Venezuela: Economic Crisis Sparks New Measures, Structures

Faced with
the growing impact of the global economic crisis, Washington's intentions to
establish seven military bases in Colombia and growing challenges in solving
structural problems, Venezuelan President Hugo Chavez reaffirmed the need to
build a new state.

Chavez
explained: "We have inherited a capitalist state that serves the interests of
the bourgeoisie and is still penetrated by interests contrary to the
revolution."

"We need
to carry out an internal shake up of the government structures", Chavez said on
September 19 during the second Expanded Council of Ministers meeting, which
also involved governors and mayors aligned with the Bolivarian revolution.

The
meeting was called to discuss a series of new measures the revolutionary
government plans to announce in coming weeks to confront some of the challenges
it faces on the economic, political and social fronts.

In all, 54
new measures have already been approved by his cabinet.

Global Economic Crisis

New
figures released by the Central Bank of Venezuela (BCV) showed the national
economy contracted by 1% in the first half of the year, including a 2.4% drop
in the second quarter.

The
pro-poor and pro-development economic measures taken during the past 10 years
of the Chavez government have ensured that some of the impact of the global
economic crisis has been lessened, particularly in comparison with other
countries.

However,
it is becoming clear that Venezuela is being negatively affected by the global
downturn.

This has
also been felt in the decline in manufacturing industry (down 8.5%), among
others, and the slight rise in unemployment, from 7.3% in March to 8% in
August.

While
pro-capitalist economists are claiming the economic crisis is coming to an end,
Chavez said: "No one can say that we have already passed through the worst of
the crisis of capitalism."

He said the
worst could still lie ahead.

Chavez
said the insistence of the US government on imposing the same economic model
"that generated the crisis" was making the situation worse.

Chavez
pointed to the military coup in Honduras and the seven new US military bases
planned in neighbouring Colombia. He said these represent "the great threat of
the empire and its pretension to continue imposing on us a model which they
insist on despite the misery it has caused".

In
Venezuela, the Washington-backed right-wing opposition continues to ramp up its
propaganda campaign, using its control of the private media, against the
government and Venezuelan people.

In most
cases, the propaganda is based on lies and distortions. However, in some cases
it takes advantage of weaknesses in the revolution resulting – a result oif
bureaucracy, corruption, internal power struggles and attempts to stifle
popular participation that pervade the old state structures.

Chavez
said an "emergency situation" existed in the health sector. He said 2000 local
medical clinics that were part of Mission Barrio Adentro, the popular
government-run program that provides free health care to the poor, were no
longer functioning due to "neglect on the part of everyone".

He warned
that "the [US] empire knows that elections will be held next year. They are
seeking a majority in the National Assembly.

"They will
try to weaken us. They will exploit to the maximum our inefficiencies.

"They are
going into the barrios (poor neighbourhoods). They are trying to create
movements to cohere support … we know they are capable of anything: buying
votes, blackmail, trickery."

Popular
support for Chavez remains extremely high. However, there is growing evidence
that, after 10 years of the revolution, tiredness and discontent with the lack
of advances in critical areas could mean that support for Chavez does not
translate into similar support for pro-Chavez candidates in parliamentary
elections.

The
opposition, which boycotted the 2005 National Assembly elections, will go into
the poll with control of a number of key governorships and a vote that has
risen in recent years, particularly in the larger cities.

There are
concerns they could win enough seats to sabotage the work of the assembly.

New State

In a July
25 National Assembly speech, Chavez raised the alarm about the failure of his
government to act on decisive issues, such as health and crime, and the impact
it was having on support for the revolution.

Some of
the social missions created by the government – with the active participation
of the people – to tackle problems in the areas of health, education and
housing have begun to falter due to neglect and flagging participation.

The social
missions emerged on the back of two important events.

Firstly,
the April 2002 defeat of a US-backed military coup through a popular uprising
that included important sections of the military.

Secondly,
the powerful mobilisation of the workers, communities and the armed forces that
defeated a two-month bosses' lockout (including shutting down the state-owned
oil industry by its corrupt management) from December 2002 to January 2003.

