Puntofijismo as a determinant of Bolivarianism

Julia Buxton
University of Bradford
[email protected]
Paper presented at the 2nd Global International Studies Conference, Ljubljana, Slovenia 2008.
Draft version.
Julia Buxton, University of Bradford.
Venezuela has produced the most well-known and controversial neoliberal alternative in South
America. Not since the Cuban revolution of 1959 has the tenets of the hemisphere’s political
economy been so fundamentally challenged as under Hugo Chávez’s Bolivarian Revolution.
Bolivarianism is a complete repudiation of the free trade, free market principles and policies that
shaped South America in the 1980s and 1990s; of the philosophical underpinnings of the
neoliberal model; and of the ‘agents’ of its adoption and institutionalization across the region –
the United States government, the World Bank and the International Monetary Fund (IMF). In
the political and governance realm, Bolivarianism eschews liberal democracy and formal
institutions, in favor of routizined popular participation (termed protagonistic democracy) and
informal, partisan and personalized modes of state management. The end-goal of the Chávez
administration is to create Twenty First Century Socialism in Venezuela, which is to be realized
through the transformation of the state’s role in the national and global economy, and of the
relationship between the state, government and Venezuelan citizens.
This chapter explores what appears to be a dramatic change in paradigms of development and
governance in Venezuela. It discusses the shift away from orthodox economic policies that were
pursued in the 1990s to the heterodox course of the 2000s and considers the accompanying
changes in the political realm, outlining how the move away from liberal democracy that had
prevailed since 1958 to protagonistic democracy impacted on modes of political representation
and institutional structures.
The chapter adjudges Bolivarianism to be a truly transformative model, one that has the potential
to represent a viable neo-liberal alternative on account of two Venezuela-specific factors; the
country’s unique status as a major oil exporter and the pre-Chávez political and institutional
legacy. These provide the financial resources and created a political culture conducive to a
radical reshaping of Venezuela’s political economy and the embedding of Twenty First Century
Socialism. However there are serious obstacles to the delivery of Bolivarian policies and
commitments, and this calls into question the viability of the Revolution and prospects for its
These Venezuela specific characteristics: oil wealth and popular antipathy to the pre-Chávez
party and political system, are also used to explain one of the great ironies of political
developments in South America – that Venezuela, a long standing democracy with a history of
centrist government, should have produced the most stridently anti-neoliberal administration on
the Continent in the 2000s. Venezuela had only fleeting exposure to economic orthodoxy, and
even then (dated crudely from 1989-1992 during the Presidency of Carlos Andrés Pérez and
1994-1996 during the Rafael Caldera administration) stabilization and structural adjustment
measures were haphazardly applied (Naim 1993). And yet this appears to have generated a
powerful backlash that was manifest in support for Chávez and the subsequent direction of, and
popular support for, his government.
In order to understand the popular appeal of Chávez and his Bolivarian model, the chapter
approaches Bolivarianism as a response to Puntofijismo, Venezuela’s limited model of
democracy that prevailed from 1958 until Chávez’s election in 1998, and not neoliberalism.
Venezuela experienced a very specific, domestic configuration of crisis – profound popular
alienation from the Punto Fijo parties and political system. This did run congruent with brief
neoliberal experiments in Venezuela in the 1990s. However the crisis of Puntofijismo predated
the flirtation with orthodoxy and it persisted when heterodoxy was resumed in the late 1990s.
The influence of Puntofijismo over the structure and orientation of the Chávez government is
understood here in both historical and temporal terms. Not only is the legacy of Puntofijismo
important to an of understanding the Bolivarian revolution, the day to day actions of Punto Fijo
actors during the Chávez presidency proved to be a decisive influence over the direction taken by
the Chávez government. In respect of the latter point, attempts by the Puntofijista opposition to
remove Chávez from power forced a radicalization of the government, with the strong rise in the
international oil price financing a more expansive and revolutionary Bolivarian project than was
envisaged in 1998. As such, Venezuela’s Bolivarian post-crisis alternative emerged very much
by default and not design, and was premised on anti-Puntofijismo not anti-neoliberalism.
To Third Way Socialism From Puntofijismo: Changing Paradigms of Development and
Governance in Venezuela
Before addressing the post-crisis policies that have been introduced by the Chávez government it
is helpful to identify the actual crisis that Chávez inherited when first elected in 1998. In
Venezuela, an oil ‘rich’ country, 20.6 per cent of the population was living in extreme poverty.1
The price of Venezuelan oil had fallen back to $10.6 per barrel (p/b), forcing the outgoing
Instituto Nacional de Estadística
government of President Rafael Caldera (1994-98) into $6 billion public spending cuts.
Venezuela ranked below the regional average in terms of government investment in health and
education and combined with moves toward privatization of welfare and social security, this had
created a social apartheid of coverage and opportunity that divided the rich and poor. The
country’s external debt was equivalent to 25.5 per cent of the gross domestic product and nearly
half of the economically active population was employed in the informal sector, where they
worked without social security protection and for less than a third of the remuneration of formal
sector workers.2
Chávez took power at the end of a decade that had seen a catastrophic deterioration in living
standards – a period that ran parallel with the application of neoliberal economic policy
measures. But the crisis of the 1990s had deeply rooted political dimensions. Indicative of the
predominance of the political over the economic, Chávez was elected on a platform of radical
political change and specifically his pledge to overhaul the Puntofijistas and refound the
Republic in line with the vision and principles of the Independence hero Simon Bolivar. There
was little reference during his presidential campaign to neoliberalism – or economic policy in
general, only a commitment to fiscal prudence and repayment of the foreign debt. The British
Prime Minister Tony Blair was actually cited by Chávez as a role model, and the incoming
Venezuelan president upheld Third Way Socialism, in which the state only intervened to
compensate for the failures of the market – as a model to be copied (Gott 2005). Indicative of the
popular hostility to established politicians and political parties, Chávez was elected as a political
outsider without ties to the dominant parties, the Social Democrat Acción Democrática (AD,
Democratic Action) and Christian Democrat Comité de Organización Política Electoral
Economist Intelligence Unit Country Report
Independiente (COPEI, Political Electoral Independent Organization Committee) that had
governed Venezuela since 1958 and he won the election on the back of the collapse of the
presidential campaign of another non-traditional candidate, Irene Sáez, a former Miss Universe
and mayoress of Chacao municipality. Underscoring the primacy of the political rather than
economic determinants of Venezuela’s crisis period, Sáez supported neoliberal approaches. This
did not undermine her popularity. Her three year lead in opinion polls only collapsed when she
accepted the backing of COPEI and the AD in the 1998 presidential race (Buxton 2000).
Opinion poll surveys reflected profound popular disaffection with national government, state
institutions and the main political parties, AD and COPEI. Traditionally high levels of partisan
affiliation and identification with the two parties had collapsed amid perceptions that these
organizations were corrupt and unrepresentative. The parties had ceased to serve as vehicles for
the articulation and reconciliation of group interests and indicative of this, there was a massive
spontaneous popular uprising in February 1989, in which four hundred people were killed by
security forces. The catalyst of the so-called Caracazo uprising was the unexpected
announcement of transport and fuel hikes, in line with a neoliberal lurch under the Carlos Andrés
Pérez government in 1989. But it was the political crisis in the parties and their deterioration as
vehicles for the negotiation and articulation of popular interests that transformed popular
opposition to the price adjustment into a full blown systemic crisis. There were two military coup
attempts in 1992 (one of which involved Lieutenant Colonel Hugo Chávez); Andrés Pérez was
impeached on charges of corruption – a first in Venezuela’s democratic history and the party
system and in the national elections of 1993 the country’s dominant two-party system
fragmented, creating a political environment conducive to the success of a radical, anti-party
outsider in 1998. It was in this context that Chávez’s proposal for a complete rupture from the
Puntofijo system and his pledge to construct a counter-veiling social, political and economic
model was so popular. The following section discusses the Punto Fijo period in order to
demonstrate how it influenced the emergence and evolution of the Bolivarian alternative.
