Posted October 18, 2013
Venezuela has the largest oil deposits in Latin America and the Caribbean. Prior to 1960, the governments of Venezuela for the most part granted to foreign oil companies the rights to extract the oil, with terms that were favorable to the oil companies and that undermined the potential to use the petroleum to promote the independent economic development of the nation. The government of Juan Vicente Gómez, a dictator who ruled from 1908 to 1935, was particularly known for granting favorable terms to Shell, Standard Oil, and Gulf, and for enriching himself and his family and friends as a result of the shares granted to him in exchange. The Venezuelan petroleum law of 1922, edited by representatives of three US firms, established a separate police force, which prohibited entrance to oil lands by anyone not authorized by the companies. During the period of the initial penetration by foreign oil companies, indigenous communities were dislodged from their lands, and independent family farmers lost their property (Galeano 2004:218-19; 1997:168).
In response to this situation, popular movements demanded greater national control of this natural resource, giving rise after 1960 to what came to be called petroleum nationalism, where the state seeks to maximize its income from the exportation of petroleum. The era of petroleum nationalism culminated with the nationalization of the petroleum companies in Venezuela in 1976. A state petroleum company, Petróleos de Venezuela, Sociedad Anónima (PDVSA), was formed.
Ironically, nationalization had the consequence of creating more autonomy for the petroleum industry and more influence for the international petroleum companies. Distinct from the nationalization of the petroleum industry in Mexico in 1938, the nationalization in Venezuela was gradual, and it occurred with the cooperation of the international petroleum companies in Venezuela. By the time of the nationalization in Venezuela in 1976, the management of the companies was Venezuelan, as a consequence of Venezuelan pressure during the era of petroleum nationalism. So the nationalization had the effect of changing ownership from international petroleum companies to the Venezuelan state, but the companies continued to be managed by Venezuelans who had been socialized into the norms and values of the international petroleum companies and had internalized the perspective of international capital.
After nationalization, the Venezuelan state relaxed its oversight of the petroleum companies, believing that the industry was now securely in Venezuelan hands. But the Venezuelan managers did not seek to utilize petroleum income to promote national development. With the intention of reducing payments to the Venezuelan state, PDVSA adopted a strategy of channeling surpluses to investments in production and sales, in order to minimize profits and corresponding payments to the state. PDVSA bought refineries and distributorships in other countries in order to transfer surpluses out of the country, beyond the reach of the Venezuelan state. An example is CITGO, a Venezuelan owned company in US territory that consisted of eight refineries and 14,000 gas stations. Yet the Venezuelan state never received any income from CITGO; all of the profits remained in the United States. Hugo Chávez estimated that Venezuela gave to the United States billions of dollars through “the perverse business of the CITGO Company” (Chávez 2006:142, 321).
PDVSA, therefore, had emerged as a state within the state, with significant autonomy and with limited effective control by the state. In 1999, Hugo Chávez became President of Venezuela, bought to power by a popular movement in reaction to the neoliberal project. Chávez sought to reduce the autonomy of PDVSA and to incorporate its resources into a project of national development. The Chávez government appointed new directors of PDVSA, replacing the directors appointed by previous governments. With the new leadership of PDVSA, the income to the state from petroleum became significantly higher, and these funds were directed toward various social projects and toward elimination of the foreign debt. As Chávez has expressed, “We have stopped being a petroleum colony. . . . We have begun to sow the petroleum, to utilize the petroleum wealth as a lever for social development and for economic development” (Chávez 2006:318-19).
The measures taken by the Chávez government generated conflict. The US government and the international petroleum industry as well as the Venezuelan petroleum management were opposed, inasmuch as the measures sought to eliminate control of Venezuelan oil by the international petroleum industry. To some extent, workers in the Venezuelan oil industry were resistant to change, since their wages reflected international levels in the industry, far above the wages earned by workers in other industries in Venezuela. From the outset, the US government has engaged in a persistent ideological and destabilization campaign against the government of Hugo Chávez and his successor, Nicolas Maduro.
The story of petroleum in Venezuela illustrates that nationalization in and of itself does not necessarily contribute to the autonomous development of the nation. State control of the Venezuelan petroleum industry became an effective tool when it was integrated into a program of national development implemented by a government that was brought to power by a popular movement and that was committed to govern in the interests of the popular sectors.
At the same time, strategies other than nationalization can be effective, such as the formation of joint ventures, cooperatives and self-employment, if implemented as part of a national plan for the autonomous economic and cultural development of the nation, as the case of Cuba illustrates. So we learn from experience that various forms of property can be developed along the road to true independence, and that each form of property ought to be an intelligent response to the concrete situation in which the nation finds itself. The key is not the form of property, but the integration of the various forms of property into a plan for autonomous development, implemented by a government that seeks to promote and defend the rights of the majority, struggling to keep at bay those powerful sectors that act aggressively in pursuit of their particular interests.
Bibliography
Chávez Frías, Hugo. 2006. La Unidad Latinoamericana. Melbourne: OceanSur.
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.
Guevara, Aleida. 2005. Chávez, Venezuela, and the New Latin America. Melbourne: Ocean Press.
