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Venezuela Takes On Oil Multinationals

By Stuart Munckton

12 May, 2007
Green Left Weekly

“Thousands of Venezuelan workers took control of foreign-owned oil fields yesterday as Hugo Chavez stepped up his battle with Washington in a new wave of nationalisation and an announcement that the country was leaving the World Bank and the International Monetary Fund [IMF]”, reported the British Guardian on May 2.

The paper reported on the most significant of the new moves by the pro-working-class government of President Hugo Chavez to “deepen” the pro-poor revolution it is leading in order to create “socialism of the 21st century” — the forcing of the foreign oil giants operating in the Orinoco Belt, believed to hold the world’s largest reserves of crude oil, into joint ventures with PDVSA that will give the state-owned oil company at least 60% control. The investments of ConocoPhillips, Chevron, Exxon Mobil, BP, Statoil and Total in the area amount to US$17 billion.

Chavez gave oil corporations until May 1 to cede control. All but ConocoPhilips struck agreements handing a majority of shares over to PDVSA. The Guardian reported that oil workers began gathering at key installations on the evening of April 30. The paper reported: “Amid jubilant scenes, oil workers wearing red T-shirts emblazoned with ‘yes to nationalisation’ moved into the giant Orinoco basin shortly after midnight …”

The moves follow the bitter, and ultimately successful, battle to bring PDVSA under full government control in 2003. Previously, the nominally state-owned industry was run by a corrupt elite that, before Chavez’s election in 1998, had begun preparing for the industry’s privatisation. Only 20% of PDVSA’s revenues were being handed over to the state.

Despite being the largest oil producer in Latin America, when Chavez was elected the majority of Venezuela’s population lived in poverty. The PDVSA elite allowed private oil corporations access to Venezuela’s oil reserves in the 1990s under a policy known as the “opening”.

As well as imposing a series of tax and royalty hikes on oil corporations operating in the country, last year the government forced 32 private operations into joint ventures with PDVSA that gave the company a majority share. Corporations that failed to come to an agreement were forcibly taken over.

The government has used the growth in oil revenue, a result of high prices and increased government control of the industry, to fund its social missions, which are aimed at redistributing wealth and empowering the poor. Pro-poor policies, which are at the heart of the Bolivarian revolution led by Chavez, have resulted in a reduction in the official level of households living in poverty from just under 50% at the time of Chavez’s election to 37% by 2005.

Following his re-election in December, with the largest number of votes in Venezuelan history and on an explicit platform of constructing socialism, Chavez insisted that strategic industries need to be under government control, and that “all that was privatised, let it be nationalised”. Venezuela’s largest telecommunications company and six electricity companies have since been nationalised.

While angering the US government and Venezuela’s corporate-owned media, such policies are strongly supported by working people. Reuters reported that at midnight on May 1, workers who had gathered for a symbolic event welcoming the takeover “exploded into a frenzied celebration after a New Year’s Eve-style countdown, dancing until the early dawn hours with some standing atop a pipeline that runs toward the installations”. reported on May 2 that PDVSA oil workers at the event symbolically swapped their traditional blue helmets for new red ones — the colour of the Bolivarian revolution.

Speaking to oil workers on April 30, energy minister Rafael Ramirez said: “Welcome to the new PDVSA. Here we begin the real petroleum nationalisation.” He explained, “The existing oil reserves in all national territory … belong to the republic and are goods of the public domain. Venezuela is exercising its right to administer its natural resources for the benefit of the people.” reported that Chavez addressed a gathering of 40,000 oil workers and supporters at the Industrial Complex Jose Antonio Anzoategui, on May 1 to celebrate the takeover and May Day, the international workers’ day. Standing in front of a banner reading “Full oil sovereignty. Road to socialism”, Chavez said: “Finally, today we have buried the 10 years of petroleum opening [to private corporations … Imperialism dominated our basic industry, our energy resources and our natural resources for a long time. That is over today.”

This year’s May Day further signalled the degree to which the Chavez government is attempting to deepen the revolutionary process in favour of the poor and working people. reported on May 1 that the previous evening Chavez announced an increase in the minimum wage of 20%, bringing it to $286 per month, the highest in Latin America. The minimum wage has been repeatedly increased under Chavez; it was $183 per month when he was first elected.

Chavez explained that previously, conditions imposed on Venezuela by the IMF required low wages. Responding to criticism from the right-wing, opposition-controlled Confederation of Venezuelan Workers that the increase was insufficient, Chavez pointed out that public service workers also receive food stamps worth $209, making the real minimum wage for public sector workers $495 per month.

A May 2 article reported that the government also used May Day to announce plans to slash the working week from 44 hours to 36 hours by May 1, 2010. A commission has been established to draw up a new labour law, with shortening of the working week a key component. According to labour minister Jose Ramon Rivero, the law would also protect household labour, require bosses at firms with more than 20 workers to provide meals, and promote the organisation of socialist education classes in workplaces. also reported that Venezuela was officially withdrawing from the IMF and World Bank. The Chavez government has been an outspoken critic of the institutions, which force neoliberal policies on Third World countries that further impoverish the population. Venezuela has initiated, with the support of Argentina, Bolivia, Ecuador and Brazil, Bancosur — the Bank of the South. Bancosur aims to provide an alternative source of cheap credit for Third World countries without imposing harsh conditions.

Chavez announced that Venezuela finished paying off its debt to the World Bank and IMF on April 13, and is demanding the IMF pay Venezuela the $3.9 billion it has invested in the institution. Chavez said: “We do not need to go to Washington, to the [IMF] nor to the World Bank. We will withdraw. I want to sign the order this evening and ask that they return what is owed us.”

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