venezuelanalysis.com | 10 October, 2016
Professor Steve Ellner. (Ángel Dejesús)
Distinguished Venezuelan history and politics professor Steve Ellner visited Caracas from September 26 to October 7 to teach an intensive seminar at the Venezuelan Planning School, titled “The Role of the Venezuelan State in the Transition to Socialism”. VA sat down with the long time Universidad de Oriente professor to discuss a range of pressing issues facing Venezuela, including the country’s current economic crisis, the recall referendum, and the future of the Bolivarian process.
To begin, I want to get your reading of the current political conjuncture in Venezuela.
In spite of the very pressing economic difficulties that translate themselves into transformation in people’s loyalties – some have become disillusioned, others who have supported the process have become apathetic, and still others have gone from the Chavista camp to that of the opposition – nevertheless, there are certain aspects of the situation in Venezuela that may be encouraging and provide room for guarded optimism.
One is that the opposition’s efforts to penetrate the barrios and to get support of barrio residents for their mobilizations have not been successful up until now. That was certainly the case during the guarimba protests in 2014, when the opposition obviously hoped that the protests, both the civil disobedience as well as the violent protests and mobilizations in areas controlled by the opposition, would spread to poorer, traditionally Chavista sectors. In the eastern part of Caracas, in Lechería as opposed to Barcelona-Puerto La Cruz, in Puerto Ordaz as opposed to San Felix, and in other opposition-controlled municipalities throughout the country, those protests flourished but didn’t spread to the barrios. And now in 2016, the same thing has happened. The opposition has not been successful in mobilizing people in the barrios.
That’s not to say that people in the barrios are overwhelmingly supportive of the government. But it’s one thing to say that they’re disappointed with regards to the situation, and it’s another to say their disappointment has reached a degree in which they enthusiastically support the opposition parties and are willing to participate in their mobilizations. Don’t forget that at the time of the collapse of the Soviet Union in 1991, the miners participated in protests against the government which contributed to its downfall. So it’s one thing that you’re disappointed, it’s one thing you’ve become somewhat disillusioned, or you’ve got second doubts. It’s another that that this disappointment transforms itself into the kind of anger or desperation that expresses itself in the form of participation in anti-government mobilizations and protests.
The opposition has attempted to politicize people in the long lines outside supermarkets. They went there and started talking politics, hoping that the people in the line would actively respond, in which case anything could have happened. And yet, even though people are naturally upset and may express that in the lines, it’s not turning into the kind of scenario that the opposition was anticipating and hoping for.
You are, however, seeing increasing levels of social discontent– though not necessarily politicized discontent– being vented in the form of lootings, etc. due to the intensity of the crisis, as in the “Cumanazo” riots earlier this year that saw police arrest over 400 and that shut down the eastern coastal city for two days.
What I have just said refers to the situation up until now. I’m not making predictions with regard to what might happen. The situation here in Venezuela is very difficult for everybody. If it’s difficult for us university professors, it’s much more difficult for the people in the popular sectors of the population. It’s true that the situation may at some point escape from the hands of the authorities, but at least up until now that has not happened in a big way. This is a reality that counters the idea that everything has been lost and that Venezuela is in a humanitarian crisis, an allegation which is a tremendous exaggeration, as bad as things may be.
No one disputes that the economic situation is very grave at this moment. But it’s also very baffling in the sense that the governmentimplemented a floating exchange rate, the DICOM, which has risenover the previous six months, while the black market rate has actually declined slightly. If the black market rate is driving inflation, one supposes that inflation would decrease. Yet inflation continues to soar and scarcities continue as imports are being cut. What is happening to the Venezuelan economy?
I would say firstly that the situation in terms of the exchange controls is qualitatively different now than before because the official [lowest] exchange rate has not slid in accordance with the changing rate of the open market.* But at the same time you have another exchange rate which is to a certain extent pegged to the open market or black market– the DICOM rate is over 600 while the black market rate is around 1000 and actually dropped a few weeks ago before increasing modestly. That is a novel situation because firstly the open market rate practically never declined after 2012, or it never stayed stable to the extent that it has over the last month or two. After 2012 and until recently, the dollar steadily shot up. And secondly, the fact that the ratio between the DICOM rate and the open market rate is less than two to one. I think that is a fairly positive sign because that was the situation of the exchange control system up until 2012. Between 2003 and 2012, the disparity between the open market rate and the official rate was two to one, and that system, although it certainly wasn’t ideal, was functional.
When the price of oil was at $100 per barrel.
That’s just it: with the price of oil at $100 per barrel, the government was able to maintain that disparity because it would inject dollars every time the open market rate began to increase. The SICADI system had a certain logic prior to 2012, basically telling people, “hold onto your bolivars, don’t buy dollars now, because as soon as we inject dollars via SICADI, you can buy them much cheaper than the open market rate.” That mechanism served to withhold bolivars from the open market. That is, people held onto their bolivars instead of placing them on the market in order to buy dollars, thus holding down dollar demand and controlling its price. The system worked because the government had dollars.
