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Venezuela: Protest Marches, PDVSA and Government Fears

5 MINS READOct 8, 2002 | 02:00 GMT
Summary

Petroleos de Venezuela President Ali Rodriguez recently warned employees that anyone participating in an Oct. 10 protest march against President Hugo Chavez would be subject to disciplinary action, including dismissal. The government is worried that PDVSA workers' involvement in anti-regime protests could escalate into situations that might disrupt company operations. However, if large numbers of workers were fired en masse, it could trigger the very disruptions the regime is trying to prevent.

Analysis

In a recent memorandum, Petroleos de Venezuela President Ali Rodriguez warned that employees who participate in an Oct. 10 protest march in Caracas against President Hugo Chavez will "suffer the consequences," the El Nacional daily reported Oct. 7. Opposition leaders say the march will attract between 600,000 and 1 million people seeking Chavez's resignation and new national elections.

The political opposition is attempting to build momentum for Chavez's ouster through ever-larger protest marches and national work stoppages. As a result, the government likely is concerned that participation by PDVSA's managers and employees in the Oct. 10 protest could generate more support for work slowdowns or stoppages — possibly snowballing into a complete shutdown of oil production, refining and export operations.

The likelihood of more strife between the Chavez regime and PDVSA's managers and employees would jump considerably if the Oct. 10 protest march is violently disrupted by pro-regime military or civilian groups.

A dispute over PDVSA board appointments between Chavez and PDVSA's managers nearly shut down the oil industry in April and indirectly sparked the protest march that ended in gunfire and briefly toppled Chavez from power. Although that dispute ended when Chavez appointed Rodriguez as company president and named a new board of directors, significant tensions linger between employees and the Chavez regime.

In recent days, some PDVSA managers directly involved in the April dispute with Chavez said the company would not participate in any marches or strikes initiated by the political opposition. However, Unapetrol — the white-collar union created by PDVSA's managers only six months ago — also told its members to "vote their conscience" as Venezuelan citizens when deciding whether to participate in the Oct. 10 march.

Since PDVSA's managers and employees are not isolated from or immune to Venezuela's economic and political turmoil, many may choose to join the protest march — and, as Rodriguez hinted in his memorandum, some likely will face disciplinary measures or dismissal.

However, if large numbers of PDVSA workers — whether managers, white-collar or blue-collar employees — join the march, the government would find itself in a bind. Rodriguez could not fire a substantial portion of PDVSA's work force without crippling the company, since it would be nearly impossible to find trained, qualified replacements.

Dissent against Chavez within the oil industry also might not be silenced if only a small number of employees take part in the march and are fired. Instead, that could have the opposite effect, sparking a new confrontation that quickly could escalate into disruption of PDVSA's operations.

Despite recent assurances by Rodriguez that all is well within Venezuela's oil industry, tensions between the company's personnel and the government appear to be on the rise. For instance, oil industry sources in Caracas report that PDVSA managers and employees suspected of anything less than blind loyalty to the Chavez regime and Rodriguez are systematically harassed, intimidated and kept under electronic and human surveillance by PDVSA's internal security division.

Many PDVSA managers also are upset by what they perceive as excessively frequent senior management turnover and horizontal transfers. Rodriguez told the Caracas daily El Nacional recently that these management decisions are "dynamic movements that obey strategies for the good of the corporation." But critics within the company claim Rodriguez is promoting and transferring managers for political reasons. These critics say that regime supporters within PDVSA get key jobs, while known or suspected dissidents are being transferred to keep them off-balance and disorganized as a group.

Since April, the government also has tried to defuse blue-collar opposition within PDVSA — mainly by working through the current leaders of the oil workers union (Fedepetrol) to dispense higher wages and more benefits to union members. Although the economic outreach likely has peeled away some of the Fedepetrol leadership's support for anti-Chavez labor groups, such as the Venezuelan Workers Confederation (CTV), Fedepetrol's members may not support their leadership's flirtations with the government.

The main issues for Venezuelan union members — including those within the oil industry — include job security, employment growth, higher wages and full payment of nearly $12 billion the government owes to public sector workers. This debt consists of unpaid wages, benefits and retirement benefits — plus interest — that have been accumulating for more than 15 years.

Oil industry workers also have been hammered by the Chavez regime's strategy of boosting oil prices through coordinated OPEC production cuts. In Venezuela's case, OPEC-mandated production cutbacks cost PDVSA more than 600,000 bpd of lost crude oil production capacity, and they virtually halted an ambitious plan that sought to nearly double Venezuela's oil production capacity to 5.8 million bpd by 2009.

The suspension of PDVSA's capacity expansion plan right after Chavez assumed the presidency in early 1999 caused a crippling recession in the private oil-services sector. Dozens of companies have shut down, and thousands of workers have been fired. Also, violence by unemployed people against workers and residents in rural, oil-producing areas has grown.

Although the price of Venezuela's oil exports recently rose above $27 a barrel, the Chavez regime lacks the financial resources, management capability and investor confidence to end the recession and fuel a rapid economic rebound.

The regime also faces a powerful foe in CTV President Carlos Ortega — a former president of Fedepetrol who twice defeated Chavez in PDVSA labor-management confrontations over higher wages before being elected president of the CTV. Ortega still has a strong base of support within Fedepetrol, and he recently has been lobbying Fedepetrol's members to join both the Oct. 10 march and a national one-day work stoppage on a still-undetermined date in October or early November.

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