Threatening Democracy in Caracas

Threatening Democracy in Caracas
By Thomas Riggins




The essential nature of the national question in Latin America and the Caribbean is that of national self-determination and the right to pursue independent policies beneficial to the overwhelming majority of the people. It is a struggle for freedom and against US imperialism. (Blade Nzimande, “Imperialism, the Crisis of Neo-Liberalism and the Struggle for an Alternative in Latin America,” The African Communist, No. 159, 2002)




A demonstration in caracas
On April 11, 2002, a US-backed coup was staged in Venezuela in an attempt to overthrow the progressive democratic government of President Hugo Chávez Frías.

To the surprise of the Bush administration as well as the oligarchical right-wing business and banking circles in Venezuela, the coup failed as a result of a split in the military occasioned by the mass mobilizations and demonstrations by hundreds of thousands of Venezuelans in Caracas and other major cities throughout the country.

President Chávez was restored to power within a few days. But even now the country is awash with rumors of a future coup. The press openly talks of the imminent fall from power of the Chávez government and discusses the various problems of “the transition.”

Why this determination to destroy the Chávez government? The Chávez administration is neither socialist nor communist. Chávez is trying to institute bourgeois democratic reforms – equitable land distribution, political and social rights for indigenous peoples, expansion of educational opportunities and health programs for the poor. Over 80 percent of Venezuelans live in poverty.

The small but powerful business class, aided and abetted by a right-wing trade union leadership, had its monopoly of power and privilege broken by the election of Chávez as president in 1999.

Chávez’s political party, Movement for the Fifth Republic (MVR), is a new phenomenon independent of the two dominant bourgeois parties that have largely alternated in power for the last 40 years or so.

Even though Chávez was democratically elected, the fact that he does not represent the pro-US business elite but the overwhelming majority of Venezuelan workers and rural poor, as well as patriotic forces in the military, is seen as a threat. A threat to whom?

Jon Lee Anderson (The New Yorker, 9-10-01), quotes former US Ambassador to Peru (1996-99) Dennis Jett who says Chávez is “the greatest threat to democracy in Latin America, with the possible exception of the FARC (Revolutionary Armed Forces of Columbia).”

Jett states this even though, as Anderson points out, the election was fair, Venezuela has no political prisoners, the press is free and opposition parties openly operate. So what “threat to democracy” can Jett and his ilk be talking about?

The answer comes from Alberto Alesina, an economics professor at Harvard, and Francesco Giavazzi, economics professor at Bocconi University, Milan, and one of the Group of Economic Advisers to the president of the European Commission (European workers: Look out!).

These fine representatives of bourgeois economics published an article, “Latin America’s Never Ending Story” in The Daily Journal (Caracas’ English Language Tory paper) of 8-27-02. Here is what they say.

The problem of Latin American governments is that they “are too large compared with their ability to raise revenue.” So, they fall into debt, have to be bailed out by the IMF, etc., over spend again, and etc. This cycle goes on and on. But why can’t they raise revenue to fund government programs?

What prevents normal taxation is lax tax enforcement, due to corrupt public administration and a bourgeoisie with a well-developed culture of tax evasion. What can be done about this?

Alesina and Giavazzi approvingly discuss the ideas of Domingo Cavallo (the economic genius behind Argentine President Menem’s disastrous economic policies), who concluded that without the taxes (which are going to overseas bank accounts and spending sprees in Miami) “the only way out was to reduce the size of government drastically” [the IMF’s and Washington’s answer to everything].

“If raising income taxes to the standard of industrial economies is impossible [because of the clever tax-evading bourgeoisie] then you must accept a lower level of public services." It is unclear who the “you” are who must accept this, probably the not-so-clever regular citizens. In other words, since the bourgeoisie and its corrupt government refuse to pay or collect even “normal” taxes (and, we are told, it is impossible to do anything about this) then the people have to get it in the neck. It’s only logical.

So you need a radical privatization program and also Cavallo’s “assault on public sector employees with their European style [what a horror] salaries and benefits.”

What other solution can we hope for? Alesina and Giavazzi say, “The problem of Latin America lies in its high level of government spending [not with IMF policies – it takes tax money to feed starving children], the lack of a solid upper and middle class ready to pay taxes to support it, and the ability to produce politicians able to use tax revenues prudently [say, for the military and police and most especially for debt service] and so break the cycle of populist demagoguery.”

So that's “the never-ending story.” The bourgeoisie wants to generate its wealth from the exploitation of the urban and rural workers but doesn’t want to pay taxes to alleviate poverty. You need some ultra-right extremist to run the government and keep the masses in their place, otherwise you get a populist “demagogue.”

This is why Chávez is considered a “threat to democracy.” He actually wants to institute normal taxation rates to fund social programs for the benefit of the majority of the population. Demagoguery stalking the land.

Anderson points out that when Chávez took office he “initiated a vast national development program, the Plan Bolivar, to build roads, schools, hospitals, and low income housing for Venezuela’s poor citizens.” Ambassador Jett must have flipped out!

Chávez also started to deal with tax evasion – the real assault on democracy. With what result? Anderson says that by the year 2000 “more than 200,000 members of the upper and middle classes have emigrated to the United States, Australia, and Western Europe, taking ‘their’ [author’s quotes] money with them. And $8 billion was removed from the country.”

They got to the US just in time for Bush’s big tax cut coming on top of the cutbacks in welfare and other social programs, and to see the embezzlement and tax evasion activities of Enron and other big corporations. At least one country is still following the IMF model for Latin America.

Chávez is a threat for the same reason Cuba is and Allende’s Chile was. If he succeeds, there will be more evidence that a government committed to the needs of working people can survive and prosper without having to kowtow to Washington, the IMF or the World Bank. Another bad precedent indeed.


--Thomas Riggins is book review editor for Political Affairs.