VENEZUELAN PRESIDENT Hugo Chávez succinctly summed up his victory in the August 15 presidential recall election: "This is a blow to the center of the White House," he shouted from the balcony of the presidential palace after the results were announced at 4:00 a.m. the following morning. Tens of thousands of the Caracas poor from the nearby barrios were on hand to cheer Chávez even after waiting ten to fourteen hours in the hot sun to vote. Caravans of vintage 1970s cars full of Chávez supporters cruised the streets of the capital the next day, even venturing into the wealthy suburbs with their high-rise condominiums, gated communities, upscale restaurants, and Mercedes Benz dealerships.

The Venezuelan opposition–funded by big business, backed by the U.S. and supported by the upper middle class and wealthy–had mobilized for more than a year to collect signatures to oust Chávez. Instead, Chávez received a resounding victory with 60 percent of the vote–with a million more votes than he received in his previous election victory in 2000. Predictably, the opposition cried fraud, with the opposition media (which is to say, nearly all) claiming that former President Jimmy Carter, an election observer, and the U.S. State Department sold out to Chávez for the sake of stable oil prices.

There’s a particle of truth in that claim. With oil prices spiraling upward, the U.S. occupation of Iraq in chaos, and American elections looming, Washington didn’t have the stomach for a repeat performance of the failed coup of April 2002. Then, the chamber of commerce (known as FEDECAMARAS by its initials in Spanish) and top labor union officials in the Confederation of Venezuelan Labor (CTV) mobilized for a march that set the stage for the attempted removal of Chávez by top military officers. The following December, the CTV and top executives in the state oil company, PDVSA, launched a "strike"–really a lockout–that devastated an already shrinking economy. Heroic efforts by rank-and-file workers and military units loyal to Chávez broke the lockout. Then, the surge in oil prices finally gave Chávez the resources he needed to carry out the "Bolivarian revolution"–a nationalist and populist agenda named after the leader of the independence movement from Spain in the early nineteenth century.

The rise of Chávez was the product of the breakdown of more than three decades of a political duopoly between the center-left Democratic Action (AD) party and the Christian Democrat party (COPEI). In a deal made in 1958 after the fall of a military dictatorship, the two parties wrote a constitution to lock out competitors (for example, the Communist Party) and built pervasive political machines. The AD tightly controlled the labor federation, the CTV. Votes for Congress were for national party slates, not individual candidates. State governors were appointed and elections were routinely rigged.

The oil industry provided the funds for political patronage. Washington saw Venezuela as a "democratic" counterweight to Cuba and rewarded the government. The 1970s oil crisis and the rise of the Organization of Petroleum Exporting Countries (OPEC) boosted economic growth via a state capitalist strategy with the nationalization of oil and basic industries. A large section of the working class benefited with secure jobs and top pay and benefits by regional standards. The Latin American debt crisis of the early 1980s, however, wrecked this model. Poverty and unemployment skyrocketed. A 1989 "structural adjustment" plan by the International Monetary Fund (IMF)–imposed by the social democratic AD party–led to a spontaneous, semi-insurrectionary uprising in Caracas in which an estimated 1,500 were killed by the military.

The armed forces, traumatized by the experience, became a hotbed of political activity, and attempted two populist coups in 1992–one of them led by Chávez. The next government took office in 1993 and was run by a former Christian Democrat who broke with his own party to win election, shattering the two-party system. The neoliberal policies continued, however, as society became more polarized. Chávez won the 1998 elections by defeating a former beauty queen backed by the two main parties.

By then the main political and state institutions of Venezuela were utterly discredited–especially the two main parties and the CTV labor federation. The Venezuelan ruling class was left with no stable or effective mediating institutions in what had become by some measures the most unequal society in Latin America, surpassing Brazil. The potential for a repeat of the uprising of 1989 was ever present, especially as the price of oil plunged in the late 1990s.

Chávez sought to fill this vacuum by governing as a left-wing populist. His first years were spent legitimizing his government with a constituent assembly, reelection, and other elections. Substantial reform, however, was blocked by the economic crisis. This allowed the bourgeois opposition to build a mass movement in the middle class as a cover for the 2002 coup attempt and bosses’ "strike." The mass popular opposition that defeated the strike, followed by the oil boom, finally gave Chávez room to maneuver.

