Venezuela: Effects of debt crisis, US sanctions hit workers hard

BY SETH GALINSKY

In the face of the deepening capitalist economic crisis, Venezuelan President Nicolás Maduro announced Nov. 2 that his government needs “to refinance and restructure” Venezuela’s debt, estimated at as much as $150 billion.

Since Maduro took office in 2013 after the death of Hugo Chávez, Caracas had not missed a single payment, shelling out more than $70 billion in interest and towards the principal, including $2 billion in the past month alone. The interest on some of the bonds is as high as 30 percent.

But on Nov. 14, the Standard & Poor’s financial ratings agency downgraded Venezuela’s debt from “junk” status to “selective default” because of a skipped interest payment, though it still views the government as “committed to honoring its international debt.”

Washington and some of its allies in Latin America are trying to use the Venezuelan government’s debt crisis as a lever to force Maduro to give up a measure of political power to the U.S.-backed bourgeois opposition. They say they won’t accept any bond restructure proposal that isn’t backed by the moribund National Assembly dominated by the opposition bloc.

The price of oil — the source of 95 percent of the government’s hard currency — dropped from a peak of about $100 a barrel in 2014 to $50 or less today. Oil income has declined even further because production from the state-run oil fields has fallen to less than 2 million barrels a day, its lowest level in 30 years, a result of bureaucratic mismanagement and corruption.

Moscow announced Nov. 14 it wouldn’t forgive but would restructure $3.15 billion of Venezuela’s debt, stringing it out over a decade. The Russian foreign ministry said that they hoped the step would encourage other governments and creditors to follow suit.

The U.S. government has opposed Venezuela’s “Bolivarian Revolution” ever since Chávez became president in 1998. The U.S. rulers opposed the new government’s collaborative relations with Havana, and the flowering of pride, self-respect and combativity that spread in the working class after the Chávez government came to power.

As much as half of Venezuela’s foreign debt is in the hands of U.S. bondholders and hedge funds.

Washington, Ottawa and the EU are all imposing new sanctions against the Maduro government. On Nov. 9, the U.S. Treasury Department added 10 current and former Venezuelan officials to its list of those banned from traveling to the United States and whose bank accounts are subject to seizure. They claim these officials are “associated with undermining electoral processes, media censorship, or corruption.”

The Venezuelan government responded that they are a free and sovereign country and U.S. sanctions “are part of the systematic campaign of aggression” against them.

Workers and farmers hardest hit
Workers and farmers in Venezuela bear the brunt of the capitalist economic crisis and an estimated 35 percent drop in the country’s gross national product since 2014.

The International Monetary Fund reports that inflation is running at 653 percent so far this year.

With hard currency going to pay the debt — Venezuela’s foreign currency reserves have dropped from $30 billion in 2013 to about $10 billion today — the government has cut food and medicine imports by more than 70 percent.

Malnutrition is growing among children. Nearly 11,500 infants died in 2016, a 30 percent increase from the year before, according to CNN. Malaria cases were up to 240,000, a 76 percent rise.

Health Minister Luis López stated Nov. 12 that there had been a significant increase in diphtheria in nine states. He said that “there is no emergency,” but refused to give any figures on how much the deadly disease has increased.

The measures to ameliorate the crisis taken by the Maduro government — including subsidizing food for working people, periodically raising the minimum wage, clamping down on black marketeering, setting up food fairs with hard to find products at subsidized prices — are all aimed at trying to somehow administer the capitalist market. But without organizing working people to take control of industrial production and agriculture to meet the needs of the vast majority, these measures offer no way to end the social disaster facing the working class.

Discontent among workers
Despite widespread discontent among working people in the cities and rural areas, the pro-imperialist opposition, grouped in the Democratic Unity Roundtable, failed miserably in its efforts to get toilers to boycott the July 30 election to a new 545-member Constituent Assembly. Maduro and the Unified Socialist Party of Venezuela organized the vote to bypass and supplant the opposition-dominated National Assembly.

The Roundtable organized large mostly middle-class demonstrations across the country for weeks leading up to the vote, but never succeeded in gaining traction among working people. Workers and farmers know from bitter experience that the pro-imperialist parties have no solution to the crisis other than even bigger attacks on their living conditions and rights.

The Roundtable splintered after the vote. Some member parties now say it was a mistake to boycott the vote for the Constituent Assembly, arguing that they only way to challenge Maduro is through the elections. Since then different factions in the Roundtable have accused each other of being “thieves,” “tumors” and “traitors.”

The revolutionary government of Cuba has repeatedly denounced U.S. interference in Venezuela, speaking out in defense of Venezuela’s sovereignty and the right of the people there to determine their own future.

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