Hugo! (47 page)

The United States started to play a covert role in shaping events in
Venezuela even before Reich officially assumed his post in January
2002. By the later part of 2001 a parade of Venezuelan politicians, businessmen,
journalists, and military officers opposed to Chávez started
passing through Washington, DC, and the US embassy in Caracas
to meet with American officials. One Venezuelan general,
Lucas
Romero Rincón, chief of the Venezuelan army, met with Pardo-Maurer
on December 18, 2001, in Washington. Another of the visitors was a
diminutive businessman named Pedro Carmona. He was the head of
Venezuela's national chamber of commerce,
Fedecámaras. He and a
delegation of seven business leaders met with Reich, Maisto, and other
officials in November. Carmona insists the meeting was to discuss
including Venezuela in a group of Andean nations that received preferential
trade treatment.

Others contend that the trips by the Venezuelans had another purpose:
to sound out the United States about support for a coup. US officials
later were to claim that they "explicitly made clear repeatedly to
opposition leaders that the United States would not support a coup,"
in the words of White House spokesman Ari Fleischer. But a Defense
Department official offered a different version, telling
The New York
Times
that "we were not discouraging people. We were sending informal,
subtle signs that we don't like this guy."

About the same time Pedro Carmona was traveling to Washington
to meet with Reich and the others, back in Caracas lame-duck ambassador
Donna Hrinak took the unusual step of ordering the embassy's
military attaché to end his frequent meetings with dissident Venezuelan
military officials. One of them,
Rear Admiral Carlos Tamayo Molina,
was a leading Chávez opponent who was contemplating a coup. A State
Department official later explained that Hrinak prohibited the meetings
because US officials had learned the attaché's contacts were "involved
in illegal activities or what would be illegal activities."

While US officials were quietly meeting with Chávez's critics, the
US government and allied agencies were also pumping hundreds of
thousands of dollars into organizations opposed to him. One group
was the Assembly of Education headed by
Leonardo Carvajal. He was
leading the protests against the education reforms and the largest street
protests to date against Chávez. The principal channel for the money
to be delivered to his and other opposition organizations was an outfit
called the National Endowment for Democracy.

For decades, the Central Intelligence Agency sought to influence events
in foreign countries in directions perceived as favorable to the United
States — namely, heading off
"radical" movements and governments
in favor of more moderate, pro-free-market ones. It covertly supported
political parties, unions, newspapers, book publishers, student groups,
and civic organizations around the world. But in the mid-1970s scandal
erupted when congressional investigations including the
Church
Commission and agency defectors such as Philip Agee revealed that the
CIA was also employing other techniques to shape world events. These
techniques included assassination, economic sabotage, coups, and the
installation of dictators. The
CIA mounted and ran the 1954 coup that
overthrew the democratically elected reformist government of Jacobo
Arbenz in Guatemala and backed the 1973 coup that ousted Chile's
Salvador Allende, the first democratically elected Marxist president in
the Western Hemisphere.

The
1970s scandals accelerated a search by policy makers in
Washington to find a way to carry out some of the same political work of
the CIA but without the baggage left by the exposés. Their answer was
the
NED. It was designed to do overtly what the CIA used to do covertly,
minus the assassinations and other direct bloody endeavors. "The NED
was created to supplement the activities of the CIA," according to
Kornbluh, an expert in US covert activities. In a September 22, 1991,
interview with
The Washington Post
,
Allen Weinstein, who helped draft
the legislation establishing the NED and was the group's first acting
president, said, "A lot of what we do today was done covertly twenty-five
years ago by the CIA." The NED's stated mission was to "promote
democracy," but its ultimate mission was to promote US interests abroad
— which might or might not coincide with the pursuit of democracy.
Some of its work was praiseworthy, such as supporting Lech Walesa's
Solidarity movement in Poland in the 1980s. Other projects were far
more questionable.