Puntofijismo as a determinant of Bolivarianism
The Punto Fijo state was created in 1958, when leading national actors committed themselves to
a democratic pact that was intended to overcome a post-independence legacy of military
government (Ellner and Hellinger 2002; Levine 1973; McCoy and Myers 2006). The Pact of
Punto Fijo (named after the home of the COPEI founder Rafael Caldera) committed signatories
from the leading parties AD and COPEI, the Roman Catholic Church, the military, business and
the trade union movement, to political restraint and a centrist policy course that provided
subsidies, protectionism and corporate benefits for all sectors committing to the pact. Aside from
the direct material advantages that were offered to Pact signatories and their constituencies, the
pact also built vested political interests into the new democratic arrangements by establishing
party political appointment and control of promotions in the judiciary, the military, the electoral
council and the national bureaucracy. For every AD loyalist promoted, there would be a
Copeyano, thus ensuring the commitments of both main parties to the survival of the new
democratic system.
Aside from the Pact of Punto Fijo, the commanding organizational role of AD and COPEI
enabled the new democracy to be quickly stabilized after a civil-military coup removed the
sitting President General Marcos Perez Jimenez presaging democratic elections (in which AD
triumphed) in 1958. AD and COPEI were intensely hierarchical parties, with power concentrated
in the party elite. Central control was exercised in a ruthless and tightly disciplinarian manner in
order to ensure that the constituencies of both parties (labor and peasants in the case of AD,
business and landholders in the case of COPEI) did not challenge the policy consensus
underpinning the pact. Autonomous civil society organizations were penetrated, controlled and
brought within the corporatist framework of the parties through AD or COPEI affiliated
federations and movements. In politics and government, the AD and COPEI party leadership
worked together to maintain the Punto Fijo commitments and delimit any challenge from third
parties of either the radical right or left. This, combined with a centralized national
administration and an electoral system that worked against minor party political competitors,
enabled the Punto Fijo model to be quickly consolidated and Venezuela lauded as a model for
other South American countries to follow (Levine 1973).
Oil export revenues flowing to the state in the form of taxes and royalties imposed on private
sector operators lubricated Venezuela’s two-party controlled democracy or partyarchy
(Coppedge 1997). The oil revenues provided the fiscal resources for successive AD and COPEI
governments to maintain the cross-class policy consensus of the Punto Fijo Pact and the political
loyalty of their constituencies. Public spending was high after the democratic transition and it
benefitted all social sectors in the 1960s and 1970s. This ‘sowing’ of the oil wealth, channeled
through the parties, structured a triangular relationship between the party controlled state, the oil
economy and the population under which the population accepted an illiberal model of
democracy in exchange for access to the oil ‘rents’, a model one observer termed a “populist
system of reconciliation” (Rey 1972). The launch of a Cuban inspired guerilla insurgency in the
early 1960s by the Venezuelan Communist Party (PCV), which was excluded from the Pact of
Punto Fijo (despite its central role in overthrowing the Perez Jimenez dictatorship), and
disaffected youth sectors of AD, convinced successive AD and COPEI governments of the need
to disperse the benefits of the oil wealth widely and particularly to lower socio-economic groups
and peasants to whom the PCV aimed to appeal. The 1960s saw a major land reform and
redistribution program that benefitted small farmers and an extensive array of benefits introduced
for workers. This social democratic approach was intended to undercut the appeal of
communism. It was very much in line with John F Kennedy’s Alliance for Progress and was a
strategy that endeared Republican and Democrat administrations in the US to Venezuela.
Venezuela experienced strong economic growth in the 1960s and early 1970s as petroleum
revenues, which increased from 28.3 per cent of central government income in 1940 to 65 per
cent by 1965, were channeled through central government spending. Real GDP over the period
1965 to 1980 grew at an annual average of 3.7 per cent. This financed public welfare provision
in line with the Constitution of 1961 and an array of labor and employment benefits. Central
government spending on education tripled between 1958 and 1965, while per capita spending on
health care, sanitation and social security doubled (Coker 1999). The adoption of an import
substitute industrialization model, a Keynesian economic strategy and petrodollar inflows
structured a positive sum game that enabled Venezuela’s party controlled state to avoid the
politically conflictive trade-off between divergent class based interests.
Deterioration and Crisis
In the mid-1970s this virtuous cycle of economic growth and strengthening political legitimacy
went into regression. A number of factors triggered the decline of Puntofijismo. In particular it
was the failure of the parties to ‘evolve’ the Pact combined with chronic economic
mismanagement that undermined the legitimacy of the Punto Fijo state. In political terms, the
heavy centralization around the leadership of AD and COPEI undermined internal democracy,
while the control exercised by the party elite in the selection of party candidates created a web of
corruption, patronage and dependence that eroded the capacity of the parties to represent the
interests of their constituents. Despite the evolution of Venezuelan society and the changing
nature of social demands, internal ideological debates were shelved in order to maintain the
fundamentals of the Pact and the promotion of a young generation of party leaders was blocked
by the old guard. Where intra-party factions emerged, these pivoted around personalities and not
policy (Buxton 2001). Although the parties became progressively detached from Venezuelan
society, social and political alternatives could not breakthrough owing to AD and COPEI’s
control of the electoral system, of the channels for the distribution of the oil ‘rent’ and the
institutions of the Punto Fijo state. In failing to re-address the political agreements in the Pact
after the early consolidation of democracy, the political parties also presided over the gradual
decay of state institutions. Partisan appointments, as set out in the Pact, undermined efficiency,
accountability, transparency and the rule of law. In this institutional and party political context,
there were no functional mechanisms for oversight or ‘checking and balancing’ the executive,
creating an environment in which economic mismanagement thrived.
In the early 1970s Venezuela adopted an expansive model of state capitalism on the back of a
ten-fold increase in the international oil price and following the nationalization of the state oil
company, PDVSA in 1974. However, President Carlos Andrés Pérez (1973-78) overextended the
state’s role in the economy, with the deepening of the ISI model (specifically through investment
in heavy industry) financed through international borrowing. Debt financed development was
predicated on the oil price remaining high, a strategy that proved catastrophically flawed when
the oil price fell back and international interest rates rose sharply at the end of the 1970s.
Venezuela’s calamitous subsequent economic situation was reflected in its debt servicing
position. In 1975 this had represented 4.3 per cent of exports. By 1980, it had climbed to 27.3 per
cent, rising to 45.3 per cent by 1985.
The burgeoning economic crisis of the 1970s revealed overdependence on the oil sector as a key
aspect of the decline of Puntofijismo. Reliance on oil export revenues rendered the Venezuelan
economy extraordinarily vulnerable to shifts in the international oil price. Periods of high prices
created ‘boom’ conditions (1974, 1979, 1981), with the country subsequently falling into
recession when the price fell. Owing to the well documented illusion of prosperity generated by
the oil income, central government made no effort to raise alternative revenue sources, such as
income tax and because export revenues were received in dollars, the Bolivar was constantly
overvalued, rendering non-oil exports artificially expensive and imports cheap (Karl 1997,
Coronil 1997). Successive Punto Fijo governments failed to correct these distortionary impacts
and this had severe structural implications as the economy acquired a highly oligopolistic
structure. Agriculture was progressively run down leading to reliance on cheap imports to cover
basic food demand, while fuelling massive rural to urban migration. Whereas 35 per cent of the
labor force was employed in agriculture in 1960, by the early 1980s this had fallen to 13 per cent,
with 80 per cent of the population located in urban areas. This new and marginalized urban
sector, and their needs, was not addressed by AD or COPEI. The parties had no mechanisms for
incorporating those located in the barrios (slums) and autonomous grassroots representation of
barrio communities was impeded by the heavily centralized institutional and electoral system. It
was these sectors that were to become the core support base of Chavismo.
