Oil and Venezuela

Any foreigner wanting to understand Venezuela needs to look at the influence of oil in our country during the last 100 years. Without a knowledge of the price evolution, of the income perceived, of the ways in which oil made complete economic structures develop or not, of the way in which all our politicians made oil a hindrance towards any real sustainable development, you cannot understand the whole picture.

Oil provides for over half of the State's revenues and the State provides for over 80% of the country's income. When the price of oil goes up, so do the expenditures of the government in power increase. When the price of oil goes down, so does the government start to close the tap.
This process is understandable.

The problem we have is that:

A) Understanding the dependency

The people do not fully grasp how dependent or not Venezuela is on oil and how much ease a Venezuelan government can have in having money to distribute when prices are low and how difficult it becomes when prices go down. Examples?
    1. Carlos Andres Perez was president of Venezuela from 1974 to 1979. Those were the times of the oil crisis (in the North). Perez was the one who nationalized oil in 1973. He became later known for being utterly corrupt and doing some extravagant things like giving Bolivia an expensive boat even if Bolivia did not have access to the sea. Presidents in Venezuela could not be reelected immediately after their period was finished, but he was then elected again in 1988 because the majority of the population THOUGHT he would bring about the wealth they could see during his first government. What happened? Perez actually tried to increase in a very clumsy way the price of gas (something Venezuelans thought should never vary) and he also tried to implement some other austerity measures asked by the notorious IMF. What happened? There were riots, people got killed and two years after the riots, military Hugo Chavez tried to gain power through a coup and a few months later some other military followers of Chavez carried out a new attempt. Perez was later sacked by the Congress and an interim president was placed, Velasquez.
    2. Caldera was president during the 1969-1974. That was also a period where there was a lot of money for the Venezuelans...thanks to Father Oil. Once Velasquez finished the end of the mandate, Caldera, a Christian-Democrat, was elected to rule in a coalition with a pletora of leftist parties. His government was a difficult one. Oil prices were in the cellar, the economy was weak and Venezuelans and others started to take their money out of Venezuela. The government introduced a currency control, there were lots of corruption cases because of the bad implementation of the control, the government finished in pain. That was the perfect time for coup leader Hugo Chavez to be elected president
    3. The first couple of years of Chavez's presidency were very tough. Oil prices were just recovering (China's and India's development were the main factor for it and only in second place a more strict behaviour of OPEC). Chavez won his 1999 appeal for a new constitution (almost dictated by him) specially because the electorate's turnout was so low. But then, up from the year 2000, prices started to go up, up, up. And now Venezuela is receiving 5 times more money every day for the export in which less than 20000 Venezuelans are employed in: the commodity oil.
B) Implementing plans to use oil to "get off the oil dependency" and into a road of sustainable development.

I will come more on that later.

Government spending in Venezuela has always been related to the amount of petrodollars
pouring into the country.

Although there has always been a lot of corruption in Venezuela, also before Chavez, it is very hard to compare the programmes carried out by the different governments if you do not take into account the amount of money coming in from oil exports.
Unlike other countries like Mexico where there are a couple of other revenues that account for
the countries income, Venezuela is incredibly dependent on its oil extraction and export.
Very unfortunately, few governments have really cared about trying to break this dependency.
The government of Chavez has taken this dependency to its extreme.

Sowing oil:

Arturo Uslar Pietri, a famous Venezuelan intellectual, wrote in the thirties of the XX Century that Venezuela had to "sembrar el petroleo", to saw oil, meaning that we had to invest the oil in trying to create new sources of income. Otherwise, we would be doomed to have a country doomed to misery.
Sembrar el petroleo (in Spanish)

Uslar did not believe that it was simply a matter of distributing the income from oil: the population would keep growing and the oil will one day come to and end, oil prices were fluctuating all the time and simply a country where most people are not producing anything that is bringing income to the country is bound to have a very inefficient and fragile economy.
We used to hear these words during our school years, we read them from time to time in the newspapers...but essentially, no one spent attention to this.
The chavismo is paying less attention than ever to Uslar Pietri's words on sowing the oil.

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