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A History Written with Oil

  • Iselin Åsedotter Strønen
Open Access
Chapter

Abstract

Providing historical context to the subsequent analysis of grassroots politics and oil culture in the Chávez era, Strønen offers a reading of Venezuelan history focusing on how the country was formed as an oil state. The chapter shows how the oil industry, dominated by foreign oil companies, played a central role in shaping political dynamics throughout the twentieth century ever since the regime of Juan Vicente Gómez. Moreover, the continuous presence of foreign, mainly US oil companies, was central for shaping social and cultural values, practices and class identities. Subsequently, Strønen shows why and how control over oil became a key axis of political conflict when Chávez came to power, and why resource nationalism and distribution of oil rents became a cornerstone in Bolivarian ideology.

In the words of the Venezuelan intellectual and politician Domingo Alberto Rangel, “no event in Venezuela can be separated from oil … It is the fundamental force that shapes national life. All aspects of the Venezuelan economy are the legitimate or bastard children of that substance that irrevocably stained our history” (cited in Tinker Salas 2009:2). In July 1914, Zumaque 1, Venezuela’s first oil well, was put in production in Mene Grande in the state of Zulia. By 1928, Venezuela was the largest oil exporter in the world (Grisanti n.d.). These first decades of the twentieth century constituted an important period of transition in Venezuelan history. In Hillman’s words, Venezuela went from a state of “caudillistic anarchy to a status of peripheral dependency” (Hillman 1994:34). Oil was a key component in this process. It attracted foreign oil companies to the country and shaped the formation of a nominally “modern” state and its economic base. It shaped Venezuela’s relation to foreign, primarily North American business interests, and the country’s relation to the global economy. It shaped the formation of different social groups and political alliances within Venezuela, as well as, with time, patterns of migration and the abandonment of the countryside, of rapid and uncontrolled urbanization, and of underdeveloped labor markets. It also shaped patterns of class formation, and the country’s exposure to North American cultural models and values (Tinker Salas 2009). Indeed, oil was a transformative agent in Venezuelan society. In a relatively short time it metamorphosed the country from being a coffee-exporting and geopolitically quite insignificant country, still caught up in its post-colonial internal power struggles and correspondingly weak state structures, into becoming a putative petro-state (Karl 1997) and a hub for international extractive industries and global commodity flows.

These patterns and processes are of deep contextual significance for our subsequent analysis of twenty-first-century Venezuela. In particular, I want to highlight three important aspects. One is the ways in which the transition from dictatorship to electoral democracy was premised upon the consolidation of a political system that centralized access to political power and the benefits of the country’s oil revenues in the middle- and upper classes, creating a deeply socially segregated society. As we follow the unfolding of this story in the period 1960–1998, some events and trajectories that would later become of potent political, social and cultural significance in the Chávez era are highlighted.

The other aspect that I will bring attention to is the United States’ strong presence in the country through the oil industry, and how this influenced the ways in which consumer culture and class identities were shaped among the Venezuelan middle- and upper classes. As we will discuss more in depth later on, this dimension of Venezuelan society is important for understanding how political ideologies, social identities and national(ist) sentiments were shaped in the Chávez era.

The third aspect that I want to bring attention to is of a subtle nature, namely how Venezuela’s formation as a state and a society is intertwined with the country’s uneven amalgamation into global geopolitics and global capitalist markets. Amalgamation, because as an oil-exporting country it was central to the flow of black gold so vital to global capitalist development. And uneven, because as a post-colonial, semi-peripheral, oil-exporting country, its political and economic processes have been intrinsically connected to political and economic forces beyond its control. These processes have brought cycles and patterns of social and political conflict and full-blown crisis.

As the country now is passing through a phase of great difficulties, I believe there is a lesson to be learned here, as well as a question to be asked: why has it been so difficult for Venezuela to find a solid economic, political and social platform for its societal development? What are the underlying causes for the country’s continuous conflictive and contradictive search for a political future? The rest of the book will seek to provide some answers to those questions, but first we need a solid understanding of where the Venezuela of today is coming from.

Gomez’s Rule

Venezuela gained independence from Spain in 1811 under the leadership of the national hero and icon Simón Bolívar. The ensuing decades were characterized by violent clashes between the Republicans and the Royalists, which escalated into the bloody three-years Federal Wars in 1858. After the war ended, the country continued to be characterized by caudillo rivalries and caudillo rule, a weak economy, abysmal living conditions for the common man and woman (Ewell 1984:19), and nascent attempts of nation building.

The first drop of oil was extracted from Venezuelan soil during the reign of Juan Vicente Gómez, who ruled the country in various periods between 1908 and 1935. Under Gomez’s rule, Venezuela stepped into the era of industrialization and increased political centralization. Gomez personally negotiated concessions and terms with foreign oil companies (Ewell 1984:57). By 1922, he had built a national administration that was stronger and more unified than anything that had existed in Venezuela since the colonial period (Ewell 1984:59). Thus, to put it simply, the Venezuelan state took form through the establishment of the oil industry, and as Tinker Salas notes, “during the Gómez era the foreign oil industry and the Venezuelan state became inextricable” (Tinker Salas 2009:2).

Gomez’s rule created significant opposition, conflicts and discontent in Venezuelan society outside of the limited circles that benefited from his regime—the army, the landed oligarchy, emerging economic elites, the church, foreign oil companies, and his loyal family and friends (Ewell 1984:59). Power struggles between old and emerging power factors carved out new political and economic faultlines. New political, ideological and artistic ideas inspired by European intellectual currents started to gain foothold, at the same time as Gomez’s regime drove many intellectuals and artists into exile (Ewell 1984:48–50). Significant social unrest, including a series of anti-government protests at the Universidad Central de Venezuela (UCV) in 1928, was violently clamped down on and spurred the formation of a new generation of political leaders. Among them were Rómulo Betancourt, Raúl Leoni and Jóvito Villalba (Hillman 1994:35); two of them would later become presidents.