Small and medium industries struggled to expand in the uncompetitive economic environment
and in the face of competition from a small circle of politically connected large business families
(the oligarquia in the language of the Chavistas: Chávez cited in Guevara 2005) who dominated
access to state credit facilities and subsidies. These powerful business groups, such as the
Cisneros family (Gott 2006) were able to progressively consolidate control of industry and
agricultural landholdings that became unprofitable for small entrepreneurs and farmers to
sustain. Employment generation in this context was a severe problem and particularly given the
dominance of the petroleum sector, a capital rather than labor intensive industry. The absence of
investment in a national infrastructure was an additional handicap, with the lack of a rail network
or paved highway system outside of major cities serving as an impediment to the development of
backward linkages in the economy and the evolution of efficient national distribution systems.
The heavy industrialization drive that was the centre piece of the Andrés Pérez development
strategy in the 1970s did generate some employment; but the sector was bloated, inefficient and
permeated by corruption as political appointees who oversaw the autonomous industrial and
regional development zones ciphered state investment into private overseas accounts – a problem
that intensified in the 1980s amid expectation of a currency devaluation. When currency
devaluation did come, on “Black Friday” in February 1983, the wealthy and politically
connected who had advance knowledge were able to convert their savings to dollars. The poor
and politically unconnected were left exposed. For one observer Black Friday signaled “the
beginning of not only a material but also an ideological crisis from which the country would
never recover” (Hellinger 2003). The populist system of reconciliation had imploded.
Despite the severity of the fiscal crisis in the 1980s, economic policy retrenchment was fiercely
resisted by the diminishing network of corporatist and business interests around AD and COPEI.
The neoliberal shift that was being undertaken in neighboring countries was abjured in
Venezuela, where economic policy-making was characterized by stop and go adjustments,
random application of deflationary policies to control public sector deficits and recurrent
devaluations of the domestic currency. This, combined with escalating inflation, had a regressive
impact on living standards, while clientelism and political favoritism distorted public sector
spending priorities. In education for example, the bulk of the budget was absorbed by the labor
costs of the AD affiliated teaching union. In terms of distribution across educational sectors,
funding patterns were shaped like an inverted pyramid, with the middle class dominated
universities that accounted for less than 5 per cent of total student numbers receiving that bulk of
spending, to the detriment of primary education, where provision and teaching standards were
poor and drop-out and abstention rates among those of limited economic means (the D and E
groups) was high (Economist Intelligence Unit 2005). It was against this backdrop of political
and institutional crisis and severe economic deterioration that a neoliberal policy shift was
attempted in Venezuela. This compounded the pre-existing crisis of Puntofijismo, culminating in
the displacement of that model with the Bolivarian alternative at the end of the 1990s.
Accelerating Crisis: The Neoliberal Experience
By 1989, the year that AD’s Carlos Andrés Pérez resumed the presidency for a second time,
general poverty had more than doubled on the level recorded during the mid-term of his first
administration in 1977, rising from 27.6 per cent of households to 58.9 per cent. Over the same
period, critical poverty increased from 7.4 per cent of households to 26.9 per cent (Maingon
2005). The incoming AD government inherited a dire economic situation, underscored by the
depletion of international reserves. With revenues to cover only four days of imports, Andrés
Pérez turned to the IMF for a $4.5 billion loan and subsequently embarked on a radical effort to
restructure the political economy of the Punto Fijo model. It was a neoliberal lurch that came
unannounced and unexpected, Andrés Pérez having been re-elected on the back of a commitment
to return Venezuela to the boom times of the 1970s.
The stabilization and structural adjustment package that was introduced in 1989 and which was
known as El Paquete, aimed to reduce and reorder the state, and transform Venezuela into an
outward looking economy, with a diversified economic base. Its introduction in February 1989
triggered the Caracazo: “the most massive as well as the most violently suppressed urban protest
in Venezuelan history” (Coronil and Skurski 2005), as prices for food, fuel and transport were
liberalized. Over the following two years, interest and exchange rates were freed; the national
telecommunications agency and state airline (CANTV and VIASA) were privatized and private
sector partners were invited to participate in PDVSA operations in 1991 (through a circuitous
legislative initiative that went against the original nationalization legislation); $21 billion of
national debt was restructured and public spending was sharply reduced. The government laid
the legal framework for private welfare and pension provision and the trading of shares in
privately held companies on the Caracas stock exchange, the Bolsa de Valores de Caracas
(Naim 1993). In foreign policy, the government sought to lock in these changes and ride the free
market and regionalist tide of the early 1990s by taking Venezuela into regional free trade
agreements and commercial associations.
However the neoliberal experience was limited in comparison to the orthodox shift in
neighboring countries and El Paquete was not applied in a comprehensive manner. There was no
rationalization of the bloated, party dominated state or reform of the income taxation structure.
The privatization process was limited and not accompanied by the introduction of adequate
regulatory mechanisms. Moreover Andrés Pérez was not averse to expansionary approaches
when the oil price temporarily increased, a policy flux that led some critics to argue that the
problem was not neoliberalism, but its half-baked implementation (Naim 1993). The social
consequences of the neoliberal shift were disastrous and particularly given the collapse of the
Punto Fijo welfare safety net. Falling real wages, which declined 53 per cent between 1982 and
1995, and volatile inflation (which soared to 89 per cent in 1989) exacerbated an existing trend
of rising poverty. There was no rapid or effective ‘trickle-down’ and government efforts to target
its limited anti-poverty initiatives were ineffectively administered by the sclerotic national
bureaucracy. By 1991, 69.8 per cent of households lived in general poverty - up from 58.9 per
cent in 1989. Of this figure 35.8 per cent were in critical poverty – an increase on the 26.9 per
cent recorded in 1989. Aside from rising poverty, orthodox policy approaches presaged a trend
of deepening inequality with the share of national income accruing to the richest 10 per cent of
the population rising from 30 per cent to 43 per cent between 1988 and 1991, while the share of
the poorest 10 per cent declined from 2.3 per cent to 1.8 per cent (Baptista 1991 cited in Coker
1999 p. 83). Food costs were particularly difficult for poorer sectors to cover, specifically after
devaluation in 1989, owing to Venezuela’s historical lack of food sovereignty and gross
inequalities in land distribution (with 70 per cent of agricultural holdings in the hands of just 3
per cent of producers). Underscoring this, malnutrition related infant mortality rates doubled over
the brief two-year period of the initial economic adjustment, increasing from 29.7 deaths per
100,000 in 1988 to 60.2 deaths in 1990 (Coker 1999).
Andrés Pérez revoked the Puntofijista social contract under which illiberal democracy was
legitimate for as long as oil rents were channeled to the population. The end of heterodoxy and
ISI meant that the partyarchy could no longer be maintained and in recognition of this, Andrés
Pérez introduced a package of sweeping institutional and political reforms. Decentralization of
traditionally centralized administrative responsibilities to mayors and state governors was
launched in 1989, elections for these positions were introduced and there was a reform of the
electoral system, which replaced closed block voting with open lists with named candidates
(Buxton 2001). The political reforms failed to re-equilibrate the political system or national
government. If anything they accelerated system crisis. New parties, such as the left of centre La
Causa Radical (Radical Cause, LCR) were now positioned to win elective office, but success in
regional and congressional elections meant that they were incorporated into a de-legitimized
political framework.
