The Venezuelan Curse (Part 1)

Hello! Before we begin this week, an update. The very strange experiment we started last episode, where, along with our friends at the Hard Fork podcast, we decided to try to help build the Fediverse. Basically, we made a small social media website that is not particularly algorithmic, not run by tech moguls, unless you count us, that we called the Forkiverse.

The Forkiverse has taken off with, frankly, much more energy than I expected. And if you want to hear about what's been going on, the micro scandals, the Russian disinformation campaign, the users we've had to ban. We covered it all on today, Friday's episode of the Hard Fork podcast, which I will include a link to in our show notes. Okay, some quick ads, then this week's story. This episode of Search Engine is brought to you in part by Quince.

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One of the well-documented problems with life on Earth right now, mentioned ad nauseum on this very podcast, is that it's very hard to answer the question of what any of us should be paying attention to. The internet, the news, offers so many competing stories, most of them highly emotionally charged, deeply complicated. It's sometimes hard not just to know where to look, but almost like, what exam am I cramming for this week?

What is the topic that I know very little about that I now have to rapidly fashion myself into a pseudo-expert on just to be a citizen? Last year, for me, one of the stories I chose not to dig into was Venezuela. It was there in my peripheral vision. Trump complaining about Venezuelan migrants, actively targeting them for deportation. I noticed, of course, when we launched missile strikes against Venezuelan boats. I could tell something weird was going on.

But this is America under Trump. Lots of weird things are always going on. And I was just more worried about other parts of the front page last year. But then, a couple weeks ago... Our country sent troops to arrest their president and his wife. And Trump announced we were now in charge of Venezuela and that we were taking their oil. And that was the point where I really felt like, okay, I need to understand this.

Not Trump, but Venezuela, this country we just got into a much more entangled relationship with. So I read some books, I talked to some experts, and I have to say, I kind of wish I'd started this earlier, because the history of Venezuela is just... as a story so compelling, so fascinating. So without further ado, I just want to introduce to you the person who will guide us through that story today.

My name is Alejandro Velasco, and I'm associate professor of history at New York University. And what is your relationship to Venezuela? Well, I have two. I have a personal and a professional relationship. I was born and raised in Venezuela, born in a small town called La Victoria, about an hour and a half west of Caracas. Then my family and I moved to Caracas when I was eight.

Which is to say that I root for the Caracas baseball team, which is really important when you think about people's relationship to Venezuela. Who do you root for? Are they a good team? I would say they're the best. But, you know, others may disagree. But then I also study Venezuela as a profession. I am an historian of modern Venezuela in particular.

which is to say the 20th century. And mostly I studied social movements, urban politics, and democracy. And when did you, you left Venezuela for the United States? Yes. So Venezuela has... Just generally speaking, in my entire lifetime, which is not to date myself, but I was born in 1978, that was a moment of, say, peak prosperity for Venezuela. And ever since I can remember, it's been a decline.

And so as a young person in the 80s, there was significant amounts of political and economic instability by the 90s when I was a teenager. that really accentuated significantly. And then by 1994, my parents decided to leave. Alejandro's family moved to the U.S., to Miami. But he would return to Venezuela later, on his own, to study the place.

He wanted to understand the complexities of what had happened there, the complexities that had caused his family to leave. He began his graduate studies in the year 2000, when Hugo Chavez had just entered the political scene. There was simultaneously lots of hope, but also lots of anxiety. But the kinds of questions that were being asked were future-looking questions without any real sense of the previous past.

I wanted to figure out, is there anything that we can learn, not from the distant past, Simon Bolivar or long dead figures, but from the more recent past that could help explain why we were where we were? How do you... This is such a broad question to ask somebody who's gone so deeply into a country, but what do you think makes Venezuela unique? How do you understand it as a country in your own mind?

I guess I don't know that I would say that it's unique. I think that some of the patterns, especially having to do with resource dependency and... the ebbs and flows of what that occasions, both in terms of economy and politics, and then how that, of course, has a broader impact on society as a whole. You know, I think that's more generally patterns that you can find elsewhere. I think what's significant about Venezuela especially in terms of its relationship with oil is that

And I'm not the first one to talk about this. There's a wonderful anthropologist historian of Venezuelan himself, Fernando Coronil, who wrote a wonderful book called The Magical State back in 1997. in which he basically argued that what's particular about Venezuela is that we have this strange relationship with past and future, and oil conditions both. What do you mean? Oil induces illusions.

It induces the capacity to imagine that the future is infinite in terms of possibilities. But it also, in terms of the structural dynamics of oil, induces catastrophe. The way that you get from illusion to illusion is through collective amnesia. You have to forget... the moment of catastrophe that the very state of illusion induced, so that by the time you get to the next possibility of a limitless future, you don't see what's right in front of you, which are...

all the evidence of the failures past. And by that, I don't mean metaphor. I mean, literally, if you, for instance, go to Caracas, you see in various parts of the city, you know, massive... architectural projects that were at one time, usually during boom times, of illusion about a limitless future. And then when the collapse came, They became dilapidated, abandoned, and the people there had to fend for themselves. And you can index the timeline of this tension and paradox.

by looking out into the valley of Caracas. So you're saying, like, if I was in Caracas, like, I would look around and I would see these, like, grand attempted pieces of architecture, like, different moments where there was boom time and somebody was in power and they were like,

this is my vision of the future. They don't work out. They're still there. And part of what makes like, this is a feature of human nature, but you're saying a feature of human nature that gets particularly expressed in Venezuela is like the ability to like, have illusions, have them fail, and just, even if they're in your sightline, block them out and keep believing in the next thing. Completely. Alejandro and I ended up talking for hours.

