After the news of Chávez’s "nationalization"

January 20, 2007

On January 8, during the swearing-in of the ministers of the new
government, Chávez Chávez announced the "nationalization" of some
privatized enterprises, appealing to "twenty-first century socialism"
and the "Bolivarian revolution" in his rhetoric; among the
enterprises are several US companies, which provoked declarations of
alarm by the US, at the same time that it generates sympathy among
the workers and peoples of Latin America. However, almost at the same
time, Ricardo Sanguino, chairman of the Finance Commission of the
National Assembly, clarified that "this is not about a measure of
expropriation, the strategic enterprises are going to be purchased"
[1]. In this way, he has calmed the sectors affected by the measures,
while showing the limits of this bourgeois nationalization, or, in
other words, of its larger nationalist trend.

Chávez announced the nationalization of all the strategic enterprises
privatized during earlier governments, mainly in the area of
telephone service and electricity. He finished his solemn
speech: "All those sectors of such an important and strategic area
for all of us, like electric energy is, all that which was
privatized, should be nationalized . . . The Compañía Anónima
Nacional Teléfonos de Venezuela (CANTV) should be nationalized . . .
the Nation must recover ownership of the strategic media, of
sovereignty, of security, and of defense" [2]. He also declared
that "all the processes of improvement of the heavy crude oils of the
Orinoco Belt" must pass into the control of the state. At the same
time that he announced these measures, he called on "the opposition
politicians" to join "the task of national development," declaring
that "we need a national business class that feels proud to be
Venezuelan. . . " These announcements were part of a series of
measures that are escaping this first analysis centered on measures
of "nationalization."

On the same January 8, the biggest impact experienced by the
Venezuelan financial market since Chávez began his first term in
1999 - was felt, after he announced the plans to nationalize the
CANTV telephone company and the electrical companies that operate in
the country, but it tended to regularize itself the following day
with a slight recovery by stocks on the Bolsa de Valores de Caracas
[the Caracas stock exchange], when it was confirmed that the affected
businesses would receive compensation. In fact, all this is about a
process of returning privatized enterprises to state ownership;
[among the enterprises affected] CANTV, the most important telephone
company of the country and Electricidad de Caracas (Elecar) stand
out, although Chávez did not directly mention any electrical company.
These businesses, as well as the strategic oil companies, all have
shareholder majorities by US businesses. Venezuela’s electrical
service is managed by the state firm Cadafe, but in the capital, the
Elecar company operates and belongs to the international group AES,
with headquarters in the US, possessing 86% of the shares. In
conventional and cellular phones, the biggest operator in Venezuela
is CANTV, whose biggest stockholder is Verizon Communications with
28.5% of the shares. The consortium that administers CANTV with that
percentage of shares can control and direct the company, while among
the workers and the state, they do not have 20% and the rest is
offered worldwide. It is useful to clarify that limiting
[nationalization] to enterprises that were once state property,
excludes the big groups of cellular telephones [from being
nationalized], which have a big share of the telecommunications

While the news of "nationalization" affects the business of certain
US enterprises, nothing more and nothing less than the strategic oil
industry remains outside of the measures [of nationalization]; in
that industry, Venezuelan and foreign companies (almost exclusively
from the US) maintain businesses worth millions. In this sector what
is sought is to accelerate the process of transition of the strategic
businesses to a different schema where the state may assume control
of the oil companies through mixed enterprises [3]. This process
began last year and it was expected that the Ministerio de Energía y
Petróleo would conclude negotiations with the transnational
corporations in December 2006, as was done with the "operating
agreements." Sincor, Petrozuata, Ameriven and Cerro Negro are the
four strategic associations of the Belt and Total, Exxon Mobile,
Statoil and ConocoPhilips, together with PDVSA, participate in them.
[4] These companies have the majority of stocks in the associations,
an aspect which must be reversed in coming months with the new
measures and on which negotiations have already begun. As already
announced, the proportion of shares will be 51% (PDVSA) and 49%
(transnational corporations). This is why no transnational sector has
complained, and, as the President of Petrobras, José Sergio
Gabrielli, stated, the measures announced for the energy sector will
not affect the oil company’s investments in Venezuela. "It should
come as no surprise to anyone. It is definitely not surprising. He
(Chávez) has been announcing this for some time now," said
Gabrielli. "It is public knowledge that we have planned a series of
investments in common there as well as here, and these negotiations
have changed nothing," he concluded [5].

According to some calculations by economic analysts, re-nationalizing
CANTV would cost $3.5 billion [6], Elecar another $3.5 billion, since
it paid $1.6 billion to acquire the majority of shares in 2000 from
other private investors [7], and the four projects in the Belt would
be at a cost of $17 billion, although the plan is not to exceed 51%
of the shares. But part of the Venezuelan business class that has
been working with the government and has echoed its appeal, up till
now has not been alarmed at such measures [8]. Thus, Francisco Natera
of Empresarios por Venezuela ["businessmen for Venezuela"] stated
that "the business class has to work with the government, by
following the policies dictated in 2006, which will be used again in
2007. Stimuli for Venezuelan industry, the countryside and services
will be maintained by suspending the value-added tax and low interest
rates. There will be excellent conditions for financing and the
[Venezuelan] nationalist business class must adapt itself to the new
policies" [9].

