World Politics

Bolivarian Venezuela at the crossroads

Nationalization, workers’ control: achievements and limitations (PART 1)

By Eric Toussaint[1]

The economic, social and political situation in Venezuela has changed
a lot since the failure of the constitutional reform in December 2007,
which acted as a warning to the Chávez government.[2] This failure had
the effect however of reviving the debate on the need to have a
socialist perspective. The debate revolves around several key
questions: further nationalization, workers’ control, the place of the
PSUV (United Socialist Party of Venezuela), people’s participation,

On Sunday 15 February 2009, 54.36% of the country’s citizens voted
‘yes’ to the amendment to the Constitution that allows political
representatives to stand for successive mandates without any time
limit.[3] Up to then the Constitution had only allowed two successive
mandates: there had to be a break before the candidate could apply
again.[4] In 2013, at the end of his second mandate, Hugo Chávez will
have the possibility to run again for president. If he is re-elected,
his mandate will end in January 2019. This is why some Chavist
activists are now concerned about what changes may occur by then that
could consolidate the progress achieved since Chávez’s accession to

Nationalization, workers’ control: achievements and limitations

In April 2008, after 15,000 workers at the SIDOR steel plant, part of
the Argentine group Techint, had been on strike for nearly two months,
Hugo Chávez announced that the company was being nationalized. The
workers' main demand was for 9,000 temporary contracts to be converted
into unlimited duration contracts. Given the employer's refusal,
nationalization was the best way for the government to guarantee that
the workers' demand was met -- a decision workers perceived as a great

SIDOR was founded as a State-owned company during the 1960s, was then
privatized and sold to foreign capital in 1997 under Rafael Caldera's
presidency. The April 2008 re-nationalization takes on particular
significance since this modern and efficient company is a production
tool that Argentinian capital, and Techint in particular, wished to
hold on to.

It should be noted that the Chavist government of the state in which
SIDOR is located had ordered the police to repress the strike as soon
as it started. In addition, the minister of Labour had done nothing to
support workers' demands. As a consequence Hugo Chávez' decision to
nationalize the company and to remove the minister was perceived as a
shift in the workers’ favour. All the more so as, at about the same
time, he announced an increase in interprofessional minimum wages and
public sector salaries as well as the nationalization of the cement
industry, which so far had been in the hands of three TNCs (Lafarge –
France, Holcim – Switzerland, and Cemex – Mexico).

In the following months and during 2009 the government made further
nationalizations in the food industry[5] (which affected both national
capital – Lacteos Los Andes – and the grain TNC Cargill). The
government justified these nationalizations as being essential for
improving the population's food supply. Finally the Bank of Venezuela,
one of the largest private banks in the Santander group (one of the
two leading banking groups in Spain) was also taken over by the State.

All these nationalizations, as well as those that had occurred earlier
(in the electricity sector, telecommunications, the Orinoco oil
fields, etc.), led to generous compensations for the former owners:
Venezuela uses part of its oil revenue to regain control of certain
strategic sectors of the economy. The main objective of such
compensation is to avoid legal penalties for not abiding by bilateral
treaties on investments signed by Venezuela. International law makes
it possible for States to nationalize companies provided they give
reasonable compensation to owners. Venezuela could proceed in a more
radical way if it withdrew its signature from bilateral treaties on
investments, left the ICSID (International Centre for the Settlement
of Investment Disputes, i.e. the World Bank's tribunal on investment
issues), and secured its liquidities and other assets abroad so as to
avoid seizure. This of course would further increase the hostility of
the establishment in industrialized countries and of the TNCs within
the country (all the major transnational oil companies are present in
Venezuela as well as General Motors, Mitsubishi, Daimler-Chrysler,

The rather cautious way chosen by the government did not prevent a
company like ExxonMobil from trying to have 12 billion dollars
belonging to PDVSA (Petróleos de Venezuela Sociedad Anónima) seized by
Dutch and British courts in 2008. This is one good reason for
Venezuela to enter into an alliance with other countries of the South
so as to repudiate bilateral treaties on investments that include
clauses that could be detrimental to the nation's interests, to
withdraw from the ICSID and WTO, and to set up a multilateral body in
the South to settle disputes –  in other words, an ICSID that would be
a Southern alternative to the World Bank’s ICSID, which serves the
interests of large private TNCs.