I found he did the thing I'm always hoping writers can do for me. He both told the story in a cinematic, compelling way, but also along the way, he could explain what it all meant. So that's the conversation I'm going to let play out from here. It is a more dense story than some we tell here, but it's worth it. I'm going to present it to you with as little interruption as I'm capable of, and we're going to break it into two episodes, which is how I heard it.

Hanging over everything you'll hear is this phenomenon that political scientists call the resource curse. Countries with something valuable in their soil, whether it's diamonds, copper, or oil, instead of that resource being a good thing, With very few exceptions, it ends up bringing devastation, a monkey's paw wherever it's found. I've read a decent amount about the resource curse. I thought I understood it, but I'd never seen a resource curse story like Venezuela.

The story of Venezuela is a story of leader after leader using oil wealth to try some of the most imaginative arrangements of government and economy I had ever heard of. The country itself almost like a laboratory for all the different ways you could try to structure a society. Okay, so we're going to start our story in a place I think you have to. Chapter one, oil.

So I want to dive into that history. Right before Venezuela finds oil, what is the country like? The economy, the government, what does it look like in Venezuela? By all accounts, before 1914, when the first oil well begins pumping oil in Venezuela. Venezuela is pretty much a... backwater state in the rest of Latin America. Its primary source of revenue is coffee. It had gone through first the cacao and then a coffee cycle in the 19th century after independence.

There have been efforts at modernization in the late 19th century through enlightened dictatorships. Some incipient efforts at urbanization, at trying to bring immigration from Europe especially. But none of those really took. And most of Venezuela was rural at the time. Its capital city, Caracas, was very, very modestly sized relative to other capital cities elsewhere in Latin America.

And the center of its politics were not in cities, but rather in this region in the Andes, who had had sort of control over the nation's politics for almost 40 years. A dictator named Juan Vicente Gomez, who came from this region, installed himself in power in 1908. was known to speak very little and rule very strongly, speak softly and in folkloric terms. And his vision for the nation...

at the time, when he came to power in 1908, was essentially just to keep things as they are. There was no real vision of progress, growth, modernity. It was under his rule, of course, that oil then begins to become the... This thing that seems like it might be a ticket somewhere, but it's unclear where. And so once people understand the power of oil, what begins to change? What happens? It took a while, right? And so it's not like... 1914, oil gushes out.

everything changes. At the time, of course, you have to remember, it's still unclear what oil is going to do to the world. Right, it's 1914. It's 1914, so it's not a sense, like, for instance, Norway later in the 60s when they discover vast reserves in the Arctic, they're like, oh. well, this is great. 1914, there's still no real sense of what this is going to do to the rest of the world. But really by the 1920s is when you begin to see a...

tremendous insertion of capital from oil companies from the United States, from Britain and elsewhere, right? That it seems to be changing the dynamic of Venezuela.

By the 1930s, and Gomez's dictatorship lasts 27 years, so it really coincides with these first two decades of oil production and exploitation. By the time his dictatorship comes to an end in 1935, it is... unquestionable that oil not only will be the defining driver of Venezuelan economy, but every political faction in Venezuela understands that.

how they were going to relate to oil, how they're going to define oil, will be the hallmark feature of Venezuela's future. And so what does that look like? What does it mean for this one resource to... be so central to the country itself well even at the time which is to say the 1920s and 30s it's not to say that everybody

saw this as an unproblematic or uncritical, simple path towards a kind of future, whether that's going to be modern or something else. As early as the 1920s, intellectuals in Venezuela are sounding some alarms about oil being the excrement of the devil, right? That if we're not too careful, this... thing that seeps seemingly freely from the ground and is viscous and inspires all these visions about

the darkness of the subsoil and what that means metaphorically and spiritually for Venezuela, that this may not be the bountiful resource that we might imagine that might come with some significant strings attached. And so people are seeing this very early, even if it's more like an instinct like just this feeling of like oh this goopy black discharge from the soil that's so valuable like people have a feeling that

This could be a problem. Yes. So there are alarms raised, although they're not generalized. And really, again, what the consensus among Venezuela's political elite and intellectual class, including its cultural elite. who begin to write novels and, you know, poetry and plays and music around oil. They're writing poems to oil? Well, not to oil, but about oil.

and about what it might mean for Venezuela, because it also just becomes a question of culture, more broadly. But again, where you feel the most impact is in the country's economy and politics, as oil becomes this...

fantastic resource and the riches of it come to Venezuela, even though they're indirect because it's mostly owned by foreign oil companies, even though there are treaties that are signed by successive Venezuelan governments. Even that spillover... wealth induces moments of tremendous growth and tremendous riches.

