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Shades of Chile 1973 as US moves against Venezuela

The Trump administration returns the US to its infamous and bankrupt policy of treating Latin America as if it were its ‘own backyard,’ endangering peace and stability in the region. TIM YOUNG reports

US Secretary of State Rex Tillerson recently suggested that Venezuelan President Nicolas Maduro might be removed by a military coup — the latest US move to effect “regime change” and topple the democratically elected government.

The leaders of Venezuela’s armed forces have rejected Tillerson’s comments as “interventionist” and reaffirmed their support for Maduro’s government.

Tillerson’s remarks were made before he embarked on a regional tour to garner further support for the US’s strategy. In addition he is threatening to ban the import of oil and crude products into the US from Venezuela.

This is the latest US move in the economic war against Venezuela, and progressive Latin American movements have compared it to the tactics the US and its allies employed against the Salvador Allende government in Chile — prior to Augusto Pinochet’s coup in 1973 — when US president Richard Nixon and secretary of state Henry Kissinger instructed the CIA and others to sabotage the Chilean economy.

But what exactly are the mechanisms of economic warfare being deployed against Venezuela and how is the government fighting back?

The achievements of Venezuela since 1998 — when Hugo Chavez was elected president — such as cutting poverty and massive increases in social spending on housing, healthcare and education — have been bitterly resented by a small, privileged elite which lost out under this redistribution of economic and political power.

So too did their powerful allies in Washington who lost their control of Venezuela’s huge oil reserves.

Neither group has taken this lying down and — mutually supporting each other — have contributed in their own ways to undermining Venezuela’s economy.

These strategies of economic sabotage have been employed elsewhere in Latin America over the years, not only in Allende’s Chile but also most notably against Cuba after the revolution of 1959 and potentially against Nicaragua.

When the right-wing coup — supported by the US — against Chavez in 2002 failed, the Venezuelan oligarchy turned to economic sabotage.

Cutting poverty and massive increases in social spending on housing, healthcare and education are bitterly resented by a small, privileged elite

An early example occurred in 2002-3 when a right-wing management lockout in the state-owned oil company PDVSA lost billions of dollars in revenue with a catastrophic impact on social projects. Shortages of petrol for transportation also led to shortages of essential goods.

The tactic of creating scarcities has been activated in the past few years as the private sector dominates crucial areas of the economy, among them food distribution, pharmaceuticals, consumer product importation and sales — not to mention the media.

Private-sector sabotage, instigated by the right-wing opposition, has involved hoarding of food and essential items, price speculation, contraband food shipments to neighbouring countries and even setting food warehouse stockpiles on fire.

Multinational companies which control the Venezuelan market for personal and household hygiene products also appear to be withholding products from sale.

The general aim of these activities is to create chaos and discontent to undermine Maduro’s government. The economic situation has been made worse by the drop, in recent years, of global oil prices.

Then there is the US government which, apart from financially supporting and encouraging the Venezuelan opposition for decades, has employed direct economic sanctions, first imposed by president Barack Obama in 2015.

Financial institutions such as international credit-rating agencies have followed suit by consistently giving Venezuela unwarranted risk ratings, despite the fact that it was honouring external debt repayments.

Trump’s latest sanctions impede Venezuela’s relations with US companies in order to restrict its ability to repay or refinance loans.

As with the US blockade of Cuba, it’s the US Office of Foreign Assets Control that polices these sanctions, and many international banking institutions are also drawn in.

This has led to the effective boycott of a number of essential transactions with Venezuela, including blocks on payments for food, medicine and other essential goods. Sanctions are already directly affecting the Venezuelan people.

Exacerbating all these difficulties has been the manipulation by the website Dolar Today of the “parallel” or “black market” exchange rate between US dollars and the Venezuelan Bolivars. Dolar Today also publishes the implied inflation rate of the Venezuelan Bolivar that is based on their currency exchange rates.

The aim is to promote an excessive increase in inflation, fostering uncertainty and hardship.

Critics have argued that the hikes in the “parallel” exchange rate for the Bolivar are completely out of sync with Venezuela’s actual macroeconomic statistics.

This is the context of Maduro government’s efforts to reassert control over the economy, control prices and ensure Venezuela’s neediest citizens are enabled to obtain low cost food and other essential items.

In his recent “state of the nation” address, Maduro highlighted the introduction of a new electronic identity card, streamlining access to social programmes for 15 million people.

A new social welfare programme is also being launched to provide up to 4 million households with monthly payments to cover basic necessities such as groceries.

Other actions include improvements in the Local Committees for Production and Supply (CLAP) programme which distributes food and basic goods door-to-door, and government moves to regulate all goods and prices.

Perhaps most important is the introduction of a digital Venezuelan currency, the Petro, to break the US financial blockade. The Petro is backed by the country’s vast reserves of natural resources, primarily oil.

Time will tell if it will enable Venezuela to bypass US sanctions. The US Treasury Department has already red-flagged it, warning US investors that existing sanctions may still prohibit any engagement with the new currency.

The United Socialist Party of Venezuela and its allies won three national elections in 2017, showing that, politically, Maduro’s strategies for combating the economic war while promoting dialogue with the right-wing opposition is succeeding.

Governments internationally, including Britain and in the EU, should do all they can to facilitate and support the dialogue process and oppose any external intervention threatening Venezuela’s sovereignty.

Tim Young is an executive member of the Venezuela Solidarity Campaign, www.venezuelasolidarity.co.uk.

Join Chris Williamson MP and guests from Latin America today at an emergency rally — Keep Trump’s Hands off Latin America — on March 15 from 6.30pm (registration 6.00pm or at https://bit.ly/notrumplatam) at 128 Theobalds Road, London WC1.

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