Venezuela: Chavista debate more than 'pragmatists vs radicals', 'Trotsky vs Stalin'

Jorge Giordani.

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By Federico Fuentes

July 21, 2014 -- Green Left Weekly, posted at Links International Journal of Socialist Renewal -- The publication of a document highly critical of the government of Venezuela's President Nicolas Maduro, authored by one of the longest-serving ministers in former president Hugo Chavez’s government, has triggered an unprecedented debate among Venezuelan revolutionaries.

Jorge Giordani dropped the bombshell on June 18, a day after he was replaced as planning minister. This was preceded by his dismissal from the boards of Venezuela's Central Bank and state oil company PDVSA, the state oil company. He had held the post almost uninterruptedly since Chavez first came to power in 1999. .

Many view Giordani as a principal architect of the Chavez government’s economic policy and representative of a more orthodox Marxist strand within cabinet. His removal has been portrayed as evidence of a widening rift between “pragmatists” and “radicals” in the government.

Giordani’s testimony

In the document, titled “Testimony and responsibility in front of history”, Giordani highlights what he views as the three key achievements of the Bolivarian revolution.

These are the dramatic cut in poverty; the dismantling of power relations that allowed foreign and domestic capital to control the state, in particular the state oil company PDVSA; and the creation of a public sector that now dominates key economic sectors.

But Giordani says these gains are at risk due to a “new path taken” after Chavez's death last year.

Combined with the impact of a right-wing offensive and a president “who lacks an ability to project leadership”, he said this has led to “a power vacuum in the presidency”.

Giordani said this resulted in “its concentration in other centres of power, thereby destroying the work of institutions such as the Ministry of Finances and the Central Bank, and consummating the independence of PDVSA from the government”.

Giordani said that capitalist interests had succeeded in pushing the Maduro government down the “path of re-installing capitalist financial mechanisms that would facilitate attempts to recapture oil wealth”.

This is in reference to attempts by the Maduro government to gradually replace strict currency controls (of which Giordani has been a strong advocate) with more market-orientated mechanisms.

Few have come out in complete support of Giordani’s statements, but at least two former ministers and high profile leaders of the governing United Socialist Party of Venezuela (PSUV), as well as the Communist Party of Venezuela, have said the document raises important issues that need to be debated.

Left versus right?

Unsurprisingly, Chavismo’s harshest critics have described Giordani’s letter as a falling out among thieves.

On the right, former opposition presidential candidate Henrique Capriles wrote that the letter simply “confirmed the level of corruption that exists within the government”. He said the government’s handling of the economy was dictated not by the needs of the people, but by “personal interests and those of a political party”.

On the other side of the political spectrum, former vice-minister under Chavez and leftist dissident Roland Denis wrote that Giordani’s letter was evidence he is part of “a leadership that is in conflict with itself”.

“Without a doubt”, Denis, said, “our friend is a typical example of the moral and political bankruptcy of a state leadership that knows full well the mess that it is in, but does not want to assume full responsibility … he tries to appear as the person least involved in corruption, even if he let it all happen.”

Most commentators, however, have viewed Giordani’s sacking as the latest step in an ongoing pragmatic shift by the Maduro government.

Francisco Rodriguez, a former head of the Office of Economic and Financial Advisory of the Venezuelan National Assembly, wrote an analysis piece for the Bank of America less than a week before Giordani was removed as minister.

In it, he described Giordani’s recent ousting from the Central Bank and PDVSA boards as a “strong sign of the waning influence of the radical Marxist wing on economic policy issues”.

Taken with the government’s moves towards softening currency and price controls, Rodriguez said it was “a strong consolidation of the pragmatist wing's control of economic decision-making”.

The view that Maduro has been gradually steering the government in a more moderate direction has also been voiced by some left sectors within Chavismo. One example is Marea Socialista, a small internal current within the PSUV.

In February, Marea Socialista said Maduro’s bid to initiate dialogue with business sectors, and the government’s decision to grant private business easier access to US dollars, but at a much high rate than the official fixed exchange rate, represented important concessions.