The price of the dollar is naturally going to go up due to inflation. There’s a correlation between the exchange rate and the price of products on the market. Eventually, there’s going to be an adjustment. But maintaining the ratio of the dollar to DICOM at two to one, or less than two to one, represents an improvement over what happened after 2012.
Now you mentioned the lowest official rate, that is, the so-called DIPRO rate. If the DIPRO rate is designed to guarantee cheap prices for certain basic necessities, then I go along with that. I think that the dual exchange rate is necessary, because if you allow the price of essential goods to become pegged to the price of the dollar, most people will be unable to buy basic products.
If you dollarize, things will be too expensive for people to buy them.
That’s right. If you dollarize like in Ecuador, certainly. Furthermore, if, as some Chavista economists propose, you peg that rate to the dollar for all products, it’s going to hurt the popular sectors of the population more than anybody else. To simplify tremendously: you have a dual or even a triple tier system, although I realize that not everything fits this pattern. First, you have the popular sectors waiting on lines for hours and hours but they are able to buy goods that they need because those prices are heavily subsidized. Then, you have products like, for instance, meat and chicken that are sold by butchers at prices higher than the regulated price, a situation which the government tolerates. So these are legal transactions, in which the members of the middle class go to these commercial establishments and buy products without having to wait on line, but they’re paying at least two times more. And then you have the bachaqueros who are selling illegally on the streets. So really you have a three-tiered system. That is certainly not a desirable situation, but on the other hand, and this is my main point, Venezuela is not an ungovernable state.
Venezuela is not in a humanitarian crisis as the media abroad in the United States and elsewhere is saying. The New York Times – which is supposedly a more even-handed, impartial newspaper than others in the United States– is now regularly talking about the “humanitarian crisis” in Venezuela, and that is an exaggeration. Of course, there are elements of truth in what they say: the situation in Venezuela economically is very difficult. But they’re doing two things that deceive the public. One is that the situation is not as bad as they’re suggesting, precisely because of what I’m pointing out: the poor people are able to access these goods. I’m not denying that those lines are sometimes 4, 5, 6 hours which is a terrible situation. I’m not denying the fact that some people are not able to eat three meals a day, and that’s even worse. But I am saying that when the media talks of a humanitarian crisis, they’re exaggerating. The system of the CLAPs** and the system of regulated prices means that poor people at least have access to these basic commodities.
My second point with regard to the so-called “humanitarian crisis” is that the media conflates two things: one, the economic situation, which is very difficult, and two, the political situation in which they claim that Venezuela isundemocratic, and that violation of human rights is the norm. This narrative conflating the economic and the political is deceptive. When they talk about the economic problems in the country they may be exaggerating, but not necessarily by much. But when they throw in the part that Venezuela’s not a democracy and that there is a systematic violation of human rights, they’re saying something that’s highly deceptive. The readers of those newspapers or the people who watch CNN are likely to think, “I know what they’re saying on the economic front is true, and so what they’re saying on the political front is probably also true.” But what they’re saying on the political front is highly misleading. And of course the accusation that Venezuela is undemocratic, more than the narrative regarding the dismal economic situation, justifies outside intervention.
Returning to the economic point, absolutely there is an economic crisis that is very deep, and the government’s new floating exchange rate has risen to a point that it’s less than two to one to the black market rate, and that’s positive. However, inflation is still soaring. The government maintains that this is an economic war. However, many critical Chavistas say, “if this is an economic war, we’re getting our asses kicked”. If we look at it from the vantage point of the state, it’s not just the decisions coming out of the state apparatus that matter, but the non-decisions, the lack of decisions. With the exception of the implementation of the DICOM– which is only a half measure – the government has not really taken any real, substantive measure on the economic front since the death of Chávez. What does that impasse or paralysis tell us about the contradictions within the Venezuelan state at this moment?
Firstly, I agree that the Maduro government has been very slow to make decisions, even though the situation is pressing and requires immediate responses. With the price of the dollar skyrocketing as it did beginning in late 2012, it was necessary to act immediately. Now, I understand that Maduro was acting president at the time and was not in an ideal position to act immediately, and that in those months the price of the dollar got way out of control. When he became president in April 2013, the situation was much more difficult to correct. The response should have been more immediate, but there was almost a power vacuum as a result of Chávez’s illness and the fact that Maduro was just acting president at the time.
But there are other situations where you can plainly state that the slowness of the government to act has been detrimental, economically and politically. For instance, the fact that Maduro waited so long to increase the price of gasoline. He announced a year before he increased gasoline prices that he was going to do that, but that he was going to wait until the appropriate moment. He waited about a year. So that’s very illustrative of his slowness to act, even though decisions needed to be taken immediately.
