Venezuela after the elections: more concessions to the capitalists, while economic crisis worsens

The Venezuelan elections on 20 May were merely an episode in a long saga of imperialist aggression, economic crisis and the deterioration of living conditions for the working class and poor. The reelected Maduro government has continued its policy of making concessions and appeals to the capitalists. If it wasn’t for the escape valves provided by subsidised food parcels, migration and the dollar-based economy, the situation would have led to a social explosion already. The mood of the chavista rank-and-file is increasingly angry and critical of the leadership.

As had already been announced, the imperialist nations refused to recognise the results of the 20 May presidential election. Washington, Brussels and the so-called Lima Group issued stern statements to that effect. They have now been joined by the Organisation of American States, which declared at its General Assembly on 5 June that the elections were not “legitimate” and called on member countries to “implement…the measures deemed appropriate at the political, economic, and financial levels to assist in the restoration of democratic order in Venezuela”. The OAS fell short of expelling Venezuela from the body altogether, but it is clear that this is what the US administration is after.

There has been a lot of discussion about the election results. Our initial comments have been confirmed by the final, detailed breakdown published by the Electoral Council (CNE). Maduro was reelected with 6,248,864 votes on a 46.07 percent turnout. His nearest rival, opposition candidate Henri Falcón, received 1,927,958 votes, 20.93 percent of those cast.

Abstention

Abstention was sharply divided along class lines, with the middle-and-upper-class areas in the big cities staying away en masse, while the working-class and poor areas, as well as the rural poor, turned out and voted overwhelmingly for Maduro. Thus, in the opposition strongholds in the east of Caracas, abstention was very high. In Chacao, turnout was 13.8 percent, in El Hatillo and Baruta 15 percent. Meanwhile, in the working-class, chavista areas, the turnout was much higher. In the 23 de Enero, 53.6 percent (with polling stations such as La Piedrita registering an 86 percent turnout with 92 percent voting for Maduro), Antimano 58.5 percent, San Agustín 52 percent and El Valle 51 percent. In rural states, the turnout was also high. In Cojedes, 62 percent Delta Amacuro 60 percent, Portuguesa 58 percent, Sucre 55 percent, Monagas 52 percent and so on.

Compared to 2013 Maduro has lost 1,338,715 votes while the electoral register has increased by 1,622,614 / Image: AgenciaAndes

While the bulk of abstentions (discounting those who never participated in any election) was made up of the traditional opposition base of support in the middle-and-upper-class areas, it is also true to say that even a section of those who traditionally voted for Chavez and supported Maduro in 2013, stayed home this time.

This layer can be quantified easily. Compared to 2013, Maduro has lost 1,338,715 votes, while the electoral register has increased by 1,622,614. In 2013, Maduro was supported by 40 percent of the electoral roll, but this time the figure went down to 30 percent. What we saw was the hardcore chavista vote mobilising to deliver a blow against the right wing and imperialism. The main problem is that these layers are now less able to mobilise others than they were even five years ago, when Maduro was elected for the first time. This is a very worrying trend, which reflects not only the impact of the economic crisis but above all the perception that the government is unable or unwilling to take the necessary measures to deal with it.

Imperialist plot

The reaction of imperialism and its regional allies was predictable: an increase in diplomatic pressure, more sanctions and further calls for a coup. They cover their demands with the fig-leaf of ‘concern for democracy’ and of wanting to ‘deal with the humanitarian crisis’ – but they fool no-one. The chorus of denunciation comes from governments like that of Mexico (a master of election fraud and with its hands dripping in the blood of human-rights defenders, trade unionists and social activists), Honduras (a regime imposed by a bloody military coup and confirmed in fraudulent elections), Brazil (whose current government has never been elected by anyone) and so on. Not to mention, of course, the puppet master behind them all – Washington – with a long record of military coups, invasions and drone bombings of innocents in the name of ‘peace’ and ‘democracy’.

The forces of imperialism have increased diplomatic pressure, applied more sanctions and issued further calls for a coup / Image: Lucha de Clases

The Trump administration was quick to tighten the sanctions against Venezuela, even before the final results of the election had been announced. Existing sanctions, decreed by Trump in August 2017 on the basis of an Obama-signed Executive Order, as well as targeting high-ranking officials in the Venezuelan state, make it illegal to renegotiate Venezuelan-issued debt. The new sanctions announced on 21 May bar United States companies or citizens “from buying debt or accounts receivable” from the Venezuelan government, including Petróleos de Venezuela, the government-owned oil company.

In effect, the US government wants to asphyxiate Venezuela into submission. These sanctions are complemented by measures from a number of Latin American governments, and numerous other restrictions, which make it increasingly difficult for Venezuela to access the world’s financial system.

An article in Foreign Policy on 6 June explained clearly and without subterfuge the aim of this policy: “It’s time for a coup in Venezuela”. The article was signed by José Cardenas, someone who was influential in the Latin American policy of the Bush administration and is very well-connected to the Cuban-exile, reactionary circles that are prominent in the current Trump administration. The idea is to tighten the economic screws until a section of the army decides it is best to remove the Maduro government.