Seemingly adding weight to this argument was the appearance, less than two weeks before Giordani’s removal, of an article by Temir Porras, a vice-minister under Maduro when he was foreign minister. Porras had also been appointed by Maduro to preside over the national development fund, FONDEN, and national development bank, BANDES.

He did not last long in these positions, as he was removed after clashing with some of Giordani’s allies within these institutions.

Porras wrote that a “change in the strategic path” is needed as soon as possible if the revolution was to not lose its achievements. In the economic sphere, he called for more “pragmatism”.

Not all, however, are convinced that Giordani’s ouster is a sign of a struggle between pragmatists and radicals, nor that Maduro is pursing a fundamentally different path to the one charted by Chavez.

Neftali Reyes, a regular contributor to the pro-revolution website Aporrea, notes that many of the concerns Giordani raises can be traced back to Chavez’s presidency.

Reyes points out that Chavez also called meetings with business sectors and initiated mechanisms to periodically free-up the flow of dollars to the private sector.

Similarly, the fact that Rafael Ramirez has been reaffirmed as vice-president for the economy and PDVSA president (a post he has held for the past decade), is a sign of continuity in the government’s economic team. Ramirez also has a long history of involvement with Marxist groups.

Victor Alvarez, an ex-minister of basic industries, wrote that Giordani’s exit signified, at most, the speeding up of the dismantling of the current exchange rate regime already underway.

This regime, said Alvarez, has greatly contributed to the country’s economic problems by benefiting importers with overvalued bolivars, punishing local producers, stimulating scarcity and stoking inflation In this way, he said, it has greatly contributed to the country’s economic problems and was “the principal incentive for corruption and speculation”.

This process, which so far has led to the creation of an official three-tiered exchange rate system, was begun under Giordani.

The main tier of the system, which is used for 80% of Venezuela’s foreign trade, continues to be fixed at 6.30 bolivars. It is administered by the state-run National Centre for Foreign Trade, which provides dollars to companies that import basic goods.

The second tier, SICAD I (which Giordani acknowledges in his letter was originally his proposal), came into effect in July last year.

Under this mechanism, companies involved in specific industries are invited to bid in a weekly auction for access to US$220 million at a rate that fluctuates between 10 and 12 bolivars.

In March, the government announced a third tier with the creation of SICAD II. This mechanism allows PDVSA, the Central Bank, banks and private entities to buy and sell dollars at a free-floating rate. The Central Bank reserves the right to intervene, however.

SICAD II has operated at a rate that has hovered around 50 bolivars.

Finally, there is the “black market” rate, which has fluctuated around 60 to 70 bolivars in recent months. It essentially operates as an unofficial fourth tier.

Popular control

Alvarez said any real change in the direction of economic policy would require unifying the existing rates within a limited, free-floating system.

Ramirez says this is precisely what the government is working towards.

Those who argue that a shift away from strict currency controls is a move towards pragmatism have generally not explained why one flows from the other.

Writing on the debate over Venezuela’s currency controls and economic policy, Mark Weisbrot, a US economist invited to Venezuela by Chavez on many occasions, wrote: “The majority of the media tends to view changes in policies — particularly in a country like Venezuela, so disliked by the business media — through a binary prism. Changes are either ‘pro-market’ or favor greater ‘state control’.

“Many on the left have a similar opinion, but with an opposing preference: the market is bad, while state influence is good.”

Yet, as Weisbrot notes, neoliberal economists and the International Monetary Fund have supported fixed exchange rates in certain situations.

Moreover, currency controls have at times bred instability — contributing to speculation, corruption, capital flight and the rise of a black market.

Few doubt that Venezuela’s existing system of currency controls have distorted the economy.

Giordani himself denounced the existence of fictitious companies that illegally acquired about $20 billion via state regulated channels in 2012. This is just one example of how the controls fail as a viable mechanism for controlling the flow of dollars.

However, simply removing the controls could end up further complicating the situation.

Until now, the government has sought to control currency exchange, but had little say over what happens after than. To change this situation, Venezuela economist Manuel Sutherland, among others, has proposed nationalising all of Venezuela’s international trade.

