The Rise and Fall of the Oil Nation Venezuela 3031346599, 9783031346590

Citation preview

Carlos A. Rossi

The Rise and Fall of the Oil Nation Venezuela

The Rise and Fall of the Oil Nation Venezuela

Carlos A. Rossi

The Rise and Fall of the Oil Nation Venezuela

Carlos A. Rossi Residencias Club Cigarral El Cigarral Caracas, Hatillo-Miranda, Venezuela

ISBN 978-3-031-34659-0 ISBN 978-3-031-34660-6 (eBook) https://doi.org/10.1007/978-3-031-34660-6 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Paper in this product is recyclable.

This book is dedicated to my wife Violeta, my two sons Jorge Felix and Carlo Luis, my mother Carmina, my father Felix, my siblings and entire family. Their support throughout this time has been loving and indestructible. Special thanks are due to Prof. Charles Hall, systems ecologist, co-author of what I consider to be the best economics book written in this century and founder of the new field of biophysical economics that interfaces the natural biophysical sciences with social economics. It was Charlie who first encouraged me to write this book and who has patiently and painstakingly edited it ever since. Thank you for your patience and for helping me to keep on track during these 20+ months of work. The equally patient support of Springer Nature has been invaluable, constantly reminding me that I am not alone in this important endeavor. This book is especially dedicated to my fellow Venezuelans. May this full understanding of our troubled history lead us all out of our

present difficulties and into a promising, inclusive and mutually respectful future that maximizes all of our productive and human potential. Right here in our homeland Venezuela.

Preface

Venezuela is an important country both at the regional level because its population at 28.4 million ranks 6th in Latin America and also at the World level because it harbors the largest accumulation of petroleum reserves left in the planet, still the most fundamental energy source that powers over 30% of the energy mix for the industrial prosperity of the modern World. But Venezuela is also a very sick country; it suffers from extreme mental bipolarization that is demonstratively capable of selfinflicting severe harm to its citizens, and it does this at the precise historical moments when it receives the most revenues from abnormally high oil prices. This paradox is explained by the detection in this book of two distinct poles that colive within the same structure in Venezuela, one I call the Elite pole that represent the traditional ultra-rich “Lords of the Valley” as they like to call themselves, and the other that groups the vast majority of poor that I call the Resenter Pole. Both these poles detest each other and endure in hostile discomfort inside a semi-democratic system. Indeed, one of the principal symptoms of this sickness is that the impoverishment of Venezuela’s citizens occurs at the precise moment when oil prices happen to be historically high and this has occurred in two distinct political epochs, in the 1970s when the Elite pole held all political power and again in this century when the Resenter pole is firmly in political control. In both cases the impoverishment of our citizens was caused by extreme corruption and intentional mismanagement of public funds that rattled the political establishment destroying almost our entire social fabric and institutions. What it is interesting in Venezuela and makes it deserving of a case study is that when its political establishment is unsettled it occurs not because the economic pillars that sustain it are rattled causing bipolarization as it happens in most other countries, but here it is the reverse, it is the inherent bipolarization of the country that first disturbs the economic base precisely because an inordinate amount of money is flowing in, which in turn leads to the unsettling of the political establishment. In other words, Venezuela is not a poor failed nation because it lacks capital and money; Venezuela is a poor failed nation because it has it. We have deep unresolved historical issues that need to be addressed in detail in the proper context for the right solutions. vii

viii

Preface

Our economic and social statistics are in shambles: Venezuela: Selected Economic-Energy-Social Data GDP (2013–2020)

−79.4% negative growth

Inflation (2013–2020)

11,600% average

GDP-per capita

US$ 1540.00 (lowest in Latin America)

Oil production (2015–2020)

−79.5% negative growth.

Poverty rate (2021)

94.7% (76.6% extreme poverty)

Minimum wage

US$ 3.00 (per month)

Acute malnourishment (2020)

12% (frequently in children under 2)

Closed+expropriated companies since 2008

500,000 (692 expropriated)

Closed private industry (2000–2018)

68.5% have closed down

Formal employment (2008–2021)

−84% negative growth

Migration exodus (2002–TODAY)

6+ million (20% of total population)

School participation

50%

Political repression

262 political prisoners (06-09-2021)

Sources various OPEP, BP, BCV, IMF; INE, Encovy, CARITAS, Consecomercio, Foro Penal.

These appalling numbers are just the tip of the iceberg of this sick but curable nation; all from self-inflicted wounds. Today Venezuela does not even have a currency any more after it was pulverized by declining GDP and six straight years of hyperinflation. Most Venezuelans are poverty stricken and unproductive and have lost all faith in democratic institutions as was proven in the last presidential and congressional elections (2018 and 2020) where the majority of people heeded to a call of boycott by the opposition political parties and didn’t even bother to vote, assuring Nicolas Maduro two forfeit victories without having to cheat and a continuation of unopposed ruling until 2024; all but guarantying that these numbers will get worse. Unraveling the root causes of this bizarre bipolar behavior through history and using that knowledge as the bedrock foundations for a nation-wide Plan that neutralizes this bipolarization and makes this country achieve its full economic potential in democracy is the entire purpose of this book. This Plan will need to cover the following five dimensions in a holistic-integrated structure over these historical foundations: Political institutions, Energy, Economics, Social Policy for the Poor and International relations. But there is also a personal reason that motivated me to write it: I am Venezuelan. As an energy-economist that has spent almost my entire adult life in Venezuela continually between 1983–1989 and 1997–present, and have labored as professionally here at increasing levels in various careers (including academics) I have witnessed the destruction of my country not once but twice in two distinct centuries/millenniums for the same reason, the sickness of its mental bipolarization with root causes that go way back to Venezuela’s pre-independence colonial days. Indeed, my research has concluded that the current malignant State of the country does not stem from the

Preface

ix

present phase of Resenters Pole ruling throughout this millennium, not even from the almost equally malignant phase of Elite Pole ruling since the 1975 Oil Nationalization begat the phase of rent-seeking behavior of the Elite and well connected, but that it stretches much further into history, back to the colonial pre-independence years of the 19th century which collapsed into class conflicts that were never neutralized until the Andino military dictatorship era 1899–1958 which, helped by petroleum revenues and timely USA diplomacy, brought peace and order to this country and uplifted Venezuela from being one of the worst of Latin America to its best in all social-economic indicators. Worthwhile mentioning that the good effects of that fine Andino era spilled over into the Golden Era of democracy and prosperity (1958–1975). But it all came apart when the key to the oil wealth was given to the political class in Venezuela and its rapacious Elite in 1975 that succumbed our still young “pacted” democracy and paved the way for present-day Resenter–Chavism, whom repeated the destruction of this country using the same oil money weapon except that they did it from the bottom up, instead of the top to bottom method applied by the Elite Pole a quarter of a century earlier; in both cases erupting a frenzy of corruption, incompetence and capital flight through the mechanisms of Rentism and Cronyism. Carlos Andres Pérez, our President who nationalized the oil industry was correct when he reflected: “Chavez did not fall from the heavens, we bore him his birth”. Mexican Historian Enrique Krauze also accurately wrote: “In Venezuela the dispute over the past is the dispute over the future”. It is only by bringing to the forefront all of this history we can see what happened, what went wrong and how to fix it. My purpose is to find a happy medium (Juste Milieu) and holistic equilibrium between these two conflicting poles that makes them work together with respect and synergy as they did in the past. This is not unlike what a psychologist does when they treat a troubled patient; he/she delves deeply into the past history, even childhood if necessary, and uses the past to fix the present and channel the patient’s future into the right path of fulfillment and prosperity. I am not recommending a return to the Necessary Gendarme era of the early 1900s because Venezuela is not a rural illiterate country anymore; but the military will need to play an important integral part of the final solution because historically they have always been determinant in Venezuelan society. The policies I will recommend will be founded from an exhaustive examination through the chapters of the book that treat the colonial elitist-slave years; the 19th century independence and fatal civil war aftermath; the military Andino era that neutralized both conflicting poles providing the nation’s quantum leap to economic fulfillment and its spill-over into the 40 year democracy epoch that started well but succumbed to oil rentism, treasury plundering and poverty; and finally the Chavez/Maduro era of this century that imploded this nation. There are six chapters on oil, because oil evolved from geology and technology independent of Venezuela but, after its discovery here in the 1900s the history of petroleum and ours are intertwined intimately in its economic and social development.

x

Preface

One of the most important conclusions of this book is that neither the Elite Pole nor the Resenter Pole can be trusted to govern Venezuela alone. Our challenge is to make them work together under a basis of mutual respect. By exposing our unresolved historical issues, this book corrects them and lays the bedrock foundations for the betterment of this country in all of its pertinent dimensions: Politics, Juridical Institutions, Energy, Economics, Social welfare. Caracas, Venezuela

Carlos A. Rossi

Introduction

The economy of Venezuela, to better illustrate it, is like someone lying on the ground and Maduro, on top, hitting him with a dagger, looking desperately to see if the person continues to have vital signs, if so, he will continue hitting him harder and harder; it is very unfortunate but I never saw something so fierce occupying a position of this nature, nor did I imagine it would exist, it destroys all existing economic theory. —William Nordhouse, Nobel Prize of Economics 2018.

Venezuela is by any measure a failed petro-state whose behavior lies well beyond what any economic textbook teaches. Venezuela’s problems are multidimensional; our problems are political, sociological, psychological, economical and above all historical. During the first oil windfall in the 1970s the Elite Pole in political power then burned Venezuela from top to bottom for its own gain. During the second windfall in 2000s the Resenter Pole that had achieved power with Hugo Chavez landslide victory burned the country in the opposite direction, from the bottom up; and worse. As this book will show it is the unresolved historical issues of this nation that has affected our cultural and economic idiosyncrasy and keeps us impoverished, corrupt and inefficient. It is so because our unresolved history caused our social structure, oil productive capacity and economic potential to collapse. One of our most cherished but simplistic historians was Mario Briceño Iragorry (1897–1958) who believed history to be “a moral discipline” and a continuum never to be deleted nor remain in the past because history is a valuable fertilizer of the present and that present is valuable insofar as it opens the possibilities of a brighter future for all (so far, so good). In his words: “The purpose of history is to maintain alive the memory of the values that serve as the backbone of the social building.”1 1

See Briceño Iragorry (1954) pp 528. And Marta-Sosa (2015) pp 277–289. To be fair, Briceño Iragorry died in 1958. The period of his life only saw the exponential economic growth and politicalinstitutional stability of Venezuela that catapulted this country from one of the most backward laggards of Latin America to its very best in all economic and social indicators. He never saw its xi

xii

Introduction

But what happens if these memories are not pleasant? When one small Elite group of people in the society damages the interest and dignity of the other group continuously, and when this larger group seeks revenge and gets it compounds the mistakes of the first group because it doesn’t know any better; thus, creating in future generations more damage, Resentment and vengeance until history repeats itself, again and again. This vicious circle is most of the story of Venezuela, except for the long prosperous era encompassing the first three quarters of the 20th century. Venezuela’s troubles not only transcend the discipline of economics but goes go well beyond our geographical borders. Venezuela harbors the largest accumulation of the best energy reserves mankind has ever known other than the Sun—petroleum. Since the supply of these reserves are declining or about to most everywhere else in this World relative to demand with no reliable substitutes ready for now, this causes oil prices to increase and with it almost any input of industrial production, agriculture and services in rich and poor countries alike all leading to World inflation and recessionary pressures. The average rates of economic growth for the G7 countries and the European Union were the dreary 1.1% and 0.9% respectively for the 2008– 2021 period, according to the IMF. As we will see, the relationship between World oil consumption and economic growth has been nearly perfect since the 1980s. It behooves the World that Venezuela’s historical problems are resolved not only for the sake of its people but also for part of the prosperity of the World too. The main purpose of this book is to make this a win-win situation. The explanation of the seemingly absurdity between our enormous economic potential and horrid socio-economic record lies in our deeply troubled history that produced two counteracting social classes that abhor each other and are divided, at one extreme by an Elite Pole composed of mostly white rich class of far right politics, entrenched in neo-colonial privileges and classist attitude but which know how to implement the best private practices of production but incorporating deeply uneven corrupt-income distribution. At the opposite extreme lies what is called the “Resentment Pole” of left inclined politics represented mostly by mestizos of black–white racial mix, that reacts to the Elite Pole attitude by wrongly blaming and deriding “capitalistic production”; and replacing it with the intensely incompetent State ownership and egalitarian distribution policies, which in practice has only also resulted in corruption, misery and distribution of scarcity as well as the destruction of most manufacturing activity, the gross national product, oil production and prosperity of the country ending up in emulating the Elite asymmetrical income distribution at the other end in mirror image. The Resenters egalitarian policies only end up enriching the higher echelons of their political power. In both of these Poles corruption, capital flight, poverty, debt, inefficiency and extreme inequality are its only possible results because all are built into their system. In the middle of these two contrasting poles there lies a once very large middle classes that are caught in between, composed mostly of professionals with university degrees downfall, nor could he have ever imagined it. His lessons of value building for new generations were ignored largely because petroleum revenues burst into the scene to-in his own words: “destroy the moral values of our nationality”.

Introduction

xiii

that began their assent in the middle years of the 20th century, picked up pace after World War 2 all the way to the early 1980’s, but which has severely eroded since then. By one count 62% of the population in 2010 was middle class that shrunk to 15% in 2019. Today there is hardly any university student that doesn’t openly State that their goal is to leave Venezuela as fast as they get their diploma. At the World stage it is hard to find one country in the planet that doesn’t think that Venezuela has a missing screw or two because it let all of its oil wealth vanish twice—in consecutive generations—by two sets of rapaciously corrupt incompetent powers from opposite ends of its society leaving behind millions of impoverished that have now all but forgotten how to thrive in a democracy. What the people in these nations don’t know is why this happened to Venezuela. This book answers that question and tells how correct it. Venezuela’s collapse occurred not despite record high oil prices, it occurred precisely because oil prices were record high and money inflows were increasing. This is a country that has proven repeatedly that the more oil money flows into its treasury the more impoverished, unequal and in debt it gets. It is because oil money flows deluged in this country at unprecedented levels that Venezuela imploded twice in our recent history. I personally suffered both implosions. When we learn how our troubled history shaped the attitudes of the Elite and Resentment class, it’s unsurprising that this happened. The good news is that Venezuela can be fixed, because we have been there before and we fixed it ourselves and we will see that some of the elements of this solution can still be used today. History repeats itself when is the same history; when its troubles are not resolved properly history loops back to a deja vu mode, and this happened to us many times. As we will see in detail the story of the last quarter of the 20th century is the same story we find throughout this century with the vital difference that it is now the Resenter Pole, not the Elite, who have been in power since 1999. With Hugo Chavez and his half-baked Cuban inspired socialism at the helm of Venezuela, oil prices rose to record levels again but for different reasons that we will see in this book but which produced, again, ill-fated management policies that demolished—again—our productive capacity and all investor confidence rendering us useless to deal with collapsed oil prices, imploding our economic and social indicators to unimaginable depths.

Venezuela Used to Be Good Venezuela wasn’t always this sick and low. For the first three quarters of the 20th century Venezuela thrived so rapidly and steadfast during a series of iron-fist dictators that vaulted this nation from the near-bottom of Latin America in the early 1900s to its most prosperous country by the end of the 1950’s; when we finally earned our democracy. For the next 18 years into our democracy to mid-1970s Venezuela really was, by all indicators available, the most prosperous nation in Latin America

xiv

Introduction

boasting a working democracy and double-digit economic growth rates, minimal inflation and a national currency that near-competed with the US Dollar and European currencies, becoming a magnet for investment and immigrants from the Latin American continent and from Europe. The absolute and extreme poverty rate in 1978 was only 17% and 6% respectively. What changed? What could possibly have happened to a nation to go from worstto-best and back to worst during the course of a century of oil-led development? The short-answer lies, on the worst-to-best direction part, that it harbored a deeply class divided and unstable political system during the entire 19th century until it discovered oil in the early 1900’s that was galvanized by strong-arm dictatorship which imposed order and union and called for major oil companies invest in exploration and production and execute its best productive practices, affording the Government the means to grant peace and stability while fostering market economic policies with high multiplier effects on infrastructure and industrial development. The combination of these actions effectively neutralized the contrasting Elite and Resentment Poles for seven decades paving the way to peaceful and increasing prosperity. On the opposite direction, best-to-worst, the inflection point that begat our present horrid troubles is specifically found in the fateful year of 1975, when Venezuela nationalized its oil and created PDVSA, our national oil company, effectively giving the political class and its bureaucracy the key to the treasuries of all the oil revenues at a time when prices were record high. The myriad public and private corruption that this decision ensued is unspeakable; punctuated by a series of horrid wealth managing decisions, crony capitalism and the creation of a Renteer class that only lived of the oil rents overhauling all of the productive incentives of the people to the point that it became normal for the well-connected Elite to secure Government funds and external debt for “personal projects” that were never meant be re-paid. Thus, evaporating the vast majority of the oil income into capital flight to foreign private accounts; demolishing Venezuela’s political and legal institutions from top to bottom. We will learn that this, in the eyes of the Elite Pole of Venezuela, is normal and expected behavior given their assumed class status. When oil prices receded in the early 1980s to pre-1973 levels Venezuelans suffered through two painful lost decades at the end of the 20th century highlighted by a percapita income collapse of almost 20%, while income inequality soared and poverty levels increasing past 50%, causing all kinds of social havoc thus paving the way for the former army and highly populistic lieutenant-coronel Hugo Chavez, who had led a failed coupd´etat in 1992, to win a landslide election in 1998. Chavez then proceeded from the extreme Resentful Pole to impart his image by attempting to rewrite our entire history and creating unsustainable institutions—including a brand new Constitution, flag, coat of arms and currency—even changing the name of the country, the time of day, and the face our Liberator Simon Bolivar, only to demolish all economic and social indicators in the opposite direction; except that instead of burning our social indicators from top to bottom as the Elite had done, Chavez burned them from the bottom to the top. You will also see that this, to both the Elite and Resenter Poles, is normal behavior given their historical makeup. It was the nationalization of the oil industry and the wrongheaded management of its revenues

Introduction

xv

that awakened the dormant Elite-Resentment Poles that were neutralized in the first 3/4 of the 20th century. Now that we have the short-descriptive answers to Venezuela’s plight, the long answers are dealt in this book with the outmost care in detail because they are complex; both above the land where the people live and below the land were the conventional and unconventional petroleum reserves are. We will all be experts on Venezuela and its oil at the end.

T.E.A.M. The whole is greater than the sum of its parts—Aristotle.

The objective of this book is to bring to light these above and below land problems of Venezuela with the sole aim of total comprehension in the proper context so we can be in the right place to use our knowledge of our past to recommend the adequate set of policies to correct our present and future. Policies that must be applied holistically and integrally because Aristotle’s famous phrase above applies. Synergies must be exploited. Today this phrase is sometimes referred to as T.E.A.M.—Together Everyone Achieves More. Our challenge for Venezuela is to transform a corrupt renteer society into a noncorrupt non-renteer society over the base of our oil rent; meaning we need to stop being what we are now and become something much better by using the very thing that destroyed us-Oil Revenues; except we need to do it in a good way this time by using this historical platform as bedrock foundations and for that we will need outside help. No international help will be good however unless it understands as much as we will the essential foundations of our history, in explicit detail, and use it to build our socio-economic and energy systems within the right political institutions. That is the chief purpose of this book. In order to achieve all these architecture we must first secure the all-important historical bedrock foundations that unite the social classes into one a happy medium that respect each other. Venezuela’s problems can be corrected because, as said, we have been there before; we have been in a similar dismal hole and from there we managed to climb out spectacularly. Today, to repeat our success story of the early 1900s to the mid-1970s we need ingredients from the past and the success elements from the present story of other successful nations adapted to the Venezuelan cultural idiosyncrasy. But first things first. To get started we need to correct the unresolved issues from our political history by examining it openly and study it entirely and holistically from its very beginnings, because it is our complex past that separates us from the rest of our neighbors in the Western Hemisphere. We need to undertake a very close, detailed and thorough look at Venezuela both above and below our landmass and come up with solutions not just on our oil prowess-which is the easier part, but on its social history that made my country implode precisely at the time oil income was flowing in

xvi

Introduction

at unprecedented levels. Help will be used from other social and scientific disciplines. This is what this book is about. Given our underground energy wealth several chapters are devoted to petroleum, how its management has historically evolved and what we need to do to make it work again. The impact of petroleum in the World economy cannot be overstated. This quote from the award winning book by Daniel Yergin sums it up well: Today, we are so dependent on oil, and oil is so embedded in our daily doings, that we hardly stop to comprehend its pervasive significance. It is oil that makes possible were we live, how we live, how we commute to work, how we travel—even where we conduct our courtships. It is the lifeblood of suburban communities. Oil (and natural gas) are the essential components in the fertilizer on which World agriculture depends; oil makes it possible to transport food to the totally non-self sufficient megacities of the World. Oil also provides the plastics and chemicals that are the bricks and mortars of contemporary civilization, a civilization that would collapse in the World’s oil wells suddenly went dry.2

The World needs a transition source of fuel to bridge the energy gap from petroleum to renewable energy and for that we need a sound Venezuela that can deliver its still vast remaining reserves. The importance of Venezuela in the context of a World currently experiencing declining oil resources and price increases without adequate substitutes for its now 8 billion souls can be summarized by these six truths, of physical and social nature, which the World needs to confront and reconcile head on: 1. The industrial World is addicted to fossil fuel energy—especially oil—for its agricultural and industrial production, transport needs, all the way to the dynamics of monetary creation, overall prosperity and political stability. Oil accounts for one-third or the Worlds energy mix, by far its biggest part. 2. Oil is a non-renewable energy resource that is subjected to the Entropy law of physics, meaning it runs out. As it approaches its peak production World economic growth is compromised unless new sources of oil are found, new technology is developed to unleash oil in hard-to-reach places and make it practical, and/or renewable sources of safe and affordable energy are deployed on a mass scale. 3. The World is now undergoing an unduly plateau of oil production with very little economic growth and forcing adjustment of consumption behavior before it embarks into an irreversible decline. Included in the first part of this book is a brief description of what oil is and the Geological Eras, where the oil was formed. Luckily in Venezuela our oil reserves are land based in shallow depth; and although most of it is extra-heavy oil (explained later) the technology exists to upgrade it into to usable oil. 4. The World needs to find other sources of non-fossil energy to gradually replace its declining conventional sources and mitigate global warming. It needs these alternative energy to be safe, renewable, non-fossil, abundant, cheap, transportable and environmentally friendly. To get there much investment will be needed and 2

See Yergin (1991) pp. 14–15.

Introduction

xvii

especially much time. This implies the need for a transition period from nonrenewable energy to renewable. Venezuela and the rest of oil endowed countries need to step up to the bat and help to afford the World the time it needs. 5. For about one hundred years up until our current regime Venezuela was one of the most consistent oil producers and exporters in the World. Our fields continue to harbor plenty of oil in almost all of its practical varieties. The most abundant today are the Orinoco Belt Reserves in the southeastern part of the country which contain the largest accumulation of petroleum in the planet, placing Venezuela, even without accounting for most of the oil in this Belt, on top of the World with the highest oil reserves. This book includes a chapter describing the amount of these reserves, their locations and development. 6. In order to constitute the proper incentives for the reinvigoration of our oil production, Venezuela must deal with its complexities that lie above the land head on and find a Juste Milieu or happy medium between its countervailing and mutually exclusive social classes that detest themselves to the point of not even acknowledging each other. As of now Venezuela is a Bipolar society as we have two Presidents, two National Assemblies (congress), two Supreme Courts and two Attorney Generals none of which recognizes the legitimacy of the other. Venezuela is literally a bipolar society with proven capability of inflicting on itself severe and lasting harm. This book comprehends Venezuela’s history to make its lessons workable. It is comprehension that enables the power of changing a countries present and future. Just as the most important part of any building is its underground bedrock and manmade foundations—that you don’t see—on which the rest of the architecture is built upon, the most important part of any country are the historical foundations—that you don’t see—on which its present and future is built upon. In our particular case our historical foundations are eroded and rotten because they were built unproperly and never corrected. Venezuela is hardly the only country to have unresolved issues in history, as I suspect many other nations do, but our historical problems exist, are particular to us, and must be resolved before going forward because they distort the present and future. The only way to correct them for good is by addressing our turbulent history head-on and providing a detailed account of all our episodes that caused the reasons that led to our bellicose class divisions, bipolarization and self-destruction into what can only be described as a FAILED NATION. Venezuela needs to reassert itself to realize its full potential in economic wellbeing, thus providing the World with part of the energy transition bridge it needs to sustainable and renewable power sources toward the prosperity of its future. This is this book.

