Energy

What Makes a Revolutionary?

How oil made Venezuela a graveyard of change

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"The king is the slave of history"—Leo Tolstoy

Speaking before a crowd of loyal supporters in his home state of Barinas, Venezuelan President Hugo Chávez announced on October 2nd that his "Bolivarian Revolution" is nearing the end of its adolescence.

"Tighten your belts because you are about to face a red avalanche," Chávez warned, "We are entering a new era of the revolution…"

Venezuelans will head to the polls on December 3rd to choose their next President, though as of right now, less than two months before the first vote is cast, Chávez seems destined for re-election. Polls consistently show the Venezuelan President with a commanding lead over the opposition candidate, Manuel Rosales, even though Chávez has spent more time in recent months conducting diplomatic missions abroad then campaigning at home.

When Chávez was first elected in 1998, he represented a radical departure from the country's political establishment. Since the 1960's, Venezuela had been governed by two main political parties that cooperated with each other in a systematic attempt to discourage the emergence of third parties. With his unlikely ascension to the presidency, Chávez promised that he would change Venezuela's political system, that he would end the reign of the country's entrenched political oligarchy and govern in the name of the poor and forgotten.

He promised revolution, and after 7 years in office, his supporters say that he has delivered.

The truth, however, is that revolution is complicated, and so is the political process currently underway in Venezuela. While Chávez has certainly ended the reign of the country's former political elite, much of his government's domestic policy seems to be less the product of radical and innovative planning than it is the worst case of history repeating itself.

In her groundbreaking book The Paradox of Plenty, Stanford political scientist Terry Lynn Karl studied the effects of the 1970's oil booms on oil exporting countries the world over. Paying special attention to Venezuela, but also touching on the development strategies of other nations such as Iran and Algeria, Lynn Karl noted that even though these countries had been the recipients of the largest recorded transfer of wealth not to involve a war, decades later they were still plagued by poverty and antiquated infrastructure.

She eventually concluded that the reliance of petro-states such as Venezuela on a single export influences and shapes various aspects of the state, from regime type to the course of public policy, and often warps them in damaging ways. During the 1970's, with Venezuela awash in oil money, then President Carlos Andres Perez engaged the country in an ambitious populist program, nationalizing the oil industry and condemning the agents of international finance and globalization as "genocide workers in the pay of totalitarianism." When the 70's boom came to an end, the massive social welfare programs that Andres Perez had implemented proved largely untenable, and Venezuela experienced two decades of economic stagnation and political frustration that were capped by Chávez's election in '98.

"It's certainly happening all over again, isn't it?" Lynn Karl told me in a recent interview. "The way Venezuela is set up, the way most petro-states are set up, is that oil revenue goes directly to the executive branch, thus falling under the power of the President."

And when the price of oil is high, petro-state presidents are able to spend freely and without oversight. The entire process lends itself to the centralization of power and the undermining of the liberal institutions that are necessary in a stable democracy. In moments of astronomically high oil prices, a president is able to exercise power without building consensus amongst the state's various actors.

"Petro-state booms encourage populism and centralization because the state has more resources, more power," says Francisco Rodriguez, who headed the Economic and Financial Advisory Office of the Venezuelan National Assembly from 2000 to 2004, and now teaches at Wesleyan University in Middletown, CT. "High oil prices are a pre-condition that make populism possible in a petro-state; it is very difficult to have populism with low prices. What an oil boom does is make it so that the state doesn't need other groups. When Chávez came into power, he had to negotiate because the price of oil was low; he came in speaking as a much more moderate politician. When the state is running out of resources, the state needs the private sector, and the need for those alternative sources of resources implies that they can't take a confrontational stance."

Petro-states play by different rules than the rest of the world. While to the outside eye, the Venezuelan political process might appear a radical break from the past, the truth is that there is nothing revolutionary in funding massive social welfare programs with oil revenues. In the case of the petro-state, where so much of what a government is capable of is based around the market price of a single commodity, governments do not define the times; it is the times that define the government.

When Lynn Karl first went to Venezuela in the 1970's, she visited the late Juan Pablo Pérez Alfonzo, a Venezuelan lawyer often cited as the "architect of OPEC". In the midst of the 1970's boom, while oil money poured into the country and Venezuelan governments boasted that they were on the verge of achieving true and sustainable development, Pérez Alfonzo warned her that the good times wouldn't last.

"Ten years from now, twenty years from now, you will see," he forecast, "oil will bring us ruin."