The social costs of the orthodox turn were popularly understood to be a result of the corrupt
Puntofijista regime and its record of economic policy failure rather than neoliberalism per se.
There was a widespread popular view that Venezuela was rich on account of its oil wealth, but
that the poor were disproportionately bearing the costs of an adjustment that had been forced on
the country because of the corruption and mismanagement of politicians and elites. Moreover the
move to slim down the state went against a tradition of high levels of intervention in the
economy, which was seen as legitimate and appropriate because of the predominance of the oil
sector. Oil shaped a majoritarian predisposition that the state should be a vehicle for social and
national advancement, and it was perceptions of exclusion from the benefits of oil wealth
distribution that subsequently shaped support for Chávez among marginalized groups in 1998.
Certainly neoliberalism was widely rejected, but the dominant social and political narrative of
this period configured around the need to reform Puntofijismo. A key demand going into the
national elections of 1993 was constitutional and institutional reform, issues that formed the
platform of the winning candidate, the octogenarian Rafael Caldera.
The Caldera debacle
Caldera’s presidency was the last chance for reform of Puntofijismo ‘from within’. He was the
founder of COPEI but split off from the party in early 1993 win his bid for the party’s
presidential nomination was rejected. He went on to win in 1993 with the support of a seventeen
party coalition, Convergencia, and a pledge to reform Puntofijsmo and reverse El Paquete. He
did neither, accelerating the social, economic and political crisis. Caldera turned to the IMF for a
$1.4 billion stand-by agreement in 1996 after the poorly regulated and recently liberalized
banking system collapsed, prompting the government to intervene a third of the country’s
financial institutions at a cost of 16 per cent of GDP.
While Andrés Pérez was arguably a committed neoliberal, surrounded by Ivy League trained
technocrats, Caldera and his economic team of ‘reformed’ leftists were reluctant, hesitant and
incompetent in their efforts to follow an orthodox approach. A flush of revenues in 1997 from
further private sector openings in the oil sector prompted the administration to ditch monetarist
approaches and embark on an expansionary spending spree, buoyed by rising oil prices. When
the oil price fell back in 1998, the year of the national election, Caldera was forced to slash
public spending. The zig-zag from heterodox to orthodox policies compounded the deleterious
social impact of the earlier adjustment. Indicative of this, the number of households living in
general poverty jumped to 77.1 per cent by 1996 of which 45.1 per cent lived in critical poverty.
Moreover the terms of many of the privatization contracts signed by the Caldera administration
were deleterious to the national interest. The Information and Technology arms of PDVSA for
example was sold to the American defense and intelligence contractor Science Applications
International Cooperation (SAIC) for just $1000, and under the oil sector opening, PDVSA was
contracted to pay private oil producers a fixed price for the oil pumped and sold back to PDVSA
under joint venture agreements. When the international oil price fell back – to $9 per barrel by
1998, the Venezuelan state was producing oil at a loss while the autonomy that PDVSA enjoyed
in investment and spending decisions deprived the central government of an important share of
the revenues from the privatization process (Mommer 2002).
The Convergencia coalition collapsed amid internal policy disputes, forcing Caldera to rely on
AD and COPEI for support in the national Congress. Unchecked by institutional reform or
efforts to democratize political space, political instability was pervasive and political alienation
rose exponentially. Pressure for system rupture rather than reform gained traction as disgust with
Caldera and the Punto Fijo parties deepened. The end result of nearly two decades of crisis in the
Puntofijista model was a society polarized over the future direction of the country. This was
personified in the 1998 election, in which the two front runners presented distinct post-crisis
options – a model of decentralized political authority and economic shock therapy (Henrique
Salas Römer) and a ‘Bolivarian Revolution’ based on popular sovereignty and a Third Way
economic model (Chávez). The application of neoliberalism exacerbated but did not generate
political and economic crisis in Venezuela, and this was reflected in support for Salas Römer
who won 40 per cent of the vote in the 1998 contest. But the cumulative impact of progressive
system deterioration was popular demand for a political rupture, and it was for this reason that
Chávez triumphed, with 56.2 per cent
Bolivarianism: Changing Paradigms of Development and Governance
The Chávez government has sought to craft a domestic and regional alternative to neoliberalism
that is based on ‘Bolivarian’ principles of cooperation, solidarity and justice and which looks to
the poor and excluded as its core constituency of support. In Venezuela, the pursuit of
Bolivarianism, redefined in 2005 as Twenty First Century Socialism, has seen the state assuming
a pro-active role in the economy as the ‘motor’ of the revolution. The privatization processes that
were undertaken in 1990s were rolled back in the oil, telecommunications, electricity, heavy
industry and mining sectors, and price and exchange controls re-introduced. New state financed
models of social, political and economic organization that stress participation and empowerment
of el pueblo (the people) were launched that included worker self-management (cogestion),
community councils (of which there were over 17,000 by 2008) and cooperative groups
(numbering around 4,000). These initiatives were underpinned by a sweeping overhaul of the
country’s constitutional and institutional arrangements and complemented by a social and
economic policy agenda that sought to build social capital and redistribute wealth through a state
rather than market led allocation process.
At the regional level, the government turned away from free market based global and regional
integration strategies pursued by Andrés Pérez and forged new Bolivarian partnerships that were
institutionalized in the Bolivarian Alternative for the Americas (Alternativa Bolivariana para los
Pueblos de Nuestra América, ALBA), a counter to the now defunct - Free Trade Area of the
Americas (FTAA) and which included Bolivia, Cuba, Nicaragua and Dominica. It also launched
an array of initiatives in order to progress the Bolivarian agenda and push back the influence of
neoliberalism. These include Bank of the South (Banco del Sur), intended as an alternative to the
World Bank; Petrocaribe, a discounted oil export agreement with seventeen Caribbean and
Central American countries, and The New Television Station of the South (La Nueva Televisora
del Sur, TeleSUR), a regional media channel that provided a South American based news
alternative to ‘Northern’ media such as Fox News and CNN en Espanol.
The Chavez government sought to reorder commercial ties by ending close bilateral economic
relations with the US and entering into commercial agreements with non-traditional statepartners that included China, Russia, Belorussia and Iran. In both domestic and foreign affairs
then, neoliberal polices and the primacy of the market and private sector were eschewed in favor
of state led initiatives and state to state, public sector partnerships. In no other South American
country did the state returned with such vengeance, was neoliberalism rejected with such vigor
and the foundations of a viable alternative economic project established. However, as argued in
the introduction, Venezuela’s post-crisis model is defined through Puntofijismo; it has evolved
over time and emerged by default.
The Meaning of Bolivarianism
When Chávez assumed the presidency in 1999, his Bolivarian project (named after the
independence hero Simón Bolívar) was presented as a domestic alternative to Puntofijismo. It
had five integrated elements: political, economic, social, territorial and international. In terms of
the political, Bolivarianism emphasized popular empowerment, with citizens serving as
protagonists of change, hence the term “protagonistic democracy.” It was a vision of a pro-active
civil society, constantly engaged in decision-making in a bottom-up system of government,
politics and social organization (Sesto 2006). The people, el pueblo, were to resume a
sovereignty that Chávez posited as usurped by the AD and COPEI partyarchy and illiberal Punto
Fijo democracy. This new model of post-crisis democracy was based on a vision of socioeconomic inclusion (the social element of the Bolivarian program) that stressed investment in
social capital, the promotion of social justice and the redistribution of economic and political
power to those excluded from the political and economic privileges of Puntofijismo. In line with
this, the economic element looked to create a “social economy” that focused on the needs of poor
people; which would break with inequitable patterns of oil rent distribution and which would
construct new economic production and distribution chains. The promotion of food sovereignty,
small and medium enterprises and the co-operative movement were integral aspects of this
economic vision and this in turn informed the national element of the Bolivarian program, which
emphasized territorial integration, ending the power of the oligarchy, land redistribution and state
investment in traditionally neglected and depopulated rural areas (Chávez 2005; Jones 2007).
