Civil Society, Credible Future - Can Micro Loans Make a Macro Difference?, Development & Aid, Economy & Trade, Headlines, Labour, Latin America & the Caribbean

VENEZUELA: Gov’t Distributes Petrodollars Through Booming Cooperative Movement

Humberto Márquez

CARACAS, Jul 26 2006 (IPS) - Cooperatives in Venezuela, which are mushrooming at a rate of over 100 a day, have become a mechanism through which the government is distributing windfall oil profits to the people.

“But it’s true that these aren’t really cooperatives in the traditional sense,” the national superintendent of cooperatives, Carlos Molina, told IPS. “Actually, they are one of the tools employed by the state as part of its policy of inclusion (of marginalised sectors) and its aim to achieve a more just distribution of wealth.”

The new cooperativism in Venezuela differs from the modern cooperative movement that traces its history back to the small town of Rochdale, England, where 28 flannel weavers saved a few pennies a week for a year until they had enough to open a co-op store in December 1844.

In Venezuela, under a law on cooperatives decreed in 2001 by the government of left-leaning President Hugo Chávez, any group of at least five people can easily register a new cooperative through a quick process that involves few bureaucratic hurdles.

Venezuela’s cooperative movement emerged in 1959. Forty years later, when Chávez was elected, there were 870 cooperatives in the areas of credit, transport and other services, although only half were successful to any degree, according to the movement’s spokespersons.

More than 1,000 new cooperatives were established in 2001, and more than 2,000 the following year. But since the government approved an enormous increase in funding for cooperatives in 2003, the number has skyrocketed, with 18,000 founded in 2003, 36,000 in 2004, 41,000 in 2005 and more than 20,000 so far this year.

In this country of 26 million, which has an economically active population of 12 million, “we have 132,000 cooperatives, with approximately 1.3 million associates,” said Molina.

April set a new monthly record, with the creation of 5,761 cooperatives.

Sixty-two percent of the cooperatives are in the services sector, 32 percent are involved in the production of goods, and the rest are credit or housing associations, or serve a social function (providing funeral services, for example), according to the superintendency.

“It is still early to talk about a third sector of the economy (as opposed to the state and the private sector), because we first need to conduct a census that would indicate what the cooperatives contribute to the country’s gross domestic product,” said Molina.

The official did note, however, that by 2004, five percent of all jobs in the country were in cooperatives, and the 6,500 cooperatives in the ‘Misión Vuelvan Caras’ – a government programme that provides financing for the activities undertaken by participants in its educational programmes – alone received 500 million dollars last year.

At the current record-high oil prices, 500 million dollars is just three days of oil revenues.

“Although they work as a transmission belt for public funding and policies, these ‘instant cooperatives’ emerge with serious deficiencies in terms of training and principles, which leads them to adopt more mercantile formulas, and to evade legal procedures and taxes,” Luis Márquez, former president of a federation of cooperatives in western Venezuela, told IPS.

María Materán, with the Agroturística Tomoporo agrotourism cooperative, on the banks of the oil-producing Lake Maracaibo in the west of the country, admitted to IPS that “It’s true that there are people who establish cooperatives only to obtain a public loan, and in some cases, the head of the cooperative keeps the lion’s share of the benefits. But that is what we have to begin to eradicate, through the Cooperative Councils.”

The councils, whose mandate is to plan and coordinate the development of the cooperative movement, have begun to be set up in each of the country’s 23 states, and are comprised of representatives of the government and cooperatives. The National Council, meanwhile, is headed by Minister of the Popular Economy Oly Millán.

In their rallies, the members of cooperatives frequently wear red t-shirts and berets, symbols of the followers of Chávez, while expressing their support for the president.

“It is useful that the government is supporting the process, with funding, rules and positions that bolster the cooperative movement. But it is fair to demand mature and responsible conduct from those who are in charge, in order to benefit all local residents, without discrimination,” Miguel Cardozo, a former president of the Americas chapter of the International Cooperative Alliance (ICA), remarked to IPS.

For the ICA, “autonomy is still a necessary principle for cooperatives,” he said.

Cooperatives that emerge virtually overnight “should prompt reflection, because of the risk that the movement will be weakened if there is financing but no education” and awareness of what the creation of a cooperative means, added Cardozo.

Juan Ángel Ciolli, with the Cabal credit card cooperative, based in Argentina, told IPS that “I have seen a great stride forward in Venezuela, which did not really have a tradition of cooperatives, and the few that did exist were fairly rudimentary. Now we should see a shake-down process, with the best cooperatives surviving.”

“The experience of Argentina, where nearly 30 percent of the population has links to the cooperative movement – there are more than 1,000 in the area of public services – and the solidarity economy is strong, has shown that what we do on our own is not enough, and that we need state support,” said Carlos Mansilla, with the Argentine Confederation of Cooperatives.

Mansilla predicted that “some day Venezuela’s cooperatives will join together in a strong confederation that will be our interlocutor in the framework of Mercosur (Southern Common Market),” the trade bloc made up of Argentina, Brazil, Paraguay, Uruguay and, more recently, Venezuela.

Molina said he hoped that in the near future, the cooperative councils would function “as a meeting-ground between the cooperatives and the state.”

He also announced that the office that he heads is planning to carry out a census, move forward with a programme of education on cooperatives, and “provide a foundation for new relations of property and production in Venezuela, based on cooperation and solidarity.”