6. Fundamentalism Triumphant

One might object that despite its unusual advantages, Brazil is still not the optimal testing area to demonstrate the virtues of the neoliberal doctrines that "American-style capitalism" urges upon countries it deems "worth exploitation." Perhaps it would be better to try Venezuela, even more favorable terrain with its extraordinary resources, including the richest petroleum reserves outside the Middle East. We might, then, have a look at that success story.

In a major scholarly study of US-Venezuelan relations, Stephen Rabe writes that after World War II, the US "actively supported the vicious and venal regime of Juan Vicente Gómez," who opened the country wide to foreign exploitation. The State Department shelved the "Open Door" policy in the usual way, recognizing the possibility of "U.S. economic hegemony in Venezuela," hence pressuring its government to bar British concessions (while continuing to demand -- and secure -- US oil rights in the Middle East, where the British and French were in the lead). By 1928, Venezuela had become the world's leading oil exporter, with US companies in charge. During World War II, the US agreed to a Venezuelan demand for 50-50 profit-sharing. The effect, as predicted, was a vast expansion of oil production and "substantial profits for the [US] oil industry," which took control over the country's economy and "major economic decisions" in all areas. During the 1949-1958 dictatorship of the murderous thug Pérez Jiménez, "U.S. relations with Venezuela were harmonious and economically beneficial to U.S. businessmen"; torture, terror, and general repression passed without notice on the usual Cold War pretexts. In 1954, the dictator was awarded the Legion of Merit by President Eisenhower. The citation noted that "his wholesome policy in economic and financial matters has facilitated the expansion of foreign investment, his Administration thus contributing to the greater well-being of the country and the rapid development of its immense natural resources" -- and, incidentally, huge profits for the US corporations that ran the country, including by then steel companies and others. About half of Standard Oil of New Jersey's profits came from its Venezuelan subsidiary, to cite just one example.

From World War II, in Venezuela the US followed the standard policy of taking total control of the military "to expand U.S. political and military influence in the Western Hemisphere and perhaps help keep the U.S. arms industry vigorous" (Rabe). As later explained by Kennedy's Ambassador Allan Stewart, "U.S.-oriented and anti-Communist armed forces are vital instruments to maintain our security interests." He illustrated the point with the case of Cuba, where the "armed forces disintegrated" while elsewhere they "remained intact and able to defend themselves and others from Communists," as demonstrated by the wave of National Security States that swept over the hemisphere. The Kennedy Administration increased its assistance to the Venezuelan security forces for "internal security and counterinsurgency operations against the political left," Rabe comments, also assigning personnel to advise in combat operations, as in Vietnam. Stewart urged the government to "dramatize" its arrests of radicals, which would make a good impression in Washington as well as among Venezuelans (those who matter, that is).

In 1970, Venezuela lost its position as world's leading oil exporter to Saudi Arabia and Iran. As in the Middle East, Venezuela nationalized its oil (and iron ore) in a manner quite satisfactory to Washington and US investors, who "found a newly rich Venezuela hospitable," Rabe writes, "one of the most unique markets in the world," in the words of a Commerce Department official.¹⁵

The return to office of social democrat Carlos Andrés Pérez in 1988 aroused some concerns, but they dissipated as he launched an IMF-approved structural readjustment program, resolutely maintained despite thousands of protests, many violent, including one in February 1989 in which 300 people were killed by security forces in the capital city of Caracas.

Though rarely reported in the US, protests continued along with strike waves severe enough to lead to fear that the country was headed towards "anarchy." Among other cases, three students were killed by police who attacked peaceful demonstrations in late November 1991; and two weeks later, police used tear gas to break up a peaceful march of 15,000 people in Caracas protesting Pérez's economic policies. In January 1992, the main trade union confederation predicted serious difficulties and conflicts as a result of the neoliberal programs, which had caused "massive impoverishment" including a 60 percent drop in workers' buying power in 3 years, while enriching financial groups and transnational corporations.¹⁶

By then, another "economic miracle" was in place: "a treasury brimming with foreign reserves, inflation at its lowest rate in five years, and an economy growing at the fastest rate in the Americas, 9.2 percent in 1991," Times correspondent James Brooke reported, noting also some familiar flaws, among them a fall in the real minimum wage in Caracas to 44 percent of the 1987 level, a decline in nutritional levels, and a "scandalous concentration of wealth," according to a right-wing Congressman he quotes. Other flaws were to come to light (in the US) a few weeks later after a coup attempt, among them, the government's admission that only 57 percent of Venezuelans could afford more than one meal a day in this country of enormous wealth. Other flaws in the miracle had been revealed in the report of an August 1991 Presidential Commission for the Rights of Children, not previously noticed, which found that "critical poverty, defined as the inability to meet at least one half of basic nutritional requirements," had tripled from 11 percent of the population in 1984 to 33 percent in 1991; and that real per capita income fell 55 percent from 1988 to 1991, falling at double the rate of 1980-1988.¹⁷

On February 4, 1992, an attempted military coup was crushed. "There was little jubilation," AP reported. "The coup attempt caps a crescendo of anger and frustration over the economic reforms that have written such a macroeconomic success story but have failed to benefit the lives of most Venezuelans and have embittered many" (Financial Times ). It "was met by silent cheers from a large part of the population," Brooke reported, particularly in poor and working-class areas. Like the Brazilian technocrats, Pérez had done everything right, "cutting subsidies, privatizing state companies and opening a closed economy to competition." But something had unaccountably gone wrong. True, the growth rate was impressive, "but most economic analysts agree that the high price of oil in 1991 fueled Venezuela's growth more than Pérez's austerity moves," Stan Yarbro reported, and none can fail to see that "the new wealth has failed to trickle down to Venezuela's middle and lower classes, whose standard of living has fallen dramatically." Infant deaths "have soared in the past two years as a result of worsening malnutrition and other health problems in the shantytowns," a priest who had worked in poor neighborhoods for 16 years said. There is ample "new wealth," much of it "poured into financial speculation schemes rather than new investments in industry. In 1991 money made in real estate and financial services almost equaled the profits from manufactures."¹⁸

In short, a typical economic miracle, achieved under unusually favorable conditions for the evaluation of the neoliberal doctrines preached with such fervor by the priesthood of what Jeremy Seabrook calls the new "International Monetary Fundamentalism."¹⁹

¹⁵Rabe, Road. Krenn, US Policy, on earlier period.

¹⁶ Excelsior (Mexico City), Nov. 11, Nov. 21, Dec. 4, 1991; Jan. 30, 1992 (LANU ).

¹⁷ Brooke, NYT, Jan. 21; AP, NYT, Feb. 5; Douglas Farah, BG, Feb. 10; Stan Yarbro, CSM, Feb. 12, 1992.

¹⁸ AP, NYT, Feb. 5; Joseph Mann, FT, Feb. 5; Brooke, NYT, Feb. 9; Yarbro, CSM, Feb. 11, 12, 1992.

¹⁹ Seabrook, Race & Class (London), 34.1, 1992.