The NED was created in 1983 at the height of Reagan's anticommunist
crusade in
Central America. Reagan was a major supporter
of the organization, as George W. Bush was to become as well.
The group insisted it was an independent and private operation, but
almost all its funding came from the US Congress. It was essentially
a quasi-governmental organization. Congress channeled its funds to
NED through the
United States Information Agency and the United
States Agency for International Development, which both were entities
of the
State Department. NED had to submit its grants to the
State Department for approval. US embassies abroad often handled
the logistics and coordination of NED programs.

One of the NED's first major successes, as outlined by William I.
Robinson in
A Faustian Bargain
, was helping to
overthrow the Sandinista
government in Nicaragua. In a single year it pumped a whopping $10.5
million in grants into the small, impoverished Central American nation
of three and a half million people. The money went to groups opposed
to the Sandinistas. Already weakened by nearly a decade of the US-led
economic sabotage and contra war, they lost the 1990 election to the US-supported
candidate, Violeta Chamorro. In a country with an economy
barely the size of Rhode Island's, the massive US military, economic,
and political intervention created a badly tilted playing field that left the
Sandinistas with little chance of survival.

As Reich and the other Iran-contra figures settled into their posts
in early 2002, most Venezuelans were unaware that the
NED was rapidly
infiltrating their society in a way reminiscent of the Nicaragua
experience. Grants were escalating quickly as US power brokers grew
increasingly wary of Chávez. As 2001 rolled into 2002 the money nearly
quadrupled, to $877,000. Most of it went to anti-Chávez "civil society"
organizations including one called
Sumate
, Join Up. Its leader,
María
Corina Machado, an English-speaking fashion plate who had attended
boarding school in Wellesley, Massachusetts, was to land an interview
in the Oval Office with
President George W. Bush — something
Chávez never achieved.

Chávez and most of the rest of the country would not become aware
of the extent of the NED's intervention until 2004 after a Venezuelan
American attorney from Brooklyn and a muckraking journalist from
Washington, DC, filed
Freedom of Information Act requests to force
the NED to release details of its operations in Venezuela. The revelations
set off a national uproar among Chávez and his supporters. The
lawyer's
book about the NED became ubiquitous on sidewalk newsstands
and its author, Eva Golinger, a darling and celebrity of the
Chávez revolution.

As 2001 drew to a close, Chávez shifted his
Bolivarian Revolution
into
high gear, sending the opposition into a frenzy. Until now, most of his
moves were aimed at dismantling the corrupt political establishment.
With the traditional parties all but annihilated, he turned to implementing
a series of reforms aimed at everything from the oil industry to
the fishing business. On November 13, using an "enabling law" that was
about to expire, he issued forty-nine decrees.

They covered everything from requiring banks to provide some
loans to small farmers to extending the area where
industrial fishing
was banned from five to ten kilometers offshore, to protect the interests
of small fishermen and the environment. In general the measures were
aimed at consolidating for the first time and enshrining in law his
reform
program on behalf of the majority poor. They were a direct challenge to
the elite.

Two decrees in particular set off a firestorm. One dealt with the oil
industry. Chávez had begun to wrest control of the state oil monopoly,
Petroleos de Venezuela, from what he called a "state within a state" that
he believed was selling out Latin America's largest company to
foreign
interests and a domestic elite. He had reversed
PDVSA's practice of busting
its OPEC quota, and played a leading role in revitalizing the organization.
Now he wanted to complete the
reforms.

The new law guaranteed PDVSA at least a 51 percent stake — and thus
control — in joint ventures with foreign oil companies. It also raised
royalty rates from 16.7 percent to 30 percent. To offset the increase, the
government would slash income tax rates, from 67.7 percent to 50 percent.
In addition, the law strengthened
prohibitions in the new constitution
against privatizing the company.