Contents

Part I 1

2

The Lay of the Land

From Classist Colony to Caudillo Anarchy . . . . . . . . . . . . . . . . . . . . . . Humble Beginnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Classism, Boves and the Origins of the Caudillo . . . . . . . . . . . . . . . . . . . . !!Death to All the White People and to Those Who Can Read and Write!! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Caudillo Galore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . What Now? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Boves Makes His Move . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Great Exodus and the End of Boves . . . . . . . . . . . . . . . . . . . . . . . . . . . The Carupano Episode . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Conflicting Historical Pole-Genes . . . . . . . . . . . . . . . . . . . . . . . . . . . . When Heaven Listens to Prayers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 4 8 9 12 13 15 16 17 18 20 24 26

The Era of Civil War . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . After Independence the Real Trouble Starts . . . . . . . . . . . . . . . . . . . . . . . . The Death of Simon Bolivar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Republics of Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Clarified Citizen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Paez Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Paez and Adam Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Paez and Hugo Chavez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Caudillism for Ever? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Fall of Paez and the Anarchy of the Liberals . . . . . . . . . . . . . . . . . . . . The Assault of Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Abolition of Slavery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Federal War: History Repeates Itself Again and Again . . . . . . . . . . . Julian Castro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Boves De Ja Vu? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27 27 29 30 31 32 33 34 36 37 40 41 42 43 44 xix

xx

3

Contents

The Federal War and the Rebirth of Boves . . . . . . . . . . . . . . . . . . . . . . . . . Treason Hits the Federalist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Paez Last Hurrah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Legacy of Jose Antonio Paez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Pattern of Chaos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Venezuela Under the Federalists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . It Is the Same Story . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Illustrious American . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The End of the Old-Fashion Caudillos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Conclusions: The Unlearned Lessons of Our Time . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

45 47 48 49 50 50 51 52 54 56 58 60

Below the Land: The Formation of Oil . . . . . . . . . . . . . . . . . . . . . . . . . . What Oil Is . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chemical Composure of Hydrocarbons . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oil Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chickens Do Come Home to Roost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Venezuela’s Geology and Oil Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . Early Political History of Venezuela’s Oil . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

61 64 65 66 66 68 70 73 74

Part II

The Rise of an Oil Nation

4

Above the Land-3: The Iron Fist of the Mountaineers . . . . . . . . . . . . The Pretensions of the Low . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Peace at Last . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Uncle Sam Makes His Entrance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cipriano Castro Goes Mad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Juan Vicente Gomez Settles In . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gomez’ Big Push Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The 1928 Generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Death of Juan Vicente Gomez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

77 79 81 82 84 86 89 93 96 97 98

5

How the Andinos Managed Venezuela’s Oil . . . . . . . . . . . . . . . . . . . . . . The Dominance of International Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Logical Mistake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oil Galore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sow the Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dutch Disease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Eleazar Lopez Contreras (1936–1941) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Its Carnival Time Again . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oil Policy and the Oil Strike . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

101 102 103 105 108 108 110 111 112

Contents

xxi

Instability in the World Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 6

The Conflicting Poles in the Military . . . . . . . . . . . . . . . . . . . . . . . . . . . . Isaias Medina Angarita (1941–1945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . World War II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Venezuela’s Oil Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Medina Pushes Too Far . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Man has Gone Mad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Communist Play Their Cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The French–Rumanian Connection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Communists Stack the Cards—And then Drop One . . . . . . . . . . . . . Back to the Past Again . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Radical Junta Settles In . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oil Policies of the New Junta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lady Barbarian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Democracy at Last? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Expected Coup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

119 119 120 121 124 126 127 128 130 131 133 133 135 136 138 140 142

7

The New National Ideal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Marcos Perez-Jimenez and the End of the Andean Era . . . . . . . . . . . . . . . El Nuevo Ideal Nacional . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Time to Build . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lady Luck Makes an Entrance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Battle on the Rancho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Inverted U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Numbers on the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Human Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Big Mistake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

143 143 144 146 150 152 154 156 157 158 159 160 161

8

The Golden Era . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Democratic Oil Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . US Oil Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Birth of OPEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Three Views . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Venezuela’s Oil Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Devil’s Excrement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Succesors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pacto de Punto Fijo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Transition to Democracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

163 164 166 167 171 172 174 175 176 178

xxii

9

Contents

Betancourts’ Perfect Storm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Attacks from Afar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fidel Castro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Runaway Marxist Passions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . With a Little Help from His Friend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Venezuela Average Annual Growth Rates of Selected Economic Indicators 1960–1975 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Import Substitution Industrialization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Venezuelan Economy in the Golden Era 1960–1975 . . . . . . . . . . . . . . . . . Venezuelan Economy in the Golden Era 1960–1975 . . . . . . . . . . . . . . . . . Oil Production (TBD), GDP Per-Capita (%) and Inflation (%) 1960–1975 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

179 180 181 182 184 188

The Explosion of the Elite Pole I 1973–1978 . . . . . . . . . . . . . . . . . . . . . . Yom Kippur War . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Import Substitution Industrialization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The State Becomes the Producer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Petrodollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Venezuela Saudita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Whose Money Is It Anyway? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rentism in Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Plan of National Destruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . What Economic System Is This? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Postscript I of Venezuela Saudita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

201 203 205 209 211 213 214 216 219 221 226 227 228

191 191 192 193 193 194 196 199

Part III The Fall of an Oil Nation 10 The Explosion of the Elite Pole 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CAP’s Successors and the End of Venezuela Saudita . . . . . . . . . . . . . . . . Luis Herrera Campins (1978–1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Average Annual Total Investment Increase 1970–1983 . . . . . . . . . . . . . . . Synchronized Monetarism Enters the Stage . . . . . . . . . . . . . . . . . . . . . . . . Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Mexican Bomshell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Venezuela’s Capital Flight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Black Friday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jaime Lusinchi (1983–1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Dance of the Recadi Differential Exchange Rates . . . . . . . . . . . . . . . Distractions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Vanishing Act of the International Reserves . . . . . . . . . . . . . . . . . . . .

233 233 233 236 236 238 239 241 242 245 247 249 251

Contents

xxiii

Requiem for Import Substitution and Venezuela Saudita . . . . . . . . . . . . . Our Enormous Paradox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . You Are Not South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Carlos Andres Perez II (1988–1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Iesa Boys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Nirvana Land that Never Was . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rich Peoples Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Distractions Again . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

254 254 259 260 261 263 266 269 274 275

11 Hugo Chavez and the End of the Pacted Democracy . . . . . . . . . . . . . . Hero Worship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Childhood Trauma? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Venezuela’s Border Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Esequibo Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The End of Carlos Andres Perez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Watergate Connection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Unlucky Return of Rafael Caldera (1993–1998) . . . . . . . . . . . . . . . . The Last Card of Democracy in Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . Venezuelan Banks Collapse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rafael Caldera Had no Luck at All!! . . . . . . . . . . . . . . . . . . . . . . . . . . . . Milton Friedman Walks Through the Door . . . . . . . . . . . . . . . . . . . . . . . . . Venezuela Is Not the USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Human Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Globalization Comes to Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The “Pardon” of Hugo Chavez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Legacy of Rafael Caldera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

277 279 281 282 284 285 286 288 289 290 292 293 294 297 298 302 306 307 309

12 Unconventional Oil and the Oil Policies of the Elite . . . . . . . . . . . . . . . The Nationalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Article 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PDVSA the Day After . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Privilege Boys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Market Backdrop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internationalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Orimulsion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Apertura Petrolera (Oil Opening) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Rose Planted in the Swamp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . What a Shame! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

311 312 313 315 316 319 321 323 324 328 329 331 332

xxiv

Contents

13 The Age of Unconventional Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Needed Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Dawn of the Orinoco Belt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Huge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Velarde-Galavis Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United States Geological Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . According to the United States Geological Service USGS 2009 Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

333 335 336 338 339 341

14 The Explosion of the Resenters I: Politics . . . . . . . . . . . . . . . . . . . . . . . . Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Political Revolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Resenter-Elite Confrontation Begins . . . . . . . . . . . . . . . . . . . . . . . . . . Alo Presidente . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OPEC in Caracas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Elite’s Last Stance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Round One: The Carmonazo Episode . . . . . . . . . . . . . . . . . . . . . . . . . . . A War of Attrition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Round 2: The PDVSA Strike . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Round 3: The National Referendum . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

347 347 351 354 356 358 360 362 363 370 375 375 377

15 The Explosion of the Resenters II: Economics . . . . . . . . . . . . . . . . . . . . Hugo Chavez Jumps to the Left . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Mocking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Missions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Enter: Oppostion and Government Mistakes . . . . . . . . . . . . . . . . . . . . . . . . Chavez Looses One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hubris and Delirium Sets In . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Enter XX1 Century Socialism? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Economic Fallout of XXI Century Socialism. Part 1 the Social Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Plan Patria and the Parallel Fiscal Budgets . . . . . . . . . . . . . . . . . . . . . . . . . The Sociological Backdrop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

379 384 386 386 389 391 391 393

16 The Explosion of the Resenters III: Social . . . . . . . . . . . . . . . . . . . . . . . Expropiese-Expropiese . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . History Repeats Itself Again and Again . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Graphic Results of Chavizm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corruption Galore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

405 408 412 413 420

342 344 345 346

395 396 401 403 404

Contents

The Fall of the Misiones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dracula’s Wake . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

xxv

423 425 427 429 429

Part IV The Collapse 17 The Political Fallout of the Bipolar Poles Part 1 . . . . . . . . . . . . . . . . . . The Death of Hugo Chavez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Legacy of Hugo Chavez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Argentine Connection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nicolas Maduro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Decomposition of Venezuela’s Elite Opposition . . . . . . . . . . . . . . . . . The Opposition Gets Its Act Together . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The 2013 Presidential Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . La Salida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Mud Elects a Spokesman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . History Walks Through the Door . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The 2015 National Assembly Elections and the Implosion of the Mud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mud National Assembly Gets to Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sanctions Take Their Toll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Legacy of Nicolas Maduro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

433 434 435 441 442 446 447 449 450 453 453

18 Oil Policy in the Resenter Context I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rafael Ramirez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Enter Plan Siembra Petrolera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

467 471 475 482 482

19 The Political Fall Out of the Bipolar Poles Part 2 . . . . . . . . . . . . . . . . . Nicolas Maduro Strikes Back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Donald Trump Enters the Door . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Maduro Diet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sanctions on Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Henri Falcon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The 2018 Presidential Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . When Egocentrism Begs Treason . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lies, Slanders and Calumnies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United We Can’t Stand, So Divided We Fall . . . . . . . . . . . . . . . . . . . . . . . . The “Interim Government” and the Official Bipolarization of Venezuela . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Civilian Military and the Coup that Wasn’t . . . . . . . . . . . . . . . . . . . . .

483 483 485 487 488 491 493 494 495 497

455 457 459 462 464 466

499 503

xxvi

Contents

The Meteoric Fall of Juan Guaido . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Human Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Catch 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Covid-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Principal Economic Indicators of Venezuela During the Chavism Era 1999–2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

507 509 510 512

20 Oil Policy in the Resenter Context II . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Failure of Plan Siembra Petrolera . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Impact of PDVSA’s Perfect Storm on the Economy . . . . . . . . . . . . . A Vicious Circle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . When Corruption Knows no Bounds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corruption and Plan Siembra Petrolera . . . . . . . . . . . . . . . . . . . . . . . . . . . . PDVSA Now . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Future Could Be a Lot Brighter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

517 517 524 526 527 529 531 536 539 540

513 514 515

Conclusions and Histoanalysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557

About the Author

Carlos A. Rossi is a Venezuelan economist with degrees from the American University in Washington DC and the University of Sussex in the UK. He has four decades of continuous academic and professional experience in development, trade integration, macroeconomics, international finance, diplomacy, petroleum and history. He has worked for the Venezuelan Government, the Andean Development Corporation, the Venezuelan Embassy in the USA, the Venezuelan National Oil Company PDVSA, the Venezuelan Association of Hydrocarbons and consulting firms, including his own Caracas-based EnergyNomics since 2013. Carlos A. Rossi has taught fundamental economics, political economy, development finance and petroleum economics at four different universities in Caracas and is the author of four books, two published in Venezuela, one published by a prestigious academic publisher in New York City, and this one published by the prestigious Springer publisher in Germany. In this book, the author unravels in detail the entire history of Venezuela, from colonial times to the present day, to explain why his country is a failed nation despite—and because of—having the largest oil reserves in the World. There are several chapters about oil in this book, because the history of Venezuela and its oil production and revenues are deeply intertwined, resulting in a nation that has become poorer since the mid-1970s precisely because more oil revenues have been pouring into its treasury. Assessing Venezuela as a psychologist would do with a physically young healthy person who is mentally ill, Carlos A. Rossi puts xxvii

xxviii

About the Author

its entire unresolved history of childhood traumas into context and discovers that Venezuela is indeed suffering from acute bipolar disorders of two class conflicts that are causing self-destructive behavior that is deeply damaging to its 28 million people, not counting the more than seven million who have emigrated from the country, summing—according to the United Nations— the largest human exodus in the history of the Western Hemisphere; most occurring in the last decade. The author also discovers that Venezuela has suffered from this complex bipolar condition for more than two centuries, from the colonial period to the present, except for a period of 70 years between 1908 and 1977 when Venezuela was able to neutralize this disorder and prosper productively for the benefit of all its citizens, becoming the most prosperous nation in Latin America, finally achieving a hard-won democracy that flourished for almost two decades, until a fatal decision was made that re-awakened the opposing bipolar poles, the so-called Elite and Resenter poles, setting the stage for some 40 years of continued and accelerating polar conflicts that resulted in the impoverishment of all its political, economic, petroleum, institutional and social indicators. Through the use of history—called HistoAnalysis in this book—he places the past in its proper contextual framework and uses it to heal the present and channel the future to its maximum potential, thus providing the platform for the bedrock historical foundation upon which the right architecture of economic policy in all relevant dimensions—including oil production and social inclusion—can be built. One that will forever neutralize the opposing poles of our self-destructive disorder. That is this book.

Part I

The Lay of the Land

Chapter 1

From Classist Colony to Caudillo Anarchy

In Venezuela the dispute over its past is the dispute over its future—Enrique Krauze

This quote by the renowned Mexican historian is right on the mark, and it happens only when the country in question has deep unresolved issue from its history that affects adversely its present and its future. It is in this early part of the countries’ turbulent history that its two bipolar and counteracting social genes are formed, the White Elitist and the Resentment Gene of black and mestizo origins. The objective of this chapter is to review this early history in detail bringing its themes and issues that were never resolved properly or buried into the ground which is of course the primary step into solving them.1 Just like Geology divides the history of this planet into long epochs of increasingly shorter duration as it approaches the present, as we will see in Chap. 3, the history of Venezuela can also be divided into six eras: 1. 2. 3. 4. 5. 6.

Colonial to Caudillo Anarchy: 1600–1821 Continuation of Civil War: 1821–1900 Iron Fist Order and Progress: 1900–1958 Golden Age Democracy: 1959–1975 Rentier Elite Petroleum Democracy: 1976–1998 Rentier Resenter Petroleum Democracy: 1999–Present.

In this chapter we will treat the first era. The others will be dealt with later. The reason we need to address Venezuela’s history and rewrite it is because, as stated in the Preface and Introduction to this book, it is the unresolved issues from our history that impedes our development and productive potentials in all sectors, including people prosperity and hydrocarbon development. It is also this history that holds the key to the solutions to most of our problems in the areas of institutional politics, economics, petroleum and poverty. Located in the north of South America, Venezuela was in the colonial period and still is today a large, resource rich and underpopulated country. Its territory compromises 916,445 km2 with a population today of 28.2 million (a sharp decrease because of 6 million + refugees have fled since 2015). For reference we are triple © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. A. Rossi, The Rise and Fall of the Oil Nation Venezuela, https://doi.org/10.1007/978-3-031-34660-6_1

3

4

1 From Classist Colony to Caudillo Anarchy

Fig. 1.1 Map of Venezuela

the size of Italy but have less than half of its population. We are flanked by Colombia in the west, Brazil in the south and Guyana to the east. North is the 2256 km long Caribbean Sea coastline plus the 556 km long Atlantic coastline, which add up to over 2868 km of sea coast which is by any measures considerable (Fig. 1.1). Among its vast mineral riches, Venezuela harbors the largest petroleum reserves in the World, the largest gas reserves in South America and one of the largest gold and coltan reserves in the World (uncertified). Our principal cities are, by order of population: Caracas (the nation’s capital where I live); Maracaibo, Valencia, Barquisimeto, Maracay, Ciudad Guayana, Barcelona and San Cristobal. According to the World Bank the urban–rural mix is roughly 88–12%, making us the third largest urban country in Latin America.

Humble Beginnings I am only telling you the truth, your will verify, lady, that the conquerors have no shame: they first arrive as beggars, they behave like thieves, and believe themselves to be Gentleman— Isabel Allende

Humble Beginnings

5

Fig. 1.2 Colonial social stratification of Venezuela

A poor country throughout its colonial history because it lacked discovered gold, minerals and the evolved native-American civilization of its Andean neighbors.2 Throughout our 300 + year colonial era the Spanish crown classified Venezuela as a post of minor importance. According to data from of the colonial period by Venezuelan Jesuit Priest Arturo Sosa, now head of all of the Jesuit Priests in the World (and a distant relative of mine), in 1800 Venezuela had approximately 800,000 people of which 2% were white from Spain; 20% were creole (whites born in Venezuela); 17% native Americans; 48% were Pardos (different black mixtures such as Mestizo); and 13% were black (Fig. 1.2). Political and economic power was held by the 2% white population who were classified as aristocrats because they descended from Spanish conquerors and they, sometimes, shared this power with the creole (criollos). The rest had neither but did all of the physical work. Most of the native Americans either lived in the jungle separated from everything or served as maids or slave hands. Worth mentioning, in the white-creole group there is a subgroup called “Blanco de Orilla” that can be roughly translated today as “white trash”, composed of non-aristocratic whites that migrated later from Spain as sailors or soldiers and held other menial jobs. They represented barely 1% of the criollos. At the other end in the black and mestizo group there evolved another subgroup called the Cimarrones (runaway slaves) which represented a bit less than 3% of all the blacks. We will see right away that it was the combination of these two subgroups that inflamed the entire nineteenth century of Venezuela with horrific and democratic effects that are still felt to this day. It was this unlikely combination of Blanco de Orilla and Cimarrones that created the Resenter Pole in this country and left both fair and destructive indelible marks in Venezuela.3

6

1 From Classist Colony to Caudillo Anarchy

Arturo UslarPietri (1906–2001), arguably Venezuela’s finest intellectual in the 2nd half of the twentieth century, author of several writings whom you will read plenty in this book wrote: The Venezuelan mestizo is the confluence of three racial elements (Spaniard, Indian and Black). His sensibility is delicate, he adapts quickly, of light and lively intelligence, high intuition, ambitious, egalitarian, devote of magic, violent, generous, incautious, poor in the popular arts, sensitive to music, quarrelsome with systemization, with order, and with hierarchy. It is the soul of the Mestizo that would give psychology to this nation and characterize its history.4

The economy was nearly all agrarian, slave and semi-slave labored in a vast and largely unpopulated colony. The principal staples were cocoa (an indigenous crop and source of chocolate) which the wealthy landowners exported to Mexico and Spain and made them very rich, earning the nickname “Gran Cacao”. Other products were sugar, wheat, tobacco, cotton, indigo, fruits, vegetables, coffee, fish and some cattle. But all of these were of minor importance because the competition from the larger colonies was formidable. Venezuelan economic historian of left persuasion Maza Zavala stated: Venezuelan society is organized, throughout history, on the basis of the exploitation of a product of the primary sector of the economy (extraction and generation of raw materials). During the last phase of the colonial era, the 18th century, cacao was extensively cultivated in lowlands, near the coast, with a hot and humid climate; and in its production—destined almost entirely for export—mainly slave labor was used, coming from Africa. After the war of independence, in the first decades of the 19th century and until the third decade of the 20th century, coffee constituted the concrete economic base, and its cultivation was done on the slopes of the mountain in a cooler climate with the use of labor in serfdom mode under the tutelage of landlords. Coffee was also intended for export for the most part.5

The Spanish relied on three institutions to help them manage their colonies. The first was the “encomienda” system that in all essence allowed white colonists to enslave the native Americans. Although not instituted until 1552 it didn’t really take much hold because native Americans were, as said, very difficult to enslave and thus were not an important part of society. That degraded into the infamous Latifundio system of serf-slavery that would last well beyond independence through the entire nineteenth century in which, as described by Economic Historian Brito-Figueroa: “The capacity of production and consumption was maintained at very low levels; Latifundio was designed to restrict the purchasing power of the exploited population only to the indispensable consuming goods for survival”.6 The second was “La Casa de Contratacion”—applied to all of Latin America— whose sole purpose was to monopolize all the trade from its colonies and prohibit the making of product that would compete with the landowning class in Spain. This institution was firmly based in mercantilist principles according to which the Spanish Crown should control all economic and trade activities as a consequence of the prohibiting trade among colonies or with anyone else. It was not always obeyed, but if caught the penalty for contraband was severe. Some economists have blamed the tardy development of intra-country trade in Latin America on the legacy of this institution. The third institution was the Catholic Church which the Spanish

Humble Beginnings

7

Kingdom provided with generous grants to build monasteries and Churches, although it reserved the right to intervene lest another idealistic priest like Bernabe de las Casas cried out about the harsh treatment of native Americans. All throughout, much like the Holy Roman Empire which still existed in 16th-century Spain, the Church and the State acted in unison and shared the same profitable interest of keeping social order in the colonies all of which were taxed 20% of their produce by Spain. This gives some credence to Napoleon Bonaparte famous quote: I do not see in religion the mystery of the incarnation so much as the mystery of the social order. It introduces into the thought of heaven an idea of equalization, which saves the rich from being massacred by the poor.7

It was a slow-paced era for the first 300 years of Spanish colonization, with little social or economic change. But that was to change very abruptly at the turn of the nineteenth century for four reasons mainly: (1) The extreme racism and harsh treatment of blacks and mestizos by the colonial white and creole Elites. (2) The enlightened ideas from Europe, especially France and England. (3) The independence revolutions of the USA and France. (4) The emergence of the first caudillo of Venezuela: Jose Tomas Boves. It was Venezuela that became the cornerstone of the independence movement of South America, and it was this country that spilled by far the most blood. This independence movement was led by a formidable generation of men who were barely in their early twenties and thirties when they started. Four man stood out above very valiant patriots. Francisco de Miranda, whose military exploits in the Revolutions of the USA and France became legendary and inspired him to take the initial baton in the South American independence revolt. Simon Bolivar, the Liberator, the most famous of all for his resilience, leadership and commitment but also for his intelligent European education and eloquence. Antonio Jose de Sucre whose military prowess brought him immortality in the Andean nations Bolivia, Peru and Ecuador. Last but certainly not least is Jose Antonio Paez, the greatest battleground general and leader, the hero of its principal independence battles and as it turned out, the true founder of Venezuela and its first president. Bolivar, as we will see later, overplayed his cards when he tried unsuccessfully to form a united country in the Andean nations which forced him out of favor everywhere, causing him to lose his grip and die virtually alone and deeply disillusioned at 47. While around much World these names are deservingly venerated, the facts of their life are not always of unblemished nobility. While I use the word “patriot” to distinguish those whose main focus was to get rid of the Spanish yoke, the essential reason for much of the fighting at the time was really class and racial warfare that may not have much to do with getting rid of the Spanish.

