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 HardFork 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 can't ask. 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 HardFork 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 Mooby. If you're tired of endlessly scrolling through streaming algorithms designed for passive background noise, you need to check out Mooby. 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One of the well-documented problems with life on Earth right now, mentioned ad nauseam 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 don't know, 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 a 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 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 study 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's 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 US 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. And so I wanted to figure out, is there anything that we can learn, not from the distant past, Simón Bolíva or long dead figures, but from the more recent past that could help explain why we were where we were. How do you, when this is such a broad question to ask me, who's gone so deeply into a country, but like, what do you think makes Venezuela unique? How do you understand it as a country in your 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. 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 Coronello, 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. But the way that you get from illusion to illusion is through collective amnesia. You have to forget the moments 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 passed. 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 just 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 a 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. The country is with something valuable in their soil, whether it's diamonds, copper, oil. Instead of that resource being a good thing, with very few exceptions, it ends up bringing devastation, a monkeys paw wherever it's found. 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 the 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 place I think you have to. Chapter 1. So I want to dive into that history. Maybe before Venezuela finds oil, what is the country like, 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. And as well as pretty much a backwater state in the rest of Latin America. Its primary source of revenue is coffee and it gone through first the cocoa and then a coffee cycle in the 19th century after independence. There had been efforts at modernization in the late 19th century through enlightened dictatorships. Some incipient efforts at urbanization and 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 came from this region installed himself in power in 1908, was known to speak very little and rule very strongly, speak softly and in full-chloric terms. And his vision for the nation at the time when it 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 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, yet 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, wow, this is great. Yeah. 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 hallmarked 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 extraments 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, you know, 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. It might come with some significant strengths 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. 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 is political, elite and intellectual class, including its cultural elite, who begin to write novels and, you know, poetry and plays and music around oil and what they're doing, 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 broadly. But again, where you feel the most impact is in the country's economy and politics, as well 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. And 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, it's executives, it's immigrants, et cetera, 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. The first president who becomes democratically elected after 1958's dictatorship is Romulo Tancurth, who had written a book called Venezuela Oil and Politics, I mean, doesn't get as, you know, 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 interest 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 like I will violently subjectate people here and I'll make sure the oil flows exactly right. Also, 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 the 50/50, 50/50, right, like 50% goes to the company is 50% comes to Venezuela. It's just bled it down and half, that acknowledges that you're putting this tremendous investment but it also acknowledges that what comes out of the subsoil is ours, right? So 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 see utopian moment, but like just paint me a picture of what life looked like when everything was going really right. Well, I mean, where was it? Is that like a. Yeah, I guess I would temper that a little bit, right? 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 insipient democratic experiment. was also a period of lower oil prices, right? So those governments, as they were trying to consolidate, also simultaneously were making the discursive promise of greater, more fair distribution of oil wealth, but 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, 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, life was great for everybody, but the more the true 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 fair 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, which is to say, one of the things that the human bus 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 petriot dollars coming from abroad. But you don't know how much time you have in power, right? And so the question for you is, do you spend conservatively to try to slowly but concertedly close to scab, 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 and you do whatever you want. In the 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. Exceptional. 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. 