Now can we attribute this slowness to Maduro personally or do we attribute it to the correlation of forces within the state that perhaps prevent Maduro from imposing a decision? In the state apparatus, there are conservative forces within the government and within Chavismo that have perhaps blocked the possibility of taking more radical steps that would have broken out of the crisis or have resolved it in the form of revolutionary advances.
When Maduro became the leader of the Chavista movement, there was a lot of speculation about the relationship between Maduro and Diosdado Cabello. The opposition and anti-Chavistas abroad were playing on those perceived differences. I witnessed that in the case of a journalist of the newspaper El Universal of Mexico who interviewed me right around that time, and the questions she asked indicated that there was an obvious intention to play on the tensions that supposedly existed between the two leaders. That hasn’t happened. Maduro has been a consensus leader within the Chavista movement– I’m not referring to consensus within the nation as a whole– but within Chavismo. Now that is advantageous in one sense, because it means you have a collective leadership and it’s naturally desirable that different leaders have an input in decision making. But when it comes to a pressing situation in which important decisions have to be taken, if you try to achieve a consensus and you’re worried too much about what everybody else is saying, that’s going to hamper your ability to respond immediately and effectively.
The economic crisis has fueled the opposition’s push for a recall referendum and that has been a particularly thorny issue. On the one hand, the opposition has accused the government of dragging its feet on the recall. The CNE announced last month that it won’t be held this year, meaning that if Maduro loses the recall, his sitting vice-president will take over for the remainder of his term and new presidential elections will not be held. Meanwhile, the government has accused the opposition of waiting too long to start the referendum process as well as of entertaining other options ofdubious constitutionality for ousting Maduro. What is your view of the recall referendum?
If the opposition committed errors in waiting too long to begin the process and if they were not careful in carrying out the collection of signatures, then it’s perfectly legitimate for the Chavistas to take advantage of these failures. There are certain lapses established in the law, not only the Constitution, but the law that was passed after the recall election in August of 2004– those are the rules of the game. Among other things, the law now requires the first step of the collection of 1 percent of signatures of the electorate, so if the process is more drawn out than it was in 2003 and 2004, and the opposition wasn’t on the ball– regardless of the explanation for why they waited as long as they did– than it’s legitimate for the Chavista leadership to insist on the lapses which hold back the process. Furthermore, there were many signatures that were not legitimate– people under age, for example. The MUD, and Capriles in particular, claimed that they had audited the signatures and that all of them were valid. Yet, you have thousands of signatures of people who were under age, deceased, etc., so where was the auditing?
When the White House demands that the Venezuelan government hold the recall because it’s what the people want, there is a double standard at play. Firstly, because in the United States you don’t have presidential recalls. Secondly, regardless of what the surveys say about Maduro’s popularity, in the United States presidential popularities sometimes reach rock bottom. I just read a survey about the popularity of different U.S. presidents, and a number of them had popularities when they left office at about 25%. George W. Bush is an example. His popularity reached below 25%, but in the months prior to leaving office it increased a few percentage points. This also happens a lot in mid-term elections. The Democrats got slaughtered in the 2014 congressional elections. They lost control of the Senate so that the Republicans now control both houses. In fact, the defeat of the incumbent party in mid-term elections is par for the course. So the fact that the MUD won with 56% or so of the vote in December– even though they got more than 56% of the number of national deputies– is not a mandate for regime change.
Actually the United States has no justification for demanding anything with regard to internal politics– but demanding a recall election in particular is not a cogent argument because that option does not exist in the U.S. at the presidential level.
In the third place, the government of Venezuela is not making demands on the United States with regard to the tremendous problems that exist there, such as the death of African-Americans at the hands of police and the impunity that surrounds many of these cases. And the list of problems goes on and on, as it probably does for most if not all countries in the world. For that reason I think that making demands about domestic policy– with the exception of extreme cases – is unprincipled diplomacy. If all the countries in the world did the same, the world would be worse off for it. In short, the barrage of criticisms coming out of the White House and elsewhere in Washington are highly inappropriate.
Clearly it’s a textbook case of imperial arrogance, but to return to the point about popularity: of course any head of state in any country in the world facing an economic crisis of this magnitude would have his or her popularity sink to this level. However, when we’re talking about a period of revolutionary transition, radical movements and parties can’t afford to lose the support of the people in the course of major defeats, because it’s not just a question of alternating power, but one of advancing towards the construction of a new order. So the question really is: while there’s not going to be a recall referendum this year, what is going to happen in the presidential elections in 2019? Because the surveys of Venezuelan youth show that the majority are ni-ni (neither for the government nor for the opposition), and large numbers aren’t really interested in politics at all. There’s great disillusionment due to the fact that this crisis, much to the fault of the current government, is associated with socialism, since they’ve proclaimed that Venezuela is socialist, even though Chávez himself said socialism is a project “under construction”. The question is, where does the left stand going into 2019? What is the future for the left in Venezuela in terms of strategic possibilities for retaking some kind of offensive here?
