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Sunday, May 6, 2007

Venezuela's Chavez may nationalize the banks.

"Happy the people whose annals are blank in history books".

-Thomas Carlyle.


TAG: The new left-wing populism of Hugo Chavez conceals many points of affinity with the strong-men, left or right, of Venezuela's past.

IN THE NEWS: Venezuela's populist president, Hugo Chavez, is threatening to nationalize the country's banks, if they refuse to support Venezuelan enterprises. The news shook the Venezuelan stock market and pushed down the share prices of Venezuelan banks. The response was mixed. New York-based Citibank, for example, found the injunction to support the Venezuelan economy reasonable. Others suggested it might result in capital flight spurred by natiuonal seizure of financial assets. Since January, Chavez has already moved to nationalize telecommunications, electricity and oil.

IN A NUTSHELL: While improving conditions for Venezuela's poor, Hugo Chavez's rule by decree, silencing of parliament, rewriting of the constitution, extension of presidential term limits and use of Venzuela's oil wealth to fortify his government's popularity- all have precedents in conservative and liberal versions of Venezuela's dictatorial 'strong man' or 'caudillo' tradition.

THEN AND NOW: Programs inspired by nationalism and social and economic reform have been launched by Venezuelan leaders since the early 19th century. Usually, however, the absence of any separation of powers along with the concentration of power in the hands of the president has allowed significant corruption to accompany social progress. This was the case with the two greatest dictators, Guzman Blanco (ruled 1870-1888) and Vincente Gomez (1908-1935). Both were known as 'caudillos', even tyrants. But both could claim, despite enormous corruption, to have contributed to the country's progress.

The Latin American cult of "caudillismo" or rule by a strong man is, in fact, neither left nor right. It is better decribed as "personal rule" and political parties have, traditionally, been defined by their leader's personalities and proclivities, rather than by ideology. So a 'caudillo' will veer to the left or to the right, toward revolution or reaction, fair rule or favoritism, dictatorship or democracy. Though Chavez pursues left-wing policies, he shares many characteristic of the traditional right, including the cult of the leader and growing cronyism and corruption.

PROXIMATE BACKGROUND TO THE EVENTS: Chaves was elected in 1999 and there is some irony in the fact that his campaign was illegally funded by Venezuelan banks. Almost immediately, he handed the duties of the assembly over to a committee while a plebiscite gave him the authority to rewrite the constitution. He then launched reforms based on a populist, nationalist "Bolivarian" ideology. "Bolivarianismo" (named for South America's liberator, Simon Bolivar) loosely descibes a populist nationalist ideology espoused elsewhere in Latin America. But while it is radical and socialist in tone, Venezuelan "Bolivarianismo" so closely reflects its leader that it is known as "Chavismo" by supporters and opponents alike. While Chavez has reduced inflation and infant mortality, redistributed land to the poor, and launched programs of free education, the initiatives have been made possible by world oil prices wich have been surging since 2004.

In the meantime, Chavez has polarized the country alienating the middle and oil-rich upper classes. Discouraged from democratic participation, they have left parliament to the Chavez supporters. As a result, the assembly has become a rubber stamp for his programs. The opposition's attempt to enact a law of recall and remove Chavez from the presidency is held to have failed but the petitions on both sides seem to have been rigged and the process, like Chavez' landslide re-eection in 2001, has been judged far from transparent by international obervers. With the gradual muzzling of the press and an assembly shorn of any critical capacity, debate has taken to the streets, where it is waged between organized bands of Chavez and opposition supporters. In January, 2007, the Chavez-controlled assembly voted to give him power to rule by decree for a year and a half.

While sabre rattling against the United States and making an informal alliance with opponents of Washington, like Iran, Chavez has forged ahead with programs of health and education for the poor and measures to gradually nationalize the oil industry and the banks.

There is no doubt that Chavez' high-handed, undemocratic campaign to wrest as much of the national wealth as possible on behalf of the poor has produced some social progress. But the absence of any effective division of powers, not to mention palriamentary oversight, is allowing for the massive corruption which may, in the end, render 'Chavismo' itself futile.