Economic crisis worsens

Meanwhile, the economic crisis in Venezuela continues its course, aggravated by sanctions and the government’s inability to access fresh sources of funding. There is a serious deterioration of all infrastructure as a result of years of bureaucratic mismanagement and corruption, the lack of funds for investment, maintenance and repairs, and now the exodus of public sector workers migrating to other countries fleeing the collapse in the purchasing power of wages.

There are regular electricity outages and water cut-offs, which now affect millions of people on a regular basis, including in the capital Caracas, where the budget of Hidrocapital has been slashed to the bone, aggravating the impact of a severe drought. As a result, areas of the capital go without water for days or weeks, people having to resort to all sorts of tricks to wash themselves and their clothes, get water for drinking and cooking and so on.

The situation is becoming desperate / Image: Flickr, Diariocritico de Venezuela

Public transportation is in disarray as bus and minivan owners demand steep price hikes to cover for the impact of hyperinflation on the price of maintenance, repairs and spare parts. In many areas, cargo transportation trucks (perreras) are replacing bus units.

At some point at the end of last year, inflation (for which there are no official figures) turned into hyperinflation, and this has pulverised the purchasing power of wages. The price of a kilo of whole chicken increased from 180,000 bolivars at the beginning of the year to about 1m by May Day, and it is being sold at 2.7m now. That would imply an inflation rate of 2,700 percent in just six months. Meanwhile, the integral wage (minimum wage plus food tickets) has increased by barely 220 percent in the same period. To put it in a different way, at the beginning of the year the minimum wage would buy 4.4 kg of chicken, now it can’t even buy a kilo!

Temporary escape-valves

The only reason the economic crisis has not yet led to a social explosion (although it came close in December-January) is because there are a number of factors that alleviate the situation, providing an escape valve. One is the system of subsidised food parcels provided by the government (CLAPs), which at least in the capital region reach a large proportion of the population. The other is the regular bonuses granted by the government to different groups of the population (workers in general, families, mothers, the youth). There have been 11 such bonuses so far this year and their amount has increased as well.

Neither CLAPs nor bonuses are a real solution, though they provide welcome relief from the brutal impact of the crisis on working people. The problem is that what these measures amount to is the government printing money (that it does not have) in order to provide subsidies. This only adds to the massive fiscal deficit, which amounts to between 15 and 20 percent of GDP (again, no official figures are available). There is no way this can continue in the long term. Furthermore, many of the products making up the CLAP food parcels are imported, and thus, they not only eat up already-meagre international reserves, but are vulnerable to sanctions from countries like Colombia, Brazil, Argentina and Mexico – now extremely belligerent towards Venezuela.  

Another escape valve is migration. This is a hotly-contested issue and there are again no reliable figures, but it is clear that hundreds-of-thousands of Venezuelans, mainly youth, have left the country in search of jobs abroad, and are maintaining their families through remittances. A few years ago, this was mainly a phenomena affecting middle-and-upper-class families, and the destination was Europe and the US. Not any more. There are growing numbers of youth from working-class families who leave for Colombia, Peru, Bolivia, Ecuador and other countries in the region, where they are brutally exploited in the worst-paid jobs and the worst conditions. Considering the minimum wage in Venezuela is the equivalent (on the black market) of 1.25 dollars, any money these migrants can send back helps their families get by.

There is also a section of the population that is able to offer services online and get paid in dollars. Due to the massive devaluation of the bolivar, Venezuelan wages are now amongst the lowest in the region. Even if you take into account the official DICOM exchange rate, the minimum wage equals 31 dollars.

Black markets and profiteering

This is not to say that everyone in Venezuela is suffering from the impact of the economic crisis. As in any situation of foreign exchange controls, hyperinflation and a massive differential between prices in neighbouring countries, there are those benefiting from the crisis. Those who for years were given preferential exchange rates for importation (and the government officials in charge of that system) were able to make massive fortunes by playing the black market. Today, though the preferential rate has been abolished, the dollar black market continues to exist and is run by a small number of increasingly wealthy people.

There are those who enrich themselves through smuggling meat – and food in general – gasoline and even bank notes, over the Colombian border. Hyperinflation (with the accompanying increase in the speed of circulation of money) has led to an acute scarcity of banknotes, as the Central Bank printing presses cannot keep up with the increase in prices. The increase in monetary liquidity in the year to the first of June was 890 percent. But the amount of notes in circulation only went up by 228 percent. The percentage of notes out of the total money liquidity is now barely 1.8 percent, down from 5.5 percent at the beginning of the year. As a consequence, the sale of bank notes, sometimes at 300 percent of their face value, has become a very lucrative business.

Listen to the author of this article, Jorge Martin, discussing Maduro's reelection on Sputnik news.