He notes that Chavez first suggested three years ago, with the former president saying: “Create a state corporation for imports and exports to end the bourgeoisie’s hegemony over imports. We look like pendejos [idiots, wimps] giving dollars to the bourgeoisie. They import, overcharge, buy whatever is desired for one dollar and charge five dollars here…”

Increasing state control would also have to go hand in hand with intensifying the struggle against corruption. A first key step in this direction would be dealing with those responsible for the US$20 billion that Giordani said was stolen in 2012. Greater state control would also have to be accompanied with greater popular participation.

For example, any move to unify the existing exchange rates will establish an exchange rate somewhere between the current fixed rate and the black market rate. Private businesses would undoubtedly use this to justify further price hikes, claiming they are due to the official devaluation.

Yet it has been demonstrated time and again that most private businesses have been rorting the system by importing goods at the lower exchange rate and selling them as if they had been bought at the black market rate.

The best way to stop this would be to allow workers and communities to monitor how private business set their prices.

Similarly, greater worker participation might stimulate production and help clarify whether the shortage of imported parts is due to a lack of dollars or corrupt practices (by business owners, state officials or both).

Legislation for such actions already exist but has not been fully implemented.

These are further examples of why greater popular power over production and distribution is vital to ensuring that any loosening of control over the exchange rate does not lead to a loss of control over the future of the country’s oil wealth.

Trotsky vs. Stalin?

Giordani’s letter has also had the effect of blasting the lid off a debate that until now had been largely simmering below the surface. Some hope that this discussion will feed into the upcoming congress of the governing United Socialist Party of Venezuela (PSUV). Despite the fact that the party base will not elect almost half of all conference delegates, grassroots activists are organising themselves to ensure that their presence is felt at the congress. Attempts, however, by certain sectors within the party to silence dissent have cast serious doubts over the future of the party.

An increasingly public dispute among PSUV leaders has involved denunciations of creeping “Stalinism” within the government. Others have countered with accusations that every revolution “has had its Trotsky”, in reference to the historic dispute in the Russian Revolution between Josef Stalin and Leon Trotsky following Lenin’s death. The clash was resolved, in no small way, through Stalin’s brutal suppression of debate, which included the exile and assassination of Trotsky himself.

In his letter, Giordani, directly criticised what he perceived to be Maduro’s inability to project clear leadership, arguing this had generated the sensation of a “power vacuum”. He stated that government action had become increasingly marked by a lack of coordination and uncontrolled public spending. He also claimed that private business sectors had successfully prodded the Maduro government towards implementing economic reforms that “would facilitate [their] attempts to recapture oil wealth”.

At the same time, Giordani outlined some of recommendations he made while still in Maduro’s cabinet. These were focused on combating corruption and increasing control over public funding, but according to Giordani were largely ignored. The purpose of his letter, he wrote, was not simply to criticise, but to make public the fact that he had tried to put forward concrete proposals. He hoped the letter could help “revive” within the revolution “mechanisms for the confrontation of ideas and joint work, under a leadership respected by all.”


Giordani’s document provoked a flurry of responses. Many noted that while Giordani had been quick to point the fingers at others for the country’s economic problems, he seemed to absolve himself of all responsibility, despite having been a key figure in the government’s economic policy.

Former planning vice-minister Roland Denis argued that Giordani did not “take full responsibility for anything, wanting to blame it all on the failure of Maduro’s government and, above all, Maduro’s lack of leadership. [His] half truths will generate a lot of pain and anger inside [the government], but in the end he is not taking up the key issues, because the objective of this letter is to exonerate himself from all responsibility, when he has no excuse to do so.”

Rodolfo Sanz, a former Chavez minister and current PSUV mayor, questioned the motivation behind Giordani’s very public criticism. “It is not unheard of”, he wrote, “for people who have held important responsibilities ... within the Bolivarian Revolution, to open fire against the process on leaving their post”. Far from being part of the “frank and constructive debate that must exist among true revolutionaries”, Sanz accused Giordani of simply attacking those who continued to advance the revolution.

