Venezuela: The Nationalisation of Banco de Venezuela

Venezuela: The Nationalisation of Banco de Venezuela

By Alan Woods

02/08/08 "ICH' -- - In a television programme broadcasted to the whole of
the country on July 31st, President Chávez announced the nationalisation of
Banco de Venezuela, the Venezuelan bank owned by the Spanish banking
multinational Grupo Santander. "We are going to nationalize Banco de
Venezuela. I make an appeal to Grupo Santander to come here so that we can
start to negotiate".

He added: "Months ago I received the information through intelligence
sources that Banco de Venezuela, which had been privatized for years, was
being sold by its Spanish owners; that an agreement had been signed between
Grupo Santander and a Venezuelan private banker, then the Venezuelan banker
needed the permission of the government to buy a bank, this is not a small
operation (...) and then I sent a message to the Spanish and the Venezuelan
banker, to tell them that the government wanted to buy the bank, we want to
recover it. Then the owners said 'no, we don't want to sell it'. So now I
say 'no, I will buy it, how much is it? We are going to pay for it, and we
are going to nationalize Banco de Venezuela'." The President continued:
"From this moment the media campaign on the part of the Spanish and
international media is going to start. They are going to say that Chávez is
an autocrat, that Chávez is a tyrant, I don't care, we are going to
nationalize the bank regardless". "Ladran, luego cabalgamos" (the dogs
bark,
therefore the caravan is moving), he said, quoting from el Quijote.

"There is something obscure here because its owners first were desperate to
sell and now they are saying they do not want to sell it to the Venezuelan
state. We are going to nationalize it so that it is put at the service of
the Venezuelan people." He added that the bank controls millions of Bolivars
which belong to "the Venezuelan people and also the Venezuelan government".

"We need a bank of that size. Because this is the Banco de Venezuela, but
this bank generates massive profits but these profits are going abroad."

Chávez also assured that the savings of the account holders were going to be
guaranteed as well as the jobs of the workers, whose conditions would
improve "as has happened with the nationalisation of SIDOR".

Chávez thanked the private managers of the bank for having turned it into a
very efficient institution, but added that the bank would cease to be a
capitalist bank to turn into a socialist one: "Profits will not go to one
private group, they will be invested in socialist social development.
Socialism is stronger every day that passes!"


Super profits

Banco de Venezuela is one of the most important banks in Venezuela, with a
12 percent share of the market in loans and obtained profits of US$170
million in the first half of 2008, a 29 percent increase on 2007, when its
profits had already increased by 20 percent. It has 285 offices and three
million customers.

Banco de Venezuela was nationalized in 1994 after a massive banking crisis
which bankrupted 60 percent of the banking sector, only to be privatized in
1996 and bought by the Spanish multinational banking group Grupo Santander
for only 300 million US dollars. In only nine months Grupo Santander
recovered its original investment. The bank's assets are now estimated at
891 million dollars. In 2007 alone it made $325.3 million in profits, which
is more than what they paid for the bank in the first place.

This is not the only example of scandalous profiteering by Spanish bankers
in Venezuela. Banco Provincial was also bailed out by the Venezuelan state
in 1994 and then sold in 1996 to Spanish multinational group BBVA. As a
result, the Venezuelan banking sector is dominated by four groups: two
Spanish multinationals, BBVA and Santander, and two Venezuelan banks,
Mercantil and Banesco. The Spanish Grupo Santander is now Latin America's
largest banking concern with 4,500 branches and it drew one third of its
profits in 2007 from the region. This is just one example of how big foreign
multinationals are plundering the resources of the continent.

The attempt of the Venezuelan government to regain control over the
resources of the country is entirely justified. Yet it has been met by howls
of protests from the multinationals. "It's looking like a negative
development, I don't see why the banking sector needs to be under the
purview of the public sector," said Alberto Ramos, a senior economist with
Goldman Sachs. "The private sector does a much more efficient job of running
that type of business."
Lying hypocrisy

This is an excellent example of the lying hypocrisy of the defenders of big
business. How can these gentlemen speak of the so-called efficiency of the
private bankers when everybody knows that the big banks in the USA and other
countries have been engaged in massive and criminal speculation for decades,
which has led to the collapse of one big bank after another in the last 12
months, threatening the entire world financial system with collapse?

Not long ago, the Federal Reserve Bank of New York was forced to hand over
US$29 billion to The Bear Stearns Companies Inc., a major investment bank in
the USA, to facilitate its purchase by another big bank, JPMorgan Chase &
Co. This is a perfect example of the "efficiency" of the private bankers,
who have made fabulous profits from criminal speculation for years in the US
housing market, and now run cap in hand to the state to bail them out with
billions of dollars of tax payers' money. Instead of going to jail for their
crimes, which caused 77,000 American families to be evicted from their homes
in the month of May alone, these wealthy parasites are richly rewarded by
their friends in the White House and Wall Street.

When President Chávez announces the nationalisation of a bank, he is accused
of committing a crime against private property. But bourgeois governments in
the USA and Europe have been nationalizing banks themselves. The Federal
Reserve, having already poured money into the pockets of the bankers in the
Bear Stearns affair have now in effect nationalized the two huge mortgage
giants Fannie Mae and Freddie Mac at a cost to US taxpayers of a further
US$25 billion. George Bush and his administration have no money for health
or pensions, but plenty of money to put in the pockets of their rich
friends. In the words of the celebrated American writer, Gore Vidal, it is a
case of "socialism for the rich and free enterprise for the poor".

