As US Reengages Maduro, Oil Giants Earn Deals — and Venezuelans Protest

In late November 2022, an article in The Economist reported that “things have changed in Caracas” with the new availability of luxury consumer goods, a new generation of high-end restaurants and the return of traffic jams. Add to that a new Ferrari dealership and it becomes clear what sections of the population are the beneficiaries of the changes — a tiny minority of wealthy Venezuelans.

At the other end of the spectrum are those whose survival depends on the minimum wage — 130 bolivars a month, or the equivalent in bolivars of around $30. For reference, a carton of eggs or a kilo of meat or cheese will cost the typical Venezuelan the equivalent of roughly $5.

Venezuela has the second largest reserves of oil in the world, yet today, most of its population lives below the World Bank’s poverty level of $2.50 dollars per day. Despite that, Venezuelan President Nicolás Maduro still claims to be continuing the socialist project of his predecessor Hugo Chavez. The difficulties faced by ordinary Venezuelans have been revealed once again with the widespread protests that erupted in January 2023, and which continue.

The demonstrations erupted across the whole country, involving teacher, nurses, civil servants as well as local community organizations. The workers at the iconic steel plant Sidor mounted protest pickets at the plants and called for other workers to join them, which they did in significant numbers. The government has announced a $30 bonus for public workers, which is little more than a token gesture while inflation remains the highest in Latin America, and the minimum wage remains wholly inadequate.

From Chavez to Maduro

When Hugo Chavez won the Venezuelan presidency in 1999, the nation adopted a new constitution that promised a participatory democracy in which oil wealth would be used for the benefit of the country’s poor. A new health service would be created and social housing built with funds diverted from the national oil company PDVSA. In the longer term, Chavez’s aim was to diversify the nation’s economy and socialize oil profits — to build the “socialism of the 21st century,” which he famously proclaimed at the World Social Forum in 2005.

Chavez´s Bolivarian Revolution coincided with progressive movements throughout Latin America, whose common aim was to address the region’s dependence on oil and minerals that were largely under the control of global capital. After a decade in which Venezuela had been subjected to extreme austerity programs imposed by the International Monetary Fund (IMF) and the World Bank, Chavez was hugely popular with the majority of the population who had suffered the consequences of these programs.

What Chavez meant by socialism was unclear, however, though it centered on the concept of participatory democracy enshrined in the new Bolivarian Constitution. How the country could address its dependence on oil and diversify the economy was less clear. Private capital was not to be expropriated: Those enterprises taken into the state sector had largely been abandoned by their owners, who were compensated. And what was to happen to the state?

In 2006, after his second electoral victory Chavez announced the creation of the United Socialist Party of Venezuela (PSUV) and invited all Venezuelans to join immediately. Six million responded. But this was not to be a democratic party. Its structures were not subject to any form of vote or consultation, and its leadership was named by Chavez. It did have a mass membership based on Chavez’s huge popularity, but control lay firmly in the hands of a select group.

The Missions, as state’s social programs were called, seemed to offer alternative structures for popular power. The PSUV, however, suggested a different highly centralized command model. The grassroots organizations that in many ways had carried Chavez to power were incorporated into the party to win support for the decisions of the party, but there was little communication in the opposite direction. If there was a model, it was Cuba, whose influence in Venezuela in every area of policy was growing increasingly clear.

With the PSUV, a new political bureaucracy was emerging with strong military support and with an ever more central role. State spending on social programs and on the state itself was growing exponentially, but it was not directed into productive investment or the expansion of the internal economy. On the contrary, there was growing evidence that imports were filling that productive role, fueled by speculation on a massive scale both in the parallel currency market and through the banks. The bolivar/dollar exchange rate fluctuated wildly and was beyond the control of the state. Private investments turned to importing goods and technology above all from the U.S., which made enormous profits.

Like so many oil states, Venezuela was prone to corruption. The large-scale infrastructural projects, like the new railway system, were extremely expensive and managed and dominated by multinational companies, like the infamous Brazilian Odebrecht, which had a special department for bribing public officials. (Its head is now in prison.) Many of these public works projects were unfinished. As a result, shortages began to occur throughout the economy — supermarket shelves were often empty and medicines became increasingly scarce. Medical equipment, building materials, technology, car parts disappeared from the formal economy.

In 2013 Chavez died under mysterious circumstances. The public mourning was genuine. His foreign minister, Nicolás Maduro, emerged as his replacement, though the electoral support he received did not match Chavez’s. Maduro, who insisted that he would continue to build the “socialism of the 21st century,” was a key figure in a new political and economic bureaucracy, which included the military and many of the original Chavista leaders. That bureaucracy claimed the Chavez legacy and the loyalty that went with it, but it was no longer implementing Chavez´s project.

Within three years of Chavez’s death, Venezuela was locked in an economic and political crisis.

The first signs were the disappearance of goods from supermarket shelves, the shortage of car parts and the absence of key medicines. Prices began to rise and the national currency — the Bolivar — began to lose its value. The capitalist class began to disinvest, exporting capital and cutting back production. Most importantly, currency speculation became a growth industry, causing imported goods to be paid for in dollars, often acquired illicitly through banks or on the black market. Goods bought in the U.S., like meat, returned to Venezuela at far higher prices.