Critics, including former PDVSA head Luis Guisti and the company's
well-oiled public relations department, painted the move as another step
toward destroying a model company and discouraging foreign investment.
Others disputed that, contending that PDVSA was actually one of
the
least
efficient major oil companies. It cost PDVSA about three times as
much to extract a barrel of oil as it did other major oil corporations such
as ExxonMobil, Shell, Chevron, or Texaco, according to a ranking by the
magazine
América Economía
. PDVSA also used transfer pricing to overseas
affiliates to lower the royalties it paid to the Venezuelan state. The
amount fell from 71¢ per dollar of gross earnings in 1981 to 39¢ by 2000.

The other decree that provoked the opposition's ire centered on land
reform. No one in Venezuela could seriously argue that
land
reform was
not needed. Between 1 and 2 percent of the landowners possessed 60 percent
of the arable land. Many landowners had obtained their property
through corruption and lacked legal titles. On top of that, they were not
using it. Two million landless peasants were living in poverty, Chávez
complained, while great swaths of the interior lay fallow with their owners
living in Caracas.

He also argued that Venezuela needed to achieve "national
food
security" by producing most of its own food. Venezuela imported an
estimated 70 percent of its food. It was the only net importer in South
America. In the previous four decades most of its residents had moved
from the country to the cities, which now held 87 percent of the population,
nearly reversing the previous ratio. Between 1960 and 1999,
agriculture's
share of the GDP dropped from 50 percent to 6 percent — the
lowest figure in Latin America.

The last
land reform attempt, in 1961, ended in disaster. The government
gave forty-four thousand square miles to
peasants, but didn't
give them the means to work the land. Most of it eventually ended up
in the hands of large
landowners.

Chávez wanted to rectify Venezuela's dismal land distribution. He
proposed
limiting the legal size of farms to areas ranging from one hundred
to five thousand hectares, depending on productivity. To help dismantle
portions of large unused
latifundios
or make them productive
,
he wanted to impose a special tax on land left more than 80 percent
idle. He proposed distributing unused land, mainly owned by the government,
to peasant families and cooperatives. His measure did permit
limited expropriation of uncultivated and fallow land from large, private
estates. But the government would take only a portion of the idle
land, depending on its quality, and would compensate the owners at
fair market rates. The law clearly stated that large landowners were
generally entitled to most of their land.

The plan was not nearly as radical as the mass expropriations of
the
Cuban and Mexican revolutions. Some compared it to Abraham
Lincoln's landmark
Homestead Act of 1862, which helped develop an
agrarian-based middle class and played an important role in the development
of democracy in the United States. The Venezuelan government
figured it could meet most of the peasants' needs by
distributing
state-owned property and would not have to touch many privately
owned holdings.

But the decree set off a
revolt among landowners. Many complained
that the president was unfairly depicting them as thieves by
questioning the legitimacy of their land titles. They contended his
incendiary statements were prompting a wave of invasions by squatters.
They feared they were going to lose their livelihoods. They
believed the government would force them to give up the lucrative
business of milking cows, for instance, because the new regulations
required them to sow plantains on the most fertile soil. Others
charged that even productive estates could be seized. They called the
program a threat to private property and a throwback to communist-style
economies.

Chávez kicked off the program with great fanfare on December 10,
the anniversary of Ezequiel Zamora's famous battle at
Santa Inés in 1859.
Chávez traveled to the exact spot of the battle in Barinas for a ceremony
marking the program's official start.

It didn't take long for violence to erupt. Landowners in the border
region complained the government was not protecting them from
Colombian rebels and invading peasants. They formed
private militias
reportedly trained by bloody right-wing Colombian paramilitary
organizations. Soon they were
assassinating land reform activists. One,
Luis Mora, was killed a month after Chávez's announcement. Two men
drove up to his house in the rural state of Mérida, pulled out pistols,
and shot him in front of his two young sons. Over the next year the government
National Land Institute calculated that another fifty popular
leaders were assassinated. By the middle of 2005 the figure was up to at
least 130.