Venezuela

Dispersed over three distinct ecosystems—the lush tropical rainforest, sweeping llanos (plains), and the imposing coastal and Andean mountain ranges—Venezuela's diverse indigenous population survived primarily as hunters and gatherers. Eventually, however, economic specialization took root, framed largely by prevailing environmental factors. In western Venezuela, for example, coastal Caquetios harvested sea products, the valley of Quibor manufactured pottery, and the area of Carora produced cotton and engaged in textile production. This specialization contributed to the emergence of regional trade networks between these groups and with the nearby Caribbean islands. Another level of exchange involved religious and ornamental artifacts made of ceramic, stone, and seashells.

Spanish conquerors landed in Venezuela in 1498 and they quickly depleted the limited alluvial gold deposits that the region possessed. On the eastern coast of Venezuela, on the islands of Margarita and Cubagua, they turned their attention to the extraction of pearl beds, which they also eventually exhausted. The trade in pearls exacted a heavy cost on the Waikéri indigenous population and severely depleted the delicate coastal environment. Besides being a rich source of natural resources, for the Spaniards, Venezuela also became an important source of labor. They enslaved the indigenous populations of eastern Venezuela and transported them to Caribbean islands, where the local inhabitants had been exterminated already by disease and warfare. Pearls and slaves were the principal economic resources of this early period, and eventually led to the establishment of Spanish outposts in eastern Venezuela.

Lacking readily apparent sources of wealth and disrupted by sustained indigenous resistance, Venezuela did not immediately attract the attention of Spanish colonizers. By 1528, however, the Crown created the Province of Venezuela, and the Spaniards began to impose their political administrative structure over this expansive territory. In this same year the Welsers, a German economic concern, acquired exclusive rights from the Spanish monarchy to exploit western Venezuela, including the vast region of Lake Maracaibo and the imposing Andean mountain range. The Welsers controlled the traffic of goods to the area's emerging settlements including Coro, which was founded in 1527, and launched several unsuccessful expeditions to locate the fabled El Dorado. Natural oil seeps, known as menes to the local indigenous population, dotted the landscape near Lake Maracaibo. Yet, with no apparent commercial value, the substance remained no more than a mere curiosity. In 1539 local authorities dispatched a sample of Venezuelan crude to the king of Spain, who purportedly used it as a remedy for gout. Confronting repeated complaints regarding ill treatment and price speculation, the Crown cancelled the Welser concession in 1545.

With the departure of the Welser's, the colonization of Venezuela began to resemble the experiences of the Spanish empire throughout Latin America. Despite continued conflict with the indigenous population, the Spanish expanded into new areas, conquered the valley of Caracas, and began to establish new settlements. Despite the continued search for gold deposits, in these newly incorporated regions economic activity revolved around agriculture, including wheat, tobacco, and cattle production. Gradually, surplus agricultural production and specialization stimulated limited trade networks that served to link Venezuela's isolated regions with each other, with nearby islands in the Caribbean, with Mexico, and eventually with Spain. The bulk of production, however, particularly of tobacco, sugar, and cacao, found its way to European markets, where it served as exchange for manufactured goods. By the end of seventeenth century one of these commodities, cacao, gradually began to dominate agricultural production. Europe quickly discovered the value and superior quality of Venezuelan cacao, which was already well known to the indigenous population. The export of cacao also linked Venezuela to Mexico, which became an important outlet for the product and an essential source of specie. Contraband in agricultural commodities, inspired by the presence of the Dutch and other European powers in the Caribbean, also became an important economic outlet for local producers.