The final aspect of the Bolivarian vision, the international strategy, stressed four core priorities:
the deepening of ties with other oil producing nations; the construction of a multipolar world;
regional integration on Bolivarian principles of solidarity and justice, and promotion of state
sovereignty. Fundamental to an understanding of the Bolivarian project is the Chavista vision of
oil resources. In contrast to established development thinking and his Punto Fijo predecessors,
Chávez rejected the view that oil dependency was a curse. It was instead posited that oil
resources were only destabilizing and anti-developmental because of the structure of the global
oil markets. Revenue unpredictability and boom and bust conditions were seen by the Chávez
government to stem from a lack of cooperation among oil producing countries and constant
downward pressure on prices from consumer countries. The full fiscal benefits of oil could be
realized if oil producers worked effectively together to keep prices high and stable, and the
amount paid by consumers reflected the real value of scarce energy resources (Chávez 2005;
Jones 2007; Kozloff 2006; Mommer 2002).
In line with this, the government pledged to reverse the oil opening of the 1990s and reclaim
state control of PDVSA. Bolivarian foreign policy looked to maximize revenues accruing to the
state through deepening ties and technological cooperation with other oil producing countries.
Strategies here included strengthening the role of the Organization of Petroleum Exporting
Countries (OPEC) and building new bilateral links with Iran, Iraq, Russia and non-traditional
consumer countries, such as China. This in turn linked into the Bolivarian vision of a multipolar
world, in which the dominance of the US, and Venezuelan commercial dependence on that
country, would be reduced. Venezuela’s historically strong bilateral relations with the United
States were seen to run completely against the national interest (Kozloff 2006). In the Bolivarian
critique, this had locked the country into supplying artificially cheap petroleum to the US
through commercial agreements signed by the Punto Fijo governments. This included the joint
venture contracts of the 1990s. This rejection of Venezuela’s traditionally strong partnership
with the US was a radical break with established foreign policy. While the Punto Fijo elite had
been closely tied, economically, culturally and politically, to the US, Bolivarianism sought to
replace North-South linkages, with South–South ties. Regional integration was integral to the
multipolar vision. It was presented as the fulfillment of Bolívar’s historic quest to build a united
southern hemisphere as a counter to the influence of the US.
It should be stressed that while this Bolivarian program would appear to be informed by strong
anti-US and anti-neoliberal sentiment, it was not articulated by the government through such a
narrative. Instead, the program was consistently presented through the lens of the domestic
political and economic experience and specifically the failures of Puntofijismo to realize
Venezuela’s potential.
Bolivarian nationalism
The primacy of anti-Puntofijismo was very much reflected in Chavista efforts to construct a new
Bolivarian identity to underpin and legitimize revolutionary change. During the Punto Fijo
period, the political parties, specifically AD, had defined Venezuelan nationalism through
reference to that party’s symbols and democratic mythology. Nationalism was understood
through the experience of the democratic struggle and AD’s distributionary project of ‘sowing
the oil’ revenues. This nationalist vision portrayed Venezuela as a modern and outward looking
society, informed by Lockean principles of social contract and consent (Buxton 2007).
Bolivarian nationalism posited a different nation and a distinct national identity. It looked
backwards to historic national heroes and legends, the most important of these being the “trinity”
of the liberator, Bolívar; Ezequiel Zamora, a military leader during Venezuela’s federal wars;
and Bolívar’s tutor, the pedagogue Simón Rodríguez. Bolivarian nationalism enjoined the nation
in a project to fulfill the historical potentialities of the country, which Bolivarian discourse
portrayed as betrayed by the Punto Fijo elite (Buxton 2007). There was a stress on racial pride
and reclaiming Venezuela’s indigenous and black heritage, which had been downplayed and
displaced by the white elite of the Punto Fijo period (Gott 2005). And where Adeco nationalism
had been Lockean and procedural in its democratic vision, Bolivarianism was informed by
Rousseauen principles of direct democracy; where Adeco nationalism had looked outwards to the
North and to ‘modernity’, Bolivarianism idealized indigenous tradition and domestic cultural
values. These tenets of the Bolivarian vision and Bolivarian nationalism easily parlayed into the
subsequent critique of neoliberalism and US ‘imperialism’ that became the hallmarks of the
administration. But this shift, which is outlined below, only occurred well into Chávez’s
presidency, which evolved across three phases. The first phase, from 1999 to 2004 was one of
moderation; the second phase from 2004 to 2006 was one of radicalization, culminating in the
third phase – of aiming to create Twenty First Century Socialism dating from the presidential
elections of December 2006 onwards. Modes of governance and consultation changed across the
phases, culminating in a push during the final third phase to institutionalize innovative informal
structures of feedback, participation, consultation and policy delivery in a revised Constitution.
The Evolution of Bolivarianism
Drivers of Radicalization
The meaning of Bolivarianism and the aims of the Chávez administration shifted dramatically
between 1999 and 2008. This was driven by factors external to the initial ideological project of
the administration, with the subsequent capacity for intra-regime evolution facilitated by the
theoretical and ideological eclecticism of Chávez and the shifting nature of alliances around the
executive. Three key drivers of change can be identified: the effects of US and domestic
(Puntofijista) opposition to the Chávez government after 1999 and the rise in the international oil
From 1999 onward, lobby groups traditionally privileged by the Punto Fijo political
arrangements mobilized against the Chávez administration. Of significance to the instability that
was experienced, these protests focused on street level mobilization, stoppages and lock outs, a
coup attempt in 2002, a takeover and stoppage at PDVSA, a recall referendum against Chávez in
2004, a non-payment of taxes campaign and an abstention platform in national and regional
elections. This reinforced the Chávez government’s view that no compromise with opponents
was possible if progressive change was to be achieved, and that the administration needed to
deepen its engagement with, and responsiveness to, excluded sectors.
The opposition’s actions were instrumental in shaping Twenty First Century Socialism in three
respects. First, they forced the Chávez government to focus on consolidating its core support
base among the poor. Welfare spending in Phase Two was used to engage and deliver to the
excluded who were pivotal in sustaining the administration and counter-protesting the
opposition’s actions. In stark contrast to Punto Fijo practices, government spending was not used
to bring confrontational elite groups into the political system, and this deepened the zero sum
characteristics of distributional politics in the country. Consequently the Missiones, a key social
policy element of the administration’s neoliberal alternative, was instrumentalized from the need
to deliver concrete gains to its constituency of support in a context of polarization and instability.
