Knocking over Dominos in Latin America
[Venezuela & Bolivia]

by Sarah Wagner

Venezuelanalysis.com, May 29, 2005 [ZNet]

On Monday, May 16th tens of thousands of Bolivian Indigenous descended from the shantytowns surrounding La Paz, the capital, demanding that the government of Carlos Mesa increase royalties on foreign transnational corporations from 18% to 50%. By the time the march ended that night in a shower of tear gas, rubber bullets and water hosing, their demands had changed. Protesters, known as the "Pact of Unity,"[1] were back on the streets on Tuesday, but now they demanded the outright nationalization of gas and oil companies, the closing of Congress and the impeachment of the President.

The protests continue under their new battle cry for accountable government, and an oil policy that ensures that the country's vast natural gas reserves - the second largest in Latin America - will be used to respond to the social needs of the Bolivian people.

It is not a new demand. In October, 2003, hundreds of thousands of Aymará and Quechua Indigenous and poor Bolivian miners took to the streets to protest the privatization of natural gas and water companies and the decision to build a natural gas pipeline that would export the natural resource through Chile. Then-Vice President Carlos Mesa condemned the violence of what came to be known as the October rebellion of 2003, and replaced former-President Gonzalo "Goni" Sánchez de Lozada. Yet Mesa has followed in his predecessor's footsteps, continuing to court the United States and international lending institutions and pushing through the privatization of the country's natural gas and water companies.

Guillermo Aruguipa Copa is a member of Bolivia's largest political party, Movement Towards Socialism (MAS), and part of the Commission of Economic Development in the Bolivian Congress. He says Bolivian's no longer distinguish Mesa from Sánchez. "The Bolivian people are demoralized. Mesa has the same 'people of confidence' that Sánchez had. Many of the people who make decisions in Mesa's government came from the Sánchez's government."

What little political stability was left in the country came close to collapsing in March when Mesa, once again proving to be more of a US ally than a public servant of the Bolivian people, refused to sign the Hydrocarbons Law arguing that it would scare away foreign investment. The law, which would impose a 32% tax on energy corporations (maintaining the 15% royalties) and require that they renegotiate their contracts with the government, was initially supported by protestors. But Mesa's intransigence emboldened them, radicalizing their demands. In the face of mounting protest, Mesa held up his resignation as a means of blackmailing protesters into accepting his decision.

The 157-member Bolivian Congress prolonged the façade of stability in this "ungovernable" Andean nation by unanimously rejecting Mesa's resignation offer. Protests were quelled using a legislative loophole that opened space for the President of Congress, Hormando Vaca Díez, to pass the law without Mesa's signature on May 17th.

While Mesa avoided both the legacy of infuriating his neoliberal allies and (at least temporarily) of meeting the same fate as Goni, it is important to emphasize that the Bolivian people, disillusioned with their government, were able to force its hand and achieve the passing of the law. Aruguipa, spells out the political climate, assuring that "the people are mobilized.they are demanding that the government of Carlos Mesa takes the same path that Chávez has."

Since the election of Hugo Chávez Frías in 1998, Venezuelan democracy has evolved from an elitist privilege to a tangible instrument. Based on popular participation and inclusion, it has empowered the previously marginalized majority and is changing the complexion of Venezuelan society and politics. Riberg Díaz works at Venezuela's state oil company Petroleos de Venezuela S.A. (PDVSA) in the state of Zulia. "We are fulfilling the very important job of consolidating what social justice, equality, peace and true democracy mean," he says. "The workers [in Zulia] are not just putting in an eight hour day; they are defending the sovereignty and security [of PdVSA] and their participation" in el proceso (as Venezuela's revolutionary process is known).

Realizing that a country cannot have a democracy with its masses plagued by illiteracy, unemployment and malnutrition, the Bolivarian government last year alone dedicated over 3.7 billion dollars to empowering, educating, nourishing, curing and employing Venezuelans. Through educational missions, illiteracy has all but been eradicated and hundreds of thousands of people are taking advantage of opportunities to earn a high school or college degree. Co-ops, micro-credits and endogenous development programs have mitigated crushing under and unemployment. Barrio Adentro, a program that exchanges Venezuelan oil for Cuban doctors, has given millions of Venezuelans free access to health care in their own neighborhoods. Over 10 million Venezuelans shop at Misión Mercal, the government subsidized grocery stores, where they buy high-quality basic food staples at discounts of up to 50 percent.

Far from your average dose of populism designed to meet the peoples' immediate needs and garner votes, Chávez is pursuing a strategy aimed at turning Venezuela from an oil-rich country of the global South to a sovereign state in which the people reap the riches of their natural resources. It is a goal that resonates inside and outside of Venezuela.

In order to ensure that the bulk of oil profits reach Venezuelans citizens instead of remaining in the pockets of corrupt and exploitative national elites transnational corporations, the Bolivarian government announced last month that it will reestablish its sovereignty over its oil industry by finally implementing the 2001 Hydrocarbons Law.

