Land Reform in Venezuela

President Hugo Chavez of Venezuela is pushing full speed ahead with land reform, an issue that has been one of the most divisive and perennially debated topics in Latin America. Land reform poses perhaps the greatest challenge yet to Chavez’s stormy presidency, as it historically has been the Achilles’ heel of left-of-center regimes. Chavez’s daunting task is twofold: first, he will have to overcome problems that doomed past attempts at land reform throughout the region by other reformist governments, notably Jacobo Arbenz’s 1954 attempts in Guatemala and Salvador Allende’s 1970 – 1973 attempts in Chile. Second, he must grapple with the middle class’s opposition to agrarian reform, which it will continue to oppose more tenaciously than any other aspect of his “Bolivarian revolution.” So far, he appears to have learned from his predecessors’ mistakes by implementing a host of cautionary institutional measures in order to avoid them. Although the rightwing wrongly considers land reform to be a carte blanche attack on private property, the opposition and business interests, such as the Vestey cattle ranch, do have some legitimate concerns that need to be addressed.

The Facts Regarding Chavez’s Land Reform The Venezuelan leader first articulated his land reform plan, what he calls “Vuelta al Campo,” (Return to the Countryside) under the Law on Land and Agricultural Development in November 2001. The goals of this legislation were as follows: to set limits on the size of landholdings, tax unused property as an incentive to spur agricultural growth, redistribute unused, primarily government-owned land to peasant families and cooperatives and, lastly, expropriate uncultivated and fallow land from large, private estates for the purpose of redistribution. On the last and most controversial goal, the landowners would be compensated for their land at market value. The National Land Institute (INTI) was set up to facilitate achieving these goals by establishing criteria to determine what land could be redistributed and the eligibility of those applying for new land deeds. Under Plan Zamora of 2003, both the INTI and its sister organizations, the National Rural Development Institute and the Venezuelan Agricultural Organization, have been tasked to administer agricultural expertise to the new peasant landowners and to provide markets for their goods. After a slow start, the Chavez government has redistributed about 2.2 million hectares of state owned land to more than 130,000 peasant families and cooperatives (1 hectare = 2.47 acres). So far, although not one acre of private property has been expropriated by the government, tensions are beginning to mount as Chavez extends his reform program from government-owned land to the latifundios (large, privately owned estates of more than 5,000 hectares, roughly 12,350 acres).

Chavez Emulates Lincoln In the history of land reform, the most accurate analogy to illustrate what is transpiring in Venezuela is not Zimbabwe or Cuba – Chavez officials have repeatedly emphasized that they are not emulating the Cuban model of land reform – but the U.S.’ own Homestead Act. Signed by President Abraham Lincoln in 1862, the measure declared that any U.S. or intended citizen of at least 21 years of age could claim up to 160 acres of government land. Like Chavez’s Vuelta al Campo, there were many restrictions in the Act which benefited the recipients by ensuring that the new reform could not be manipulated by entrenched, moneyed interests. Under Lincoln’s legislation, the land could not be sold to speculators or used as debt collateral, and only after five years of “actual settlement and cultivation,” according to Section 2, could the homesteader submit an application for a land patent. Similarly, in Chavez’s plan, only after three years may the peasants obtain legal ownership of the land, and only then after they have rendered it productive. The Homestead Act was one of the most progressive and far-reaching government initiatives in U.S. history insofar as it helped to develop and secure an agrarian-based middle class, which had an epic impact on the future democratization of the nation. That Chavez is trying to emulate it in his own country, as part of his plan to extirpate Venezuela’s entrenched inequality, is an effort that all right-minded people should applaud.