The critical sign of a reversal of the Bolivarian process was the Arco Minero project, announced in 2016, which offered the huge oil and mineral resources of the Orinoco River Basin, occupying 12 percent of the national territory, to private and foreign capital. The area was also militarized and the army was given control over the extractive industries there. It was the opposite of the national sovereignty over resources that Chavez had made central to his program, and it made nonsense out of Chavez´s ecological commitments. This was simply a first stage in a return to privatization, in which the state collaborated in joint projects with private capital.

Guaidó and the Right-Wing Opposition

The right-wing political opposition began an active campaign against the Maduro government, a campaign which became increasingly violent with the rise of street barricades. Both the right and the left conducted street mobilizations. Government demonstrations could still count on the popular support for Chavismo. But the crisis deepened, and there was growing evidence of large-scale corruption. At the same time, the U.S intensified its own campaign against Venezuela. Washington was already using economic sanctions against individual members of the government and in international financial agencies. Under the Trump administration, sanctions against the country blocked access to international loans. But the economic crisis that was developing by 2015-16 was not the result of sanctions, though they clearly hurt. The economic crisis had begun earlier, and its roots were in Chavismo itself, in its mismanagement and corruption, in its waste of resources and its lack of an economic strategy, all of which were exploited by a new political class.

By 2016, Venezuela was approaching hyperinflation at around 1500 percent, the highest in Latin America.

In January 2019 — after Maduro won reelection in a widely disputed 2018 presidential election — Juan Guaidó, the speaker of the National Assembly, claimed the presidency, despite the fact that there had been no democratic process to elect him; it was simply his turn for the chair of the Assembly. Guaidó was a member of Popular Will, a right-wing organization whose prominent leader, Leopoldo López, was imprisoned by Maduro, who held him responsible for violent demonstrations in the previous years. Nonetheless, Guaidó was formally recognized by the U.S., the European Union and the Lima Group of Latin American governments, and was given access to Venezuelan government funds abroad. Street demonstrations on both sides escalated in the following days, but by maintaining control of the institutions of the state and its associated mass organizations, Maduro continued to act as president.

Guaidó continued to describe himself as the president until 2021, but by then it was obvious that his alliance had barely any public support, and it soon divided into warring factions. His international allies were now advocating talks with Maduro, who was already forging his own alliances with other parties.

Maduro’s base of support consists of the beneficiaries of state funds, state employees and the hard core of Chavista support in the poor barrios. The opposition’s support came from the middle- and lower-middle class. The demonstrations that were shown in the mass media were limited to middle-class areas, and while they gave an outlet for the mounting anger of people, they did not reflect an organized support for the opposition. There was still, despite everything, a level of loyalty to a Chavista project which had to all intents and purposes disappeared.

Rapprochement With the U.S. Amid Rising Anger Within

In the face of economic crisis, the flight of Venezuelans across borders in search of work became a flood. By 2022, 7 million Venezuelans were refugees, working in the informal sectors of the Latin American and European economies and sending back resources to keep their families alive. In general, poor Venezuelans met a hostile response wherever they went.

The Biden administration slowly began to reengage with Maduro’s government through prisoner exchange agreements and formal talks beginning in Mexico chaired by Norway. It also gave permission to Chevron-Texaco to conduct joint projects with PDVSA, and later organizing a first prisoner exchange in 2022. The impact of war in Ukraine on the oil market has also opened avenues for further talks with Maduro, and the EU has also initiated negotiations.

The corruption that has characterized Maduro´s government continues, but it seems that the international situation favors rapprochement. Presidential elections are scheduled for October 2024, though there is a possibility that they will be brought forward. The right is fragmented and quarrelsome, with nothing to offer beyond the search for a credible candidate for the presidency — none has yet emerged. The Maduro government is continuing to open the Venezuelan economy to foreign capital. Significantly, Biden approved a joint operation between PDVSA and the giant Chevron-Texaco oil corporation. The productive system has collapsed, in industry and agriculture, and the economy is still reliant on imports. The dollarization of the economy, which Maduro has described bizarrely as a form of popular resistance, simply serves to reinforce the gulf between those with access to foreign currency by whatever means, and the rest of the population. The 20 percent of the population who are in refugees have no immediate prospect of returning.

The demonstrations in January give a sense of a broad movement of people who are reaching the end of their tether, and who are angry at the vast gulf that is opening up between the new rich and the poor. They no longer have a charismatic spokesperson as they did in Chavez. Maduro’s government represents a new ruling order, a new bourgeoisie which has enriched itself in the midst of chaos. The government has not published economic data for years, and the continuing references to socialism are cynical. The right-wing opposition is now increasingly part of that new, expanded bourgeoisie, in collusion with Maduro. It has nothing to offer the majority of the people.

The Bolivarian project inspired optimism across the international left. Chavez enjoyed mass support and his commitment to a Bolivarian alliance across Latin America promised new possibilities in the context of the “pink tide.” But the reality is that Chavismo’s original supporters are now in exile or living a continuing economic crisis inside the country. There is no definition of socialism that can justify the coexistence of extravagant wealth and extreme poverty. The promise of Chavismo was betrayed. It now exists only in the words of a corrupt and repressive new ruling order, and in the memory of the left.