El Trienio: 1945–1948

Several factions and transitory parties were formed in the years that followed, but it was eventually Acción Democrática that stood out as the victorious party. Not only did it boast important national intellectuals and politicians on its side, such as Rómulo Gallegos and Andrés Eloy Blanco, but it also successfully managed to tap into the campesino population and gain the upper hand with the worker movements, weakening the Communists (Ewell 1984:91–92). Many middle-class professionals also gathered behind the party, carefully distancing themselves from communism as well as fiercely opposing the gomecistas (Ewell 1984:91–92). The seeds for a multi-class, but not a class-based party, were sown.

Gómez died in 1935 and was succeeded by General Eleazar López (1936–1941) and General Isaías Medina Angarita (1941–1945). Growing discontent and rigged elections in 1940 led to a coup against Medina in 1945, organized by Acción Democrática and young army officers.

Rómulo Betancourt, from Acción Democrática, headed the new governing junta. During the three years that they stayed in power—called el trienio—the junta wrote a new constitution, implemented a new petroleum law (Hillman 1994:36) and extended suffrage to all citizens above 18 years of age, including women and illiterates (Ewell 1984:97). Moreover, collective bargaining was introduced for the first time. Adeco cadres (members of Acción Democrática) tirelessly visited neighborhoods and municipalities, facilitating party organization and reaching half a million party members in 1948 (Ewell 1984:99).

However, the junta failed to be considered as legitimate mitigators between diverse claims and interests emerging from the church, the military, militant political party activities as well as the Christian-conservative COPEI, the other dominant party (Hillman 1994:36). In 1947, Rómulo Gallegos was elected president for Acción Democrática. Shortly thereafter, the military carried out a coup.

The Rule of Marcos Pérez Jiménez

The rule of General Marcos Pérez Jiménez lasted until 1958. Pérez Jiménez was accused of widespread corruption and of favoring himself and his allies. He banned opposition parties, closed the UCV and jailed and tortured opponents. But he also presided over a significant leap in industrialization, infrastructural developments and the promotion of sports and culture (Ewell 1984:108; see Derham 2010 for a re-reading of Pérez Jiménez’s rule). As a consequence of the increased economic activity in the country, the non-petroleum share of GDP increased significantly, as did commerce and services (Ewell 1984:111). In 1955–1956, Pérez Jiménez’s government negotiated a new set of petroleum concessions, seeking a way to ensure fresh revenues for its ambitious projects (Ewell 1984:110).

During his regime, urbanization processes accelerated, the immigration rate expanded, birth rates went up and life expectancy increased, and a media market of film, TV, press and radio took shape. These years also transformed the social life and values of the Venezuelan population. Many of the movies, TV-shows and magazines consumed in Venezuela were North American productions (Ewell 1984:113–114). A growing and prosperous middle class looked to Europe and North America in search of new identities. Christian Dior and Yves Saint-Laurent opened shops in Venezuela in the 1950s. The number of cars in the streets skyrocketed, so did the consumption of Scotch whiskey and champagne (Ewell 1984:117). Bars and nightclubs, not to mention brothels, rocked the Caracas night life (Ewell 1984:115–117). In short, Venezuela, at least urban Venezuela, was a booming country with political censorship.

Public conflict levels were low during large parts of the Pérez Jiménez regime. The clandestine parties kept a low profile, and the relative prosperity maintained popular discontent under control, even among the peasants and the working class (Ewell 1984:118). However, from 1957, tensions started to intensify. Commerce and business sectors, the working class and even the military started to feel excluded by different aspects of Pérez Jiménez’s style of governance (Ewell 1984:119). An announced plebiscite over Pérez Jiménez’s rule, designed to make him win, provoked the anger of the public. A failed military conspiracy against him on January 1, 1958, alerted civilian leaders of the high levels of dissatisfaction in military circles. Civilian political leaders had been clandestinely organizing and mobilizing for a long time, and now the time for action had come. Under the banner Junta Patriótica, they called for a general strike on January 21, and a popular uprising followed. On January 23, 1958, Pérez Jiménez fled the country.

1958–1998: A Pacted Democracy

When Rómulo Betancourt once again assumed the presidency in 1959, this time through democratic elections, the political game had largely already been determined. Prior to the elections in 1958, all presidential candidates has signed the interparty agreements Pacto de Punto Fijo (Pact of Punto Fijo) and the Declaración de Principios y Programa Mínimo de Gobierno (Declaration of Principles and Basic Program for Government) (Karl 1997:82). In these documents, all the signatories committed themselves to pursue the same political and economic policies, regardless of the electoral outcome. Moreover, the Pact of Punto Fijo ensured that in future elections, each party would be guaranteed a piece of the pie, regardless of the electoral outcome, in the form of state jobs and contracts, control over ministries, as well as political positions granted through a complicated spoils system (Karl 1997:83).

The Programa Mínimo established that development would be pursued through the accumulation of foreign and private capital, and the private sector would receive subsidies and protection in order for it to prosper. Expropriation and socialization of property were ruled out, and land reforms were to be accompanied by compensation. Nationalization of the oil sector was also ruled out and the continued presence of multinational companies was guaranteed (Karl 1997:84). This implied a radical shift from Acción Democrática’s previous nationalistic and anti-imperialist stance (Herrera Campins 1978, cited in Karl 1997:84).

Locking the Political Game

In the new constitution approved in 1961, presidential powers were greatly expanded. This granted Betancourt the authority over all significant public bodies, along with the power to name cabinet ministers, state governors and state enterprise officials (Karl 1997:83). A non-reelection clause was included, that in time would contribute to the lack of accountability of those installed in office (Karl 1997:84). The powers of congress were reduced by containing political competition, creating a system that left little room for challenging the executive (Karl 1997:84).

