On January 29, Venezuela’s acting President, Delcy Rodríguez, signed a law that opens Venezuela’s oil industry to privatization. With the stroke of a pen, Rodríguez signed, not only the law, but the death certificate of a decades old Latin American dream.
In 2007, Hugo Chávez, the democratically elected President of Venezuela, completed the nationalization of Venezuela’s oil industry that had begun in 1976. Chávez promised Venezuelans that his “government is here to protect the people, not the bourgeoisie or the rich”. With that promise, he nationalized the electricity, telecommunications and steel industries and ensured that the profits from Venezuela’s resources go to essential services for Venezuela’s people. Most importantly, the president of this hugely oil rich nation completed the nationalization of the oil and natural gas industries that had mostly been controlled by American corporations.
But Chávez’s reforms in Venezuela did not come out of nothing. They were an important modern evolution of a decades old Latin American dream.
Venezuela’s first constitution declared that “because governments are constituted for the common good and happiness of men, society must provide aid to the destitute and unfortunate.” Mexico’s 1917 constitution set out the blueprint for how that would be done. The nation’s land belonged to the nation. As Greg Grandin explains in America, América: A New History of the New World, though land could be granted as private property, everything under the land would be socialized. The constitution states that the nation has the right to limit private property “as the public interest may demand” and the right to “regulate the development of natural resources, which are eligible for expropriation in order to conserve them and equitably to distribute the public wealth.”
This would be the blueprint to ensure that the people, and not foreign powers, would benefit from their own natural resources. This would be the blueprint for how Latin America would find the revenue to finance the vision of a social democracy that would provide essential services and provide aid for all, including “the destitute and unfortunate.”
Although Mexico was the first to fully flesh it out, the concept itself wasn’t new. Grandin points out that Haiti had already prohibited foreign ownership of land, Colombia had claimed for the nation public ownership of the oil beneath the public land and Bolivia mandated state ownership of all territory with oil. Soon, much of Latin America had constitutions that enshrined the idea that the wealth of the land belonged to the people of the nation, and that resource sovereignty would finance social services for the people. In 1937, Bolivia became the first Latin American country to formally nationalize the oil industry, followed one year later by Mexico.
Nicaragua’s José Santos Zelaya would insist that U.S. companies in Nicaragua honor their agreements. Fidel Castro introduced agrarian reforms and nationalization policies. In the 1950’s, Guatemala’s Jacobo Arbenz redistributed the 20% of Guatemala’s land that United Fruit owned so it could benefit the people of Guatemala. A decade later, in Brazil, João Goulart would advocate for reforms that would transform the land into a resource that benefited the people of Brazil. A decade after that, Chile’s Salvador Allende would nationalize copper mining as well as the Chilean Telephone Company, which was 70% owned by the American telecommunications giant ITT. In the next decade, Ecuador’s Jamie Roldós legislated that profits from Ecuador’s oil resources had to benefit the people of Ecuador and informed foreign oil companies that they would have to leave if their activities did not adhere to this. Panama’s Omar Torrijos and Manuel Noriega would demand Panamanian control of the Panama Canal.
Then came Chávez, who would be followed on the nationalization trail by Honduras’ Manuel Zelaya– who would refuse to privatize his country’s telecommunications industry– and by Bolivia’s Evo Morales, who insisted that mining of his country’s lithium had to be done in equal partnership with Bolivia’s national mining company.
Chávez kept his promise to the people who elected him. Venezuela’s oil yielded resources that went to the social welfare of Venezuelans. Poverty and unemployment were impressively and rapidly declining in Venezuela, as were the wealth gap and economic growth.
Many factors contributed to the end of the success of that program, but U.S. sanctions on Venezuela were the most significant. According to Mark Weisbrot, co-director of the Center for Economic and Policy Research, Trump’s 2017 sanctions rapidly accelerated the decline in oil production. In the first year, production would drop by 700,000 barrels a day, causing crippling losses in revenue.
Following the capture of Venezuelan President Nicolás Maduro, the Trump administration recognized his vice-president, Delcy Rodríguez, as the acting president of Venezuela. But Rodríguez was acting with a gun to her head. Trump warned that the U.S. is “ready to stage a second and much larger attack if we need to do so” and that if Rodríguez “doesn’t do what’s right, she is going to pay a very big price, probably bigger than Maduro.” There are even unconfirmed reports that when the U.S. captured Maduro, they gave the interior minister, the congressional president, and Rodríguez “15 minutes to respond, or they would kill us.”
Then, only days after Rodríguez told oil workers that it was “enough already of Washington’s orders over politicians in Venezuela,” she signed the law that gave into Washington’s demand to essentially privatize Venezuela’s oil industry. In what The New York Times called the return “to an era of gunboat diplomacy,” the legislation gives private companies control over the production and sale of oil and caps income tax and royalties. It also transfers any disputes from Venezuelan courts to independent arbitrators.
In an ironic political twist, while the Maduro regime signed the law demanded by the United States, Maria Corina Machado, the radical opposition figure who has long advocated for privatization of her country’s oil industry and inviting in American companies, seemed to undermine it. Asked about the new law, Machado said that since she does “not recognize the National Assembly as a legitimate power…. whatever comes from that National Assembly has no legality.”
She may be right. Not because the National Assembly that passed the law has no legitimacy, but because it passed the law under threat. With the passing of the law, the Chavismo dream died.
