This is a
somewhat long article in today’s El Nacional (page A-9), since it is quite
interesting and goes right to the spirit and origin of the title of this blog
and most people don’t have access to El Nacional, I thought it was worth translating.
A true enemy by Ibsen Martinez (My subtitle: The Devil’s Excrement revisited)
What the hell
does oil have that it poisons? This is the question that many Venezuelans,
Indonesians, Nigerians Algerians, Mexicans and Iranians born in the XXth. century
have asked themselves at some point, without finding an answer.
devote yourself to study OPEC” said Juan Pablo Perez Alfonzo (The Venezuelan
lawyer considered to be the “father” of the cartel of producers), to the US researcher that interviewed him one
day in the seventies. “Opec is a boring matter-he added- You should study
preferably what oil does to Venezuela; what it is doing with all of us”
paradox of the petrostate-archetypical of the rich country, according to modern
imagination-lies in its inability to deal with the turbulences that windfalls
bring win time, and in their propensity to flog its citizens with all sorts of
misfortunes. The most painful and ironic of all of them being extreme poverty.
from the fruits of her labor, Terry Lynn Karl, fruitfully followed the advice
by the father of OPEC. In 1997, the University of California at Berkeley published her book “The paradox of plenty: Oil booms
and petro-states”. (Not available yet in Spanish). This book can be
read as a physiology of the petroleum state, understanding the latter, as a
very special case of the mining states.
In a little
cited chapter of The Wealth of Nations,
Adam Smith called attention for the first time, about the specific differences that
make mineral wealth a class of wealth in itself. What Karl has found,
throughout research carried out over a decade shows additionally, how
petro-states not only do not share the characteristics of mining states, nor
those of manufacturing or agricultural countries of the industrial or developed
world, whose products are not limited, nor are as “intensive” in capital, nor
are so dominated by external variables, as is the case with oil.
erected themselves, obviously, over what was there before the oil industry
appeared in those nations. In the majority of cases, the oil industry
encountered the same thing that, around 1911, was found in Venezuela, a legacy of institutional weakness
and of extreme administrative laxity. It can be said, that at the beginning of
the XXth. Century, after almost a century of cruel internal wars, when the
first advanced parties of oil exploration arrived in our country, the modern
Venezuelan state had not begun to take shape. The oil industry gave it, in
great measure, its definite shape, whether good or bad.
The way in
which the states “earns its living-Karl tells us-is decisive in its patterns of
industrialization”. But, it almost never fails, that the way in which the state
collects its resources, creates incentives as well. Sometimes these can be unimaginable,
as they impose preferences on the Governments when it comes time to
“redistribute”. And with them, perverse restrictions are created to the
available policies to fight poverty, for example, or insure education and free
health care for the population.
In the case
of petrostates, everything that would be bad on its own, gets worse because the
way in which they “earn their living” is exposed, on top of that, to a
circumstance inherent to the nature of the oil business itself: the cycles, the
alternation of booms and the dry spells.
Venezuela has gone through various booms. Prof. Karl analyzes
the two most recent ones, that of 1973, that followed the oil embargo decreed
by OPEC (?) and the one that followed in 1983. Today, many Venezuelans accept
that it was corruption, rampant in those years of the “Saudi Venezuela”, which was
the overwhelming cause for Hugo Chavez’ ascent to power.
focused her analysis on the performance of Venezuela during the booms of 1973 and of
1983, to compare it with the other oil exporting countries subject to the same
pressures and temperatures that a boom in the price of oil can introduce in the
economic system of a petrostate.
Some of the
petrosates considered by Karl are members of OPEC, most of which arose from the
decolonization process that followed World War II, such as Indonesia, Nigeria or Algeria. Others are Hispano-American, born
at the beginning of the XIXth. century like Ecuador. Karl considers also the performance
of a non Arab Islamic nation, as is the case of Iran. The result? Different countries,
different social and economic structures, different cultures and the same ills.
And the same inept answers with equally paradoxical effects of indebtness and
discerns two “conducts” that petrostates follow in periods of windfall. One
pertains to the jurisdiction and authority of a petrostate, that all petrostates
that go thorugh a boom tend to expand their jurisdiction, to find new areas of
“competence” where they exert their action in deficient fashion. Or where they
refuse to move aside, as long as they can neutralize economic agents.
rulers fall with frequency in a manic phase and come ask their citizens to give
them special powers to allow them to surround the historical inefficiencies of
the petrostate, in order to better confront the happy contingency of a boom.
Thanks to the windfall, we can now do everything; as a consequence, everything
must be done. Thus, there appears, without order or coordination, new competences,
new jurisdictions, new agencies.
those petrostates, those competences, jurisdictions and agencies fight bloody
battles for the control of the huge resources, battles which weaken even more
the institutional fabric and favor the concentration of powers, the legal
vacuum and last, but not least, corruption.
of the reactivation of the economy by President Chavez immediately after his
victory in the recall referendum last August 15th, contemplated the
creation of a new state airline, and of various new ministries in charge of “social
programs”, one of which changed names and Minister in less than 48 hours. Car
sales have grown in surprising fashion, so have the sale of private airplanes
and the real state registry contains transactions for amounts unheard of in quite
a long time.
poverty, between 2000 and 2003, without strident populism, nor a belligerent nationalism,
Chile reduced poverty in 1.8% to reach 18.8% (since 1990 it has gone down 50%),
while Venezuela is the country in Latin America where poverty is growing the
fastest and according to the Catholic University Andres Bello, there are today
two million more people in poverty than when Chavez was elected President. In Venezuela, social policies limit themselves
to spending money with a clientist propagandistic criteria and huge
assistential inefficiency. All of this at the same time that PDVSA, the country’s
state company announced revenues of US$ 30 billion in 2004 alone.
foresee in the current increase of conspicuous consumption in Venezuela, the birth of a new caste of millionaire
contractors associated with public expenditure and reminiscent of the Saudi Venezuela
that followed the boom in prices in 1973. Is the so called “bolibourgeois”. The
“diplomacy of crude” inaugurated by Venezuela in the English speaking Caribbean region during the times of all-powerful
Carlos Andres Perez is experiencing a resurgence. Lately, the demential
largesse of the Venezuelan Government is directed towards the Southern Cone and
it has taken it to buy Argentinean debt or finance a sub regional TV channel.
conduct that a petrostate undergoing an oil boom displays, is to appeal to
international credit to avoid the conflicts that collecting taxes at a time of
a windfall entails. These bond issues of the country are backed by oil revenues
and are justified as operation with little risk “because we have oil for quite
a while”. It happened in Venezuela in past booms and is happening again.
The book by
Prof. Karl ends with a comparative study between the performance of those countries
mentioned and that of a relatively poor European country, but one which is
institutionally mature, and that has been able to confront the discovery of a
sudden oil richness, without being catastrophically affected by it, like we Indonesians,
Nigerians, Algerians and Venezuelans have: Norway.
seems relevant when one thinks that despite the political cataclysm that
overcame Venezuela in 1998, and despite the official rhetoric,
the populist petrostate, monstrously inept and monstrously corrupt that Chávez fought
only to inherit it, is still alive.
Venezuelan petrostate, unscathed in the middle of the boom we are undergoing –
the most sustained one of the last fifty years- with its sequel of wastefulness,
of subsidized ineptitude and of corruption is, perhaps more than yanqui imperialism,
the true threat and the true enemy of the Bolivarian “revolution”.