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 US. Here is Alejandro Velasco with chapter three of our story, Petro State. So my parents are both from Colombia, and they immigrated to Venezuela in the 1970s. In that moment, Colombia was racked by civil war. The economy was really in tatters. Lots of instability and this neighboring country seemed to be doing pretty well relative to other parts of Latin America where they had the tear ships of the 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 what that 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 a 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 to just the population is too small, 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 of the infrastructure required to create that car. But in order to make sure that people buy it domestically, especially if the competition is forward, Chrysler, et cetera, we're going to also have to impose high tariffs on those exports and then basically get people to buy the local cars 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 Fanatracto. 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. And so, 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 we remember it in Venezuela, Davarato, Amelos, which is to say, it's cheap, give me two. And so, you'd like cop on a flight to Miami on a Friday and come back on a Sunday night. And people are just like Venezuelans, they're just, 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 petro state, but let's go in the weeds and the dynamics of a petro state. Okay. Okay. To the weeds we go. So, the major problem of a petro state, it's not just dependency on a single resource, which is volatile in an international marketplace. The major problem of a petro state is that it creates perverse incentives. [BLANK_AUDIO] 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 an equality, 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 ex-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, et cetera, et cetera, 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 petro-state 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 then? I mean, you were extremely honest. What was your family's understanding? So I left when I was 16, and as I said, you know, when we started, you know, you can sort of, this was sound very social-scientific, but of course, living it was a different story. Here I can index, you know, my youth and adolescence in terms of successive dramatic moments of crisis, just give you three examples. So the first one was in 1989 in February. So you were like 11? Yes. And so I was in school, and this is a Monday. You know, my mom had dropped my sister and I off at school, and suddenly parents started coming to school, pulling their kids out. You know, and you could hear it on the loudspeakers, like, you know, so-and-so, your parent is here, please report to the office 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, and I was like, what is going on? And then finally it was my turn, like, at Anorolasco, 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. What had been happening was a-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. 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, packed it 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. And that protest quickly grew massive and uncontrollable. 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, was very clearly an economic crisis that had come about to Venezuela. Everyone blames 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." And I take 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 Shava's story goes, you describe me in 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 for 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 and Roses played. I think that I guess. Wow. And this is a huge G&R. Oh, yeah. I was appetite for destruction in the days G&R fan, okay? I'm talking, like, old school, you know, rocksy, live situation. And so this was the first time that Guns and 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 got tickets to go. And then we organized this group of us to get to the concert and, you know, we went and there's all sorts of speculations. Is Axel gonna show up? Is Slash gonna play with us back to the audience? How late are they going to be on stage? All the things, right? Just eating it up. Show is amazing. I believe. 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. Another coup attempt. And this one was far bloodier, far louder and 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 know, you can really think that it ruptured the social pact between the government and the population at 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. We're now in chapter five, the origin story of Hugo Chavez. So Hugo Chavez was born in 1954 in body-ness in the Plains region of Venezuela. The reason why it's significant is because that's a region known as sort of the heartbeat of the country. It's where most of the folkloric music comes from, some of the folkloric literature comes from. And so it's really a kind of a nationalist core of the country. And that deeply informed his sense of self. Some people have said he's a hard-scrabble, super poor. That's not quite the case. His parents were schoolteachers, several siblings, so it's not like they were doing well, but it's not like they were living in misery. His upbringing in the 1960s was just 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 narrating my own upbringing and life history, both in Venezuela and since I write, you know, I say, that is indexed by these 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 youth 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 poor 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 Guachavez as a kind of stridently anti-American figure. That is not the case, right? There wasn't kind of this, you know, breeding animosity towards the United States. And that's generally true in Venezuela. Venezuelans are not by and large in anti-American population, in part because of this long history of relationship with the United States. But 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, Venezuela 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 a socially conscious military dictatorship. 