The attempted coup de'tat on Venezualan President Hugo Chavez.
On April 11,
2002, President Chavez was kidnapped at gunpoint and
flown to an island prison in the Caribbean Sea. On April
12, Pedro Carmona, a business partner of the US oil
companies and president of the nation's Chamber of
Commerce, declared himself President of Venezuela –
giving a whole new meaning to the term, "corporate
U.S. Ambassador Charles Shapiro immediately rushed down
from his hilltop embassy to have his picture taken
grinning with the self-proclaimed "President" and the
leaders of the coup d'état.
Bush's White House spokesman admitted that Chavez was,
"democratically elected," but, he added, "Legitimacy is
something that is conferred not by just the majority of
voters." I see.
Chavez had provoked the coup not just by clawing back
some of the bloated royalties of the oil companies. It's
what he did with that oil money that drove Venezuela's
One Percent to violence.
Just after Bush's inauguration in 2001, Chavez' congress
voted in a new "Law of Hydrocarbons." Henceforth, Exxon,
British Petroleum, Shell Oil and Chevron would get to
keep 70% of the sales revenues from the crude they
sucked out of Venezuela. Not bad, considering the price
of oil was rising toward $100 a barrel.
But to the oil companies, which had bitch-slapped
Venezeula's prior government into giving them 84% of the
sales price, a cut to 70% was "no bueno." Worse,
Venezuela had been charging a joke of a royalty – just
one percent – on "heavy" crude from the Orinoco Basin.
Chavez told Exxon and friends they'd now have to pay
Clearly, Chavez had to be taught a lesson about the
etiquette of dealings with Big Oil.
Clearing House" -- -- On August 26, 2005, the
Lord spoke to His servant on cable television and His servant
told the faithful watching in TV land: "Hugo Chávez thinks we're
trying to assassinate him. I think that we really ought to go
ahead and do it."
Reverend Pat Robertson has a tough time with the separation of
church and hate. But Pat Robertson is not crazy. He is, in fact,
one of the most ingenious, un-crazymen I've ever met. And the
most calculating and viperous. Those who dismiss him as some
cornpone, Bible-thumping Elmer Gantry fruitcake have dangerously
underestimated him and his reach into political and financial
power centers in Washington and abroad.
He never speaks for himself. Whether he speaks for God, I can't
say, but certainly Dr. Robertson uses his television platform to
preach the evangel of the elite to which he was born. His
father, U.S. Senator Absalom Willis Robertson, was the mentor of
Senator Prescott Bush. "I am not a 'televangelist,'" he told me.
"I am a businessman."
And when he spoke of taking down Hugo Chávez, President of
Venezuela, Robertson was all business. The hit the Reverend
proposed was calculated for risks and rewards like any
investment: "It's a whole lot cheaper than starting a war, and I
don't think any oil shipments will stop. This is a dangerous
enemy to our South controlling a huge pool of oil that could
hurt us very badly ... We don't need another $200 billion war
... It's a whole lot easier to have some of the covert
operatives do the job and then get it over with."
When I met with President Chávez in Caracas, in April 2002, he
offered to write the introduction to the Spanish translation of
my last book. I'm not crazy about politicians endorsing
journalists, but I agreed on condition he meet the deadline:
He'd have to write it before he's dead. Chávez wasn't overly
concerned. "It's a game of chess, Mr. Palast. And I'm a very
good chess player."
He's more than that. He is, as Robertson says, a dangerous man.
But dangerous to whom? Mr. Beale, the Arabs have taken billions
of dollars out of this country, and now they must put it back.
It is ebb and flow, tidal gravity.
In October 2005, Hugo Chávez defied gravity and withdrew $20
billion of Venezuela's petro-dollars from the United States
Federal Reserve and deposited the money in an account with the
International Bank of Settlements for investment in Latin
America. There is no Third World, there are no nations, Mr.
Beale, there is only IBM and Exxon. Maybe.
At the beginning of 2001, Venezuela instituted a new "Law of
Hydrocarbons." Henceforth, Exxon, British Petroleum and Shell
Oil, the major oil extractors in Venezuela, would get to keep
only 70% of the sales revenues from the Venezuelan crude they
The oil majors had grown accustomed to their usual take - 84%.
