Venezuela and Argentina: A Tale of Two Coups

New Internationalist Magazine Sunday, July 7, 2002 by Greg Palast

The big business-led coup in Venezuela failed, where international
finance's coup in Argentina has succeeded. Greg Palast gives us the
inside track on two very different power-grabs.

Blondes in revolt

 On May Day, starting out from the Hilton Hotel, 200,000 blondes marched
East through Caracas' shopping corridor along Casanova Avenue. At the
same time, half a million brunettes converged on them from the West. It
would all seem like a comic shampoo commercial if 16 people hadn't been
shot dead two weeks earlier when the two groups crossed paths.

The May Day brunettes support Venezuelan President Hugo Chávez. They
funnelled down from the ranchos, the pustules of crude red-brick
bungalows, stacked one on the other, that erupt on the steep, unstable
hillsides surrounding this city of five million. The bricks in some
ranchos are new, a recent improvement in these fetid, impromptu slums
where many previously sheltered behind cardboard walls. 'Chávez gives
them bricks and milk,' a local TV reporter told me, 'and so they vote
for him.'

 Chávez is dark and round as a cola nut. Like his followers, Chávez is
an 'Indian'. But the blondes, the 'Spanish', are the owners of
Venezuela. A group near me on the blonde march screamed 'Out! Out!' in
English, demanding the removal of the President. One edible-oils
executive, in high heels, designer glasses and push-up bra had turned
out, she said: 'To fight for democracy.' She added: 'We'll try to do it
institutionally,' a phrase that meant nothing to me until a banker in
pale pink lipstick explained that to remove Chávez, 'we can't wait until
the next election'.

The anti-Chavistas don't equate democracy with voting. With 80 per cent
of Venezuela's population at or below the poverty level, elections are
not attractive to the protesting financiers. Chávez had won the election
in 1998 with a crushing 58 per cent of the popular vote and that was
unlikely to change except at gunpoint.

 And so on 12 April the business leadership of Venezuela, backed by a
few 'Spanish' generals, turned their guns on the Presidential Palace and
kidnapped Chávez. Pedro Carmona, the chief of Fedecamaras, the nation's
confederation of business and industry, declared himself President. This
coup, one might say, was the ultimate in corporate lobbying. Within
hours, he set about voiding the 49 Chávez laws that had so annoyed the
captains of industry, executives of the foreign oil companies and
latifundistas, the big plantation owners.

The banker's embrace

Carmona had dressed himself in impressive ribbons and braids for the
inauguration. In the Miraflores ballroom, filled with the Venezuelan
élite, Ignazio Salvatierra, president of the Banker's Association,
signed his name to Carmona's self-election with a grand flourish. The
two hugged emotionally as the audience applauded.

 Carmona then decreed the dissolution of his nation's congress and
supreme court while the business peopled clapped and chanted,
'Democracia! Democracia!' I later learned the Cardinal of Caracas had
led Carmona into the Presidential Palace, a final Genet-esque touch to
this delusional drama. This fantasy would evaporate 'by the crowing of
the cock,' as Chávez told me in his poetic way.

Chávez minister Miguel Bustamante-Madriz, who had escaped the coup, led
60,000 brunettes down from Barrio Petare to Miraflores. As thousands
marched against the coup, Caracas television stations, owned by media
barons who supported (and possibly planned the coup) played soap operas.
The station owned hoped their lack of coverage would keep the Chavista
crowd from swelling; but it doubled and doubled and doubled. On l3
April, they were ready to die for Chávez.

They did not have to. Carmona, fresh from his fantasy inaugural,
received a call from the head of a pro-Chávez paratroop regiment
stationed in Maracay, outside the capital. To avoid bloodshed, Chávez
had agreed to his own 'arrest' and removal by the putschists, but did
not mention to the plotters that several hundred loyal troops had
entered secret corridors under the Palace. Carmona, surrounded, could
choose his method of death: bullets from the inside, rockets from above,
or dismemberment by the encircling 'bricks and milk' crowd. Carmona took
off his costume ribbons and surrendered.