You see that in the 1940s. You see that in the 1950s. There is a real general sense that Venezuela is changing. The cities are growing, that people are leaving the countryside because now there's nothing really there for them. And what's there is... this both, you know, service economy that's rising to support the oil industry, its executives, its immigrants, etc., but also that

We don't want to be left behind, right? And so you have this massive urbanization that happens between the 1950s and 1960s. And in the 1960s, you have the return of democracy in Venezuela after a dictatorship that lasted 10 years and was overthrown in 1958.

Chapter 2, Venezuelan Democracy. Toma el juramento y coloca la banda insignia al presidente constitucional, señor Romulo Betancourt. The first president who becomes democratically elected after 1958's dictatorship is Romulo Betancourt. who had written a book called Venezuela, Oil and Politics. I mean, it doesn't get as more on the nose than that.

And in that book, basically what he argues is that the way in which Venezuela can control its own natural resource is going to inform how its politics can be defined as democratic or not. What is his prescription for... the relationship between how Venezuela controls its own oil and whether or not it's democratic.

In two ways. The first one is we need to exert more control, literal control over our oil. It cannot just be completely given up to foreign oil interests or companies. We have to be able to assert a kind of independence and sovereignty over this resource in a way that it hadn't been. the case in the first decades of the oil industry. Because what you have in the early decades is essentially like dictators making deals with foreign oil companies.

I will violently subjugate people here, and I'll make sure the oil flows. Exactly right. And so, you know, they would give extremely generous concessions to these companies to come and extract oil. And what Betancourt and others came up with was this formula in Venezuela. It's called el 50-50.

50-50. 50% goes to the companies, 50% comes to Venezuela. Let's just split it down in half. That acknowledges that you're putting this tremendous investment, but it also acknowledges that what comes out of the subsoil is ours. But that's... in some ways going to change significantly with the oil shock that is the 1973 oil embargo. Before the oil shock, because it seems like it's kind of a very, I don't want to say utopian moment, but like...

Just paint me a picture of what life looked like when everything was going really right. Well, I mean— Or was it? Is that like a— Yeah, I guess I would temper that a little bit, right? Not— Everything was going better. Whether everything was going really right is more of a subjective question. Even as the political system was stabilized and the democratic system...

really entrenched itself in the 1960s and by the early 70s. There were still those who had not seen the desired effects of this democratic system being able to distribute the wealth of oil. in a way that seemed fair and equitable, right? There were still significant amounts of inequality. And in part, that's also because even though in the 1950s there was a period of oil boom, in the 1960s... coinciding with this incipient democratic experiment, it was also a period of lower oil prices.

those governments, as they were trying to consolidate, also simultaneously were making the discursive promise of greater, more fairer distribution of oil wealth. with fewer resources to be able to distribute. But they did distribute it. They distributed it in the context of building an educational system that eventually became a real envy of many parts of Latin America.

You know, social services that were also increasing in terms of its capacity as well as its efficiency. Building new cities that were meant to extract other resources like steel in the southern part of Venezuela. And building infrastructure beyond just the major cities to try to link up the country. And so there was a palpable sense of progress, but not...

quickly enough to satisfy everyone, right? So it's like, it's too simple to say, oh, like, life was great for everybody. But the more, the truer thing to say would be, like, things were relatively stable. There were a lot of people in Venezuela. for whom life was good, but there were also have-nots. And part of the problem was just in a given year, no matter who's in charge or what their ideology is, what is the price of oil? And so even if you're making promises about fairer...

redistribution, if the price of oil goes down, what you have to redistribute is less, and people who aren't getting anything might not be very patient about that. And that is key, to understand the... balance between dictatorship and democracy in venezuela patience um which is to say one of the things that the boom and bust cycles of oil generates is in moments of bust

the breach between those who have and those who have not accentuates and extends and grows. But then that means that when the next boom period comes, you have a choice to make, whoever is in power. You can either try to close that gap, and you have the wherewithal to do so with petrodollars coming from abroad, but you don't know how much time you have in power. And so the question for you is, do you spend conservatively to try to slowly but concertedly close this gap? Or do you spend lavishly?

what you have coming in, in order to try to be able to secure and close that gap very quickly, and then get the political benefits of having done so, especially in a democratic regime. The problem, of course, is that in a dictatorship, you don't have to worry about what the population thinks. You're just the dictator. You can do whatever you want. In democracy, you have to worry about the ballot box. And so your time horizon for results is much shorter.

Therefore, the incentive, if, for instance, you're in a period of boom, to spend all the money that you're getting right away, and in fact, more even than you're getting right away, is much greater. But of course, then that ties you to the... whims of the international oil market and if a boom comes a bust comes as it always does then you're left holding this bag of not only promises but investments that you can no longer pay it's a very hard country to govern

Exceptionally. We're going to take a short break, and then all the people who've tried to govern this exceptionally difficult place and what befell them. This episode of Surge Engine is brought to you in part by Square. One of the things I love about visiting my favorite local spots, like Cafe Spaghetti and Red Hook, is how smooth everything feels.

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Welcome back to the show. We're in the 1970s now. Venezuela, at this point, has a democratic government, and crucially this decade, the price of oil is going to skyrocket. This is NBC Nightly News, Wednesday, October 17th. Reported by John Chancellor. Good evening. The Middle East war produced developments all over the world today. There will be a series of oil shocks, huge spikes in the international oil price. The first big one is intentionally caused by OPEC.