The reaction to the reduction in Big Oil's share of the
Venezuelan pie was swift. Otto Reich, Assistant Secretary of
State for Western Hemispheric Affairs, met with Venezuelan
"dissident" billionaires and shortly thereafter, on April 11,
2002, Chávez was kidnapped. The President of Venezuela's Chamber
of Commerce, an oil industry lawyer, declared himself President
of the nation - giving a whole new meaning to the term
The coup d'état against the elected president, Chávez, was
endorsed by The New York Times. On April 12, banking and oil
industry chiefs held an inaugural party in Venezuela's
Presidential Palace. The U.S. Ambassador rushed down to have his
picture taken with his arms around the partying coup leaders.
But within twenty-four hours, the party was over.
I learned later that Chávez, geopolitical grandmaster, had
expected the coup and planted commandoes inside secret passages
of the Presidential Palace. When informed that Chávez had
secretly moved his knights into kill position, the partygoers
took off their custom-made Presidential sashes and costumes and
returned the real President to his desk, without bloodshed,
within 48 hours of his capture.
The Times apologized. But not the White House. Bush's spokesman
conceded Chávez "was democratically elected," but, he added,
"legitimacy is something that is conferred not just by a
majority of the voters." I see.
Chávez was just warming up. Exxon had begun tapping into
Venezuela's heavy tar oils in the Orinoco Basin. Despite rising
oil prices, Exxon figured the government should be satisfied
with a 1% tax on the profits. Chávez changed that to a 16.6%
tax. Shell Oil and other foreign extractors had made a habit of
not paying taxes on their oil windfalls.
Shell, when handed the back-tax bill, balked and was surprised
to find itself, in 2005, bounced out of a lucrative natural gas
project. Chávez redirected the gas, meant for export, back to
Venezuela's own consumers.
Venezuela has landless citizens by the millions. It also has
unused land by the millions of acres locked up in fallow
plantations on which a tiny elite had squatted for four
centuries. In 2001, a new law required selling untilled land to
the landless. It was a program long promised by Venezuelan
politicians at the urging of John F. Kennedy as part of his
Alliance for Progress. Progress waited for Chávez.
Heinz Ketchup's Venezuela division didn't like the new terms for
doing business and shut its plant in the state of Maturin.
Venezuela seized the multinational's property and put the
workers back to work.
Pat Robertson was not the first to suggest terminating Chávez
with prejudice. In response to previous threats, the very good
chess player instituted a kind of "assassination tax" on U.S.
oil companies. Every time a new plot to shoot the President was
foiled, Chávez' tax authorities would send another bill for
those "back taxes." Shell was hit with a new $130 million tax
bill and got the point.
In June 2004, neo-con Otto Reich, friend of the coup plotters,
was dis-employed by the U.S. State Department. And what does
Chávez do with Shell Oil's tax money? In Caracas, I met with a
reporter for the TV station whose owner is generally credited
with having backed the failed 2002 coup. She pointed to the
"ranchos," the slums, above Caracas where shacks, most made of
cardboard and tin, were quickly transforming into homes of
cinder blocks and cement.
"He gives them bread and bricks, so they vote for him, of
course." She was disgusted. By "them," she meant the 80% of
Venezuela that is "negro e indio" (Black and Indian). This poor,
dark 80% had, until Chávez ran for President, left the running
of government, and the spending of the nation's wealth, to the
minority white 20%. The bread and bricks, and jobs and new
health clinics, are intimately tied to the "ebb and flow" of
capital; and now Chávez was standing in its way.
In early 2003, his government overturned the keystone of
borderless globalization and imposed controls on the movement of
capital. The Wall Street Journal reported, with surprise, that
instead of economic doom: "... the controls trapped liquidity
within the economy, which in part led to reduced interest rates
and helped boost economic activity."
Lots of economic activity. In 2005, their economy grew by 9.4%,
the highest in the Western Hemisphere, following a blazing 17.9%
in 2004, with the biggest boosts occurring in the non-oil
sector. Government services for health, education and food
subsidies didn't drain the economy, as "flat world" globalizers
predicted, but added to economic demand and productivity.
Chávez then waded further into the rushing flow of international
finance to build another economic dam. His backers in
Venezuela's Congress voted to require all private banks to
dedicate 20% of their lending portfolio to "micro-loans" for
small businesses and small-plot farmers. As a result, a large
portion of the oil wealth in Venezuela would have to stay there,
barred from flowing northward as is the custom with
petro-dollars. Most important, 20% of the working class's
savings would be channeled back to it rather than rising upward
to fund the extravagant high-rises in Caracas.
