The country has more oil than Saudi Arabia, yet the majority of its citizens live in poverty. Venezuela’s history is instructive, even for Europeans. When demand for oil rose during the Second World War, the country benefited from its location outside the military conflicts in Europe and Asia to such an extent that in the 1950s it ranked fourth in the world in terms of GDP per capita.
It is noteworthy that this success was achieved under the dictatorship of Jimenez, which refutes the theory that dictatorships of any kind are bad for the economy. Jimenez created a healthy coexistence between foreign corporations and his state: large companies such as Exxon Mobil and Shell brought their technologies and expertise and received 50% of the profits in return, with the other half going to the state treasury.
| Country | GDP per capita in 1950 |
| USA | 9 500 $ |
| Switzerland | 9 000 $ |
| New Zealand | 8 500 $ |
| Venezuela | 7 500 $ |
| Australia | 7 200 $ |
Source: IWF
When the Arab producers united in OPEC raised prices during the oil crisis in the 1970s, Venezuela was flooded with petrodollars (incidentally, OPEC was Caracas’ initiative). Government revenues rose by 300% between 1972 and 1974! However, the “democrats” who ruled after the fall of Jimenez did not think about the future: instead of building up reserves for a rainy day, such as the Norwegian state pension fund, they spent everything. Although the standard of living in the country rose and the education system was developed, the economy was completely “channelled” into oil production instead of being diversified, as the countries in the Persian Gulf are currently doing. At the same time, the ruling Democrats around Pérez made numerous other mistakes: for example, they embarked on a course of neoliberal austerity policies. When it came to austerity, they resisted the notorious IMF, which tried to impose its will (i.e. that of the US government) on Venezuela, as it did on many other countries around the world. Incidentally, Pérez aptly described the IMF as a “neutron bomb” that “kills people but leaves buildings standing.” Later, due to falling oil prices on the world markets, Pérez privatized state-owned enterprises, subsidies and price controls for public services were abolished, and oil prices were liberalized, which was intended to satisfy the IMF and enable new loans from major Western banks. However, foreign debt hardly decreased, but fuel at petrol stations and public transport prices became significantly more expensive.
Although Pérez was partly neoliberal, he belonged to the National Socialist Party and opened the door to the greatest plague in the world – socialism. And, of course, this did not happen without bloodshed, but with mass protests against his policies, the deployment of the army against its own people, and military coups in which thousands were killed. Extremists naturally emerged victorious from the battles: the Marxists led by Hugo Chávez, the supporters of the Bolivarian Revolution. And lo and behold: while the country had been doing well after the Second World War, despite being ruled by a military junta, its steep decline began with the government of an officer who had been infected with Marxism.
The large corporation that was created by the nationalization of oil companies under Pérez in 1976, which deprived foreign corporations of control over resources (in an effort to achieve self-sufficiency), PDVSA (Petroleum of Venezuela), began investing in infrastructure and technology in the 1990s when oil prices rose again. Once again, foreign companies were allowed to cooperate, contributing capital and technological solutions. This made it possible to produce oil cost-effectively even in old, inefficient fields. As long as PDVSA was independent of politicians, invested in refineries abroad in order to process Venezuelan oil (which was of poor quality) effectively, and performed well on the stock market, the entire post-war system continued to function efficiently. However, Chávez did not like the fact that the company’s lower profits due to investments were making the state coffers in Caracas poorer. He turned PDVSA into a wholly state-owned company, filled it with his own people, and made it ineffective, inefficient and unprofitable. This was also the fate of almost all companies in the former Soviet bloc that were taken over by the state.
Chavez’s policies were met with massive protests because he dismissed over half the workforce of the company that fed the state. The protests (supported by whom? – take a guess) led to Chavez even being arrested in 2002. George Bush triumphed and Donald Trump now wants to follow in his footsteps. But then Chávez returned to power and ruled for so long that he had to name his successor – Nicolás Maduro.
The two men – Chávez and Maduro – ruined the country. PDVSA had consolidated revenues of $96.2 billion in 2007. In 2015, it was barely $12 billion. Not to mention the decline in GDP per capita over the last two decades! Inflation rose from an initial level of 40% in 2013 to over 250% in 2016. Was that when Western sanctions began in order to stop the president? No way! It was to take back the resources!
We do not want to burden you any further with a historical description of the defeat of the Venezuelan socialists/Marxists. There is too much to write about. It suffices to mention a few facts and figures to illustrate the outcome of decades of left-wing governments: Over the past 20 years, Maduro has carried out a complete expropriation of businesses and citizens, the economy is practically non-functional, inflation has risen to an absurd level of 1.3 million per cent, oil production has fallen to World War II levels, foreign assets have been seized by creditors, there is a shortage of food and medicine in shops and pharmacies, and almost 3.5 million Venezuelans have left the country.
Only the USA has the military capability to take over/occupy the country/resources/beautiful piece of nature in South America. War is always waged in the name of something. This time, it is in the name of the fight against drugs and, of course, against dictatorship. If the Russians or Chinese had such an opportunity, they would have seized it immediately. The armed forces have already been sent to the Caribbean.
