This delivery of “Insurgent History” tackles the Venezuelan elites’ submission to US imperialism in the 20th century. (Background photo from Archivo Fotografía Urbana)
Venezuela’s oil policy has not merely been a set of technical regulations, but rather a battleground where national sovereignty has been defined in the face of Western imperialist interests. In this sense, the 20th century in Venezuela began with cannons trained on its shores. The naval blockade by England, Germany, and Italy in 1902 was the result of demands to collect debts incurred since the War of Independence and throughout the nineteenth century to build the oligarchic and fragmented republic that emerged in defiance of the Bolivarian project of unity.
Unable to pay the creditors, Venezuelan President Cipriano Castro refused to hand over the country’s resources and territory, which is why he is considered the first nationalist president to be overthrown by the imperial powers of the time. In response to the foreign pressure exerted through the blockade, his proclamation was published in national newspapers: “The insolent foreign boot has desecrated the sacred soil of the homeland!” Castro embodied a defiance that the powers would not forgive.
However, the real tragedy was not the external attack, but the internal betrayal. Juan Vicente Gómez, who was also the president’s close friend, was not only the instigator of the 1908 coup d’état, but also the architect of the first major economic model of submission. Under his government, Venezuela was transformed overnight from an agrarian economy into an oil-producing enclave.
The concessions granted starting in 1922 through laws and decrees were not commercial agreements; they were acts of surrender of territorial and economic sovereignty to Standard Oil and Royal Dutch Shell, shaping the new geometry of power and the emergence of a new way of being and doing politics: what anthropologist Rodolfo Quintero called “the oil culture” had been born, a society whose elite looked more to the north than to the Venezuelan hinterland plains.
Venezuelan historian Oscar Battaglini provides an in-depth analysis of the inner workings of this new economic and political culture.
…imperialism organizes (acting directly as in the days of old colonialism) a strong and truly centralized state at the head of which appear, in the role of mere ‘native overseers,’ the remnants of the old oligarchy: large landowners, agro-exporters and importers, and usurious bankers … The state that emerges … its primary mission was to maintain the cruelest and most open repression, the stability of the established oil order; which amounted to guaranteeing the oil companies consistently high profits, and to the dominant domestic sectors, the appropriation … of oil tax revenue…
Following Gómez’s death in 1935, his own Minister of War and the Navy, Eleazar López Contreras, was tasked with serving as the transitional bridge from a highly repressive, personalist system of government to one that appeared to be freer. With oil reserves beneath his feet and an active US presence in the ports of Lake Maracaibo, López walked a tightrope. The various political and popular sectors, already consolidated though silenced, launched a fierce resistance: oil workers, students, political parties, and activists who until then had operated underground, women, and impoverished peasants entered political life with a bang.
The expansion of oil wells, coupled with the events of World War II and the rise of fascism, laid the groundwork for the consolidation of an economic model that compromised national sovereignty, established interventionism as a mechanism of “negotiation,” and undermined political development through the persecution of any expression that might threaten the interests of the highly lucrative oil business.
From the 1943 Law to the Puntofijo Pact: The institutionalization of dependence
The government of Isaías Medina Angarita represented a significant political opening and steered the oil industry toward national interests. During his administration (1941–1945), the first fair legislation regarding the management of oil revenues was drafted, as well as the first plan for the development of a productive economy that aimed to overcome the rentier model that had already taken root during the Gómez era. With the 1943 hydrocarbon law, further strengthened by the 1942 Income Tax Act, the Venezuelan state was granted a 60% share of oil revenues – a development that did not favor the US oil companies, accustomed to reaping up to 75% of oil earnings. This law, combined with the 1945 agrarian reform law, set the stage for an intervention that prevented the democratic and sovereign transition to another presidential term and precipitated what some have called “the October Revolution” and others a “coup d’état” against these measures, which affected the regime of land ownership and control over Venezuela’s fossil fuel resources.
After the coup, and during the “Adeco triennium” (1945–1948) led by Rómulo Bentancourt, even though the 1943 law was not repealed, a sort of relaxation was applied, known as the “fifty-fifty” arrangement, which consisted of guaranteeing oil companies a 50% revenue share, avoiding the tax levy, and thereby preventing subsequent increases in rent. At this point, it is worth noting that this process did not affect only economic aspects; rather, the oil enclave also became consolidated, which, as in any colonization process, includes cultural elements, in this case, the establishment of an “(North) American way of life” in the oil fields and their surroundings.
Encampment-cities were created to operate as islands of foreign modernity, segregated from the national reality, where local management began to adopt the mindset and interests of the parent companies. A clear example of this was Judibana, in Falcón State, near the Amuay refinery. Judibana is an urban complex designed around 1948 by the Creole Petroleum Corporation, which at that time included schools, clubs, a commissary, and an isolated, self-contained internal dynamic. During the 2002 oil lockout, it served as an enclave for the anti-nationalist oil class.
