‘Land of plenty, land of poverty, Venezuela ought to be soaring, a great success story in South America, with exceptional oil wealth spreading prosperity to all’.With these words James Robbins begins his documentary ‘Oil, Politics and Hugo Chavez’, part of the BBC’s Our World series first broadcast in February 2011. Sam McGill exposes this report as baseless propaganda.
Lack of investment in infrastructure?
Full of sloppy journalism, Robbins first claims that little of Venezuela’s oil wealth has been spent on infrastructure other than the iconic metrocable in Caracas, where he sets the opening scenes.
In 1998, before the election of Hugo Chavez, just one fifth of Venezuelans had access to primary health care. The average rate of infant mortality was 19 per 1,000 live births. Health care was a privilege, not a right. In 2002, following a political struggle to wrest control of Venezuela’s huge oil reserves, the Bolivarian Revolution was able to channel profits from oil into health care among other social priorities. This included an agreement between Venezuela and Cuba whereby, in return for subsidised oil, Cuba has sent thousands of educators and medical personnel to create a free health care (Barrio Adentro) and education system across Venezuela. This prioritises the needs of the poorest and hardest to reach communities, whilst providing training for Venezuelan students to become the next generation of doctors and teachers. By 2008 infant mortality had dropped to 13.9 per 1,000 live births and is expected to fall below 10 per 1,000 in the next few years.
2010 saw an increase in the budget for health care with $93 million invested in infrastructure and technology for the Barrio Adentro programme. $21 million has been used to fight dengue, malaria and Chagas disease. Another $186 million supported 114 new projects in health care in 2010; this included the National Vaccination Plan which aims to immunise 95% of the population against 14 diseases.
There have also been huge investments in education. In 2009 alone, over 91,155 computers were given to 2,729 schools; 86 pre-school centres and 44 schools were built; 2,872 schools benefited from maintenance work; 364 buildings were renovated and four new universities were built. Before the revolution there were only 400,000 university students. Currently the Bolivarian University of Venezuela has nine established university sites in nine different states, in addition to 190 stand-alone classrooms across the country. University attendance has almost tripled, from 28 per 1,000 in 1999 to 78 per 1,000 in 2007.
Last year the government expanded the state’s satellite network, installing 728 satellite antennae. As a response to the electricity crisis – caused by a severe drought which stemmed from the El Nino climatic phenomenon – 70 million incandescent light bulbs were replaced with energy-saving bulbs. The government also built 13 milk factories and eight corn factories.
In February 2011 further investments in infrastructure were announced, including $581.4 million to improve water services in Miranda state, and $321 million to repair water pipes and build treatment plants, pump stations, and storage tanks in and around Caracas. Thus the assertion that there has been little investment into infrastructure and services in Venezuela since the election of Hugo Chavez and the beginning of the Bolivarian Revolution is simply a lie. Investments have clearly benefited the majority of the population who before 1998 had little access to health care, higher education, internet access and technology.
A sinking, shrinking economy?
The documentary also claims that Venezuela is the only economy in Latin America which is not growing but shrinking, leading to increasing inequality. Robbins asserts that Venezuela is becoming more and more dependent on oil.
Venezuela has been hit by the global economic crisis and has experienced a six-quarter recession, yet the Central Bank (BCV) reported 0.6% GDP growth in the fourth quarter of 2010 and 2% growth has been predicted for 2011. Venezuela has the most equal distribution of wealth in the region, with the lowest Gini coefficient (0.39) in Latin America (excluding Cuba). As further evidence, Venezuela’s National Statistics Institute reported that poverty decreased to 23% in 2009, while extreme poverty fell to 6%. In 1997, before Chavez was elected, poverty stood at 60.94% and extreme poverty was estimated to be 40%.
Poverty reduction is only possible through a commitment to social spending. 2010 was undoubtedly a difficult year for the oil-exporting nation. In the context of the global recession, Venezuela saw a 5.8% drop in its GDP and a decrease of 5% in the oil sector productivity. Dependent on hydroelectricity from the River Caroni, national production was hit by drought-related electricity shortages. Inflation has consistently been a problem for Venezuela. At the end of 2010 the BCV registered an annual inflation rate of 28.5%, making Venezuela the country with the highest inflation in the region for the fifth consecutive year. However, inflation has to be understood in a historical context – inflation was high long before Chavez’s presidency: for example, in 1996 it soared to 100%. Despite all of these factors, social spending and investment has remained steady throughout 2010.