8

1 From Classist Colony to Caudillo Anarchy

Classism, Boves and the Origins of the Caudillo At this juncture it is worthwhile to devote a few paragraphs to the Latin American phenomena of the caudillo, meaning strongman ruling that continues to plague our history. In this continent it is exemplified by fearless, charismatic, largely uneducated leaders capable of mobilizing large masses when people perceive that the established order is weak and doing much harm with no end in sight. They usually spring up when a power vacuum is created after a long-standing order collapses and is replaced inadequately, by weak and feeble-erratic-unpopular ruling. Case in point the French Revolution of 1789 that ousted and decapitated the monarchy of Louis XVI in favor of the horrific guillotine prone ruling of the Jacobins; that wasn’t settled until caudillo Napoleon Bonaparte rode his army and seized control of France in 1800. In Venezuela the brief fall of the 300 + year ruling of the Spanish Colonials in 1819 was also replaced inadequately: creating a power vacuum that is breeding pond for caudillos. Pancho Villa, Juan Peron, Hugo Chavez, Daniel Ortega, Velazco Alvarado, Fidel Castro, Che Guevara and too many others are examples. In Venezuela the two principal caudillos are Jose Tomas Boves (1782–1814) and Jose Antonio Paez (1790– 1873). Boves is the most controversial figure of Venezuela’s history right alongside Hugo Chavez. Boves was the first champion of the underclass and the man who ended up building the first Resenter Pole. It is here that Venezuela’s history starts. As we will see now, Boves has been regarded by some historians as our version of Genghis Kahn and by other historians as our first true democrat. Both versions are correct. To understand Boves properly we need to first explore the ultra-racist and classist backdrop present in Venezuela when this white low-class sailor arrived from Spain in 1800, a period when black slaves and Pardos were treated unforgivingly harshly and pejoratively despite (or because) it was them who did all of the work in the lands that the Spanish crown and oligarchs (the mantuanos) expropriated from the indigenous population. Venezuela’s racism in the colonial years was extreme, beyond what the Spanish Crown allowed. Social mobility was impossible.8 Two historical anecdotes serves the purpose of explaining this issue. The first relates to Francisco de Miranda’s father, Sebastian Miranda, who was considered a low-level white immigrant because he made a living selling merchandize and because of this he wasn’t allowed by the Elite to wear a military uniform nor use a cane unless he went through the humiliating process of “blanqueo de sangre” (whitening of blood) which meant that he had to prove beyond any doubt that his blood wasn’t tainted with either Black, Jewish, Arab or native-American ascendants. His wife, mother of Francisco de Miranda, complemented the income of the family by baking and selling bread, and that also was reason to preclude the family of ever becoming part of the inner circle of the true Elite of the Caracas society. They were not alone in suffering this humiliation. Juan German Roscio, one of the principal ideologues of the independence movement and co-author of our first Constitution, was first denied incorporation into the lawyers school after successfully completing his degree because it was found out that his mother was native American. You can

!!Death to All the White People and to Those Who Can Read and Write!!

9

understand their motivation for Spanish and colonial independence. In Francisco Miranda’s case that motivated him to travel and participate personally in the rebellions of France, the USA (where he befriended George Washington, Alexander Hamilton among others and participated in some independence battles) as well as England, Spain and Russia to gather experience and finances to lead the independence in his home country. Miranda failed but historians rightly regard him as the precursor of our independence. The other anecdote refers to the three Bejarano sisters, of black Pardo origin, who at the end of the eighteenth century had earned the reputation of being the best-dessert cake makers in Caracas.9 Because of this delicious talent the sisters accumulated a small fortune from the sales at the Elite parties that they were hired to cater. When they heard that the Spanish Kingdom issued a Decree that allowed some white privileges to be bought and thus ascent the social ladder (unimaginable then), the three sisters showed up and paid; given the right to attend white Churches, wear the mantuano blanket and even be called “Doñas” (ladies). But when they arrived to Church on Sunday they were turned back by mantuano whites telling them that they were “appealing” their case to the Spanish King. A few months later and after much scandal in the small city of Caracas (30,000 people) where the sisters suffered much vexation for their unheard off pretentions, these white Elite received a harshly worded letter from the Kingdom of Spain ordering them to let all the three sisters have all of the white privileges and from here onward they should be treated as whites. So the Bejarano sisters, feeling vindicated, dressed up for Church the next Sunday. As soon as they walked inn and sat down all of the whites stood up and left them alone in the Church. Needless to say the sisters lost their clients and never attended Church again. Also, needless to say, Venezuela was sitting on a powder cake that just needed someone to come in a light the fuse. This is where Jose Tomas Boves comes in.

!!Death to All the White People and to Those Who Can Read and Write!! Trained as a military sailor Boves migrates from the Asturias region of northern Spain arriving in Venezuela at the turn of the nineteenth century; in Maracaibo he engages into contraband and piracy and is sent to prison for eight years. After his release Boves was sent to the central plains city of Calabozo (Jail House in English) where most of the immigrants with “a history” were dispatched to. There he sets up a small retail store and lives modestly; his mechanical abilities allow him to befriend the higher Elite landowning class there but only at an arms-length basis. This was because Boves, not matter how hard he tried, was not white enough Elite material to be admitted inside their inner circle, all composed of ultra conservative white slave owners, many of whom nevertheless sympathized with the independence movement

10

1 From Classist Colony to Caudillo Anarchy

that was beginning to brew in the country. The 20% royalty fee that they paid the Crown had doubled and then tripled due to the Napoleonic wars of the time. This was a time of much turbulence in Europe. Napoleon Bonaparte had become the strongman in France and in his ambitions to conquer all of Europe decided to strangle England economically by forbidding continental Europe from trading with it. Portugal disobeyed when they realized Britain would pay plenty for anything they could send there, especially agricultural produce, so Napoleon decided to invade Lisbon. To do that his army had to go through Spain, which it does in 1807, dethroning King Carlos IV and his son (Fernando VII, the future King) and installing his own brother Jose Bonaparte in the Spanish Throne. They would rule Spain until they were ousted in 1814. The Venezuelan Elite colonials, upon hearing of these events, decided to separate from Spain but not to form an independent country; but to prove their loyalty to the Spanish crown that they will not accept becoming a colony of France. Their slogan was “For our Kind, for our Laws, and for our Religion”. So on April 11, 1810—a national holiday in Venezuela—they set up a meeting in Caracas and ousted the Spanish Governor on the pretext that he wasn’t representing Spain anymore but France. These historians record as the short-lived First Republic of Venezuela (according to Hugo Chavez wrongful interpretation of history; his represents the 5th Republic; we will rewrite this in later chapters). Francisco de Miranda had joined the Spanish army and risen to the rank of Captain and used that post to betray Spain, befriend Napoleon and join the French army to help them conquer Spain; which is why his name features prominently in the Arc of Triomphe in Paris. Something the Spaniards will never forgive him for. From there Miranda traveled to London where he lived and to the USA and Russia to seek support for independence but receives only a fraction of what he was asking for. He nevertheless arrives in Venezuela in 1810 on Simon Bolivar’s request who had traveled to London to convince him, and notwithstanding the humiliating treatment of his father, Miranda is appointed by the colonials as their army general due to his military experiences abroad. But the First Republic would not last, the Spanish regrouped in Puerto Rico and invaded Venezuela in 1812 and, helped by a devastating earthquake in Holy Week, reconquered their colony by trouncing the First Republic rag-tag army, capturing Colonel Bolivar who, to save his neck, cut a deal with the spaniards and betrays Miranda by personally leading the soldiers of the new Spanish Governor Domingo Monteverde (a very cruel and ruthless man) to where Miranda was hiding in exchange for a passport to flee Venezuela. Miranda would die four years later in a Spanish jail.10 While all of this is going on, the plains in Venezuela were left devoid of power. Spain did not even rule over their own country, much less their colonies, and the Caracas Mantuanos couldn’t even hold Venezuela together from a Spanish invasion from Puerto Rico. Jose Tomas Boves at first liked the independence movement but mistrusted the Mantuanos, and apart from implanting the Venezuelan flag in his shop that Miranda had drawn up, which is still our flag (except for a minor change the Hugo Chavez implanted), Boves decided at first to distance himself from all of this. He fell for the daughter of a white landowner but her father denied her hand on account that he was a low-life white trash with a past. Thereafter, in a pivotal event that historians are not too clear about, his aristocratic “friends” completely turned on Boves when

!!Death to All the White People and to Those Who Can Read and Write!!

11

he pretended to collect a debt that was owned to him by an aristocrat from a card game, which was substantial. The sore loser-likely drunk-betted his farm, only to find out that Boves had better cards, not only refused to pay but used his connections to throw Boves in jail and be executed on trumped up charges. The very day Boves was to be hanged an army of Spanish soldiers attacked the town of Calabozo and liberated all of the prisoners including Boves, who immediately asked to join the Spanish army and was accepted on the condition that he find and recruited soldiers. This is when Boves recalled what he had heard about the “Cimarrones”—runaway slaves—who had escaped the brutal treatment of their owners and were living as fugitives nomads hiding in the Venezuelan plains, coming out at night to steal calves and chickens. So Boves went out alone on his horse to look for them carrying a white flag, and when he found some of them he asked permission to speak to all of them. It is here that Boves unleashes his greatest talent, his power to speak and mobilize the masses of slaves—all illiterate—and convince them that he was their savior. Boves had Hitler-like orator qualities to rouse up people to blindly follow him. Boves told them that they were humans, not beasts, that the white man had come to this country, killed the indigenous people, stole their land, captured their ancestors in Africa and brought them here centuries ago to force them to be slaves and work them to death and, on top of all of this, look down on them and treat them like animals. He added that the independence movement was really led by the same slave owners Elites who had exploited them for generations, that all they wanted was to get rid of the Spanish so they could keep the same status quo (including slavery) and appropriate the surplus for themselves without paying royalty to Spain. “Follow Me and all of the Land will be Yours”, Boves told the Cimarrones. Boves wasn’t wrong. The independence movement was led by white Elite owners, and Simon Bolivar was an example, which explains why that movement wasn’t all that popular among the Black-Pardos. Boves crusade immediately caught the central Venezuelan plains like wildfire. Slaves in droves turned on their masters to massacre them and steal their horses and farm animals to join Boves who assaulted the plains unopposed with uncanny vengeance and ferocity, causing all sorts of havoc while his army swelled in numbers and fighting power. Boves became the prototype of the caudillo figure, with authentic leadership qualities through strong persona, unparalleled charisma, organizational skills, gifted speaking and with an obsession for destroying white mans social and productive structures by equalizing everything to the lowest common denominator. Upon hearing that his young wife and child had been tortured and killed, Boves lost it. In fury he imparted his most famous battle cry that he screamed at the start of every battle and town conquest, to rally his hoards: !Death to all the White People, and to those who can read and write!

And Boves delivered plenty of death through the fateful years of 1812–1814. His madness anger reached such a pitch that he invaded towns in Central Venezuela and burned the lands, stole the animals and liberated the slaves into his army, forcing the white people to hide in Churches where Boves personally rode inside to kill them, including their children. His freed slaves ascended in the ranks of his army according

12

1 From Classist Colony to Caudillo Anarchy

to how many white people heads and body parts were delivered to him. This was new to them, the blacks Pardos had never heard of a merit system that could improve their standing and lot. When he returned to Calabozo for vengeance on his former elitist captors, Boves did them with unspeakable cruelty. To give one horrid example, when Boves captured the man who had helped trump charges against him to be jailed and killed, he had him buried neck deep into the dirt, poured honey over his head and watched with his back leaning to a tree how a myriad of red ants devoured his head down to his bare skull.11 To be fair this heavy cruelty in the war of independence was shared by both sides. In June 1813 Simon Bolivar issued his infamous Decree of War to the Death which ordered patriots to kill all Spaniards that did not labor on the cause of Venezuelan independence and pardoned the creoles regardless of whom they were fighting for. This decree was not only unfair but unleashed a terror command to anyone with a bayonet. Bolivar may have wanted to give an international projection to his struggle by dissuading people that thought (correctly) that this was a civil war. But many innocent people were brutally murdered because of this decree. Arturo Uslar Pietri, in summarizing the caudillo ideas of the intellectual, and former Argentine President Domingo Sarmiento opus work Facundo (1845) wrote: Facundo appears as the quasi-fatal personification of a historic and social situation. The anarchy provoked by the sudden disappearance of the Spanish political institutions, and by the inefficiency and inadaptation of the Republican experiment, produced a power vacuum. The simple natural and direct authority that represented Facundo and his liked-minded people— The Caudillos-filled that power vacuum with primate and authentic authority and created spontaneous focus of personal authority. Its proliferation caused anarchy and civil war.12

As we will see in later chapters, this Facundo description fits Hugo Chavez plenty. Jose Heredia, the Spanish Regent in Venezuela in this period wrote to the King of Spain his deep worries that Boves insurgence had taken a life of its own that was not in the interest of Spain. While it was true that Boves fought against the independence movement, his fiercely anti-slavery crusade weakened the long-standing colonial pro-slavery tradition by placing blacks and Pardos not only front and center of his movement, but as the ONLY element with a right to live and rule the entire Venezuelan colony. Herdia wrote: Boves is an insurgent of a different species…from the beginning of his campaign he manifested his proposed system from which he has never departed. The destruction of all the whites, keeping, contemplating and flattering the rests of the casts…distributing houses and belongings of the dead and exiled and providing the blacks with property titles.13

Caudillo Galore I swear before you, I swear by the God of my fathers, I swear by them, I swear by my honor and I swear by my country, that I will not give rest to my arm, nor rest to my soul, until I have broken the chains that oppress us through the will of Spanish Power!—Simon Bolivar Oath at Monte Sacro, Rome, August 15, 1805. He was 22 years old.

What Now?

13

While the most important common enemy was Spain, the fact is that most of the bloody warring was between the various factions who spent most of their energies fighting each other. The glorious independence movement was mostly civil war, and the proof is that when the Spanish were finally defeated and gone in 1821, the fighting continued off and on for the rest of the century. In 1813 Bolivar returned from the exile Monteverde that had sent him off to what is now Colombia and organized an army with his general and older relative Jose Felix Ribas (also a younger relative of Monteverde) and invaded Venezuela from the Andes in the west. They won easy victories from the Spaniards in some towns, including Merida whose citizens were white landowners without slaves (See Chap. 4) and on May 23, 1813, they honored Bolivar with the title “El Libertador”, which is how Venezuelans call him today. Less than a month later Bolivar signs his brutal War to the Death Decree. Upon successfully entering Caracas on August of that year its citizens and the cream of society ratified the Merida Libertador title and bestowed it formally on Bolivar, in what some historians today call The Admirable Campaign, that established Venezuela’s also short-lived and ill-fated Second Republic.

What Now? What shames us most of our past is our present—Pedro Leon Zapata (Venezuelan cartoonist)

That is the question that Bolivar faced. He was adamantly against Federalism because he thought Venezuela wasn’t ready for that yet, it needed strong central authority except that if he applied that people would think that he just wanted all powers to himself, a situation he wanted to avoid at all costs because Santiago Mariño, a patriot General had also invaded Venezuela in the East and was calling himself “The Liberator of the East” and calling Bolivar “The Liberator of the West”. Bolivar knew he didn’t have union in his country yet. So he takes a middle road, which turned out to be the worst possible decision. He re-establishes the 1811 Federalist

14

1 From Classist Colony to Caudillo Anarchy

Constitution that he had fiercely criticized except in the areas of diplomacy, war, peace and treasury following the successful example of the USA; a totally different country that sprang up without inherited aristocracy traditions from the old continent, which many historians believe to be one of its greatest attributes. I wholly agree with this assessment because it installed in the USA the time-honored traditions of fair play, level playing field, no one is above the law and “give the little guy a fighting chance”.14 Venezuela was nothing like the USA. The Spanish under Monteverde still controlled Puerto Cabello, the biggest port, and Bolivar tells Monteverde that if he did not relinquish that port he would use his War to Death Decree to kill all of the Spanish in jail and in the hospitals. Monteverde replies that for every Spanish killed he would double that number in Venezuelan deaths. Bolivar makes good on his threat by ordering the massacre of over 1200 Spaniards in a jail and in a mental asylum in Port La Guaira. Historian Elias Pino Urdaneta writes of this horrible episode: Gonzalez: The war to the death or the terror of the years 1813-1814, far from being a means of victory, was an insurmountable obstacle to achieving it; he (Bolivar) created thousands of enemies inside the Republic, took away its international sympathies, brought 60,000 Venezuelans to the grave and shaped Boves.15 Pino-Iturrieta: Only Bolivar knows exactly what he is doing and offers little explanations of convenience, as he wrote to his friend Juan Jurado in December of that same year: “Would it be fair to suffer the War to the Death and not do it?” Effigies of the king and the Caracas brigadier consumed at the stake, men gutted by the mere fact of keeping copies of the Caracas Weekly, of copies of the Constitution of Cadis, priests thrown from the towers of the chapels due to the content of their sermons, girls raped by royalists and patriots, crops dried at their roots, animals thrown on the sides of the roads, depredations in the treasury and robberies in the privacy of homes, offices subjected to looting from both sides…such is the War to the Death that must be suffered and waged.16

With Bolivar in power now his War to Death Decree terrified the Spaniards that worked in the bureaucracies throughout the country who quit their jobs and fled, thus destroying the 300-year-old monarchical institutions that Spain had built in Venezuela with nothing to replace them, leading to chaos and anarchy because without bureaucracies a country cannot function anywhere, much less in one so tightly controlled by a Spanish crown that decided on any transaction right down to the price to be paid. People started walking like zombies in a limbo, not knowing if they still had jobs, who their bosses were or what to do. Protesters began to fill the streets joined by the Catholic Church, all of whom urged Bolivar to flee the city, which he is forced to do. That again left a power vacuum for caudillos to exploit. Bolivar’s army still controlled part of the north, Mariño and his friend Manuel Piar were the caudillos in the East, Jose Antonio Paez controlled the south western plains, and Juan Bautista Arismendi had a stronghold on Margarita Island. So Venezuela had no less than six different caudillos dominating separate portions of the country; except that it was Boves who controlled the all-important central plains and who would end up destroying, single-handedly, the 2nd Republic of Venezuela. The 1813–1819 period was the middle ages of the independence war of Venezuela where caudillos roamed the country side causing all kinds of instability, killing, theft, rape and destruction.

Boves Makes His Move

15

Boves Makes His Move Boves was alerted of Bolivar’s return and headed up north to fight him early in 1814 where he first met the patriotic but very cruel general Campos Elias, who had taken upon himself to recapture Boves slaves at gunpoint and force them back to the white farms where they belonged. Campos Elias had conquered the town of Barinas and ordered the slaughter of the ranchers there and many of their slaves, most who fled to join Boves, who trounced Campos Elias in a battle adding to his troops not only more runaway slaves, horses and ammunition, but also many native-American tribes whose lands the whites had stolen. He then headed to the city of Valencia, then the second largest city in the country, burned most of it down and killed any white man who crossed him before moving east to Caracas. On the fall of Valencia the aforementioned Regent Heredia wrote: “From then on it was rooted in Valencia the mortal hatred between whites and blacks, that has been so fatal there and in all places of the providence were it spread to, without the possibility of knowing the lasting impacts of this evil that is still ongoing”.17 On his way to Caracas Boves encountered Jose Felix Ribas, the valiant patriot general who lacking soldiers organized a rag-tag army of students, most recruited from a monastery studying priesthood, to combat Boves whose army more than doubled Ribas in numbers. Boves, feeling sick at the time, decides to sit this one out and let his subordinates take care of it. Imagine Boves’ great surprise when he is told that Ribas had beaten his army in the town of La Victoria. The victory itself was illusionary, as Boves had no trouble regrouping his army and trouncing Ribas a couple of days later, but it was an important omen of what would come later; that Boves was irreplaceable—that without his leadership his hordes were nothing. There is a very good reason for this. Boves was the only one in his army who wasn’t illiterate, the only one who could read and write. His black hordes had been kept completely illiterate by their masters for three centuries and certainly expected that their leader knows the art of reading and writing.18 Thereafter followed the battle of San Mateo in the providence of Aragua, which was a landholding that Bolivar owned roughly 100 km west of Caracas. It was the longest battle of the war of independence, lasting 9 days, that pitted Boves versus Bolivar and which Bolivar’s army initially won after great heroic sacrifices (including most of Bolivar’s entire patrimony). But it was a victory badly mishandled by Bolivar although not entirely his fault. When Boves ordered a charge on Bolivars tired troops, out of nowhere came Santiago Mariño’s troops who attacked Boves’ flank, forcing Boves to turn his troops to face Mariño while leaving the other flank uncovered which Bolivar hurriedly attacked. Boves, seeing himself lost, orders his army to disband and narrowly escaped with his life by hiding in a Church. When Bolivar missed a golden opportunity to kill him there Boves then regroups his soldiers with old and new recruits from the neighboring coastal towns (where the slaves had always been abundant). Then the unthinkable happens. When Boves mounts his horse to counterattack he finds to his pleasant surprise that Bolivar and Mariño were infighting with each other, as the arrogant Mariño refused to acknowledge any orders from Bolivar and to prove himself decides to attack a Spanish military command (that was there to report of the battle) by himself

16

1 From Classist Colony to Caudillo Anarchy

and is roundly defeated. Then, as if that hadn’t happened, Mariño attacks Boves’ newly regrouped army who roundly defeated him as well. Mariño escapes but his senseless actions cuts down his troops to almost nothing, leaving Bolivar in a very weak position; so Boves—who by now had invented another rousing chant:—“Death to the white exploiters of Pardos and Indians!”—counterattacks Bolivar and Mariño and easily wins. Boves regains the initiative forcing the patriotic troops of Boliviar to retreat and abandon San Mateo leaving nothing to oppose Boves in his way to Caracas.19 This is one of many reasons why the words “unity under a trusted leadership” are taken much more seriously by the underclass Resenters than by the upper tiers Elite of Venezuela all through our history; then and now. Whereas the upper class is mostly about inflated egos wishing to be the top honcho of any movement—as in the case of Mariño and today’s opposition—the underclass has usually preferred being united as a whole under the one caudillo that they trust. In the independence wars keeping unity in his troops was perhaps Bolivar´s greatest torment: “Unity, Unity or anarchy will devour us…Unity will save us in the same way division will destroy us if it inserts among us” were just two of his constant grievances. Fast forward this story to the year 2019, where US State Department Secretary Mike Pompeo complained publicly to the US press: “Our dilemma of keeping the Venezuelan opposition united has proven extremely difficult. The moment that Maduro leaves, they will all raise their hands and say: Take Me, I am the next president of Venezuela!!…more than 40 opposition politicians believe themselves to be the chosen ones to govern the nation”.20

The Great Exodus and the End of Boves Upon hearing that Boves’ formidable army was coming, the civilians of Caracas entered in panic and hurried eastward by foot in what was probably one of the most horrendous internal exoduses ever recorded. It lasted almost the entire 2nd half of 1814. Over 20,000 people at first, of all ages from children to the elderly, were forced to track by foot, donkey or horseback through the humid intractable forests as fast as they could because Boves’ henchman were gaining on them. Bolivar accompanied by his main generals Mariño, Ribas and Piar tried their best to protect the civilians by leading the exodus, but the forces of Boves were too much for them. In August 1814 Bolivar hears that a patriot General Jose Francisco Bermudez army was stationed in the small eastern town called Aragua de Barcelona just south of where they were, so Bolivar and Mariño decide to join him and front Boves there. Except that Bermudez was more contemptuous than Mariño and decides not to take orders from Bolivar either. That he should be the head honcho because it was his army that he recruited and trained. When Boves arrives he finds that Bolivar and Mariño had left Bermudez alone on this disagreement over leadership, so he sends his henchman Morales and 3000 soldiers and defeats Bermudez. Meanwhile Bolivar and Mariño return north and thinking that what awaited them was to front Boves in an open battle and likely die, they spot a boat heading to Jamaica and embark on it leaving the Caracas people

The Carupano Episode

17

all on their own with only Ribas and Piar to face Boves’ relentless siege. When the forests led them to the northern beaches of the east coast the refugees faced another problem, Spanish gun-boats shooting at them. Thousands of civilians died in that exodus from fatigue and both sources of gun-fire. Eventually, about 415 km east of Caracas in the small town of Urica, the trees ended and without the forest to protect them the people had no other choice but to face Boves in the battle field with scant resources and an exhausted and dissipated rag-tag army. They were vastly outnumbered by the hordes of vengeful Boves army. This was the Battle of Urica on December 5, 1814, a turning point in the independence war where whatever was left of the patriots had to make their last stance against the anti-white caudillo. It was checkmate. And here is where the unthinkable happens. Boves makes the silliest mistake imaginable. Boves elected to ride a beautiful horse that he had just acquired, probably the night before from a woman friend. But the horse was not battle tested! As soon as the guns rang out fear engulfed the horse and became uncontrollable, even to an expert horseman like Boves. Pedro Zaraza, a young patriotic lieutenant, noticed and charged Boves on horseback with the bridle in his teeth and a spear on each of his hands. Boves saw him coming but could not control his new horse. In one swoop Zaraza drove one spear through Boves chest, dismounted his horse and drove the other spear through Boves throat after he had fallen from his horse, killing him instantly: all in the first few minutes of the battle. The town of Urica is now named Zaraza. Boves hordes did technically win that battle; but the life of Boves was too much of a price to pay as his hordes were left leaderless. When Morales, Boves second in command, was asked by his troops “what do we do now?” Morales raised the Spanish flag and said “we fight for King and Spain”; but the hordes answered “no way, those are the guys that started the enslavement in the first place”. But they surely would not fight for the mantuanos either, those were their former slave owners. They were really at a loss of effective leadership who would fight for their cause, freedom and land. Their first reaction was to join the army of General Manuel Piar, whom they liked because of his valiant sword; although he had lost to Boves that year, Piar showed incredible valor in the battle. Piar was also the son of a black mulato mother, and his physical features showed it—thus augmenting his popularity and trust with Boves former hoards. But just as Piar’s army started to swell from former Boves combatants, an incredible incident happened that would end his life at 40.