But even more, Chávez goes on appealing also to those business
sectors that supported the coup [against Chávez, in April 2002], like
Fedecámaras to revise their positions and join the project. Thus, on
Monday during his speech, after harsh statements against this sector,
he affirmed that, "if only they would change and take on a national
project; a national business class is what we need ("un empresariado
nacional necesitamos"), and we are willing to work together with an
indigenous ("criollo"), national business class, that feels pride in
being Venezuelan and that would work to satisfy the needs of the
people, of Venezuelan society." In this framework, the measures seek
to take control once more of the enterprises that were privatized in
the decade of the 90’s in the sense of re-making national capital and
improving the terms of exchange in relations with the big imperialist

In resuming this policy, a clearer turn toward nationalism is taking
place in the government, compared with the eight years of the
preceding period and especially contrasting it [the policy] with that
of other governments, like Kirchner’s and Lula’s, but it has
absolutely nothing to do with ("pero para nada se trata de")
revolutionary measures that would definitely affect international or
Venezuelan capital. A clear measure in this sense would have meant
the simple, straightforward expropriation ("la expropiación lisa y
llana") without any sort of compensation, taking into account that
all the enterprises have more than recovered the pittance they paid
for them during the period of economic opening under Carlos Andrés
Pérez. Nor is there any measure that would aim at producing any
substantial change in the distribution of the national income in
favor of the workers and the popular sectors and to the detriment of
the bourgeoisie. There are no big changes as for his strategic
project of the "Venezuelan way to socialism," of co-existence between
private and state capital. Nor is Chávez moving forward in
nationalizing 100% of the oil industry, rather, he is moving towards
setting up mixed enterprises, just as he has already done with
the "operating agreements" and now with the "strategic associations."

- Twenty-first Century Socialism?

The perspective of "twenty-first century socialism" that Chávez’s
government sets out, is only limited to a bourgeois designation [of a
given enterprise] as state property in some sectors of the economy,
with compensation for the parasitic groups that have filled their own
pockets for decades at the cost of the hunger and misery of millions,
by permitting Venezuelan bourgeois sectors and big imperialist firms
to go on making million-dollar deals in other sectors of the economy
and even in the main Venezuelan industry, oil. For Trotsky, to whom
Chávez referred in his speech, the key to success was to connect the
expropriations with the perspective of overthrowing capitalism and
therefore it was necessary to complete [the expropriations]
with "expropriating the banks and establishing a single national
bank" and "conquest of power by the working class." However, for
Chávez, his "Venezuelan road to socialism," passes through co-
existence with private capital as shown by his appeal to the
Venezuelan business class to join his project.

In contrast, as revolutionary socialists, we fight for expropriation
without payment and under workers’ and consumers’ ("usuarios")
control of all privatized enterprises, on the road to expropriating
all the big enterprises, banking and the strategic hydrocarbon
industries, and the establishment of a government of the working
class, the only class that can plan the whole economy rationally and
at the service of the big working-class and popular majorities and
finally put an end to the imperialist plundering of the wealth of our

- References

[1] El Nacional, 10/01/2007.

[2] Speech by Hugo Chávez during the swearing-in of his new
ministerial cabinet in the Teatro Teresa Carreño in Caracas.

[3] See "La revolución bolivariana y el mito del socialismo del siglo
XXI", in Estrategia Internacional Nº 23.

[4] The composition of the "strategic associations" is the following:
Petrozuata (Conoco-Phillips 50,1%, PDVSA 49,9%), Hamaca-Ameriven
(PDVSA 30%, Phillips 40%, Texaco 30%), Cerro Negro (PDVSA 41.67%,
Exxon Mobil 41.67%, Veba 16.67%), Sincor (PDVSA 38%, Total 47%,
Statoil 15%). The "strategic associations" produce 620,000 barrels of
oil, from the sale of which PDVSA gets significantly smaller profits
than those of the transnational corporations.

[5] Últimas Noticias, 10/01/2006.

[6] Calculation made based on the investments made once the company
was privatized. Reporte Económico, 10/01/2007, y "Estado actual de
las comunicaciones en Venezuela", Universidad Central De Venezuela.
Facultad de Ingeniería. Caracas. Venezuela.

[7] Calculation of current cost also based on alleged investments
made after the re-purchase in 2000. "AES sufre revés en América
Latina por nacionalización en Venezuela". Reporte Económico

[8] For a better analysis of this economic sector, see "Las
negociaciones con el empresariado y el surgimiento de los "nuevos
ricos bolivarianos" in Estrategia Internacional Nº 23.

[9] El Nacional, 10/01/2007.