The following Op-Ed article appeared in the New York Times. Carlos Omaña's response may be found below the article.

Power to the Privileged

By Amy Chua ( Op-Ed ) 693 words

Underlying this crisis lies a central paradox of globalization, and of United States foreign policy: the combination of laissez-faire capitalism and free elections can create political and economic instability.

Venezuela is only the most recent illustration. President Hugo Chavez was democratically elected in 1998 in a landslide victory, a result reconfirmed in a vote in 2000. Since taking office, however, Mr. Chavez has presided over an increasingly chaotic economy -- a chaos not always, though sometimes, of his own making. The strikes currently crippling Venezuela's economy, for example, are largely the work of business interests that are intensely opposed to Mr. Chavez because of his threats of nationalization and his attempts to seize control of the oil sector.

There is also an ethnic dimension to Venezuela's crisis. Along with roughly 80 percent of Venezuela's population, Mr. Chavez is a ''pardo'' -- a term with both class and ethnic overtones that refers loosely to brown-skinned people of Amerindian or African ancestry. But Venezuela's economy has always been controlled by a tiny minority of cosmopolitan whites, or ''mantuanos,'' the Venezuelan term for persons with European features and pretensions. Not surprisingly, foreign investors deal almost exclusively with members of the well-educated, English-speaking mantuano class.

Venezuela's problems are part of a much larger global phenomenon -- pervasive outside the West yet almost never acknowledged -- of market-dominant minorities: ethnic minorities who, for widely varying reasons, tend under market conditions to dominate economically the indigenous majorities around them. (Chinese in Indonesia, whites in Zimbabwe and Indians in Kenya are other examples.)

Market-dominant minorities are the Achilles' heel of free-market democracy. In countries with a market-dominant minority, markets and democracy favor not just different people, or different classes, but different ethnic groups. Markets -- even if marginally lifting all boats -- concentrate wealth in the hands of the market-dominant minority, while democracy increases the political power of the impoverished majority. Under such circumstances, the pursuit of free-market democracy often becomes an engine of ethnic nationalism, pitting a frustrated indigenous majority, easily aroused by demagogic politicians, against a resented, wealthy ethnic minority.

This confrontation is playing out in Venezuela today. In 1998, Mr. Chavez swept to electoral victory by attacking Venezuela's ''rotten'' white elites, calling himself ''the Indian from Barinas'' and arousing into impassioned political consciousness Venezuela's impoverished pardos.

After taking power, Mr. Chavez disbanded the ''worm-eaten'' mantuano-dominated Congress and Supreme Court. He suspended privatization, vowed to dismantle Venezuela's plantation system, and decreed scores of laws intended to soften what he called ''savage capitalism.'' Predictably, all this had a devastating effect on Venezuela's economy.

The coup against Mr. Chavez last April was a classic effort by a market-dominant minority to retaliate against a democratically elected (if also blundering) government threatening its wealth and power. The interim president, Pedro Carmona Estanga, was a wealthy white businessman. Union representatives were excluded from positions of authority. To the dismay of the United States government, which initially hailed the coup as a victory for democracy, the high-handed actions of the Carmona regime, combined with Mr. Chavez's still-strong support among Venezuela's poor majority, returned Mr. Chavez to power with stunning speed.

What should the United States do now about Venezuela? Candor would be a good start. If we genuinely support democracy in developing countries, we cannot endorse coups, even pro-capitalist ones, against democratically elected presidents. Moreover, if global markets are to be sustainable, ways must be found to spread their benefits beyond a handful of market-dominant minorities and their foreign investor partners. Otherwise, markets and democracy will continue to clash, destabilizing economies and exacerbating ethnic conflict throughout the world.

Dear Ms. Chua:

I am a Yale Graduate ,B.A. ´56 B. Arch. ´58, currently President of the Yale
Club of Venezuela as well as Delegate of our Club to the AYA Assembly, so I
read  the above article, entitled "POWER TO THE PRIVILEGED", with  both
dismay  and disbelief. My initial reaction has been somewhat tempered by
your letter to the New York Times as well as your replies to Tom Koppel and
Ricardo Mitre, nevertheless for the sake of good order and  for didactic
purposes following are my  personal comments on your opus.

General

Your article pretends to explain the current complex situation in Venezuela
in very simplistic black and white terms, no pun intended, i.e. ethnic and
economic reasons, with little or no mention to the real issues involved.
Judging from some of the terms used to describe the racial composition of
our country (mantuanos and pardos) one can safely assume that you have a
profound lack of knowledge of Venezuela and its history. These terms have
not been used for over 200 years , since colonial times, and appear
principally in history  books and related texts. Moreover, you refer to
Chavez the current President, as  a pardo, while he would technically
qualify as a sambo, a mix of african and indigenous people, and a term he
likes to be identified with for local and particularly foreign consumption.
Venezuela has been proud to be a "melting pot" of different nationalities
enriched further in the 1940s, when our country welcomed thousands of
immigrants from war-ravaged Europe. This immigration contributed highly to
the then growing economy through their expertise and labor as well as to our
general wellbeing through  their culture. Venezuela up until now has been a
socially mobile and racially diversified society, and prior to Chavez
assumption of power had an important middle class, which has been decimated
by " the devastating effect on the Venezuela´s economy" of Chavez´ s plans
which you correctly indicate.

