View Full Version : CIA Venezuelan Destabilization Memo Surfaces

11-29-2007, 10:24 AM
CIA Venezuela Destabilization Memo Surfaces


November 28th 2007, by James Petras

On November 26, 2007 the Venezuelan government broadcast and circulated a confidential memo from the US embassy to the CIA which is devastatingly revealing of US clandestine operations and which will influence the referendum this Sunday, December 2, 2007.

The memo sent by an embassy official, Michael Middleton Steere, was addressed to the Director of Central Intelligence, Michael Hayden. The memo was entitled 'Advancing to the Last Phase of Operation Pincer' and updates the activity by a CIA unit with the acronym 'HUMINT' (Human Intelligence) which is engaged in clandestine action to destabilize the forth-coming referendum and coordinate the civil military overthrow of the elected Chavez government. The Embassy-CIA's polls concede that 57 per cent of the voters approved of the constitutional amendments proposed by Chavez but also predicted a 60 per cent abstention.

The US operatives emphasized their capacity to recruit former Chavez supporters among the social democrats (PODEMOS) and the former Minister of Defense Baduel, claiming to have reduced the 'yes' vote by 6 per cent from its original margin. Nevertheless the Embassy operatives concede that they have reached their ceiling, recognizing they cannot defeat the amendments via the electoral route.

The memo then recommends that Operation Pincer (OP) [Operación Tenaza] be operationalized. OP involves a two-pronged strategy of impeding the referendum, rejecting the outcome at the same time as calling for a 'no' vote. The run up to the referendum includes running phony polls, attacking electoral officials and running propaganda through the private media accusing the government of fraud and calling for a 'no' vote. Contradictions, the report emphasizes, are of no matter.

The CIA-Embassy reports internal division and recriminations among the opponents of the amendments including several defections from their 'umbrella group'. The key and most dangerous threats to democracy raised by the Embassy memo point to their success in mobilizing the private university students (backed by top administrators) to attack key government buildings including the Presidential Palace, Supreme Court and the National Electoral Council. The Embassy is especially full of praise for the ex-Maoist 'Red Flag' group for its violent street fighting activity. Ironically, small Trotskyist sects and their trade unionists join the ex-Maoists in opposing the constitutional amendments. The Embassy, while discarding their 'Marxist rhetoric', perceives their opposition as fitting in with their overall strategy.

The ultimate objective of 'Operation Pincer' is to seize a territorial or institutional base with the 'massive support' of the defeated electoral minority within three or four days (presumably after the elections though this is not clear. JP) backed by an uprising by oppositionist military officers principally in the National Guard. The Embassy operative concede that the military plotters have run into serous problems as key intelligence operatives were detected, stores of arms were decommissioned and several plotters are under tight surveillance.

Apart from the deep involvement of the US, the primary organization of the Venezuelan business elite (FEDECAMARAS), as well as all the major private television, radio and newspaper outlets have been engaged in a campaign of fear and intimidation campaign. Food producers, wholesale and retail distributors have created artificial shortages of basic food items and have provoked large scale capital flight to sow chaos in the hopes of reaping a 'no' vote.

President Chavez Counter-Attacks
In a speech to pro-Chavez, pro-amendment nationalist business-people (Entrepreneurs for Venezuela ­ EMPREVEN) Chavez warned the President of FEDECAMARAS that if he continues to threaten the government with a coup, he would nationalize all their business affiliates. With the exception of the Trotskyists and other sects, the vast majority of organized workers, peasants, small farmers, poor neighborhood councils, informal self-employed and public school students have mobilized and demonstrated in favor of the constitutional amendments.

The reason for the popular majority is found in a few of the key amendments: One article expedites land expropriation facilitating re-distribution to the landless and small producers. Chavez has already settled over 150,000 landless workers on 2 million acres of land. Another amendment provides universal social security coverage for the entire informal sector (street sellers, domestic workers, self-employed) amounting to 40 per cent of the labor force. Organized and unorganized workers' workweek will be reduced from 40 to 36 hours a week (Monday to Friday noon) with no reduction in pay. Open admission and universal free higher education will open greater educational opportunities for lower class students. Amendments will allow the government to by-pass current bureaucratic blockage of the socialization of strategic industries, thus creating greater employment and lower utility costs. Most important, an amendment will increase the power and budget of neighborhood councils to legislate and invest in their communities.