Luxurious restaurants in Caracas are packed every night of the week. Parties go on all night in expensive and exclusive nightclubs, where capitalists mingle with corrupt state officials and army officers in charge of state-owned companies.

This situation clearly cannot last. The state has already defaulted selectively on a number of government and PDVSA bonds. Oil production has collapsed down to 1.4m barrels a day, the lowest level in 33 years if you discount the oil lockout in 2002-03 and significantly down from 2m barrels a day last year. Industry analysts Platts reported that PDVSA had notified eight of its customers that it would not be able to fulfill their orders in June. Contracts amounted to 1.495m BPD but PDVSA was only able to supply 695,000 BPD. PDVSA might have to resort to invoking force majeure to get its customers to accept a cut in the deliveries.

Part of the reason was ConocoPhillips’ temporary seizure of refineries in the Caribbean as part of a ruling on the expropriation of some of its assets by Venezuela a decade ago. This prevented PDVSA from refining oil for export. The conflict has now been, temporarily, solved in Venezuela’s favour, but it goes to show how vulnerable PDVSA is not only to sanctions but also to concerted action by PDVSA bond-holders demanding payment.

Maduro makes concessions to capital

And what has been the government’s response to this aggravating crisis at all levels? Immediately after the 20 May election, Maduro resumed his policy of making concessions and appeals to both the opposition and the capitalists.

First of all, he had a high-profile meeting with the representatives of finance capital in which he basically went on to accept all their demands: a delay in the introduction of a new currency, which was scheduled to come into place in June, and an increase in credit card rates. The delay in the introduction of a new currency system will give black marketeers and speculators plenty of time to launder their ill-gotten gains. The increase in credit card rates (to a maximum of 29 percent) will hit working families hard as they had been using them to beat hyperinflation, borrowing today and paying back with devalued money tomorrow. If any more concessions are made in this field it could also lead to a serious debt crisis in the banking system as customers would be unable to repay their debts. 

This meeting enraged the chavista rank-and-file. It was not only the fact that, once again, the government was prepared to meet with those it accuses of being responsible for the economic war, but also the arrogant way in which the president of the Banking Association demanded concessions from Maduro, on live TV, and the way in which he acquiesced.

To add insult to injury, the Supreme Court of Justice decided to release a number of people jailed for their involvement in the opposition’s violent offensives of 2014 and 2017. These are people who are responsible for the deaths of dozens and who have not repented. Amongst those released was US citizen Joshua Holt, a gesture of goodwill that was responded to by Washington with a stern statement that sanctions would not be lifted. Scandalously, amongst those released was Angelis Gutiérrez, who had been jailed for her involvement in a fraud in which she received down payments for cars that she never delivered. Clearly, she has friends in high places who were probably involved in the fraud and managed to get her released.

A number of BANESCO bank directors were released separately. They had been arrested just before the elections, accused of being part of the economic war against the Venezuelan economy. The question must be asked, were they only jailed right before the election so that the government could appear as being tough on the capitalists?

As an indication of the mood brewing amongst chavista activists, a video containing extracts from a speech by Chavez during his first swearing-in, in February 1999, has now gone viral. In a hard-hitting statement, which fits the situation today like a glove, he says: “to look for consensus with those who oppose the changes that are necessary is betrayal”. It would seem as if he was responding to Maduro’s statements since 20 May.

Counter-revolution in the countryside

Meanwhile, the conflict in the countryside continues between the comuneros fighting the latifundia and a coalition of state officials, local judges, police officials and wealthy landowners who have launched a broad offensive against agrarian reform. In the past few months, peasant communes have been expelled from land they were occupying legally. At least two peasant leaders have been executed on orders from landowners.

A few days after the election, the spokesperson of the El Maizal comune, Angel Prado, and two other comunero leaders were illegally detained by police officers. They were accused of purchasing products they need for sowing from illegal sources in the black market. They replied that the official state-owned company, Agropatria, was refusing to sell the products to them legally and that in fact it was managers at this company (expropriated under Chavez) who were involved in the black market! The peasant leaders were released and have now launched a campaign demanding a solution to the crisis.

Conflict in the countryside continues between the comuneros and a coalition of state officials, local judges, police officials and wealthy landowners who have launched a broad offensive against agrarian reform / Image: public domain

The countryside is quickly becoming a battlefield between revolution and counter-revolution, and in most cases the state apparatus is either by action or omission on the side of counter-revolution.

The re-election of Maduro on 20 May has not solved anything, as we warned. It has postponed the oligarchy’s return to power, but still working people are paying the price of the economic crisis, while the government’s policies prepare the conditions for defeat.

It is difficult to predict how this situation will be solved. What is clear is that the entry of the workers and peasants onto the scene with their own independent policy is urgently required. It is not an easy task, as the economic crisis weighs down on working people, desperately absorbed by their day-to-day survival. It is however necessary, and the only way in which this complex situation can have a solution that benefits the workers and the poor of Venezuela, who have fought and sacrificed so much over the last 20 years.