An alliance of oil selling countries that Venezuela is a part of. The oil producing countries of the Arab world decided to use their oil as a political weapon. They will reduce oil production by 5% a month until the Israelis withdraw from occupied territories. If the Arab countries keep that pledge, it would reduce their production by almost 50% in one year.

This big reduction in oil raises prices precipitously. And later, there's a second oil shock during the Iranian revolution. The revolution craters Iranian oil production.

The 1970s in general, a time that was as economically good for Venezuela as it was bad for the U.S. Here is Alejandro Velasco with chapter three of our story, Petrostate. So my parents are both from Colombia, and they immigrated to Venezuela in the 1970s. In that moment, Colombia was, you know, wracked by civil war. You know, its economy was really in tatters.

lots of instability. And this neighboring country seemed to be doing pretty well, you know, relative to other parts of Latin America where they had dictatorships, civil war, etc. This seemed to be a pretty stable political system where... there were opportunities for economic growth, not just at the level of the oil industry, but really, as we were talking about before.

potentially at the small and middle-sized industrial level. So one of the major challenges of all Venezuelan governments have been to diversify the economy, to make it less completely dependent on this single resource. And the idea is to then direct some of the wealth coming from the oil industry, not just into services and social programs, but rather into productive, alternative, non- hydrocarbons-related sectors of the economy, right? Steel, for instance, was one, but with that, you know,

does is generate other kinds of derivative industries. My father, for instance, he started a company manufacturing nails, screws, bolts, and things like that, which of course then become the thing that literally tie other things together. And so there was a real moment in the 1970s where the government was investing, but that investment was in part also founded on this sense of an illusion about...

limitless future. And what I mean by that is, I'll give you one example. One of the dreams of the president in the 1970s during the oil boom was to have cars made in Venezuela, like have a Venezuelan-made car, like a Venezuelan-branded car. Now, the market in Venezuela does not sustain a locally-made car. Because it's too, just the population is too small? It's too small. Yeah. Especially for the investments required to mount something as large as a car. But of course, in the logic of...

limitless wealth, we can do all of the industry required and all the infrastructure required to create that car. But in order to make sure that people buy it domestically, especially if the competition is Ford, Chrysler, etc. We're going to also have to impose high tariffs on those exports and then basically get people to buy the local car as opposed to the imported car.

But people may not want it because its quality is not assured, right? And so the viability and certainly the profitability of that national car is... tied to a long-term reality that, as we talked about in a democratic context, is really difficult to see bear out. And so...

They tried to start this. First, they tried it through a tractor company. The company was called Fine Attracto. They built the infrastructure, they built the warehouses, they bought the machines, and there wasn't a single tractor that left the production line. before the oil money evaporated god and so you know again these are

You can go and see the warehouse and it's dilapidated. But again, at the time, yes, there were lots of different opportunities and lots of excitement about how to start companies that are not tied to oil, which then creates...

For Latin America, what is a very robust middle class. This is a middle class who is benefiting from access to cheap dollars, and they use these cheap dollars to travel internationally. This is the period of... as you know we remember it in venezuela which is to say it's cheap give me two right and so you like hop on a flight to you know to miami

on a Friday and come back on a Sunday night. And people are just like, they're using cheap dollars to just shop internationally. Shop internationally. But of course, that's at the... individual level, this is also happening structurally. And this is, you know, I don't know how in the weeds you want to get into the dynamics of a petrostate, but— Let's go in the weeds into the dynamics of a petrostate, right? Okay, okay. Into the weeds we go.

So the major problem of a petrostate, it's not just dependency on a single resource which is volatile in an international marketplace. The major problem of a petrostate is that it creates perverse incentives. And so... When, for instance, you have a period of oil boom, especially as massive as the one induced by the oil crisis of the mid-1970s, and Venezuela was just reaping massive amounts of petrodollars.

The incentive to invest those petrodollars in domestic industry... in order to induce import substitution industrialization, which is to say, to substitute our dependence on imports by industrializing our economy so that we can domestically produce what we would otherwise import. The mass availability of petrodollars makes it far cheaper and far quicker to just continue importing. rather than investing those resources in the domestic economy and therefore create a different...

industrial apparatus that could generate independence, economic independence, away from imports. And what you're trying to do, you're trying to convince people, while the dollar is very strong, to... domestically start to make goods that they can get very, very, very cheaply internationally. And it's just like, it's very hard to do that. It's incredibly hard to do that, right? It's sort of like saying, you know what?

You're sitting on a winning lottery ticket. Don't really spend it. Just save. Yeah. I mean, it's in some ways that simple, but the psychology of it is really hard, especially, of course, if you have... you know, country where there's inequality, right? And then the incentive is to spend not on the long-term industrialization that might generate some stability, but rather on the quick...

import that can satisfy the immediate needs of X person at any given time, right? And that translates from anything to, you know, medicine to basic goods. to luxury items like cars or electrodomestics, etc., etc., right? And so the availability of cheap dollars in an oil economy in the midst of a boom

makes the dependency not on oil but on imports all the more pronounced. And that ultimately is the crisis of a petrostate, that the dependence on oil... generates the vast availability of cheap dollars, which then creates an additional dependency on imports, which then when the bust comes, you can no longer buy those imports cheaply and you have nothing domestically to replace it with.