The Carupano Episode Upon hearing of Boves demise Bolivar and Mariño returned from the Caribbean islands on a rented boat—loaded with plenty of gold and ammunition for the independence cause—and disembarked on the port of Carupano in the east, only to find that Ribas and Piar were waiting for them seething in anger not only for leaving them alone in the latter part of the exodus to face Boves by themselves, but mostly because of their infighting before that had let Boves escape from the Church he had hid in San Mateo—where he should have been killed—and in so allowing him to regroup

18

1 From Classist Colony to Caudillo Anarchy

his army, defeat them in that battle and loose the entire valley of Aragua to attack Caracas and provoke the exodus. So Ribas and Piar jailed both Bolivar and Mariño in Carupano and strip them of their military ranks; Ribas taking Bolivar’s rank and Piar Mariño’s. But a quick action from the Italian owner of the boat, Giuseppe Bianchi, threatened to set sails with the gold and ammunition if Bolivar and Mariño weren’t released and restored of their ranks. Ribas was left with no choice but to release both of them. Within days after this release Ribas hid in the plains but his position was blown by a bribed slave to the Spanish army in very obscure circumstances. Ribas was badly tortured and killed by a firing squad, beheaded and his body dismembered. His head was fried in cooking oil and sent to Caracas along with his limbs in a bird cage to be shown in different parts of the capital city. Worth mentioning, in his campaign in 1998 Hugo Chavez referred to that dark period of the independence war when he said that the leaders of the main opposition party, Acción Democrática, should “all have their heads fried in cooking oil”. That never happened of course, and Chavez may have just been joking. But it had resonance. Manuel Piar escaped to Cartagena but two years later returned and won an epic victory against the more numerous Spaniards in the southeast city of San Felix where Bolivar left him alone to fight. This fed into his (erroneous) suspicion that Bolivar was only fighting for the interests of his Mantuano class that Piar detested. Karl Marx, reflecting on this episode years later wrote: “Simon Bolivar was the General of the Retreats”.21 After this battle Piar protested to Bolivar, questioning his leadership abilities for abandoning him to face a larger Spanish army, so Bolivar, nervous by his accusation and especially by the size of his new army of former Boves hoards, had Piar arrested, tried for treason and executed by a firing squad ordered by Bolivar in the city of Angostura. This left the hoards of former Boves slaves leaderless again; that would not last long as they would soon find another fearless commander in the plains that was as brave as Boves, completely filled with patriotism instead of resentful vengeance, loved by his troops, a better army general and a true leader and statesman.22

The Conflicting Historical Pole-Genes The reason this story needed to be told is because Boves is the progenitor of the “Resentment Pole-Historical Gene” that Venezuelans have in their historically genetical makeup. Similarly the white Elite he detested were the progenitor of the “Elitist Pole-Historical-Gene” which the minority side of Venezuela have ingrained in their historical makeup. Both genes are conflicting and mutually exclusive but as we will see later they do not have to be. As the word itself implies, resentment is a reaction to something adverse that maybe real or not, except that in Venezuela— and certainly in the case of Boves and the hoards that followed him—it was very real. Resentment was created as a reaction to the white elitist three centuries long harsh treatment of slaves that Boves capitalized on. There is no doubt that he was a bloodthirsty sociopath of inconceivably cruelty and forbidding, which is why most conservative historians regard him as nothing short of Genghis Kahn. However, at

The Conflicting Historical Pole-Genes

19

the same time, as some Venezuelan intellectuals including 19th-century Juan Vicente Gonzalez, Francisco Herrera Luque, Arturo Uslar Pietri and Simon Bolivar himself remarked, Boves was also the first true Democrat of Venezuela because it was him who emancipated the black people and all of their mixtures, by far the vast majority of the population of the country, and told all of them for the very first time that their VALUE AND TRUE WORTH in Venezuela as human beings, not beasts of burden. Boves personified social equalization, and he promoted his soldiers on a merit-based system (punishing as it was) but still something unheard off in Venezuela before him, which was used to promotions based solely on social casts and white skin color that had been the norm since the early colonials. Jose Tomas Boves’ legacy in Venezuela is far from dead, and stills arouse to this day the imaginations of historians, sociologists, psychiatrist, novelists, pundit, politicians and movie makers. The step forwards that Boves achieved for the emancipation, respect and recognition of the underclass cannot be reversed.23 Arturo Uslar Pietri summarizes Boves as: Boves was not a creole but Asturian (from northern Spain). He had lived since very young in the plains of Venezuela and had managed to plainly consubstantiate himself with the lifestyle and mentality of the “Llaneros” (cowboys). When the first idealistic and infective First Republic fails in 1812, and later in 1814 Bolivar comes back without illusions from that experience to reinvigorate the fight, Boves for personal reasons only initiates a campaign at the head of his llaneros against Bolivar and his patriots. Following him is an immense hoard of horseman that obey him blindly from his natural indiscipline and whom under his command will seed the horror and destruction of the whole country until defeating the patriots and put everything under his personal authority, with only a tacit acknowledgement to the figure of the King. He didn’t have any military grade, his soldiers called him commander and, more frequently, “Taita”. He constituted a formidable incomparable force of spear wielding horseman and became de facto the owner of the country, more effectively than the pale shadow of the Spanish military chiefs and the civilians of the Crown.24

Boves represents the first form of the caudillo that appears in our history. In him the phenomenon is condensed for the first time, which will then be repeated with variants throughout the 19th century. He is brave and daring. He is terrible to enemies and good to his own. He is deeply identified with his people. He incarnates in a precise way what in them is dark greed or cloudy resentment, or will to power. He is the executing arm of what to his people is instinct.25

The personality and action of Boves reveals much of the nature of the caudillo phenomenon. Nobody would remember that he was Spaniard. For his llanero followers he was the natural un-substitutable boss that rallied them to victory, that assured them the fruits of the plundering and the satisfaction of their hatred and personal vengeance….His authority did not come from any institution, he himself had won it. He didn’t organize, in the correct and formal sense, an army, his own soldiers appointed and fired their commanders, there existed the most familiarity in their treatment with him, but all of them acknowledged and trembled as the unique boss and supreme owners of their lives and lands…Commander Boves, dressed as a plainsman, spear in hand, represented to those men its own glorified image and the satisfaction of all of their hopes and resentments. They were willing to follow him blindly, to kill and destroy and sacrifice without blinking their own lives.26

20

1 From Classist Colony to Caudillo Anarchy

Historian Ricardo Martines notes something deeper of Boves legacy:

The work initiated by Boves was already indestructible: the slave regime that was the basis of the colonial system received a death blow; the Creole and Spanish nobles, their representatives, had fled and most of them had been adjusted by the revolutionary terror. The seed of the Venezuelan nationality, raised by Boves armies, would continue to germinate; the class war that Boves had waged when giving birth to the first gems of nationality, opened the way to the war of liberation from the Spanish colonial yoke.27

Here we note that Boves not only emancipated the black people from their inhumane colonial status, but in doing so also destroyed the slavery system and with it the core basis of sustainability of the 300-year-old colonial regime. There are those who argue, as Martinez does, that Boves was truly revolutionary because he led the first revolutionary movement in Latin America with the aim of destroying slavery and in the way destroying the existing class relationships of white landowners and black slaves; and that much is true. However in my opinion to be classified as “revolutionary” the destruction of something needs to be replaced by something else that is not only decidedly different but presumably better and long lasting, and Boves did destroyed everything bad but never implanted anything good. A revolution may be defined by a radical change in the forms of production and in the existing class relationships. Boves only achieved the second part, not the first. As said, his hordes were at a loss without him; except that a retreat to pre-Boves times was impossible. Boves single-handedly killed that epoch; as he also killed, according to Bolivar “Three centuries of culture, illustration and of industry”.28 A phrase that most of my colleagues would concur with what Chavism did to Venezuela in this century. But that raises the important question. Is it possible to destroy all of the bad without destroying the good? In my opinion yes but only if it is done carefully, and for that you need an agreement in the middle with both Poles, The Elite and the Resentful. That was impossible to do it in the entire 19th -century history of Venezuela. It was done in the twentieth century, and it is possible to do it now.

When Heaven Listens to Prayers At the beginning of 1818, knowing that Bolivar was stationed in the hacienda of Cañafistola…I hurried up to meet him accompanied with the principal commanders of my army. As soon as he saw me from afar, he mounted his horse and rode to receive me, and when we found each other we dismounted our horses and with the greatest joy we hugged each other. I manifested to him that I had the happiest presage for the cause of our fatherland to see him in the plains, and hoped that his privileged intelligence will find new ways by using the resources that we put at his entire disposition, it would launch rays of destruction to the enemies we were trying to defeat. With his characteristic generosity he told me in flattering phrases how he knew of my constancy and resilience in resisting the dangers and necessities

When Heaven Listens to Prayers

21

of all kinds that I had to endure in the defense of the fatherland, assuring me that with our mutual efforts we will finish destroying the enemy that oppressed us—Jose Antonio Paez.29

With Boves and Piar gone his horde of battle trained slaves were devoid of effective leadership and needed a new Taita, a true caudillo they could trust, understand their cause and lead them to battle. The man that they found was another plainsman named Jose Antonio Paez (1790–1873) who was fighting, training and recruiting warriors since 1810 in the opposite part of the country, the large plains of Apure in the southwest, next to the Andes. Paez had similar physical features as Boves: white, blond, strong and barrel chested and also shared the same characteristics of the llanero plainsman because Paez had been that all since his teenage years, warring, eating, sleeping under the stars and could handle a horse and lead an army in hand to hand combat better than anyone. In his youth Paez assassinated two ruffians in self-defense who were trying to rob him, so he hid in a cattle farm of a family friend whose owner thought the young man better learn the ropes of cattle ranching, so he hired Paez as a peon and put him under the orders of his chief slave, a big black man known as Manuelote who worked Paez to the bone, forcing him to tame wild bulls, ride wild horses on bare-back, cross rivers with the animals before he knew how to swim, sleep on the floor, chop wood and fix fences barefooted. Manuelote even had Paez wash his feet and rock him to sleep at night. The two years he spent there made Paez tough and strong and learned the hardships manners of the slaves, who he befriended. After two years of hard labor, the farm owner—Manuel Pulido—promotes Paez to managing the sales department, which he does for a year. All of that earned him the respect of all the Pardos whom would also later blindly followed his leadership when he decided to fight for the independence of Venezuela in 1810, at age 20. This Pardos former Boves hoards swelled his army to more formidable proportions that Boves ever had. They even confided on Paez the same nickname of “Taita” (father in llanero lingo) that they had called Boves.30 Reading from his autobiography, Paez wrote of the llaneros: I managed to attract them; I managed to make them suffer content and be submissive to all the miseries, annoyances and shortages of the war. They gladly obeyed me and loved me as a father ... I did not have much faith in the patriotism of those men who only accompanied me and had taken services out of sympathy for me.31

Irish General Daniel O’Leary, who was Bolivar’s right-hand man at the end of his life collecting laboriously all his letters and published them in his voluminous memoirs, met Paez and described him as a plainsman who was observant but quiet and shy in the presence of people better educated, but eloquent and garrulous in the presence of his illiterate army, who treated him with enormous respect and admiration because:

22

1 From Classist Colony to Caudillo Anarchy

As a guerrilla leader he was without equal. Bold, active, brave, prolific and cunning, quick to conceive, resolute in execution, and quick in his movements, he was all the more fearsome when the force he commanded was less numerous.32

Simon Bolivar wrote in 1821: “When General Paez occupied Apure in 1816, finding himself isolated in the middle of enemy territory, without support or hope of obtaining it anywhere else, and without even being able to count on the general opinion of the territory he was operating, he was forced to offer his troops that all the properties that belonged to the Government of Apure (which were confiscated from the enemies) would be distributed among them freely. Among others, it was the most effective means of compromising those soldiers and increasing them because they all ran to share equal advantages”.33 In short, Paez did what Boves had done, with the difference that he did it for independence. To this, the historian Manuel Tomás Lander adds: As can be seen, the personality and charisma of the caudillo were decisive to win proselytes, and if additionally any benefit was offered to the followers, as the llanero caudillo (Paez) did when promising them land and fortune assets, the unconditional support of that impoverished mass was assured because they had no other way to improve their situation.34

A very important trait of the personality of Paez is that even though he lacked all education other than a minimal base of reading and writing, is that Paez was always a man in relentless search for knowledge, surrounding himself with the most educated man of his time. When he met Bolivar he instinctively knew that this man could fill many holes in his brain as far as learning goes and bowed his entire leadership to the superiority of Bolivar’s intellect, a measure that caused him some trouble with his llanero troops who flat out told Paez that they would only take orders from him, not from a mantuano. Bolivar interceded and assuaged the llaneros by assuring them that their boss will always be Paez, and that any orders would be “talked” between the two of them. Bolivar immediately recognized Paez thirst for knowledge and was only too happy to teach him and feed his brain on everything he knew about World history, philosophy, laws, languages, institutions, diplomacy, religion, geography, the French and American Revolutions, literature and culture. That’s all they talked about during the long months and years they rode together. In return Paez put at Bolivar’s service the entire masses of his llanero troops and his unheralded military skills and leadership prowess, and it was Paez who would win all of the remaining battles of Venezuelan independence and preside the nation in the first difficult quarter of a century. The synergy between these two patriots was enormous, perfect and heaven sent. In can be said that if Manuelote molded the physics of Paez by making him tough, resilient, brave and strong, it was Bolivar who molded his intellect and made him smarter, a statesman and a better patriot.35

When Heaven Listens to Prayers

23

Before they met Bolivar had ran into deep trouble with his eastern generals not only because he let Boves escape in San Mateo or because he himself escaped the exodus siege on to Jamaica, but mostly afterward when he ordered the execution of his popular General Manuel Piar, who as we saw had challenged his authority for leaving him alone in the difficult Battle of San Felix. Piar’s surprise execution caused most of Bolivar’s remaining generals, all Piar’s friends, to challenge his authority in a mini-congress to the point that Bolivar had to escape from them fearing for his life until he ran into Paez early in 1818, who immediately ordered his obedient masses of llaneros to protect Bolivar from his persecutors and thus became his loyal strongman and right-hand man for the remaining of his life. As rightly pointed by Venezuelan intellectual diplomat and historian Simon Alberto Consalvi: “Without Paez there is no Bolivar”. Paez happy presages came true. The plains Paez controlled gave Bolivar the army vanguard that he needed from the Orinoco River to Apure, which not only gave Venezuela its independence but from which also supplied much of the man-warriors for the South American Battles of Boyaca (Colombia), Pichincha (Ecuador) and Ayacucho (Peru). Paez differed from Boves in five vital areas: (1) Paez was white person who fought for the Patriots, not the Spaniards. As said above, while the Spanish Crown soldiers and the Mantuano Patriots each had opposing agendas in the independence wars, the black former hordes of Boves had their own agenda, different from the other two, and it was theirs that would ultimately define the winners and losers of the Venezuelan independence because it was them that brunt the fighting. In other words, the hordes of Boves army were largely indifferent as to whom they were fighting for or against as far as the conflict Patriots vs. Spaniards was concerned because that, to them, was just another white man’s war. What they were really fighting for was their emancipation as humans, the end of slavery and a fair share of the wealth of the land. In other words, for them the independence war was a Civil War, a true revolution. (2) Paez was a noble, magnanimous man, with no cruelty and vengeance in him, and his sole motivation was the liberation of Venezuela and keeping order afterward. (3) Paez fearless bravery and military tactics were legendary and unmatched, often winning battles with enormous disadvantages, like the famed Queseras del Medio in 1819 were with a 150 man army defeated an army of 6000 Spaniards by attacking at night, simulating retreat and re-attacking with his famous cry “Vuelvan Caras” (About Face). There were many other similar examples properly recorded.36

24

1 From Classist Colony to Caudillo Anarchy

(4) As said, although poorly educated Paez liked to surround himself with the most intelligent people he could find, always yearning to learn all that they knew. Boves, in contrast, wanted to demolish all education because to him that was just an instrument to keep blacks as slaves and the Elite on top. (5) By recognizing Simon Bolivar’s qualities and education, he accepted his superiority and humbly followed all his orders. It was Paez who finally sealed the army union Bolivar had been seeking for years because no one dared to front Paez llaneros. The Bolivar-Paez synergy couldn’t have been better. In all of the time that they spent together Bolivar made a true Statesman out of Paez which would serve him well during his tenures as President of Venezuela. In exchange Paez would assure Bolivar’s safety from his eastern generals, win all the remaining battles of the war of independence, including the decisive Battle of Carabobo on June 24, 1821, that Paez led and won from beginning to end (Bolivar ascends Paez to Chief General of the independence armies in the battle field). On June 29, 1821, with the Spaniards finally defeated Simon Bolivar and Jose Antonio Paez entered triumphal into Caracas, receiving the highest honors from of the entire country. Simón Bolivar made sure all the honors that he received were shared equally with Paez, including having him sit next to him and placing on his head one of the two Laurel crowns that the city bestowed to Bolivar, while dedicating the other one to the people of Colombia.37 It is estimated that 200,000 lives were lost in the 13-year War of Venezuelan Independence. By far more than any other country in Latin America. But as we will see, the Civil War between Elite and Resenters would extend off and on, mostly on, for the remaining part of the 19th century.

Notes 1.

2.

3.

4. 5. 6.

Venezuela is not the only country with unresolved historical issues. There are other countries far older than Venezuela that if you read their history, one almost concludes that democracy will never evolve there. The particulars of our unresolved history happen to be unique in this hemisphere. Venezuelan indigenous native tribes such as the Caribes were hunter gathers mobile and war like, unlike the Aztecs in Mexico or the Incas in the highlands of the Andes who depended on land cultivation. The enslavement of our Indians was nearly impossible so the options the Spanish Conquistadores took were to annihilate them or drive them to the Amazon Jungle where some tribes such as the Yanomano live now in deeply impoverished conditions. Their place, as in the Caribbean islands, Brazil and North America, was taken by African Slaves who were treated brutally and harshly. See Lander (1992) The black mixture includes Pardos which summed a three way mix. Mestizos (white-native Americans); Mulatos (white-black); Zambos (black-native Americans). Quoted in Lander; p. 74. See Maza-Zavala (1985), p. 458. See Lander (1991), p. 255.

Notes 7. 8. 9. 10.

11. 12. 13. 14. 15. 16. 17. 18. 19.

20.

21.

22.

23.

25

Often paraphrased as “Religion keeps the poor from killing the rich”. Mantuanos refers to the velvet blanket the Elite class wore to Church on Sundays. Only they were allowed to wear it, and only they could go to certain Churches to receive salvation. There are still cookbooks in Venezuela that list their delicious recipe in the dessert section. Miranda’s betrayal of Spain in favor of France obeyed, in my view, two reasons. First Miranda detested the Spaniards because it was them that ruled over Venezuela. Second because Miranda, like Bolivar, was a very well educated man and was influenced by the revolutionary theories of the enlighten period of which the French philosophers were in the vanguard position. Miranda wasn’t alone, many Elite intellectuals in Spain were called “afrancesados” (French influenced) because they regarded these philosophers (Descartes, Voltaire, Rousseau, Montesquieu, etc.) correct and signaling new modern times, whereas the thinking in Spain was medieval and outmoded. Bolivar, also an afrancesado, betrayed Miranda by survival instinct, he would have been surely tortured and killed by Monteverde—had he not accepted his offer to turn inn Miranda, who had charges of betrayal waiting for him in Spain. Miranda died in a Spanish Jail four years after the fall of the First Republic in 1812. See Herrera Luque, in his best-selling historical novel Boves El Urogallo (1980). See Uslar Pietri (1986), p. 90. See Brito-Figueroa (1987), Vol. IV, pp. 1298–1299. As first exposed in the writings of Frenchman Alexis de Tocqeville “Democracy in America” (1835). Cited in Mondolfi (2006), p. 35. See Pino-Iturrieta (2009), p. 72. See Brito Figueroa (1987), Vol. IV, p. 1300. The Battle of La Victoria that Ribas’ student army won was on February 12, 1814, a national holiday today. It’s not clear how Bolivar let Boves escape. According to one account Boves hid in a local Church. When Bolivar was told he sent someone to kill him there, but that person mistook Boves with someone else and killed him instead. Perhaps the most salient sacrifice of the San Mateo battle was the immolation of patriotic hero Antonio Ricaurte, whom Bolivar had put in charge of the explosive arsenal of his troops in his house. Ricaurte, who was a bit of a war historian, saw Boves winning and his troops approaching the house. He let some of them inside and then exploded the entire arsenal killing himself and many of Boves army, thus preventing Boves from capturing all that war powder. From an audio obtained by the Washington Post confirmed by Pompeo’s twitter account. One of the pretenders is Leopoldo Lopez, whose maverick character and divisive career resembles Mocho Hernandez (see next chapter) in many ways. Lopez has even let it known that he must be the chosen one because he is a descendant of the Bolivar family tree—even though the Liberator never had any (known) children of his own. Karl Marx was always a harsh critique of Simon Bolivar; in an 1858 letter to Frederick Engels he used adjectives as miserable, brutal and coward when describing Bolivar and how he allowed his efforts to degrade into “military anarchy”. Hugo Chavez, as well as his entire entourage have proclaimed themselves to be both “Marxists” and “Bolivarians” but neither has ever addressed this contradiction. This leads one to believe that in reality they are neither, and they use both these names (and Che Guevara) as political disguises and window dressing just as they would have used Batman if that was ever popular in Venezuela. Who betrayed Ribas by bribing his slave to his hiding has never been known. Most likely it was the Spanish army itself. But Bolivar was the greatest benefactor. There is no proof that Bolivar had anything to do with Ribas’ betrayal. But suspicions of this exist because it is certain that neither Ribas nor Piar would never take any orders from Bolivar ever again; which to Bolivar was unacceptable. Historians have no doubt that Bolivar had everything to do with the execution of General Manuel Piar. Probably the most famous is Francisco Herrera Luque’s fable novel Boves El Urogallo (1980). Besides Herrera-Luque’s (a psychiatrist) historical novel, there have been plenty biographies, movies and textbook stories on Boves for his name, to this day, ignites the passions of many. He was mentioned by Hugo Chavez.

26

1 From Classist Colony to Caudillo Anarchy

24. 25. 26. 27. 28. 29. 30.

See Uslar Pietri (1986). Cited in Mondolfi (2006), p. 101. Uslar Pietri (1986), pp. 87–88. Martinez (1963), p. 89. Vallenilla-Lanz (1999), p. 120. See Paez (1945), Vol. 1, p. 139. Later Paez in the independence wars captured Manolote in a battle, embraced him and Manuelote told Paez: “I told you I’d make a man out of you”; “Indeed you did” Paez responded. After a half night of drinking to the old days Paez invited Manuelote to join his army and the black slave happily accepted and the roles were reversed, it was Paez turn to be his boss. They remained good friends during the rest of the war (see Paez, J. A. Autobiografia del General Paez, 1945, Vol. 1). See Paez Autobiography, Vol. 2. Cited in Plaza (2000), p. 49. Vallenilla-Lanz (1999), p. 103. Lander (1991), p. 239. Almost comparable to the modern synergies of Bill Gates and Paul Allen or Steve Jobs and Steve Wozniak. In his winter years Paez learned the violin and composed walts melody for that instrument. After that battle Bolivar told the victorious soldiers and their commander Paez “You just fought the most extraordinary feat that could ever be celebrated in the military history of nations”. The defeated Spanish general, Morillo, in response to a harshly reprimand from the King of Spain Ferdinand VII, told him. “Your majesty, you give me Jose Antonio Paez and 100 thousand of his Apure llaneros and I will have Europe at your feet”. In another battle, Bolivar saw Paez cross a crocodile-infested river with his troops to attack and beat the more numerous Spanish army. “If I hadn’t seen this with my own eyes I would never believe it” Bolivar remarked. See Paez autobiography Vol 1. After the battle of Carabobo a few isolated Spanish strongholds remained, like the city of Cumana that was conquered by Bermudez late in 1821, the sea port of Maracaibo that was conquered after a ferocious sea-battle won by Admiral Padilla (of black color-later excecuted by Bolivars order on questionable insurrection rumors) in 1823 and the Castle of Puerto Cabello, conquered by Paez also in 1823 by leading his army to attack the Castle from the front, meaning the sea waters, which they had to walk at night for hours.