Particular

Let us now analize other misconceptions in your article one by one.
The first paragraph indicates that the "general strike..... was instigated
by Venezuela´s wealthy business elite" while in fact the civic stoppage
was called by a coalition of the Confederation of Venezuelan Workers" (CTV)
which represents the majority of both public and private unions ,comparable
the AFL/CIO in the U.S., Fedecámaras, the Federation of Cambers of Commerce
and Industry, which represents the principal economic sectors of the country
and the Democratic Coordination (CD), a diversified group of  42 NGO´s,
political  and other groups, ranging from the far left, Bandera Roja, to
Catholic conservatives in the other extreme. Human rights , ecological  and
other political groups  complete the picture in the middle. The civic
stoppage was actually called by these groups on December 2d and was  later
joined by the oil workers ,both managerial and contract, accounting for
about 85% or 30,000 people of total employees in the oil industry.
In he third paragraph you indicate that Chavez was  elected in 1998 by  " a
landslide,  a result confirmed in a vote in 2000" . I believe the term
landslide should be qualified since in 1998  Chavez  was elected by
3.675.685 votes  or  only 30.7 % of the registered voters and  in 2000, just
two years later, was reelected, not confirmed as you indicate, this time for
a further 6 year term, in  according to the new Constitution, with 2.896.948
votes or  only 24.2 % of the registered voters. In retrospect one should
have  perceived even then the  drastic reduction in Chavez legitimacy which
by now should be closer to 20 %, in marked contrast to the 80% rating of
support  he had in the beginning of his tenure, according to most polls.
Another indication  of the foregoing is that during December, 2.000.057
signatures were speedily obtained in order to request a referendum to ask
him to resign voluntarily. This number of signatures exceeds comfortably the
10 % of the electorate required to trigger said referendum according to the
Constitution.

In the third paragraph you indicate that "the strikes are largely the work
of business interests that are intensely opposed to Mr. Chavez because of
his threats of nationalization  and his attempts to seize control of the oil
sector". Perhaps you are not aware that most of the important enterprises
in Venezuela are owned and controlled  by the State, particularly since 1976
when the oil and gas and other  basic industries such as iron , steel and
aluminum were nationalized. It is also well to point out that the state is
by far the largest land holder in the nation. What is true is that since
Chavez has been in power he has tried to destroy the efficiently run oil
Industry by  Petróleos de Venezuela (PDVSA) a first world company,  and
convert it into an appendage of  the Government, not well known  for its
managerial skills to say the least. The only sectors not owned by the
Government , but under its close scrutiny ,are  banking, communications (
including  Telephone, Radio, TV and Newspapers) some private power companies
and  agricultural and related industries. I believe you might agree that the
threat of "nationalization" of the media would constitute a very dangerous
precedent for the democracies of the world.

I think I have already addressed paragraphs four, five, six, seven and eight
so I will continue with paragraph nine. There you describe Pedro Carmona
Estanga as a wealthy white businessman, while in fact he belongs at best to
the higher(now diminished ) middle class and  during his career has been
more of a bureaucrat in the private sector than a wealthy captain of
industry as you imply.

The last paragraph of your article proposes that the U. S. should not
condone a coup against  democratically elected presidents. I fully agree
with your concept but on the other hand as you point out in  your reply to
Tom Koppel "democracy must mean something more than elections and
unrestrained majority rule". The aforementioned idea is specifically
included in the Inter-American Letter of the Organization of American States
(OAS). In line with the foregoing you must be aware that  since November,
under the auspices of the OAS , President Carter and the U.N., a Negotiating
and Agreements Table, with Secretary Gavíria as facilitator ,constituted  by
six members each from the Opposition and the Governments side, has been
discussing  three pre-agreed  issues or tasks   1) To come up with a
constitutional, democratic and electoral solution  to the current  crisis 2)
Constitute a Truth Commission to determine responsibilities for the April
11th. events ( 19 deaths) ,now compounded by the massacre at Altamira Plaza
(3 deaths) in December,  all events  that took place in 2001, and the
January  2003 incident ( 2 deaths) in the Los Próceres Avenue. So far no
tangible results have  been presented after more than forty meetings.

Final comments

Because of the interest you have shown on the subject, our Club would be
more than pleased to coordinate a visit to our country  at an opportune
time, so that you  can get some first hand  experience with our situation.
In this sense we could develop an appropriate agenda for your consideration..
Currently the State Department has warned U.S. citizens not to travel here
and indeed has sent non-essential  diplomatic personnel posted in Venezuela
back home. Additionally there are restrictions in the supply of motor
gasoline which can put a damper on travel. Conversely perhaps Yale could
sponsor a seminar or meeting on the subject. In any event these are ideas
to consider in the future.

I hope the foregoing comments serve to clarify some of the issues raised by
your article, which to say the least has had an impact not only with
"members of the well educated , English speaking mantuano class" Chua dixit,
but  also with the general public.

Best regards
Carlos R. Omaña

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