DISTANT BACKGROUND TO THE EVENTS: Just before World War II, Venezuela's long history of despotism appeared to come to an end with the emergence of a new, more conscientious liberalism. Under Presidents Gallagos and Bentancourt, Democratic Action, the social-democratic party took power with promises to attack poverty. However the 'age of the cauldillos" returned (as it always seems to) with a coup in the person of General Perez Jiminez. Perez carried on the old tradition of modernization by decree, improving Venezuela's infrastructure, enriching Venezeuala's oil rich middle and upper classes and doing nothing for the poor majority. In the late 1950s, however, Perez was overthrown and Democratic Action returned to power in the person of President Betancourt. In the 1960s, liberal and social-democratic rule began to be attacked from its own left, some radical groups getting support from Cuba's Fidel Castro.

In the 1970s, nemesis arrivid in the form of high world oil prices, producing a lop-sided oil-rich economy while other sectors remained undepeveloped. Agricultural products had to be imported. In the 1980s, the truth hit home with a slump in oil prices. To fight massive recession, successive presidents imposed austerity which only provoked massive protests from the poor and the left. The recession of the early 1990s only made things worse. In 1992, it was to oppose the austerity measures that Hugo Chavez, then a military officer, launched a failed coup d'etat. In the mid-nineties, Venezuela continued to suffer as a single-resource economy.

REMOTE BACKGROUND TO THE EVENTS: After the collapse of Simon Bolivar's dream of a united 'Gran Columbia' of northern South America, democratic and free from Spanish rule, the "caudillo tradtion" can be said to have begun with the despotic General Perez who brought about the Venezueals's secession from Granh Colombia. He ruled on behalf of the landowners at the expense of the cattle herders. His reign was long and interspersed with liberal rebellion and civil war. The mid-nineteenth century saw, finally, the rise of a liberal tradition, of which Hugo Chavez might be said to be the descendant. By 1870, Guzman Blanco, the son of a liberal opposition journalist had taken power. Though he ruled by decree and with a measure of brutality, he was the first president to bring about social reforms, including free primary education. In 1908, Vincente Gomez took power. Guzman oversaw the discovery and exploitation of oil and the granting of cncessions to foreign oil companies. His long rule, until 1935 was marked by massive corruption. Though he had modernized the country, his death was celebrated.

CROSS-CENTURY SUMMARY: There is a long history of reform in Venezuela, though much of it has had the character of modernization rather than social improvement. Nevertheless, free primary education has been introduced by leaders of different political stripes. But even when they have helped the poor, presidents have carried on tradtions of personal rule or "caudillismo". It continues to this day, in the person of Hugo Chavez.

PRESENT SITUATION: Chavez, is using his 18 months' rule by decree, granted by a passive assembly, to pressure hospitals to regulate health care costs and the banks to invest in Venezuala under threat of nationalization.

PLUS CA CHANGE: In 1958, after the overthrow of President Perez, Wolfgang Larrazbal of the left heads a junta with Communist support. Larrazbal, with popular support and spurred by anti-Americanism, places a 60% tax on foreign oil profits. In 2007, President Chavez proceeds with a policy of gradual nationalization that includes oil, and, most recently, the banks.

CURIOSITY: After seizing power in a coup in 1890, , the peasant despot Cipriano Castro refused any payments on Venezuela's foregin debt. British, Italian and German warships blockaded Venezuela's ports to force compliance until US President Grover Cleveland intervaned with arbitration. In the end, however, Cipriano Castro got away without paying a cent.



1498- on his third expedition, Columbus sights the mouth of Venezuela’s Orinoco River, believing he has discovered not only the East Indies, but the gates to paradise and the Garden of Eden. He proclaims that here “no one can go but by God’s permission.”

1499- coast explored by Alonzo de Ojeda and Americo Vespucci.

1520- the Spanish begin to colonize Venezuela.

-Germans Ambrosio de Alfonger and George de Speyer explore Venezuela for Habsburg
Charles V

1550-1800- English buccaneers prey on the coast of Venezuela

1785- a brief uprising against Spanish rule.