The electorate supporting the constitutional amendments is voting in favor of their socio-economic and class interests; the issue of extended re-election of the President is not high on their priorities: And that is the issue that the Right has focused on in calling Chavez a 'dictator' and the referendum a 'coup'.

The Opposition
With strong financial backing from the US Embassy ($8 million dollars in propaganda alone according to the Embassy memo) and the business elite and 'free time' by the right-wing media, the Right has organized a majority of the upper middle class students from the private universities, backed by the Catholic Church hierarchy, large swaths of the affluent middle class neighborhoods, entire sectors of the commercial, real estate and financial middle classes and apparently sectors of the military, especially officials in the National Guard. While the Right has control over the major private media, public television and radio back the constitutional reforms. While the Right has its followers among some generals and the National Guard, Chavez has the backing of the paratroops and legions of middle-rank officers and most other generals.

The outcome of the Referendum of December 2 is a major historical event first and foremost for Venezuela but also for the rest of the Americas. A positive vote (Vota 'S^') will provide the legal framework for the democratization of the political system, the socialization of strategic economic sectors, empower the poor and provide the basis for a self-managed factory system. A negative vote (or a successful US-backed civil-military uprising) would reverse the most promising living experience of popular self-rule, of advanced social welfare and democratically based socialism. A reversal, especially a military dictated outcome, would lead to a blood bath, such as we have not seen since the days of the Indonesian Generals' Coup of 1966, which killed over a million workers and peasants or the Argentine Coup of 1976 in which over 30,000 Argentines were murdered by the US- backed Generals.

A decisive vote for 'S^' will not end US military and political destabilization campaigns but it will certainly undermine and demoralize their collaborators. On December 2, 2007 the Venezuelans have a rendezvous with history.

James Petras, a former Professor of Sociology at Binghamton University, New York, owns a 50 year membership in the class struggle, is an adviser to the landless and jobless in brazil and argentina and is co-author of Globalization Unmasked (Zed). His new book with Henry Veltmeyer, Social Movements and the State: Brazil, Ecuador, Bolivia and Argentina, will be published in October 2005. He can be reached at: jpetras@binghamton.edu

11-30-2007, 03:54 PM
Right on cue, CNN has coverage of the opposition to Chavez:

http://www.cnn.com/video/#/video/world/2007/11/30/whitbeck.venezuela.opposition.march.cnn?iref=video search

"Hugo Chavez' attempts to turn Venezuela into socialist state meet protests. CNN's Harris Whitbeck reports."

11-30-2007, 09:46 PM

(c) 2007 Reuters

12-01-2007, 11:31 AM
And cue the NY Times:


December 1, 2007
Saying No to Chávez

Since he took office eight years ago, Venezuela’s president, Hugo Chávez (http://topics.nytimes.com/top/reference/timestopics/people/c/hugo_chavez/index.html?inline=nyt-per), has grabbed more and more power, exploiting his nation’s oil wealth to buy up popular support. Now there are hopeful signs that his plan to become president for life may be too blatant for the electorate to swallow.

Tomorrow, Venezuelans are scheduled to vote on a package of constitutional reforms proposed by Mr. Chávez that would grant the president control over nearly every major political institution, as well as the option to stand for re-election as many times as he wants. A few months ago, it looked like Mr. Chávez would easily get his way. A survey last week by an independent pollster found that 49 percent of Venezuelans opposed the changes and only 39 percent supported it. We hope those numbers hold.

The breathtaking gall of Mr. Chávez latest lunge for power is alienating even some of his closest allies. A former defense minister, Gen. Raúl Isa^as Baduel, likened the proposed changes to a “coup.” Thousands of university students have taken to the streets to protest, facing down armed Chávista thugs.

Mr. Chávez’s current control — including over the National Assembly, the Supreme Court (http://topics.nytimes.com/top/reference/timestopics/organizations/s/supreme_court/index.html?inline=nyt-org) and the national oil company — is unheard of in modern democracies. The package of amendments would also give the president unchecked power to decree a state of emergency and suspend basic rights indefinitely. It would strip the Central Bank of its autonomy and would allow the president to use the country’s reserves as he saw fit and give the government the power to expropriate property without first getting a court order. Mr. Chávez also put in some crowd pleasers, including a mandated 6-hour workday.