Secondly, the general strikes, lockouts and stoppages convened by opponents led the state to
acquire a higher profile in the economy by default, in order to keep production and distribution
chains functioning. For example, a lock out that paralyzed food distribution over the Christmas
period 2002 led the administration to introduce a number of informal supermarkets and
subsidized food outlets in order to overcome shortages. Hugely popular among the poor, these
were maintained after the strike had collapsed, and institutionalized as Mission Mercal. Similarly
capital flight and the non-payment of taxes campaign encouraged led the Central Bank to impose
exchange rate controls in order to stabilize the currency. This became a key monetary tool,
prefiguring later moves to extend executive control over the economy, as seen for example in the
Constitutional reform proposal of 2007 to place international reserve management in the hands
of the executive. The lock outs in the private industrial sector encouraged pro-Chávez unions to
takeover private manufacturing facilities, a development that in turn pressured the government to
accept nationalization of some facilities and endorsement of a model of worker-management
control called cogestion. Thirdly, the opposition actions led the Chavistas to assume hegemony
within state institutions by default. For example, the lock out of PDVSA in 2002 provided the
government with grounds for purging all striking oil sector workers (17,000 members of staff)
and replacing them with loyalists, a move that accelerated the progression of state control of
PDVSA, while the failed coup attempt of 2002 led to a purge of the armed forces and
replacement of senior commanders with Chavista loyalists. The opposition strategy of boycotting
election processes in order to de-legitimize the Chávez government enabled the already popular
Chavistas to gain control of every tier of elective office across the country.
A second driver of radicalization, and one which accounts for the acquisition of antineoliberalism initially in foreign rather than domestic policy, was the severe deterioration in
Venezuelan-US relations after President George Bush assumed office in 2000. The Republican
government adopted a phlegmatic view of the Venezuelan government, whose initiatives were
seen to run against US security interests. US support for the anti-Chávez opposition, expressed
through official statements and financial allocations channeled through USAID and the National
Endowment for Democracy (Gollinger 2006), led the Chávez administration to pursue foreign
policy goals that would allow Venezuela to insulate itself from, and deflect, US pressure. Antineoliberalism, oil financed regional integration and anti-Americanism became the key tools for
achieving this objective and they were advanced in the Second Phase as US antipathy toward
Venezuela – and the pursuit of destabilizing strategies became pronounced. Moreover US efforts
to punish Venezuelan ‘deviance’ through for example a 2005 arms embargo, fuelled incentives
to build multipolarism. Blocked from upgrading its US supplied weaponry, Venezuela turned to
China and Russia.
Finally, the administration’s evolution was influenced by the strong rise in the international oil
price. Venezuela is the world’s fifth largest oil producer, with output estimated to be 1.7 billion
barrels per day. When Chávez first assumed the presidency, the value of the Venezuelan basket
of crude had bottomed out at $7 per barrel. After 2002, the oil price strengthened, rising to $25.7
per barrel in 2003, $32.9 p/b in 2004, $46.1 p/b in 2005 and $56.5 in 2006. This petrodollar
windfall, in addition to the negotiation of more beneficial contractual terms for the state in oil
venture agreements provided the administration with ample fiscal resources to deliver the
Missiones and finance regional integration projects. Venezuela’s oil wealth uniquely positioned
the Chávez government to break dependence on foreign and private investment and international
financial institutions. They also made it fiscally possible to experiment with a post-crisis model
that directly challenged the ideological hegemony of neoliberalism. Finally, the abundance of oil
revenues provided Chávez with an unprecedented level of independence from US political
pressures and traditional tools of North American hard diplomacy such as embargos, sanctions
and the blocking of loans.
The Three Phases of Bolivarianism
Phase One 1999-2004
The first phase dates from Chávez’s assumption of the presidency through to the beginning of
2003, when a lock out of PDVSA by opponents of the government fragmented. The collapse of
the stoppage, which led to oil export revenue losses of over $17 billion, was the culmination of a
period of high instability that included a failed coup attempt against Chávez in April 2002.
During this period, the administration was modest in its ambitions. Its appeal and program of
government was specifically structured around the critique of Puntofijismo, and support for the
administration was broad-based. The key actors around the Chávez presidency, and the cabinet
itself, was comprised largely of moderate figures from the centre-left, which included members
of the LCR offshoot Patria Para Todos (PPT) and Chávez’s own Movimiento Quinta República
Party (MVR).
The introduction of a new constitution was pivotal to the project of re-founding the Republic. A
referendum on the redrafting of the constitution was decreed by Chávez in February 1999, it was
supported by a majority of voters presaging elections to a constituent assembly and the drafting
of a new Bolivarian Constitution, which was approved in a referendum in December 1999. This
inaugurated the Fifth Republic and reflecting a national rebirth, the country was renamed the
Bolivarian Republic of Venezuela. Through these popular consultation exercises, the
administration sought to establish an agenda of change mandated and led from below, with
referenda serving as a mechanism for bottom-up articulation of the preferred post-crisis state and
institutional framework. The Bolivarian Constitution eliminated all institutional vestiges of
Puntofijismo, emphasized the sovereign nature of the oil sector, precluding nationalization and it
institutionalized an expansive array of state guaranteed welfare and social rights as a basis for the
new vision of citizenship. Fresh presidential, national and regional elections to re-legitimize all
elective positions were convened in 2000. The Chavista alliance, the Polo Patriótico emerged as
the dominant political force, consolidating the political shift that had taken place in the country.
Throughout 2001 and 2002, the administration focused on establishing a legal framework in line
with the provisions of the 1999 Constitution. Measures such as the 2001 Hydrocarbons Law, the
Land Law, the Organic Law on Potable Water Services and the 2002 decree on Urban Land
Tenancy sought to structure the new social economy and establish social participation in
development projects and public service provision. This in turn catalyzed new models of social
organization and participation. Comités de Tierras Urbanas (CUTs, Urban Land Committees)
sprang up across the country to meet the legal requirement for communities to self-organize
(typically in groups of 200 families in urban areas and 500 in rural areas) and present community
regeneration plans in order to receive land and tenancy rights through the National Land
Institute. Similarly, in line with the legislation on potable water provision, Mesas Técnica de
Agua (MTAs, Technical Water Tables) emerged as the organizational form for the planning and
elaboration of community water projects and negotiations with municipal and state water boards
(Lerner 2007; Wilpert 2007). These organizational forms, which included other initiatives such
as the Organización Comunitaria Autogestionaria (OCAS; Community Self Management
Organizations), had a long but academically neglected history. They particularly flourished in the
municipal capital, Libertador in the early 1990s and other municipalities under the control of the
La Causa Radical party (Bravo-Escobar 2007). But they had been small in scale and without
legal status or funding. Under the Chávez administration, they became the central organizational
vehicle for the delivery of the Bolivarian agenda of social development and citizen engagement
(Wilpert 2007).
By contrast to developments in the political realm, economic policy was marked by continuity
with the loose orthodoxy of the preceding administration. The government emphasized its
commitment to repaying the national debt and respect for private property rights and commercial
contracts, a position that alienated it from the radical left which in turn went on to form an
eclectic alliance against the government with former enemies from the Punto Fijo elite. The
administration did not elaborate a coherent social policy agenda only a public works program,
the Social Emergency and Internal Defence and Development Plan, under the command of the
armed forces. This focused on school and road building, with the armed forces deployed in order
to bypass the ineffective state administration and in line with Chávez’s vision of the military
assuming a progressive national role (Trinkunas 2006). However the absolute priority, and
reflecting the influence of the anti-Puntofijismo dynamic, was constitutional reform. The
elaboration of Bolivarian foreign policy was similarly muted, although the small steps that were
taken caused deep controversy. Chávez visited the former Iraqi leader Saddam Hussein as part of
the move to strengthen OPEC, and the energy team succeeded in negotiating a price band
mechanism among OPEC producers in 2001. This kept the price per barrel in a range of between
$22 and $28, a policy that was condemned by the incoming government of US President George
Bush as contrary to global and US energy needs.
Phase Two: Toward anti-neoliberalism 2004-2006
During this second phase the administration became more overtly anti-neoliberal and radical in
its vision of social change. The role of the state was dramatically extended and a more
interventionist role in the economy and economic management was assumed. The government’s
core support base progressively narrowed and became focused on the poorest sectors, as middle
class support for the administration waned. The coalition of influence around Chávez shifted as
‘moderates’ who emphasized consensus such as Chávez’s early ‘mentor’ Luis Miquilena and
former military colleague Francisco Arias Cardenas broke with the Chavistas, as did the
Podemos party.
