Thursday, June 15, 2006

Rich people, bad apples

Hugo Chavez has been in power in Venezuela since 1988. Ever a thorn in the side of the US, he has vocally criticised Washington’s foreign policy whilst domestically implementing policies which fly in the face of US and IMF fiscal recommendations (in short, reducing the power and profits of corporations, and increasing direct benefits and assistance to the poorest people of his country). These policies have been wildly popular domestically, but have made him some powerful enemies (primarily the US, and the rich minority in Venezuela).

In 2002, he survived a coup that was almost certainly US-sponsored, with only a vast show of support on the streets forcing the return to power of the democratically elected Chavez.

The opposition secured a 2004 referendum on his leadership – Chavez won convincingly. In the Venezuelan congressional election late in 2005, the opposition parties pulled out of the running (a fairly clear attempt by the rich Venezuelan minority to destroy the legitimacy of the election, rather than risk another clear-cut defeat at the polls).

At one point, US TV Evangelist Pat Robertson actually espoused assasination: “We [the US] have the ability to take him out and I think the time has come that we exercise that ability”.

In the face of the constantly escalating rhetoric from Washington, Venezuela has been stockpiling weapons to guard against military action. This ranges from receiving 30 fighter planes, to 100,000 assault rifles (all from Russia). Arms discussions have also been ongoing with China, Brazil and Spain.

Chavez is also joining hands with his allies. He has called for Ecuador and Bolivia to be allowed to join OPEC, signed trade agreements with Bolivia, signed oil and energy agreements with Brazil, signed agreements to open Venezuelan oil fields to Chinese investment, and has agreements and proposals with Argentina covering everything from a gas pipeline linking Argentina, Brazil, Peru and Venezuela, an investment fund for Latin America, through to a South American union.

These events in Venezuela have to be seen in the context of a much larger swing to the left in South America – the biggest other example of this being Bolivia, where new president Evo Morales won his presidency on a platform of raising social spending and abandoning free-market policies. Morales has also dramatically pledged to join Venezuela in the “anti-imperialist fight”.

In short, there are serious problems developing in South America for the current US administration. Chavez is showing that the IMF formula for development (trade liberalisation, free movement of capital, “trickle-down” economics) is fatally flawed – and that taxing of the rich – both individuals and corporations – can deliver material improvements to vast numbers of the poor in vital areas such as healthcare and provision of education.

Would this matter to the US if Chavez wasn’t so verbally belligerent? The short answer is yes. The problem for the US in Venezuela is not just the alternative to the capitalist tradition of rewarding the rich at the expense of the majority – for Venezuela is only one country. The problem is that by implementing this alternative, acting in the best interests of the poorest in his society, and refusing to tow the US line, Chavez is providing an example to the hemisphere and the world – and it is in the providing of this example that Venezuela forms the greatest threat to US hegemony. Chavez has become the dreaded ‘bad apple’ that spoils the basket. He is rocking the boat, and the danger is that others might be inspired to follow - the same danger that has seen Cuba punished for decades.

So when Condoleezza Rice warns that Chavez is “one of the biggest dangers facing Latin America”, ask yourself this: to whom is he a danger? Why?

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The US economy is in a disastrous state. Currently, the major props preventing its total collapse are the Chinese financing of US debt, and most of the world steadily purchasing dollars to function as their reserve currency – largely due to the dollars position as the currency required to purchase oil.

China are a growing power. As such, they will pull the plug on the US debt when it suits them. For other countries, the requirement to purchase oil in dollars is likely to continue until there is a viable alternative.
In November 2000, Iraq stopped trading oil in dollars, and started trading it in euros instead – a policy for which the then Iraqi administration and it’s people paid severely. (Again illustrating the point that any country setting a non-compliant example must be quashed immediately).
In June 2004, Iran announced its intention to set up an international oil exchange, trading in Euros. Month by month, the manufactured crisis with Iran grows ever deeper.
In May 2006, Chavez stated that Venezuela (the worlds 5th largest producer of oil) might price its oil exports in euros, as opposed to dollars.
Perhaps he is right to be purchasing weapons and forming strategic alliances after all.