Maduro himself appeared to publicly question Giordani’s motivations during a televised cabinet meeting on June 19. Although he did not mention Giordani by name, many believe that his statement regarding disloyalty as akin to betrayal was a direct reference to the former minister. Some comrades, said Maduro, prefer to stay in the rearguard “and become chroniclers of failure”, rather than realise that “people are the heart of the revolution”. Defending his record in government, he said he had always acted in favour of the people, “not for the bourgeoisie or for technocrats who think they are superior to the humble folk”.

Others welcomed Giordani’s letter, even if they did not completely agree with its form or content. The Simon Bolivar Collective noted that despite their disagreement with Giordani’s general political outlook, he could not be labelled a traitor. They said his criticism was necessary, even if “mistimed”. PSUV members Toby Valderrama and Antonio Aponte, who for many years have published a widely read newspaper column, warned against dismissing Giordani’s accusations. “[When] a key cadre like Giordani raises an alert”, they wrote, “the Revolution, and above all its leadership, is obliged to reflect.”

A number of high-profile PSUV leaders and former ministers also made calls to respect differences and for the government and party to deal with Giordani’s statements in a serious manner.

PSUV national executive member Freddy Bernal wrote an article on the popular pro-revolution website Aporrea noting that revolutionary unity required “criticism and self-criticism”. Debates, rather than divide the movement, helped to “tweak unity, correct the path in case of deviations and accelerate the march towards socialism”.

On June 24, former Chavez minister and PSUV national executive member Hector Navarro published a letter on Aporrea. Navarro used his letter to recall how Giordani had tried on several occasions to raise his concerns in private with both Maduro and the PSUV leadership. Having been met each time with silence, Navarro said, “what is a revolutionary’s responsibility once all avenues are taken to raise the alarm on problems that threaten the course of the revolution, and those that are responsible for listening and acting don’t listen? Can someone who acts like this truly be called a traitor?”

He also referred to the denunciation made by Giordani last year, that in 2012 some US$20 billion had been illegally acquired through the existing currency regime system, and asked, “Is Giordani the traitor? Or are the traitors, even if no one talks about it, those who assigned dollars that today are needed by our hospitals, or are necessary to boost production and to meet the needs of the people?”

Silencing dissent?

Later that same day, Aporrea published another letter by Navarro in which he revealed that had been called up to face the PSUV’s disciplinary tribunal. This provoked the ire of another former minister and PSUV national executive member, Ana Elisa Osorio, who tweeted “two of Chavez’s most loyal comrades suspended and called traitors. Something bad is happening in the PSUV.” Another former Chavez minister, Victor Alvarez, denounced the move as “pure and simple Stalinism.”

“What Stalin, or not Stalin?”, responded Maduro at a June 25 public rally. Ratcheting up the heat on the debate, he made reference to “vacillating petty bourgeois” sectors and “disloyal ex-ministers who didn’t do things as they should have... They are very inconsiderate these enemies of the left. History will judge them.”

Various other government and PSUV leaders made comments along a similar vein over the next few days. Speaking to an assembly of PSUV militants, the party’s first vice president, Diosdado Cabello, criticised revolutionaries who “instead of using their energy to criticise the right, criticise President Nicolas Maduro... Is criticism more important than loyalty?”

He also warned that the party had rules “and we will make sure they are implemented”. PSUV governor Francisco Ameliach used his weekly radio program to argue, “We can’t let a few individuals generate fissures in our party.”

On the other hand, PSUV leader Freddy Bernal said that neither Navarro nor Giordani could be deemed to be traitors, and that both would be given an opportunity to express their viewpoints at a meeting with the PSUV leadership.

With discontent over the handling of the debate spreading through the party, Maduro used a June 30 speech to publicly extended an olive branch to those he had so harshly criticised just days before. Maduro said these differences with comrades who are “without a doubt revolutionaries and Chavistas” had to be dealt with in a manner that could facilitate a “reunification”. Later that day he asked everyone to “turn the page” on the saga of tit-for-tat letters and statements. “We have said everything we had to say... Now, the hand is extended and the embrace is ready to be given to all comrades.”