This phase was also noteworthy for the organizational shift that took place within the Chavistas
themselves. As the weaknesses of MVR became apparent, particularly in relation to its capacity
to mobilize votes for Chávez and articulate government policy, new community and grassroots
based movements became the central organizational force of the Chavista movement. Emphasis
was placed on the development of community based pro-government political and electoral
organizations outside of the framework of the MVR. In the first instance this took the form of the
Círculos Bolivarianos (Bolivarian Circles CBs), originally created by Chávez in the early 1990s
as a prelude to the founding of MVR in 1997. The role of the CBs, which typically grouped eight
to ten people in educational and activist cells, was to engage at the grassroots in consciousness
raising and community projects (Antillano 2005; Escobar 2007). The importance of the CBs
declined, but as it became clear that MVR lacked the capacity to mobilize at the grassroots level,
the CBs became an important organizational arm. As political opposition to the administration
grew in 2001 and 2002, other new grassroots based pro-government initiatives outside of the
formal framework of MVR emerged. These included the Comando Político de la Revolución
(Revolutionary Political Command), responsible for coordinating the Bolivarian Circles; the
Comando Ayacucho, tasked with mobilizing support for Chávez in the August 2004 recall
referendum; the Comando Maisanta, which evolved from the Comando Ayacucho; and the
Unidades de Batalla Electoral (Electoral Battle Units) that mobilized for the legislative and
regional municipal and state elections of 2005. Going into the 2006 presidential election contest,
a new vehicle, the Comando Miranda was established. These constantly evolving organizational
initiatives reflected and reinforced the emphasis on non-traditional party political forms as a key
characteristic of the government’s post neoliberal political project. This was a period of constant
experimentation with new mechanisms for and types of participation, that broke with established
party based schemas of institutionalized modes of representation (Raby 2006). Their ad hoc
nature reflected the challenge faced by the Chávez government of mobilizing and incorporating
traditionally excluded and marginalized groups in a context of alienation from, and disaffection
with, established party politics.
This phase also saw a more pro-active and ambitious social policy agenda, laying the
foundations of the neoliberal alternative model. Informal structures were created for the delivery
of an extensive range of integrated welfare services for the excluded, with these new social
policies linking citizens to the state in a radically different manner to that which had prevailed
under Puntofijismo. Termed the Missiones, these sought to provide in situ access on the basis of
community identified need, which was determined by citizen participation in community
organizations. This marked a strengthening of moves in Phase One to construct a new model of
linkage between people and the state that bypassed state institutions. They included Mission
Barrio Adentro (April 2003) that provided primary and preventative health care staffed by
17,000 Cuban medics operating in 4,400 community clinics; Mission Robinson, a national
literacy campaign staffed by 100,000 volunteers (July 2003); Mission Sucre (July 2003) which
expanded access to higher education and included the construction of new public Bolivarian
universities; Robinson Two (October 2003) which increased elementary education and led to the
construction of over 2,000 Bolivarian schools with breakfast clubs; Mission Ribas (November
2003) a program to facilitate the completion of high school through the provision of grants to
over 100,000 students; Mission Mercal (January 2004), a network of 6,000 subsidized food cooperatives and popular markets; Mission Identidad (February 2004) that provided identification
cards-a prerequisite for access to service provision and voter registration; Mission Vuelvan Caras
(March 2004) that provided job training and Mission Habitat (August 2004) that focused on
housing provision for the poor.
The Cuban government’s model of social welfare delivery was certainly an influence over the
policy direction that was taken. The approach was also pragmatically informed by the
institutional weaknesses of the post-Punto Fijo state, and the administration’s need to deliver
rapid social benefits to its core constituency of support. Community organizations consolidated
their position as the key organizational mechanism for the government’s model of protagonistic
democracy, assuming responsibility for the coordination and delivery of the Missiones. The
government extended significant financial support to community based vehicles, with over $6
billion in funding diverted from PDVSA to the 12,000 organizations that existed by 2006
(Wilpert 2007).
Opposition to the government’s Bolivarian revolution was the key driver of change and
innovation during this second phase. However, the government’s narrative continued to be
framed through reference to Puntofijismo. The administration condemned the opposition as elitist
and claimed that their hostility to Bolivarianism was predicated on vested interests in restoring
the exclusionary Punto Fijo model. However, in foreign policy, government language altered
dramatically with the adoption of an approach that saw foreign policy objectives articulated
through anti-neoliberalism. During this phase the administration became pro-active in
developing a foreign policy consonant with its vision of a multipolar world and formulating
strategies and institutions for regional integration. The focus of initial anti-neoliberalism was the
planned Free Trade Area of the Americas. Chávez couched his hostility to the proposal through
reference to the negative impacts of free trade and neoliberal policy in other South American
countries and as a counter to the FTAA, Venezuela advanced the ALBA. While the ALBA was a
small project drawing on some of the weakest and most fragile economies of the region, its
significance lay in its possibilities and symbolism as a non-free trade based model of regional
Venezuela’s oil emerged as a vital tool for advancing regionalism, a development that was
facilitated by the reassertion of PDVSA majority share in all ventures through the 2001
Hydrocarbons Law. This served to enhance the authority of the Ministry of Energy over the
traditionally autonomous PDVSA executive, bringing the oil economy and oil policy under the
direct control of national government. The 2001 oil legislation also increased the oil revenues
flowing to the state by increasing the taxes and royalties paid under joint venture agreement.
These changes to the political control of the oil sector enabled the government to introduce
Bolivarian energy initiatives such as Petroamerica, Petrocaribe, Petrosur (a strategic alliance
with other South American public and semi-public energy companies) and regional energy
integration and cooperation strategies, such as financial and technical assistance for the
upgrading of Cuban, Ecuadorian and Nicaraguan oil refining and Bolivian gas exploration
capacities. Oil revenues also positioned Venezuela to purchase over $1 billion in Argentine debt
bonds and provide development assistance to social projects in Bolivia, Cuba, Haiti and Belize,
to name but a few of the recipients of Venezuelan financial support. This commitment to
expanding Bolivarian principles of solidarity and regional cooperation was counter-posed against
the lending practices of international financial institutions such as the World Bank and IMF. The
Venezuelan administration condemned these institutions for the harsh conditionalities imposed
on borrowers, and the impacts of their neoliberal prescriptions on the poorest people in the
region. Financially positioned to craft an alternative and follow through on this commitment to
liberate the Americas from the IFIs, Venezuela began to develop proposals for a new regional
lending institution, the Banco del Sur, with Brazil, Argentina, Bolivia and Ecuador in 2006.
The anti-neoliberal rhetoric and emphasis of Venezuelan foreign policy was also clear in the
strategy of constructing wider multipolarism. Commercial, military and energy agreements were
signed with Iran, China and Russia during this second period, with the Venezuelan
administration emphasizing its preference for bilateral relations with state owned companies over
private interests. Taken together, these ventures enabled Venezuela to delimit the country’s
exposure to the globalized economy, reduce reliance on private (and volatile) foreign direct
investment and lay the foundations of a distinctive alternative political economy. With the
country insulated from reliance on private foreign direct investment, domestic macroeconomic
management strategies focused on lowering interest rates and generating economic conditions in
line with national development needs and not the requirements of foreign investors or risk
Twenty First Century Socialism
The final third phase marked a deepening of the revolutionary project and moves to consolidate
a coherent ideological and organizational alternative to neoliberalism both domestically and in
foreign policy. First unveiled by Chávez at the 2005 World Social Forum meeting, this was
termed Twenty First Century Socialism, a model that would be driven forward by the ‘Five
Motors’ of the revolution. These five motors were: the ‘explosion’ of communal powers; a new
geometry of power in order to institutionalize the authority of the communal councils; an
educational and moral struggle to inculcate new communitarian values; the use of executive
decree –to drive through the changes proposed and; reform of the constitution to allow for
consolidation of the new socialist model.
