Venezuela: progress report

Substantial economic and social changes afoot in Venezuela

The changes that are taking place in Venezuela are perhaps far more radical than is usually apparent from afar – after all Chávez has not sought to overthrow capitalism and in fact the private sector in Venezuela today has a larger share of the economy than before President Chávez took office. (See ‘Comment on the Center for Economic and Policy Research paper “The Venezuelan economy in the Chávez years”’,, 26 July 2007)

Yet still: “In real (inflation-adjusted) terms, social spending per person has increased by 170 percent during the period 1998-2006. But this does not include the state oil company PDVSA’s social spending, which was 7.3 percent of GDP in 2006. With this included, social spending was at least 314 percent more in 2006 than in 1998 (in terms of real social spending per person). This has brought about significant gains for the poor in health care, subsidized food, and access to education, some of which are detailed in the paper.

“The official poverty rate, which measures only cash income and does not include such advances as increased access to health care and education, has dropped by 31 percent from 1998 to the end of 2006 – from 43.9 percent of households to 30.6 percent. Measured unemployment has dropped from 15 percent in June 1999 to 8.3 percent in June 2007.”

Increased production

This massively increased spending on the welfare of the Venezuelan people is blamed for Venezuela’s current problem of inflation which is running at some 15-20 percent per annum. The IMF has recommended as a ‘cure’ for this problem that Venezuela raise its interest rates to nearly 40 percent and reduce its public spending by 20 percent, but this is not a ‘cure’ which the government is prepared to even contemplate: “We will not apply any economic policy that makes our people suffer again”, says Finance Minister Rodrigo Cabezas. (Quoted in ‘Venezuela to continue with anti-inflationary measures’ by Chris Carlson,, 10 July 2007)

If the cause of inflation is that there is too much money chasing too few goods, bourgeois measures to curb it always involve the reduction of money supply in the economy – ie, making the money expensive to borrow, thereby reducing spending, or cutting wages and/or social spending. What Chávez is doing instead is further to increase production on the one hand, and to increase the goods in circulation by imports on the other – which itself demands an increase in national production in order to be able to pay for these goods.

The strategies for increasing national production are many and varied. Agricultural production is a particular target. This apparently fell significantly at the end of last year, reaching a low of 64,000 tons. Current production, however, is at 112,000 tons, and the goal is to reach 150, 000 tons. Among the measures taken to secure this goal is the distribution of tractors to farmers who have set up collective farms on lands expropriated from absentee landlords. The tractors themselves are being produced in Venezuela by a joint venture company set up with Iran, Veniran Tractors. Currently this company, set up over two years ago, produces about 20 tractors daily. Gradually, the tractors, which today are only 18 percent made in Venezuela, are to become 100 percent Venezuelan by 2010.

It goes without saying that the goal of increasing agricultural production could never be achieved by putting interest rates up to 40 percent, as is recommended by the IMF. On the contrary, very cheap loans need to be made available to the peasantry in order to help them in the drive to boost agricultural production; this is exactly what is being done.

In July 2007, the first Venezuelan-made motor car rolled off the production line. Again, it is the product of a Venezuela/Iran joint venture, Venirauto, inaugurated in November last year, and which is 51 percent Iranian and 49 percent Venezuelan. It will be producing 25,000 cars a year by 2010.

Chávez has also just announced a programme called ‘Socialist Factory 2007’, which will create 200 state-owned socialist companies whose purpose will be to make Venezuela self-sufficient in all kinds of manufactured goods, including cement, glass, bicycles, paper, plastics, rubber products, kitchen appliance, oil pipelines, wheelchairs, etc. Added to existing state-owned companies, these will be in a position to compete with the private sector in almost every area of the economy.

Maintaining oil production

The oil industry obviously plays a vital part in maintaining both growth at home and the full programme of international aid on which Venezuela has launched,.

The state-owned oil company, Petróleos de Venezuela (PDVSA) accounts for about half of government revenues and three quarters of Venezuela’s exports. In May, PDVSA also took over all the operations abandoned by ConocoPhillips, ExxonMobil, Chevron and Total, as well as 46 oil rigs.