Defeating
the lockout meant the government won control over the state oil company,
allowing it to use oil revenue to set up the social missions. By organising the
masses to help run the missions, the government was able to bypass the decrepit
and corrupt old state structures that had proven incapable of meeting the needs
of the people.

However,
several years down the track, these new emerging structures have begun to be
"infected" by the "old state structures", Chavez warned on August 25.

"We cannot
allow the new to be infected … its failure will mean the end of the
revolution."

That is
why "we have to finish off demolishing the old structures of the bourgeois
state and create the new structures of the proletarian state".

At the
September 19 meeting, Chavez called on the government to revitalise the social
missions – this time within a single system with a single fund to ensure the
resources reach the missions. Chavez said right now, "there are many entities
responsible [for different missions], something which is holding back the
process".

"The
missions have to be instruments for the acceleration of the creation of the new
state", and therefore must not fall into the hands of "the old bureaucracy".

In order
to reinforce Mission Barrio Adentro, more than 1000 Cuban doctors and 213
Venezuelan doctors trained in Cuba, as well as 257 specialists in intensive
therapy, endoscopy and other areas, will arrive in Venezuela in October.

They will
join the almost 30,000-strong team of Cuban doctors, specialists and health technicians
already working in Venezuela.

Chavez
emphasised on September 17 that these plans had to go hand-in-hand with the
strengthening of popular power organisations.

"The
communal councils have to reactivate and commit themselves to this
revitalisation … because the role of the communes and communal councils are
vital for consoliding its success."

At the
cabinet meeting two days later, Chavez said that the communal councils, which
group 200-400 families in urban areas and 20-50 in rural areas to solve the
problems of local communities, "have to be a cell of a bigger body that is
called the commune".

Chavez has
constantly referred to the communes as the fundamental building blocs of a new,
revolutionary state.

Chavez
announced the transfer of almost US$57 million for more than 330 projects
decided on by local communal councils and communes.

As part of
the government shake up, Chavez announced the creation of six new vice
presidencies. These positions would each work to improve the coordination of
government policy and ministerial action in the areas of social and political
issues, the financial and productive economy, territorial development, and
defence.

A new
Council of Revolutionary Ministries has also been formed, involving the six
vice presidents and a permanent secretary. It will involve an executive
roundtable – the finance and planning ministers, the first vice president and
Chavez – whose aim will be to speed government action by cutting through bureaucratic
obstacles.

Chavez
also requested a law be drafted and presented to the National Assembly to
create a Federal Council of Government involving all ministers and governors.

"The
opposition governors will be able to come", he said.

"As of now
we invite the opposition. Instead of recruiting paramilitaries and enacting
plans to destabilise the government, come to the Bolivarian Federal Council,
where the people govern."

Economic Measures

Chavez
indicated which direction the economic measures will be likely to head when he
presented a number of them at the September 19 meeting.

These
include the creation of a new ministry and the Venezuelan Public Banking
Corporation (BCV) to restructure and regulate the banking sector. With the
completion of the government buy-out of the Bank of Venezuela, the state now
directly controls around 16% of loans and 24% of deposits.

Eight
public banks, which until now have functioned with autonomous boards of
directors and no coordination between them, will come under new banking
corporation.

Chavez
demanded stricter regulation of the private banking sector, and noted this
sector "continues, almost in its entirely, to not comply fully with its role of
financial intermediary".

He called
on governors to present productive projects for the creation of "mixed
companies between the national state, the workers and the regional states in
order to continue creating a new public sector based on social property".

In line
with this proposal, Chavez said the cabinet had decided to create, together
with the BCV, a fund to finance and support all initiatives of the new
companies of social property.

A Special
Plan for Employment has also been entrusted to the minister of infrastructure,
housing and public works, and the minister of science, technology and medium
industry.

The
National Assembly has announced plans to approve a reform of the labour law by
the end of October. Pro-worker changes to be discussed include the reducing the
workday, job protection, workers' councils and banning labour-hire practices.