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Petro-Politics Fueling Venezuelan Crisis
Posted: Tuesday, December 31, 2002

By Stephen Kangal M.O.M

An appreciation of the internal dynamics of the tri-dimensional configuration of the current petro-politics being conducted by the protagonists in Venezuela is fundamental to an understanding of the current month-long crisis/4th strike that has hitherto virtually paralysed the oil-rich country.

Petro-politics underpins the strategies adopted both by Chávez and the Opposition (Coordinadora Democratica) that includes the private press/ electronic media, the Unions (CTV), The Fedecamaras (Caracas Chamber of Commerce), PDVSA and led by Carlos Ortega. PDVSA, the Venezuelan oil monopoly is pivotal to the anti-Chávez strike action. It earns 80% of Venezuela's foreign exchange earnings and contributes 50% of Government's revenues.

Petro-politics is the common thread underlying the escalation of the crisis and therefore serves as an instrumental and appropriate tool of crisis analysis and understanding. It is manifested in and determines the nature of the daily action-reaction/stimulus-response that is unfolding simultaneously at the national, regional and international levels. In fact the confrontational nature of the petro-politics is fueling the crisis. It is both the cause of as well as the short and long- term solution to the political situation in Venezuela.

The National Dimension

President Chávez has since assuming the Venezuelan Presidency in 1998 prosecuted his own genre of strident tri-dimensional petro-politics to foster and promote the viability of his own reformist national social agenda geared to reduce inequity and poverty among 80% of Venezuela's 24 million that supported his Bolivarian Revolution so overwhelmingly (56% of votes) that he eliminated the COPEI and Accion Democratica parties in the 1998 elections. Chávez's commitment to achieving a strong and viable OPEC predicated, inter alia, on Venezuelan determination to adhere rigidly to established OPEC production quotas was responsible for OPEC oil price stabilisation much to the dismay of the Americans who have a penchant for cheap oil irrespective of the long term high costs.

Internally he set himself the task introducing more Government controls by reforming the operations/management of Petroleos de Venezuela (PDVSA) that were controlled by the traditional middle-upper class elitist oligarchy. They siphoned away 80% of PDVSA's revenues with only 20% going to the State. The remaining dissident management with workers of PDVSA itself is using an oil-shutdown, aided by crews of tankers, trucks joining forces with the Opposition Chilean-style, as a weapon in Venezuelan petro-politics designed to remove Chávez prematurely and unconstitutionally from the Mira Flores Palace. Workers of PDVSA have also defied a Court Order to return to work.

The President of PDVSA, Ali Rodriguez said of the petro-politics: "What can be gained by using PDVSA for an action that is clearly political"? (Newsday Dec.2, p. 57)

They have also picketed the T&T Embassy in Caracas in retaliation for T&T's state-owned Petrotrin undertaking to ship gasolene to Caracas on New Year's Day.

Venezuelan petro-politics has caused oil production to plummet from 3m bpd to 300,000 bpd and a revenue loss of $50m daily ($1.3 bn so far) causing Venezuela to import its first shipment of 520,000 barrels of gasolene from Brazil (Express 27 Dec, p.4). It is unable to supply regional partners including Cuba (Express 23 Dec., p.4) and most Caricom countries under the Caribbean Oil Facility that was itself an expression of Caribbean petro-politics designed to up-stage T&T and enhance Venezuela's influence in the Caribbean.

Chávez has instituted military control over most of the operations of PDVSA (30,000 of 40,000 employees support the strike), purged some anti-Chávez elements from senior management and will enforce effective 1 January a Hydrocarbon Reform Law to wrest control of PDVSA from the parasitic oligarchy to contribute more oil revenues to the national coffers to fund his social initiatives. In the aftermath of April 12 he also purged the army of potential opponents that explains why the military now supports his regime. This virtually rules out a military coup at present since the army chief also accused PDVSA employees of economic sabotage.

In fact the stubborn unwillingness of the Opposition elements to wait until the August 3 mid-term constitutional referendum is due is influenced by the fact that the economic position of Venezuela can improve from high oil prices following an Iraqi invasion and thereby enhance Chávez's political fortunes. Venezuela's economy shrank 6% last year, unemployment is at 17 % and inflation at 30%.

The Regional Dimension

Venezuela's regional petro-politics symbolised notably by its Caribbean Oil Facility offering oil on concessionary terms to Caribbean/ Central American countries was instrumental in galvanising diplomatic support for the embattled Chávez regime both within the OAS and bilaterally. The accession to the presidencies of two oil-producing neighbouring countries, Brazil and Ecuador by populist, leftist leaders Lula De Silva (1 Jan/03) and Lucio Gutierrez(10 Jan/03) respectively has made the overthrow of the Chávez regime more untenable (Guardian Editorial, Dec 9., p.24). The OAS Resolution passed 32-0 with solid Caribbean support backing the legitimacy of the Chávez regime is not only democratically inspired but also a manifestation of Caribbean petro-politics.

Shipments of 300,000 barrels of gasolene to be effected on New Year's Day from Petrotrin (Sunday Express 29/12, p.5) as well as food supplies received from the Dominican Republic and Colombia to be paid for in Venezuelan oil are indicative of regional solidarity with Venezuela as well as of strategic alliances.

The International Dimension

The beginning of hostilities against Iraq would appear to be conditional on the resolution of the strike at PDVSA since together they supply 5.5 million bpd and can trigger an oil price in excess of US$ 40.00 that will cause havoc in the world economy (The Probe, 29 Dec., p.4). Any attempt to ignore this reality of the petro-politics that can be catastrophic to developed and the developing world alike will be deemed extremely irresponsible on the part of the UK and USA as well as insensitive to the notion of the emerging globalised village.

It is to be noted that OPEC has issued a statement supporting the Chávez regime (Newsday 28 Dec., p. 9). The Allies would appear to be in a dilemma since no military action can responsibly be initiated against Iraq in the face of a closure of Venezuelan pipelines. Iraq and Venezuela contribute 5 million bpd of the 76m world- oil market. The US has released crude from its Strategic Petroleum Reserve to make up for dwindling supplies (Guardian Dec. 24, p. 13).

In fact US support for the removal of Chávez both in April and at present is closely linked to securing reliable supplies of Western Hemispheric energy in the face of the volatility of supplies from the Middle East and Chávez's own leftist anti- US stance. Removal of Chávez is the target of US petro-politics at the international level with no regard or precedence being accorded to the democratic basis of Chávez's election to the presidency. This reminds one of a similarity with the 1973 overthrow of democratically elected Salvador Allende of Chile with CIA complicity.

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