Karl defines the design of these arrangements as “the right to rule for the right to make money” (Karl 1997:85). In essence, Acción Democrática carved out a political model design to lock the political game to their benefit and secure control over the state apparatus, in exchange for guarantees to the business sector. The model also guaranteed that the interests of foreign business sectors, the church, the military and the ascending middle class were secured. Those who didn’t have access to the party machine via client organizations, such as unorganized peasants or unskilled urban workers, were effectively shut out from the clientelist system. Labor and peasant groups were incorporated in the party-dominated Confederación de Trabajadores Venezolanos (CTV-Confederation of Venezuelan Workers) as well as in the Federación Campesina Venezolana (Venezuelan Peasant Confederation). Labor negotiations, especially tied to the oil industry, were carefully controlled through state-mediated collective bargaining, so as not to stir tensions with foreign oil companies. Acción Democrática’s manipulation of workers’ unions and the formation of parallel unionism undermined the influence of leftist currents and weakened organized labors’ bargaining power (Derham 2010:185). The growth of the oil economy undermined agricultural production, and the continuation of migration from the countryside to the cities, which had intensified under Pérez Jiménez (Derham 2010:176), quickly weakened the peasant class. Land reforms were enacted on a very limited scale, mainly applied to public land, or the land of perezjimenistas (Ewell 1984:139).

In order to contain forces within the party that wanted to push the limits of the pre-signed agreements of the Punto Fijo pact, Betancourt purged the party of radical elements from peasant and labor organizations, and stopped trying to mobilize new groups (Karl 1997:85). Both the Communists and the radical wing of Acción Democrática, whose members had risked their lives in the struggle against Pérez Jiménez, grew increasingly frustrated. In 1960, the youth branch of Acción Democrática left the party in protest. Later, they would re-emerge in the form of a guerilla movement allied with the Communists (Karl 1997:85).

Betancourt’s Line

The initial phase of Puntofijismo coincided with a shift in the North American approach to Latin America. While Washington had previously supported Pérez Jiménez as a bulwark against communism and because of his openness to foreign capital (Ellner 2008:51), they soon embraced the new democratic dawn in Venezuela. Betancourt appeased the neighbor in the north by signing favorable oil contracts with foreign companies, pursuing a staunch anti-communist line domestically and aiding Washington in politically isolating Cuba (Ellner 2008:62). Indeed, Rómulo Betancourt would become a close friend of both Nelson Rockefeller and John F. Kennedy. Internal struggles with the far left were dealt with through a divide-and-conquer political maneuvering, as well as through raw power, as expressed by the maxim attributed to the interior minister Carlos Andrés Pérez, who would later become president: “Shoot first and ask questions afterwards” (Ellner 2008:60).

Carlos Andrés Pérez: First Term

Betancourt was followed by Acción Democrática’s Raul Leoni, who largely continued along the political line of the Betancourt years. In 1969, the presidential elections were won by COPEI for the first time, and Rafael Caldera, who founded the party in 1946, took the presidential seat. In 1974, Carlos Andrés Pérez, or CAP as he was also called, was elected president of Acción Democrática at a moment in which Venezuela overflowed with oil revenues—a result of the 1973 OPEC oil bonanza caused by the Arab oil embargo. These were years of lavish spending, and Venezuela was nicknamed “Venezuela Saudita.” The country was awash in petro-dollars, social programs were launched in order to mitigate social conflict, and even the labor movement stopped calling for redistributive policies (Ellner 1989:118). According to Karl, the charismatic Carlos Andrés Pérez, or CAP as he was also called, had an immense ego and desire to leave his mark on Venezuelan history (Hellinger 2000:107). In an address to congress in 1974, he announced far-reaching social and political reforms, as well as a development plan called the Fifth National Plan, designed to put the country on track toward becoming a developed nation. Ambitious industrialization programs were drawn up to change the country’s economic structures overnight, and massive infrastructure projects were put in motion (Hellinger 2000:107). Modernity and development were thought to be just around the corner, symbolized by the potent skyscrapers that dominate Caracas’s cityscape to this day. As Judith Ewell (1984) put it:

The new wealth and the perceptions of it affected all aspects of national life … Money abounded to subsidize more publishing and artistic ventures and a reorganization of the state cultural bureaucracy. Middle-class Venezuelans luxuriated in consumption and display of status symbols from imported food and clothing to the acquisition of condominiums in Miami, Florida. Neglected regions received more national investment to create poles of development in the interior. It is doubtful that much of the new wealth reached the poorest and least skilled of the population, but massive development projects encouraged the eternal expectation that soon the wealth would indeed trickle down to the poor. (Ewell 1984:193)

During these years, middle-class Venezuelans went to Miami on weekends for shopping trips, generating the famous expression “está barato, dame dos” [it is cheap, give me two]. Corruption reached unprecedented levels during Pérez’s rule (see Karl 1997). The sheer amount of money in circulation, a re-organization of the state administration, the massive development projects, and the close linkages between Pérez’s office and his close circles of technocrats, business and political allies, gave ample space to corrupt practices. 1

The Beginning of the End

However, the boom didn’t last long. Elected in 1979, Luis Herrera Campins, from COPEI, “inherited” a massive foreign debt that had been accumulated during the Pérez years (Ellner 2008:79). In 1983, the combination of reduced oil prices and declining confidence in the economy triggered speculative pressure on the Venezuelan bolívar, leading to the adoption of price controls. 2 Having borrowed on the basis of anticipated future oil prices, the country now found itself in an economic quagmire as oil prices fell. However, in spite of criticizing Pérez for his borrowing practice, Herrera Campins went ahead and doubled the foreign debt. This placed Venezuela in a state of dependency vis-à-vis foreign creditors that would later lead to a deal with the Bretton Wood institutions. Debt payments absorbed between one-fifth and one-third of the country’s annual foreign exchange earnings over the following years. And as Pérez’s grandiose development plans were abandoned, highly indebted state companies were left with a bloated bureaucracy and an underutilized work force (Ellner 2008:80).

The Crisis Continues

The disasters of the previous years had already spurred off voices arguing for privatization and neoliberal reforms. The economic and political deterioration that continued under the presidency of Jaime Lusinchi (Acción Democrática) strengthened these positions. By 1985, foreign-exchange reserves were at a mere USD 1.8 billion, state companies were heavily indebted and corruption was endemic. Many claimed that in the subsequent years, state companies were deliberately bankrupted in order to prepare the ground for privatization (Ellner 2008:81). Lusinchi cashed out on the foreign debt, including parts of it that were allegedly illegal, having been borrowed in contravention of Venezuelan law. The exchange mechanisms applied to foreign debt payment were opaque at best, and even Lusinchi’s own planning minister claimed that the currency conversion process implemented in 1983 represented the “greatest state transfer to speculators in world history” (Ellner 2008:82).