1808- after invading Spain, Napoleon sends a captain-general to rule Venezuela.

-revolutionary juntas are proclaimed in various cities in New Granada- but the most radical is in Caracas, represnted by Simon Bolivar and Francisco de Miranda.

-1810- in response to Napoleon’s invasion of Spain and upsetting of the Spanish monarchy, Cabildos, or districts of popular sovereignty, begin to take power in Venezuela and New Grenada on behalf of a sovereign Spain.

1810- Francisco de Miranda starts a movement against Spanish rule, deposes the capitain-general ruling on behalf of Napoleon and Simon Bolivar sets up a junta.


1811- Venezuela declares its independence.

1812- an earthquake hinders the cause of the patriots and helps the royalists. The rebels relent and sign a peace treaty. Believing that Miranda had collaborated with the royalists, Bolivar and his followers hand Miranda over to imprisonment in Spain. Bolivar takes refuge with revolutionaries in Cartagena.

1813- Aug. 6- Bolivar's new army marches from Cartagena and retakes Caracas.

1815- the rebel cause suffers reverses and Bolivar goes to Jamaica in exile.

1818- Bolivar joins forces on the Orinoco and declares the Third Venezuelan Republic.

1819- Bolivar is elected dictator and president of the liberated areas. He campaigns into the Andes and defeats Spanish forces at Boyaca. He creates the state of Gran Colombia which includes Venezueala and all of northern South America.

1819-1830- after the campaigns of Bolivar, he rides into Bogota and Colombia, then “New Granada” gets its independence before uniting with Ecuador, Venezuela and Panama. In the Union of Gran Colombia.

-meanwhile, Jose Antonio Paez acts as dictatorial governor of Venezuela.

1821- the capital of Gran Colombia is set up at Cucuta on the Colombia-Venezuela border.

1821- Simon Bolivar wins independence once and for all, in Venezuela, at the battle of Crabobo.

1821- Bolivar inaugurates the confederation of Venezuela, Colombia and Ecuador as Gran Columbia but Venezuela is an unwilling participant.


1823- Jose Antionio Paez brings down the last Spanish garrison at Puerto Cabello. Paez is the natural leader of the ranching population.

1829- the collapse of Gran Colombia.


1830-1835 Venezuela, led by Paez, wins its indepndence from Gran Colombia. Landowners hold the power.

1838- Paez is re-elected. He consolidates the power of the landowners at the expense of the cattle herders or "llaneros".

-Antonio Guzman starts a liberal newspaper attacking the abuses of Paez.

1846- Paez jails Guzman and makes an alliance with the party of the Monagas brothers. Jose Tadeo Monagas and his brother wrest power from Paez.

-Guzman, released from jail, forms a federalist-liberal alliance against the conservative-centralist Monagas brothers.

1858- the Monagas brothers overthrown in a civil war.

1861- Paez returns to make himself dictator.

1863-Paez hands over power to liberal Juan Falcon.

1861-1868- civil war wracks Venezuela. The Blue party represents the army and the conservative centralists. The liberal Yellow party is led by Guzman's son, Guzman Blanco .

1864- a brief federation, the United States of Venezuela created by liberal Juan Falcon.


1870- Guzman Blanco seizes power at the head of the army.

1870-1888- President Guzman Blanco represses the Church and reforms communications, education and finances. Primary education is made free and public. Industries are set up in the towns. All his reforms were done by decree. He hoards wealth and lives in luxury with his clique.

-By repeatedly appointing a successor who hands the power back to him, Guzman sidesteps a provision in the constitution limiting the presidential term to two years.

-Venezuela, after years of anarchy since 1810, finally has a strong state.

-Guzman, an auto-didact, travels and soaks up culture in Europe. He even legislates from abroad.

-1887- Guzman Blanco is overthrown while he is in Paris- where he remains until his death in 1899.

1892- dictatorship is renewed by Guzman Blanco's lieutenant, Juaquin Crespo who continues the policies of Guzman Blanco.

-Venezualan boundary dispute with Britain over the border with British Guiana. Britain's territorial claim extends into Venezuela.