31. 32. 33. 34. 35.

36.

37.

References B. Figueroa, Federico (Universidad Central de Venezuela, Caracas-Venezuela, Historia Económica y Social de Venezuela Tomos I y IV, 1987) M.T. Lander, Historia amena de Venezuela (Editorial Histamena, Caracas-Venezuela, 1992) R. Martínez, A Partir de Boves, Manuscrito (Caracas-Venezuela, 1963) A. Uslar Pietri, Godos Insurgentes y Visionarios (Biblioteca Breve, Barcelona-Spain, 1986). E. Plaza, El Último Régimen del General José Antonio Páez: 1861–1863 (Universidad Central de Venezuela, Caracas-Venezuela, 2000) M. Lander, Historia amena de Venezuela (Editorial Histamena, Caracas-Venezuela, 1991) D. Maza-Zavala, Historia de Medio Siglo en Venezuela: 1929–1975 (America Latina: Historia de Medio Siglo, Vol 1; Mexico D.F., Editores Siglo XXI, 1985) E. Pino-Iturrieta, Simon Bolivar (El Nacional, Caracas-Venezuela, 2010) E. Mondolfi, Mudar Derrotas (Libros Comala, Caracas-Venezuela, 2006) L. Vallenilla-Lanz, Cesarismo Democrático (El Nacional, Caracas-Venezuela, 1999) J.A. Paez, Autobiografía del General José Antonio Páez-Vol 1 (H.R. Elliot & Co., New York USA, 1945)

Chapter 2

The Era of Civil War

In Chap. 1 we saw that the war of independence that liberated Venezuela from Spanish colonial ruling was really a part of a much deeper civil war in the country, a war that pitted the Elite Mantuanos versus the Boves-emancipated Pardo Resenters who turned violently against the three century slavery socio-economic system. Here we see that the fighting went off and on well after 1821 for the next 80 years. And for the same reason: the still unresolved quandary of the Elite versus Resenter Pole that still maintains Venezuela bipolarized.

After Independence the Real Trouble Starts After independence Simon Bolivar tried to implement his utopian dream of liberating the rest of the Andean Nations from Spain which he did with the enormous help of fellow Venezuelan General Antonio Jose de Sucre—and to unite them into one formidable country called “La Gran Colombia” in honor of Christopher Columbus. He chose the city of Bogota as the capital city of its grand project with a Constitution of Central Power. What motivated Simon Bolivar was, principally, his fear that the USA would someday become a very strong country, and he wanted a counterbalance with a strong nation in the south. This worked uneasily for about a decade until it all came apart due to social divisions among the untrusting oligarchies of each country, especially the Venezuelans who deeply mistrusted the closed Elite oligarchy of Bogota and refused to be submitted to an inferior position to them like they had been throughout the colonial years; less so to a country that Venezuelans Generals had led to be liberated and whose original Constitution Venezuelans had drafted and signed. Bolivar was practically alone in this idea and paid harshly for it as Colombia´s vice president, Francisco de Paula Santander, a lawyer, whom at one point had been under Paez army command, tried to kill Bolivar at least twice.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. A. Rossi, The Rise and Fall of the Oil Nation Venezuela, https://doi.org/10.1007/978-3-031-34660-6_2

27

28

2 The Era of Civil War

Before embarking to lead the liberation of the Andean nations in 1821 Bolivar wisely decided to leave Paez at the helm in Venezuela as Governor with full authority, because he recognized in Paez as the only man who had complete leadership of his llaneros to keep order in the country from the internal forces—mostly Eastern Generals, that wanted to tear it apart. So in 1826 a movement named “La Cosiata” started to separate Venezuela from La Gran Colombia as the general mistrust of Bolivar’s too close attachments with Bogota became widespread and the Venezuelans reckoned that with Paez in charge, why would they need Bolivar?, a sentiment that was even more prevalent in the army. Marquez del Toro, a prime Venezuelan oligarch whom Paez had named intendent of Caracas, wrote in 1826: “It was not only the noble character of the man but the fact that his popularity and influence over the towns of the province were so great, that only he was able to maintain order in the population and with his authority, avoid outrages from the troops or other ill-disposed people”.1 The Grand Colombia movement ended in 1830 when Bolivar ordered Paez to organize a national referendum on the question of separation and the results from the 92 providences were unanimous in favor of voluntary separation. Bolivar travels to Venezuela and upon seeing the unanimous results of the referendum has no choice but to accept the separation of Venezuela stating: “General Paez has saved the Republic; General Paez is the first man of Venezuela”.2 Since then a fundamental base was created in our organic Constitution and in our political morals about ‘the commitment of man to man, the social bond of person to person, the personal loyalty without collective obligation founded on the general principles of society’ to arrive, through a necessary evolution, to the recognition of a supreme leader as representative and Defensor of the national unity: General Paez, you are the Fatherland, Paez was told by the separatist sympathizers in 1830.3

This is why historians credit Jose Antonio Paez as the True Founder of Venezuela. This enhanced ever more the trust and respect of both the Elite and the llaneros Resenters on the leadership of Paez, which contributed in no small matter to the progress and prosperity of his first two administrations and successors up to 1847. What persuaded Simon Bolivar to favor Colombia and its capital city Bogota over his birth country is something that has puzzled historians. I believe a clue may come from a quote from Bolivar himself when he said: “Ecuador is a convent, Colombia is a University and Venezuela is a military barrack”. There is no doubt that in his time Colombia was a much more educated and law-abiding country than Venezuela, product of the higher rank it had during the long colonial period “Virreinato”, which translates to Vice Royalty, a very high status, whereas Venezuela was only a “Capitania”, a much lower rank. Also, there is no doubt that the brunt of the major battles of independence of the five nations Simon Bolivar led to liberalization was shed in Venezuela, and for a far longer period, with a total estimated death toll of about 200,000 in a decade, making almost our entire male population of all ages war-like plainsman, and Bolivar just wanted to start his new nation from what he thought was the most peaceful and best fertile ground he had available. Be that as it may, the irony is that Simon Bolivar couldn’t have been more wrong. Colombia turned out to be the most violent country in the Americas having endured no less than 9 Civil Wars

The Death of Simon Bolivar

29

in the nineteenth century and one in the twentieth century that lasted 53 years!—not counting the guerrilla wars that still exist today. Its current elected President, Gustavo Petro, is a former guerrilla.

The Death of Simon Bolivar The three greatest fools that humanity has bred are Jesus Christ, Don Quijote de la Mancha and ME!…I have sown the Sea…My Glory! My Glory! Why do they snatch it away? Why do they slander me? Paez! Paez! I have resolved to leave Colombia, to die in sadness and misery in foreign lands. Oh my friend, my afflictions don’t have a place because the slanders are drowning me…My last votes are for the happiness of the fatherland; if my death contributes for the parties to stop and for the union to consolidate, I will descend to my grave in peace—Simon Bolivar in his death bed, December 1830

The breakup of Gran Colombia in 1830 ended the so-called 3rd Republic of Venezuela (according to Chavez and some historians interpretation—we will rewrite this here and now). Before that Paez, knowing all too well what the results of the referendums would be, told Bolivar that the only way he could save his project was if he elected himself King of Gran Colombia, and that if he made that decision he would back him all the way. But Bolivar refused this offer in no uncertain terms: Me wanting to be a monarch? I would first tear my heart apart before trying to perjure me, before I succumb myself to such vile degradation. Be sure of this, north Colombians (referring to Venezuelans) never, never, will General Bolivar, your Liberator and your father, will ever be a king, not a sovereign in Colombia, nor in America, and Jose Antonio Paez will never cooperate in that nefarious parricide.4

Simon Bolivar died that year on December 17, 1830, virtually alone in deep despair and disillusioned, in the city of Santa Marta, Colombia. Historians believe he had contracted tuberculosis but his State of mind couldn’t have been more depressing. The news of the assassination of his dear friend General Sucre by ruffians earlier that year, his forced separation from his long-time lover Manuela Saenz, plus the collapse of Gran Colombia and the knowledge that oligarchs from Caracas to Lima were burning effigies of himself to show how much they abhorred him took a heavy toll. In Santa Marta in the house of a friend Bolivar was waiting on a ship to take him to Europe as he had been expelled from Colombia; and although Paez never officially impeded his return to Venezuela it was no secret that his military men and practically all of the rest of Venezuelans didn’t want him around, because the first few years after independence bore horrid economic conditions that they blamed on Bolivar’s Gran Colombia. Bolivar’s legacy today is Heroic and Legendary and deservedly so. Notwithstanding the mistakes expected in his incredible venture, Bolivar, as opposed to other statesmen before and after whose Glory is measured in the conquest of lands (think of Alexander the Great and Julius Caesar, to name two), is remembered by liberating four nations from the Spanish yoke, not conquering them, VenezuelaColombia-Ecuador and Peru and creating another one, Bolivia. Worth mentioning,

30

2 The Era of Civil War

Simon Bolivar was born very wealthy and died very poor, which is exceptional in military generals that conquered countries. Early in 1830 Paez convenes the finest Venezuelan intellectuals of his time to draft a Constitution that elects him for a five-year term 1831–1835 thus becoming on record the true founder of Venezuela. The nickname that Venezuelans called them evolved from “Taita” and “The Centaur of the Plains” to “The Clarified Citizen”.

The Republics of Venezuela Those who make peaceful revolutions impossible will make violent revolutions inevitable— John F. Kennedy

This in my opinion is the true First Republic of Venezuela. The failed Gran Colombia experiment (1821–1830) can’t hardly be called a Republic because Venezuelans were officially under the mandate of Bogota (even though two Venezuelans, Simon Bolivar and Rafael Urdaneta, were its President). The other two “Republics” were not really either because Venezuelans were never in full control of the country for any relevant length of time. As we saw, the so-called first republic started in 1810 with the Caracas citizens deposing of the Spanish Governor on the account that he was de facto representing the French that had taken over Spain, and then by the Venezuelans who formally declared independence the next year on Miranda’s insistence except that it got very little popular support and was defeated by Spain shortly after in 1812. That is hardly enough time to be called a Republic. And the “second republic” fared even worse as Boves crushed it from within as soon as it got had started but was killed too soon to establish anything new. In neither of these cases did the Venezuelan patriots controlled the entire country. But in 1830 they did. So it is Paez that begins formally The First Republic of Venezuela. The other four Republics are these, and they are so because Venezuelans were in full control of the country every time and the political or social economic order was changed dramatically. Republic

Period

Political characteristic

Social economic order characteristic

Economic results

1

1830–1899

Civil war off–on

Slavery in decline until full abolition. Serfdom

Prosperity at beginning and end. Mostly poverty

2

1900–1958

Andean military dictatorship

Open economic system

Prosperity

3

1959–1975

Democracy

Open economic system

Prosperity (continued)

The Clarified Citizen

31

(continued) Republic

Period

Political characteristic

Social economic order characteristic

Economic results

4

1976–1998

Bi-party democracy

Elite–renteer corrupt economics

Disguised prosperity leading to poverty (Venezuela Saudita)

5

1999–present

Single-party democracy

Resenter–renteer corrupt Disguised economics prosperity leading to poverty (socialismo siglo 21)

Technically revolutions imply the forceful overthrow of a Government and social economic order that is replaced by a new system of both. But here we are talking about Republics, not revolutions, even though every time a coup was attempted its leaders called it “Revolutions” for no other reason than to gather popularity and followers. Here Republics are inflection points in the policies of the established political order, that may or may not have evolved peacefully or forcefully, which changed the direction of the social economic order drastically; not quite 180 degrees but close enough. So everything starts with Paez in 1830, and the evolutions of the rest of the republics will be explained in do time.

The Clarified Citizen Forms of Government should adapt themselves to the places where they are to be applied; not vice-versa. This sublime truth, corroborated now more than ever, will let the convention see that brilliant theories shine only momentarily; until they become the pitfall that bury all actions and men—Jose Antonio Paez.

The First Republic would start well because of Paez prestige and authority, but as we will see, when that started to wane in mid-century—mostly due to mistakes by Paez himself—this Republic would end badly. Leaving a plainsman, an ordinary citizen like Paez, who slept under the stars with black slaves that he led and befriended them as the Strongman President and maximum ruler of Venezuela had very deep implications as far as social mobility goes. It meant that in Venezuela no one felt that the highest office was socially beyond him; that there were no casts to impede anyone from achieving what Paez had achieved because he was one of their own. Once a member of a cast is raised in social status so is the rest of his or her cast. This created democracy it its true essence but also initial instability. Today it is not unusual for the son of a wealthy lawyer to sit next to the son of a janitor in a university class. But it also left the door open for

32

2 The Era of Civil War

any caudillo wannabe to aspire to the highest office in the nation and most who tried to oust Paez failed—but others did not fail as we will see. Perhaps this very expressive anecdote that occurred to General Carlos Soublette, Paez’s able right-hand man and twice his Presidential successor, drives this point. Soublette writes that when President he always strolled from his house to the Presidential palace and always found a poor fat man he didn’t know waiting just to walk next to him on the narrow sidewalk, leading to the palace, forcing Soublette to walk on with one boot on the mud. One day Soublette confronted this man by asking; “Why do you always do this”? and the man replied: “Because this is an independent country and we are both equal; I am a citizen and you are a citizen just like any other”. Soublette said: “Very well then, we are both equal, so one day I walk on the good part of the sidewalk and the next day you walk on it. But it can’t always be you!”.5

Paez Economics Paez outlived Bolivar for more than four decades, becoming the undisputed strongman of Venezuela for over a quarter of the nineteenth century (1821–1847). Paez had the unenviable task of starting to build a nation from scratch after it had been ravaged by the independence wars, and that included the wildly uncivilized hoards, now free citizens, who only knew now how to wage war, not work the land; and whose Elite classes that survived the Boves siege had mostly emigrated. The population census that Paez ordered in 1825 revealed 659,000 in the entire country, about an 18% drop from the start of the century due to war with the most productive lands destroyed. So Paez starts without a disciplined population not knowing how to work, not many investors, nor did he have a mantra of capital nor known natural resources to work with. His first task was to populate the country by allowing immigrants to come in from anywhere and give them generously enormous tracks of land, and some came from Europe. The larger question was what to do with the economy now that he was the supreme authority of the country and people were itching for real results. But little by little Paez somehow managed. Indeed, during his first two tenures historians agree that Paez managed a progressive, pacific and law-abiding Government that enjoyed economic progress. What helped make Paez administrations successful was the fact that his persona incarnated the best of both Poles: The Recenters because those were his origins and the Elite because circumstances forced him to befriend them and collaborate with them to earn their trust, investment and management skills; a trust that was sealed when he protected the Elite interest by leading the separation from Gran Colombia and then by protecting the nation from several coup attempts from would be Resenter putschists—some from his former army officers—that just wanted full power to establish mob rule (what political science calls “Ochlocracy”), steal or both.

Paez and Adam Smith

33

A move toward the establishment of capitalism was out of the question; that system was still in its late formative stages in Europe and North America, whereas in Venezuela the mercantilist period (the step between feudalism and capitalism) had never taken hold due to the tight control of the crown overall economic activity including the prohibition to trade with neighboring countries. Paez helped established the mercantilist system by allowing traders to import/export from anywhere they liked. Then there was the question of freedom and land distribution to the former slaves that fought the independence wars that both Bolivar and himself had promised. Paez fixed this issue by honoring his promise, and he gave large tracks of land to the former slaves but told them that was all he could do, because the country was so poor that he couldn’t afford to give them tools, animals, seeds or money to start with, just the bare land. So the former slaves who now had title certificates of land but nothing to work it with, with no educational skills, were left with no choice but to sell the land back to the Government at a specified (low) price and then accept to do the only thing they could, work someone else’s land in a semi-slave serfdom until their situation improved with education and land-tenure skills. Paez also drafted laws that eased slavery and condemn that horrid institution to its extinction, as we will later in this chapter. But he had to be gradual and careful because he and Bolivar had as reference the horrid experience of Haiti, who did achieve independence from the French 18 years prior to Venezuela in 1803 and did apply Ochlocracy, with disastrous results that affect that country to this day. Paez and Bolivar wanted the slaves to be free, that was one of the prime reasons for the independence movement, and they knew that, thanks to Boves, a return to the slave past was nothing short of suicidal. They realized—like the USA had also realized before—that they could not do it all at once, that it needed a process of several stages of gradualism that included their education, training in agriculture and cattle herding, farm management, simple accounting, among other things. Laws were passed to these effects but sometimes were never heeded for lack of dutiful enforcement.

Paez and Adam Smith Also worthwhile mentioning is the connection between Paez and Scottish Economist Adam Smith (The Father of Economics) who died in 1790, the same year Paez was born. Next to this anecdotical curiosity they had something more important in common. It is well known that Smith wrote feverishly against mercantilism (a term he coined), recognizing in traders and entrepreneurs a new prodigal economic class which, if let largely alone from State interference, would bring productive prosperity to all nations through an “invisible hand” that the market has that arranges the right equilibrium of production and prices through the laws of supply and demand.6 Paez encountered in his tenures as President of Venezuela a similar dichotomy between the old landowning class and the new trader merchant class (comerciantes), and he took the side of the latter. When he was asked by the landowners to create a law

34

2 The Era of Civil War

erasing the substantial debt that they owned to the merchants Paez did the opposite, he passed a law that forced landowners to agree on a time frame for the payment of the debt, after which if it remained unpaid the landowners would have to surrender ownership of their land to the traders. Like Smith, Paez regarded the traditional landowning (Latifundio) tenure an outmoded production mode that needed to be slowly replaced. Other laws that Paez passed concerned monetary policy by letting the money lenders set interest rates themselves instead of the Government; this ensued competition between the lenders that lowered interest rates and increased lending and production—as Adam Smith would have predicted and approved. Paez also nullified the 10% payment landowners had to make to the Catholic Church; instituted a Lassie Faire-Lassie Passe policy that allowed traders to export with any country, not just Spain. These measures increased production and exports and with a new effective tax code resulted in easing the financial burden of the country by lowering its external debt. Other measures in line with institutional stability included the First National Library, Contract Laws and a limits treaty with Colombia that established the border frontiers of each country. Paez also delivered peace as he militarily defeated the internal coups and Venezuela prospered well during his first two terms as President (1830–1835/1839– 1843) and during the terms of his successor and right-hand man Carlos Soublette (1837–1839/1843–1847); but not so much in his third term (1861–1863) as we will see.

Paez and Hugo Chavez The only thing that belongs to us is our past—Ernesto Sabato

As an editorial aside it is worthwhile mentioning the curious animosity that Hugo Chavez (our President Caudillo from 1999 until his death in 2012 or 2013) had against Jose Antonio Paez, and the reasons that I think were behind it because it bears some light not only into the mentality of Chavez but also to the extreme Resenter class that he represented. Hugo Chavez detested Jose Antonio Paez with pathological obsession; regularly decrying him in his hours-long Sunday speeches, calling him traitor, corrupt and coward, downplaying Paez’ place in history and in the battles that he fought for independence, to the point of stating that he betrayed Bolivar when he separated the country from Gran Colombia, an erroneous interpretation because, as all historians agree, that was an utopian dream of Bolivar that was impossible to be implemented, then as now, and that Paez was only delivering what the rest of Venezuelans wanted; that Bolivar even agreed with it at the end because he also realized that forcing that union would have likely resulted in an all-out civil war that would have likely turned against Paez, who was essential for the union to consolidate. In his rants Chavez also despised Paez siding with “the rotten oligarchs” and re-instituting the slave system by dressing it up in a different code, which has also been explained, because

Paez and Hugo Chavez

35

it was these oligarchs that had the capital and know-how of working the land and exporting–importing the products that they made and because slaves had neither the educational skills nor the capital to work the land that they were given and that was the result of 300 years of brutal slavery; not Paez’s fault. The slaves voluntarily sold that land back to the Government. As for corrupt, we will see that when Paez was exiled to the USA and South America he arrived there penniless. Also, Chavez never explained what he would have done in place of Paez. Drill for oil? Chavez even went to the extreme of publicly stating that the corpse of Paez be taken away from the National Pantheon where it has been resting since 1888—except that the Venezuelan Army forbade him to do that; so an angry Chavez took all the historical paintings of the independence wars that featured Paez out of the Presidential Palace in Caracas.7 I believe that there are two possible explanations for Chavez animosity toward Paez, besides the ones already mentioned. One was brought up by current comedianturned political analyst Laureano Marquez in a nice half-hilarious-half historical piece he wrote called “Open Letter to Hugo Chavez from Jose Antonio Paez”. Here Marquez States that to back his revolution Chavez thought he needed to embrace a historical figure and whom better that the Liberator himself? As we will see in later chapters, Chavez called his revolution “The Bolivarian Revolution” and even officially changed the name of the country to “The Bolivarian Republic of Venezuela”. In order to effectively mark his message Chavez needed to elevate Bolivar to a Godlike figure; except that God-like figures need a Devil for comparison, and since he couldn’t use Spain or Colombia he used Paez who did have an initial rift with Bolivar over the separation issue. This letter goes on to explain Paez manifold contributions to the early years of Venezuela and even stating that without our separation from Colombia Chavez would have remained just another anonymous nobody, least of all elected President. The other reason Chavez detested Paez with outrage (this is mine) is that Hugo Chavez wasn’t educated enough to really comprehend the history of Venezuela. He never made General in the Army; meaning that he never took and passed the required courses (called Estado Mayor) that are essential to make General in the Army or Admiral in the Navy. Intuitive familiarity with a complex subject is superficial knowledge at best which often leads to dangerous conclusions and actions, whereas true comprehension of a subject encompasses a much deeper understanding that relates all the relevant elements and circumstances that provokes moments in history and transforms its aftermath. German Philosopher Johann Von Goethe once wrote: “There is nothing more frightful than ignorance in action”. Teodoro Petkoff, a 20th–21st-century left leaning politician and former Marxist guerrilla (whom we will read about later) once remarked that: “Hugo Chavez read something about the 19th Century and knows nothing of the 20th Century”.8

36

2 The Era of Civil War

Caudillism for Ever?