Pérez’s Last Round

In 1989, Carlos Andrés Pérez was elected president for the second time. Fashioning himself as a nationalist and a defender of el pueblo, he capitalized on popular sentiments resisting privatization, neoliberal policies and economic tutelage under the Bretton Woods institutions. However, in the backroom he had brokered a deal with the International Monetary Fund (IMF), which ensured that significant structural adjustment programs would be implemented once he took office. On February 28, 1989, the government of Carlos Andrés Pérez and the IMF signed a letter of intent that would align Venezuelan petroleum products—which had been heavily subsidized—with prices closer to the international market. On average the prices were to rise 94 percent, and it was scheduled for prices to rise an additional 70 percent in January 1990 (Mommer 1996:147). The IMF deal also included a severe readjustment of interest rates and the deregulation of certain basic commodities in addition to a sharp price increase of others (Ellner 1989:105).

Pérez had called the neoliberal package el Gran Viaje (the great turnabout), portraying it as a necessary measure to safeguard the nation’s future. But he underestimated the extent to which the poor part of the population, which throughout the past years had seen living conditions radically worsen, had been brought to their brink. The first phase of Pérez’s structural adjustment reform led to the “the largest and most violently repressed revolt against austerity measures in Latin American history” (Coronil 1997:376). The uprising, called el Caracazo or el Sacudón, is described in the next chapter and will not be examined in detail here. Suffice to say that the government’s violent response to the massive protest left somewhere between 300 and perhaps as much as 3000 dead. These numbers are still disputed.

Social unrest continued and increased in the aftermath of el Caracazo, leading to violent confrontations between protesters and state forces frequently resulting in injuries and deaths (López et al. 1999). The legitimacy of not only the political parties, but also of the whole political system was free falling. There was also unrest within military ranks. The lower ranks were primarily staffed by young men from poor backgrounds. Dismayed by having been sent out to “kill their own” during el Caracazo, many of them started to question the legitimacy of the Pérez government. One of them was Hugo Chávez, who was already a central figure in clandestine left-wing milieus. He led a secret dissident group within the army, called Revolutionary Bolivarian Movement-200 (MBR). In 1992, the group, which had attracted more supporters after el Caracazo (Ellner 2008:96; Trinkunas 2002), led out a failed civil-military uprising against the Pérez government. The justification for the uprising was that the government had lost its constitutional legitimacy after massacring its own people during el Caracazo. The uprising failed and Chávez was jailed, but the cause, and Hugo Chávez himself, gained enormous popular support (see Strønen 2016).

Impeachment

At this point there was a sense of chaos in Venezuelan society (see López et al. 1999; Trinkunas 2002). The following year, Carlos Andrés Pérez was impeached on corruption charges, partly becoming a scapegoat for the de-legitimization of the political system at large. Before leaving office, Carlos Andrés Pérez left his mark in the Venezuelan economy. In spite of el Caracazo, the IMF-prescribed shock treatment was implemented. A 1992 privatization law facilitated widespread privatization of strategic sectors. Organized labor was weakened and the informal economy expanded. Except for a few basic commodities, price controls were lifted, tariffs were sharply reduced, and restrictions to foreign investments were removed. This resulted in a massive multinational penetration of sectors such as finance, gasoline retail and fast-food outlets (Ellner 2008:92). Cost of living increased and new sectors of the population descended into poverty. Decentralization laws reduced the powers and responsibilities of the state in a number of strategic areas, while new municipalities were established in affluent areas, diminishing the tax base that befell the poor neighborhoods (Ellner 2008:93).

Paving the Way for Chávez

Caldera won the presidency in 1994 through embracing an anti-neoliberal discourse and showing sympathies for the cause of Hugo Chávez and his fellow rebels, attributing the coup attempt to the unacceptable social conditions among large parts of the citizenry. In the first phase of his presidency, Caldera took some steps to curb the effects of Pérez’s reforms (Ellner 2008:100). However, soon after, the consequences of Pérez’s deregulation of the financial sectors started to set in. In the wake of deregulation policies, the banks had gained control over companies in sectors such as telecommunications, agriculture, tourism and broadcasting (Ellner 2008:100). However, this expansion soon turned into collapse as a number of banks went bankrupt. Caldera’s response to the banking crisis was to take over and administer 18 of the country’s 41 banks, representing 70 percent of all deposits (Ellner 2008:100). Moreover, the government permitted foreign takeover in the banking sector, greatly weakening domestic capital. The former bankers fled the country, heading for the United States and elsewhere. With them they brought both the money they had embezzled from the banks as well as the funds the government had injected into the system in order to keep the banks floating. A total of 322 bankers were issued arrest warrants—none were brought to justice (Ellner 2008:100). It was an economic fraud of epic proportions. In the meantime, real wages continued to fall, and inflation reached 71 percent in 1994 and 57 percent in 1995 (Ellner 2008:100).

“The Opening”

In 1996, Caldera entered into a new deal with the IMF, which he called “Agenda Venezuela.” The IMF granted Venezuela a 1.4 billion loan, while also giving its stamp of approval to government policies in order to reassure foreign investors of the country’s solidity. In 1997, the national steel company SIDOR was privatized, and the government sold out its last shares in the communication company CANTV. (Both of these companies were later re-nationalized by Chávez.) Health and retirement branches in the social security system were privatized, and severance payment systems reformed in a manner that reduced payouts to workers (Ellner 2008:100–105). Caldera also continued the process of privatization of the oil industry that had begun under Pérez, a maneuver euphemistically termed la apertura (the opening).