Upping the Ante Last month, the president of INTI, Eliecer Otaiza, said that “We hope to issue 100,000 land grants within the next six months.” This announcement followed a series of new decrees issued by the government intended to speed up the reform. However, since where the land will come from for the proposed grants is not clear, hostility has ignited between ranch owners and campesinos as the government begins inspecting which private estates it might appropriate. According to Juan Forero of the New York Times, even before these latest decrees were passed, “as Mr. Chavez’s government trains its sights on 6.6 million acres of private holdings, farmers are increasingly worried that it will recklessly seize private property.” The government has recently set up an “Intervention Commission” to determine what lands are productive and were obtained legally. Last January, this commission began exercising its mandate under the INTI by inspecting the British-owned Vestey cattle ranch of El Charcote in Cojedes. In two months, the commission is due to announce its findings pertaining to the ranch’s proprietorship and productivity.

The Right Throws a Fit The prospect of Chavez’s “revolutionary” government supporting hundreds of thousands of machete-wielding campesinos as they shout “fuera los ingleses” (out with the English) has provoked a spate of somewhat hysterical editorials by conservative Caracas and U.S. commentators. Frequently, much of what is written in the U.S. press on the subject is simply inaccurate or egregious hyperbole, which eventually gets passed off as gospel. For example, though the New York Times got it right, the Christian Science Monitor wrote in an editorial that “The plan supposedly applies to both private and governmental agricultural holdings, but so far only private lands are being targeted.” While that statement is demonstrably false, the Washington Post – ominously reminding its readers that Chavez is a “disciple of Castro” – noted that the “assault on private property is merely the latest step in what has been a rapidly escalating ‘revolution’ by Venezuela’s president that is undermining the foundations of democracy and free enterprise.” Carlos Ball of the CATO Institute flatly declares in his piece, “Chavez’s Land Grab,” that in the Bolivarian Republic, “Private property is history.” Even though, as of today, no privately owned land has yet been redistributed to the landless poor by the government, the rightwing and its media lapdogs seem mighty nervous over any possible change in the status quo of Venezuela’s landed elite. But before dismissing Chavez as another Castro, it would behoove one to analyze the Venezuelan land barons and the history of agriculture in the country, at least since the oil boom, in order to determine just how radical the president’s land reform plan really is.

A Brief History of Venezuela’s Spectacular Iniquities In Venezuela roughly 75 to 80% of the country’s private land is owned by 5% of all landowners. Regarding agricultural holdings, that figure drops to a mere 2% of the population owning 60% of the country’s farmland, much of which is fallow. Because these stark statistics do not help one understand the extraordinary levels of both rural and urban inequality in Venezuela, perhaps the following analogy will. Imagine if in the U.S. a handful of families owned the entire state of California. There is no California Coastal Commission, no limits on the amount of land that may be purchased, no zoning laws, no government oversight of any kind, nothing of the sort. But none of this really matters to the average citizen because California, as a conglomeration of large, privately owned estates, will never be seen by most U.S. residents (excepting itinerant laborers). In other words, try to think of one of the most beautiful states in the U.S. as a giant gated community. Meanwhile, the country’s landed oligarchy owns the vast majority of the land, most of which lies fallow because they prefer to sit on it for the purpose of land speculation rather than use it for agricultural production. With most of its arable land unused, the U.S. is the only net importer of food on the continent and is forced to purchase more than two-thirds of its foodstuffs abroad. Though this analogy may help one to empathize with the land situation in Venezuela, it is still woefully inadequate for conveying an adequate grasp on the levels of inequality in that country, as California only makes up 4% of the U.S. land mass.

Venezuela and the “Dutch Disease” Today, about 90% of Venezuela’s 25 million people live in urban areas. This gross imbalance between urban and rural populations is largely a result of the 1970s oil boom. Before that, about two-thirds of Venezuelans lived in rural areas. However, once the country became flush with petrodollars, a succession of middle-of-the-road governments began to neglect the countryside and focus its resources in the petro industry. This concentration led to a demographic surge from rural to urban areas as peasants left their traditional vocation for the lure of urban jobs. The dire consequence of this internal migration was to turn the country into a net food importer, the only one in South America. With campesinos fleeing from the country to the cities, Venezuela’s planners failed to provide for the labor required to build or even sustain its pre-1970s agricultural base.

