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Venezuelan Crude

Posted on Monday, 11th March 2013 @ 01:06 PM by Text Size A | A | A

As we all know, Venezuela’s President, Hugo Chávez fell into a coma last week before dying on Tuesday of respiratory failure after cancer spread into his lungs.

Hugo Rafael Chávez Frías was born on July 23, 1954 and died Tuesday, March 5, 2013 as President of Venezuela, a role he filled from 1999. He was formerly the leader of the Fifth Republic Movement political party from its foundation in 1997 until 2007.

Chávez was often as crude as Venezuelan oil.

Unlike his hushed health condition, it’s no secret that his brash and often abrasive comments toward capitalism in general and the United States in particular.  Since his death last week several of his colorful “declarations” have gone viral.  Among them is his now famous reference to George W. Bush, comparing him to the devil and telling the U.N. General Assembly that its system is “worthless.”  Referring to Bush, “The devil came here yesterday,” Chavez said, referring to Bush, who addressed the world body during its annual meeting Tuesday. “And it smells of sulfur still today.”

The American right as well as many on the center left denounced him.  Ed Royce, chairman of the House Foreign Affairs Committee, declared, “Good riddance to this dictator.”  In April 2002, the CIA backed an operation resulting in displacing Chavez from power in a coup that had him imprisoned before eventually being restored to power.  That restoration was largely due popular revolt among the more impoverished layers of the population.  Dictator?  Depends on whom you ask.

It’s this broad based populism from the ranks of the impoverished that seems to get lost in the noise of all the rightwing bluster.   To the credit of his critics, yes, Chávez often made crude and brash remarks toward the United States and even courted many of our enemies.

Born into a working-class family in Sabaneta, Barinas, Chávez became a career military officer, and after becoming dissatisfied with the Venezuelan political system, he founded various movements in the early 1980s that eventually overthrew the existing system.  In 1992 Chávez led a group in an unsuccessful coup d’état against the Democratic Action government of President Carlos Andrés Pérez, resulting in Chávez’ imprisonment. After two years he was released, founding the Fifth Republic Movement, and was elected president of Venezuela in 1998.

During the 14 years this former paratrooper lieutenant colonel had in power, impressive economic progress had been achieved, primarily to the benefit of the poor but also the economy in general.

For more than a decade and coordinated from  Santiago de León de Caracas, the Chavez government has been at the forefront of some very encouraging and progressive programs under way in Latin America. Loosely framed as Bolivarianism, these political doctrines are named after Simón Bolívar, the 19th century Venezuelan general and liberator who has led the charge for the independence people throughout much of South America and especially throughout Venezuela.

The Chávez administration established a new democratic constitution based on the political philosophy of Simón Bolívar and participatory democracy, the nationalization of several key industries, increased government funding of health care and education, and significant reductions in poverty, according to government figures.

Under Chavez, Venezuelans’ quality of life improved according to a UN Index.  According to Bloomberg News, Venezuela  rose seven spots to 73 out of 187 countries in the United Nation’s index of human development from 2006 to 2011, a period that covers the latter half of Chavez’s rule, which ended with his death.  The poverty rate fell from 48.6 percent in 2002 to 29.5 percent in 2011, according to the U.N. Economic Commission for Latin America.

Following decades of corruption, repression and inept governance, Chávez’ broad based coalition that voted him in by democratic election 4 consecutive times has arguably made Venezuela the most democratic nation in the Western Hemisphere and has probably done more for the poor than any other in our time as well.  This, despite claims a dramatic concentration of power and open disregard for basic human rights guarantees by such notable organizations as Human Rights Watch.

With that said, until Chávez arrived on the scene, Venezuela had been awash with oil resources for over half a century but the spoils the richest industry on earth had still escaped the people who inhabited its land.  It was not until he elected in 1998 that this was used for the public good of most Venezuelans.  Yes, oil and all natural resources are public goods, not commodities or political weapons.   Previously, Venezuela had served only to enrich a small elite and ensure cheap oil supplies to US multinationals.

Chavez inherited a country where over half the population lived below the poverty line.  In fact, as of 1995, 75 per cent were in poverty and in the 25 years prior to Chavez being elected, the income per head in Venezuela was actually falling. During the initial years “Plan Bolivar”, Chávez’ social and economic program, thousands of schools, hospitals, clinics, homes, churches, and parks had become revitalized. Over two million people received medical treatment. Nearly a thousand inexpensive markets were opened, over two million children were vaccinated, and thousands of tons of trash were collected, just to name a few of the program’s results.

According venezuelanalysis.com, by the Chávez government developed programs that focused on an overall macroeconomic policy for alleviating poverty. The most important elements of this plan were to reduce inflation, diversify the economy, and increase non-oil revenues. These were goals of previous regimes but almost all had failed.

Perhaps one of the greatest advances has been the development of free national health service, something we still shy away from here in the United States, carrying out 300 million consultations reportedly saving over 120,000 lives.  The NHS was praised by the World Health Organization last year.

The broad outpouring for Chávez last week shows the strong support for the improvements in social conditions for the country’s poor under the democratically elected president.  His credits include a halving of the poverty rate, although it remains higher than the South American average.

It’s Chávez’ use of oil revenues that interests me most.  While I am no fan of the use of oil or any other fossil fuels as a  source of energy, Chávez energy policies were commendable to the extent that he directed oil revenues to lift the quality of life for millions of Venezuelans.  Venezuela is one of the world’s largest exporters of crude oil and the largest in the Western Hemisphere. The oil sector is of central importance to the Venezuelan economy. As a founding member of the Organization of the Petroleum Exporting Countries (OPEC), Venezuela is a high profile member of the global oil market.

The Venezuelan crude basket is a reference price based on an average of all crudes handled by the national oil company, Petroleos de Venezuela.

Venezuela contains some of the largest oil and natural gas reserves in the world. It consistently ranks as one of the top suppliers of oil to the U.S.  These oil revenues account for over 90 percent of the country’s earnings and are based for the most part on exports to the US. He used these earnings to fund various social assistance programs for the poor.

Much of the Chávez método to address economic inequality has been through redistributive programs in land reform and social programming. This has included food, healthcare, and education to improve economic, cultural, and social conditions. In 2003, the Venezuelan government created Mission Mercal, a chain of state-owned grocery stores, selling staple foods at 39% below market value, buying 40% from small or medium sized domestic producers.  Perhaps the United States can learn something in this approach when it comes to alleviating our rampant condition of “food deserts”.

In his 2009 documentary which premiered at the 2009 Venice Film Festival, South of the Border Oliver Stone attempted to vindicate Chávez as a leader who has been wrongly portrayed as an authoritarian caricature 2000 miles south of the Rio Grande.

In the film Stone addresses free-market economic policies, the approaches of the International Monetary Fund, and their failure to correct Latin America’s chronic income inequality. The film suggests that financial calamities such as the Argentine peso collapse of 2001, combined with Latin suspicions of U.S. drug-eradication efforts and resentment over the selling off of natural resources through multinational companies, have contributed to the rise of social-democratic leaders across the region, not just in Venezuela.

Right or wrong, Stone’s assessment captures the face of a South American leader, crude to many Americans but light and sweet to those whom he helped escaped equatorial depravity.

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