As we will explore further in the subsequent chapter, social protests and political unrest was abundant during these years. People in the barrios still spoke of Chávez, and many sympathizers and leftist activists visited him in prison. In 1994, Chávez was granted pardon from Caldera and released from prison. Caldera was an old political hawk, and sensed the popular sentiments that were simmering in favor of Chávez. In 1997, Chávez formed a political party, Movimiento Quinta República or MVR (the Fifth Republic Movement). Chávez toured the country with an anti-establishment message promising to restore justice and dignity to the country, to call for a constituent assembly, and to break with the old Puntofijismo system. In the 1998 elections, Chávez’s main electoral contender was Irene Sáenz, a former Miss Universe and the mayor of the wealthy municipality of Baruta, in Caracas. Sáenz was faring well on the polls, until she was endorsed by COPEI just before the elections: a move that proved fatal. Chávez won the presidential elections with 56 percent of votes, ending 40 years of Acción Democrática/COPEI hegemony backed by the Punto Fijo pact of 1958.

The Exceptionalism Myth

It should be noted that the reading of Venezuelan history has in many ways been greatly re-interpreted during the past few decades. Contemporary writers from the Punto Fijo period tended to overlook the underlying internal conflicts and the power struggles simmering below the surface of an apparently functioning democracy. For long, Venezuela was hailed as an exceptional case in Latin America, a designation also referred to as “the Venezuelan exceptionalism.” Surrounded by countries marred by military coups and authoritarian dictatorships, Venezuela showcased an uninterrupted line of democratically elected governments since 1958. The Punto Fijo pact sustaining this model has led researchers to term the Venezuelan model “partidocracia” (Rey 1989:266, cited in Hillman 1994:17), “pacted democracy” (Hellinger 1991:94) and “pactocracy” (Cockcroft 1989:340, cited in Hillman 1994:17). Elsewhere, Hellinger defined it as “elections without participation” (Hellinger 1996:4). Few analysts foresaw the breakdown of the Venezuelan political system that started to gain pace since the early 1980s. One exception is Hellinger, who in 1984 wrote: “The Venezuelan state is likely to find itself increasingly caught up in reviving class struggle as the decade proceeds” (Hellinger 1984:56).

Especially in the aftermath of the social and political disintegration starting in the 1980s, as well as after Chávez’s electoral victory in 1998, critical research shed light on the cracks in Venezuela’s “exceptional” political model. Indeed, Derham has argued that “the myth of a popular, fully representative Venezuelan democracy has been created by an alliance between self-interested democratic politicians and foreign (mainly US) scholars and ‘mentors’” (Derham 2010:271). In a similar vein, Ellner indicates that

For many years, political analysts, along with those close to the circles of power in Washington, presented the exceptionalism view by labeling Venezuela as a model democracy due to its stability, marginalization of the left, and avoidance of militant independent trade unionism. (Ellner 2008:2) 3

Moreover, Buxton has argued that the “failure of the state to competently administer elections debased any claim that the country was a ‘democracy’” (Buxton 2001:103). She argues that not only was the right to vote or have your vote counted often flaunted in practice, but that “the electoral system was rife with gerrymandering and characterized by a lack of regulatory clarity and an absence of institutionalized norms” (see Buxton 2001:82–103 for details).

Oil, Puntofijismo and Foreign Oil

The abundance of oil revenues is a central factor for explaining the long durée of the Punto Fijo system. As Hawkins notes:

The oil revenues allowed the hegemonic parties to develop an extensive network of clientelist networks, creating mechanisms whereby new political actors were either co-opted or excluded. (Hawkins 2010:89)

A central element of this consolidation of power was to make sure that potentially radical elements were kept at bay (either with carrot or stick), while at the same time ensuring that powerful interest groups and the dominant ascending political base—the middle classes—were satisfied. Acción Democrática, presumably the most radical party as opposed to the conservative COPEI, had radically changed its social and political orientation from the first ruling experience in 1945–1948 to the consolidation of power in 1959. While el trienio was relatively socially radical, anti-imperialist and nationalist, post-1958 Acción Democrática was staunchly anti-Communist, pro-North America and politically shrewd.

However, intimately interlinked with AD and COPEI’s co-optation over access to oil revenues and positioning in the political game, another process was taking place, shaping Venezuela’s economic and political architecture, as well as the country’s relation to the global economy. Foreign petroleum companies carved out an extensive space for political and economic maneuvering and revenue extraction, while domestic elites, who were intimately connected to and identified with the global world of extractive business and cosmopolitan ideals, controlled the national oil industry. At the same time, middle-class identities and material interests gradually became, in part through social engineering by the foreign oil companies themselves (Tinker Salas 2009:4), intimately tied to the continuous presence of foreign oil companies. In order to understand how this happened, we need another quick detour back in Venezuelan history.

Shaping the Petro-State

The appearance of foreign oil companies under Juan Vicente Gómez’s rule took place at a time with surprisingly weak state structure, or in Karl’s words: “A legacy of extreme administrative weakness that is remarkable even in the context of Latin America” (Karl 1997:74). Part of the reason was that Venezuela was marginal to the Spanish empire because it had few resources that were attractive to the European emerging markets. The country had been ruled by shifting caudillos, and few administrative structures were developed. The limited scope of the state and the lack of a strong state identity gave the foreign oil companies, backed by the United States, an easy pass once they entered the country. As Karl writes:

Together, they were able to effectively limit Venezuela’s sovereignty by fashioning the international oil market and the conditions for domestic business in their favor, redesigning the country’s property laws, keeping social forces weak, decisively influencing leaders, and, when necessary, helping to change actual rulers. (Karl 1997:89)

The development of the country in the aftermath of the emergence of the oil industry was conditioned by the encounter between the weak domestic political economy and the most powerful forces of the international economy (Karl 1997:73). The establishment of a petroleum regime subsequently led to what Karl terms “petrolization,” or the formation and empowerment of oil-related interest groups to the expense of non-oil-related interest. Oil-related sectors became pegged to the state, discouraging political diversification. The gravitating power of the oil economy also prevented the development of other economic sectors, and undermined the agricultural economy that had been the backbone of the country prior to the oil industry’s emergence. Venezuela had become a net importer of food already during Gómez era (Tinker Salas 2009:207), a condition that strongly contributes to its fundamental problems today. Already in 1958, 71 percent of the state’s revenues came from oil (Tinker Salas 2009:211).

