Brian Wilson: Venezuela’s troubles stem from discovery of oil

Venezuela's self-proclaimed "acting president" Juan Guaido talks to the media as he takes part in a protest against the government of President Nicolas Maduro (Picture: Luis Robayo/AFP/Getty Images)
Venezuela's self-proclaimed "acting president" Juan Guaido talks to the media as he takes part in a protest against the government of President Nicolas Maduro (Picture: Luis Robayo/AFP/Getty Images)
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In one script, Venezuela was a happy, prosperous land before wicked lefties came along to destroy it. In the other, a noble reformer, President Nicolas Maduro, is being laid low by the machinations of Washington. One caricature is as nonsensical as the other, writes Brian Wilson.

Venezuela’s problems developed over decades which produced gross inequality while Maduro is a hopeless figure characterised by incompetence and authoritarianism.

Venezuela has had oil for almost a century and possesses the world’s largest proven reserves yet it is an economic basket case where the vast majority of its people have nothing to show for the vast wealth produced.

Is that an indictment of Maduro and his predecessor Hugo Chavez? Well, yes and no. Much the same sentence could have been written 20 years ago and indeed that explains the election of Chavez as President in 1999.

He offered hope in a country where most of the people lived in poverty and illiteracy. Latin America has produced plenty demagogues who pitched their appeal to the poor. At least Chavez, for a decade or so, delivered some of that, cutting extreme poverty by two-thirds.

However, his social programmes depended entirely on revenues from oil. By the time he died in 2012, the writing was on the wall as the oil price plummeted. Maduro has clung to power while the economy collapsed around him.

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Venezuela is the classic victim of what’s known as “Dutch Disease”. As far back as the 1930s, its other industries – notably agriculture – were allowed to disintegrate because there was so much money from oil. Most of it headed straight to Miami rather than into the country’s infrastructure.

Venezuela is a fertile country yet everything has to be imported at ruinous expense. None of this began with Chavez but once he started draining the oil revenues for his social programmes and running the state oil company, PdVSA, as a bottomless well to pay for them, the end-game was predictable.

I got to know the place a little as Energy Minister and also helping Scotch whisky when Chavez took to denouncing it as “the drink of the oligarchs” whlle exhorting the masses to drink rum instead. In the short term, efforts to fend off this threat prevailed though not many Venezuelans are buying whisky now.

Of course, the Americans have been working from the day Chavez was elected to bring Venezuela back into their sphere of influence. There was a botched coup in 2002 which made it more difficult to mount anther and, until recently, America was quite dependent on Venezuelan oil.

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All of that is true but none of it invalidates the fact that the poor whom Chavez set out to liberate are now the biggest victims of a disastrous downward spiral. American military intervention would be completely mad but diplomatic pressure for change is justified on humanitarian grounds alone.
Venezuela’s troubles are rooted in the discovery of oil and with uncanny symmetry, the same questions are arising at this very moment in its next-door neighbour, Guyana, where Exxon Mobile and the Chinese National Oil Corporation are making vast discoveries.
Production is due to start next year. In a poor country of just 750,000 people, the question is already being asked – will oil be a blessing or a curse? In other words, has anything been learned in the past century about how to avoid the classic pitfalls?
Perhaps politicians with an interest in that region should turn their attention to Guyana where it is still possible to make a difference, rather than score points over Venezuela.
The British left should always have supped with a long spoon since the flaws in Chavez’s rhetoric were not very hard to spot.
Equally, Tories who pretend there is some read-across to British politics should be careful about the alternatives they are implicitly endorsing.
Venezuela should be seen as a long-term tragedy and warning. For anyone interested in how oil can make or break a country, Guyana is now the one to watch.