[Marxism] âBoligarchsâ rise to top in socialist Venezuela

["Fred Fuentes" <fred.fuentes@xxxxxxxxx>]

Tuesday, December 2, 2008

'Boligarchs' rise to top in socialist Venezuela

Vheadline

Ten years ago, Wilmer Ruperti was just another ambitious businessman.
Now, as Venezuelan president Hugo ChÃvez marks a decade in power, Mr
Ruperti is a billionaire shipping tycoon and one of the richest men in
the country.

Many of Mr Ruperti's peers claim that his success is owed to more than
his business acumen. He has been branded a quintessential "boligarch",
one of a new breed of Venezuelan business magnates. They are said to
enjoy close relations with Mr ChÃvez's "Bolivarian" government â named
after SimÃn Bolivar, South America's 19th century independence hero.

Mr Ruperti says he has been castigated for his role in breaking the
infamous oil industry shutdown in 2002-03, which was engineered by Mr
ChÃvez's opponents, many of them business leaders, who were trying to
topple his government.

After making oil tankers available to the government â thereby
enabling the president to survive the opposition's attempt to cut off
his key revenue source, oil exports â Mr Ruperti was well positioned
to win future shipping contracts with the state oil company, PDVSA, at
a time when others were excluded.

"It was a big decision. Normally I don't gamble like that," says Mr
Ruperti, who admits it paid off. "But really I was just complying with
my contract."

Daniel Hellinger, a historian and political scientist specialising in
Venezuela, says previous oil booms spawned new business elites. "It is
history repeating itself," he says.

He distinguishes two groups of boligarchs: members of the old order
who "changed their colours at the right time" and a new group who
"made smart decisions, built government connections, were very shrewd
and just knew how to work the system".

But those business leaders who backed the oil strike, and a botched
coup d'Ãtat in 2002, have suffered. The most high profile casualty is
RCTV, formerly Venezuela's most popular television channel. Its public
broadcasting licence was revoked last year, due partly to Mr ChÃvez's
accusations that it was behind the putsch.

The difference between the old and new elites, say observers, is that
the new eschews politics. "Evidently the government is more
comfortable working with people that are not trying to overthrow it,"
says Arturo Sarmiento, who has imported whisky and traded oil and now
runs Telecaribe, a regional television channel.

Alberto Cudemus, a prominent businessman involved in pork farming who
enjoys good relations with the government, says: "Many of the
traditional business people simply haven't understood that there has
been a huge change hereâ.â.â.âBusinesses have to get back to what we
are supposed to be doing: investing, generating employment, improving
technology and producing goods and services. It's not our job to make
laws."

Indeed, although Mr ChÃvez calls his creed "21st century socialism",
some capitalists â mainly those in commodities, those exposed to
Venezuela's consumer spending boom and those benefiting from economic
distortions â have been flourishing .

For some companies, Venezuela is the most profitable country in the
region. "Companies can â and do â make serious money in Venezuela,"
says Daniel Linsker, an analyst at Control Risks, which advises
several large international companies operating in Venezuela. "That
doesn't mean it is not challenging, that private companies do not face
a high degree of uncertainty and even state harassment, or that
companies can freely remit their profits," he adds.

Banks, in particular, have thrived. This is largely due to an exchange
rate that has been fixed since 2003 to prevent capital flight owing to
fears of instability resulting from Mr ChÃvez's impulsive style. But
after remaining unchanged against the dollar since then, after years
of soaring inflation, it is now heavily overvalued.

This has fomented an active black market that has allowed savvy
bankers â particularly those with good government contacts â to make
"Russia-like fortunes", according to one senior local investment
banker.

But making a fortune in Venezuela is likely to be much more difficult
from now on. The collapse in oil prices means the country's
capitalists, boligarchs or not, face tougher times.

As for Mr Ruperti, he scoffs at the term boligarch. "In Venezuela
people make up all kinds of ridiculous stories," he says. "I have
spent all of seven minutes with ChÃvez."

-- 
Michael A. Lebowitz
Professor Emeritus
Economics Department
Simon Fraser University
Burnaby, B.C., Canada V5A 1S6

Director, Programme in 'Transformative Practice and Human Development'
Centro Internacional Miranda, P.H.
Residencias Anauco Suites, Parque Central, final Av. Bolivar
Caracas, Venezuela
fax: 0212 5768274/0212 5777231
www.centrointernacionalmiranda.gob.ve
mlebowit@xxxxxx
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