 Taking on the oil giants

 I interviewed Carmona while I leaned out the fourth floor window of an
apartment in La Alombra, a high-rise building complex. I spoke my pidgin
Spanish across to his balcony on the building a few yards away. The
one-time petrochemical mogul was under house arrest - the lucky bastard.
If he had attempted to overthrow the President of Kazakhstan (or for
that matter, the President of the US), he would by now have a bullet in
his skull. Chávez, in a gracious if strained nod to the ultimate
authority of the privileged, simply confined Carmona to his expensive

 In response to my question about who gave him authority to name himself
president, coup leader Carmona responded, 'Civil society'. To him this
meant the bankers, the oil company chiefs and others who signed his

 Most telling were Chávez's laws to which Carmona and coup leaders
objected. The prime evil was the Ley De Tierras, the new land law which
promised to give unused land to the landless, in particular, properties
held out of production by the big plantation owners for more than two
years. But Chávez's tenure would not have been threatened had he not
also taken on the international petroleum giants. Chávez's crimes
against the oil industry's interests included passing a law that doubled
the royalty taxes paid by ExxonMobil and other oil operators from about
16 per cent to roughly 30 per cent on new finds. He had also moved to
take control of the state oil company PDVSA - nominally owned by the
government, but in fact in thrall to the foreign operators.

 Chávez had almost single-handedly rebuilt the Organization of Petroleum
Exporting Countries (OPEC) by committing Venezuela to adhere to its OPEC
sales quotas, causing world oil prices to double to over $20 per barrel.
It was this oil money which paid for the 'bricks and milk' programme and
put Chávez head to head against ExxonMobil, the number-one extractor of
Venezuelan oil.

 This was no minor matter to the US. As OPEC's general secretary Alí
Rodriguéz says: 'The dependence of the US on oil is increasing
progressively. Venezuela is one of the most important suppliers of the
US, and the stability of Venezuela is very important for [them].' It was
the South American nation that broke the back of the 1973 Arab oil
embargo by increasing output from its vast reserves way beyond its OPEC
quota. Indeed, I learned from Alí Rodriguéz that the 12 April coup
against Chávez was triggered by US fears of a renewed Arab oil embargo.
Iraq and Libya were trying to organize OPEC to stop exporting oil to the
US to protest American support of Israel. US access to Venezuela's oil
suddenly became urgent.

 In an interview Chávez told me: 'I have the written proof, I have the
time of the entries and exits of the two military officers from the
United States into the headquarters of the coup plotters - I have their
names, who they met with, what they said on video and still
photographs.' He elaborated: 'I have in my hands a radar image of a
military vessel that came into Venezuelan waters on 13 April. I have
radar images of a helicopter that takes off from that ship and flies
over Venezuela and of other planes that violated Venezuelan air space.'

 With such powerful enemies, it seems unlikely that attempts to remove
Chávez will stop there.

 Exception to the New Order

 While the immediate cause of America's panicked need to remove Chávez
was a looming oil embargo, the Bush administration's grievances go much
deeper. Miguel Bustamante-Madriz, a member of Chávez's cabinet, paints a
bigger conflict with the global corporate agenda: 'America can't let us
stay in power. We are the exception to the new globalization order. If
we succeed, we are an example to all the Americas.'

 Despite the European and American media's hoo-ha over how Chávez has
'ruined' Venezuela's economy, in fact last year its Gross Domestic
Product grew by 2.8 per cent. And it wasn't all due to improvements in
oil-prices; excluding crude oil, economic activity jumped by about 4 per
cent. Compare the 'ruined' Venezuelan economy to Argentina's. That
'poster boy' of neoliberalism ended last year in a depression which has
since turned into an economic death spiral.

 Chávez is an old-style social democratic reformer: land to the
landless, increasing investment in housing and infrastructure, control
over commodity export prices. But with Marx discredited as the
philosophy of the 'losers' of the Cold War, 'Chavismo' is as radical as
it gets. His redistributionist reformism offers an operating, credible
alternative to the corporate-friendly free-market prescriptions of the
kind currently being handed to Argentina by the World Bank and the
International Monetary Fund (IMF).