There's no question that Chávez's largesse to the "negros e
indios," for the bricks and medicine and loans abroad, is made
possible only by wildly high prices of petroleum. That still
makes Chávez one of a rare breed. After all, the new oil riches
of Kazakhstan ended up, at least $51 million of it, in the Swiss
bank account of its President (according to the bagman who
deposited it). At the same time, pensions in Kazakhstan are half
of what they were in 1993. Despite the windfall of receipts from
privatization of the Kazakh oil fields, the Red Cross reports
that the unequal distribution of the nation's oil wealth has
pushed "three-quarters of Kazakhstan's 15.7 million population
below the poverty line." Tuberculosis is now epidemic in the
oil-rich nation. Kazakhstan's manufacturing employment has
fallen by 36% and its GDP has imploded. Other developing oil
states - Nigeria, Indonesia, Sudan - show just as little
interest in distributing their petroleum wealth to the mass of
And, after all, Venezuela itself was a wealthy oil exporter long
before Chávez, without much to show for it except massive
international debts. Three decades ago, I wrote about the
"peasants under the bridges in golden Caracas in shacks made of
packing boxes." That was after the real price of oil hit $80 a
barrel. Then, in the 1970s, in Caracas, no one passed out bricks
Chávez is called a Marxist and a socialist. He is neither. His
reformist, cooperative and redistributionist program, and his
handling of oil wealth, is clearly "Norwegian-ist." Chávez is a
dramatist, calling his Scandinavian-style reforms the
"Bolivarian revolution." It seems to drive Washington just crazy
that brown people are demanding Nordic privileges. It's one
thing to be kind to poor folk, another to rearrange the global
flow of petroleum.
After bouncing Shell from one project, Chávez signed major
development deals with the state oil companies of Brazil, China
and India. Now, for the first time, a flow of crude would bypass
the oil majors. Chávez was cruising for a bruising. And it was
Chávez, of course, who played Latin Lone Ranger to Ecuador and
Argentina, writing checks to support their bond sales. And when
Ecuador's indigenous population seized Occidental Petroleum's
fields, it was Chávez who arrived in Quito with two million
barrels of oil products in tow to keep the nation on wheels.
The point was clear: Petroleum and petro-dollars could ebb and
flow without Occidental or Chevron. And without the IMF and
World Bank. It was The Wall Street Journal that dubbed Chávez "a
tropical version of the International Monetary Fund, offering
cut-rate oil-supply deals and buying hundreds of millions of
dollars of bonds from financially distressed countries such as
Argentina and Ecuador."
The un-tropical International Monetary Fund in Washington was
not amused, nor were money center banks of New York and London.
Petro-dollars are supposed to move from Venezuela to New York
and only then return to Latin America as loans carrying interest
rates up to 16%. Chávez, bypassing the side trip to New York,
showed that the costly financial cycle is not, Mr. Beale, "tidal
gravity ... an immutable law."
And to underscore the point, Chávez traveled to more Third World
nations with gifts of low-cost oil: the Bronx, New York, and
Chicago's West Side. In September 2005, Chávez offered these
poor racial Bantustans within the USA (Hispanic neighborhoods in
Chicago, African-American 'hoods in the Bronx) discounted
heating oil through CITGO, the U.S. retail outlet of Venezuela's
oil company. A public relations gimmick? Undoubtedly. But Chávez
is making a point: The public, American public included, does
not have to remain hostage to the Saudi-Houston cartel.
Chávez is a wily gamester. He pushes only so far. He may tax the
oil majors, sell to their Brazilian competitors and spend oil
loot in Ecuador, but his state oil company has, at strategic
moments, waived most of the higher royalties and signed
lucrative contracts with Exxon and Shell to extract offshore gas
reserves. His government sells tantalizing morsels of
concessions in the Orinoco Basin to keep industry majors
mollified. Nevertheless, Chávez has challenged the great ebb and
flow of international finance capital and petro-dollars. If
Chávez were president of Kazakhstan, he could play Robin Hood
with his nation's oil money without incurring the fanatic wrath
of the White House.
Venezuela is a different matter altogether. Chávez is,
correctly, seen as a class warrior, a crafty opponent of what
George Bush calls "the impressive crowd, the Haves and the
Have-Mores." Chávez wanted me to film him under the
larger-than-life oil painting of Latin America's "Great
Liberator," Simon Bolívar. Chávez sees himself as Bolívar,
taking his class war beyond his borders, from Argentina to the
Bronx, tilting the flat world back to level.
Can he? The difference between a grandiose nut and a grand
visionary is the economic power to impose the vision.
Palast is author of "Armed
Who's Afraid of Osama Wolf? China Floats, Bush Sinks, The Scheme
to Steal '08, No Child's Behind Left, and Other Dispatches from
the Front Lines of the Class War.
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