Chapter four, the crisis years of the 80s and 90s. Your family ends up leaving the country. What was your understanding of what was going on? I mean, you were extremely young. What was your family's understanding? Um, so I left when I was 16. And as I said, you know, when we started, you know, you can sort of, this will sound very social scientific, but of course, living it was a different story. You can index, you know, my...

youth and adolescence in terms of successive dramatic moments of crisis. I'll just give you three examples. Yeah. So the first one was in 1989 in February. You were like 11? Yes. And so I was in school. And this was a Monday. My mom had dropped my sister and I off at school.

And suddenly, parents started coming to school pulling their kids out. And you could hear it on the... loudspeakers like you know so and so your parent is here please report to the office to to return home so and so your parent is here please return to the office so and so and it was like one after the other i was like what what is going on and then finally it was my turn like

Alejandro Velasco, your mother is here. Please come to the office to be picked up. And she was in a state of panic. She's like, get in the car now. And like, we'll get in the car and we sort of rush back home. And what had been happening started as a small protest over a hike in public bus fares.

But it was part of this much, at the time I didn't understand it, but part of this much larger structural adjustment package which had been announced by the recently re-elected president who had presided over the oil boom of the 1970s.

And who was elected largely on the promise of returning to that period of oil boom. But of course, with none of the oil boom and with many of the accumulated debts of that earlier period. And so he, even though he had denied... it during the campaign trail, pacted with the International Monetary Fund to get an influx of cash for Venezuela, but with extremely severe conditions for how that cash was going to be used.

social services needed to be slashed public companies needed to be privatized and subsidies to things like for instance public transportation needed to be cut And that was the first thing that happened, that people felt, the Monday that the policies went into effect, the hike in the price of fares. And people started to protest. En todas partes de la capital, grupos de manifestantes se dieron a la tarea de saquear los negocios, especialmente en los centros comerciales donde se diversa índole.

And that protest quickly grew massive and uncontrollable. And then the government first deployed the police, which was... very quickly overrun, and then deployed the military. They called the curfew, and everybody has to stay home. And again, this is all happening during that Monday. This is February 27th of 1989. And so...

We get home, and we don't leave home for two weeks. And during those two weeks, you're trying to watch the news, but you're also at the same time hearing gunfire from the military that's trying to quell these protests. Later on, we discover that what had happened was what the Inter-American Court of Human Rights called a state-sponsored massacre. Hundreds of people died, upwards of perhaps as many as a thousand. Mass graves were discovered later.

Um, and so this really, you know, as an 11 year child, you're like, the only, the primary thing you worry about is like, am I going back to school? Right. Um, but then you realize. Something seems very different. You know, kind of the state of anxiety of my parents, of my friends' parents, of the adults in school. It's very different. That sense of...

a stable country that had enjoyed, even if it was under some kind of economic dress during the previous almost 10 years, that seemed no longer tenable. Example one. Yeah. Example two. So it was 1992 in February also. There's something about February in Venezuela history, which is kind of curious to think about. But again...

You know, early in the morning, this is before I was going to school, but, and my mother obviously has a role in this, she wakes me up very early and says, you got to come and watch what's going on. And so we turn on the television set, and what you see on the image on the screen is this grainy... i mean i know that it seems and weirdly cinematic but that's the way that my mind remembers it it's a grainy image of a military officer

backed by two other ones holding large rifles. And this guy was reading a statement saying that there's a coup that has taken place. We are seizing control over the state in order to bring about... democracy to venezuela which has been trampled by the corrupt regimes that have been in power and that's the first thing and then you start to hear the fighter jets flying overhead And then you start to hear bombs going off. And then you start to see as dawn turns into morning.

um other images come forward and you know this is a very famous image but i remember watching it live which was of this person that at the time none of us knew his name turned out to be lieutenant colonel ugo chavez Who had come out after... surrendering after unsuccessfully trying to take over the presidential palace and arrest the president at the time, Carlos Andres Perez. And he was given this

period of time to speak to the nation, primarily to tell the troops elsewhere that were loyal to him to lay down their arms. But he used the time that he had to also, in a very subtle but extremely effective way. talk about two things. First, why they undertook this coup attempt. And also, to take responsibility for it. And those two things were astonishing to hear, even for me as a 14-year-old, because no one had taken responsibility for what...

By that point, it was very clearly an economic crisis that had come about to Venezuela. Everyone would blame somebody else. Oh, the IMF or the prior presidents or, you know, this person or that person, etc. And here he was saying, I'm responsible for this movement. I take responsibility, accountability for what happens next. This is a movement that is really meant to...

bring about a change that Venezuela so desperately needs. I mean, it wasn't profound, it wasn't dramatic, it wasn't certainly a policy statement, but it seemed to be enough to generate a sense of... don't agree with what happened but the dude's not entirely wrong it's where you like knowing where chavez's story goes you describing that moment it gives me chills it makes me feel the feeling of like

I don't know, like adrenaline or something. Imagine living it, right? So, of course, that was dramatic. The third example happens a little bit later in 1992. This will tell you something else about me. So on November 25th, I believe it was November 25th, Guns N' Roses played in Caracas. Wow. Were you a big GNR? Oh, yeah. I was Appetite for Destruction Day's GNR fan, okay? I'm talking like old school. You know, Roxy Live type situation.