The Hydrocarbons Law stipulates that any foreign investment in the oil sector must be in the form of a joint venture instead of a service agreement. It limits foreign companies to a 49% stake in any project, reserving at least 51%, the majority, for PdVSA. And it raises royalties (the money to be paid to the government before a foreign company subtracts its expenses) from 1% to 16% for extra-heavy crude production in the Orinoco belt and from 16.6% to 30% in the rest of the country[2].

The law calls for Venezuela's tax agency Seniat to investigate all 32 service agreements the government currently has with foreign oil companies and to take legal action against any transnational who has committed tax fraud or breeched it's contract. According to Minister of Energy and President of PdVSA Rafael Ramírez, 90% of the corporations involved have either falsified documents enabling them to declare losses and thus did not pay taxes or simply did not pay taxes and royalties, causing combined losses of US$3 billion in taxes and $1 billion in royalties. Additionally, it has recently come to light that several of these transnationals have broken their contracts by increasing production, up to double the quota stipulated in their contracts, mixed heavy and lighter crude and did not comply with their responsibilities to invest in PdVSA.

The Threat of a Good Example

Venezuela is a country that has simultaneously been branded by Washington as a member of the "axis of subversion" and held up by Leftists as exemplary of a democracy transformed from elite-dominated to participatory and inclusive. Such contradictory international sentiment reflects the domestic polarization of those who love Venezuela's charismatic leader, and those who hate him. However, polarization in Venezuelan politics, both nationally and internationally, is far from a 50/50 split. Pegged by Datanálysis, a polling firm traditionally linked to opposition party Democratic Action, as having a 71% national approval rating, Chávez' popularity has never been higher.

Internationally, as the idea of the "socialism of the 21st century" reverberates through Latin America and as the Bolivarian version of social justice further resonates with the vast majority of Latin Americans, calls to emulate Chávez have grown stronger. They reverberate from Mexico City, where prospective presidential candidate Lopez Obrador threatens to challenge US economic dominance, to Uruguay, where Tabaré Vazquez broke the 170 year two-party dominance in Uruguayan politics to usher in what is hopefully expected to be a shift to a socially-oriented government.

Yet it would be erroneous to buy into sweeping generalizations asserting that the influence of the Bolivarian Revolution has given rise to a political shift to the Left in Latin America. It is frequently postulated that three-quarters of Latin American countries are governed by "leftist" leaders based on the mere fact that they ran on leftist tickets or belong to parties traditionally associated with the Left. The people of Argentina, Brazil, Ecuador, Bolivia and Peru voted for leaders who spouted anti-imperialist and anti-neoliberal campaign promises-platforms that were far more radical than the policies they implemented once elected. This is illustrated by the riots in Ecuador and Bolivia, Peruvian President Alejandro Toledo's 4% approval rating, the poor showing of Lula's Workers' Party in recent regional elections; and the hordes of Mexicans, numbering in the hundreds of thousands who gathered in the Zocaló to voice their support for López Obrador.

The current social unrest across the board in Latin America reflects the people's disgust with their elected leaders' deceit. Prior to Chávez, Latin Americans demanded change, better wages and working conditions, social services and educational opportunities. With Chávez's arrival, they have a concrete example to emulate and are holding up Venezuela's Bolivarian Revolution as a model for change for their own countries.

"We don't have anything," notes Aruguipa, "therefore, there is no other path than to recuperate our strategic resources." "This is key for our future generations," he continues, "this is why I believe that we are strengthened by the different interventions that Chávez has done. This strengthening is seen everywhere in Bolivia: in the Congress as well as in the reunions of different social organizations."

The Bolivarian revolution's accomplishments have forced Latin American Presidents and presidential candidates to walk a thin line between professing to follow Chávez' example in order to avoid alienating their bases, and not pissing off Washington. As illustrated by Rumsfeld's and Rice's failed efforts to isolate Venezuela during their recent Latin American tours, it would appear that Latin America is prioritizing its political ties with Caracas rather than with Washington.

But Venezuelan oil worker Riberg Díaz PdVSA Zulia cautions that it is not Chávez's style but rather the success of the "Bolivarian revolution" that resonates with people around the world. "The CIA and Bush say that Chávez has influence. That is not true. It is the Revolutionary Movement that has the influence. Other movements take the Bolivarian Revolution as a point of reference. And the Bolivarian Revolution has influenced on an international level, not only in Latin America, but in Spain, in France, in Iraq and in IranEvery day the people are assuming a greater consciousness, a greater commitment to Latin America, to the world, to peace and to the exploited," Díaz asserted passionately.

This is precisely what makes Chávez so dangerous to Washington. Oftentimes Washington's attacks on the Bolivarian Revolution are written off as US concern for the lifeblood of its economy: oil, and without doubt the geopolitical importance of Venezuelan oil for the American economy cannot be underestimated. Venezuela's oil reserves, the largest in the Western Hemisphere, consist of 78 billion barrels, in addition to 1.2 trillion barrels of super heavy crude. However this is a reciprocal relationship: the US depends on Venezuela's ability to churn the oil out just as Venezuela depends on the US' ability to consume it.

