Hugo Chávez and Venezuela Rachel M

McNair Scholars Journal Volume 9 | Issue 1 Article 10 2005 Resistance to U.S. Economic Hegemony in Latin America: Hugo Chávez and Venezuela Rachel M. Jacques Grand Valley State University Follow this and additional works at: http://scholarworks.gvsu.edu/mcnair Recommended Citation Jacques, Rachel M. (2005) "Resistance to U.S. Economic Hegemony in Latin America: Hugo Chávez and Venezuela," McNair Scholars Journal: Vol. 9: Iss. 1, Article 10. Available at: http://scholarworks.gvsu.edu/mcnair/vol9/iss1/10 Copyright © 2005 by the authors. McNair Scholars Journal is reproduced electronically by ScholarWorks@GVSU. http://scholarworks.gvsu.edu/ mcnair?utm_source=scholarworks.gvsu.edu%2Fmcnair%2Fvol9%2Fiss1%2F10&utm_medium=PDF&utm_campaign=PDFCoverPages Resistance to U.S. economic hegemony in Latin America: Hugo Chávez and Venezuela Abstract Introduction Recent years have seen increasing opposition On April 11, 2002, a group of to U.S. political and economic influence in senior military officers stormed the Latin America. Venezuela is a key player in presidential palace in Caracas, the the South American economy. This project capital of Venezuela. They ousted the researches the country’s history from the leftist president, Hugo Chávez, and 1950s to the present and the role of the replaced him with the more conservative U.S. in its formation. Through political Pedro Carmona. The coup had the economy, this study asks if recent political support of the business community, changes are due to the effects of U.S. policies the upper classes, the mass media, and in Venezuela. The research examines tacit support from the U.S.; however, the relationship between the two nations the de-facto government was short and the development models proposed lived (Cooper, 2002; Hellinger, 2003; by the Chávez government. The paper García-Guadilla, 2003; Parenti, 2005). considers alternative models of economic Thousands of the nation’s poor filled development, independent from U.S. the streets demanding that Chávez be political hegemony. restored to office while, in a surprising move, branches of the Venezuelan military acted to support rather than Rachel M. Jacques suppress the movement. After two McNair Scholar days of massive protests, Carmona stepped down and Chávez returned to power. Scholars Steve Ellner and Daniel Hellinger (2003) claim that this scenario “has no equivalent in Latin American history” (p. ix). No equivalent in Latin American history? Such a strong assertion, as well as the media controversy over Chávez and his “Bolivarian Revolution,” are what spur research on this topic. What has happened in Venezuela to create such controversy, and what does it mean? The goals of this project are two-fold. The first is to investigate recent changes in Venezuelan society since the election of Hugo Chávez, putting them in a historical context that reveals their root causes. This enables one to see beyond the rhetoric and romanticism of street protests and coups, making sense of social and economic changes that may appear at a glance to be chaotic. The second goal is to develop a theoretical interpretation of these national changes George Lundskow, Ph.D. that is grounded in a global framework. Faculty Mentor Globalization has been changing the way people understand the concepts of community and economy; therefore focusing on the national level alone is GVSU McNair Scholars Journal VOLUME 9, 2005 81 insufficient. Careful attention has been was founded in 1958 with the Pact of power with nature, rather than with paid here to the colonial history of Punto Fijo, an agreement that established the people: “the nation’s social body Latin American countries – this history an electoral democratic system after became more marked as the passive continues to shape development and years of dictatorship and coups. The beneficiary of its natural body, seen politics of power in the region, and it is new arrangement was designed to bring now as the main source of the nation’s my belief that present-day inequalities together democracy, oil nationalism, powers” (Coronil, 1997, p. 168). It is stem from its legacy. Upon looking at and economic development in a project in this context that one can understand the case of Venezuela, I argue that the that cast the state as distributor of oil Venezuela’s economic system of statism. revolutionary program proposed by rent money (Coronil, 2000; Hellinger, Such systems, internally-focused and Chávez is not so shocking given the 2003). In the electoral system, two less open to foreign investment, were history and structure of Venezuela’s dominant parties shared power – the common from the 1930s to 1960s in political-economic system. I also submit social democratic Acción Democratica Latin America and the United States. that, despite its shortcomings, the (AD) and Christian democratic Comité Statist philosophy maintains that the program offers policy changes that are de Organización Política Electoral state should create the conditions for necessary for the development of regional