And so this was the first time that Guns N' Roses had played in Latin America. Oh, wow. And it was at the Use Your Illusion tour. Oh, that's a show. It was a show. And so, of course, you know, I did everything that I could to convince my, you know, my mom and friends, like, we gotta go! And God... tickets to go um and then like we organized this like group of us to to get to the concert and you know we went and there's all sorts of

speculation is, is Axel going to show up? Is Slash going to play with his back to the audience? How late are they going to be on stage? All the things. Just eating it up. The show was amazing. Unbelievable. So fantastic. You know, I still get chills thinking about that. So, you know, we basically kind of sleep through the whole next day. And then the day after that, we wake up to another coup.

Pueblo venezolano, en nombre del Movimiento 5 de Julio, les hago un llamado para que salgan a la calle y terminen de derrumbar este gobierno que solo ha dejado miseria para ustedes, a mis compañeros de armas. There's another coup attempting, and this one was far bloodier, far louder, far scarier.

also unsuccessful. But I think for me at that moment, I realized, and I'm sure my parents made the same calculation, which is why even then they started making plans to leave, which we did a couple of years later. This isn't just a flash in the pan. Now we had this thing that happened in 1989, which was eventually known as the Caracasso.

Which, if you think about it in social scientific or historical terms, you can really think that it ruptured the social pact between the government and the population writ large. And then you have the coup of Chavez in February of 1992, which... gives a sense that, okay, the government itself is not stable. And then this additional coup, while Chavez is in jail, right? So clearly, it was a sense not only that the government was unstable, but that...

Anything can happen, and who knows what the future brings. We're going to take a short break. When we return, we arrive at the most formative era in modern Venezuelan history. Hugo Chavez takes over. Could this vintage store be any cuter? Right? And the best part? They accept Discover. Accept Discover? In a little place like this? I don't think so, Jennifer. Oh, yeah, huh? Discover's accepted where I like to shop. Come on, baby. Get with the times.

Right, so we shouldn't get the parachute pants? These are making a comeback. I think. Discover is accepted at 99% of places that take credit cards nationwide. Based on the February 2025 Nielsen Report. This episode is brought to you in part by LinkedIn. If you've ever hired for your small business, you know how much pressure there is to get it right, which is why you need LinkedIn jobs.

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Welcome back to the show. We're now in chapter five, the origin story of Hugo Chavez. So Hugo Chavez was born in 1954. in Barinas, in the plains region of Venezuela. The reason why it's significant is because that's a region known as sort of the heart beat.

of the country it's where most of like the folkloric music comes from some of the folkloric um like literature comes from and so it's it's really a kind of a nationalist core of the country and that deeply informed his sense of self some people have said things like hardscrabble super poor that's not quite the case his parents were school teachers he had

several siblings, and so it's not like they were doing well, but it's not like they were living in misery, right? His upbringing in the 1960s was really just, you know, kind of an impoverished but not miserable in that sense sort of life. Part of what's significant about his biography is that much in the way that...

And I'm not comparing myself to Chavez. But much in the way that I was sort of narrating my own upbringing and life history, both in Venezuela and since I arrived in the United States, there's one that is indexed by these moments. dramatic moments in Venezuelan history, so too was it for Chavez, right? He was born in 1954 during that period of dictatorship that I talked about before, the advent of democracy, but his...

was in the formative period of democracy. When he became an adolescent, he joined the military academy at a moment when the military academy, in the context of democratic stability, had become really professionalized and was seen by many as a pathway towards upward mobility. But also, as somebody from the poorer sectors, popular sectors of Venezuela, you know,

He had interest in the kinds of things that all of us do in Venezuela, which is baseball. And he was actually a standout baseball player and had dreams of becoming a major league baseball player in the United States. And so that's all to say that... Of course, we now remember Hugo Chavez as a kind of stridently anti-American figure. That is not the case, right? There wasn't kind of this breeding animosity.

towards the United States. And that's generally true in Venezuela. Venezuelans are not, by and large, an anti-American population, in part because of this long history of relationship with the United States. He joins the military, and a couple of things happen that are really significant. The first is, as a cadet, he is sent to different countries of Latin America to observe governments and militaries.

He goes to Peru where the military dictator and no relation, Velasco Alvarado, is experimenting with a different approach to military rule than had been the case elsewhere in Latin America, which had been much more... tightly wound around elite control of resources and repression. And more about, well, the institutions of the state are already captured by the elites and the military is the only one that can...

project any kind of social benefit. And so this was more of like a socially conscious military dictatorship. Wait, so the idea is that you have like, the haves are the elites and they're sort of capturing the resources. and the military are going to be a counterweight that stands for the people. Yes, exactly. But then the second thing that happens during that time is that his brother, Adán Chávez's older brother, is a radical Marxist.

