The Struggle for Venezuela’s Soul -- and Chavez’s Ouster

This is the core of a paralyzing national strike, this dirty little intersection just off the highway that runs through the heart of the capital.

Above it rises the headquarters of the world’s second-largest state oil company, Petroleos de Venezuela, known by its initials, PDVSA. The building towers over surrounding shops, its green and gray walls muted by a patina of grime from car exhaust.

On a typical day, about 2,000 workers arrive to dispatch petroleum orders, approve new contracts and meet in polished boardrooms. But now, two weeks into a strike designed to force President Hugo Chavez from office, about 500 workers a day check in.

Refugees from this and other PDVSA offices throughout the capital, they gather in a frantic effort to keep alive the nation’s behemoth oil industry, source of more than 10% of U.S. oil imports. Human resources executives help dispatch oil tankers, accountants patch together complex communications networks, middle managers make photocopies.

It is a desperate, urgent struggle for those who believe in Chavez and his plans for a social revolution to improve the lives of Venezuela’s impoverished millions. PDVSA is the heart of the nation’s economy, accounting for one-third of gross domestic product. If the company fails, so does Chavez.

“I am defending democracy,” Enny Pulgar, 48, told reporters. The mid-level accounting executive suddenly found herself last week writing international shipping manifests for oil tankers.

On the other side of the picket lines, the fight is no less vital. As many as 90% of the company’s 46,000 employees have joined the strike, causing oil production to fall by 70%. Most are middle or upper class, and many were educated in the United States. They are true believers in open markets, corporate ladders and trickle-down economics.

For them, PDVSA is not some bloated state agency but more like a private corporation. They see in Chavez the ruin of their beloved company, an attempt to funnel Venezuela’s oil wealth into ill-conceived social welfare programs for his poor followers.

These are not wild revolutionaries. They are people who believe that they have fought their way to the top, who won their position by hard work and skill. By striking, they are risking everything they have worked for: careers, homes, pensions, even personal safety.

Last week, they gathered by the thousands in a hotel ballroom, in golf shirts and Donna Karan blouses, to chant like the most fervent university demonstrators against Chavez’s rule: “Out! Out! Out!” they screamed.

The strike seeks new elections to permanently oust Chavez, who was restored to power after a brief coup in April.

“We are fighting for the principles of liberty and democracy,” said Edgar Paredes, who after striking was fired from his job as the president of Pequiven, a petrochemical company that is one of PDVSA’s biggest subsidiaries. “That’s worth more than a career.”

As the protest grinds on, crippling oil production, cutting food supplies and making the lives of millions difficult, the battle for PDVSA has become the battle for Venezuela’s soul: Will the company, and the nation, focus on profits or poverty?

“PDVSA will serve the interests of Venezuela, and not the elite,” Chavez said Sunday in his weekly presidential address.

Pride of Venezuela

PDVSA is far more than an oil company. It is the pride of Venezuela, a symbol for those who believe that the country can have a booming economy and a vibrant middle class.

The company came into being in 1975, after President Carlos Andres Perez nationalized the industry, paying about $1 billion for all the foreign-owned oil licenses and assets in the country. With reserves of 77.9 billion barrels of oil, Venezuela is the fifth-largest oil supplier in the world, producing about 2.7 million barrels a day until recently. Only Saudi Aramco is a larger state-run oil company.

The conversion brought those workers from businesses such as Shell into a state enterprise. From the start, the idea was to separate the company from politics and the messy business of running a country.

Although owned by Venezuela, PDVSA would be run like a private corporation.

“We live in a competitive world. What that means is that we have to be efficient,” said Juan Fernandez, 47, the company’s planning manager, who also was fired recently after emerging as the leader of striking workers.

The heart of the corporate culture is the idea of meritocracy. There are annual performance evaluations that determine promotions, and evaluations of “potential” every three years that determine how far one rises. Many who work in these grimy offices came from humble backgrounds, their parents immigrants or field workers, and moved up in the ranks.

Over the years, PDVSA employees came to see themselves as the best and the brightest, creators of a First World company in a Third World nation.

They believed that they could best help the country by being the most profitable company possible. With sales of $46.2 billion last year, PDVSA sent about $9 billion to the treasury, about half the government’s budget.

“The company best helps the country by opening markets and providing opportunity to Venezuelans,” Paredes said. “This is what Chavez doesn’t understand.”

