’ policies were democratic, the overwhelming majority of Venezuelans and military officers wanted him back in power as they staged the military rebellion against Carmona’s short-lived government.  Also, when the right claims that Chavez is an “authoritarian” it is absolutely hypocritical, since the government they supported after the violent coup in fact did away with many of the democratic institutions and procedures that Chavez himself created for the Venezuelan people.

The counter-arguments delivered in the previous section clearly illustrate the misconceptions and false beliefs about Chavez and his socialist government.  As explained, the United Socialist Party of Venezuela has pursued and achieved numerous and unprecedented successes compared to all the previous governments in the country.

Having said this, the Bolivarian Revolution has significantly improved the economic, social and political atmosphere for the majority of Venezuelans, especially by raising the standard of living for the most impoverished sectors of society.  As Chavez and his administration continue to rule the country in a peaceful and democratic manner, they still hold overwhelming support from their citizenry and face a weakening yet contemptible opposition movement which is unable to offer any viable alternatives to Chavez’ successful Bolivarian Revolution.

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