Capital in Venezuela

international | anti-capitalism | opinion/analysis Wednesday May 03, 2006 02:53 by JamesO'B. - WSM - Pesonal Capacity

According to ABN AMBRO Bank, Venezuela “has developed a reputation for fiscal responsibility and is seen as a stablizing influence in the markets of both Ecuador and Argentina.”

Possessed of perhaps the most left of the governments in Latin American, Venezuela has emerged in recent years as the most strident with its president, Hugo Chavez, vocally challenging both the foreign and economic policy of the United States. His regime has begun modest levels of redistribution of wealth and increased social spending especially in healthcare and education.

Recently ABN AMRO Bank, one of the richest entities on the planet, looked at Venezuela from the point of view of the capitalists. Despite the overblown and often threatening rhetoric emanating from Washington, the view from the boardroom is actually quite positive.

Traditionally, the business press is the one area of the capitalist press where one can find a fair degree of truthfulness. The mainstream media’s usual diet of propaganda which serve to promote the various agendas – an invasion of Iraq here, a bombing of Iran there – does tend to be moderated when it comes to dispensing hard information to the folks whose task it is to invest billions of euros.

Capitalism clearly can’t function if those investing the capital don’t have accurate information as to the state of the country they’re investing in: information about its infrastructure, its levels of corruption, its policy with regards to redistribution of wealth, the strength of the labour movement etc. All these are vital indicators for capitalists and not surprisingly, they spend quite a bit of time compiling reports in order to keep each other informed. And to entice investment in areas which suit them(1).

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Venezuela is the fifth largest exporter of oil in the world and with prices the government has been rewarded with a windfall “equivalent to 18% of GDP”(2). The Chavez government has curtailed the creaming off of profits by the super-rich (hence their dissatisfaction) and used the money to finance ‘missions’ to better the standard of living of the poor and the working class. Interestingly, however, it has chosen to save 40% of that revenue and is in the process of paying hundreds off millions of foreign debt.

According to ABN AMRO, its recent massive issuing of bonds “demonstrates the huge strides that Venezuela has taken in the past three to four years in cleaning up its public finances, restructuring its outstanding liabilities and changing investors’ perceptions of financial and political risk in the country. The public sector is estimated to have around €23 billion financial assets up from €14 billion in 2004…And this figure does not include €30 billion in foreign reserves held by the central bank. For the first time in modern history Venezuela’s public external debt has fallen below 100% to a low of 79%.”

The advantage of satisfying big players like ABN AMRO is that it decreases the chances of another attempt at a right-wing coup – and subsequent slaughter such as occurred in Chile in 1973. And while one cannot rationally predict the actions of the irrational Bush regime, it is reasonable to assume that as long as Venezuela plays the game with international capital the Chavez government will be better protected from forcible overthrow. The downside is the inevitable curtailment of wealth distribution and social spending that operating in the capitalist paradigm means. The precise balance at which social spending versus adherence to the wishes of international capital will settle is currently unknown. Unless the government can persuade capital that an educated, healthy workforce will be able to provide increased profits in the reasonably near future, it will have fairly limited room for manoeuvre.

On the plus side for investors, the Chavez government is demonstrating an ability to deliver the perquisites for investment. #1) Stability: according to ABN AMBRO Bank, Venezuela “has developed a reputation for fiscal responsibility and is seen as a stablizing influence in the markets of both Ecuador and Argentina.” #2) Government moderation, as despite the increases in social spending, it hasn’t gone crazy and encouraged, let alone begun, expropriating many businesses.

The Venezuelan government has begun to mention socialism as a distant goal, with the hope that capitalism will gracefully retreat in the wake of enlightened reforms. This hopeful vision has unfortunately proven short-sighted from Louis Blanc to the German SDP. Socialism is a word that means different things to different people, but on its classical meaning(3), the partnership(4) between the government and banks like ABN AMRO indicates that in this regard Chavez is unlikely to succeed.
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1. Dawkins and Krebs conjecture that animal communication is mainly devoted to manipulating the behaviour of other animals.
2. Information on Venezuela’s economy was taken from articles by ABN AMRO, written for Euromoney Magazine, April 2006 and venezuelanalysis.com.
3. My version of the classical: Socialism = Anarchism = a classless, stateless, self-managed egalitarian society.
4. According to Wikipedia such partnership predated Chavez’s attainment of power: “Controversially, foreign banks — including Spain's Banco Bilbao Vizcaya Argentaria (BBVA) and Banco Santander, each the owner of one of Venezuela's largest banks — illicitly funneled millions of dollars into Chávez's campaign.” See the link to Chavez on wikipedia, below.
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Links

ZNet’s Venezuela Watch
http://www.zmag.org/venezuela_watch.cfm
http://www.venezuelanalysis.com/
Sympathetic to Chavez

Of Chavistas and Anarquistas: Brief Sketch of a Visit to Venezuela
by Michael Staudenmaier with Anne Carlson
http://www.anarkismo.net/newswire.php?story_id=839®i...ombia

Venezuela 2006: Anarchism against all odds
http://www.anarkismo.net/newswire.php?story_id=2574&sea...zuela

Articles Venezuela on anarkismo.net http://www.anarkismo.net/newswire.php?search_text=Venez...earch

Venzuela article on wikipedia:
http://en.wikipedia.org/wiki/Venezuela
Hugo Chavez article on wikipedia:
http://en.wikipedia.org/wiki/Hugo_Ch%C3%A1vez#CITEREFMa...o2005