In 1970, Eduardo Galeano wrote of petroleum: “No other magnet attracts foreign capital as much as ‘black gold’ . . . . Petroleum is the wealth most monopolized in the entire capitalist system. There are no companies that enjoy the political power that the great petroleum corporations exercise on a universal scale. Standard Oil and Shell lift up and dethrone kings and presidents; they finance palace conspiracies and coups d’état; and they dispose of innumerable generals and ministers; and in all regions and languages, they decide the course of war and peace. . . . The natural wealth of Venezuela and other Latin American countries with petroleum in the subsoil, objects of assaults and organized plundering, has been converted into the principal instrument of their political servitude and social degradation. This is a long history of exploits and of curses, infamies, and defiance” (Galeano 2004:203-6; 1997:156-59).
During the twentieth century, the transnational petroleum companies exploited the petroleum of Latin America in an abusive form that did not recognize the right of Latin American governments to control their natural resources and to utilize them for the long-range economic and cultural development of the nation. The oil companies defied efforts of Latin American governments to apply national labor laws to the foreign petroleum companies operating in their countries. In addition, the foreign companies drained oil deposits rapidly, without concern for the long-term development of the industry. And they sold Latin Americans their own oil at prices higher than those for consumers in the United States and Europe. Any effort by governments of Latin America to control their petroleum resources were greeted with aggressive resistance by the companies and the US government.
In Uruguay, in response to the history of abuse of petroleum resources by foreign companies, a state-owned company was established in 1931, which was dedicated to the refining and sale of petroleum. It was the first state-owned refinery in Latin America. Along with the refining of Uruguayan crude oil, the government contracted with the Soviet Union the purchase of cheap Soviet crude oil for refining in the Uruguayan state-owned refinery. The oil cartel reacted swiftly and aggressively, threatening to impose an embargo on Uruguayan purchase of crude oil or machinery. In March 19933, a coup d’état occurred, and the new dictator annulled the right of the state company to monopolize the importation of crude petroleum. The country eventually became obligated to buy forty percent of its crude oil from Standard, Shell, Atlantic, and Texaco, at prices set by the oil cartel (Galeano 2007:208; 1997:160-61).
In Mexico, twenty years of foreign ownership of the oil industry had left the country with exhausted fields and antiquated refineries by the 1930s. In response, Mexican president Lázaro Cárdenas “converted the recuperation of the petroleum industry into a great national cause.” In 1938, he nationalized the foreign companies and formed Petróleos Mexicanos (Pemex), which assumed control of the production and marketing of Mexican petroleum. The global powers reacted by imposing an international embargo from 1939 to 1942 on Mexican petroleum exports and on the importation of supplies necessary for wells and refining. The dispute was resolved by the Mexican government paying compensation from 1947 to 1962. In spite of these penalties, Pemex became a successful company during its first thirty years (Galeano 2007:207).
Coups d’état, like the one in Uruguay, were common. From 1930 to 1966, seven coups d’état occurred in Argentina as governments were about to sign a petroleum agreement in which the interests of the international cartel were at stake. In Peru as well, one year after nationalizing the reserves and refinery of an affiliate of Standard Oil of New Jersey, the nationalist general Alfredo Ovando was overthrown by a military junta (Galeano 2007:210-14; 1996:162-65).
The war between Bolivia and Paraguay from 1932 to 1935 was provoked by competition between Standard Oil of New Jersey and Shell. Standard financed the Bolivian Army, and Paraguay was backed by Shell. Since Paraguay and Bolivia were among the two poorest countries of South America, the war came to be known as “the war of the soldiers without clothes” (Galeano 2007:210-14; 1996:162-65).
The US government supported the international petroleum companies in their aggressive pursuit of interests in Latin America. “The North American government always makes their own the cause of the private petroleum companies” (Galeano 2007:212). In 1950, the US ambassador in Bolivia, in his report to the White House, expressed pride in his accomplishing the denationalization of Bolivian petroleum industry, which he described as “nationalization in reverse” (Galeano 2007:212-13; 1997:164).
In our next post, we will discuss the Latin American country that has the largest petroleum reserves, Venezuela.
Galeano, Eduardo. 1997. The Open Veins of Latin America: Five centuries of the pillage of a continent, 25th Anniversary Edition. Translated by Cedric Belfrage. Forward by Isabel Allende. New York: Monthly Review Press.
__________. 2004. Las Venas Abiertas de América Latina, tercera edición, revisada. México: Siglo XXI Editores.
Key words: Third World, revolution, colonialism, neocolonialism, imperialism, democracy, national liberation, sovereignty, self-determination, socialism, Marxism, Leninism, Cuba, Latin America, world-system, world-economy, development, underdevelopment, colonial, neocolonial, blog Third World perspective, open veins of Latin America, Galeano, petroleum, oil