Independiente (COPEI). The two parties industrial development and strategic sovereignty for South America and for alternated in power uninterrupted for strength (Kelly & Romero, 2002). This a sustainable system that is inclusive of nearly four decades. was the goal of the Pact of Punto Fijo, previously marginalized Venezuelans. The According to historian-anthropologist which organized the state to be the “revolution” that Chávez brought with Fernando Coronil (1997), Venezuelan manager of its natural resource wealth. his presidency may well be a middle- democracy was distinctive because The close relationship between the road model that defies both traditional of its fusion of resource wealth with state and industry in this model meant capitalist and state-socialist models. political power. With this combination, that the government derived most of he says, citizens could expect to both its revenue from the oil industry. Oil History participate in the political system and drilling had begun in 1914, expanded Traditional democracy: The Punto Fijo system benefit from the natural wealth of the quickly throughout the 1950s, and For decades, Venezuela was considered country’s resources. Furthermore, he when Venezuela nationalized its oil by many to be an “exceptional” nation, describes how the nation could be industry in 1976, it represented the both because of its prosperous economy thought of as having two parts: a “social culmination of the Punto Fijo project and because of its governmental system body” made of its people and political (Hellinger, 2003). After the oil embargo similar to that of the United States organization, and a “natural body” made by the Arab states of OPEC, global (Coronil, 2000; Ellner, 2003; Kelly & of its physical resources. This split was oil prices skyrocketed, making for Romero, 2002). The political structure significant because it aligned political windfall revenues to oil-exporting nations world-wide. (See Figure 1.) Indeed, Venezuela received more money Figure 1. International crude oil prices from 1978 to 2005 (Source: Oil Energy) during this boom than all of Europe did under the Marshall Plan (Coronil, 1997). The surge in income allowed the Venezuelan government to further its statist agenda. It increased spending on social programs and infrastructure projects, and from the oil industry grew a prosperous middle class. A sharp decline in oil prices after the 1970s began to erode the middle class and forced the government to borrow heavily to maintain its social spending. This caused Venezuela (and numerous other Latin American export-based economies) to accumulate massive debts, the effects of which are still felt today. 82 Resistance to U.S. economic hegemony in Latin America: Hugo Chávez and Venezuela It is critical to understand how the in Venezuela was to create a society If the Punto Fijo system is analyzed bond between governmental institutions in which the population expected in this light, the failure of Venezuela to and oil money shapes the economic the state to distribute the wealth create a sustainable economy did not and social progress of the country. of its export, despite the lack of result only from mismanagement by Statism and Import Substitution productivity and organization on the party leaders, but also from the structure Industrialization were common in other part of the population (Parenti, 2005; of the political-economic system itself. It Latin American countries as well, but Kelly & Romero). Ever since 1936, is well-documented that the system was the high revenues brought in by oil (as the government has touted its goal of marred by corruption, and the struggle opposed to other primary-good exports) “sowing the oil,” the phrase for using to be rid of it continues (Maya, 2003; were what had helped to bolster the nation’s oil wealth to establish Roberts, 2003; Gott 2001; Coronil, Venezuela’s exceptional image. productive enterprises in other sectors. 1997; Munckton, 2005; Parenti, 2005). The country’s failure to “sow the Corruption was visible when Carlos The demise of Punto Fijo and the statist oil” does not surprise Coronil (1997), Andres Pérez, president for the first model: Long-term causes however, who argues that Dutch Disease time during the late-seventies oil boom, The exceptionality was not an inherent is a misnomer. He says that it should suffered two separate coup attempts national characteristic, however, and in be renamed the “Third World” or “Neo- during his second term in 1992. The the last decade Venezuelans watched colonial Disease,” pointing out that coups failed, but Pérez was impeached as their system of 40 years came apart it is “an epidemic in the monocrop on counts of corruption the following at the seams. There are both long-term economies of the third world” that year. In the 1993 presidential elections, and immediate reasons for the decline, seldom afflicts nations of first-world the abstention rate was 39%, the both of which must be acknowledged status (Coronil, 1997, p.

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