The oil revenues were allocated largely towards urban infrastructural projects, almost all of which went towards middle class neighborhoods and white collar pursuits, at the expense of shoring up the country’s agricultural sector and domestic manufacturing. The result was a convulsed economy and a shrinking agricultural base. Accordingly, it was no wonder that the Venezuelan co-founder of OPEC, Juan Pablo Alfonso, said in 1975: “I call petroleum the devil’s excrement. It brings trouble . . . Look at this locura_waste, corruption, consumption, our public services falling apart. And debt, debt we shall have for years.” This problem of the “Dutch Disease” – the phenomenon of an economy slumping as a direct result of a rapid spike in one of its sectors while the others remain constant – has plagued Venezuela for decades. According to some analysts, even the country’s culture suffered as a result of the boom. Gregory Wilpert, a freelance journalist and political scientist based in Caracas, has written that the problem with “Venezuela’s reliance on oil is that it has fostered a rentier and clientelistic mentality among Venezuelans. The consequence was that rather than engaging in creative entrepreneurial activity, Venezuelans were encouraged to ally themselves with the state, seeking either employment or contracts from the state, which had a monopoly on Venezuela’s oil income.”

In short, since the Punto Fijo pact of 1958, the successive governments under the two dominant middle-class parties, the Christian Democrats (COPEI) and Democratic Action (AD), made the same mistake as many Middle East regimes: they poured oil revenues into a privileged elite when they should have been spread out to most Venezuelans. This mismanagement of resources thereby created a nation divided between those who benefited from the oil revenues squarely pitted against those who ultimately suffered from them. By facilitating what the government hopes will be a long-term demographic movement back to rural areas, Chavez intends to strengthen precisely those sectors of the economy and culture that suffered the most from the oil boom. His land reform program should thus be viewed in the broader context of his “Bolivarian Revolution,” which can be described as an attempt to reverse much of the damage the country suffered by the problems of its mismanaged oil wealth, coupled with the clientelism, profligacy and corruption of the leprous series of COPEI/AD governments.

Why Chavez’s Land Reform just Might Work Chavez has been criticized for returning to a dead end social program, characterized more by socialist babble than by clear thinking and sound planning. Critics point out that land reform already has been tried in Venezuela and failed. Some argue that Chavez’s plan could make for the same kind of agricultural disaster wrought by President Robert Mugabe’s land reform policy in Zimbabwe. Regarding this context of botched agrarian reform attempts, the Christian Science Monitor notes that, “In the 1960s and ’70s, much of Latin America (including Venezuela) tried such land reform and failed . . . Government control of agriculture is on the way out globally.”

While it is true that during the 1960s land was distributed to 150,000 peasant families, there are fundamental differences between Chavez’s current plan and those that have failed in the past – differences that indicate the “Fifth Republic” under Chavez has learned from past mistakes. In a paper prepared for the 2002 World Bank Latin American Land Policy Workshop in Pachuca, Mexico, one key reason identified for the botched attempts of previous agrarian reform campaigns was the state’s failure to implement “programs to promote efficient use of land by beneficiaries.” According to the report, reform efforts fail “where access to land is not accompanied by a set of institutional reforms able to secure the competitiveness of beneficiaries.” In other words, the approach of most governments towards agrarian reform was, “here’s a plot of land. Good luck.” Chavez has already taken steps to ensure this mistake is not repeated.

