'Oil fuels class conflict in Venezuela'

Fred Feldman ffeldman at bellatlantic.net
Sat Aug 23 05:33:29 MDT 2003


Friday, August 22, 2003 Oil fueling class conflict in Venezuela

Populist president seeks to wrest petrowealth from rich

ANA CAMPOY Special to the Tucson Citizen

Day 5 of 6 CARACAS, Venezuela - This once-prosperous city is now
converted into a battle terrain for two opposing groups.

In the poor and working-class neighborhoods on the west side of town
stand the supporters of President Hugo Chavez.

The east, with its gated communities and upscale malls, is taken by
his opponents.

At the center of their fight are 78 billion barrels of oil, the reason
why this Caribbean capital is lined with concrete and glass high-rises
instead of palm trees, and why Venezuelans are under the impression
that they are rich beyond measure.

The viscous liquid recently has become the ideological rallying point,
and the material weapon, for two factions of society polarized by
Chavez's incendiary political speech and a growing economic crisis.

In early December, upper and middle management of PDVSA, the state oil
company, launched their biggest attack, a two-month oil strike that
paralyzed the economy and stopped oil shipments to the United States -
Venezuela's largest customer - but failed in its objective to oust the
president.

It did, however, catapult civil society, both Chavistas and
opposition, into the streets to fight over a resource that they had
long taken for granted.

"Oil was always like God. He exists but no one has seen him," says
Teodoro Petkoff, former minister of planning, ex-guerrilla and current
director of Tal Cual, an opposition newspaper in Caracas.

"Oil before the strike not only didn't mean anything, but I'd be
surprised if 100,000 of the 23 million Venezuelans had seen oil and
knew what color it was."

Resource divides nation

It has since clearly taken two distinct hues that underscore the
differences between a white middle class attuned to the global
capitalist system, and a mulatto underclass that blames "the rich" for
its misfortunes.

"One part of the country thinks that the gentlemen from PDVSA are
shining knights, Quixotes, in the fight against Castro-communism,"
explains Petkoff.

"The common Venezuelan in the barrios thinks that these knights of
PDVSA are an emanation of the oligarchy who intend to take over the
company and privatize it, because they feel that now oil really
belongs to them."

Leonidas Alejos takes that mantra seriously. His family's house is
perched on one of the many hills cluttered with slums that overlook
the city.

"They said the oil belonged to everyone, but I've never received any
benefits," says Alejos, an unemployed security guard wearing a mesh
tank top and flip-flops.

He has had to procure electricity and water for his family by
illegally hooking up his small concrete house to the city's systems,
and is forced to water the bare yard to keep dust from blowing into
the two rooms separated by makeshift curtains.

"No one has ever come up here. In 40 years of democracy, these poor
neighborhoods have only grown larger," he says, his wiry arm pointing
at the houses clinging to the hills.

Chavez appeals to masses

Since he became president in 1999, Chavez has built an escape route
for this built-up frustration and disappointment, says Edgardo Lander,
a sociology professor at Venezuelan Central University.

"This is the most important thing that has happened in Venezuela, a
sort of cultural revolution, a voice that is made present through a
leader with which the people identify and trust."

This voice can now be heard through Bolivarian circles, grass-roots
community organizations named after the national hero Simón Bolívar.
Upon Chavez's suggestion they sprouted all over Venezuela, including
the slum La Vega, where its members gather in crowded living rooms and
rooftops crisscrossed with clotheslines.

"We are now looking at what can come out of PDVSA because oil is ours.
They have to give out resources," says Pedro Luis Morales, member of a
Bolivarian circle. He wants the oil company to pay for project ideas
that come out of his circle's evening meetings, such as a plant to
recycle trash and a technical school to train his neighbors to work in
PDVSA.

"At last the phrase to sow the oil is going to come true," he says,
referring to slogans previous governments used.

PDVSA loyalists horrified

Old-line PDVSA loyalists are horrified at the remake of their beloved
corporation.

The oil industry had been run by an English-speaking, Ph.D.-holding,
globe-trotting Venezuelan elite, for the best part of last century
until the strike. This management class lived through the price
control era of OPEC in the early '60s, the nationalization in 1975 and
the apertura, when PDVSA opened up to private investment again and
control over the public company slowly slid out of the hands of its
main shareholder, the state.