His favorite provisions, of course, would extend the presidential term from six to seven years and remove presidential term limits.

The referendum could still go Mr. Chávez’s way. He is an able politician and benefits from lavish government spending funded by expensive oil. He has milked fights with Spain and Colombia to whip up nationalistic fervor. Earlier polling suggested his cause would be helped by a high abstention rate, with many opponents fearful of being tagged as foes and others planning to boycott the whole thing.

Now there are signs that more Venezuelans have decided to take a stand and vote no. This referendum is too important to miss. Opponents are calling for a massive “no” vote. For the sake of Venezuela’s battered democracy, voters should heed the call.

12-03-2007, 12:35 PM
Was the memo bullshit? Larry Johnson thinks so.


Next up is the bogus memo allegedly written to the Director of the CIA by some nimrod diplomat at our Embassy in Venezuela. Dubbed Operation Pliers (on some websites) and Pincers (on others) (http://www.venezuelanalysis.com/analysis/2914), we are offered a peek behind the curtain of CIA efforts to topple Chavez. It starts off:

November 20,2007


De: Michael Middleton Steere, US Embassy

Para: Michael Hayden, Director Agencia Central de Inteligencia.

Asunto: Avance de la Fase Terminal de la Operación Tenaza

Tomando en consideración los anteriores avances documentales en torno a la Operación Tenaza que coordina Humint en Venezuela según la directiva 3623-g-0217, cumplo en informarle para los fines consiguientes, del status actual de dicha operación, la cual entra en su fase terminal según lo estimado.

As the official bubble burster let me state for the record, this is patent nonsense. State Department officers do not write memos to Hayden. Particularly mid-level Foreign Service Officers. A CIA officer under diplomatic cover sends his communications to headquarters via an encoded message. We call these messages cables, harkening back to the days of telegraphs and telegrams.

This, in my judgment, is the work–very clumsy work at that–of the Venezuelan intelligence service eager to build on the truth that the United States has sought to oust Chavez. All of this is quite convenient with Venezuelan elections on the horizon. It may be hamhanded, but for internal Venezuelan consumption, this is brilliant psyops and should help Chavez further demonize the equally clumsy Americans.

12-04-2007, 07:53 AM
US, opposition cheer Chavez's defeat in Venezuelan referendum


5 hours ago

CARACAS (AFP) — The United States, opponents and business leaders on Monday cheered Venezuela's rejection of reforms that would have opened the way for left-wing President Hugo Chavez to rule over South America's biggest oil exporter for life.

"Clearly this is a message from the Venezuelan people that they do not want any further erosion in their democracy and their democratic institutions," US State Department spokesman Sean McCormack told reporters in Washington.

In Venzuela, opposition groups were emboldened by the result of Sunday's referendum, which was rejected by the slimmest of margins -- 51 percent to 49 percent.

"It was the people's battle against a state plan that tried to place all the nation's power and oil wealth at the service of a political project," said Leopoldo Lopez, a mayor in the anti-Chavez chic Chacao district in Caracas.

Chavez, a 53-year-old charismatic former paratrooper known for his bullish ways and sharp anti-US rhetoric, was uncharactistically subdued when he finally emerged early Monday to accept his loss.

"Don't feel sad," he told his supporters, pointing out the razor-thin margin by which they were defeated.

He said he recognized his plans to enshrine his vision of a socialist economy in Venezuela's charter had been thwarted "for now" -- but stressed he would not give up.

The opposition had won a "Pyrrhic victory," he claimed, adding that he would not "change one comma" of his plan.

The result was disappointing for ailing Cuban leader Fidel Castro and his regime, which views Chavez as a close ally and relies heavily on Venezuelan oil shipments.

But Castro praised Chavez for how he faced up to defeat.

"Dear Hugo: I send you revolutionary congratulations for your speech today, which was a 'Veni, vidi, vici' of dignity and ethics," Castro said in a message relayed by state television, referring to the Latin phrase uttered by a victorious Julius Ceasar -- "I came, I saw, I conquered."