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, then Chavez his older brother, is radical Marxist. He's lining up with the guerrillas. He is very much 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 Moviento Bolivariano Revolucionario Revolutionary Bolivarian Movement 200 and the 200th anniversary of Bolivar. Right. And the idea is that on his 200th anniversary, the vision that Bolivar 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 president in 1994, four years later, he uses his new national profile to run for president. que fue. El capítulo 6, alo presidente. Hola, es un día para la historia. Yo, ustedes saben que yo lo que soy el sol final. Y ahora como presidenta de Venezuela, pues para nada va a cambiar mi condición. O el lado de un pueblo. Un carajo de un pueblo. Chavis fue un comunicador gifted. Aunque ahora, no, no, no, no, no, no. Como known por un poco. Pero él también tomó clases y comunicaciones. Y eso fue comprado con, pues, como he mencionado antes, este monstruo dramática, después de su hijo, donde él fue en televisión, y él le dio el mensaje. Y él fue nuevo desde un último momento, que televisión, específicamente, fue un extremamente importante, comunicador vehicle. Y medio. Y una cosa que él hace, en su presidencia, es que él empezó a tocarlo. R-N-V, la voz de Venezuela, presenta. A lo presidente, el programa del presidente Hugo Chávez-Frias, en vivo. So every Sunday, it's called a lo presidente, to reflect that you could just call up the president. It's like, "A lo? A lo? A lo presidente, right? And would the phone lines were open? Initially. Yes. Not later. But initially, the phone lines were open. Buenos días, señor presidente. Buenos días. Buenos días. Buenos días a tu familia. Hola. Estoy tan emocionada como el día que yo vota. Bueno, que Dios te bendiga saludos a tu familia, y viven en el valle, ¿en qué parte? En San Antonio. En San Antonio. En San Antonio, tú sabes que yo. Y esto es realmente central para entender, o para intentar entender, Chávez, Chavismo, donde estamos ahora en Venezuela. Es. no solo no acuerda, sino que es. "Wilfully false" para su suggest que. Chávez, fue un cohesivo político de la vuelta. El primer marco de Chávez, es adaptación sobre el tiempo. Y así, Chávez, en el momento, cuando él es electo, tiene un particular proyecto en el mind. Pero es. Socialist, nor anti-american, quite the opposite. Su primer visión para la Venezuela, en el momento, fue. "We are going to. expand participatory democracy. 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 which, in the 1990s, had undergone a process of re-privatization, 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 Chavistas revision for Venezuela. And so, part of the story of Chávez, even in the beginning, is going to be about his relationship to the country's oil reserves power. Can you tell me about that? The price of oil, which Chávez 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. So, have you think about the difference between 8 and 160? That oil price is there around $60. The historic average has been between $45 and $50. So, 8 is not just low. It is reasonably low. And so, one of the things that Chávez 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 useless, yet seemingly very powerful, you know, global cartel together to say to them first. Listen, we have to get this house in order. The oil price is due 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 Venezuela at that time. And in particular, and the relationship between the United States and Venezuela at that time. Obviously, the attacks of September 11th in 2001 are, you know, 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. Chávez publicly decries the bombing campaign and it's a very bad news. And it's a very bad news. 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. [LAUGHTER] In the most improbable and truly unprecedented turn of events, Chavez returns to office within 72 hours. Oops. Oops, it's right. And so when he returns, you see all sort of packed pedaling on the part of the White House. But really, by that point, I think the damage is not only done but irreparable. [SPEAKING SPANISH] 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 at the time, a unipolar power in the world, that there's nothing that they won't do to try to contraband that. [SPEAKING SPANISH] And then the other big thing that changes is just the price of oil, which, as you said, at the beginning of his presence, he was at $8 a barrel. It just shoots. 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 US 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 huge, huge, huge-- you both-- the supply gets concerted a little bit by the US 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 order prices. Chapter seven, 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. Even the military. While the coup against Chavez had been un-successful, it had revealed the members of the military who were disloyal. So he purged them, which then 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 and to 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 Pedevesa were resisting the idea of, let's cut back on production, let's not flood the market with oil. So what he wanted to do was change the governing board of Pedevesa and appoint loyalists to his vision of the oil company and therefore of the country. He resisted that and then the coup happened, but then he tried again in late 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 perched 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 connected these firings live on TV. This was during an episode of Aloe Presidente with Chavez calling out the employees by name and blowing a soccer whistle to celebrate each termination. Offside, no, they are committed to the country seriously, with the country we are and especially with the country we are going to do, with the country we can be a great country to be in Venezuela. He fired 18,000 oil industry workers. These were executives, engineers, 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 petro-dollars 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 in 2005 happen. 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. It is 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 Chavez 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's where he 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, Chabismo, while the link in the show notes. We'll see you next week. Forge Engine is a presentation of Odyssey, created by me, P.J. Vote, and truthy Permanaining. Gary Graham is our senior producer, Emily Maltaire is our associate producer. Special thanks to speak to Miguel Santiago Cologne. Theme original composition and mixing by Armand Bizarrian is observed as fact-checked by Piper Dumont. Our executive producer is Leah Reese-Dennis, thanks to the rest of the team at Odyssey, Rob Morandi, Craig Cox, Eric Donnelly, Kong Gainer, Mora Curran, Josephine Francis, Kurt Courtney, and Hillary Shaft. 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 search engine.show. Thanks for listening. We'll see you in a few days.