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, Venezuela
Venezuela has the largest oil deposits in Latin America and the Caribbean. Prior to 1960, the governments of Venezuela for the most part granted to foreign oil companies the rights to extract the oil, with terms that were favorable to the oil companies and that undermined the potential to use the petroleum to promote the independent economic development of the nation. The government of Juan Vicente Gómez, a dictator who ruled from 1908 to 1935, was particularly known for granting favorable terms to Shell, Standard Oil, and Gulf, and for enriching himself and his family and friends as a result of the shares granted to him in exchange. The Venezuelan petroleum law of 1922, edited by representatives of three US firms, established a separate police force, which prohibited entrance to oil lands by anyone not authorized by the companies. During the period of the initial penetration by foreign oil companies, indigenous communities were dislodged from their lands, and independent family farmers lost their property (Galeano 2004:218-19; 1997:168).
In response to this situation, popular movements demanded greater national control of this natural resource, giving rise after 1960 to what came to be called petroleum nationalism, where the state seeks to maximize its income from the exportation of petroleum. The era of petroleum nationalism culminated with the nationalization of the petroleum companies in Venezuela in 1976. A state petroleum company, Petróleos de Venezuela, Sociedad Anónima (PDVSA), was formed.
Ironically, nationalization had the consequence of creating more autonomy for the petroleum industry and more influence for the international petroleum companies. Distinct from the nationalization of the petroleum industry in Mexico in 1938, the nationalization in Venezuela was gradual, and it occurred with the cooperation of the international petroleum companies in Venezuela. By the time of the nationalization in Venezuela in 1976, the management of the companies was Venezuelan, as a consequence of Venezuelan pressure during the era of petroleum nationalism. So the nationalization had the effect of changing ownership from international petroleum companies to the Venezuelan state, but the companies continued to be managed by Venezuelans who had been socialized into the norms and values of the international petroleum companies and had internalized the perspective of international capital.
After nationalization, the Venezuelan state relaxed its oversight of the petroleum companies, believing that the industry was now securely in Venezuelan hands. But the Venezuelan managers did not seek to utilize petroleum income to promote national development. With the intention of reducing payments to the Venezuelan state, PDVSA adopted a strategy of channeling surpluses to investments in production and sales, in order to minimize profits and corresponding payments to the state. PDVSA bought refineries and distributorships in other countries in order to transfer surpluses out of the country, beyond the reach of the Venezuelan state. An example is CITGO, a Venezuelan owned company in US territory that consisted of eight refineries and 14,000 gas stations. Yet the Venezuelan state never received any income from CITGO; all of the profits remained in the United States. Hugo Chávez estimated that Venezuela gave to the United States billions of dollars through “the perverse business of the CITGO Company” (Chávez 2006:142, 321).
PDVSA, therefore, had emerged as a state within the state, with significant autonomy and with limited effective control by the state. In 1999, Hugo Chávez became President of Venezuela, bought to power by a popular movement in reaction to the neoliberal project. Chávez sought to reduce the autonomy of PDVSA and to incorporate its resources into a project of national development. The Chávez government appointed new directors of PDVSA, replacing the directors appointed by previous governments. With the new leadership of PDVSA, the income to the state from petroleum became significantly higher, and these funds were directed toward various social projects and toward elimination of the foreign debt. As Chávez has expressed, “We have stopped being a petroleum colony. . . . We have begun to sow the petroleum, to utilize the petroleum wealth as a lever for social development and for economic development” (Chávez 2006:318-19).
The measures taken by the Chávez government generated conflict. The US government and the international petroleum industry as well as the Venezuelan petroleum management were opposed, inasmuch as the measures sought to eliminate control of Venezuelan oil by the international petroleum industry. To some extent, workers in the Venezuelan oil industry were resistant to change, since their wages reflected international levels in the industry, far above the wages earned by workers in other industries in Venezuela. From the outset, the US government has engaged in a persistent ideological and destabilization campaign against the government of Hugo Chávez and his successor, Nicolas Maduro.
The story of petroleum in Venezuela illustrates that nationalization in and of itself does not necessarily contribute to the autonomous development of the nation. State control of the Venezuelan petroleum industry became an effective tool when it was integrated into a program of national development implemented by a government that was brought to power by a popular movement and that was committed to govern in the interests of the popular sectors.
At the same time, strategies other than nationalization can be effective, such as the formation of joint ventures, cooperatives and self-employment, if implemented as part of a national plan for the autonomous economic and cultural development of the nation, as the case of Cuba illustrates. So we learn from experience that various forms of property can be developed along the road to true independence, and that each form of property ought to be an intelligent response to the concrete situation in which the nation finds itself. The key is not the form of property, but the integration of the various forms of property into a plan for autonomous development, implemented by a government that seeks to promote and defend the rights of the majority, struggling to keep at bay those powerful sectors that act aggressively in pursuit of their particular interests.
Bibliography
Chávez Frías, Hugo. 2006. La Unidad Latinoamericana. Melbourne: OceanSur.
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.
Guevara, Aleida. 2005. Chávez, Venezuela, and the New Latin America. Melbourne: Ocean Press.
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, Venezuela
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