He's lining up with the guerrillas. He is very much, you know, in line with the idea that only armed revolution is going to bring us to paradise. And so that's what begins this process for Chavez. And it's in 1982 that he begins this movement called the Movimiento Bolivariano Revolucionario. What does that mean? Revolutionary Bolivarian Movement 200. 200-year anniversary of Bolivar.

Right. And the idea is that, you know, on his 200th anniversary, the vision that Bolívar had for not just Venezuela, but Latin America more broadly will come to fruition and we will be the people who marshal that into reality. So Chavez persuades his followers, people in the military, to read up on these 200-year-old ideas about revolution and a united Latin America. And unlike most book clubs, his goes somewhere. It leads to his famous failed coup.

The one that ends with him live on national TV telling his followers that he's stopping for now. Chavez leaves prison in 1994. Four years later, he uses his new national profile to run for president. He wins.

Chapter 6. Allo Presidente. Ustedes saben que yo lo que soy es un insolidado. Eso es lo que yo soy. Y ahora como presidente de Venezuela. Pues para nada va a cambiar mi condición. ¡Soldado de un pueblo! ¡Hombre de un pueblo! ¡Luchador de un pueblo! ¡Y siempre a todo por un pueblo! Chavez was a gifted communicator, although now we know, not now, we've known for a while, that he also took classes in communications. And...

That was coupled with, as I mentioned before, this really dramatic moment after his failed coup where he goes on television and delivers this message. And so he knew from an early moment that television is... specifically was an extremely important communicational vehicle and medium. And so one thing that he does early in his presidency is he starts this talk show. La Voz de Venezuela presenta Aló Presidente El programa del presidente Hugo Chávez Frías

So every Sunday, it's called Aló, Presidente, to reflect that you could just call up the president, like, Aló? Aló? Aló, Presidente, right? And when the phone lines were open? Initially. Wow. Yes. Not later, but initially the phone rings were open. And this is really, really central to understanding or even trying to understand Chávez, Chavismo, where we are right now in Venezuela. It is not only...

But it is willfully false to suggest that Chavismo was a cohesive political project from the start. primary hallmark of Chavismo is adaptation over time. And so Chavez, at the moment when he's elected, has a particular project in mind, but it is neither socialist nor anti-American. Quite the opposite. His primary vision for Venezuela at the moment was, we are going to expand participatory...

So we're going to try to create mechanisms for people who have felt left out of the political system to have more direct engagement with the political system. And we're going to rebuild state capacity. by rebuilding our oil industry, which in the 1990s had undergone a process of reprivatization, even though it had been nationalized in the 1970s under that period of, you know, oil boom.

And so those were the two primary hallmarks of the early Chavista sort of vision for Venezuela. And so part of the story of Chavez, even in the beginning, is going to be about... his relationship to the country's oil reserves, and the price of oil when he takes power. Can you tell me about that? The price of oil when Hugo Chavez is inaugurated into office in 1999 is $8. Very low.

I mean, I'll give you the contrary example. At the height of peak oil, the price per barrel of oil was around 160. Jesus. So if you think about the difference between eight... And $160, it's a lot. Right now, for instance, if you look at oil prices, they're around $60. The historic average has been between $45 and $50. So $8 is not just low, it is...

And so one of the things that Chavez tries to do in terms of building state capacity by revitalizing, not just revitalizing, but capturing more of Venezuela's oil revenues is... to bring OPEC, that long kind of toothless, yet seemingly very powerful, you know, global cartel together to say to them first, Listen, we have to get this house in order.

En el ingreso petrolero. Y el ingreso petrolero del país depende del potencial de producción, de la capacidad de producción del país y del precio del barril de petróleo. Oil prices do rise somewhat in his first couple of years in office. I think they get up to about $22 per barrel right around 2001. But something...

dramatic changes in the relationship between the United States and Venezuela at that time. And in particular, in the relationship between the United States and Hugo Chavez. Obviously, the attacks of September 11th in 2001 are extremely traumatic for the United States and the world. The subsequent bombing campaign of Afghanistan is a moment when using his communicational skills and access to media, Chavez publicly decries the bombing campaign as a cruel and exaggerated response to a vicious act.

Nosotros apoyamos la lucha contra el terrorismo, pero no se entienda esto como una carta blanca. Of course, the incoming Bush administration is in no mood, and neither, I should say, is the U.S. public at the time, broadly speaking, in no mood to be criticized about their sort of response to 9-11. Clamamos por eso. Lo vuelvo a repetir. Después de más de un mes, aquí lo dije, no se puede responder al terror con más terror.

But what it does is it puts Chavez in the sights of the United States. A few months later, in April of 2002, Hugo Chavez is briefly overthrown after a series of popular protests, all of them having to do with control over the nation's oil company called PDVSA and what it was going to do. do in this moment. That led to confrontations in the streets, which left several people dead, which then induced a coup that ousted Chavez from power.

Then, the United States and the Bush administration openly said, this was great. And we absolutely support this coup. And we're ready to work with the new government in Venezuela. And it's fantastic that Hugo Chavez is no longer in power. But isn't the new government in power for like three days or something? Yes. In the most improbable and truly unprecedented turn of events, Hugo Chavez returns to office within 72 hours. Oops. Oops is right.