1898- alarmed by British incursions into Venezuela, US President Grover Cleveland invokes the Monroe Doctrine which declares American guardianship of the western hemisphere. Britain submits to arnitration but still wins territory for Guiana.


1899- from the Andes, President Cipriano Castro takes power by force ruling with a "peasant and soldier" government. Incompetence and corruption.

-Castro alienates the international community by refusing to pay down the foreign debt.

1902- British, German and Italian war ships blockade Venezuela to force the payment of international debts. The US intervenes and brokers an agreement- but in the long run Castro avoids ppaying any of Venesuala's foregin debt.

1908-1935- tyranny of the dictator Juan Vincente Gomez who nevertheless brought prosperity. He centralizes the government, taking power from the local elites.

-Gomez keeps Venezuela neutral in World War I.

1917- Vincente Gomez inaugurates the exploration and exploitation of oil. He grants leases to foreign oil companies which try to curry favour with Venezuela by hiring and providing benefits for Venezuelan oil workers.

1935- Gomez' death greeted by mass celebration.


1935-41- President Eleazar Lopez Contreras, a liberal, renegotiates contracts with foreign oil companies in Venezuela’s favour.

- Contreras’s successor, another liberal president, Isaias Medina Angarita reforms agriculture, cattle ranching, habours and ports.

-Medina brings Venezuela into alliance on the side of the allies.

1945- the popular political movement, Democratic Action is founded and takes power with support from the military. Romulo Betancourt, appointed to succeed Medina, in a transitional junta, achieves a degree of democracy and social reform.

1946- Democratic Action leader, Romulo Gallegos elected president.

1947- new constitution enshrines election of Democratic Action head, Romeo Gallegos, by popular vote.

-Gallegos declares the Age of the Caudillos to be dead.


1948- after stopping a group of officers from embezzling from the treasury, President Gallegos overthrown in a military coup, givign way to a repressive junta led by General Marcos Perez Jiminez.

1952- General Marcos Perez Jimenez leads a repressive police state in the caudillo tradition.

1953- confirmed as president, Perez brings about economic reforms in which the country is modernized and the middle and upper classes prosper. But conditions for the poor majority remain the same.

1957-58- a recession causes the US to cut back on oil imports, reducing social security in Venezuela, provoking in turn, a surge of anti-Americanism.

1958- Perez asks for a plebiscite to extend his term in office, contrary to the constitution.

-January- Perez jails thousands of officers and liberal priests after an ettempted coup.


-US vice President Nixon is given a harsh reception in Venezuela due to a tide of anti-Americanism.

1958- February- a popular, liberal revolt rises against Perez Jiminez who flees to Miami. Betancourt takes power again.

-Wolfgang Larrazbal of the left heads a junta with Communist support. Larrzbal, with popular support and spurred by anti-Americanism, places a 60% tax on foreign oil profits.

1958 President Betancourt of Democratic Action wins a fair election.

1961- A new contitution. Oil revenues leave the country wealthy.


-Communisists, socialists and the poor begin to form a restive opposition.

1962- two left-wing military revolts, supported by Fidel Castro, are repressed while the Betancourt government faces violent opposition from the right as wll.

1964- President Raul Leoni.

1966- Left wing attacks in Caracas provoke the army to occupy the university.

1968- President Rafael Caldera brings the Social Christian party to power.

-border strains continue with British Guiana and relations with Columbia are strained over Columbian workers flooding into Venezuela.

1969- an amnesty helps to constitute a left wing rebel movement

-the social democratic Democratic Action and the Christian Democrats vie for power.

-1970- high world oil prices enrich Venezuela but create a highly unbalanced economy with underdevelopment of agriculture.

1973- Venezuela joins the Andean Group economic association.

1973- President Carlos Andres Perez wins for the Democratic Action party.

1976- foreign-owned iron and oil companies are nationalized.

1978- President Luis Herrera Campins.


1980-83 –depression in world oil prices strains a Venezuelan economy in which other resources remain underdeveloped. Severe recession sets in despite government attempts to reduce agricultural imports.