This independence made PDVSA prosper, say former employees and some
economic analysts. "You don't have to be a genius to know that if
government is in business, it's not going to work," says Robert
Bottome, an economist and director of the business newsletter
Veneconomia.

"The one glorious exception was the oil itself, which was nationalized
in a way that ensured that it would be run as a private corporation.
Supposedly forever. But the forever collapsed when Chavez became
president," he said.

The business sector blames the president for interfering with the
management of the company. "The sensation is that people that weren't
invited to their dance barged in dressed improperly, without taking a
shower, pinching the ladies," says Lander.

The meritocracy principle, as former PDVSA employees refer to the
system of ascending positions through merit, had insulated the company
from these kinds of people, or kept them in the lower ranks through an
elaborate evaluating system that involved more than 50 levels.

Old power structure gone

"There's a chain that ranks you according to your yearly performance,
but also your potential, the wish you have of developing yourself,
your way of relating with others," says Mirian Delgado, a former
finance executive, who wears a charm bracelet to fend off Chavez's bad
vibes. "If someone speaks incorrectly, I obviously cannot take this
person to meet with the executive board, this person doesn't have the
manners that the job requires."

Back at the oil company, those who stayed - mainly lower-rank workers
and retired employees who have come back - are settling into their new
positions. Production levels have increased to 90 percent or 60
percent of prestrike levels, depending on whom you ask. Gasoline is
flowing from the pumps and Venezuelan oil is being shipped to the
United States.

The strike allowed new management to implement changes former top
management had strongly resisted for the past decade. Chief among
these was the readjustment of the oil income that went to the state,
which had shrunk from 65 cents per dollar in 1993 to 45 cents last
year. Previous governments, argues Bernard Mommer, an aide to the new
president of PDVSA, committed a "serious failure of regulating" and
the company became more powerful than the ministry that dictated its
policy.

With the oil company now firmly under Chavez's control, Venezuela's
new oil policy - respecting OPEC quotas, selling oil to Cuba at
discount prices, and redistributing the country's oil wealth - has
propelled the former executives from the wood-paneled chambers of
PDVSA's penthouse to the chaotic streets of Caracas. Chavez, who likes
to call his opponents escualidos - the squalid ones - has awakened an
almost religious fervor among many of the levelheaded executives who
only recently strolled PDVSA'S hallways.

Both sides rally support

At a fund-raiser on a Sunday afternoon they sang together the newly
composed PDVSA hymn. "We're going to raise our arms to sing with all
these brave people that are here," shouted an organizer from the
podium.

A recording of inspirational piano music started playing and people
sang the memorized words: "This is a song of love, liberty and peace,
if we fight together we will triumph." A father waved his baby girl
above his head like a lighter at a concert.

Others flapped their flags enthusiastically. Then hundreds of yellow,
blue and red balloons - the colors of the Venezuelan flag - were
released into the pale blue Caracas sky.

Some 80 miles west, under a highway overpass, other patriotic
Venezuelans have been stirred out of their complacency by oil.
Maebelis Areche, 18, quit her job as a receptionist at a local company
to "defend" a gasoline filling station after the strike.

"We have kept a vigil for three months, 24 hours a day, because we
believe in this and we don't want anything to slip in."

After the strike Chavez called for people to come out to defend their
oil; they did and now Areche lives under the roaring traffic of a
highway, in a makeshift tent of red fabric and sticks. "We know that
this doesn't end here, we know that this revolution is permanent,"
says Areche, wearing a red bandanna over her hair, and camouflage
pants.

Its impact on the oil industry will also be permanent.

With all this fighting over to whom the oil belongs lies a great
paradox: The fighting itself is driving much of the oil into foreign
hands. With fewer people PDVSA will rely more on outside companies to
do its job, says Bottome. "The great irony in all of this is that
they're going to denationalize the oil industry," he adds.

This, however, does not delight Bottome, ordinarily a staunch defender
of privatization. "Venezuela's pride of owning a First-World
corporation - well, that's gone."










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