The 81-year-old leader, who has handed over power to his brother Raul Castro since undergoing surgery in July 2006, said Chavez had shown "courage and wisdom" in his reaction.

The Caracas stockmarket, however, was encouraged by the poll result. Monday, the main index closed four percent higher.

And Ricardo Sanchez, one of the leaders of university students who had spearheaded the resistance to Chavez's reforms through street protests, said: "It's in Chavez's hands if he wants to continue with confrontation."

Overnight, students and other youths celebrated the "no" result with an imprompty outdoor party in the center of the capital as fireworks exploded in the sky.

"We've been waiting for this for a long time -- it's the beginning of the end for Chavez, we've shown we can beat him," said Edwin Sanchez, a 27-year-old student.

"The people were fed up with his perpetual paranoia," said Anna Camelo, a 30-year-old shopworker also celebrating. "He wanted to impose a dictatorship on us and cut us off from all the other countries."

Chavez, who has cultivated ties with Cuba and Iran, had called all those ranked against him "traitors" acting on behalf of US "imperialism."

He had banked on his high popularity among voters to push through his plans to make Venezuela a socialist economy, ending the central bank's autonomy and allowing authorities to stifle the media in times of emergency.

He has said he also wanted to stay in power "until 2050," through the reform's scrapping of presidential term limits.

But, under the extant constitution, he will now have to step down at the end of his second mandate, in January 2013.

The European Commission said it was "satisfied" with Chavez's admission of defeat, while Spain -- whose King Juan Carlos last month told Chavez to "shut up" during a summit -- congratulated the Venezuelan people for their "democratic maturity."

Venezuela's constitution prevents Chavez from again presenting his constitutional reform under the current congress -- though he could conceivably appoint a constituent assembly to draft an entirely new basic law for adoption.

Raul Baduel, a former defense minister and one-time Chavez ally who has emerged as a rallying figure for the previously fractured opposition, urged supporters to remain vigilant against another attempt to usher in the reforms.

"We need to remain conscious of the possibility that the president could attempt to reach the same results through the legislative process," he said.

12-04-2007, 07:58 AM
Larry describes himself as the "official bubble burster." More often than not, that is exactly what he does. He doesn't think there is a problem with the 9/11 story (http://www.yourbbsucks.com/forum/showthread.php?t=4224) either.

12-04-2007, 05:30 PM
Larry describes himself as the "official bubble burster." More often than not, that is exactly what he does. He doesn't think there is a problem with the 9/11 story (http://www.yourbbsucks.com/forum/showthread.php?t=4224) either.

Yeah, I probably should have ignored his opinion on this topic.

12-04-2007, 06:57 PM
No... you should always post both sides of a story. Work out the details later. What Larry SHOULD have done is explain how the CIA WOULD have disrupted the elections if that's what they were tasked with doing.

12-05-2007, 03:45 PM

Venezuelan Referendum: A Post-Mortem and its Aftermath

by Prof. James Petras

Global Research (http://www.globalresearch.ca/), December 5, 2007

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Venezuela’s constitutional reforms supporting President Chavez’s socialist project were defeated by the narrowest of margins: 1.4% of 9 million voters. The result however was severely compromised by the fact that 45% of the electorate abstained, meaning that only 28% of the electorate voted against the progressive changes proposed by President Chavez. While the vote was a blow to Venezuela’s attempt to extricate itself from oil dependence and capitalist control over strategic financial and productive sectors, it does no change the 80% majority in the legislature nor does it weaken the prerogatives of the Executive branch. Nevertheless, the Right’s marginal win does provide a semblance of power, influence and momentum to their efforts to derail President Chavez’ socio-economic reforms and to oust his government and/or force him to reconcile with the old elite power brokers.

Internal deliberations and debates have already begun within the Chavista movement and among the disparate oppositional groups. One fact certain to be subject to debate is why the over 3 million voters who cast their ballots for Chavez in the 2006 election (where he won 63% of the vote) did not vote in the referendum. The Right only increased their voters by 300,000 votes; even assuming that these votes were from disgruntled Chavez voters and not from activated right-wing middle class voters that leaves out over 2.7 million Chavez voters who abstained.