The political ascent of General Jose Antonio Paez represents precisely the emergence of the caudillo who manages to unify around his authority, although not absolutely, the different regional forces. His great prestige has been cemented through the fight against the royalists and later in the leading role he plays in the separation of Venezuela from the Republic of Colombia. In the course of this process, he acquires the necessary strength and support to momentarily silence internal antagonisms…. Paez’s leading role is based on political-military power, which allows him to become the leader, whose authority is considered a guarantee of peace, stability and the consequent increase in production, which in turn will result in the increase in foreign trade. These conditions satisfy both the interests of landowners and merchants, who manage to jointly impose their purposes of domination at the national level through the Republic created in 1830––Federico Brito-Figueroa

At the end of his first tenure Paez could not be immediately re-elected according to the new Constitution, so he left office peacefully to farm his own land as a private citizen in Valencia, where he invited his former soldiers to teach them how to work the land. A voluntary bequeath of presidential power was of course an unprecedented event in the history of the country. Unfortunately, his first successor was the indecisive and faltering Jose Maria Vargas, a British educated medical doctor and teacher who never wanted to be president and who actually campaigned telling congress not to vote for him. But Vargas was imposed anyway by the oligarch landowning class. According to some historians Vargas´ candidacy was levied by the Elite to drop Paez influence a couple of notches, except that it backfired because it ignited the rancor of all the military class who were outraged that a civilian would take the highest office when it was them who fought the wars while Vargas was studying in England; and Paez had to save Vargas from internal coups from his former comrades, from which Paez came out stronger than ever. Vargas only lasted a year before his second resignation was finally accepted. The imposition of Vargas over Paez candidate Carlos Soublette—an educated military general and war hero was a mistake; the first of many made by the Elite Pole. Historian-Sociologist Vallenilla Lanz attributes this error to the white Elite’s senseless need to re-establish its class above the masses without realizing that they were getting rid of the only man who could do just that. Vallenilla Lanz writes: Pretending to replace the personal prestige of the caudillo, the only possible institution in those times, the only powerful source of social order, with the personal prestige of the laws that were not the concrete expression of the needs or of the social State, that did not correspond to de facto conditions, nor to the modalities of the environment, nor were they in the national customs, was the height of lack of foresight and empiricism.9

In other words, Paez did not just guarantee the institutions under the Constitutional Order in Venezuela, Paez Was The Constitutional Order. But it was here that Paez

The Fall of Paez and the Anarchy of the Liberals

37

also displayed his major weakness as a leader, his uncanny naivete of pardoning everyone, including the putschist, because they were his former trusted soldiers. After one of those coups against Vargas Paez elected to forgive the aggressors trusting that they had learned their lesson, while Vargas wanted the hardest punishment: the firing squad. Unfortunately, Paez won that argument; a decision he would live to regret the rest of his life. Another naïve decision that Paez made, that he also repented big time when he was president, concerned an incident when two of the heroes of independence, the Monagas brothers, Jose Tadeo (whom we will see resembled Hugo Chavez in many ways) and his younger brother Jose Gregorio, both former generals under his command in the wars, took over a big size of land in the southeast and decided upon themselves to create a new independent republic to be named “Colombia”. Paez sent his army Chief General Santiago Mariño—the same guy who lost with Bolivar the battle of San Mateo in 1814—to dissuade the Monagas brothers whom, with Mariño, had also taken part in the coup against Vargas. Imagine Paez surprise when he gets a letter from Mariño informing him that the Monagas clan had convinced him to join their separatist movement—naming him as their leader, and then had the gall of sending a letter to Caracas for congressional approval of this separation. Congress trashed that letter and instructed Paez to personally gather his llanero troops and traveled east to quell that rebellion, which he did without trouble (a good thing because unknown to anyone at the time this is where most of the unconventional oil of the World is located—see next chapter). But once again, when Paez was told by his “friends” how sorry they were he forgave them all; again! That would backfire on Paez big time. His trusted advisor and chancellor Santos Michelena resigned on Paez thinking that such degree of naiveite was impossible to bear. How could Paez miss calibrating Jose Tadeo Monagas? How could he have been so naïve and trusting? Paez, in explaining himself, wanted to show that he never pretended “to win laurels tainted with the blood of my fellow patriots, I always tried to be lenient with my numerous enemies that I had the glory to defeat….I just couldn’t bring myself to be cruel against my brothers at arms”.10 Sir Robert Ker Porter, the British Ambassador in Caracas in this period wrote to his Secretary of State regarding this episode that: “The real motive of this rebellion appears to be, from the part of their leaders, more due to their personal hatred to the President of the State, General Paez, than to any other patriotic sentiment related to the welfare of the country”.11

The Fall of Paez and the Anarchy of the Liberals

In our war of independence the most transcendental phase, the most dignified of study, is that anarchy of all social classes that pushed the egalitarian movement that has fulfilled the history of this century of independent life—Laureano Vallenilla Lanz

38

2 The Era of Civil War

Jose Antonio Paez was the undisputed leader—strongman of Venezuela throughout our first 26 years post-Spanish independence, from 1821–1847. Throughout his entire period Paez applied progressive conservationism with success. But that began to wane down fast in 1847 as the second Government of Soublette ended and elections came up and Paez decided not to run and to retire to farming his land and to take care of his ailing long-time lover Barbara Nieves, who died late that year. Paez decides to his almost immediate regret to back the candidacy of Jose Tadeo Monagas, the same guy he had pardoned so many times, but who had military experience and by now had become a rich cattle farmer in the east of the country. Paez States: “History of the new nations of America testifies that almost all subsequent revolutions have occurred because their heroes have perpetuated themselves in power—I want to spare Venezuela from such a disgrace”.12 The other relevant choice was writer Antonio Leocadio Guzman, a non-military political newsman and founder of the Liberal Party with lefties ideas that he brought from France, along with its distinctive yellow colors, which would have much influence the rest of the century. Guzman is now regarded as one or the greatest demagogues of our entire history. Guzman at one point had supported Paez in his newspaper but then broke ranks with him citing that Paez had become too conservative and that Venezuela needed to step up, to directly support the underclass by distributing the wealth from the Oligarchs. Guzman, like Monagas, campaigned hard for the Presidency but Paez chose the elder Monagas. Monagas convinces Paez that he would follow the general directives of his and Soublette and even accepts his invitation to stay for a month in Paez house before he could ascend as President, where Paez holds a party in his honor to introduce him to the oligarchs and merchants and other important people in Caracas; except that Monagas notices that all of these people wanted to converse with Paez, not him. As soon as he sat down in the Presidential palace Monagas does an about turn of 180

The Fall of Paez and the Anarchy of the Liberals

39

degrees in policy by gyrating his back on the conservatives and applies his hidden agenda of Resenter-Liberalism. He starts by firing all of Paez loyalists from office, including Paez himself who had remained as head of the army. We will see later that Hugo Chavez did the exact same deceiving trick 151 years later with the exact same results. As told by Paez himself: As soon as he sat down in the Presidential chair, General Jose Tadeo Monagas inclined himself to the applause from the party that had shaken the Republic and resentful to the man who had combated and beaten him. He provoked a discord with the Government ministries to the point of forcing their resignations; removed all of the officials from the military and replaced them with his own creatures, most of which lacked the legal requisites; refused to name governors in the providences of people that had been designated by the law, and gave these jobs of officers to those that had partaken with him the (failed) revolutions of 1831 and 1835. He collected and appropriated the arms and military equipment of war that belonged to the States and put them all in the hands of his cronies; disarmed the active militia; and called the reserve army to service without the previous authorization that the law required, to the detriment of the public finances that should pay these people when they are called to arms.13

Monagas then starts implementing the left leaning policies of Guzman, taxing the oligarchs and distributing the money to the poor, mostly to his own pockets and of his clan. Venezuela starts imploding, and the Elite begins to realize that they had made a mistake with Monagas, that he had fooled them and Paez. Monagas thought that his liberal policies needed a philosophical backdrop so he chose to apply Guzman´s French-type liberalism, and it was these ideas that shaped tacitly the Resenters Pole; because it became imperative that their movement was not so obviously seen as led by a blind man. The Monagas clan believed in a philosophical backdrop much like Chavism would need their version of Marxism in the twenty-first century to justify their policies. But in reality they pretty much used Liberalism and Marxism as window dressing for policies they would apply anyway. One of the major differences between Monagas and Paez conservatives was in regard to Federalism, meaning they favored giving the States and providences much more latitude—bordering on sovereign status—in contrast to the conservative centralized power that Paez and Bolivar favored. As we will see now that policy became a tragedy that spelled their fallout. But these Liberals philosophy did define the rest of the nineteenth century counting no less than a dozen Presidents—including prominently Guzman’s son—before it died in 1899. The resemblance of Monagas and Hugo Chavez starts here. Both had military backgrounds, both led failed coup attempts, and both were pardoned. Monagas arrives in power at the hand of the Elite and powerful by concealing his true agenda, as does Chavez in 1998, as we will see. More importantly, they both came from the Resenting Pole, and they both faced entrenched Elite opposition in their early years, and both defeated them delivering in the end disastrous results. This gives credence to John Maynard Keynes famous quote: Practical man, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.14

40

2 The Era of Civil War

The Assault of Congress When Monagas showed his true colors the conservative congress that had elected him on Paez’s recommendations decided to do something about it. On January 24, 1848, when Monagas is scheduled to render his first annual report speech to congress he gets word that and internal mutiny is brewing up, so he sends one of his ministers to deliver the speech in lieu of himself and congress sequesters him and proceeds to draft a law to put Monagas out of office, which of course was technically a coup because Monagas had been elected properly. The mistake of congress was to do it without the tacit support of the army. False rumors spread that his minister had been assassinated. Monagas reacts by assaulting the congressional palace with his army led by himself and his friend Santiago Mariño, wounding and killing many of its members, including Paez former chancellor Santos Michelena, and replacing all of them with loyalists. Needless to say, the wound on the Venezuelan Democracy of this assault was nearmortal, Monagas had no trouble in dominating the congressional body to his whims and making it an appendage of his power, like any ministerial bureaucracy. Congress would never really regain its autonomy until deep into the twentieth century. We will see later that the Elite conservative congress elected in 2015 suffered a similar fate from the Resenter Maduro Government that succeeded Chavez and for the same reason; drafting laws to out his elected Government. Paez, grieving the loss of his friend, told of this incident in a way that made Monagas the entire culprit, so he sends him a letter telling him that he regretted supporting his candidacy and that he is forming an army to once again attack Monagas and defeat him; except that Paez doesn’t have much of an army anymore, most of his loyal llaneros were gone or too old, and some had even switched to Monagas Resenter side. After some brief battles where one of his followers makes a tactical mistake, Paez is captured by Monagas chief henchman Ezequiel Zamora (whom Monagas had recently pardoned his death sentence imposed by Soublette) and then Paez is totally humiliated by Monagas, who ties his hand and feet to a post in a moving cart and displays him in several cities like a priced tortured animal: eventually sending him to a prison cell in an old castle in the eastern city of Cumana (now a tourist attraction that I have twice visited). Paez would spend a tortuous year there until his wife tells Monagas wife to convince her husband to release Paez and exile him to Philadelphia and New York City, where he Paez goes to find that his prowess was nothing short of legendary as he receives all the honors of an independence hero, as he would receive later from England, Peru and Argentina. Paez, not being corrupt, arrived in the USA ruined and later had to find work as salesman of a meat grinder. Jose Tadeo Monagas governed badly pursuing a highly inefficient redistributive policies with no production benefits. The assault on congress, justifiable or not, provided a mortal wound to the confidence of investors, growth stagnated as the Elite recoiled investment plants and the Resenter class demanded retribution. As previously planned, Monagas younger brother Jose Gregorio succeeded his elder

The Abolition of Slavery

41

brother in 1851 on the condition that at the end of his term in 1855 he handed back the presidential seat back to his older brother, which he does.

The Abolition of Slavery The younger Monagas is now better remembered than his older sibling because it was his Government who first drafted the first Mining Legal Code of the country anticipating European and American investments in our underground wealth. More importantly it was also his Government who freed the slaves in 1854, a decade before the USA. But there are two huge differences. The first is that the USA they had to endure a grueling four-year Civil War to finally abolish slavery, whereas in Venezuela it was the abolition of slavery that preceded and, in some ways, caused our Civil War. The second was that in our case the backdrop for the abolition of slavery was human philosophy that dated back to the Boves black emancipation battles and the promises made by Bolivar and Paez in the wars, whereas in the USA and most other places the backdrop of dropping slavery as the backbone of production economics was the industrial revolution; along with human philosophy in their Declaration of Independence in 1776 (“All Men are Created Equal”—Thomas Jefferson). When he took the pen to sign the anti-slavery law Jose Gregorio Monagas was nervous and his pulse quivering, so he took a moment before grabbing the pen and said: “I want to have a serene pulse, I don’t want posterity to think that I signed with fear”.15 Slavery in Venezuela was waning down in the early 1850s. Paez had instituted measures like the prohibition of importing slaves. The freedom of all slaves born after 1821, the liberty of slaves who fought for the cause of independence and to those who turned 18 years old or older. These depositions condemned the slavery institution to its gradual extinction. After the breakup from Gran Colombia in 1830 new laws were passed that prolonged the liberation of slaves from 18 to 21 years old and the liberation of 20 slaves per farm per year, plus the creation of a trust slave fund to compensate the owners for every slave freed, which backfired because the masters only freed the old, injured and useless slaves and collected as if they were freeing the young and able. In 1840 a new law as passed that would ease the burden of freeing those slaves that were about to turn 18 by passing them to serfdom status, meaning that they were given parcels of land to farm themselves for survival wages which produce had to be sold to their old masters in exchange for miserable prices, until they turned 25. By these measures slavery continued to be semi-slaves of their old masters, except that they were acquiring experience in farm management of the land. One problem that arouse concerned the age of the slaves, because it was the masters who held their birth certificates and although they were required to inform the local authorities of their birth in their land, they seldom did. Another problem concerned the Slave Trust Fund, which was frequently out of cash because the instability of those times often required the Government to drain all funds to pay the army to quell internal rebellions. Paez once had to ask the wife of Jose Tadeo Monagas for a loan

42

2 The Era of Civil War

for just this purpose. The masters refused to free the slaves unless they were paid on the spot. By the 1850s however the slave population had declined by plenty. The 1825 census revealed about 50 thousand slaves in the entire country, compromising 7.3% of the total population. Estimates in 1834 had the slaves population at 36 thousand and 21 thousand in 1844. A decade later when Monagas signed the law to abolish slaves there were only about 12 thousand slaves.16 That landmark decision places the younger Jose Gregorio Monagas high in the history books, with a burial place in the National Pantheon and a State named after him (something Paez has never had). But, the immediate aftermath of that decision cost him his life in the cruelest manner a few years later. Perhaps because it officially signaled in Venezuela an end to a long era in the way it did production economics for its entire history, colonial and independence, the same way the World did it for at least five millennials. That is not an easy transition for the old guard to accept anywhere, especially in the backward nations because, as opposed to the rich countries where the recently discovered fossil energy (coal), that caused the industrial revolution to replace slave work, that hadn’t happened in Venezuela yet. I.E. The dilema here amounted to: If slaves are freed, who is going to provide the energy to work the farm? As scripted, the younger Monagas ceded the next elections back to his elder brother Jose Tadeo, who did the same inefficiencies as his first Government with the same results; but when his second Government ended and is told his brother wouldn’t run again, Monagas the elder decided on his own to change the Constitution to make himself president for life. That backfired quickly provoking the disastrous Federal War of the 1860s.

The Federal War: History Repeates Itself Again and Again Unfortunately, instead of transforming the social structure of our agriculture, those wars only served so individuals of inferiors casts displaced the mantuanos of their land, appropriating them and leaving the same agriculture and economic regime. Over the ruins of the old oligarchies, new oligarchies were funded. But Juan the common man, the peon, stayed as poor as always––Juan Liscano (twentieth century Venezuelan poet)

The Federal War (1859–1863) was a horrendous destructive epoch of our 19thcentury history where the two conflicting poles, the Elite and Resenters, that Paez had been able to neutralize with much difficulty, revived. Without Paez to contain them these Poles came to a full showdown blow. When Jose Tadeo Monagas decided to uproot the Constitution late in 1857 the Elite Pole sensed a golden opportunity when they realized that the army was uncomfortable with his decision and decided to turn the clock and recover their privileges of Paez years. They decided to capitalize on the friendship the Valencia city conservatives had made with the Governor of Carabobo State, General Julian Castro, who was a well-educated Resenter and convince him to ride his army to oust Monagas, which he does early in 1858 forcing Monagas to

Julian Castro

43

escape to the French Embassy. His younger brother and slave liberator Jose Gregorio, who had retired to farm his land, was not so lucky. He was captured by the Castro army, jailed in the same Castle of Cumana where Paez had been imprisoned, and later transported to the Castle of Maracaibo and left to die there of respiratory ailment in 1858 during the Government of Julian Castro. This was the abrupt end of what historians today refer to as the Monagato Period. But as we will see, neither Monagas the elder nor his son and nephew weren’t quite through stepping on Venezuelan politics.

Julian Castro A precedent embalms a principle—Benjamin Disraeli

The story of this man deserves our lasting attention because it is what happened to him that portends and is indicative of the crux of our present-day political problems. Julian Castro is convinced that his former friend Monagas overstepped his mark and when he ousted him it provoked France, England and other European nations to temporarily block Venezuelan ports. It is the first successful military coup in Venezuela, and it wouldn’t be the last. Castro surrounds himself with conservative people at first only to find out—to his dismay—that the powerful Elite with which he sided with was deeply disunited and distrustful of each other and the only thing that held them together was their collective hatred of the Monagas Clan; but with them gone there was no glue to hold them together. Much like the opposition of Venezuela thereafter till this day. So Castro incorporates some of his buddies from the Resentful side which only made matters worse because that put Castro in no-man’s land; in the middle of a very polarized country taking hits from both sides. Elite Conservatives are generally better educated than the Resenters, but that in itself is no guarantee that they would be looking out for the general public; most times they just look out for themselves. Cuban Poet Jose Marti, the brilliant ideologue of his nation’s independence and a great admirer of Bolivar and Paez, wrote:

There is no battle between civilization and barbarism, but between false learning and nature. The natural man is a good man and respects and rewards the superior intelligence, as long as it does not use his submission to harm him, or offends him by dispensing with him, which is something that the natural man does not forgive, willing to recover by force the respect of who hurts his susceptibility or harms his interest. By this conformity with the neglected natural elements, the tyrants of America have risen to power; and they have fallen when they betrayed them. The republics have purged off the tyrannies their incapacity to know the true elements of the country, to derive from them the form of Government and to govern with them….The spirit of the Government should be the spirit of the Country, the form of Government should resemble the particular Constitution of the Country. The Government is nothing more than the equilibrium of the particular elements of the country.17

44

2 The Era of Civil War

In other words, the Resenter admires and will submit himself to the higher education and intelligence of the Elite—as Paez did with Bolivar—unless the Resenter finds out that the higher educated are using their advantage to damage their interest and susceptibility, to humiliate them despairingly (as occurred later to Chavez) or that they will do without them. At that point all trust is gone and the Resenter will use force if necessary to avenge their dignity by finding a leader/caudillo who understands their cause and lead the disenfranchised and cheated. Marti also says that the best type of Government is one that finds equilibrium between the distinctive and conflicting forces of all the “elements of the country”. As we will see later, that is precisely the situation Hugo Chavez found himself in Venezuela in 1998 after decades of Elite mismanagement of oil revenues in Venezuela. Jose Marti presents us with one of the greatest unlearned lessons of our time.

Boves De Ja Vu? (The Federal System) may very well be the most perfect and most capable in producing human happiness in society but, nevertheless, it is the most opposite to the interest to our new born States––Simon Bolivar

In 1858, in the Castro mixed-type Government—the Elite, mistrust the Resenter minority and let them know it, whereas the Resenter minority dislikes the Elite for mistrusting and looking down on them, and let them know it. But Julian Castro is a man of reconciliation; he really believed that he could throw bridges and strike a Happy Medium solution between these two conflicting Poles. The Elite, true to their cast customs, insisted on total and absolute control of power into their own hands. In the meantime, trouble in the country side was brewing up big time. It centered on three men. Juan Crisóstomo Falcon, Ezequiel Zamora and Antonio Guzman Blanco, son of demagogue Antonio Leocadio Guzman. Falcon was a welleducated man from the Resenter Pole with some military experience who was obsessed with the idea that Venezuela’s problems could be fixed if it only adapted a decentralized Federal political system of the USA, which as said was a totally different country with distinct historical backdrop. The irony being that the USA was undergoing its own Civil War at the time and a big reason was that its Federalist system had collapsed when eleven of its southern States left the Union because Abraham Lincoln was elected in 1860 and their hapless president, James Buchanan, just stood in the White House and waved them good riddance. Both Buchanan and Falcon are rightly placed at the bottom of the list of presidents in both countries in the nineteenth century by their respective historians.

The Federal War and the Rebirth of Boves

45

Flanking Falcon was his brother-in-law Ezequiel Zamora (the same who captured Paez and led him to prison), his battleground military strategist, expert in militaryditches-type warfare. Zamora was a deep admirer of Boves and his ochlocratic methods and, like Boves, had uncanny leadership skills and ferocity over the hoards of former slaves; coping his famous battle cry: “Death to all the White People and Those who can Read and Write”; plus “Land and Free Man”; “Everything for the Poor, Nothing for the Rich”, and a few others of that nature—Zamora, like Boves, was white and literate. In his version it meant: Utter Destruction of all the physical and social structures that the white man built. Like Boves, Zamora raided towns, killed landowners and distributed Boves like “title certificates”. Never quite as cruel and blood thirsty he too ravaged the countryside adding slave revolt support anywhere he went. One reason that vexed Zamora to exasperation was the way the slaves had been liberated by the younger Monagas in 1854, who used Government funds plus a loan from a foreign Government to purchase the slaves from their owners and set them free. That enraged Zamora who agreed with the abolition of slavery but felt that if anyone should be compensated monetarily should be the slaves themselves, not their owners. After all, the slaves had no land, no capital, no education and most ended up working the land at dearth level wages of their former bosses who were now richer, because of them. Rumors surfaced that the Monagas clan themselves got richer in this deal. Zamora believed that the freedom of the slaves was only a disguised measure to keep them slaves and poor where the bulk of the wealth was still in the hands of Latifundios.

The Federal War and the Rebirth of Boves Horrified by the divergence that has reigned, and must reign among us due to the subtle spirit that characterizes the federative Government, I have been forced to beg you to adopt centralism and the reunion of all the States of Venezuela in a single and indivisible republic. This measure, in my opinion, is urgent, it is vital, it is redemptive. It is of such nature that without it the fruit of our regeneration will be death—Simon Bolivar, Discourse of Angostura 1819

So Zamora called them to arms and most followed, joining the Federalist movement led by Falcon. The Federalist was a movement firmly convinced that Venezuela´s problems lie in too much central authority of its president, that this authority should be shared with the governors of the providences much like the political model of the USA. The Federal War (1859–1863) and its aftermath devastated and destroyed Venezuela all throughout to levels not seen since the independence wars, and for the same reason, unresolved historical issues that render a deeply class divided bipolarized nation with self-destructive disorders. Sociologist-Historian Vallenilla Lanz summarized it best: All those movements were simply the continuation of the same struggle begun in 1810, the spread of the same fire, sometimes hidden under the ashes or raising its

46

2 The Era of Civil War

flames until the horizon reddened, but always relentless in its work of devastation and leveling. In 1846, as in 1859, the same hordes of Boves and Paez were again concentrated under the vigorous arm of another great caudillo of the same moral physiognomy (Zamora), of the same leadership skills, of the same heroic drive, of the same detachment, of the same ochlocratic instincts and we can even say that of the same breed of the legendary Asturian (Boves).18 Worth mentioning, Ezequiel Zamora was largely a forgotten figure until he was resuscitated by Hugo Chavez this century (whom as we will see also destroyed more than his share of Venezuelan property by expropriating policy). Chavez put Zamora’s legacy at even keel with Simon Bolivar, stating that he incarnated the continuation of “bolivarianism”. Chavez seldom stopped to glorify Zamora in his hours-long Sunday speeches (Alo Presidente). He showered Zamora with all kinds of honors; plastering his face in posters all over the country; naming after him bridges, roads, currency bills, social missions, oil fields in the Orinoco Oil Belt, football teams and even an oil refinery (budgeted but never built). Last but certainly not least of the men who flamed the Federal Wars was the young-ambitious shrewd and cunningly calculating Antonio Guzman Blanco, who unlike his father did join the military. We will see here that Guzman Blanco was much sharper and pragmatic that his father and, as it turns out, also much more corrupt and narcissistic. His educational level and fathers connections landed him a general rank in the Federalist Army without taking part in battle. In June 1858 Julian Castro makes the mistake of having his army expel all of these three Federalist sympathizers out of the country, which led them to conclude that Castro had been trapped by the Elite Pole and would not negotiate with them. That left them no choice but to return to Venezuela with vengeance and wage an all-out war. Realizing his mistake Castro drafts a new Constitution with some strong federalist elements in it, like the direct election of Governors, some tax collection, while keeping most authority in the capital city. Here Castro is throwing bridges to both sides asking them to meet halfway; in a happy medium because his new Constitution had the reconciliation elements he thought it would be acceptable to both sides and unify them. This Constitution would become the first true democratic of Venezuela because it contemplated that both Presidents and Vice presidents would be elected directly (although not by universal vote; that would have to wait 89 years until 1947). Castro’s Constitution went into effect on the last day of 1858. President Julian Castro convenes a meeting with the Elite in mid-1859 to convince them the wisest path of negotiation with the Resenters is to incorporate some of their demands without losing central control. He tries to impress on them with this new Constitution that had both central and federalist authority including some power to the municipalities, so they too can draft some provincial laws in their territories and collect taxes. Castro tells them that it would surely appease the Resenters in the countryside because as former Governor he knew their State of mind and trust. No sooner Castro finished talking the Elite Pole grabbed him and threw him in jail and replaced him by one of their own. Out the window went any hope of

Treason Hits the Federalist

47

reconciliation. A few months later Castro was forced to resign, found guilty by a “court of law” of high treason and thrown out of the country.19 What follows is a tragic-comedy of a revolving door of incompetent power Elite grabbers. The divisive Elite tripped all over themselves (as their modern version still do) and appoint one of their own inner circles to preside Venezuela; when that doesn’t work they appoint another, when that doesn’t work either they appoint a third one who happened to be the same first guy, and when that doesn’t work out either they appoint a fourth guy who was the same second guy, which didn’t work out either.20 When it became clear that nothing was working, that the Federal War was in full swing and two whole years had been wasted giving time for Falcon and Zamora to gather steam and add more troops to their cause, the Elite was left with no choice but to literally write and beg the aging Paez (71) to return to power only this time as a Dictator, because it was impossible to consider presidential elections in this time of extreme turbulence. Paez was living in New York City helping Venezuela with some diplomatic issues with Spain. Paez had come back briefly in 1858 but returned to USA after he disagreed with the Elite plans of absolute rule. He wrote from New York City that: “It is not possible to punish crime and moralize the Republic solely through the letters of the Constitution…an illustrated Dictatorship is the supreme remedy to save it; it is the only one”.21

Treason Hits the Federalist

Lucky bullet! Blessed be a thousand times the hand that triggered it. For Ezequiel Zamora to be great-and he was with the proportion of a warrior and an apostle-the Venezuelan land gave birth to soldiers. That man did not have an army, he had people tormented after his footprint—Juan Vicente Gonzalez (renowned Venezuelan writer of mid-nineteenth century).