However, as Navarro noted in a further open letter dated July 12, Maduro’s call for dialogue largely fell on deaf ears. No meeting to discuss the differences was called, the demand to face the disciplinary tribunal remained and “name-calling persists in speeches by some [PSUV] leaders.”

Navarro drew particular attention to statements by Ramon Rodriguez Chacin, the coordinator of the PSUV disciplinary tribunal. Chacin had publicly spoken about the affair, arguing that every revolution “has had its Trotsky”. Apart from questioning the right of the head of the tribunal to condemned him as guilty without a fair trial, Navarro asked: “If according to Rodriguez Chacin I am Trotsky, is he suggesting that Comrade Nicolas Maduro is a Stalin, thereby agreeing with the enemy? Furthermore, is Rodriguez Chacin suggesting for me a fate similar to Trotsky?”

PSUV congress

Navarro drew attention to serious problems in the democratic functioning of the party. According to him, the PSUV national executive hardly met over the past year, and has essentially been replaced by a high political command composed of government ministers and top party officials. The party’s leadership bodies at almost all levels are not functioning, claimed Navarro, and “the [internal] spaces in which true collective discussions can be held about government and party-related problems are diminishing”.

Roberto Lopez Sanchez, a trade union leader and PSUV militant, raised similar concerns, when he wrote: “Today, more than 18 months after [the high political command] was created, we do not know if it is part of the state structure or if it is a ‘super-leadership’ over and above the PSUV national leadership.”

He denounce the undemocratic nature of this unelected, seemingly “all-powerful” body, and said any deepening of the revolution was predicated on a return to the original, participatory spirit that Chavez had imbued in the process. A newly elected PSUV leadership should replace the unelected high political command, he argued.

With the PSUV’s third congress fast approaching it is evident that a fierce debate has opened up within the party, with for the first time, party leaders publicly taking opposing sides. Going beyond Stalin-Trotsky analogies, it appears that two positions have emerged.

While some have pointed to divisions between “radicals” and “pragmatists” or “the grassroots” and “the bureaucracy”, it appears that the key division is between those who condemn public criticism as disloyalty to the leadership and those that see peoples’ active participation and criticism as the heart of the revolutionary process. Pragmatists and radicals can be found on both sides of this debate; so too can party leaders and rank-and-file members.

The fact that almost half of congress floor will be comprised of unelected delegates who hold public posts (mayors, governors, parliamentarians, etc.) will no doubt have a big impact on the outcome of the congress. PSUV leaders have also announced that a new party leadership will not be elected at this congress.

Both issues demonstrate how far the PSUV has drifted way from the original idea Chavez had for the party back in early 2007. In the speech where he first proposed creating a new party, Chavez blasted the idea of designating representatives from above.

“This should all be done from below, from the base. The people should take these decisions, as has been written in our constitution for seven years, except we haven’t done it.  Now is the time to start.” He also argued for new faces and new leaderships, saying anything else “would be a deception”.

Importantly, Chavez argued that grassroots and participatory democracy was vital to ensuring that the party became “a political instrument at the service not of blocs or groupings but of the people and the Revolution, at the service of socialism”. The new party had to be different to the Russian Bolshevik party, which after Lenin’s death, “ended up as an anti-democratic party”, he said.

Rather than being a vehicle for uncritically implementing decisions made by an unelected leadership, a party like the one envisaged by Chavez would be a powerful instrument through which people could defend their class interests. Such a party would not only pose a threat to the capitalist class but also those who preferred to use positions of power for personal gain. It could prove a space for the people to take control over the destiny of the process.

While the PSUV never became the party Chavez wanted during his lifetime, the former leader demonstrated that he was able to use his authority to maintain unity among competing currents of opinion, while simultaneously encouraging greater grassroots empowerment. Maduro now faces a critical test as to whether he can follow the same path, and in the process help put the PSUV back on its original course.

[This was originally written as a two-part series published on Green Left Weekly and ZNet.]

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