There have, however, been problems in this field also, which again Chávez seeks to resolve by moving towards self-reliance. PDVSA’s 2007 plan had a target of 191 oil rigs to produce 3.3 million barrels of oil per day (mbd), but in fact only 112 are currently operational, a number that will not increase beyond 120 by the end of the year. This is partly because of a new law in Venezuela that requires contract winners (including the providers of oil rigs) to put 10 percent of the contract value towards social programmes, and partly because of an international shortage of rigs, the cost of hire having doubled since last year to $400,000 a day. In response to this problem, the Venezuelan government, besides immediately acquiring some rigs from Iran and China, is arranging for future Chinese rigs to be assembled in Venezuela.

Meanwhile, industrial unrest is brewing among some sections of oil workers, as a labour-aristocratic elite has traditionally had some influence in the oil workers’ unions and indeed had bureaucratic control at the time of the attempted coup against Chávez in 2002. These elements are undoubtedly doing their best to help US imperialism unseat Chávez by raising quibbles over the content of the collective agreement currently being negotiated, in the hope of turning minor grievances or worries (for instance unavoidable delays in absorbing former employees of the imperialist corporations that have pulled out) into anti-Chávez militancy. However, the fact that the vast majority of Venezuela’s oil workers are enjoying conditions of life that they have never before known – with education for their children and free health care readily available, among other things – makes it very unlikely that these elements will be able to do much harm.

Independent financial arrangements

Another way in which the Venezuelan government is acting to enhance its economy is by stemming the flow of tribute to imperialist banks. This has involved repaying debts owed to them (the high price of oil has helped in that regard).

One of the measures announced by the finance minister is a strategy to continue to decrease the balance of external debt. Finance Minister Cabezas has stated that the government might carry out another buying of bonds later this year as it did toward the end of 2006 when it bought outstanding Brady bonds. Last year the government bought US$3.9m in external debt, reducing the total by 15.2 percent and bringing it down from US$31bn to US$26bn, ie, a level of 17 percent of GDP. The intention is now to reduce external debt to 10 percent of GDP by 2010.

Chávez is also seeking to set up a Latin American development bank, the Banco del Sur, that will enable countries in the region to borrow at low rates of interest and without conditions that damage the economy and the population. The Banco’s founding members are to include Venezuela, Ecuador, Argentina, Brazil, Bolivia, Uruguay and Paraguay and it is expected to start operating next year.

The racial question

Venezuela shares with the US the phenomenon that as one goes down the social strata from the richer to the poorer, the darker the average skin colour becomes. Pro-Chávez demonstrators are of noticeably darker hue than anti-Chávez demonstrators, for instance.

For centuries, the ruling elite of Venezuela were all white people of mainly Spanish descent, and it was only they who appeared in the Venezuelan media. From outside, it appeared that Venezuela was exclusively a country of white people. The truth, however, is that only 23 percent of the population is white. Some 10 percent is black, while around 2 percent is indigenous and the rest are mestizos – mixtures. The Venezuelan government is conducting a vigorous campaign to ensure that the majority of the people do not continue to be non-entities in their own country.

The television station that lost its licence to broadcast recently, RCTV, amidst howls from the imperialists and their local stooges about loss of freedom of speech etc, was typical in that its programmes were “dominated by whites or light skinned individuals, [relegating] blacks or dark skinned people to play roles as criminals or servants in soap operas”. (‘A real racial democracy? – Hugo Chávez and the politics of race’ by Nikolas Kozloff, Christian Science Monitor, 15 October 2005)

Richard Gott in The Daily Telegraph of 27 June 2007 says: “To watch a Venezuelan commercial station (and several still survive) is to imagine that you have been transported to the US. Everything is based on a modern, urban and industrialised society, remote from the experience of most Venezuelans. Their programmes, argues Aristobulo Isturiz, until recently Chávez’s minister of education (and an Afro-Venezuelan), encourage racism, discrimination and exclusion.” (‘Chávez ousts oil giants’)

The Christian Science Monitor article, written in 2005, continues:

“Chávez has struck back against the established media through Vive TV, a state sponsored station. In contrast to TV stations like RCTV, which airs shows such as ‘Quien Quiere Ser Millionario’ (‘Who Wants To Be A Millionaire’), Vive TV shuns American-style consumerism. According to its website, Vive TV promotes ‘the common citizen, the millions of Venezuelans and Latin Americans who have been made invisible by imperialism and its cultural domination.’ Through Vive’s programming, claim the station’s managers, ‘it is possible to acquaint oneself with the reality, lives and struggle of people of African descent [and] indigenous peoples.’ As Blanca Eekhout, the former manager of Vive explains, people of colour previously ‘have appeared in the media but in a stigmatized way; they are shown as marginal people, criminals. They are not shown building, constructing, which is part of the struggle for the development of the country. That’s one thing we are trying to change.’ … Chávez has also increased the visibility of Latin America’s indigenous peoples through the launching of the government-sponsored Televisora del Sur (Telesur). The network, which offers news and opinion programming, has hired Ati Kiwa as a presenter, an indigenous Colombian woman who wears traditional dress. The station provides a stark contrast to Univisión celebrity anchor Jorge Ramos, who wears a jacket and tie”.

Since 2005, giant strides forward have been taken in the battle against racism and discrimination.

“The new state-funded channels (and there are several of them too, plus innumerable community radio stations) are doing something completely different, and unusual in the competitive world of commercial television. Their programmes look as though they are taking place in Venezuela, and they display the cross-section of the population to be seen on cross-country buses or on the Caracas metro. As in every country in the world, not everyone in Venezuela is a natural beauty. Many are old, ugly and fat. Today they are given a voice and a face on the television channels of the state. Many are deaf or hard of hearing. Now they have sign language interpretation on every programme. Many are inarticulate peasants. They too have their moment on the screen. Their immediate and dangerous struggle for land is not just being observed by a documentary film-maker from the city. They are being taught to make the films themselves.

“Blanca Eekhout, the head of Vive TV, the government’s cultural channel, launched two years ago, coined the slogan ‘Don’t watch television, make it’. Classes in film-making have been set up all over the country. Lil Rodriguez, an Afro-Venezuelan journalist and the boss of TVES, the channel that replaces RCTV, claims that it will become ‘a useful space for rescuing those values that other models of television always ignore, especially our Afro-heritage’. With time, the excluded will find a voice within the mainstream.” (Richard Gott, op cit)

The government has also been promoting the rights of the indigenous population. These rights are codified in the 1999 Constitution, which states, inter alia, that while Spanish remains the country’s official language, “Indigenous languages are also for official use for indigenous peoples and must be respected throughout the republic’s territory for being part of the nation’s and humanity’s patrimonial culture.”

The constitution also recognises the land rights of the various indigenous tribes as collective, inalienable and non-transferable. This includes the right for indigenous people to be consulted before any extraction of natural resources takes place in their territories. Slowly but surely, the various indigenous tribal leaders are being handed title deeds for their traditional land, a process which started in 2005 at the World Festival of Youth and Students in Caracas when land titles were handed out to 4,000 people from six Kariña communities encompassing 317,000 acres in the Venezuelan states of Monagas and Anzoategui.


Had the coup against Chávez succeeded in 2002, there is no question that Venezuela’s people could never have even dreamt of the improvements that have come about in their lives. The Venezuelan economy would have remained stagnant, while the multinationals and international financial institutions would have continued to make away with massive superprofits.

But still, the process of liberation is far from easy. Important contradictions among the people need to be resolved. Outside interference has to be countered, and there is no shortage of internal counterrevolutionary demagogues trying to take advantage of every problem that arises – as though the counterrevolution could ever solve anything! But if public confidence in the revolutionary process were to be eroded, the counterrevolution would avidly seize the opportunity for restoration of the imperialist playground and all would be lost.

However, Chávez is not just implementing policies that provide for Venezuelan people to have jobs, wages, social provision, etc – he is also involving them in creating the new Venezuela themselves, unleashing their talents and creativity; restoring their dignity. Working closely with the Cuban communist government, Chávez has been able to draw extensively on the experience of the Cuban and other socialist revolutions to enhance the revolutionary process in his own country.

In these circumstances, the bright future of the Venezuelan revolution should win through whatever obstacles it might encounter strewn on its path by its class enemies.