Diagnosis of the Defeat

Whenever the issue of a socialist transformation is put at the top of a governmental agenda, as Chavez did in these constitutional changes, all the forces of right-wing reaction and their (‘progressive’) middle class followers unite forces and forget their usual partisan bickering. Chavez’ popular supporters and organizers faced a vast array of adversaries each with powerful levers of power. They included:

1) numerous agencies of the US government (CIA, AID, NED and the Embassy’s political officers), their subcontracted ‘assets’ (NGO’s, student recruitment and indoctrinations programs, newspaper editors and mass media advertisers), the US multi-nationals and the Chamber of Commerce (paying for anti-referendum ads, propaganda and street action);

2) the major Venezuelan business associations FEDECAMARAS, Chambers of Commerce and wholesale/retailers who poured millions of dollars into the campaign, encouraged capital flight and promoted hoarding, black market activity to bring about shortages of basic food-stuffs in popular retail markets;

3) over 90% of the private mass media engaged in a non-stop virulent propaganda campaign made up of the most blatant lies – including stories that the government would seize children from their families and confine them to state-controlled schools (the US mass media repeated the most scandalous vicious lies – without any exceptions);

4) The entire Catholic hierarchy from the Cardinals to the local parish priests used their bully platforms and homilies to propagandize against the constitutional reforms – more important, several bishops turned over their churches as organizing centers to violent far right-wing resulting, in one case, in the killing of a pro-Chavez oil worker who defied their street barricades.

The leaders of the counter-reform quartet were able to buy-out and attract small sectors of the ‘liberal’ wing of the Chavez Congressional delegation and a couple of Governors and mayors, as well as several ex-leftists (some of whom were committed guerrillas 40 years ago), ex-Maoists from the ‘Red Flag’ group and several Trotskyists trade union leaders and sects. A substantial number of social democratic academics (Edgar Lander, Heinz Dietrich) found paltry excuses for opposing the egalitarian reforms, providing an intellectual gloss to the rabid elite propaganda about Chavez ‘dictatorial’ or ‘Bonapartist’ tendencies.

This disparate coalition headed by the Venezuelan elite and the US government relied basically on pounding the same general message: The re-election amendment, the power to temporarily suspend certain constitutional provisions in times of national emergency (like the military coup and lockouts of 2002 to 2003), the executive nomination of regional administrators and the transition to democratic socialism were part of a plot to impost ‘Cuban communism’. Right-wing and liberal propagandists turned unlimited re-election reform (a parliamentary practice throughout the world) into a ‘power grab’ by an ‘authoritarian’/’totalitarian’/’power-hungry’ tyrant according to all Venezuelan private media and their US counterparts at CBC, NBC, ABC, NPR, New York and Los Angeles Times, Washington Post. The amendment granting the President emergency powers was de-contextualized from the actual US-backed civilian elite-military coup and lockout of 2002-2003, the elite recruitment and infiltration of scores of Colombian paramilitary death squads (2005), the kidnapping of a Venezuelan-Colombian citizen by Colombian secret police (2004) in the center of Caracas and open calls for a military coup by the ex-Defense Minister Baduel.

Each sector of the right-wing led counter-reform coalition focused on distinct and overlapping groups with different appeals. The US focused on recruiting and training student street fighters channeling hundreds of thousands of dollars via AID and NED for training in ‘civil society organization’ and ‘conflict resolution’ (a touch of dark humor?) in the same fashion as the Yugoslav/Ukrainian/Georgian experiences. The US also spread funds to their long-term clients – the nearly defunct ‘social democratic’ trade union confederation – the CTV, the mass media and other elite allies. FEDECAMARAS focused on the small and big business sectors, well-paid professionals and middle class consumers. The right-wing students were the detonators of street violence and confronted left-wing students in and off the campuses. The mass media and the Catholic Church engaged in fear mongering to the mass audience. The social democratic academics preached ‘NO’ or abstention to their progressive colleagues and leftist students. The Trotskyists split up sectors of the trade unions with their pseudo-Marxist chatter about “Chavez the Bonapartist’ with his ‘capitalist’ and ‘imperialist’ proclivities, incited US trained students and shared the ‘NO’ platform with CIA funded CTV trade union bosses. Such were the unholy alliances in the run-up to the vote.

