Globalaffairs

Issue 7/February-March 2008
By Rafael Vanegas

After the Second World War the new world re-composition was very important. International system actors changed definitely, powers such as Germany, France and England stopped being powers and other countries in the path of being powers became powers. This is the case of the USA, who played an important role in the reconstruction of the destructed Europe and the USSR, a country that emerged as a new power.

The new international system composition was bipolar, the EU and the Soviet Union were hegemonies. In this new world order it was a media and ideas war: the Cold War, a conflict that provoked very important world changes. This conflict was developed not only in Third World countries but also Latin America meanwhile the Soviet Union was trying to expand its ideas in the region and the USA was trying to impede the socialism extension. For this reason, Latin America had a period of high instability because powers were looking for strategic allies to accomplish their purposes. In this sense it was clear how the Soviet Union was helping new illegal groups for expanding its ideas, being Cuba the main base in Latin America and therefore provoking a great instability in the region, especially in Central America, where several internal conflicts took place.

Likewise, the USA who was doing the same in South American lands at the same time. American strategy was to give money to countries – those that could make the USA vulnerable - and promote coups for restoring country principles, most of the countries ended up being dictatorships. The case of Chile in the 70’s is a clear example of this situation.

In this media war it was patent how Latin American production systems were not being used in the best way because the economy base was the agriculture and most lands were properties of few people therefore the region had much poverty. Despite development plans were against poverty at that time, they were ineffective in practice because political systems were favouring specific personal interests who were changing the direction of these countries.

Due to those bad practices, it was evident that economic plans such as the ECLAC (Economic Commission for Latin America and the Caribbean) were inefficient; on the other hand, Latin American countries accumulated a great external debt, this one nowadays is impossible to pay for a large number of poor Latin American countries.

After the end of the Cold War, the whole world was in a transition period that in this region meant the way to democracy and decentralization of state-owned companies that caused great corruption which is still looting Latin American countries treasuries.

Resulting from these events, a populist movement emerged in Latin American land that was against governments and brought hope to peoples counteracting somehow corruption in that time full of anxiety.

A bearer of this hope in the region is the current president of Venezuela, Hugo Chavez. This president was elected the 2nd February 1999 to give hope to thousands of Venezuelans who want to overcome poverty and end long-lasting corruption – the President Carlos Andres Perez was removed from power for corruption-. In his power arrival, Chavez managed a set of reforms needed to implement his government plan, for example a constituent assembly approved by referendum (70% of citizen votes) therefore he obtained enough support to continue his government.

In these reforms it was the called Land Law that was against land accumulation by a small percentage of the population. A large amount of land was brought by the state even being unproductive thus helping a large number of farmers to improve standard of living and fulfilling basic needs. This law was hardly critiqued by the opposition because it violated citizen private property but it was a way for the government to control capital accumulation, a measure that could strengthen an economy primary sector as the agriculture.

The Petrol Law was an important card played by President Chavez when he nationalized petrol and removed the control of the precious hydrocarbon from transnational companies (TNC) because such companies were getting the most benefit percentage – more than 70% - only a small 30% was for the country. Since the Petrol Law percentages changed, 80% for the country and the rest for transnational companies.

The background of Chavez’s policies is petrol because due to petrol he has a power for implementing all his government plans, these are ambitious and are social development focused as Chavez stated in Clarin journal to the journalist Eleonora Gosman “ we have trebled health budget and we have an educational system where today 50% of Venezuelan population are studying. We have an 800 million dollars plan for equipping hospitals with high technology; 1000 million for an iron and steel plant; we invest in gold and diamond mines and 1000 million are for roads, railways and tunnels. In total, more than 5000 million dollars a year invested in this kind of programs”.

With companies’ nationalization, which were administrated by state corrupted governments sometime, the government increased public spending and bureaucratic jobs. This balances the position of Venezuela in petrol agreements with other countries and boosts the creation of regional blocks that according to President Chavez is the only way for fighting imperialism represented by the USA.

In his foreign policy, the main project for Chavez’s government is the ALBA (Bolivarian Alternative for the Americas) that is fairer than the FTAA because it is against capitalist plans of the USA. The ALBA is a very important project for Venezuelan government because it gathers region countries and it helps to balance all markets bringing joint development in the region.

Within ALBA there are other important projects for targets consecution, such as the South Bank proposed by Chavez that could be implemented before July which will bring autonomy for the region for managing its economic structures and financial flows and it will remove power from the World Bank and the International Monetary Fund which are the only organizations that can implement economic reforms and give loans for such projects. This bank will be mainly financed by Venezuela and members of MERCOSUR.

Apart from this, the government of Chavez has financed projects for Caribbean countries regarding infrastructure and governmental agreements for petrol sale without additional costs; also he has purchased Argentinean bonds for helping the country to pay its external debt.

The problem of this issue is to establish to what extent Chavez’s policies are self sustainable for his government, his foreign policy targets and taking into account his petrol benefits to what extent his growing obligations within his country and aboard are self-sustainable. To what extent his actions are viable in a future where he could have the chance to acquire elements for Venezuela becoming a power and thus influencing the weakest nations for supporting his government policies.

In terms of self-sustainability we can realise that his policies and interventions bring uncertainty that he uses in market, keeping high petrol prices for maintaining self sustainability needed for continuing his governmental projects and also his block projects.

This is a very risky game played by Chavez’s government, he does not take into account the interdependence of the region with world powers and the potential market domino effect due to petrol prices variations; he could change from being the ideological leader to villain for the lack of prevention resulting from being dependent only on natural resources, which could play him up in the future.

Rafael Vanegas
Journalist

Global Affairs is not liable for author’s opinion