I believe that what is really lacking is a restructuring of the Chavista movement, and the movement going beyond Chavismo, in such a way that you have more decision making coming from the rank and file, coming from the grassroots. I say this not because I’m a social movements fetishist– social movements are important but I’m not a social movements zealot in that sense. Nor am I a champion of the model of a Rousseau-type democracy in which all decisions come from the bottom up. I believe that the Chavista process has been a process from the top down and from the bottom up simultaneously, and it’s been successful (to the extent that it has been) precisely because of that dynamic.The community councils, for instance, were really jumpstarted by a law, the Communal Councils Law of 2006, and by functionaries of what is now the Ministry of Communes, who went into the communities and encouraged people to form community councils. So, I’m not advocating a kind of bottom-up, grassroots democracy.
Depends on how you define it– some of the advocates of grassroots democracy are opposed to political parties per se and think that social movements are where it’s at. But I believe for instance that one of the keys in correcting the current problems is transforming the United Socialist Party of Venezuela (PSUV) into a party that is not synonymous with, or intricately tied to, the state– that maintains a position of relative autonomy, not complete autonomy, because the Chavista party naturally has to support the Chavista government. But the party should not be a party controlled by ministers, governors, and mayors. I think that’s important because if the party were to be given a degree of autonomy, you’d have more open debate within the Chavista movement. First, the leading positions in the party at the municipal, state, and national levels should be held by people who do not belong to state institutions. Secondly, there should be primaries in which the governors and mayors are not allowed to participate in any way so the candidates have a level playing field, so Chavista voters in internal elections are not given so-called chuletas, in which they receive a piece of paper with the names of the candidates they should vote for.
I think more open debate is important for a couple of reasons. One is that a degree of lethargy has set in, a certain feeling within the party’s rank and file that decisions are coming too much from the top. In the case of denunciations of corruption, for instance, the Chavista leadership may claim that the opposition is acting in bad faith whereby an honest functionary is accused of wrongdoing in order to create confusion and chaos. But what about a Chavista, an active member of the PSUV at the level of the rank and file, who denounces acts of corruption? Many Chavistas complain that no workable mechanism exists in order denounce corrupt officials. I think that this type of shortcoming leads to apathy and disillusionment at a time when the Chavista movement needs enthusiasm and confidence. It needs mobilization capacity which it has demonstrated that it has, but it would have even greater mobilization capacity if people didn’t have a kind of mindset of impotence when it comes to corruption. In short, the democratization of the PSUV in which the party becomes semi-autonomous vis-à-vis the state would generate a greater degree of enthusiasm within the party, and thus should be a priority topic of discussion.
And the second point is that you don’t have the degree of discipline among party cadre that you have in other countries where organized leftist struggle has more of a tradition than in Venezuela in the latter decades of the twentieth century. The PSUV is an open party while in other countries, the party is close-knit. In order to join, you have to be pre-approved as a proven militant. In Venezuela the party is open and undemanding of its militants, and that is a problem when it comes to activities like the CLAPs. You need disciplined people who can work in that capacity and can be trusted. The sense that I have is that the CLAPs, which are all Chavista-run, are doing a fairly good job, but there are exceptions and some of them are getting criticized for irregularities. Strengthening the party is essential because the state has to rely on disciplined people who support the process in order to staff state-sponsored programs such as the CLAPs. The disciplined militants who are needed in situations like this are more likely to come from the party than from the social movements.
* In March, the Venezuelan government streamlined its currency controls regime, consolidating its 6 and 13 bolivar per dollar fixed exchange rates into a new 10 bolivar rate, DIPRO, available for vital imports such as food, medicine, and raw materials as well as pensions for Venezuelans living abroad. The government has also implemented a new floating exchange rate, DICOM, which as of October 5 stands at 659 bolivars per dollar. The black market rate currently stands at 1084 bolivars per dollar.
** In a bid to confront the nation’s deep economic crisis, earlier this year the Venezuelan government launched a new system of Local Provisioning and Production Committees (CLAPs), in which the state partners with grassroots groups to provide direct, house-to-house food distribution to communities based on evaluated need.
In a forthcoming part II, Professor Ellner continues the conversation with VA regarding a host of key topics, including the CLAPs, populism, the government’s controversial Mining Arc, and much more.
Steve Ellner has taught economic history and political science at the Universidad de Oriente in Puerto La Cruz, Venezuela since 1977. He is the author of numerous books and journal articles on Venezuelan history and politics, specifically in the area of political parties and organized labor.