In the post-election period this unstable coalition exhibited internal differences. The center-right led by Zulia Governor Rosales calls for a new ‘encounter’ and ‘dialogue’ with the ‘moderate’ Chavista ministers. The hard right embodied in ex-General Baduel (darling of sectors of the pseudo-left) demands pushing their advantage further toward ousting President-elect Chavez and the Congress because he claimed “they still have the power to legislate reforms”! Such, such are our democrats! The leftists sects will go back to citing the texts of Lenin and Trotsky (rolling over in their graves), organizing strikes for wage increases…in the new context of rising right-wing power to which they contributed.

Campaign and Structural Weakness of the Constitutional Reformers The Right-wing was able to gain their slim majority because of serious errors in the Chavista electoral campaign as well as deep structural weaknesses.

Referendum Campaign:

1) The referendum campaign suffered several flaws. President Chavez, the leader of the constitutional reform movement was out of the country for several weeks in the last two months of the campaign – in Chile, Bolivia, Colombia, France, Saudi Arabia, Spain and Iran) depriving the campaign of its most dynamic spokesperson.

2) President Chavez got drawn into issues which had no relevance to his mass supporters and may have provided ammunition to the Right. His attempt to mediate in the Colombian prisoner-exchange absorbed an enormous amount of wasted time and led, predictably, nowhere, as Colombia’s death squad President Uribe abruptly ended his mediation with provocative insults and calumnies, leading to a serious diplomatic rupture. Likewise, during the Ibero-American summit and its aftermath, Chavez engaged in verbal exchange with Spain’s tin-horn monarch, distracting him from facing domestic problems like inflation and elite-instigated hoarding of basic food stuffs.

Many Chavista activists failed to elaborate and explain the proposed positive effects of the reforms, or carry house-to-house discussions countering the monstrous propaganda (‘stealing children from their mothers’) propagated by parish priests and the mass media. They too facilely assumed that the fear-mongering lies were self-evident and all that was needed was to denounce them. Worst of all, several ‘Chavista’ leaders failed to organize any support because they opposed the amendments, which strengthened local councils at the expense of majors and governors.

The campaign failed to intervene and demand equal time and space in all the private media in order to create a level playing field. Too much emphasis was placed on mass demonstrations ‘downtown’ and not on short-term impact programs in the poor neighborhoods –solving immediate problems, like the disappearance of milk from store shelves, which irritated their natural supporters.

Structural weaknesses There were two basic problems which deeply influenced the electoral abstention of the Chavez mass supporters: The prolonged scarcity of basic foodstuffs and household necessities, and the rampant and seemingly uncontrolled inflation (18%) during the latter half of 2007 which was neither ameliorated nor compensated by wage and salary increases especially among the 40% of self-employed workers in the informal sector.

Basic foodstuffs like powdered milk, meat, sugar, beans and many other items disappeared from both the private and even the public stores. Agro-businessmen refused to produce and the retail bosses refused to sell because state price controls (designed to control inflation) lessened their exorbitant profits. Unwilling to ‘intervene’ the Government purchased and imported hundreds of millions of dollars of foodstuffs – much of which did not reach popular consumers, at least not at fixed prices.

Partially because of lower profits and in large part as a key element in the anti-reform campaign, wholesalers and retailers either hoarded or sold a substantial part of the imports to black marketers, or channeled it to upper income supermarkets.

Inflation was a result of the rising incomes of all classes and the resultant higher demand for goods and services in the context of a massive drop in productivity, investment and production. The capitalist class engaged in disinvestment, capital flight, luxury imports and speculation in the intermediate bond and real estate market (some of whom were justly burned by the recent collapse of the Miami real estate bubble).

The Government’s half-way measures of state intervention and radical rhetoric were strong enough to provoke big business resistance and more capital flight, while being too weak to develop alternative productive and distributive institutions. In other words, the burgeoning crises of inflation, scarcities and capital flight, put into question the existing Bolivarian practice of a mixed economy, based on public-private partnership financing an extensive social welfare state. Big Capital has acted first economically by boycotting and breaking its implicit ‘social pact’ with the Chavez Government. Implicit in the social pact was a trade off: Big Profits and high rates of investment to increase employment and popular consumption. With powerful backing and intervention from its US partners, Venezuelan big business has moved politically to take advantage of the popular discontent to derail the proposed constitutional reforms. It’s next step is to reverse the halting momentum of socio-economic reform by a combination of pacts with social democratic ministers in the Chavez Cabinet and threats of a new offensive, deepening the economic crisis and playing for a coup.