Later, the Marcos Pérez Jiménez dictatorship (1953–1958) proclaimed the “dream of progress” through the transformation of the landscape and a policy of monumental public works that reflected the “almighty” nature of oil and served as a physical manifestation of state power. Following his overthrow in 1958, the Pact of Punto Fijo emerged, giving rise to what many scholars call “pacted democracy.” Although it was presented as the stabilization of the political system, authors suggest that it was a mechanism for excluding popular forces and shielding transnational interests.
Rómulo Betancourt, leader of the Acción Democrática party – also known as the “Father of Venezuelan Democracy” – served as the first president under the Pact of Punto Fijo. Despite the nationalist rhetoric in his youth, he established a model during his administration (1959–1964) in which oil revenues were used to pacify social conflict without altering the structure of property ownership. “Submission” here became more sophisticated: it was not the direct surrender of land, but rather subordination to US foreign policy. The commercial and financial bourgeoisie abandoned any industrialization plans to become a parasitic class living off state revenue.
Under the Punto Fijo governments (1958–1998) Venezuela was viewed as a “laboratory” for the implementation of social democratic policies that served as a counterweight to the influence of the Cuban Revolution (1959) – characterized by its strong anti-imperialist stance – thereby consolidating the structural hegemony of the US market, which by 1997 received nearly 70% of the country’s oil exports.
Neoliberalism and the “denationalization” of the 1990s
After a lengthy process of drafting legislation and negotiations, on January 1, 1976, the national flag was raised at the Zumaque No. 1 oil well. With this symbolic and legal act, Petróleos de Venezuela S.A. (PDVSA) was born as the company tasked with planning, coordinating, and supervising the industry, marking the beginning of a phase in which the state assumed not only income but also the total operative control of the country’s oil resources.
Bernard Mommer, an expert on the subject, offers a sharp critique that distinguishes between nationalization – whose objective was supposed to be the political and economic control of oil in the interest of national sovereignty – and statization, which entailed the creation of a state-owned corporation (PDVSA) that, over time, began to operate according to a private corporate logic, distancing itself from the needs of the national government and the objective of this ostensibly sovereign strategy. In this regard, Mommer argues that, following nationalization, the industry remained under imperialist control. PDVSA inherited the organizational structure and culture of the former concessionaires (Shell, Exxon, Mobil), which created a “state within a state.”
The neoliberal shift of the 1980s and 1990s marked the moment when submission was cloaked in the technical language of the Washington Consensus. The Oil Opening (Apertura Petrolera) was the ultimate expression of this process: an initiative in which PDVSA operated according to transnational logic, minimizing benefits for the country and paving the way for full privatization. It was more a matter of “denationalization,” where the state ceased to act as a demanding owner and instead became a promoter of foreign investment, sacrificing tax revenue, drastically reducing royalties (from 16.6% to 1% in some cases), and ceding operational control.
Denationalization policies were not limited to the oil sector. Telephone services (CANTV) and airlines (Viasa) were privatized, and attempts were made to privatize basic industries such as iron and aluminum. In this process, PDVSA’s management began to distance itself from the guidelines of the Ministry of Energy and Mines to become an entity managed by neoliberal international interests.
El Carmonazo: A failed attempt to return to the past
With Hugo Chávez’s rise to power in 1998, an effort was made to reverse this process of denationalization through the 2001 Organic Hydrocarbons Law. This law raised royalties to 30% and required the state to hold a majority stake (51%) in any joint venture. It restored the Ministry of Energy’s control over PDVSA.
The reaction of traditional sectors such as the CTV (Venezuelan Workers’ Confederation) and FEDECAMARAS business lobby, allied with the church and military sectors, was the call for an oil strike and the coup d’état (the Carmonazo) carried out on April 11, 2002 – a direct response by PDVSA’s managers and the neocolonial oligarchy to protect the contracts and the vision of the Oil Opening. The short-lived Carmona coup regime’s decree sought to repeal these laws to return Venezuela to the management model of the 1990s: a “privatized” PDVSA and a state with no control over its principal source of wealth.
The “Carmona Decree” was the purest expression of the neocolonial oligarchic mentality. In less than 24 hours, the public authorities were dissolved and the name “Bolivarian Republic” was removed, symbolically reverting to the “Republic of Venezuela” controlled by the elite. The main objective was to halt the Land Law and the Hydrocarbons Law, returning control of revenue to the PDVSA management aligned with external interests.
From the blockade of 1902 to the coup of 2002, the common denominator has been a Venezuelan elite that perceives sovereignty as an obstacle to its business interests. Submission is not just a political stance, but a class identity that confuses progress with mimicking the imperial core.
The history of this century in Venezuela demonstrates that the struggle for nationalization is not just about oil, but about a people’s ability to decide their own destiny without the tutelage of the insolent foreign boot.
Rosanna Álvarez holds an MSc in History of Republican Venezuela from the Central University of Venezuela (UCV). She is a researcher at the Centro de Estudios Simón Bolívar and Fundación Hugo Chávez, as well as a writer at the Libertador 8 Estrellas magazine. She is the author of Venezuela vista e imaginada. Un recorrido visual por nuestra historia and host of the Bolívar Nuestro show on Radio del Sur.
The views expressed in this article are the author’s own and do not necessarily reflect those of the Venezuelanalysis editorial staff.