Nevertheless, Chávez' control over one of the world's most important geopolitical resources, is not what makes him dangerous. The Venezuelan President and his Bolivarian Revolution are feared by Washington and others because of the example it is setting to other countries. And US policy has always endeavored to squash alternatives.

Why else would the US have invaded Grenada, a tiny island of 100,000 people? It has never been what one would call a geopolitical goldmine. Why was Haiti, the most impoverished nation in the Western Hemisphere invaded by US-led forces in 2004? Why during the 1960s-1980s did the CIA train and fund Guatemalan police forces to murder, torture and disappear 200,000 of their countrymen and why was the same pattern repeated in El Salvador, Argentina, Brazil, Paraguay, Uruguay, Chile, among others? Why did Washington invade Panama in 1991? Why have they enforced a forty-five year world-wide embargo on the Cuban people? Why did they invest millions of dollars in destroying Nicaragua's peaceful Revolution, it's Christian based communities, it's poetry workshops and it's literacy campaigns?

The rationale lies in preventing an example. In The Last Colonial Massacre: Latin America in the Cold War (2004) Greg Gandin argues that the ideological battle during the Cold War was not between capitalism and communism, but rather between two kinds of democracy: one stagnant and tepid and the other vibrant with the possibility to change the social fabric of society. The US brought this battle to any country that attempted to implement the latter; US governments have been bribing, killing and squashing any form of sovereignty or resistance since the inception of the Monroe Doctrine.

The Cold War is over, yet this battle between democracies continues. Since Mesa took office in 2003 in Bolivia there have been close to 900 (and counting) protests, and the direction the Andean nation will take is far from clear. Indications that Evo Morales is "the natural leader of Bolivia," in the words of Aruguipa and is ready to lead Bolivia are questionable. Morales and the MAS' wide-reaching social movement want to increase royalties on transnational corporations to 50% in addition to the 32% tax. However, Morales' recent discourses seem watered down and out of touch with the marches and the fiery protests of the people and the MAS leader's calls to end road blockades between principle cities and leading out of the country have not been heeded. This has not gone unnoticed. Natural leader or not, in the words of one MAS leader, Román Loayza, "the bases are by-passing us. We want to march for more royalties, but the people want nationalization. And for that we will struggle." Dionisio Nuñez, a MAS Congressman, concurs. "We are going to fight against the law," he affirmed. "The marches have to continue because in Congress not all the senators and deputies defend the people. Sometimes they defend the multinationals."

The Bolivian peoples' demands now revolve, not around increased royalties or taxes as MAS advocates, but rather advocate outright nationalization and even expropriation - without compensation. They argue that transnational corporations have pillaged Bolivia's natural resources and exploited and impoverished its people. Raising taxes is seen as small potatoes. "The people have a right to nationalize and expropriate," affirms Jaime Solares, the leader of Bolivian Workers Central, affirming that "the people no longer believe in neoliberalism."

While the United States would like to isolate Chávez, Cuban President Fidel Castro, Bolivia's protestors and anyone else who tests the status quo, they fail to recognize that as the Bolivarian Revolution deepens, it is unlikely that the Latin American people will tolerate unfulfilled campaign promises. In the context of the achievements of the Bolivarian model, protests and discontent are likely to increase until elected leaders prove themselves worthy of the democratic rhetoric they champion by bringing concrete results and deep change.

Washington, through indirect (and probably direct) support for the short-lived April, 2002 coup and the oil industry shutdown, has tried to overthrow Chávez and destroy the Bolivarian Revolution. They failed. Now the success of the Bolivarian Revolution is reverberating from Tijuana to Tierra del Fuego and the voices of the Latin American people are demanding change louder than ever. What will Washington's next move be? Will it be sufficient to snuff the flame of inspiration, example and hope that the Bolivarian Revolution has ignited in millions of hearts in Washington's "backyard." Chávez isn't alone," affirms Evo Morales. "The people of Latin America support him. That is the new reality."

[1] The Pact of Unity included organizations such as the Federation of United Neighbors of El Alto (FEJUVE-El Alto), the Regional Workers Central of El Alto (COR-El Alto), the Public University of El Alto, the Departmental Workers Central, the Confederation of Original Peoples, the Federation of Peasants of La Paz "Tupaj Katari," the Bolivian Workers Central (COB), the teachers unions of El Alto and La Paz, coca growers, and miners, among others

[2] In addition to the increase in royalties, the Hydrocarbons Law lowered taxes from 67% to 50%. Foreign companies will not longer be paid in US dollars, but rather Bolívares, Venezuela's currency and expenses such as clothing, vehicles and food can no longer be charged to PdVSA accounts.

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