Middle and upper management workers earned far more than most Venezuelans, though salaries are low compared with multinational oil companies. Today, young executives bring in $30,000 to $45,000 a year. Top executives reportedly make as much as $250,000 a year.

Many members of top management drive SUVs, live in comfortable duplexes and can afford to vacation in Miami. They send their children to private schools, have sculptures and paintings in their living rooms and dine in hushed restaurants.

The apartness of PDVSA is inescapable. Top managers say the rest of Venezuela should be more like the company. It is a small, tight club where you join, you work, you rise and you retire with a pension plan that you long ago converted into dollars to avoid the deflation that eats away at other workers’ retirement checks.

“We all share this idea: We want to get hired by PDVSA, we want to work in PDVSA and we want to retire from PDVSA,” said Horacio Medina, 49, a top executive fired last week. “This is my life.”

That sense of separateness has changed since Chavez took office, workers say. Now, employees have created a nonprofit group independent of the company to help the poor someday.

But there is also a sense that the company has done no wrong. PDVSA made money. It was the government’s job to spend it. Venezuela’s widespread poverty is a failure of politics, not commerce.

“Don’t blame PDVSA. Blame the politicians,” said Ramon Espinasa, a consultant with the Inter-American Development Bank and former chief economist for the firm. “This is a company that has to be as profitable and well managed as possible.”

Chavez Brings His Ideas

Chavez attacked that corporate philosophy from the moment he ran for office in 1998, calling the company a “state within a state” that had to be brought into service for the “Bolivarian revolution,” an odd mix of leftist ideas to improve the lives of the poor.

Once in office, he cut a deal with Cuban President Fidel Castro, a friend, to supply about 53,000 barrels of oil a day at cut-rate prices to the communist government. He issued a new decree requiring that future oil projects have 51% state ownership and doubling royalties paid to the government. He ordered the country to strictly adhere to OPEC oil production levels, overturning plans to more than double production to 6 million barrels a day.

Chavez and his supporters are unapologetic about their vision for PDVSA. As a state company, it’s a state tool. The idea that it is a business, driven only by profit, is wrong, they say.

They are seeking an oil company that is more an arm of the state, a partner in a quest to pave roads, electrify towns, build sewers and support Chavez’s generally left-leaning policies.

“The state has the right to create a policy of social development,” said Angel Rodriguez, a Chavez ally in the National Assembly. PDVSA “is fundamental to supporting it.”

The crisis between the white-collar PDVSA employees and the nation’s leader came to a head in February, when Chavez installed five of seven directors and named Gaston Parra, a left-leaning university professor with no experience in the industry, as corporate president.

The workers, led by Fernandez, began work slowdowns and stoppages. Chavez fired Fernandez, Paredes and five other workers, appearing on television to declare: “Juan Fernandez. Thanks a lot. Now get out!”

Outraged, the oil workers joined a nationwide strike in April. A protest march erupted in violence that led to the coup. Chavez was returned to power 48 hours later by loyal troops.

Chavez tried to make amends, rehiring the fired workers and appointing a new president acceptable to both sides: Ali Rodriguez, a former leftist guerrilla who had risen to become the president of the Organization of the Petroleum Exporting Countries. He is backing Chavez in the current strike.

But further attempts at understanding failed. Chavez opponents began seeking to hold a referendum on his rule in February 2003, a move he refused to recognize, saying the constitution allows a vote no sooner than next August.

Chavez and the opposition clashed repeatedly, with oil workers watching worriedly from the sidelines. But during the current strike, which began Dec. 2, national guard troops attacked demonstrators gathering at a PDVSA office building -- prompting many PDVSA employees to join the protest.

Their participation saved the strike, which had been fading. They in effect shut down the industry. But Chavez and his supporters fought back ferociously, loading at least one tanker with oil and taking over tanker trucks to ensure continued, if haphazard, delivery to gas stations.

It is still not clear whether Chavez will succeed. His supporters among PDVSA workers interviewed at the headquarters described a chaotic situation where a skeleton crew was struggling to make the system function.

But the workers said they will do anything necessary to keep the company afloat. Showing much of the same determination as their peers, they work 16-hour days, seven days a week.

Said Pulgar, the accounting executive: “We are not going to let them beat us.”