 Since 1980, the World Bank and IMF have peddled a four-part free-market
agenda: free trade, 'flexible' labour laws, privatization and reduced
government budgets and regulation. Chávez rejects it all outright,
beginning with the phoney 'free' trade agenda under the terms of the
World Trade Organization (WTO) and the North American Free Trade
Agreement (which the US would expand to South America under the aegis of
the Free Trade Area of the Americas). Trade under these terms is
anything but free to the peoples of the Southern Hemisphere. Instead he
calls for a change in the North-South terms of trade, increasing the
value of commodities exported to Europe and America. Chávez's
longer-term policies of rebuilding OPEC and higher tariffs on oil must
be seen in the context of smashing imbalanced trade relations epitomized
by the WTO.

 World Bank and WTO rules have also forced nations such as Argentina to
sell off their state-owned and locally owned banks and insurance
companies to foreign financial giants such as America's Citibank and
Spain's Banco Santander. These swiftly vacuumed up the country's hard
currency reserves, setting the stage for the national bankruptcy at the
first hint of speculator-driven currency panics.

 The anti-Argentina

 Argentina accepted the World Bank's four-step economic medicine with
fatal glee. Not that it had much choice. I have obtained the secret June
2001 'Country Assistance Strategy' progress report of the World Bank,
ordering Argentina to pull out of its economic depression by increasing
'labour force flexibility'. This meant cutting works programmes,
smashing union rules and slicing real wages. Contrast that with Chávez's
first act after defeating the coup: announcing a 20-per- cent increase
in the minimum wage. Chávez's protection of the economy by increasing
the purchasing power of the lower-paid workers, rather than cutting
wages, is anathema to the globalizers.

 His Venezuela is the anti-Argentina, taking a path exactly opposite to
the guidance given, and ultimately imposed, on Argentina by the World
Bank and IMF.

 For example, in the June 2001 document, World Bank President James
Wolfensohn expressed particular pride that Argentina's Government had
made 'a $3 billion cut in primary expenditures'. Slicing government
spending in the midst of a recession is economic suicide, killing demand
when it's most needed. Who could have pushed the banks to demand such a
berserk programme? The answer is hinted at in the document. That $3
billion cut will 'accommodat[e] the increase in interest obligations' to
pay off those foreign banks - Citibank, Chase Manhattan Bank, Bank of
America, Credit Suisse, and Lloyds Bank - who, having bled the nation of
capital, lent Argentina back its own money at rates that can only be
called usury. Foreign banks working with the IMF had demanded that
Argentina pay a whopping 16-per-cent risk premium above US Treasury
lending rates.

 Chávez would take Venezuela in the opposite direction. His plan is to
pull out of a downturn threatened by a corporate embargo of investment
in his nation by taxing the oil companies and spending - the 'Bricks and
Milk' solution, old-style Keynesianism.

 And while Chávez moved to renationalize oil and rejects the sale of
water systems, Argentina sold off everything including the kitchen-sink
tap. The World Bank beams: 'Almost all major utilities have been
privatized.' That includes the sale of water systems to Enron of Texas
and Vivendi of Paris, companies which immediately fired workers en
masse, let the pipe systems fall apart and raised prices as much as 400
per cent. Wolfensohn, for some reason, is surprised to note that after
these privatizations, the poor lack access to clean water.

 Coup Nouvelle

 George W Bush is an oil man; he owned oil companies, now it looks like
they own him.

 Certainly the Keystone Kops-style plot against Chávez by Venezuela's
military-industrial complex served Big Oil's interests. But that's an
old-style shoot'em-up coup, likely to fail. The coup d'etats of the 21st
century will follow the Argentine model, in which the international
banks seize the financial lifeblood of a nation, making the official
presidential title-holder merely inconsequential except as a factotum of
the corporate agenda.


 Palast's latest book is, "THE BEST DEMOCRACY MONEY CAN BUY: An
Investigative Reporter Exposes the Truth about Globalization, Corporate
Cons and High Finance Fraudsters." At you can read
and subscribe to Palast's London Observer and Guardian columns and view
his reports for BBC Television's Newsnight, including his interview with
President Hugo Chavez.

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