Book Excerpt - Armed Madhouse by Greg Palast
Here is an extract from Greg Palast's new book Armed Madhouse, to be published in Britain on July 1 2006. Get Armed Madhouse at www.GregPalast.com. Greg Palast will be signing copies of his new book Armed Madhouse on Tuesday 4th July from 8pm at the NUJ headquarters (308 Grays Inn Road, London WC1, nearest tube: Kings Cross) with Hands Off Venezuela and the NUJ book branch. For more information see the press release Greg Palast talks to Hands Off Venezuela.
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 sold.
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 "corporate takeover."
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 their citizenry.
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 and bread.
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.