As a result of the nationalisation of unproductive companies alongside a concerted effort to increase national production, non-oil sector exports grew by 12.9% in 2010. Although in some instances, such as Sidor (steel company), there have been difficulties in the progress of nationalisation, 2010 saw more examples of nationalised companies producing better results. In 2009 food processing company Pronutrico produced 748 tonnes of cornmeal per month. Following state intervention, it now produces 4,791 tonnes per month. When the Diana vegetable oil company was nationalised in July 2008, it was producing 1,535 tonnes per month. By November 2010 production had increased to 4,756 tonnes.1
Venezuela is still heavily dependent on oil: exports generate about 80% of total export revenue, make up around half of government income and approximately one third of Venezuela’s GDP. This is a result of over a century of underdevelopment in all other areas of the economy. In the 1920s, agriculture made up around a third of Venezuela’s economy; by 2003 it only accounted for 6%. US intervention and control over oil has been a problem in Venezuela since its discovery in the early 20th century. Despite this the Bolivarian Revolution has made advances, increasing food and non-oil sector production both for export and domestic use. In 2009, its National Seed Plan produced six million kilos of seeds and the newly-established Marisela Corporation has begun planting rice and raising livestock on land expropriated from large private estates in Apure State. Agricultural production has increased by 24%, corn production by 205%, rice by 94% and sugar by 13%.
In 2010 Venezuela’s external debt was reduced to 20.17% of GDP, compared to 1988 when it was 80%. In stark contrast to other Latin American nations, Venezuela repaid its debts to the World Bank and cut off all ties with the IMF in 2007, freeing it from imperialist control over its economy.
Whilst Venezuela is clearly not free from economic problems, it is hardly a sinking economy. Despite being heavily affected by world oil prices and the global capitalist crisis, production plans are working towards achieving food sovereignty, increasing national production of non-oil products and continuing the commitment to social spending.
Distortions, omissions and complete fabrication of reality
The documentary continues with biased and factually incorrect journalism. Robbins details the expropriation of the historic La Francia building in Caracas in February 2010. However he describes the building as a ‘jewellery store’, and discusses the ‘plight’ of its workers who lost their jobs. Although La Francia did contain various jewellery stores, it was notorious as a base for black-market currency exchange and the trade of illegally-mined gold and gemstones. Illegal currency exchange has been contributing to capital flight from Venezuela. In the first half of 2010 capital flight stood at $8.69 billion and thus the expropriation was part of a crackdown on the black market and economic destabilisation.
‘Oil, Politics and Hugo Chavez’ also claims that ‘Investment and output of oil has fallen under Chavez’. Whilst it is true that oil exports have decreased due to an OPEC-mandated cut in 2009, gasoline production for domestic consumption has increased, particularly to fuel new thermoelectric power plants. Furthermore, February 2010 saw the signing of some of the biggest contracts in recent years for development of the Orinoco oil belt. In these mixed enterprises, companies like Chevron will have a 34% stake in exploration and oil exploitation whilst Venezuelan State Company PDVSA will control 60%. Chavez’s government has raised foreign oil companies’ corporate tax rate to 50% and increased royalties payable to the government from 1% to 33%. This ensures hard currency for Venezuela and majority control over each contract – providing the funds to maintain a high level of social spending.
Perhaps the most disgusting distortion is Robbins’ reference to the emergency powers passed by the outgoing National Assembly. He states that Chavez ‘has already moved decisively to make the [newly elected] assembly all but toothless, by taking emergency powers for himself, instead’. What Robbins fails to mention is that these powers relate to the fact that Venezuela, like many countries in the region, has experienced a catastrophic natural disaster. Torrential rains have caused flooding and landslides over 40% of the national territory leaving 138,000 homeless and killing 35 people. In response, on 15 December 2010 Venezuela’s National Assembly approved an enabling law, allowing Chavez to enact decrees related to flood recovery independently of the National Assembly. These powers are limited to a maximum period of 18 months. Enabling laws have been used by Venezuelan Presidents several times over the past century: they are not specific to Hugo Chavez.
Finally Robbins maintains: ‘And if parliament has been weakened, so has opposition within the media’. The interview with Ana Cristine Nunez from Globovision TV alludes to the case of Guillermo Zuloaga, president and owner of 70% of the prominent opposition news network Globovision. Zuloaga fled the country in 2010 to avoid arrest for conspiracy and usury. Despite persistent claims of restricted freedom of expression in Venezuela, Globovision continues to broadcast with a free public licence granted by the state, and its reporters freely criticise the government. Seven of the top ten newspapers in Venezuela openly support the opposition, and estimates of the extent of private control of television range between 75% and 95%. Furthermore, an article by BBC Mundo (the Spanish version of BBC World) on 17 February 2011 presents a global internet filtering map created by the OpenNet Initiative which shows there is no evidence of internet censorship in Venezuela.
Coverage by BBC Mundo and the BBC in the UK is frequently at odds. It is clear that the documentary is politically motivated and presents a distorted and factually inaccurate picture of the situation in Venezuela. With continued progress in social indices and the role that Venezuela is playing regionally in the Bolivarian Alliance for the Americas,2 Venezuela is a success story in South America. The problem for Robbins and other bourgeois commentators, such as Rory Carroll of The Guardian, is that the Bolivarian Revolution is challenging the imperialists’ control across the continent, inspired by, and in partnership with, Cuban socialism – developing an alternative to the misery imposed by imperialism across Latin America.
1 For more information on nationalisation in Venezuela, see ‘The Battle for Workers’ Control’, FRFI 214, April/May 2010
2 For more information on ALBA, see ‘ALBA, new dawn for Latin America’ FRFI 212, December 2009/January 2010.