1983- Haime Lucinci elected President. Introduces austerity measures but inflation and unemployment continue.

1989- Venezuela is crushed by its national debt. Wages decline by 38%.

1989- President Perez re-elected. Rioting erupts in response to austerity measures enacted by Perez.


-military officer Hugo Chavez leads demonstrations against Perez’ austerity measures.

1992- Perez survives an attempted coup led by Hugo Chavez.

1993- Perez, accused of corruption, is impeached and removed from office.

1994- Rafael Caldera elected president.


-low world oil prices result in increasing poverty in this one-resource economy..

1997- oil amounts to 80 per cent of Venezuela’s oil exports.

-1998- Chaves campaigns to become president- He unveils his Bolvarian plan:a a “party-dominated” “new republic” . He promises to overhaul the constitution and fight corruption and poverty..

-but Chavex’ campaign is illlegally funded by the banks.


1999- February 2- Chavez wins the presidency.

1999- the rule by traditional parties ends. Hugo Chavez vows to fight corruption and poverty.

1999- August- “legislative emergency “ declared- a committee takes over fiunctions of assembly. New

constituional assembly drafts new constitution- presidential temr liits 5 to 6 years.- greater powers for



-Chavez organizes a referendum for a new constitution.

-2001- Chavez reelected. But international observers claim a lack of transparency in the voting.

-Chavez embarks on an ambitious plan of social reform through his “Bolivarian Missions”, a development program with citizen and worker-managed governance. Land reform; free land titles to the poor. Expropriation of unused factories and estates. Free health care for the poor. A Cuban-aided medical school. Is set up. A program is launched for free education. Primary school enrollment is increased.

Chavez moves to help preserve the rights and culture of indigenous peoples.

-Inflation and the infant mortality rate are both lowered. Meanwhile Chavez maintains economoic growth.. Aaccess to higher education improves anlong with remedial high school education.


-Chavez forces labour unions to have state-monitored elections. International labour protests at this encroachment on labour’s independence.


-polarization of parliament and abstention and absenteeism of the deputies give Chavez parliamentary control , eliminating its capacity for criticism and oversight. This will result in corruption..

2002- Chavez is briefly deposed during an attempted oppostion coup.

2003- the opposition volunteer civilian voter rights group, Sumate, organizes a vote for presidential recall. Ironically, the law of recall had been passed by Chavez.’ Government.

Both sides claim coercion in signing or refusing to sign the petition. New petition but claims of fraud

-since 2003, the GDP hasincreased; inflation is down; unemployment down and oil production is up- Wolrd Bank and CIA Wodl Fact Book-.


-2004-recall attempt defeated. European observers were absent, saying Chaves placed to many restrictions on obervation of the vote. Allegations of vote rigging.

-March, 2004- during recall demonstrations- Amnesty International reports human rights violations- detention of oppositions leaders- national guard use of violence in oppositions demonstrations.

-2004- world oil prices spur huge economic growth, enbling Chavez to enact many opf his reforms.

-2005- Chavez inaugurates Mission Barrio Adentro for secondary and tertiary health care centers run by Cuban doctors. Other doctors complain that funds are being redirected away from regular hospitals.

2007- Jan. 21- the assembly gives Chavez the right to rule by decree for 18 months. Starting a new 6-yr term. He wants a socialist society.

2007- Chavez nationalizes the phone companies and begins to implement state control of the central bank.

-According to the Berlin based research institute, Transparency International, Venezuela is listed at 130 out of 159 nations for the transparency of its government.

-2005- libel and slander laws directed at media criticismof gov’t.

2006- law for spontaneous “communal councils” to skip state and municipal governments which are believed to be corrupt.

-gov’t gangs allegedly attack media which Chavez accuses of being pro-US.

-2006- personally revoked license of RCTV- gov’t’s 2nd largest TV channel- because it is accused of anti-govenrment activities. And violating :social responsibility” legislation for the media.

2007 -increasing complaints of crime and corruption.-


May 1- Hugo Chavez is using his new powers of presidential decree to regulate prices in private hospitals in Venezuela. Clinics that refuse to comply will be nationalized.

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