Chavismo as Savage Capitalism

Oil wealth will be replaced by a private production network that will serve the mafias that keep the dictatorship standing. What’s happening with gas is only the first step

Photo: Racq Live

Chavismo is a money-making machine that feeds on the disgrace of Venezuelan people. The most recent evidence is the price increase of fuel through a two-pronged system that has a subsidized scheme on one side and a litre-for-half-a-dollar scheme at the other. The regime that always prided itself on an alleged oil “nationalization”which really took place in 1976 by Carlos Andrés Péreznow privatizes fuel sales in a murky way—what it’s really doing is handing benefits to a group of privileged people who can buy low and then sell at a higher price, in the not-so-revolucionario American dollar.

But fuel privatization won’t be the last initiative of savage capitalism by the Bolivarian socialism. Other upcoming privatizations have shown their heads on the horizon, individually chosen to favor the corrupt and their front friends. Carabobo’s flamboyant state governor, Rafael Lacava, said in November 2019 that “it’s necessary to privatize the electric power service” at rates that represent “what electricity is worth” (meaning: rates that are profitable).

It’s easy to imagine what chavismo has in store for the Venezuelan economy, now that it has pretty much stopped producing oil (since hydrocarbon exports and refining have dropped to historic lows). The economy will depend, in good measure, on money laundering from corruption, drug dealing, gold mining, and assorted shady businesses. This answers to a folding-back-logic at a time when dirty civilian and military agents are having trouble moving their money around the world thanks to the sanctions imposed by the U.S. Treasury Department, and controls by the European Union.

Pressed and Clean

The so-called “bodegones” were a relatively successful experiment to dollarize sales until the COVID-19 pandemic arrived. Without generalizing, some of these stores, filled with delicacies, American candy bars, liquors, and many other imported products, have been relatively small money-laundering machines. The same could be said about some construction projects in Caracas. But the big deal will be privatizing public services with dollarized fares.

The big deal will be privatizing public services with dollarized fares.

The money coming from corruption and illegal businesses is already there. The ability to import Chinese technology, as well as Turkish, Russian, and Iranian tech and commodities is also there, with evident political will (proven by Iran in our fuel shortage). The social context is favorable. Repression, propaganda, censorship, food extorsion (through systems like CLAP), the incarceration of opposition figures and citizens who demonstrate, the existence of paramilitary groups and brutality by police and army officers that have subdued the “brave people.” There are also incentives for money laundering in Venezuela. The corrupt individuals associated with chavismo know that their properties and bank accounts in the United States, Europe, and other countries could be confiscated. Venezuela, under the umbrella of Maduro’s regime, is a safe haven to invest and have a foreign currency return. Besides, they’re offered participation in highly profitable enterprises like drug, mineral, and human trafficking, and the now “legal” trade of gasoline in dollars (and in the near future, public services).

How Criminal Authoritarianism is Financed

In the end, these corrupt regimes depend on poverty. We can look in the mirror of Cuba, post-Soviet Russia, or even the Democratic Republic of Congo (DRC) to understand how power mafias are constantly reinventing themselves. In the case of Cuba, a systematic parasitic policy is in place, first under the protection of the USSR in the midst of the Cold War, and later under Hugo Chávez, allowing the communist dictatorship to survive while it keeps the Cubans in misery. For this, it counts on the support of a martial caste that handles the consortium of military companies GAESA, which is in charge of the tourism activity on the island, among other things.

Post-communist Russia is an example of how the old Soviet nomenklatura (the equivalent of the chavista “elite”) can transform into capitalist oligarchs—what the anthropologist Alexei Yurchak called the “performative change” in his research about the end of the Soviet Union. Putin, a former KGB agent turned into an autocrat with Tsar-like aspirations, has been able to take out some of these oligarchs when they opposed his hegemonic policies.

The RDC, a country plagued by wars and epidemics, is dramatic evidence that “the show must (and can) go on” thanks to the exploitation of mineral resources, particularly the coveted coltan, destroying the environment and causing brutal violence among paramilitary forces that have resulted in thousands of deaths.

When Will It End?

Everything points to privatizations turning into economic support for the regime. Shady privatizations, without open bids. They will allow dark capitals to enter the country, reproduce, and legitimize in Venezuela and other allied countries like Iran, Russia, China, and Turkey. It will be a privatization that will benefit the same civil and military oligarchy. A huge majority will continue to be impoverished, subject to the “arepa muzzle,” a Venezuelan version of The Hunger Games. A civil and military oligarchy living like kings will prosper within the country that has become a big prison, while being in the crosshairs of the United States and other countries. A diminished middle class will survive with minimal income in foreign currency. They will all be players in a wild capitalist economy behind the mask of socialism, controlled by a few chavista hierarchs that will continue in charge thanks to theft and violence. 

When will it end? Cubans, Russians, and Congolese have been asking themselves that same question for years.