The costs associated with the wars of independence from Spain in the first decades of the nineteenth century left Venezuela impoverished. The absence of political consensus and the desire of regional elites to control new economic arrangements repeatedly degenerated into open military conflict, hampering the resumption of traditional agricultural activity. Under these conditions, foreign merchants with access to capital established an important foothold in the export of agricultural commodities. Political tensions notwithstanding, the cacao-based colonial economy gave way to a new dominant export crop—coffee. The organization of coffee production reintegrated Venezuela into the international economy while increasing dependence on foreign capital and the role of foreign merchants and brokers. Although some areas prospered, Venezuela increasingly became subject to the vicissitudes of the international coffee economy, experiencing repeated economic crises throughout the nineteenth and in the early part of the twentieth centuries. Before the advent of oil, European countries, especially Germany and England, absorbed over 64 percent of Venezuela's agricultural exports, the United States received over 28 percent, and the remainder found its way to the Caribbean and other Latin American nations.

The growing importance of oil in the world economy led some Venezuelans to reconsider the natural menes, or seeps, that had been previously overlooked. In 1878 in the Andean state of Táchira, Antonio Manuel Pulido and several Venezuelan partners formed the Táchira Petroleum Company and began to extract oil selling it almost exclusively in the local region. By the beginning of the twentieth century Dutch and British controlled companies spearheaded the exploration for Venezuelan oil, uncovering several promising fields in Mene Grande in 1914. From Lake Maracaibo Venezuelan oil was shipped to Curacao, a Dutch colony, where the companies established a refinery. In this early phase the refined products were shipped predominantly to European markets. The advent of World War I significantly slowed oil exploration throughout the country. Venezuela entered the era of modern oil production in 1922, when crews drilling at a site named the Barroso N. 2 discovered a new field, and the out-of-control well produced upwards of 80,000 barrels a day. The Barroso N. 2 well inaugurated a boom period, and oil production quickly displaced other economic activities, especially agriculture production, which were already in various stages of decline.

U.S. companies moved quickly to establish a presence in Venezuela, and over time they acquired a dominant position in oil production. By 1930 over 100 foreign oil companies operated in Venezuela, and oil production reached in excess of 370,000 barrels a day. As agricultural production faltered by the 1940s, Venezuela became a net importer of basic food products. The Creole Petroleum Corporation, a wholly owned subsidiary of the Standard Oil Company of New Jersey, and Shell Oil emerged as the dominant oil producers in Venezuela. As other countries in Latin America (Mexico, Bolivia, and Argentina) nationalized oil holdings, Venezuela continued to permit foreign control of its oil industry. Faced by impending competition from emerging Middle East oil producers, in 1949 a Venezuelan delegation visited the region and sought to open lines of communications. These efforts eventually led to the establishment of the Organization of Petroleum Exporting Countries (OPEC) in 1960, of which Venezuela and Saudi Arabia are founding members. In 1976 the Venezuelan government nationalized foreign oil holdings, fully compensating U.S. and European interests and creating a new national entity, Petróleos de Venezuela (PdVSA). Current production hovers at near 3 million barrels a day, and the U.S. remains the largest recipient of Venezuelan oil. Despite an economy that includes mining, food processing, textiles, steel, and auto assembly, oil continues to cast a long shadow over Venezuela. It generates approximately 80 percent of export revenue, and it remains the govern-ment's principal source of operating income. In recent years, the government's role in the national oil industry has intensified political struggles for control of the Venezuelan state.

SEE ALSO Conquistadors; Empire, Spanish; Encomienda and Repartimiento; Import Substitution; International Monetary Fund (IMF);Laborers, Aztec and Inca;Nationalization;OPEC;Peru;Petroleum;Rockefeller Family;United States.

BIBLIOGRAPHY

Karl, Terry Lynn. The Paradox of Plenty: Oil Booms and Petro States. Berkeley: University of California Press, 1997.

Roseberry, William. Coffee and Capitalism in the Venezuelan Andes. Austin: University of Texas Press, 1983.

Yarrington, Doug. A Coffee Frontier: Land, Society, and Politics in Duaca, Venezuela, 1830–1936. Pittsburgh, PA: University of Pittsburgh Press, 1997.

Miguel Tinker Salas