Venezuela: Nationalizations Aim to Make Industry Serve Peoples’ Needs

By Federico Fuentes. On August 27, Venezuelan President Hugo Chávez announced the end of negotiations with former owner Ternium over the nationalization of the Sidor steel factory, stating that the government would “take over all the companies that it has here,” and that Ternium “can leave.”

Speaking during a televised broadcast, Chávez explained that Ternium “did not recognize our sovereignty.”

“The deadline for reaching an agreement has expired. We will move ahead and pay them what it really costs. Moreover, it will not be all in one go as they wanted. No, we will pay them at a pace that is appropriate for us.”

Until the April 9 decision to nationalize Sidor, the Ternium consortium, whose biggest shareholder is the Italian-Argentine transnational Techint, had 60% control of one of the largest steel factories in Latin America, located in the industrial state of Bolívar.

Chávez stated in his August 27 broadcast that a tentative agreement on the purchase price, reached the previous week, had broken down when Ternium tried to impose unacceptable conditions. Among the transnational’s demands was a law giving it immunity from any future lawsuits related to abuses committed by Ternium against the Sidor workforce.

The decision to nationalize Sidor came after a 15-month-long dispute between the workers and the transnational over a collective contract. Having intervened in order to help reach a resolution, Venezuelan Vice-President Ramon Carrizalez declared that negotiations with Sidor’s management were no longer possible, due to its “colonizer attitude” and “barbarous exploitation.”

“This is a government that protects workers and will never take the side of a transnational company,” Carrizalez said.

Nationalization push

During the August 27 broadcast, Chávez stood alongside business owners from the cement industry, with whom the government has also been negotiating since the April 3 announcement that it plans to nationalize the three largest cement companies, which control 90% of the sector.

The government had reached agreements to buy out the majority of shares from the French company, Lafarge, and the Swiss company, Holcim, but negotiations had stalled with the largest company, the Mexican-owned Cemex.

On August 18, after the negotiation period expired, the government announced that it would expropriate Cemex, and ordered the takeover of its installations.

By law, there is a 60 days period starting from the declaration of intent to expropriate during which the two parties can reach an agreement. Cemex is asking for US$1.3 billion, but the government has stated it will not pay more than $650 million.

However, Chávez said that, in contrast to the record with Ternium, there were positive signs that an agreement could be reached.

Chávez also used the broadcast to explain a new law, approved in the first round of discussion by the National Assembly, that will put the distribution of fuel back into government hands. The state oil company PDVSA will supply fuel directly to the 60% of the country’s service stations that are privately owned (many by small proprietors), eliminating the capitalist intermediaries who now sell to them for a profit.

Negotiations will now begin with the seven largest companies, including Texaco and BP and 650 other firms that currently finance a majority of private service stations.

Energy minister Rafael Ramírez also announced that the government was looking at similar measures regarding the distribution of Liquid Petroleum Gas (LPG) cylinders.

Last month, Chávez announced plans to nationalize Spanish-owned Banco de Venezuela, an action that will almost double the state’s control of the financial sector from its previous 10%.

Reversing neoliberalism

Together with the announcements made earlier this year to take control of more than 30% of milk production and food distribution, and last year’s decision to take majority control of the oilfields in the Orinoco Belt, these moves are part of a second wave of nationalizations, focused on industries related to production.

The first wave, begun at the start of 2007, was directed at telecommunications and electricity, to guarantee all Venezuelans access to basic services.

The August 25 edition of the Caracas daily El Universal reported that since last year 11 industries have passed over into state hands.

While pro-capitalist governments privatized a number of important industries during the 1990s (including Sidor, part of the electrical sector and telecommunications company CANTV), they always had their eyes set on the big prize, PDVSA. Chávez’s election in 1998 halted such privatization plans. Since then the government, backed by the majority of the population, has worked towards rolling back neoliberalism.

Unsurprisingly, the first major showdown was a result of government attempts to gain full control over the nominally state-owned PDVSA. Fierce resistance by the parasitic capitalist class, accustomed to leeching off the rent produced by PDVSA, led to a military coup that briefly overthrew Chávez in April 2002 followed by a shutdown of the oil industry by the pro-capitalist management in December 2002.

Both attempts by the capitalist class to bring down Chávez were carried out in alliance with the corrupt trade union bureaucracy of the Confederation of Venezuelan Workers (CTV).

During more than two months of intense struggle caused by the shutdown, oil workers, working alongside poor communities and the armed forces, reopened PDVSA and restarted it under workers’ control.

This victory was crucial in ensuring that the government could begin to redirect PDVSA’s profits away from the capitalists and towards funding the social missions that provide, among other things, free health care and education. The missions also helped organize the Chavista grassroots supporters.

Publicly declaring in January 2005 that he had become convinced that his project for national liberation and the eradication of poverty could not be achieved within the bounds of capitalism, Chávez argued for the need to move towards a “new socialism of the 21st century.”

That same month, he announced the nationalization of the Venepal paper company, whose workers had been fighting to reopen it after the bosses shut down operations in December 2002. Renamed Invepal, the company was handed over to the workers as a joint state-worker cooperative. Since then, a number of other smaller companies that had been shut down and then taken-over by their workers have been nationalized.