The oil economy also created a class pattern different from other Latin American countries. Since growth was fueled by oil rents more than by real productive activities, the middle class grew proportionally larger than the working class—an inverted class pyramid propped up on petro-dollars (Karl 1997:82–83).

The Formation of Petróleos de Venezuela S.A (PDVSA)

Venezuelan oil production was in its first decades almost entirely dominated by foreign companies. In 1928, there were 107 companies working on Venezuelan soil, but the big three—Dutch Shell, Gulf, and Standard Oil controlled 98 percent of the market (Ewell 1984:63). Most of the exports consisted of heavy crude, and most of it was refined in the Dutch Antilles before it was shipped to the eastern coast of the United States (Ewell 1984:63). Less than 3 percent was consumed domestically (Ewell 1984:63). The “big three” cultivated close relationships with shifting governments, while the US state department carefully monitored the relationship between the foreign companies and the Venezuelan government (Tinker Salas 2009:205).

The first state oil company, Corporación Venezolana de Petróleo, was not created until 1960 (Mommer 1996). On September 10, that same year, delegates from Venezuela, Saudi Arabia, Kuwait, Iran and Iraq gathered in a meeting in Baghdad. Few days later, OPEC was formed (Grisanti n.d.). The Venezuelan delegate, Juan Pablo Pérez Alfonso, played a crucial role in this process.

After having gradually built a national knowledge- and capacity base, and reflecting nationalist currents in and beyond the country, the Venezuelan oil industry was nationalized in 1976 under the first government of Carlos Andrés Pérez. The foreign companies put up resistance, but they had also carefully monitored nationalist sentiments in the country and positioned themselves for a shift in policies. And in effect, international oil companies continued profiting from the Venezuelan oil industry through lucrative service contracts, indemnification, expensive loans, foreign investment diverted to other economic sectors and other mechanisms (Bye 1979:73; see also Hellinger 1984, 2016; Tinker Salas 2009:228–229).

However, the nationalization of PDVSA served another purpose. The popular and working-class agitation platforms of class struggle and nationalist advocacy were neutralized, and replaced by a national consensus ideology (Bye 1979:63). As Tinker Salas notes, political parties and leftist intellectuals for the most part lost interest in oil after the nationalization, while the managers of the oil industry increasingly viewed both politicians and the populace as “a potentially disruptive force” (Tinker Salas 2009:229). Indeed, in spite of the nationalization, PDVSA’s Venezuelan oil executives continued to share the perspective of the international oil companies that had trained them (Mommer 2004:131). Over time, PDVSA developed into a “state within the state” (Mommer 2004:131), viewing itself as a player on the global scene steeped in corporate neoliberal logic rather than a national state company that had to respond to its owners, that is, the Venezuelan state and the Venezuelan populace. The country’s subsequent political leaders failed to put in place efficient fiscal and regulatory systems (Mommer 2004) and the oil giant effectively escaped political oversight.

Oil and Labor

The oil industry was a generous employer to the lucky few who were able to secure work there. In 1958, the 40–50 thousand workers employed by the oil and iron industries, comprising less than 3 percent of the country’s total workforce, earned more than half of the country’s wages. In addition, their housing, education and health services were provided by their employers (Lieuwen 1961:14). In contrast, the common city wage earner employed in industry and commerce on the other hand, spent 48 percent of his income on food. Less than one-third of dwellings were reported to have running water in the 1957 national census (Lieuwen 1961:13–14). Thus, even if Venezuela reportedly had the continent’s highest per capita income at the time—USD 743 in 1962—this wealth was concentrated in the hands of those who benefited (Lieuwen 1961:14) from the oil industry. The labor movement tied to the oil industry emerged as the most powerful part of the Venezuelan labor movement (Tinker Salas 2009:11), prompting some to call them a labor aristocracy (ibid.). As we will discuss more in detail below, the oil industry also became the center of gravity for the ascending managerial and professional classes, allowing them to enjoy an elevated standard of life that resembled that of their middle-class peers in the United States—far beyond reach for the common Venezuelan worker.

The development of the oil industry also intensified the migration from rural to urban areas, as peasants flocked to the oil fields and to the cities in order to find work (Ewell 1984:64). The oil production itself wasn’t labor-intensive, but the infrastructures and services (including prostitution) spread and provided job opportunities around the oil areas (Ewell 1984:64).

Re-ordering Venezuelan Society

The development of the oil industry spurred the construction of large oil camps surrounding the oil fields. As Tinker Salas (2009) has analyzed in detail, the oil camps became an epicenter for the social, spatial and cultural re-ordering of Venezuelan society. Of key importance in these processes were the construction of new divisions between public and private space, the fostering of new ideas of work ethics and personal development, the consumption of new commodities and foods, the promotion of new models for family life, gender relations, citizenship and racial hierarchies, and the promulgation of new forms for social interaction and social rituals (Tinker Salas 2009). Over time, the norms, values and standards of living in the oil camps evolved “into a set of social assumptions and class expectations that defined those employed in the industry and against which other elements of society could measure their own status” (Tinker Salas 2009:171).

The Venezuelans who managed to get a foot inside or in the ambits of the oil industry eagerly absorbed these new political, social and cultural models. Ever since the 1940s, the companies also pursued a strategy termed “venezolanization,” seeking to employ Venezuelans in all but the top-level managerial positions. The explicitly stated aim was to ensure that the Venezuelans had a personal stake in the company’s presence and that their employees would circulate between oil and the state in a revolving-door manner, safeguarding that the companies’ long-term interests would be upheld (Tinker Salas 2009:186). And rightly so, many of them became important actors on other political, commercial and social arenas in Venezuelan society (Tinker Salas 2009:5). Consequently, their views, reflecting “a series of self-sustaining myths about the oil industry and its importance to the nation and society” (Tinker Salas 2009:5) were diffused throughout society.