First, his government is taking a much more activist roll in the reform process than previous attempts at land reform. Under Vuelta al Campo, the government does not just distribute land and then walk away. Unlike past attempts, the government maintains a legal and market-oriented purview over the land reform process. This includes de facto government ownership of the distributed land, dissemination of knowledge about proper farming techniques to the new peasant cooperatives and, most importantly, the creation of internal and external markets required to absorb the new products. The intention behind de facto government ownership, in which public authorities basically hold the deeds to the distributed land in an escrow account, is to ensure that the new peasant families will not sell their farms back to the big landowners. That is precisely what happened in the 60s when many of the peasants re-sold their newly distributed land to the latifundistas due to a lack of government assistance and a sufficiently clarified market for their produce, which promptly resulted in a reversion to the status quo.

Furthermore, the previous land reform in Venezuela never got to the core of the problem, which was the retention of large, unused but arable tracts of land by the latifundistas. Under that system, land was left idle for the purpose of “engordar el toreno,” (to fatten the cow), defined as not using the land for any agricultural purposes but keeping it fallow while engaging in land speculation. In an interview with COHA, Professor and Venezuelan expert Miguel Tinker-Salas of Pomona College said this is the bankrupt agricultural system that Chavez is seeking to reform: “The attempt at land reform under the COPEI/AD government was never an effort to break up the large, landed estates. It was basically a patronage system. It left the fundamental power structure in tact, which is what Chavez is trying to change.” He argues that unlike the “superficial efforts at land reform in the past, in which the government provided little support,” Chavez is earnest about changing the status quo, and that we “should view his land reform program in the broader context of the overall social transformation taking place in Venezuelan society.”

The Right does have a Point In fairness, it certainly looks like the government is on the cusp of expropriating some private lands, though it would only do so if the INTI determines such land to be fallow or unlawfully gained. The government’s intervention in the 32,000 acre El Charcote cattle ranch, owned by the Vestey Group of Britain, raises legitimate questions regarding how far Chavez’s land reform will go and whether it is prepared to risk scaring away foreign investors. That prospect poses a serious problem to the regime since a precipitous flight of foreign capital over fears of “another Castro” is the last thing Chavez’s social movement needs. As Jose de Cordoba of the Wall Street Journal reported, “Fear of confiscations is drying up agricultural investment and financing, and a continuation of this trend almost certainly would erode production in the not-too-distant future.” In the wake of Chavez’s repeated calls for a war against the latifundios, squatters have appropriated much of the Vestey ranch’s land. While they undoubtedly have suffered historical wrongs, the sight of campesinos pouring over the vested estates is almost guaranteed to send investors scurrying.

Just imagine the CEO of a firm specializing in agricultural exports reading in the New York Times that, according to Anthony Richards, the manager of the El Charcote ranch, “the presence of the squatters has forced the farm to cut the size of its herd to a little more than 6,000 from 13,500 in 1999. Instead of producing 3.3 million pounds of meat a year, the farm now produces about a third of that amount.” If Chavez gives into all the squatters’ demands, many of whom may in fact be occupying land that is both lawfully owned and productive, his Vuelta al Campo could become another sad example of the revolution eating its children. Why he is eyeing some estates which, like the Vestey ranch, appear productive and beneficial to Venezuelans (the combined Vestey cattle ranches produce around 5% of the country’s beef), rather than focusing all attention on shoring up the productivity of government land that has already been distributed – at least as a first stage – is a perfectly legitimate question to pose to Chavistas.

Nice Job so far – but be Careful Chavez is right to enact sweeping land reform, both as a means of reducing Venezuela’s feudal levels of inequality and as a way of boosting agricultural output, which now accounts for a pathetic 6% of the country’s GDP. And the right is certainly wrong to offer up only its usual, knee-jerk reaction to anything Chavez promotes. That noted, Chavez would be well advised to consolidate the gains already made by the newly landed peasants on public lands. By making certain that those who have been deeded public land live up to their end of the bargain – as was the main obligation of Lincoln’s Homesteaders – Chavez can establish his program as a rare success story in a region littered with failed attempts at agrarian reform.

Seth R. DeLong, Ph.D, is a Senior Research Fellow at the Center for Hemispheric Affairs.