And so when he returns, you see all sort of pack peddling on the part of the White House. But really, by that point, I think the damage is not only done, but irreparable. Desde esta misma tribuna, el señor presidente de los Estados Unidos, a quien yo llamo el diablo, vino aquí hablando como dueño del mundo. I think by that point it really convinces Chavez that there's no possibility to think about the United States government as anything other than this kind of, that if anyone steps outside.

of what the US government, especially as a, at the time, a unipolar power in the world, that there's nothing that they won't do to try to countermand that. Que se consolide pues, que se consolide la dictadura mundial. El discurso del presidente tirano mundial, lleno de cinismo, lleno de hipocresía, es la hipocresía imperial.

And then the other big thing that changes is just the price of oil, which, as you said, at the beginning of his presidency was at $8 a barrel. It just shoots up. At one point, it's at $100 a barrel. I mean, it rises as high as around 160. How fast does that happen? So it takes a little bit of time. It really begins to surge after 2003 and the U.S. invasion of Iraq.

That takes a significant player out of the picture, at least for some time. It also, of course, creates instability in neighboring oil-producing nations. But that couples with the rise of China. An industrialization that at the time is going to require massive amounts of natural resources to underpin. So you have this like huge, huge, huge, you both, the supply gets constricted a little bit by the U.S. entering Iraq, but

what you really have is like a huge demand surge because of China. Massive. And so both of these things kind of coincide right around 2003 to induce this massive boom in oil prices. Chapter 7.

Total power. Alejandro says that Hugo Chavez did not immediately use the immense gusher of money pouring out of Venezuela's oil business. There were other matters to attend to. One, the military. While the coup against Chavez had been unsuccessful, it had revealed the members of the military who were disloyal. So he purged them, which meant he now controlled the military.

Chavez also said about bringing Venezuela's national oil company, Pedevesa, completely under his thumb, something no president before him had really done. The entire premise of the national oil company, Pedevesa, after it was... founded in the wake of the nationalization in 1976 was that it was going to run as an oil company, not anything else.

It was going to be free of politics. It was going to provide a subsidy to the state, but its primary mission is only and exclusively to pump oil from the ground and to export it abroad. hopefully generate market share, especially in the United States. Chavez was trying to change that. Chavez was trying to exert actual direct control over the oil industry because the oil executives in PDVSA

were resisting the idea of like, you know, let's cut back on production. Let's not flood the market with oil. And so what he wanted to do was change the governing board of Bedevesa and appoint loyalists to his vision. of the oil company and therefore of the country they resisted that and then the coup happened but then he tried again in late in 2002

And then the oil industry, most of the engineers and all of the executives conducted a lockout. They went on strike. But what it did for Chavez, he had already again purged the military after the coup. What it did is identify very clearly for Chavez who in the oil industry was not supportive. So he fired them. Just to pause on this for a moment, Chavez conducted these firings live on TV.

This was during an episode of Allo Presidente, with Chavez calling out the employees by name and blowing a soccer whistle to celebrate each termination. He fired 18,000. oil industry workers. These were executives, engineers, the people with the most technical know-how, lots of history with the company. Which then meant that to jumpstart...

the company again. He had to find people from other parts of the world and then also train a new cadre of engineers, etc. But of course, now he was doing so in a way that he could refashion the oil industry to serve the vision that he had laid out, which is there's no longer going to be this firewall between the national oil industry and the state.

The national oil industry will serve the interests of the people represented by the state, which is represented by me. And so now the direct flow of petrodollars to... The executive is complete. There is one final part of Hugo Chavez's consolidation of power here. It comes out of a real miscalculation by the opposition parties. The opposition decides in 2005...

to fully sit out the parliamentary elections as a protest against fraud they believe took place in an earlier election. So they boycott the parliamentary elections in 2005, and Chavez says, thank you. Great. If you're giving me the legislature on a silver platter, I will take it. And so unsurprisingly, the legislature elections of 2005 happened. And now Chavez has control over the military.

control over the national oil industry, international credibility, democratic credibility, and control over the Congress just at the time when oil prices are hitting their peak. Just an immense amount of power. It's complete power, is what it is. It is total power, which eventually will be the Achilles heel and the reason why Chavismo fails.

So how does Venezuela go really in just a decade from an oil rich democracy with a popular democratically elected president to just abject disaster? That story continues in our next episode, which will be out. After the weekend. In the meantime, you can read a great article that Alejandro wrote, which is about Chavez and his political movement, which outlived him, Chavismo. We'll have a link in the show notes. We'll see you next week.

Search Engine is a presentation of Odyssey. It's created by me, PJ Vogt, and Truthy Pimentini. Garrett Graham is our senior producer. Emily Maltero is our associate producer. Special thanks this week to Miguel Santiago Colon. Theme, original composition, and mixing by Armin Bazarian. This episode was fact-checked by Piper Dumont. Our executive producer is Leah Reese Dennis.

Thanks to the rest of the team at Odyssey. If you'd like to support our show, get ad-free episodes, zero reruns, and bonus episodes. please consider signing up for incognito mode at searchengine.show. Thanks for listening. We'll see you in a few days. RingCentral will completely transform the way you work. It gives you built-in AI across all your business conversations. Your phone system has an AI receptionist that answers calls 24-7. Your video meetings have AI that takes notes instantly.

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