Oil, Nationalism and Modernity

At the core of these beliefs was the idea that the foreign oil industry was of paramount importance if the country were to enter into the era of modernity (Tinker Salas 2009:5). The trope of modernity and its association with foreign oil was multi-faceted and forged over time. For one, the foreign oil companies conjured an imagery of themselves as the anti-thesis and solution to the backwardness and thirdworldism of the country prior to their establishment in the country. This aligned the companies with the potentiality for progress and modernity, interlocking their presence with middle-class ambitions and the post-1958 developmentalist political leadership. They even embraced and propagated the famous slogan “sowing the oil,” first coined by Arturo Uslar Pietri in 1936. Referring to the need to diversify the economy through investing (“sow”) oil into other economic arenas, in particular agriculture, the slogan was appropriated by the oil companies who portrayed themselves as key agents in the modernization of the Venezuelan economy (Tinker Salas 2009:190).

The oil companies also carefully monitored communist and nationalist currents in society, working in close relationship with the government and security services (Tinker Salas 2009:213–216). At the same time, they maneuvered diligently to associate themselves with cultural nationalist sentiments in a manner that hedged against the surge of political nationalism that could threaten their interests. The companies engaged extensively in philanthropy as well as making content for media outlets, ranging from radio programs to sponsoring and publishing magazines featuring famous national writers and articles promoting popular and traditional cultural heritage (Tinker Salas 2009:193–199).

The Triad

Seen as a whole, what took place in Venezuela during these decades was the construction of a political and social triad among the dominant political classes, the oil industry and the main beneficiaries from the oil economy: the labor aristocracy, the middle classes and the elites. Their views became hegemonic in the Venezuelan public, and together, like in an echo chamber, they crafted the idea of the oil industry as the exclusive enclave through which modern Venezuela was emerging. As the notion of meritocracy had been cultivated throughout the industry’s development (in spite of the central importance of nepotism and networks in hiring practices), people nursed by the oil industry were comfortably reassured of them being deserving of their status and priveleges. This evolved into a sense of privilege as a birthright: they were the pillars upon which modern Venezuela was standing. Concurrently, the middle classes had an intrinsic interest in maintaining status quo, making them essentially conservative and reactionary vis-a-vis political radicalism and the country’s underprivileged citizens.

Oil and Struggle in the Chávez Era

A picture now slowly emerges of a nation whose social identities and political interests were segregated between those who benefited from the circulation of oil wealth, and those who were cut off from the benefits from not only the oil industry per se, but also the whole array of social, cultural and political arrangements conjured up in its orbit. As Tinker Salas notes: “the portrayal of a prosperous oil economy transforming the nation obscured the fact that a significant portion of the Venezuelan population existed on the margins of the oil economy” (Tinker Salas 2009:6). This picture, when extended into also encompassing an understanding of the extensive corporate and political interests tied to the control over the oil industry, enables us to better understand the enormous shake-up that Chávez’ arrival to power, and his gradual attempt take control over the oil industry, represented. Tinker Salas summarizes it succinctly:

At one level, the dispute between Chávez’s government, the oil company hierarchy, and the oil workers’ unions regarding the future of the oil industry was a struggle for the economic purse string of the nation, a battle between the new PDVSA, aligned with the social priorities of the government, and the old mode. At another level, the dispute was a symbolic contest over the nation’s identity, its model of citizenship, and a definition of modernity and progress previously defined by élite and upper-middle-class concerns. (Tinker Salas 2009:207)

The first thing Chávez did in terms of oil policy was to (successfully) reach out to other OPEC countries in order to strengthen cooperation and reach an agreement for limiting production and rising prices (Hellinger 2016:64).

Politically, the Chávez government would not get control over PDVSA until after the oil strike/sabotage in 2003. By then, a struggle had for long been unfolding between the national executive and the PDVSA management. Traditionally, PDVSA executives had controlled the ministry of petroleum by appointing “their people” to ministerial posts, and the ideological position of the PDVSA leadership was essentially neoliberal and pro-privatization. They had for long advocated for the final privatization of the company, putting them in direct confrontation with Chávez’s government, who were well aware that they would be politically and economically castrated if they didn’t gain control over PDVSA. Tellingly, middle-class employees in the oil industry also formed a group called Gente de Petroleo (Oil People) who were actively opposing Chávez.

In November 2001, having been granted special powers by the congress, Chávez passed 49 laws by decree—one of them securing the state full control over the oil sector (Tinker Salas 2015:150). The following months, tensions escalated across Venezuela and rumors of a coup-in-the making were simmering. In early April 2002, Chávez fired several of PDVSA’s top executives on live TV. On April 11, 2002, a large opposition march, symbolically convoked to gather outside the PDVSA headquarters in Chacaito, marched toward the presidential palace Miraflores. I will not go into the details of the coup here. 4 Suffice to say that the coup was well planned and included the use of massive media manipulation, snipers to make it look as if the government had fired on protesters and pre-organized dissent among a group of military generals. Chávez, threatened with having the presidential palace bombed, was eventually taken into custody by the military coup plotters. He was later flown to a military base on the island La Orchila off the Venezuelan coast. Eventually, the coup fell apart as a result of internal disagreements among the coup plotters, massive popular mobilization in favor of Chávez, and a series of maneuverings by Chávez’s supporters within the military. On April 14, he was brought back to Miraflores.

The coup had been orchestrated by the labor union CTV (historically tied to Acción Democrática), the national business confederation FEDECAMERAS, opposition parties, the private media and dissident military generals. By now, there is also considerable evidence that the United States was involved in the coup at some level (Golinger 2005; Al Jazeera 2009; Villegas 2009; Beeton et al. 2015). When the coup was defeated, Chávez took a reconciliatory tone, setting up the Presidential Commission for National Dialogue. He also re-hired some of the people on PDVSA’s top executive board, who had been fired on live TV. However, in December 2002, the PDVSA management, as well as CTV, FEDECAMERAS and the opposition parties called for an indefinite general strike. The purpose was to force Chávez out of power by creating a situation of in ungovernability and popular discontent.