In 2009, further nationalizations again raised the issue of workers’
control. Left-wing trade unions and workers' collectives are in fact
demanding the implementation of control mechanisms through which
workers can control the boards of nationalized companies. They want in
this way to ensure that the original objectives of such
nationalizations will be adhered to; they also want to prevent bad
management, wastage, embezzlement, corruption, and misuse of company
assets by insisting on the opening of ledgers, transparent commercial
and industrial strategies, and the periodic submission of balance
sheets and accounts. They rightly voice their distrust of many of the
private executives who stayed on after nationalization, but also of
some new executives who look after their personal interests rather
than seek what is good for the community. Achieving and indeed
demanding control increases workers' self-confidence and their
capacity to collectively contribute to a socialistic kind of
management and labour relations on the one hand, and, on the other,
create a counter-weight within companies in the hands of private

We see instances of workers occupying private companies and demanding
their nationalization. Inevitably the issue of workers’ control will
have to be raised again in the oil industry. It first flared up during
the oil lockout (December 2002 - January 2003), when workers, who
wanted to resume production, had called an oil conference. Later Hugo
Chávez rejected the idea of workers’ control in this key industry
because of its strategic importance, whereas of course it would be a
good reason to go for it. The same applies to the production and
distribution of electricity, which were also nationalized. Workers in
this sector started demanding control in September 2009. Electricity
supply in Venezuela is critical since over 50% of its production[6] is
'lost' or diverted (meaning stolen) during distribution. Losses are
mainly due to the use of old equipment because before they were
nationalized by the Chávez government, certain companies like
Electricidad de Caracas (owned by AES, a U.S.-owned TNC) were almost
systematically deprived of the necessary investments to buy new
machines. On the other hand, large private industrial companies steal
and squander large quantities of energy. There are also unauthorized
electric hook-ups in residential areas but in the case of working
class households, which are not big consumers, such piracy is limited.
Workers in the electricity sector are in the best position to solve
the issue of supply and to fight squandering and bad management by
senior executives – and thus avoid power cuts. These are the arguments
being developed by trade union leaders to demand workers’ control.

Ángel Navas, president of the Electricity Sector Workers’ Federation
(FETRAELEC), told the media during a demonstration by some 3,000
workers in Caracas on 25 September 2009: “We the workers are in touch
with users in the neighbourhoods. We know how we can solve the
crisis... We have to change the bureaucratic structures and the
structures of capitalist management into structures with a socialist
vision. We must change production relations and do away with all this
bureaucracy which is killing the company.”[7]

During the first half of 2009 Hugo Chávez stated at a public meeting
with worker managers that he was favourable to a law on the election
of managers of nationalized companies[8], but nothing has happened
since then to put this commitment into practice.

This struggle for workers’ control of company management is essential.
Its outcome is decisive for the ongoing process in Venezuela.[9]

Translated by Christine Pagnoulle and Judith Harris, in collaboration
with Francesca Denley and Stephanie Jacquemont

Next part:  Debate and contradiction in the PSUV (United Socialist
Party of Venezuela) (Part 2)


[1] Eric Toussaint, Doctor in Political Science (University of Liege
and University of Paris VIII), is president of CADTM Belgium
(Committee for the Abolition of Third World Debt, ). He
is the author of A diagnosis of emerging global crisis and
alternatives, VAK, Mumbai, India, 2009, 139p; Bank of the South. An
Alternative to the IMF-World Bank, VAK, Mumbai, India, 2007; The World
Bank, A Critical Primer, Pluto Press, Between The Lines, David Philip,
London-Toronto-Cape Town 2008; Your Money or Your Life, The Tyranny of
Global Finance, Haymarket, Chicago, 2005.

[2] On 2 December 2007 51% of voters said ‘No’ to Chávez'
constitutional referendum as against 49% voting  ‘Yes’.  This is
Chávez' only electoral setback between 1998 and 2009. See Éric
Toussaint, “The failure of 2 December 2007 can be a powerful lever for
improving the process currently unfolding in Hugo Chávez’ Venezuela”,
December 2007,

[3] It should be remembered that article 72 provides for the
possibility of citizens recalling the President of the Republic and
all other elected officials half-way through the term of office.

[4] The campaign depicting Hugo Chávez as a “despot for life” played
on the scandalous nature of unlimited re-election. Yet several
European democracies work in the same way. This is the case in Spain,
Italy and the United Kingdom for the post of Prime Minister, and in
Germany for the post of Chancellor (in all 4 countries, it is the head
of government who really holds the reins of power). In France, up to
the adoption in July 2008 of the constitutional law on the
modernization of institutions, there was no limit on the number of
consecutive mandates. Since then, the number of consecutive mandates
is limited to two.


[6] We should also note, however, a very positive structural feature
in Venezuela: electricity is very largely produced from dams and
rivers. Fossil fuels are only rarely used and there are no nuclear
power plants.

[7] See a very interesting video of the demonstration with interviews
of several TU leaders on the Marea Socialista website:

[8] This was the case on 21 May 2009 during a meeting between Hugo
Chávez and 400 delegates from the steel and aluminium industries held
in the State of Guayana. A meeting to consolidate other commitments
made during this important assembly took place on 21 August 2009 in
the context of the “Plan Guayana socialista”. See Marea socialista,
no.22, p. 3.

[9] To know more about initiatives or position statements on workers’
control in Venezuela, read issues 19, 20, 21 and 22 of the magazine
Marea Socialista, July-August 2009, which discuss the situation at
SIDOR, CorpoElec, Cadafe, cement works, Cafeaca, Alcasa,