Within weeks of retaining the presidency and in line with the vision set out in the Five Motors
schema, the Chávez administration decreed majority ownership of heavy oil projects in the
Orinoco belt and nationalizing (with compensation) foreign and private interests in the
telecommunications and electricity sectors. This underscored the extent to which the
administration was prepared to deploy the new authority of the state to limit the country’s
economic openness and focus on the perceived priorities for nationally focused development. An
initiative to merge the heterogeneous pro-Chávez party political coalition and disparate
grassroots organizations was launched under the umbrella of a new United Socialist Party of
Venezuela in a process based on broad public consultation that was intended to dictate the
structure and organization of the new party. In September 2007, a series of planned reforms to
the 1999 Constitution, which affected thirty-three of the text’s three hundred and fifty articles,
was announced by Chávez. The measures included the elimination of term limits on presidential
re-election, executive control of international reserves, a redesign of the federal territory (in line
with the ‘new geometry of power’ schema), and a new classification of land to include
cooperative and social ownership. The measures, which were subject to two rounds of legislative
debate ahead of their submission to the electorate in a referendum in December 2007,
represented a move to institutionalize the reconfigured economic and political relations within
Venezuelan society and between citizens and the state that had emerged during the second phase
of Bolivarianism, and the new balance between growth and social spending priorities that
followed from the launch of the Missiones. They were however rejected by the electorate, in a
move that marked the first electoral defeat for the Chavistas. The defeat of the proposals was
attributed to abstention among traditional Chavistas pointing to a growing disaffection with the
administration among its core support base. Chávez subsequently pursued the changes on a
reform by reform basis. But as the Conclusion discusses, the most pressing issue faced by the
administration was not its capacity to pursue its ideological end goal, but the weakening popular
endorsement of this vision.
Conclusion: Reflecting on New Modes of Governance and Political Economy
Venezuela has without doubt moved the furthest in laying the foundations of a neoliberal
alternative model but by 2007 it was evident that the survival and consolidation of the Bolivarian
process was contingent on addressing debilitating structural weaknesses and contradictions
within the model. The weaknesses identified show striking similarities to those experienced
during the Punto Fijo period.
While Bolivarianism and Puntofijismo are posited as radically distinct, there are strong elements
of continuity. The first of these is weak institutions. The sclerosis and politicization that
characterized the Punto Fijo institutional framework was prevalent under the Bolivarian system.
In the Chávez period, these stemmed from factors that included: the low priority given to
institution building by the Chávez administration; the reliance on informal, parallel mechanisms
for policy and service delivery; partisanship in staffing state institutions and the failure to
develop effective checks and balances, the latter owing much to the heavy centralization around
the executive and the highly personalized nature of the Chávez presidency. In the absence of
effective, functioning institutions based on principles of meritocracy and accountability, the
Chávez government struggled to deliver its social policy agenda and to shift service provision
from an emphasis on quantity of provision to the more complex challenge of quality of
provision. Waste, inefficiency and corruption were serious problems by the time the government
was entering into the third phase and this in turn translated into mounting popular disaffection
with the government and diminishing faith in its capacity to deliver on policy pledges.
A second element of continuity was that of oil dependence and the pre-1990s model of oil
financed state led development. Although the Chávez government aimed to break with the Punto
Fijo regime’s debilitating reliance on the oil sector, by the third phase oil export revenues had
actually increased as a percentage of central government income and trade with the US had
increased, despite Chávez’s aims of diversifying commercial ties. More problematically, the
same structural and macroeconomic distortions that had been present during the Punto Fijo
period continued into and were arguably reinforced during the Bolivarian period. This was
particularly problematic for the Chavistas as it threatened to undermine the goals of the
Bolivarian revolution. For example, the overvaluation of the exchange rate undercut efforts to
boost food sovereignty as the country continued to suck in cheap imports. Crafting socialism in
an oil boom was a complex economic policy challenge, one that rising inflation and production
shortages indicated the Chávez government had not devised adequate tools for. However, on a
note of difference, while boom and bust conditions were a severe problem during the Punto Fijo
phase, the prognosis for the international oil price was one of sustainable price highs during the
Bolivarian period. However, the benefits to the Chavistas here was offset by serious concerns
relating to underinvestment in oil drilling and production capacities owing to diversion of oil
profits into social spending.
A final element of continuity related to foreign policy. A much neglected aspect of the Punto
Fijo period was the consistent policy emphasis on Bolivarian principles of multipolarism, of
supporting progressive revolutionary movements (for example the Sandinistas in Nicaragua), of
building a just international order, promoting regional solutions to the conflict in Colombia and
of building ties with other oil producing nations. These were all central tenets of the Chávez
administration, but in the manifestly different conditions of the War on Terror and diminished
US tolerance of ideological deviance in its backyard. The danger Chávez faced going into the
Third Phase was of a major shift in the regional order; the ending of the presidency of his
nemesis George Bush and the weakening of centre left regional administration’s that helped to
insulate Chávez and which gave his Bolivarian experiment hemispheric traction. And while
Chávez went further than his predecessors in realizing the long-held vision of a multipolar world,
basic inefficiencies in the Bolivarian government, in delivering on commitments and following
rhetoric through with actual policy on the ground was a severe impediment to the consolidation
of the changes the Bolivarian government introduced through initiatives such as ALBA and
Banco del Sur.
Alongside continuity between Puntofijismo and Bolivarianism there was also significant change.
At the elite level, the political left that was excluded from the founding Pact assumed control of
the country and in turn brought into politics those that fell out of the Puntofijo framework. There
was a redistribution of political and also economic power through the protagonistic democracy
model and the government’s social spending and development strategy. According to
government figures, by the end of 2007, unemployment was down to 6.3 per cent; the infant
mortality rate had fallen from 25.6 per 100,000 births in 1990 to 13.9; enrollment and completion
in basic, secondary, higher and further education all showed strong improvements over the
decade of the Bolivarian process and the number of people living in extreme poverty fell from 24
per cent in 1990 to 9.4 per cent. The external debt to GDP ratio was down to just 11.3 per cent
and Venezuela experienced double digit growth and a strengthening of its international reserve
position. This was also a period of strengthening political legitimacy. Poll surveys showed that
Venezuelans had a high level of confidence and trust in their participatory democracy, president
and electoral system – marking a strong change from the 1980s and 1990s (Escobar 2007;
Latinbarometro 2006). Further to this, there was a growing body of evidence that the Missiones,
the MTAs, the CUTs and community councils had a transformative impact on traditionally
marginalized and excluded groups (Bravo-Escobar 2007; Encuentros 2005; Garcia-Guadilla
2007; Hellinger 2007; Lacabana and Cariola 2005), with participation in these organizations
improving perceptions of individual efficacy, levels of interpersonal trust, connections to
government, access to welfare and social development. Ultimately the challenge facing the
“Bolivarian alternative” lay in institutionalizing these progressive and democratic changes
introduced by the revolutionary process and ensuring their survival beyond the presidency of the
authoritative figure of Chávez. This was a complex proposition in a period of conflict, evolution
and transformation; persistent shifts in the power bases around the government; eclecticism in
policy direction; the high turnover of personnel and ad hoc policy initiatives – all of which were
key features, and weaknesses of the Bolivarian alternative.
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