PDVSA was subsequently shut down by upper-management against the will of the petroleum worker union FEDEPETROL and other smaller unions (Ellner 2008:119). Other opposition-led businesses also orchestrated lockouts, while the majority of businesses in non-affluent areas remained open (Ellner 2008:119). As gasoline reserves dried up, the country came to a halt. Citizens were forced to queue for up to two days to fill a tank of gasoline, and people died as ambulances ran out of gasoline and could not attend to emergency calls. Supermarkets ran out of basic goods as the supply system broke down. In the barrio households, which cannot afford to store large quantities of food, people scraped together whatever they could find to eat, sharing among family, friends and neighbors. Many had to burn their furniture for cooking and sterilizing baby bottles. 5 The strike lasted eight weeks, although it was never formally called off. The government managed to take over the oil establishments that had been closed, with the help of the military, retired personnel and loyal workers, and production slowly regained pace (see Tinker Salas 2015:163–168 for a detailed account of these events). The sabotage affected the popular sector the most, but the popular uprising that the sabotage-plotters had hoped for never materialized. Rather, people rather stoically endured the hardships in a spirit of collective struggle, turning their anger toward the conservative sectors that was strangling the country for political purposes.

The People’s Oil

The effects of the strike were devastating; GNP declined 24 percent that year (Weisbrot and Sandoval 2007) and poverty rates spiked drastically. Nevertheless, the government came out as the winner after the strike. It removed 16,000 (mostly white-collar) PDVSA workers who had participated in the strike, and took political control over the company. As Tinker Salas notes, “many Venezuelans applauded Chávez’s efforts to rein in the oil conglomerate” (Tinker Salas 2009:233).
Photo 2.1

Poster of Che Guevara made by the Ministry for Energy and Petroleum. It reads: “with energy we sow oil and we sow consciousness in order to form the new man and construct a new society.” Photo by the author

Following this takeover, PDVSA was ideologically re-fashioned as a guarantor of social development and national sovereignty. Not only was a large portion of oil revenues channeled into the government’s so-called social missions that were rolled out during the following years (see Chap.  4), but the company also had an active role in many of them. Contracts with foreign companies were reviewed and re-negotiated giving PDVSA a majority stake in all joint ventures, and taxes and royalties were raised. In 2005, Petro-Caribe was established, through which several economically vulnerable Latin American nations were provided with Venezuelan oil through long-term credit arrangements (Tinker Salas 2015:151; see Hellinger 2016 for a review of Chávez’s oil policy). Through an oil-for-doctors exchange with Cuba, the government’s flagship social program, Barrio Adentro (Into the barrio), was established, setting up health clinics across Venezuela staffed with Cuban doctors.

Ideologically, these moves were fashioned as a break with corporate, neoliberal logic, and PDVSA became a potent symbol for national sovereignty, social justice, international solidarity and integration between developing countries. To Chávez’s supporters, the symbolic remaking of PDVSA as well as the government’s policies of steering oil revenues into social welfare became a very tangible evidence of the government’s commitment to comply with radical demands from below.

* * *

This chapter has chronicled a broad—and far from exhaustive—trajectory of Venezuela’s political and social history in the twentieth century. The narrative shows that oil is an indispensable key for understanding the most significant features of Venezuela: its economic strengths, weaknesses and inherent vulnerability, the solidity and durability of the Punto Fijo system, the Punto Fijo system’s eventual demise, the country’s development efforts and failures, the formation of different classes with diverging social ideologies and world views, and eventually, the rise of Hugo Chávez and the dense significance of oil in his rule.

As a social anthropologist, I am interested in the ways in which a passive agent (oil) becomes formative for molding social and political dynamics and structures (see Mitchell 2011). As previously stated, this is the argument that I am trying to puzzle together in this book; we need to understand oil as property that works through political structures, economic processes, and social relations in a multiplicity of ways. The rest of this book is an attempt to trace the “secondary effects of oil,” that is, how the political and structural legacy of oil, its cultural representations and social expectations gained salience in the Bolivarian process as lived in the barrios of Caracas. To start that journey, we will now turn our attention to the relationship between Chávez and his supporters.

Notes

  1. 1.

    Ellner (2008:72) identifies Pérez with a leftist, pro-Third World current in opposition to the more moderate and conservative currents within Acción Democrática. That being said, Pérez was originally associated with the Betancuristas, having been Betancourt’s personal secretary in the 1940s and minister of the interior in the 1960s when he was accused of orchestrating massive human rights abuses (Ellner 2008:71). However, during his presidency, Pérez re-established relationships with Cuba, supported the Sandinistas in Nicaragua and advocated for a strong interventionist role of the state as a means to achieve greater independence vis-à-vis the developed countries (Ellner 2008:72). In 1976, the oil industry was formally nationalized, though, as we will discuss more in depth below, the nationalization did not lead to a real process of independence from foreign oil companies operating in Venezuela. However, in spite of conflicts with the more conservative Betancourtista currents in the party, Pérez never engaged in a real confrontation with established interests, and he didn’t mobilize broad popular support. His outreach to the labor movement was rather lukewarm (Ellner 2008:73).

     
  2. 2.

    The new exchange regime established a three-tier system, which according to Ellner could have worked hadn’t it been for the excessive irregularities and corruption associated with it (Ellner 2008:79).

     
  3. 3.

    It can be argued that there were some aspects about Venezuelan politics that were exceptional. Venezuela had less visible manifestation of class conflict than other countries, the working class was less violently and systematically repressed than in countries like Bolivia and Argentina, and the vast oil resources channeled through clientelist mechanisms discouraged collective struggle (Ellner 2008:2). Moreover, the internal mechanisms developed within the dominant multi-class parties allowed for the negotiation of class disputes, and social mobility, especially within the military, contributed at times to easing social tensions (Ellner 2008:2–3).

     
  4. 4.

    Detailed accounts of the coup can be found in Bartley and Ó Briain (movie) 2003, Golinger 2005, Palacios (movie) 2004, Villegas 2009, Gott 2005. For an analysis angled from the oppositions’ point of view, see Nelson 2009.

     
  5. 5.

    Most people in the barrios cook on gas stoves.

     

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Authors and Affiliations

  • Iselin Åsedotter Strønen
    • 1
    • 2
  1. 1.University of BergenBergenNorway
  2. 2.Chr. Michelsen Institute (CMI)BergenNorway

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