Economic Conflicts Often Turn Political

Economic Conflicts Often Turn Political
[Analysis] The cliche may be repeating itself in Venezuela
Alfredo Ascanio (askain)
Published 2009-03-30 11:38 (KST)
Edited by Carlos Arturo Serrano

On Saturday, President Hugo Chavez reduced the national budgeted oil price from US$60 to $40 per barrel and lowered the oil output estimate from about 3.67 million a day to 3.17 million. More than half of government spending is financed by crude oil revenue.

Then he cut the 2009 budget by 6.7 percent to $72 billion and raised the minimum wage in 20 percent. Also, he increased planned government financing from $5.6 billion to $16 billion, and the sales tax from 9 percent to 12 percent.

The bureau in charge of money exchange, CADIVI, now sells the dollar to imports at a parallel rate of 6.50, thrice the official exchange rate of 2.15, to get more bolivars per dollar, thus devaluing the exchange rate. This adjustment and the 3-percent sales tax increase leave the poor with lessened purchasing power. The nation's GDP is feared to have decreased by 3 percent, in contrast with the only 1 percent expected for all of Latin America.

This neoliberal package shall first cause low-intensity conflicts, such as demands from labor unions for benefits. If the government does not meet their economic claims, this will become a political conflict.

This endogenous crisis, unrelated to the global one, can be a great opportunity for the opposition to galvanize the currently scattered social struggles to achieve a program that enables dialogue and find a long-sought balance.

If dialogue finds itself broken in this polarized society, it's not, as Chavez suggests, because of class struggle, but because there is a society concerned about how the country is affected by the looming economic crisis. Nevertheless, the President has tried to turn such a polarized society into a class struggle of so-called "revolutionaries" and the "oligarchs" or "Piti-Yankees," which he considers his enemies.

Recently he has behaved aggressively towards six opposition figures who won state government seats and a number of new mayors. This assault against his rivals, particularly against one governor who had nearly won the presidency, is a strategy to eliminate a potential future rival.

President Chavez sees policy as war, and assumes that the enemy cannot shoot with weapons, as in Cuba, so he shoots with profanities. If he goes on with such behavior, the 30 percent of poor people who always put their hopes in government may change their minds when they notice that the President has been manipulating them.

Alfredo Ascanio is a professor of economics at Simon Bolivar University in Caracas, Venezuela.
©2009 OhmyNews

Other articles by reporter Alfredo Ascanio