World-system structures, forged by the European colonial powers from the sixteenth through the nineteenth centuries, are characterized by the exportation of raw materials from peripheral zones, on a base of forced and low-waged labor; and by the exportation from the core of industrial manufactured goods. In reaction to the underdevelopment and poverty that resulted from world-system structures, anti-colonial popular movements emerged in the peripheralized regions, and they were able to forge independent states. But the newly independent nations confronted various economic and political obstacles to the transformation of the core-peripheral relation (see various posts on the origin and development of the world-system; see also posts in the category neocolonialism).
In Latin America, independent republics were established during the period 1810 to 1825, but during the period 1850 to 1900, British and US control of commerce facilitated semi-colonialism. During the twentieth century, US imperialist policies made possible a more complete commercial, financial and ideological penetration of Latin America, creating a more developed system of neocolonialism under US hegemony. During this entire period of semi-colonialism and neocolonialism, raw materials flowed from the region, as they had during the period of Spanish and Portuguese colonialism (see various posts on the Latin American history as well as “The characteristics of neocolonialism” 9/16/2013).
In the case of Venezuela, petroleum surged as the principal raw material export during the period of 1917 to 1960. The petroleum companies were foreign owned and largely unregulated. As the result, the Venezuelan state received little income from petroleum, and the benefits to the economy and the people of Venezuela were minimal. During the period, a popular movement emerged to demand greater national control of the petroleum industry. After 1960, this became the prominent popular demand, such that the period of the 1960s and 1970s is known as the era of petroleum nationalism, in which the people were demanding that the state maximize its income from the exportation of petroleum. During the period, the management of the companies became increasingly Venezuelan, as the foreign companies sought to respond to the demands of the popular movement and ensure political stability. A gradual and cooperative transition to Venezuelan state ownership was unfolding.
Petroleum nationalism culminated in the nationalization of the petroleum industry and the formation of a state-owned petroleum company (Petróleos de Venezuela, Sociedad Anónima, or PDVSA) in 1976. Inasmuch as the companies were under Venezuelan management by 1976, the nationalization changed ownership from international petroleum companies to the Venezuelan state, but it did not change the management of the companies in Venezuela. And inasmuch as the Venezuelans that managed the companies had been socialized into the norms and values of the international petroleum companies and had internalized the perspective of international capital, the 1976 nationalization of the companies had little effect on their behavior. PDVSA adapted itself to the neocolonial world-system, exploiting petroleum in accordance with the norms and interests of the international petroleum industry, rather than utilizing the petroleum industry as an integral part of a development plan for the nation.
After nationalization, the Venezuelan state relaxed its oversight of the petroleum companies, believing that the industry was now under national control. However, this was not really the case, as Venezuelan managers were directing PDVSA from the perspective of the international petroleum companies. By creating a false impression of national control of the industry, nationalization had the consequence of creating more autonomy for the petroleum industry.
Like the foreign owned oil companies in other neocolonized countries, PDVSA sought to reduce payments to the Venezuelan state. Accordingly, PDVSA adopted a strategy of channeling surpluses to investments in production and sales, thus minimizing profits and corresponding payments to the state.
In the 1980s, PDVSA internationalized its investments in production and sales. It bought refineries and distributorships in other countries in order to transfer surpluses out of the country, thus avoiding payments to the Venezuelan state.
With the turn to neoliberalism in 1989, the government of Venezuela greatly reduced its regulation of foreign investment in all branches of commerce, industry and finances. With respect to the oil industry, PDVSA was given responsibility for supervising the “opening” of the country to foreign investment. Under PDVSA supervision, many international petroleum companies formed joined ventures, with terms highly favorable to the foreign companies, and without consideration of national development.
PDVSA, therefore, had emerged as a state within the state, with significant autonomy and with limited control by the state. It did not seek to develop the petroleum industry and to attract foreign investment in the industry in a form that was integrated with a project for national development.
During the 1990s, there began to emerge popular rejection of the neoliberal project, as a consequence of its negative consequence for the people. This dynamic included a condemnation of the role of PDVSA and its failure to contribute to a national development project. In this scenario, there emerged the post important charismatic leader of the beginning of the twenty-first century, Hugo Rafael Chávez Frías, whom we will discuss in the next post.
Key words: petroleum, PDVSA, nationalization, Venezuela, neoliberalism