Venezuela - Global trade trumps revolution with Chavez

Roger Cohen presents an interesting analysis of the limits of 21st century Revolution. Cohen's first point (of 8) I find especially interesting, then I will discuss his third point.

1) Trade trumps politics. Even as Chávez has been calling President George W. Bush "the devil," U.S.-Venezuelan commercial ties have blossomed.

This is the western hemisphere's equivalent of the Taiwan-China relationship: political enemies engaged in booming business. Bilateral trade will amount to about $47 billion this year, up on 2006, with Venezuelan exports to the United States reaching $37 billion (mainly oil), and imports totaling close to $10 billion. Chávez derides the "little Yankee" but can't get enough American cars and clothes for his "21st century socialism." Such links dilute danger.

So active and extensive trade is a major limitation on military force between nations. But Cohen's third point emphasizes something I have long believed:

3) Oil centralizes power. Venezuelan oil fetches a lower price than most because it's harder to refine, but Chávez is still pocketing between $4 billion and $6.7 billion a month, depending on whom you believe. Give anyone in an opaque, rather than open, society more than $100 million a day and he might start raving about ruling until 2050, as Chávez has. "The tendency of the petro-state is to recentralize, petrify and personalize power," said Margarita López Maya, a political scientist who long supported Chávez but is now disillusioned. From Moscow to Luanda to Caracas, this has proved the case.

The large sums of money from the oil trade tend to be controlled by the government because centralizing power is a way to keep the nation stable. Foreign oil companies prefer stability in nations that sit on top of the oil they are extracting, and there is little function for a middle class in pumping and exporting oil.

In Venezuela, as an a great many oil-rich nations, that has meant that there are very wealthy people and large numbers of very poor people, and there is not much economic use for a middle class. and the wealthy like it that way. Like wealthy Americans, they resist any reduction in the ability to buy yachts and Lexus' just so that some poor peasant's kid can get health care and education. There are too many peasant's kids to begin with. Move into a gated community, hire security guards, and just ignore the poor.

This routinely causes major pressure for a revolution, so the wealthy classes expect the Police and the Army to 'maintain order' in the lower class. Those efforts add to the pressures for more repression. An example if Iran, an oil country under the Shah. The Shah had his very brutal secret police, the SAVAK. The actions of the SAVAK, together with the great disparity between the average income of the ordinary Iranian and those working for the oil companies were major causes of the 1979 Iranian Revolution. The discovery of oil in Libya in 1959, then one of the poorest nations in the world, caused similar pressures that led to the coup d’état against King Idris by Muammar Abu Minyar al-Gaddafi in 1969.

In Venezuela, similar pressures led to the 1998 election of Hugo Chavez on a platform of anti-corruption and anti-poverty. Although Chavez achieved power through an election, he did so by orchestrating the discontent of the poor Venezuelans. The discontent had the same bases as did the similar discontent in Iran and Libya. The disparity between the income of the wealthy and the poor, the large flow of money that came in because of oil but was not distributed equitably, and the disdain and limited repression of the poor by the wealthy class was the core of Chavez' election. Repression was less important than was the great disparity of income between the wealthy and the poor, but the corruption of the government and the absence of any accepted route out of poverty for even the most capable made it a clear that Chavez was offering the poor Venezuelans something they really wanted.

But Libya's revolution was 1969, and Iran's was 1979. Globalization was not the force against excess it was in 1998. Chavez may not realize that, so his efforts today to rewrite the Venezuelan Constitution may not be successful. I'd suspect that the 2002 Venezuelan coup d'état attempt failed for similar reasons. Venezuelans, especially the poor, saw in 1998 that the great disparity between the wealthy and the poor was caused by politics and was not necessary, so they elected Chavez to remedy the inequality. But the key is that they elected him. The Coup attempt was not acceptable.

The question now is whether Chavez' effort to rewrite the Constitution so that he can continue to run for President indefinitely will be any more successful than the 2002 coup was. Whether it is or not, Venezuela remains an oil producing nation in which the government retains control of the international revenue from oil, so the government will remain centralized.

One last point - the government had to take control of the oil companies. The companies would no more have permitted the greater distribution of oil profits to support the poor than the wealthy classes did. Because of the nature of oil production, only a very few people will control the oil wealth. Venezuela will be most stable if that oil wealth is distributed in the country in ways that appear fair. No totally free market will do that because of the centralizing effect of oil wealth.

So now we wait for the election results from Venezuela tonight. While you wait, go read the rest of Cohen's article.