Venezuela's Oil: Wellspring of Bad Blood

December 17, 2002
By JUAN FORERO
www.nytimes.com

CARACAS, Venezuela, Dec. 16 - As planning manager for
Venezuela's most vaunted company, Petróleos de Venezuela,
Juan Fernández was known for caution and restraint as he
plotted the state oil giant's financial future.

Now, the unruffled American-educated economist is plotting
a different kind of future for the company: making sure its
taps stay shut long enough to force President Hugo Chávez
from power.

Charging that Mr. Chávez's left-leaning government is
leading Venezuela to ruin, Mr. Fernández, 47, and a
vanguard of white-collar rebels have vowed to remain true
to a two-week national strike that has paralyzed oil
exports from the world's fifth-largest supplier, which
provides 14 percent of the oil used in the United States.

"I am not thinking of the risks," Mr. Fernández said in an
interview at his home. Even as he vowed to stay off the
job, the government said Mr. Fernández and four other
leading Chávez opponents in the company had been dismissed.
"This is my priority," he said. "This is what has become of
my life."

It is also a struggle for the life of Venezuela. When Mr.
Chávez won power here in 1998, he pledged to use the oil
revenues as his most powerful tool to remake a country with
glaring disparities between a European-descended upper
class and the vast majority of Venezuelans and Chávez
supporters, who are poor and dark-skinned. "It cannot be
seen as a state within a state," the president said of the
oil company.

Since then, Mr. Chávez's policies have divided Venezuelans
as never before, and observers of the two-week political
standoff now warn that whoever controls the $46 billion oil
company will gain the upper hand and may well end up
controlling the nation.

"Oil is everything because that's how you control the
money," said Roger Diwan, managing director at the
Petroleum Finance Company, a Washington consulting company.
"If the government succeeds in getting back the oil on
line, they would have won. The question is, Is that
possible at this stage?"

Already the strike, now in its 15th day, has severely
debilitated the oil industry. Production is down 70
percent, to about one million barrels a day, with losses
for the government estimated at $350 million a week.
Coupled with the threat of war in Iraq, the strike has
driven up world oil prices to a two-month high.

"It is the first time that Venezuela fails in its policy of
being a secure and trustworthy supplier of petroleum," Roy
Chaderton, Venezuela's foreign minister, said in an
interview. "We consider that grave for Venezuela."

After gaining the presidency, Mr. Chávez, a pugnacious
former army paratrooper, quickly set about rewriting the
Constitution and loading a new Congress and Supreme Court
with his allies.

While his policies have created a host of powerful enemies
from the influential middle and upper classes, the most
potent spring from the white-collar work force at Petróleos
de Venezuela, known throughout the oil industry as Pdvsa,
pronounced peh-deh-VEH-sah.

To the government and its supporters, Mr. Chávez is simply
trying to manage Petróleos de Venezuela for the good of a
country that, despite its vast oil wealth, has been mired
in poverty.

But to the executives and office workers at Petróleos de
Venezuela, whose management was once autonomous, Mr.
Chávez's government has meddled in the company's top ranks
and mismanaged its finances by appointing what they called
"ideologues."

Instead of increasing production, Chávez appointees sold
oil at cut rates to Cuba and began funneling ever-growing
sums of money into little-known social programs, said
alienated former oil executives like Mr. Fernández.

"The petroleum industry serves the government, not the
Venezuelan state," Mr. Fernández said. "I cannot work in
this company, or this country, the way it is."

When he joined the company 18 years ago, Mr. Fernández
said, workers rose through the ranks in a highly
structured, merit-based process that graded them on their
achievements. "You made your career," said Mr. Fernández,
who started as a budget analyst. "It was up to you if you
rose."

But now, he and others said, there is little respect for
what executives here called "the meritocracy" that had made
Petróleos de Venezuela highly unusual among many state-run
companies.

The displeasure with the government's interference and Mr.
Chávez's policies has prompted about 90 percent of the
company's 15,000 office workers - people who had once
pledged loyalty - to walk out. In addition to the
executives, tanker crews have declared themselves in
rebellion and workers at refineries and other installations
have also walked off the job.

"This is worth more than a career," said Edgar Paredes,
president of the company's chemical branch and one of the
opponents dismissed by the government. "History has given
us an opportunity, and we are going to use that
opportunity. What is in play is very important: the future
of Venezuela and its liberty."

Mr. Chávez acknowledged in an interview on Sunday that the
industry had been battered by the walkout. He called the
strike an attack and sabotage and vowed to weather the
crisis by searching for replacement workers and, if
necessary, seeking technicians from the Organization of
Petroleum Exporting Countries, of which Venezuela is a
member.

Not all workers at the company have left. The president has
the help of people like Enny Pulgar, 48, a 25-year veteran,
who is working 15 hours a day, seven days a week, to fill
in. "I am proud to be defending a company that has given me
bread for 25 years, but also to defend the government I
voted for," she said.

In his weekly radio address on Sunday, Mr. Chávez said he
would stand by his aim to use the company to ease poverty,
calling the plan a "nationalization" of the company.

"Pdvsa will serve the interests of Venezuela, not the
elite," he said.

He called for tough measures, including giving Ali
Rodríguez, the company's president, the authority to hire
and fire, powers once held by the board of directors.

The government has also started to retake tankers whose
crews declared themselves in opposition, and used the
military to commandeer private tanker trucks to keep
gasoline flowing for the domestic market.

Still, bringing Petróleos de Venezuela back to life is a
patchwork effort, say the pro-Chávez workers who have
stayed on the job. The company's headquarters in Caracas is
three-quarters empty, many blue-collar workers remain on
strike, and shipping clerks are, in some cases, declining
to take orders.

Omar Pérez, a human resources analyst now working in the
shipping department, said he and others loyal to Mr. Chávez
were determined to resuscitate the company.

"We are hanging by the edge of our nails," said Mr. Pérez,
45. "But we are doing it."

http://www.nytimes.com/2002/12/17/international/americas/17VENE.html?ex=1041260420&ei=1&en=41984cd61e4e1939