But something had happened in January 1860 that would buy the Government some time. It was Ezequiel Zamora’s turn to get himself killed, not by a silly mistake as his hero Boves. This time was treason. Zamora had won the most decisive battle of the Federal War in the southwest Barinas State late in 1859 (The Battle of Santa Ines), but exactly a month later a bullet literally caught his eye and went through his cranium while he was inspecting war ditches in turf that he had captured in the city of San Carlos. Most historians have pinned it down to “a stray bullet from friendly fire”. In my opinion and others his likely killer was none other than Antonio Guzman Blanco for the following seven reasons22 :

1. Zamora was killed with one shot. 2. His only companion was Antonio Guzman Blanco, who wasn’t shot at or harmed. 3. His death was unannounced for an entire week.

48

2 The Era of Civil War

4. No one was ever blamed. 5. Guzman Blanco knew too well that Zamora’s troops responded only to his orders, and that Zamora wasn’t the type of General to ever relinquish army commands to anybody; unlike Paez whom as we saw did surrender his command over the llaneros to Bolivar in 1818, under much opposition from his loyal troops. Zamora was like Boves, not Paez. 6. As it turns out Guzman Blanco was the greatest benefactor of Zamora’s murder. 7. Perhaps more importantly, both Falcon and Guzman Blanco had deep misgivings about Zamora’s ochlocratic tendencies of mob rule. They wanted a decentralized federalist type of Government but they realized that Venezuela also needed some sort of centralized order, not outright anarchy that would doubtless have resulted in a Zamora-type Government.

Paez Last Hurrah Late in 1860 Paez personally congratulated Abraham Lincoln on his election victory and impressed on him that Venezuela was living with a free slave system. When he was begged to return by the desperate Venezuelan Elite in 1861 the aging Paez would preside his country for the 4th and final time, except that now on Dictatorship status. His job is to assuage the Federalist Pretentions by trying a different reconciliation approach than Castro, with the slogan “Peace and Union” which resonated a bit at first but failed later. Paez is waved farewell by the cream of New York City and received in La Guaira port like a Rock Star by a multitude of people cheering him all the way to his house in Caracas with gun salutes and fireworks. When he is officially instated at the helm of Venezuela the congress meets and Paez receives from his finance minister an opprobrious report that States: “Venezuela doesn’t know how much it owes or to whom it owes. Venezuela ignores who it owes to and how much they owe it. That is why Venezuela pays what it doesn’t owe and does not charge or gets paid what it is owed”.23 In a later chapter we will learn that a very similar situation happened to the Elite bound Government of Venezuela in 1983 for the exact same reason: lack of financial morals of a sick nation. In all likelihood it will also happen to the first Government that replaces the Resenter Maduro Government this century. But by then it was too late even for the ancient warrior Paez to do anything. Zamora’s death did drag out the Federal War for three more disastrous years but in 1863 it all ended with the Federalist rebels on top when a peace treaty, co-authored by Guzman Blanco, was signed in Caracas in 1863. The Federalist will govern the country alone with no Elite to counter balance, badly and very incompletely until 1870. Paez returned to New York City in 1863 to finish learning the Violin and write music for that instrument. He also wrote and published his voluminous autobiography in 1869 where he completely obliterates the sorry experience of his 4th and final term at the helm of Venezuela. He ends his autobiography in 1850 with this conclusion:

The Legacy of Jose Antonio Paez

49

I end here the history of my life when my public career should have ended…After having reviewed the facts of my life, I retain the satisfaction that can be presented as proof of the truth that these words convey: “NIHIL MORTALIBUS ARDUUM” (Nothing is Impossible to Man).24

Jose Antonio Paez died in New York City in 1873, a month short of his 83rd birthday.

The Legacy of Jose Antonio Paez If Boves is branded by some as the first caudillo and democrat (because of his emancipation of the blacks), then General Paez deserves much more recognition because it was him, the ultimate victor of the low class and the man who occupied the highest office of the country he dominated it for 26 years. Laureano Vallenilla Lanz had this to say: The rise of Paez, who from the humble position of peon of an hacienda to the highest position in the military and in politics, had to produce profound repercussions within our plain, anarchic, individualistic and semi-barbarous masses... The man who reaches a high position elevates with him the class to which he belonged and on it reflects the honors that are paid to him. For this reason the popular imagination is pleased to attribute to the great a humble origin a legend... Paez, supreme head of the nation has meant a thousand times more for Venezuelan democracy than all the preaching of the Jacobins and all the “sacrosanct” principles written in the Constitutions.25

But it is also true that hard as he tried, Paez could not build the necessary institutions for a true democracy to last beyond his own personal period and thus failed to bring lasting peace to a country ravaged by decades of civil wars that brought illiterate hoards on horseback welding machetes (cane knifes) led by wannabe caudillos sometimes into the Presidential leadership; who knew best how to make war and profit from their plunders. Even though Páez incarnated in his persona both the Elite and Resenter Pole genes, and governed well with the most capable men of his time, he had to spend too much time protecting Venezuela from nomadic coups.26 Venezuelan historians have settled Páez’s legacy in these terms and Hugo Chavez decrying him was never taken seriously by intellectuals nor historians, not even by the military, the uneducated and even most Chavista politicians who only kept quiet when Chavez ranted against him for fear of crossing him. With very few exceptions almost everyone thinks highly of General Paez. In my opinion Páez, although not flawless, was our greatest hero of the nineteenth century at the national level; only lower to Simon Bolivar for the latter’s heroism in liberating Colombia, Ecuador and Peru and creating Bolivia, which Paez had nothing to do. In Venezuela, which Paez founded and personally led for over a quarter of a century, he did the best anyone could, and better, under the dire circumstances he was forced to confront. Unfortunately for Venezuela Paez was not enough.

50

2 The Era of Civil War

The Pattern of Chaos The field is the sole influence of the particle––Albert Einstein

What is interesting is that all of the coups against Páez, and even beyond him all the way to the twentieth century, followed by a similar pattern of a vicious circle: An established order is perceived to become oligarchic and corrupt, a yearning for social justice breeds a new generation of idealistic wannabe putschist who eventually wage war to overthrow this established order and, because their ignorance precludes all effective economic or institutional plan of what to do after they come to power, they soon fall into the old habits of their predecessors to become themselves the new oligarchs. This is followed by incompetence and corruption in Government, leading to more poverty and resentment, more idealistic social justice yearnings by a new generation of dissatisfied wannabes and more coups. Then the cycle repeats itself, replacing the old with the old equivalent. In each and every case the name of Bolívar is flaunted as window dressing by both sides of the conflict, a tradition that is followed today. Political scientist Humberto Eco described this pattern as “Ur Fascismo”. As Teodoro Petkoff tells it: The cult to the historic tradition, the manipulation of it to adjust to its political objectives, the hyper-nationalism, the cult to violence and death, the cult to action for action itself, the bellicose verbosity and military postures, the brutal, nasty and aggressive attack on the political adversary, the denial of the opposition, the disregard of the Other and the propensity of their annihilation: all are some of the characters of Ur-Fascist.27

The nineteenth century of Venezuela was a complete disaster as far as the middle goes, but on the extremes of the century, that is during the Paez years and during the first tenure of Guzman Blanco era—as we will see now in this chapter—it was actually very good. What we need to learn is what made the difference. In both extremes of the nineteenth century Venezuela was led by two caudillos who incarnated in their persona both poles, The Elite and the Resenter Pole. But in the rest middle years it was the lack of cooperation between these conflicting poles that drove them to civil war that manifested the deep polarization of classes and self-destructing behavior that wasn’t really settled until the first decade of the twentieth century.28

Venezuela Under the Federalists Wherever the hoards passed nothing was left except ruins and land devastation—Romulo Gallegos (Novelist, former President of Venezuela)

The devastated country that the Federalist caused would suffer from the failed application of their ideology, which basically consisted of subduing most central authority in favor of more provincial authority following, they thought, the model of the USA. Falcon even changed the country name to “The United States of Venezuela”.

It Is the Same Story

51

The problem in Venezuela was that the federalist idea had never been properly discussed anywhere at any time and only tried once before with disastrous consequences in the 1811 Constitution. As said Simon Bolivar believed the principal cause of the failure of that experiment was excessive federalism, because the country wasn’t ready for decentralized Government yet. It didn’t get any better 55 years later. The provincial State Governors, not sure where their authority ended and the central Governments began, or on which issues, soon started behaving as if they had complete authority over everything and behaved as Kings of their feudal parcels, and the inept Falcon spent almost his entire 5 years in office on his horse traveling to all the providences to put out the fires he himself had lit-up, explaining these matters to the local caudillos where he was seldom well received. The economy staggered and his presidency failed abruptly when he tried to change the Constitution to re-elect himself indefinitely. Falcon was summarily disposed in 1868 not by a new revolution but by an old one, called this time “La Revolución Azul”, headed by the ancient Jose Tadeo Monagas, the same one who presided the country badly twice, jailed Paez in 1849 and who himself was disposed off eight years later when he too tried to change the Constitution to have himself re-elected indefinitely. Falcon resigned and retired while the triumphant Monagas entered Caracas only to die of old age at 84 before he could take power. Poet-Historian Arraiz Luca wrote:

It is impossible not to note the paradox according to which Jose Tadeo Monagas takes power after Falcon, and he is forced to leave power for trying the same thing that led Monagas to lose it in 1858: the constitutional reform with a view to being reelected indefinitely. To top it off with historical symmetries: Monagas comes to power and develops the same magnanimous politics that Falcon advanced when he came to power. Sometimes the history of Venezuela resembles the desperate experience of a merry-go-round.29

It Is the Same Story A knot cannot be untied without knowing how it was made—Aristotle

This recurring phenomena of history constantly repeating itself in Venezuela has one explanation. It is the same history. History only repeats itself when the country doesn’t solve its major issues properly. In our case is because it is the same sociological Pole-Genes confronting themselves from opposite extremes: The unbending Elite versus The avenging Resentful. With respect to the social economic order historian Manuel Lander States: While it is true that the independence revolution and the consequent war for emancipation caused a weakening of the country’s productive activities, however, the fundamental economic structure of Venezuela did not change. In effect, the base of the colonial economy was structured on the latifundium, the exploitation of slaves and monoculture, maintaining

52

2 The Era of Civil War with few variations after the end of independence wars since what was pursued with the elimination of Spanish rule was a change in the political system not in the economic regime.30

The senseless Federal Wars instigated by Falcon all but destroyed this feudal latifundio system but since the winners knew nothing about replacing it with alternative economic systems, what they ended up doing was rebuilding the same feudal latifundio from scratch, with the difference that slavery had been abolished in 1854 and a new oligarch class taking over from below by the victorious Resenters. But that did not make much of a difference either, because as said earlier, although the slaves were technically free, they still needed to live; and having zero capital, no education or management skills let alone connections, most ended up working for their old masters that did not emigrate at slave wages that barely afforded them food to reproduce themselves; very much like the majority of Venezuelans do right now because still is the same history (the principal aim of this book is to change this for good).

The Illustrious American Venezuela is like dry cow hide-leather. You put one foot in one end and the other end burst up––Antonio Guzman Blanco

The last 30 years of the nineteenth century were earmarked by another caudillo, Antonio Guzman Blanco, the cunning right-hand secretary of Falcon and the one who benefited the most from the assassination of Ezequiel Zamora (and, as said, his likely killer). After Monagas death in 1868 a power struggle pitted his son against his nephew (son of Jose Gregorio Monagas) that was never resolved. Perhaps because both their fathers emerged from the Resenter Class but their sons had grown up as the new Elite in the 1850s and had hence adapted the Elite divisive characteristics—even though they were cousins—as opposed to the union qualities of true Resenters like their fathers. So after two years of family feud that included battles and skirmishes between the followers of each, Guzman Blanco decided to put an end to it all in 1870 when he grouped former loyalists of Falcon and Zamora to lead what he called “The Revolucion de Abril” and muscles himself into absolute power, sweeping the Monagas descendants forever. He would rule Venezuela for three presidencies in the next thirty years, where he ruled even when he wasn’t president through his appointed cronies. Guzman Blanco was a Resenter of different sort, not the uneducated machetewielding llanero on horseback but a well-educated and traveled man who had represented Venezuela in the USA and Europe both in diplomacy as well as in financial negotiations and had experience in Finance Ministry and Chancellor. He also had one trait not seen in Venezuela since Paez, Guzman Blanco incarnated in his persona both of the conflicting poles. The Resenter because he had been a big part of the Federalist Movement and the Elite because of his high education, multiple languages and intelligence, as he was able to convince them with pro-business policies that he had

The Illustrious American

53

been wrong in his youth, that he wasn’t holding the banner of Federalism anymore; that he now favored strong Centralized Government (as we will see later, Romulo Betancourt—the father of Venezuelan Democracy—was in a similar position in the early 1960s). Guzman Blanco tacitly held the banner of the Liberal Party that his father created in the 1840s both because he needed it as window dressing justification for his policies but mostly because his overbearing father was still very much alive during much of his presidency; and he insistently tried to wield (too much) influence on his son; except that the younger turned out to be much more down to earth and pragmatic than his demagogue father and in so doing became the most progressive president Venezuela had in the nineteenth century. This is largely why Venezuela prospered well during his first term as President; he really bought peace and prosperity to Venezuela. Until he got bored and fed up. Historians have generated mixed reviews on the legacy of Guzman Blanco. On the positive side they cite that he was obviously very intelligent, astute and pragmatic, and he, at least during the seven years of the first of his three presidencies, did some very good things for Venezuela that began when he was able to throw bridges to all sides except that in his case, (unlike Julian Castro) were accepted and well received by both sides, probably because the people were too tired of war and destruction. Moreover, instead of the utopian socialist ideas that his father brought from France, the son brought from that same country the good stuff. Railroads, theaters, the Capitol Building, the monetary currency Bolivar, an agricultural bank, a large basilica (named after his wife), the national pantheon, roads for the interior of the country, a national statistics office, a law for free public education, electric lighting in Caracas, nationalized the telegraph and extended it throughout the country. He also brought stability, and with the help of the military he achieved relative peace and order easily defeating some isolated coups that occurred in much less instances. Guzman Blanco even writes a letter to Paez telling him that “Our shared dream of lasting Peace is here”. But that would not last much after his tenure. On the whole Guzman Blanco brought modernization to Venezuela, and the office of the presidency was not seen with fear anymore but with respect. For that he is remembered as the “Illustrious American”. On the downside Guzman Blanco was narcissistic and corrupt to the extreme, ordering countless statues and portraits of himself to adorn the emblematic halls and streets of Caracas, confiscated Church land, closed convents and catholic seminars, stole their wealth for his entourage, changed the Constitution and became infatuated with the city of Paris, France, where he frequently traveled and lived there while he was president. Guzman laboriously succeeded in having his daughter marry a French nobleman so he could insert himself inside the Parisian aristocracy. While at Paris where he lived in absolute luxury, his military henchman, General Joaquin Crespo—a big, protuberant, loud, fearsome and cruel man—took care of daily things in Venezuela, often behaving like a ruthless Manager of a large farm that belonged to Guzman Blanco; keeping his country in order with the same policy of siding with the powerful

54

2 The Era of Civil War

rich, the new Guzman oligarch class that grew out of the new found prosperity, whose most influential and richest member was the banker Manuel Antonio Matos. Guzman Blanco died in Paris in July 1899 about a decade after he technically left his third presidency of Venezuela (one that he staged to be “acclaimed” for from Paris). Until his death the shadow of his presence was permanently there.31 Guzman Blanco is remembered mostly by the modernization he presided to the devastated country he helped cause and the small prosperity he brought to an increasing population that was now about 1.8 million when he left. But historians are also right to point out that Guzman did indeed participate in the disastrous Federal war and horrid failure (which he corrected to a point). But mostly his legacy is tarnished by his corrupt narcissism, governing the country from France as if it was his own personal hacienda and especially of nurturing a new ultra conservative oligarch class that grew under his long tenure unchecked, the so-called modern “Amos de Valle” (Lords of the Valley), whose blazingly Elite and Superior attitude they acquired from Guzman of “owning” Venezuela would do much harm in the early years of the next century, provoking an invasion from three European superpowers and a salvation from the USA—see Chap. 4. Worth noting, narcissism is also a common variant of Venezuelan politics, mostly, but not exclusively, from the Resentment gene whom appear to feel the need to tell their people and mostly the Elite, that they LIVE and are HERE! In modern times the obvious examples are Carlos Andres Perez and Hugo Chavez the last of which, as we will see, tried—like Guzman Blanco—to build a cult of his persona. Guzman Blanco’s most famous quote was: “Venezuela is like dry cow leather (hide), you step on one end and the other side burst up”; i.e., you solve one problem and that starts another problem. On balance, I believe the legacy of Antonio Guzman Blanco was negative for Venezuela. Because of the bad precedent that he set with his luxurious Parisian lifestyle-financed with confiscated Government treasury funds, that set a horrid example to the white Elite Pole of Venezuela; both in his time and ours. It was Guzman Blanco who initially sowed the seeds of Government theft and massive capital flight by an Elite class to be deposited in other countries banks where they would escape to live a luxurious life style forever. It was under Guzman Blanco that Venezuela becomes a country not to be built, but to be plundered. This gives credence to a famous quote from Andrew Jackson, the 7th President of the USA: “A Mere Precedent is a Dangerous source of Authority”.

The End of the Old-Fashion Caudillos Joaquin Crespo was the strongman caudillo in Venezuela when Guzman was away in Paris. It is worthwhile noting that Guzman Blanco pay tacit acknowledgment to elections, winning all and when it wasn’t his turn he ceded to appointed loyalist, mostly to his military henchman Crespo and to his lawyer friend Rojas Paul, both from opposite sides of the Pole, Crespo from the Resenter side and Rojas from the

The End of the Old-Fashion Caudillos

55

Elite (who once turned against Guzman much to his demise). But Guzman´s policies of throwing bridges to both sides did payoff for a long time. Here another unthinkable happens to the history of Venezuela that would change it forever. It was Crespo’s turn to get himself killed by a silly mistake. It all came apart once again as a new underclass generation of wannabees tried to unseat the strongman Crespo from power, just two years before Guzman’s passing, but this time through the electoral votes. The botched elections of 1897 lit the fuse, when populist leader Jose Manuel Hernandez known as Mocho, who had traveled to the USA to see for himself the electoral campaign between W. J. Bryan and W. McKinley, that the latter won and used those same electoral tactics in his own campaign (traveling the country, hosting town-hall meetings, shaking hands, kissing babies and so forth). Mocho won a large popular following that challenged, successfully—as historians concur, the unpopular Ignacio Andrade, whose national origins were never proven definitively. But Andrade was the favorite candidate of Crespo and ordered most of Mocho’s votes to be suppressed, refusing to acknowledge his victory. So Mocho Hernandez took up arms and challenged Crespo to a battle in the plains State of Cojedes, not far from where Zamora had been killed by treason. Crespo´s more numerous and disciplined army easily routed Mocho’s ill-equipped rag-tag forces, but at the cost of his life. What is known is that in the middle of the battle Crespo approached a tree on his horse not realizing that Mocho had placed a sniper in the top branches of the same tree with a loaded rifle. The bullet pierced his hat and took out his jaw, killing Crespo before he hit the ground. Why Crespo approached that particular tree and didn’t look up is anybody´s guess. That is the bloody end of the First Republic of Venezuela because the aftermath of that killing marked a new decisive epoch of this country just as the twentieth century arrived. This will be the subject of Chap. 4. Worth noting, Crespo’s killing was the third assassination of 19th-century Venezuela that changed the country forever and for good. The first was Boves in 1814 at the battle of Urica; one cannot begin to imagine the fate of this country had Zaraza not noticed that Boves couldn’t control his new horse. The second is Zamora’s “lucky bullet”; for he would have surely been the head of the Federalist Government, and his ochlocratic policies would likely have done us similar lasting damage as Haiti. This Crespo mishap also changed Venezuela forever and in a good way. This is the subject of Chap. 4. In mid-twentieth century another assassination occurred and although not quite with the same dramatic consequences as these three, it did change Venezuela’s policy directions plenty. This is the subject of Chap. 6. Ignacio Andrade would be the last President of the Liberal Party. About the death of that movement he wrote: “Like waters without current, the political parties that do not have doctrinal activity, do not carry out the natural renewal of their organism in the course of time and events, they stagnate and rot. On top of the dead surface the tragic flowers of psychological malaria bloom”.32

56

2 The Era of Civil War

Conclusions: The Unlearned Lessons of Our Time Every day I am lacerated more by the fate of my country and every day it looks more irremediable…Like a wounded deer, we have in our bosom the arrow head and that will bring us death without remedy, because our own blood is our poison—Simon Bolivar

The relatively happy beginning and horrid middle and end of the nineteenth century of Venezuela, called here the First Republic, has many lessons to teach Venezuelans which unfortunately have gone ignored. The most important unlearned Lesson from this chapter is that none of the historical pole genes, neither the Elite nor the Resentful, can govern Venezuela alone. They both need each other in optimal combination that finds the moderates among them and discards the extreme radicals from both ends. This is what some of us call the “Happy Medium”—or Just Milieu—that brings out the best from both sides—disregarding the extremes of each—to complement equilibrium and create the necessary synergy for the benefit of the country. As said, the reason that both Jose Antonio Paez and Guzman Blanco were so successful through their tenures is that they both incarnated in their own self this Happy Medium Equilibrium, the first at the start of the century and the other at the end. Paez did it by earning the Elite trust when he befriended the landowners and merchants to reconstruct the besieged Venezuelan economic infrastructure with smart pro-business policies and by agreeing to lead the separation from the Gran Colombia. Guzman Blanco did it by throwing bridges to the Elite and also smart pro-business economic policies in his first term. But in both cases they failed to prolong their legacies beyond themselves because their successors only carried one of the Poles and would not throw bridges to the other, and when they did it was flatly refused, as in Julian Castro. Without the equilibrium of Elite and Resenter Venezuela falls hopelessly into the caudillo mold which distrusts deeply everything the Elite does, like sound economic policies. This affects Venezuela today in many ways. Could it be that what Boves implanted—the irreplaceable strongman personal ruling of the caudillo that levels everything to the lowest common denominator is all that Venezuela is good for? As we will see in Chap. 4 and later, this is not necessarily always the case. We can definitively do better but not if we put elements of casts and privileges in front. Another valuable lesson to be learned here and Latin America is that once Resenters class achieve political power they never leave it completely and not ever to the same Elite class that they ousted. Peronism in Argentina arrived in mid-1940s and is still there long after the progenitors of that movement have passed away; at times losing power to military dictatorships and in elections but always in the backdrop of the story of that country and sometimes, as now, back into the forefront. Its class conflicts resemble Venezuela in many ways. Juan Peron and his populist resentful wife Eva Duarte changed Argentina politics forever because they put their poor people front and center of their discourses and policy of what was previously a very rich but unequal country. Resenters do not cede the terrain that they win legally or illegally. Going back to pre-peronism in Argentina for a lasting and stable period has

Conclusions: The Unlearned Lessons of Our Time

57

proven to be impossible. Same in Venezuela, were now you still find plenty of Elite “politicos” with catchy but empty slogans like “Maduro Vete Ya” (Maduro leave now) but which don’t present concrete poor people policies other than to go back to the pre-chavez years of the 1980s–1990s where Elite white corruption rampaged Venezuela, as we will see. Resenters also steal a lot, as we will also see, except that the poor much rather be robbed by one of their own than by the white-collar Elite Class because Resenters are their social cast and they can at least dream that one day they will be in that powerful position; something that they cant do in an closed-exclusive Elite Government. In the 1950s the Resenters in Argentina chanted a catchy phrase that rhymed: “Muy Mujeriego y Ladron, pero queremos a Peron” (Very much a womanizer and a thief, but we love Peron). Similar analogies can be made with Mexico and now Brazil. A closer look at the lesson of the Federal War of 1859–1863 reveals that nothing but absolute power is good enough for the Elite Pole class that considers itself, proudly but wrongly, to be a cast above the rest. As we will see when we tackle the Chavism years, it is a horrible but recurring mistake by the Elite to use the military to oust a Resenter in political power (as they used Castro to oust Monagas) with the objective of placing themselves on top only to immediately ditch completely that military because they come from the underclass. It is a silly mistake that the Elite can’t help themselves repeating as they did in the early years of Hugo Chavez, as we will see. Today practically all history books rank Julian Castro near the bottom of the heap as Venezuelan presidents go; some don’t mention him at all, calling him incompetent and inefficient, just another sorry episode of our sad history. But this is plainly unfair, the truth is that Julian Castro was never allowed to be efficient. When he proposed a new Constitution in 1859 that contemplated a mix Government of Centralism and Federalism that would probably have saved the nation from the Federal War; the Elite responded by literally throwing him in jail and out of the country. The Elite lost the Federal War and got what they deserved, at the expense of Venezuela. It would not be the first time this happened. The reason that this is an unlearned lesson of our time is because Julian Castro parallels the experience of a contemporary Venezuelan politician named Henri Falcon (no relationship to Juan Crisostomo Falcon), whom as we will see in the last chapter was not allowed to win the 2018 elections against Nicolas Maduro’s Resenter Pole because today’s Elite mined his entire campaign (that I was personally involved). Like Castro 160 years prior, Henri Falcon comes from a poor Resenter origins and black mixture (we don’t use the word Pardo anymore), and like Castro he has a military background and was Governor (elected twice) of the important western State Lara that harbors the 4th most populated city of the country—Barquisimeto where Henri Falcon was also twice elected Mayor—and, also like Castro with Monagas, Henri Falcon enjoyed the absolute confidence of Hugo Chavez until he saw where his Government was going with its catastrophic expropriation policies leading him to resign in 2009 from the Chavez political party (PSUV) and challenge Maduro in the elections of 2018 with the only weapon he had available, democracy.

