Black Gold Funds the Chavez Dream

Despite its unremarkable appearance, it was here at the Guatire plant that Hugo Chávez’s left-leaning Bolivarian revolution faced one of its gravest tests. Guatire is the sole gasoline and fuel distribution center for the entire Caracas region, serving at least seven million people.

Its strategic position made it the linchpin of the crippling, management-led oil strike in the winter of 2002-03 that brought Venezuela’s economy to its knees. If no fuel had moved in or out of this little distribution center, Caracas would have fallen into anarchy, and Hugo Chávez’s revolution would have likely been swept away.

In Venezuela oil is everything, and PDVSA is the central institution of the oil economy. Created in 1975 when the entire Venezuelan petroleum industry was nationalized, PDVSA has operated as “a state within a state,” never fully controlled by any of the governments that technically owned it. The engineers, geologists and managers who traditionally ran the company constituted a class unto themselves: petroleros: the cream of the Venezuelan elite.

Today PDVSA makes at least $40 billion a year in revenues, and all of Venezuela is financially dependent on PDVSA. Petroleum sales provide half of state income and make up 80 percent of all Venezuelan exports.

Yet oil has also been a curse. Its profitability has boosted the value of Venezuela’s currency, making imports cheap and exports uncompetitive, thus killing off much local industry.

Massive oil wealth has left the country with an administrative culture of dependency, corruption, incompetence and bureaucratic ossification.

Since coming to office in 1999, Chávez has attempted to fundamentally reform Venezuela’s political culture and economy. To address Venezuela’s widespread poverty, his government has spent billions on new social programs. But to really transform Venezuela, to move away from oil dependency and create development alternatives, Chávez must first control PDVSA – something no previous president has managed to do.

During the early years of his presidency, Chávez appointed a series of loyalists to run the company, but each failed. The company remained a black box at best; at worst, a staging ground for saboteurs. That is, until the strike.

The December 2002 oil strike started out slowly at first, but affairs quickly turned grim as PDVSA’s fleet of tankers refused to move, headquarters staff walked off the job, and the whole system began backing up and shutting down.

Within days, gas supplies had begun to run out, and chaos seemed imminent. Many top Chavistas felt that accommodation with the strikers had to be reached at almost any cost.

But Alí Rodríguez, then head of PDVSA, recommended firing the strikers – all 18,000 managers, engineers and workers who had left their posts, nearly 45 percent of PDVSA’s personnel – and Chávez followed his advice. In the government’s view, Rodríguez’s harsh counterassault on the strikers succeeded in flushing out an entire class of entrenched saboteurs and counterrevolutionaries who would have been impossible to purge one by one. And in rebuilding PDVSA, the Chávez government has sought to transform it into something more than an oil company – an engine of alternative development.

A Different Kind of Oil Company

On the east side of Caracas on a hilltop in the huge slum of Catia sits an old gasoline distribution plant, almost identical in its layout to the Guatire plant. But this one was decommissioned 12 years ago and has recently been turned into the Fabricio Ojeda Endogenous Development Nucleus.

It is a sort of socialist business park, a model for future growth and the perfect symbol of PDVSA’s transformation into something more than an oil company.

Chavez is massively excited about these endogenous development centers, and hundreds are planned; this one includes cooperative shoe and apparel factories, a large clinic, a school to train new cooperatives and a series of terraced hillside gardens for training in alternative agriculture. Known by their Spanish acronym as NUDEs, these focal points of industrial training, social services and investment are supposed to become the motors of the new egalitarian, geographically decentralized, non-petroleum dependent economy that Chávez hopes to construct. All government ministries will be required to fund and organize NUDEs, but so far only PDVSA’s Nucleo Fabricio Ojeda is up and running.

At La Campiña, the PDVSA headquarters, I met Daniel Nuñez Gleynzes and one of his older, supervising comrades, Ingel Vere. In a small, windowless office, the two Chavistas told me the tale of their work and how they arrived at PDVSA.

During the strike, anti-government mobs had stormed PDVSA’s central offices. Leftist community organizations responded. “La Campiña is like the White House of PDVSA. We couldn’t let them have it,” explains Vere, who worked with a coalition of Caracas community organizations during the oil strike.

But now, with the worst of the crisis over, the Restructuring Committee turned to other tasks. “Now we’re changing the culture here,” explains Nuñez in a more philosophical tone. “There are still many people who do nothing but collect a check. We want them out. All the escualidos should go.”

“If we fail, another century of misery”

Toward the end of my trip, I meet Hector Ciavaldini in the quiet courtyard of a hotel. He was one of the first truly Chavista presidents of PDVSA. When I ask him about the progress of the revolution he turns the conversation back to PDVSA. Does he think PDVSA can recover from the firings, the strike and the ongoing sabotage?

“It is too soon to know,” says Ciavaldini with a shrug.

“But I’ll tell you this: if we do not get this right, we are doomed. I don’t just mean the revolution, or Venezuela. I mean all of Latin America. If we fail, it means another century of misery, violence and hunger.”

This is a grand mission, nothing less than a relaunching of the socialist dream. But grand missions run the risk of hyperbole and overheating into ideological froth. And with oil prices well above $50 a barrel, the ongoing crisis at PDVSA, and thus at the heart of the Venezuelan revolution, can easily be overlooked. The tendency is to spend the windfall, to invest in big ideas and talk of even bigger ones.

At times, Chávez encourages this with discourse that veers into messianic mumbo-jumbo. Recently he proclaimed: “Either capitalism, which is the road to hell, or socialism, for those who want to build the kingdom of God here on Earth.”

Among the fishermen and oil workers of Ciudad Ojeda or the women making shoes at the Nucleo Fabricio Ojeda, it’s the smaller things that matter most. They want jobs, loans, education and contracts for their new cooperatives. The kingdom of God can wait.