Policy Alternatives

The Chavez Government absolutely has to move immediately to rectify some basic domestic and local problems, which led to discontent, and abstention and is undermining its mass base. For example, poor neighborhoods inundated by floods and mudslides are still without homes after 2 years of broken promises and totally inept government agencies.

The Government, under popular control, must immediately and directly intervene in taking control of the entire food distribution program, enlisting dock, transport and retail workers, neighborhood councils to insure imported food fills the shelves and not the big pockets of counter-reform wholesalers, big retail owners and small-scale black marketers. What the Government has failed to secure from big farmers and cattle barons in the way of production of food, it must secure via large-scale expropriation, investment and co-ops to overcome business ‘production’ and supply strikes. Voluntary compliance has been demonstrated NOT TO WORK. ‘Mixed economy’ dogma, which appeals to ‘rational economic calculus’, does not work when high stake political interests are in play.

To finance structural changes in production and distribution, the Government is obligated to control and take over the private banks deeply implicated in laundering money, facilitating capital flight and encouraging speculative investments instead of production of essential goods for the domestic market.

The Constitutional reforms were a step toward providing a legal framework for structural reform, at least of moving beyond a capitalist controlled mixed economy. The excess ‘legalism’ of the Chavez Government in pursuing a new referendum underestimated the existing legal basis for structural reforms available to the government to deal with the burgeoning demands of the two-thirds of the population, which elected Chavez in 2006.

In the post-referendum period the internal debate within the Chavez movement is deepening. The mass base of poor workers, trade unionists and public employees demand pay increases to keep up with inflation, an end to the rising prices and scarcities of commodities. They abstained for lack of effective government action – not because of rightist or liberal propaganda. They are not rightists or socialist but can become supportive of socialists if they solve the triple scourge of scarcity, inflation and declining purchasing power.

Inflation is a particular nemesis to the poorest workers largely in the informal sector because their income is neither indexed to inflation as is the case for unionized workers in the formal sector nor can they easily raise their income through collective bargaining as most of them are not tied to any contract with buyers or employers. As a result in Venezuela (as elsewhere) price inflation is the worst disaster for the poor and the reason for the greatest discontent. Regimes, even rightist and neo-liberal ones, which stabilize prices or sharply reduce inflation usually secure at least temporary support from the popular classes. Nevertheless anti-inflationary policies have rarely played a role in leftist politics (much to their grief) and Venezuela is no exception.

At the cabinet, party and social movement leadership level there are many positions but they can be simplified into two polar opposites. On the one side, the pro-referendum dominant position put forth by the finance, economy and planning ministries seek cooperation with private foreign and domestic investors, bankers and agro-businessmen, to increase production, investment and living standards of the poor. They rely on appeals to voluntary co-operation, guarantees to property ownership, tax rebates, access to foreign exchange on favorable terms and other incentives plus some controls on capital flight and prices but not on profits. The pro-socialist sector argues that this policy of partnership has not worked and is the source of the current political impasse and social problems. Within this sector some propose a greater role for state ownership and control, in order to direct investments and increase production and to break the boycott and stranglehold on distribution. Another group argues for worker self-management councils to organize the economy and push for a new ‘revolutionary state’. A third group argues for a mixed state with public and self-managed ownership, rural co-operatives and middle and small-scale private ownership in a highly regulated market.

The future ascendance of the mixed economy group may lead to agreements with the ‘soft liberal’ opposition – but failing to deal with scarcities and inflation will only exacerbate the current crisis. The ascendance of the more radical groups will depend on the end of their fragmentation and sectarianism and their ability to fashion a joint program with the most popular political leader in the country, President Hugo Chavez.

The referendum and its outcome (while important today) is merely an episode in the struggle between authoritarian imperial centered capitalism and democratic workers centered socialism.

James Petras is a frequent contributor to Global Research. Global Research Articles by James Petras (http://www.globalresearch.ca/index.php?context=listByAuthor&authorFirst=James&authorName=Petras)