It’s All About Oil. Part II … Venezuela

April 4, 2009

The more things change, the more they stay the same.

mapscaor

Venezuela.  This is an interesting tale of a Latin American coup that failed. It was a garden variety coup like the failed Indonesian coup of 1958;  certainly not as horrifying as the 1965-1999 massacres and land grabs in Indonesia and East Timor, but definitely instructive in its political architecture.

Moreover, the cast of characters and their methods never really change. Breathtakingly, American political operatives are able to set policies, carry them out and then step back into the comfort and riches of defense contracts and think tanks.

The more things change…

Will Obama, President Fauxgressive, be any different?  So far, I’m thinking: NAAH!

Perhaps the most important thing to know about Venezuela is that it is an oil exporting country, the fifth largest in the world, with the largest reserves of conventional oil (light and heavy crude) in the western hemisphere and the largest reserves of non-conventional oil (extra-heavy crude) in the world.

Thus begins Gregory Wilpert’s 2003 article concerning the politics of Venezuelan oil and the April 2002 coup that briefly ousted President Hugo Chavez.

Venezuela’s oil boom years encompassed 1912-1943. Standard Oil and Shell Oil were the first companies to drill on Venezuelan soil. Things changed in 1943 with Venezuela’s  Hydrocarbons Act which declared that no foreign oil interest could make more profit on Venezuelan oil than the Venezuelan state. Oil revenues increased.   However, as oil production rose, other parts of the economy suffered and the populous became more dependent upon state services provided by oil revenues rather than income taxes.

In the 1950’s large international surpluses of oil (especially in the Middle East) drove  prices to record lows, causing social instability in a nation economically dependent on one resource. So

In 1960, the world’s main oil exporting countries, largely due to the prodding of the Venezuelan government, decided to form the Organization of Petroleum Exporting Countries (OPEC). Also in 1960, Venezuela created the Venezuelan Oil Corporation, which later formed the basis for the nationalization of Venezuela’s oil industry.

Political stability in a petro state necessitated a “pacted democracy” which guaranteed proportional access to state produced wealth by oligarchs of both parties regardless of which was in power.

Sound familiar?

The 1973 embargo of Middle East oil had a huge impact on Venezuela, quadrupling its oil revenues. By 1976 the country moved to fully nationalize its oil industry with the creation of Petroleos de Venezuela (PDVSA). PDVSA outsourced many of its general operations, including accounting and information technology.

The government promised to “sow the oil”, raising all boats in a nation coasting on oil. The article cited above also points out:

Critics of the nationalization process, such as Carlos Mendoza, say that the newly nationalized oil industry was nothing more than a Trojan Horse. Venezuela’s oil industry maintained an anti-statist and transnational corporatist management culture throughout its existence. The ties to the former owners of the nationalized Venezuelan companies were maintained primarily through technical assistance contracts with the former owners and through commercialization contracts, which heavily discounted the price of oil to their former owners.

By the 1990’s the world’s over-supply of oil had, once again, plunged Venezuela into the economic doldrums.

Hugo Chavez was elected by popular referendum in 1998. Almost immediately, Chavez pressured members of OPEC and the non-OPEC producers to hold the line on production quotas. When Chavez moved to replace the PDVSA board with other technical resources, PDVSA joined a work stoppage against the government. More from the article cited above –

Perhaps the most important instance of outsourcing, in terms of the management of PDVSA, is the joint venture it engaged in with the U.S.-based company SAIC (Science Applications International Corporation) to create INTESA (Informática, Negocios, y Tecnología, S.A.) in 1996. INTESA was to manage all of PDVSA’s data processing needs.

A recent investigation into INTESA, and especially into its majority owner SAIC (60%), revealed some information that ought to be quite disturbing to the government of Hugo Chávez. That is, INTESA, which controlled all of PDVSA’s information, is in turn controlled by SAIC, a Fortune 500 company … that is deeply involved in the U.S. defense industry, particularly as it relates to nuclear technology, defense intelligence, and computing technology. Its managers included two former U.S. Secretaries of Defense (William Perry and Melvin Laird) and two former CIA directors (John Deutch and Robert Gates). Its current Board of Directors includes the former commander of the U.S. Special Forces (Wayne Downing), a former coordinator of the National Security Council (Jasper Welch), and the former director of the National Security Agency (Bobby Ray Inman)           (italics mine).

Recall that Robert Gates served in the Reagan and Bush II administrations. He now serves President Barack Obama’s as Defense Department chief.

The government moved from taxing oil industry profits to charging royalties, making oil extraction more expensive. Chavez also re-directed Venezuelan oil supplies to non-U.S. buyers.

Then in 2002 came the attempted coup.

2002 Venezuelan coup d’état attempt

The Venezuelan coup attempt of 2002 was a failed coup d’état on April 11, 2002 that lasted only 47 hours, whereby the head of state President Hugo Chávez was illegally detained, the National Assembly and the Supreme Court dissolved, and the country’s Constitution declared void.

Venezuelan Federation of Chambers of Commerce (Fedecámaras) president Pedro Carmona was installed as interim president. In Caracas, the coup led to a pro-Chávez uprising that the Metropolitan Police attempted to suppress. Key sectors of the military and parts of the anti-Chávez movement refused to back Carmona. The pro-Chávez Presidential Guard eventually retook the Miraflores presidential palace without firing a shot, leading to the collapse of the Carmona government and the re-installation of Chávez as president.

The coup was publicly condemned by Latin American nations (the Rio Group presidents were gathered together in San José, Costa Rica, at the time, and were able to issue a joint communiqué) and international organizations. The United States and Chile quickly acknowledged the de facto pro-US Carmona government, but ended up condemning the coup after it had been defeated.

And more from Gregory Wilpert in his 2003 article:

Matters reached a boiling point in April 2002 with the coup d’etat against Chavez Frias which surprisingly lasted only two days as millions of Venezuelan poor came to his defense. The 48-hour usurper, Carmona, moved almost instantaneously to turn around ChavezFrias’ Bolivarian policies and consolidate what amounts to an “oiligarchy.” Within 48 hours, he dissolved the parliament and the supreme court, dismissed all mayors and governors, stopped the shipment of oil to Cuba, and started a massive wave of repression across the country. But there is more…

According to the British paper The Observer

… one of those giving the nod to the attempted coup was Elliot Abrams, a member of the Reagan team involved in the dirty wars in Central America convicted over actions during the Iran-Contra Affair. He was later pardoned by George Bush, Sr. Another coup advocate was Cuban, Otto Reich, assistant administrator for USAID 1981-1983 and named ambassador to Caracas in 1986.

There it is again, USAID. For those of you who doubted USAID, a benevolent agency of the U.S. government, might be converted to covert uses, enjoy the view.  My previous post noted that Ann Dunham Soetoro was engaged in “microfinance” with USAID in Indonesia in the 1970’s and 1980’s  — during one of the worst human rights atrocities of the century — and perhaps Pakistan in the 1980’s.

Next step:  let’s see what the World Bank, Ford Foundation, Rockefeller Foundation and East-West Center, University of Hawaii, were up to.

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