58

2 The Era of Civil War

Also, like Julian Castro who had a superb middle of the road Constitution in 1859 that the Elite balked at, Henri Falcon had a superb economic plan written by a Harvard PhD Economist-Francisco Rodriguez, whom I know—that the Elite also refused. In the 2018 elections that Falcon participated and the Elite boycotted (another of our unthinkable silly mistakes) they belittled Falcon with an unbelievable smear operation of lies, slanders and innuendos that completely destroyed his campaign. Every single time that the Elite has refused power sharing in our history and lost, so has Venezuela. The Elite, then as now, would rather lose an election by forfeit to a man they detest than debase themselves to cooperate with a person with a Resenter background to win, even if that person is a proven middle of the road reconciliation man with Governor experience that presented an excellent economic plan from an outstanding economist from one of the top universities of the World. Again, the Elite got what they deserved, at the expense of Venezuela. This will all see with more detail in the last chapter, where we will also learn how this time the USA failed Venezuela big time after a lifetime of excellent neighbor cooperation. Today the conflicting Poles Elite and Resenters are as far apart as two sides can be due to their unresolved historical issues. The attitude is: “We are Different from You”. A short list that goes both ways: I do not admire you

My work culture is different

My children’s name are different

My vision of history is different

My values are different

My clothing and food tastes are different

My music and dancing is different

My leisure and recreation is different

My idols are different

My reading is different

In Venezuelan lingo: “Juntos pero no revueltos” (“together but not mixed”)

Fixing this social division, a prerequisite to revamping Venezuela in all its dimensions can be done because it has been done before. That is the subject of Chap. 4 and other chapters.

Notes 1. 2. 3. 4. 5. 6.

See Alcantara (2000), p. 191. Vallenilla-Lanz (1999), p. 131. Ibid 136. The inner quotes by Vallenilla Lanz refer to F. Guizot, History of Civilization in Europe (1828). See Paez (Vol. 1), p. 539. Cited in Caldera (2013), p. 20. Economist learned much later however that this “invisible hand” where individual egoism leads to the general good, as Adam Smith firmly believed, only works in periods of abundance of natural resources. It doesn’t work too well in periods of scarcity. In the twentieth century economists have developed clever tools in Game Theory framework to work out equilibriums that solve this problem; largely due to the pioneering work of Nobel Laureate American mathematical economist John Nash and his followers.

Notes 7.

8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

22.

23. 24. 25. 26.

27. 28.

29.

30.

59

When I heard Chavez order to remove from the National Pantheon, I called an Army General I knew to offer the modest resting land of my family to bury Paez there for as long as it takes. I was genuinely afraid Paez corpse would end up in a common grave. That General was deeply offended. “That’s not going to happen Carlos, I give you my word, over dead body is Paez to be removed from the National Pantheon”. He nevertheless told me later that he called some contacts inside the military, and they assured him that Paez body wasn’t going anywhere. He wasn’t. Petkoff (2010). Lanz (1919), p. 42. See Alcantara (2000), p. 289. Ibid. Paez (Vol.2), p. 430. Ibid. pp. 451–452. See Keynes General Theory of Employment Interest and Money. See Moreno-Molina (2007), p. 60. Ibid 53–61. Cited in Lanz (1919), p. 145. Ibid, pp. 181–182. Julian Castro would not come back to Venezuela until 1870 to help Guzman Blanco’s revolution, he died five years later in Valencia, incognito even to most historians. The names of these two hapless Elites were Pedro Gual and Manuel Felipe Tovar. Cited in Alcantara (2000), p. 492. Worth mentioning, when Paez accepted the call in 1858 he was bidden farewell by the cream of New York City society in the Metropolitan Hotel. The New York Times published an editorial on 10-6-1858 bidding Paez farewell and the best of luck in helping “the hurting Republic of Venezuela”. Zamora was buried in the garden of a family friend in San Carlos and forgotten there for years; there were no ceremonies of any kind mourning the death of the “General of the Sovereign People”. Late in 1860s his body was exhumed and taken to the city of Los Teques and forgotten there again until presumably they were buried in the National Pantheon in 1872 by his likely killer Guzman Blanco. To this day there is controversy surrounding if the body there is really Zamora’s; even though the bullet wound in his right eye and cranium should be evidence enough. Alcantara (2000), p. 495. Paez Vol. 2. (1869), pp. 487–488. Lanz (1919), pp. 187–188. Contrary to the perception of many, Páez was not a corrupt man, a rarity in Venezuelan politics. When he lost the grips of power in the late 1840s and was forced to long exiles in New York, Argentina and Perú, he was so short of money that he was forced to live under the generosity of monthly hand-outs from the Governments that received him. As said in New York, as an old man, he even had to work as a salesman of a meat cutting devise. Petkoff, p. 146. One irony of this episode was that both Falcon and Guzman-Blanco were huge fans of Paez. Falcon invited Paez to stay in Venezuela with full guarantees and a generous pension but Paez refused; drawing from his experience, that his presence would confuse things for this new Government. Paez was also adamantly opposed to the Federalist ideas of Falcon, and with good reason. Falcon insisted on traveling to Carabobo battle grounds with Paez so he could relate to his troops the details of that decisive battle in 1821. Paez accepted the invitation but before he started speaking Falcon screamed to his soldiers: “Listen Up!! You are about to hear from the mouth of Aquiles his own prowess”. Arraiz-Lucca (2007), p. 82. I would argue that J. C. Falcon and J. T. Monagas had the worst legacies of the entire turbulent nineteenth century of Venezuela; and that is saying a lot. Of the two, Falcon was worst. One historian said of Falcon: “He never did anything wrong to anyone, he wronged everyone at once”. Lander (1992), p. 185.

60

2 The Era of Civil War

31. One of the principal reasons that may have motivated Guzman Blanco’s frequent long trips to France was to rid himself of the burning presence of his frustrated-cynical and overbearing father, who´s entire adult life felt he should be president because he felt was smarter than anyone else and whose treacherous demagoguery landed him in jail several times, even with death sentences that were never carried out. Guzman the elder frequently burst into his son’s office and interrupted him with defiance, who for sentimental reasons the son could never quite get rid of him. Sometimes the son tried to appease him by building statues of his living father and eulogizing him at every ceremony. It only ended when the elder died 15 years into his son’s tenure. 32. Quoted on Palma (2006), p. 48.

References P. Alcántara, J.A. Páez, G.E. Ediciones, (Caracas-Venezuela, 2000) R. Caldera, De Carabobo a Punto Fijo, Libros Marcados (Caracas-Venezuela, 2013) L. Vallenilla-Lanz, Cesarismo Democrático, El Nacional (Caracas-Venezuela, 1999) T. Petkoff, El Chavizmo Como Problema, Libros Marcados (Caracas-Venezuela, 2010) D. Palma, Biografías de Venezolanos Notables, Panapo (Caracas-Venezuela, 2006) M. Lander, Historia a Mena de Venezuela, Editorial Histamena C.A. (Caracas-Venezuela, 1992) A. Moreno-Molina, Jose Gregorio Monagas, El Nacional (Caracas-Venezuela, 2007) R. Arraiz-Lucca, Venezuela: 1830 a Nuestros Dias. Editorial Alfa (Caracas-Venezuela, 2007)

Chapter 3

Below the Land: The Formation of Oil

The substantive meaning of economics derives from man’s dependence for his living upon nature and his fellows. It refers to the interchange with his natural and social environment, insofar as this results in supplying him with the means of material want satisfaction––Karl Polanyi

In this chapter we take a break from Venezuela’s history above the land to take a summary view to the factors that made it a rich energy country, particularly in petroleum, and to do that we need to take in the slow but fascinating World dynamics of below the surface of our planet (Fig. 3.1). Petroleum is not a homogeneous liquid like water, but a mixture of hydrocarbons, meaning a compound of hydrogen and carbon atoms. Its name is derived from Latin, meaning “Rock Oil”. To understand how petroleum formed its best to look at it from the geological perspective which was part of my training when I worked with Geologists for three years during my tenure at PDVSA in the 1990s. The reason I received this training is because energy has been a vital part of the evolution of all types of life and hydrocarbons in particular have been essential part of the prosperity of all mankind since their discovery and massive use in the eighteenth century, igniting the industrial revolution. Hydrocarbons formed very slowly during a series of long eras, epochs, periods and ages. Oil formed millions of years ago long before the age of man and some before the age of the dinosaurs beginning in the Strata that geologists classify as the Paleozoic era that started about 540 million years ago and lasted about 290 million years. This Paleozoic era includes as its first of six very long epochs the Cambrian, famous for producing the radiation of the most intensive and diverse explosion of life ever in history which origins are not fully understood. The Cambrian epoch lasted 65 million years leading to the Ordovician–Silurian epochs (lasting both also about 65 million years) known for the massive ice age covering the entire planet and mass extinction of ocean life; ceding at the end to the Devonian epoch-also known as “the age of fish” (359–416 million years ago) and where trees began to develop. This Devonian is followed by the Carboniferous epoch (300–360 million years ago) known for vast swamp of shallow lakes that produced coal from dead animals and plants—mostly algae—it was an era of giant trees due to highly nutritious soil. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 C. A. Rossi, The Rise and Fall of the Oil Nation Venezuela, https://doi.org/10.1007/978-3-031-34660-6_3

61

62

3 Below the Land: The Formation of Oil

Fig. 3.1 Venezuela’s oil basins

The Carboniferous is called that way for its carbon-bearing time. It was followed by the Permian epoch (250–300 million years ago) known mostly because it is here that the massive super-continent land mass Pangea was formed and because reptiles ruled overland life. During Pangea the northern part of Venezuela was completely submerged inside a colossal lake next to what is now Nigeria and Texas, all flush oil regions and all believed to have been vastly rich in plants, minerals, proteins nutrients, etc., making the animal species and trees of the time to have gigantic proportions. On the downside the Permian Epoch was also of rapid climate change and highly volcanic activity that caused a mass extinction of about 95% of the marine life and about 70% of terrestrial life.1 The Paleozoic era gave way to the long Mesozoic era—186 million years—where most of the Oil was formed first and Gas later. The Mesozoic is composed in three Epochs: The Triassic epoch (200–250 million years ago)—where Dinosaurs first appear; the Jurassic (200–146 million years ago)—because Dinosaurs thrived here and, importantly, it is when the earth land mass Pangea began to break up into the 7 continents we know. It is considered by geologists that the origin of those petroleum reserves comes from the remains of those fossils and plants that were buried in depths of up to 25,000 m and “cooked” by the high temperatures and underground pressures in long timelines. The Jurassic epoch was followed by the longer Cretaceous epoch (146– 66 million years ago)—when dinosaurs became extinct due to falling asteroids and also an epoch were many geologist believe Venezuela may still contain plenty of

3 Below the Land: The Formation of Oil

63

oil in the western Zulia region; all of which gave way to the current Cenozoic era (starting about 66 million years ago to present times) but which geologist subdivides into two subepochs starting with the Paleogene epoch (65.5–24 million years ago), followed by the Neogene epoch (24 million years ago to present times) which contains inside a period called the Miocene where our first human ancestors first appear (Hominins). That is followed by another period called Quaternary Period that began 2.6 million years ago and extends to our lifetimes. This period is mostly known for glacial retreats and the spread of humans; geologists call it “The Age of Humans”. This Quaternary Period is further subdivided into two Ages, first the Pleistocene (2 million to 11,900 years ago) where Neanderthal Man lived unforgivingly for about 100,000 years before and during our last ice age and the second age is called the Holocene age (11,900 years to the present) where we now stand. In the internet you may find one of many charts depicting this entire geological timeline, some containing slight variations of names and dates and periods, which shows you that geology, as economics, is not (and can’t be) exact sciences. The further back you go into time the hardest it is to pin records with precision. In the deep south of Venezuela there lies the Tepuys, a series of 115 flat mountain tops that predate the Cambrian period. Geologists estimate their age to be anywhere between 1.5 and 2.0 billion years, the oldest land mass in the planet. Roraima, shown below, is the tallest Tepuy with a height of 2810 m and Auyantepuy is the biggest one in land mass that harbors the largest water fall in the World (Angel Falls, 1283 m) (Fig. 3.2). Note that the Geological Epochs, Periods and Ages since the start of the current Cenozoic era have strata times of shorter durations as they approach our present. The present Quaternary period where we all live is less than 3 million years old and represents only 0.1% of all geological time. So if you are standing in line in a supermarket and someone taps your shoulder to ask you: Where are we?, your answer may be: You are now standing in the Cenozoic Era, inside the Neogene epoch, within the Quaternary Period, in the inner part of the Holocene age. It may not be the answer that someone was expecting but you wouldn’t be wrong. But that might be changing now. Although most geologists still think we live in the Holocene, which is an Age they love because it has been remarkably stable contributing in no small way to the further evolution of mankind, there are other geologists, ecologists and social scientists, including myself, who believe we likely began crossing into a new geological age called The Anthropocene Age some 160 years ago at the start of the hydrocarbon/industrial Revolution. And we might be there now. This is different from all the others because it is not caused by natural geological forces but by the imprint of human activity upon the earth’s soil, water, coral reefs, oceans, air, forests and ozone layer affecting most species and the overall environment. Ever since the man-made industrial revolution transformed the life of most of this planet from a pastoral agricultural setting that depended on the energy provided by slaves, serfs, animals, trees and sunlight into the energy provided by hydrocarbons in the industrial age, transforming most industrial inhabitants into urban city-folks, the geology of this planet must have changed too and continues to change do to the injection of millions of units nitrogen on its soil and the extraction of millions of

64

3 Below the Land: The Formation of Oil

Fig. 3.2 Venezuela’s Roraima Tepui

tons of coal, oil and units of gas, which we know has affected the environment of our planet-not always in a good way. Moreover, there are also some Anthropologists who believe that the present Homo sapien brand of humans also contains a subspecies they call “Hydrocarbon-Man”, in reference to the total dependence of this type of mankind upon hydrocarbons energy for its well-being. If this is true, we need to ask: Is The Anthropocene Age stable? Would post-Hydrocarbon Man be prosperous? This is not a debate for this book.2

What Oil Is In all this time organic material of dead biological forms like plants, algae and some marine animals migrated until they were trapped by sedimentary porous rocks for millions of years until an oil driller found them. This rock provided pressure and heat to “cook” them at the right depth to form the hydrocarbon products of oil and gas. Sometimes, this sedimentary rock, also known as “mother rock”, either produced too much oil and gas or its porosity wasn’t sufficiently big to hold all of it, causing the extra oil to migrate through the fissures underground until it was trapped by another

Chemical Composure of Hydrocarbons

65

basin, often times dragging and accumulating other minerals it found along the way, like sulfur and vanadium, that increased its viscosity and thickness thus lowering its quality. When the migrating oil didn’t find a basin to entrap it, the oil seeped upward to ground level where it formed lakes that were exposed to the Sun, water and oxygen which in due time evaporated all or the better part of it. The bubbles we see seeping from the ground is the gas that comes with the oil.

Chemical Composure of Hydrocarbons

# Carbon atoms

# Hydrogen atoms

Form

1–4

4–10

Gas

5–16

12–34

Liquid

18–35

38–72

Solid

In this long geological journey throughout the many ages of the 4th Dimension we call Father Time transformed the chemical composure of the World’s chief energy source other than the Sun, it is useful to know certain characteristics of how chemists and engineers classify petroleum. There are basically two characteristics. First is API Grade, the higher the better and second is its sulfur content, the lower the better. The API (American Petroleum Institute) grade compares the density of oil to water which is 10° API, so if the oil has a higher API than 10° it floats over water because it is less dense, and is considered light oil of high quality. If its density is lower than 10° it lies beneath the water and is considered heavy and extra-heavy oil. API grade

Petroleum quality

30°–40°

Light oil

22°–29°

Medium oil

10°–21.9°

Heavy oil

< 10°

Extra heavy oil

Another complementary measure is the sulfur content of oil divided into sweet oil and sour oil; the sweeter the better because it contains less than 0.5° sulfur, whereas the sour or bitter oil contains more than 0.5° sulfur. These terms date back to the early oil years when the oil-man literally tasted the oil to gauge its quality. Lower quality oil either because it’s too heavy or has too much sulfur is still useful because it provides energy, but its process is more complex and expensive, both in monetary terms and energy terms, as we will see in a latter chapter.

66

3 Below the Land: The Formation of Oil

Oil Reserves The name of the game is power-power to mobilize transportation, industry, and mechanical hardware; power to heat and cool; power to influence foreign affairs and domestic policies; power to conduct the most expensive and uncertain gamble on earth; and power to win or lose World conflicts––Robert Wheeler, Maurine Whited

Knowing the chemical classifications of petroleum is straight forward, knowing its reserves classification is a bit trickier because it involves, in addition to the always improving technological and engineering sophistication, two concepts that are often times hard to pin down. Statistical probability and, above all, economic dynamics (supply and demand) that last of which belong to the social sciences of which the Economists have traditionally been very strong but whom are now, generally speaking, the least useful due to their lack of training, and disregard, of the physical sciences (Economist take no science courses). The classifications are Proven Reserves (P90); Probable Reserves (P50) and Possible Reserves (P10). Proven reserves are the ones we read about because they are the only ones private and national oil companies are allowed to publish according to the guidelines of the Society of Petroleum Engineers. These reserves are proven with 90% or more probability of being drilled out, processed, refined and marketed with existing technology and commercial “viability”, meaning profits which depend much on the oil price. It is published to the World because they have been reasonably evaluated by well drilling, seismic technology and other technical procedures that assure its continued production flow. The second, Probable Reserves, lies between 50 and 89% probability and haven’t been tested or certified directly with enough wells at profitable margins but which do lie within the established geographical and geological limits and are just waiting for the drilling tractor to show up. Last and certainly not least are the Possible Reserves—sometimes called “Plays”—that only have between 10 and 49% probability of oil in-situ but are nevertheless acknowledged by geologists and geophysics to be “possibly there”; and they are usually right. Since these “Plays” and Probable Reserves are categories considered too speculative they can’t be talked about outside company headquarters (inside they are mentioned plenty; I personally witnessed many enlightened debates among my geologist/geophysics bosses on these plays and even participated in elaborating economic models to gauge their future profitability; accounting for their high-risk ratios and future prize dynamics).

Chickens Do Come Home to Roost Case in point. Prior to the 1973 OPEC oil shock, most oil companies were aware of the probable and possible existence of the vast quantities of oil in the North Sea, Gulf of Mexico, Alaska, Siberia, the African Atlantic and even in unexplored fields belonging to the OPEC countries themselves. But none would venture into developing these expensive areas because back then the oil prices were too low. For

Oil Reserves

67

example, the Prudhoe Bay reserves in the north slope of Alaska, the biggest ever found in the USA, carried a total estimated cost per barrel of about $14.00 in 1972, but the WTI oil price was around $2.50. But 1973 changed all of that, the Arab embargo on the USA and Holland due to their support of Israel in the Yom Kippur War quadrupled oil prices and suddenly made these reserves more than interesting for both economic and political reasons. By New Year’s Day in 1974 the oil price had risen to $11.61 per barrel, a full 349.7% from the exact date a year earlier. By 1980, due to the Iranian Revolution followed by the Iran–Iraq War oil prices were over $37.00 (about $120 in today’s terms.) Politically, the USA and Europe pursued aggressive policies of “Get OPEC of our Backs” and created the International Energy Association in Paris in 1974 and two years later, under the Carter Administration, created the US Department of Energy both of which central job was to help the big private oil companies finds ways to reduce the western countries dependence on middle eastern oil.3 Not everyone was optimistic. Frank Ikard, then President of the American Petroleum Institute, said in 1973: “There are more than 60 Federal departments, agencies, offices, Government commissions occupying themselves of the energy crisis and more than 30 committees and sub-committees in Congress…But the cold truth is that there is nothing in these programs that signifies not one barrel of additional oil. What we are doing is distributing scarcity…The truth is that energy self-sufficiency in our lifetimes is improbable.”4 But it worked-for a long while. As the increase in oil prices made possible that these “Probable and Possible Reserves” become” Proven” and came on stream (known today as “Elephant Fields”), it caused a flurry of oil drilling all over the planet. In the 1970s is when the Alaskan and Siberian pipelines were built, the California and the Elk-Hills (Navy) Field were stimulated and expanded; when the rich offshore oil fields in the North Sea (between UK and Norway) were drilled, plus the Gulf of Mexico and other finds, all of this oil began to flush all over the World. So in a way the World should be thankful that the 1973 oil embargo occurred, because it provided the price incentives that Big Oil needed to tap into these huge oil reserves that the World needed then, at affordable prices. By 1986 these new streams of oil supply collapsed oil prices back to pre-1973 levels in real terms, igniting in oil-importing nations a period of prosperity that would last them for the rest of the century up until 2003 when China, and to a lesser extent India, both whom had been awakened to industrialization during the last 15 years of the twentieth century by the western capitalistic frenzy quest for cheap labor, these two extra-populous countries began their unprecedented import demand surge for oil which, summed to a reinvigoration of the Peak-Oil scare that energy scientists (and a handful of energy savvy economists) began alerting the World’s consumers with hard data, it all combined to increase the World oil price brushing levels in July 2008 $147 (WTI); dwarfing the early 1980’s and causing a World recession which we still feel today. According to IMF/OECD stats, in the period covering 2008–2019, the yearly average GDP growth rate for the USA, the Euro-Area and Japan have been a meek 1.7%, 0.8% and 0.5% respectably. COVID-19 of 2020 to present day

68

3 Below the Land: The Formation of Oil

worsened things for everyone, as human realization with the limits of nature came to prominence. Highly important is the petroleum engineering notion of oil extraction which they divide into three or four parts. The first is called “Primary Recovery” which essentially means you let the forces of natural pressure do the work for you. When that is gone there is still plenty of oil left in the ground but it needs a helping hand in extraction so companies move to “Secondary recovery”, also called “Enhanced Oil Recovery” (EOR), which involves gas and water injection and other catalyst that re-invigorates the pressure and oil flow. This generally follows primary recovery, but in complex wells both have been used simultaneously. Tertiary Recovery also called “Exotic Extraction” follows and it involves unorthodox means, like steaming and/or the inundation of chemical substances that very carefully and slowly heat the oil underground to facilitate its flow upward. A new one and very popular in the USA is called Hydraulic Fracking, which cracks and extracts the shale oil trapped in tight formations. As with everything new, Fracking had some problems at first that made it unsafe, now corrected to a great extent. It is essential to acknowledge that all of this is done not until the well is dry, not even when it hits underground water, but when it ceases to make sense in economic and, perhaps more importantly, in energy terms. Pollution “externality” considerations are also increasingly mandatory. This differs from country to country. In Venezuela oil wells are closed, by policy, when it hits 40% water. In China that number is over 90%. In Canada, due to the very solid State of most of its oil (