[Marxism] Nationalized oil company aids working people in Venezuela

Fred Feldman ffeldman at bellatlantic.net
Sun Mar 14 10:56:00 MST 2004

***** The New York Times, March 11, 2004
The Oil Company as Social Worker

CRUCERO DEL CARO, Venezuela - Siadys Bayuelo, 33, has spent four
years urging local authorities to pipe potable water into her home in
this dusty town in eastern Venezuela, sparing her the trouble of
walking a mile every day to the nearest well.

Now, contractors are drilling wells around the region as part of a
$140,000 project that will eventually pipe water into her three-room
cinderblock house and hundreds of others nearby, easing a
hardscrabble life. But rather than thanking the local government, Ms.
Bayuelo says she is grateful to the state-run oil company, which has
extensive but faceless operations in this gas-rich region.

"I'm so happy that we're finally going to have water in the house,"
she said recently while bathing her 1-year-old son from water drawn
out of an old petroleum drum. "This is the first time the company has
ever done anything for us."

All across this oil-rich and poverty-riddled country, the state oil
giant, Petróleos de Venezuela, the country's economic engine, is
embarking on a radical and wide-ranging social spending program that
includes building homes, running literacy programs and developing
agriculture. In all, the company, known worldwide as Pdvsa
(pronounced peh-deh-VEH-sah), is increasing its social spending from
less than $40 million in previous years to $1.7 billion this year,
according to the company's 2004 budget: $616 million on various
programs, $600 million on agricultural development and $500 million
on low-income housing.

The new spending measures are transforming a state company long run
like a private concern into President Hugo Chávez's primary vehicle
for social change in the world's fifth-largest oil exporter.

"Pdvsa used to function as a transnational company only interested in
maximizing oil sales," said Pdvsa's president, Alí Rodríguez. "Now,
Pdvsa is working with other state institutions to reduce Venezuela's
exceedingly high rate of poverty." According to Venezuelan research
groups, more than 70 percent of the population lives below the
poverty line. Social spending initiatives are crucial for the
embattled President Chávez, who has recently faced violent opposition
protests as electoral authorities announced setbacks in a recall

First elected in 1998 on promises to redistribute oil wealth, Mr.
Chávez's rule has been characterized by deep polarization. His foes
accuse him of ruining the economy; supporters say he is the first
leader to represent the poor. While thousands of Mr. Chávez's
adversaries have demonstrated against him and in favor of a recall
vote, millions are set to benefit from programs that receive Pdvsa
financing and other donations, from furniture to literacy videos.

Energy experts warn, however, that Pdvsa never fully recovered from
the grueling anti-Chávez strike the company called in December 2002,
which makes it hard for Pdvsa to justify such a large social
investment budget. The energy experts estimate oil output at roughly
2.5 million barrels a day, though Pdvsa says it is producing more
than 3 million.

They also say new social spending initiatives will soak up capital
the company needs to shore up production, particularly after a
decrease of more than 30 percent in the company's total investment
budget last year, to $2.19 billion. Without at least $5 billion a
year in oil investment, oil analysts say, Pdvsa will face production
declines down the road.

"Pdvsa is now investing in activities that are outside of the realm
of oil production at the expense of maintaining its productive
capacity," said Ramón Espinasa, chief economist for Pdvsa until 1999
and now an economic analyst in Washington. "It shows that Pdvsa no
longer operates within the logic of a corporation." And this, he
said, will ultimately bankrupt the company.

Executives at the company did not respond to repeated requests for
comment on such criticism, but government leaders have pointed to
increased profits in 2003 as evidence of the company's financial
health. . . .

Pdvsa, created in 1975 as part of the nationalization of Venezuela's
oil industry, was for years considered as efficient as major oil
companies like Exxon Mobil and ChevronTexaco, functioning as a
corporate multinational with an elite cadre of oil professionals. But
since the oil industry is both the lifeblood and the Achilles' heel
of Venezuela, both Mr. Chávez and his adversaries realized it was
impossible to control the country without controlling Pdvsa.

The company's corporate leadership, largely opposed to Mr. Chávez's
vision for the oil industry, clashed with the president as the
country's political divisions widened. There were two strikes at
Pdvsa in 2002, ultimately failed attempts to force Mr. Chávez's
ouster. In 2003, Mr. Chávez fired 18,000 workers accused of joining
the second strike, cutting the company's work force in half and
gutting its finance and planning departments.

During this period, Mr. Chávez replaced the former Pdvsa leadership
with new executives supportive of his reform agenda, making it
possible to open up Pdvsa to major social spending initiatives.

Here in the municipality of Anaco in the eastern state of Anzoátegui,
the company is working with several state agencies on a $675,000
project to increase production of vegetables, meat and dairy
products. In an orchard just outside the company's Anaco
headquarters, local residents carefully weed and trim experimental
patches of rice, tomato and lettuce under the blazing sun as part of
a training program in sustainable agriculture.

"Pdvsa is teaching us to produce food in harmony with nature," said
Kamal Saab, 40, who was outfitted in a straw hat and a blue Pdvsa
jumpsuit and was standing in a patch of lettuce. "They're giving me
the opportunity to learn about agriculture and start my own
business." Mr. Saab, once a contractor who maintained oil drills, now
receives a monthly stipend of roughly $85 to study soil properties
and cultivation methods in an orchard he says was once reserved
exclusively for company managers. When he finishes the course, Mr.
Saab said, Pdvsa will help him acquire land where he can grow
vegetables and raise pigs.

The programs are solidifying Mr. Chávez's support among the growing
lower classes as he continues to face a potential recall vote this
year. For Venezuelans like Ms. Bayuelo, whose modest house sits half
a mile from a tower spitting out a flare of burning natural gas,
finally benefiting from the country's oil revenue is a convincing
reason to back him.

"I have to stick with whoever is looking out for me," Ms. Bayuelo
said, glancing at the unused pipes that will soon bring water to her
house. "Right now, the only one out there is President Chávez."

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