What does this case tell us about the "efficiency" of the private bankers of
the USA? Fannie Mae and Freddie Mac, which account for at least 50 percent
of all mortgages in the USA, have issued $5 trillion in debt and mortgage
backed securities. Of that amount more than $3 trillion is held by US
financial institutions and more than $1.5 trillion is held by foreign
institutions. Their involvement in massive swindling and speculation posed a
serious threat to the stability of the global economy. That is why the US
authorities were forced in effect to nationalize them. Yet nobody raises any
questions about this.

We saw exactly the same thing last year in Britain, where the fifth biggest
bank, Northern Rock, was nationalized by the government to stop it from
collapsing. These private bankers were so efficient that they caused the
first run on a bank in Britain for over 150 years, with long queues of
worried savers waiting all night to withdraw their money. The
nationalisation of Northern Rock cost the British taxpayer £20bn (US$40bn).
At the same time, Prime Minister Gordon Brown tells the British workers that
there is no money for wage increases and everyone must make sacrifices -
everyone except the private bankers!
Appetite comes with eating

The workers of Venezuela and the whole world will welcome the
nationalisation of the Banco de Venezuela. They will understand that the
attacks and calumnies against Hugo Chávez are dictated by hypocrisy, greed
and hatred of the Venezuelan revolution. The Spanish bankers, who have been
shamelessly plundering Venezuela, were quite prepared to sell the Banco de
Venezuela to a private Venezuelan banker, that is, a companion in crime, but
they were not prepared to allow the bank to be taken over by the state and
used to further the interests of the Venezuelan people.

For Marxists, the question of compensation in itself is not a question of
principle. Long ago, Marx advocated paying compensation to the British
capitalists as a means of minimising their resistance to nationalisation and
Trotsky raised a similar possibility in relation to the USA. However, the
idea of the reformists that the capitalists' property must be bought at
market values is entirely false and impossible in practice. Our policy
should be minimum compensation in cases of proven need only. In other words,
we would consider compensation for middle class small shareholders, old age
pensioners, etc., but not lavish sums for the super-rich who have already
made vast fortunes out of the plunder of countries like Venezuela. The Grupo
Santander bought the Banco de Venezuela at the ridiculously cheap price of
300 million US dollars. This sum of money has been paid for many times over.
There is no justification for paying them a single Bolivar more.

However, the real issue here is not the amount of compensation. It is the
fact that a big bank is being taken out of private hands. What the
capitalists and imperialists really fear is that the tendency of the
Venezuelan revolution to make inroads into private property will become
irresistible. The crisis of capitalism means that an increasing number of
banks and other private enterprises will enter into crisis and close in the
next months, causing a sharp rise in unemployment. Already, private
investment in Venezuela has plunged. The Venezuelan economy is only being
maintained by state investment and the public sector. This poses a serious
threat to the revolution and can adversely affect the results of the
November elections, especially if one takes into account the high and rising
rate of inflation.

The argument of the reformists and Stalinists that the revolution must form
a "strategic alliance with the national bourgeoisie" is dangerous stupidity.
Everybody knows that the bourgeoisie is the enemy of the revolution and
socialism. It is not possible to form a "strategic alliance" with the
progressive national bourgeoisie which does not exist. The reformists and
Stalinists would like to create a national bourgeoisie with state money.
What logic is there in this absurd proposal, which they put forward as
so-called realism? Instead of throwing money at private capitalists who will
immediately send it out of the country to bank accounts in Miami, the state
should take the productive forces into its hands and use its resources to
create a genuine socialist planned economy. The prior condition for this is
that the productive forces should be in the hands of the state, and the
state should be in the hands of the working people.

Despite all the exhortations, the private capitalists will not invest in
Venezuela. The only way forward is nationalisation. The expropriation of
SIDOR earlier this year was the result of the movement of the workers from
below. The threat of factory closures in the next few months will
undoubtedly lead to a new wave of factory occupations and demands for
nationalisation. The nationalisation of the Banco de Venezuela will give a
further impetus to the workers' demand for expropriation and workers
control. Appetite comes with eating!! That is why the owners of the Banco de
Santander wished at all costs to avoid their property passing into the hands
of the state, even though the President offered to pay for it.

In the television programme in which President Chávez announced the
nationalisation of the Banco de Venezuela he mentioned Marx and Lenin and
referred to the importance of reducing the working week, as well as
analyzing the world crisis of capitalism. He said that only with socialism
can societies achieve their emancipation. That is absolutely true. But
socialism is only possible when the working class takes power into its
hands, expropriates the bankers, landlords and capitalists and begins to run
society on socialist lines.

The Venezuelan revolution has begun to take measures against private
property. Marxists welcome every step in the direction of nationalisation.
At the same time, we point out that partial nationalisations are not
sufficient to solve the fundamental problems of the Venezuelan economy. The
nationalisation of the entire banking and financial sector is a necessary
condition for establishing a socialist planned economy, along with the
nationalisation of the land and all big private firms, under workers'
control and management. This would enable us to mobilise the entire
productive resources of Venezuela to solve the most pressing problems of the
people.

We therefore welcome the nationalisation of the Banco de Venezuela as a step
forward. But the main objective has not been yet attained: the elimination
of the economic power of the oligarchy and the establishment of a real
socialist workers' state. The battle continues.

Barcelona, 1st August 2008
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