However, the nationalizations initiated in 2007 marked a qualitative leap in the process of state recuperation of control over strategic sectors.

State planning

These nationalizations have been carried out in accordance with the government’s overall economic plan, which seeks state control over strategic industries in order to direct production towards the needs of the Venezuelan nation.

Now under state control, the three cement companies will be merged into the new National Cement Corporation and will integrate its production plans with PDVSA and Sidor — focusing on infrastructure development, creating new industrial centres and pushing forward the government’s badly needed housing construction plans.

The Steel Corporation of Venezuela is also being created — it will manage the whole steel production chain that is now 80% under state control, from primary material to finished products. Production will be directed towards the needs of small and medium companies, the oil industry and the housing sector.

And while no specific public statements have been made, it seems likely that the nationalization of Banco de Venezuela will lead to reorganization of the public banking sector into a single national public bank.

The new Public Administration Law, decreed on July 29 as part of the package of 26 laws issued by Chávez, states that where various state companies exist they should be grouped into one. This can include companies in different industrial sectors that, due to their nature, work together.

With the recent nationalizations, the number of workers in the state sector will increase by 41,400, totalling just over two million according to the National Institute of Statistics. This does not include those in the fuel distribution and LPG cylinder distribution sectors, which are slated to come under state control.

This represents a 53.5% increase in the number of public sector workers in the last nine years. Importantly, Chávez has raised the need to eradicate the practice of contracting out labour in the state sector, which will further increase this number.

In the same period, employment in the (formal and informal) private sector grew from 7.3 million to 9.4 million.

Worker and community participation

Almost none of the recent nationalizations are the direct result of workers’ struggle in favour of such measures, although in many cases labour disputes were factors. This was the case with fuel distribution, where unions have been warning that the bosses were trying to manufacture shortages and provoke strikes to undermine the government.

In contrast to most of the earlier nationalizations involving small factories, only in Sidor can it be said that the demand for nationalization came from the workers. Even then, the demand was raised only in the last period of the struggle after persistent campaigning by a small nucleus of Sidor workers.

Yet, the future of the nationalized companies depends on the political and organizational capacity of the working class in running these industries, and the working class currently finds itself in a state of dispersion and fragmentation.

Unofficially, according to the daily newspaper Ultimas Noticias (April 27), there are no fewer than 3,600 unions in Venezuela.

This fragmentation is due to numerous factors, but two in particular stand out. Firstly, with the coming to power of Chávez and the expansion of workers’ rights and union freedom, workplaces across the country experienced an explosion of union organizing.

In the aftermath of the defeat of the bosses’ lockout, a majority of the pro-revolution unions came behind the formation of the National Union of Workers (UNT), which rapidly overtook the CTV as the largest union confederation. However, the UNT is plagued by bitter internal disputes. This division deepened earlier this year when two currents left the UNT to form a new union confederation.

Added to this are negative experiences in some cooperative-run factories, including the exploitation of contract labour and self-enrichment by co-op owners.

Secondly, actions by sections of the government and state bureaucracy have also worked against the self-organization of workers and their participation in running state industries. Under the previous labour minister, José Ramón Rivero (who actively worked against the Sidor workers), parallel unionism was promoted in order to favour the union current from which he came and to dampen labour disputes.

In PDVSA and the state electrical company, workers have faced attacks at the hands of a bureaucracy that is afraid of losing power if workers take on a greater role in management.

The recent nationalizations have coincidedwith the launch of the “April 13 Mission.” Chávez has stated that part of the mission’s aim is to transfer control over services to organized communities through communal councils and communes and the creation of productive units and factories that will be socially owned and run.

Without the participation of workers and organized communities in the running of industries and in democratic planning, control of state companies will remain in the hands of bureaucrats who are more interested in maintaining their share of power and privileges. This would restrict the ability of workers to fully develop their creative potential, boxing them into their role as simple providers of labour power.

This has created situations like the one in the nationalized Inveval valve factory, run under workers’ management. It has the capacity to produce valves for PDVSA, but it has been pushed aside by PDVSA bureaucrats who prefer to continue their contracts with private companies.

Significantly, it was reported on August 28 that Inveval will become a mixed company, jointly owned with PDVSA, and will directly supply the state oil company with valves.

A crisis threatens the electrical sector, where, despite repeated warnings by the workers, power generation and distribution plans have failed to take into consideration increased demand caused by the boom in industrial and housing projects.

Speaking on the eve of this year’s May Day demonstrations, Chávez once again repeated his call for the working class to take the lead in the struggle for socialism. “There is no revolution without the workers, and I would add, there is no socialism without the working class,” he insisted.

“That is why the working class that the revolution needs has to be very conscious, very united,” he said.

“The Bolivarian revolution … needs to be ‘proletarianized’ … the ideology of the proletariat should dominate in all spheres, a transformational, truly revolutionary ideology, and overcome petty bourgeois currents that always end up being … counter-revolutionary.”

Federico Fuentes is a Green Left Weekly correspondent based in Caracas, Venezuela.