Chávez’s oil-funded "missions" include subsidies for food, access to free health care for the poor in the barrios and rural areas, support for farmers and indigenous groups, and expanded access to higher education. All this benefits the estimated 80 percent of Venezuelans who live under the official poverty line. They are, of course, intolerable to the architects of neoliberalism in Washington, who worry that transfers of wealth from the rich to the poor set a dangerous example in a continent where 42.2 percent of the population lives in poverty, according to the latest United Nations Human Development Report. To Washington, these reforms, coupled with Chávez’s calls for self-determination and independence, represent a challenge to the unholy neoliberal trilogy of deregulation, privatization, and "flexible" labor reform. This is in sharp contrast with the record of Brazilian President Luis Inácio Lula da Silva, who has disappointed his Workers Party supporters by diligently pursuing capital’s agenda and bowing to the United States.

Nevertheless, Chávez’s break with neoliberalism has been partial. He has continued to pay Venezuela’s debts to the IMF and hasn’t directly confronted capital. As Latin American expert James Petras wrote, "President Chávez’s policy has always followed a careful balancing act between rejecting vassalage to the U.S. and local oligarchic rentiers on the one hand and trying to harness a coalition of foreign and national investors, urban and rural poor to a program of welfare capitalism." Chávez, he concludes, is closer to Franklin Roosevelt’s New Deal than Castro’s Cuba.

Moreover, the missions, funded by huge revenues from oil exports, are an NGO-ized twist on the traditional clientelism of Latin American populist governments of the past, such as Lázaro Cárdenas in 1930s Mexico and Juan Perón in Argentina in the 1950s. The missions allow Chávez to bypass the state bureaucracy controlled by the opposition (mainly the AD) and provide Chávez with a recruiting base for cadre as a substitute for any real party organization. (His campaign in the referendum was run not by his Fifth Republic Movement party, but by a top-down apparatus called "Commando Maisanta," named for Chávez’s grandfather, a guerrilla fighter.)

To the bourgeoisie, Chávez constantly threatens to "deepen the revolution"–presenting himself as the only alternative to a popular uprising from below. He aims to exclude or break bourgeois political organizations that remain allied to U.S. imperialism and implacably oppose his rule, while making concessions economically to leading capitalists, both domestic and international (which includes a recent deal with Chevron-Texaco to explore for natural gas). Essentially, Chávez aims to dislodge sections of the bourgeoisie from their middle class shock troops–and in the medium term may have some success given the ludicrous claims of electoral fraud by the opposition.

Chávez’s rule represents a balancing act between the main classes in society. To the mass of the poor, Chávez is a revered figure who has finally brought some improvement to their lives–and for those not yet affected by the missions, at least a tangible potential for change. His modest background–and the fact that he’s of Black, indigenous, and white ancestry–is important to his appeal in a country long dominated by white politicians. To the working class, which hasn’t been affected by the missions, Chávez presents himself as a bulwark against the "fascist" opposition and their class enemies. However, real wages overall are at 1950s levels. Unemployment is at about 20 percent. In the state industries–oil, aluminum, etc.–real wages are comparatively high but have been stagnant for nearly twenty years. Indeed, the constant elections have allowed Chávez to present voting as a substitute for a confrontation between workers and capital.

Chávez aims to continue this strategy via local and regional elections in October, and with presidential elections in 2006. However, the situation is highly contradictory and unstable. A fall in the price of oil would force a choice between a rollback of the reforms or a significant transfer of wealth from the bourgeoisie to workers and the poor. Moreover, pressure is building in the working class for higher pay, better conditions, and new jobs. Despite rapid economic growth in recent months, job growth hasn’t remotely kept pace with population growth, adding to the social pressure. Half the population works in the informal sector as street vendors, day laborers, and the like.

This situation presents an enormous challenge to a new trade union center, the National Union of Workers (UNT). The UNT, led by veteran socialists and social-Christian labor activists, is aligned with the revolutionary process, which has led to accusations of state domination by the CTV and its backers in the AFL-CIO. But the UNT is in fact the result of splits and rebellions from the CTV following the oil lockout. The UNT’s leaders and activists are debating how to develop their own agenda rather than simply following the government’s lead.

The likelihood of intensifying class conflict will constantly pressure Chávez’s government to choose sides. The more he leans towards workers and reforms, the greater the intensity of capital’s opposition–including future coup attempts. If gains for workers are postponed, however, then Chávez could lose popular support by the next election in 2006.

The dynamics of the struggle will be determined in action, however. From the uprising of 1989 to the mobilization that defeated the coup of 2002, the mass of the urban poor have shown an enormous capacity for mobilization and radical politics. Trade-union militants are working to build "classista"–class struggle–unions that can further labor’s interests and give leadership to workers in the informal sector. Ultimately these are the social forces that will determine whether a fundamental social transformation in Venezuela takes place–because there is no such thing as a revolution from above.

Lee Sustar is a contributing editor for Socialist Worker.