Booker T. Washington High School

Model United Nations Club

Country Briefing: Venezuela 

Venezuela is a relatively well-off South American country with a population of 25 million and a per-capita GNP of $4,760.  Oil revenues represent up to ¼ of the economy and account for its relative prosperity.  However, there is considerable uncertainty in Venezuela as its leader, Hugo Chavez, faces international pressure for his alleged authoritarian tendencies.

 History: Venezuela has been home to Indian civilizations for thousands of years.  Spanish settlers arrived in the wake of conquistadors in the 16^th century, building a caste hierarchy of whites, mestizos and Indians.  Today much of the population is of mixed blood.  When the Spanish Empire in South America broke up in 1821, Venezuela became part of the new state of Gran Colombia.  Rivalries and geographic obstacles plagued the country, and it subsequently broke up into component pieces.  Like most other Latin American states, Venezuela was dominated by the same racial hierarchy after independence, with rich white landowners on top.  Towards the end of the 19^th century, trade with other European countries grew.  This helped develop the local economy but increased its vulnerability to foreign colonialism.  The United States intervened around the turn of the century to prevent Europeans from intervening directly in Venezuelan politics.  This of course left Venezuela within the US sphere of influence.  A group of traditional parties representing landowners and urban businessmen alternated in government for many years, undermining public confidence in their leadership.  From time to time, the military had to seize power to prevent revolution, further hardening cynical attitudes.  In 1961, a formal democracy was created, dividing power between 21 states and the federal government.  With wages rising and oil production increasing, Venezuela appeared to have a confident future.  The government had difficulty using oil revenues to build a stronger economic base, however, and a growing gap between the rich and poor created new political tensions.  High oil prices in the 1970s bought Venezuela more time, but much of the new wealth was siphoned off by corrupt officials and the wealthier classes.  Radicalism grew.  In 1989, austerity programs were needed to stabilize the economy in a weak oil market, leading people to take to the streets to protest rising prices.  The military was called in.  The event, known as the caracazo, left hundreds dead and signaled a new era of military involvement in politics.  In 1992, an army captain named Hugo Chavez led a coup attempt.  It failed, but Chavez became very popular and served only a short time in prison.  In 1998, after a remarkable political campaign, he was elected president on a populist ticket.  Since then, he has more or less suspended the 1961 constitution, built closer ties with Cuba, and suppressed popular opposition.  Last year, a strike by oil workers crippled the economy, but Chavez survived.  He now faces considerable opposition from the United States and other countries who condemn him for destroying democracy in Venezuela.

 Diplomatic Agenda: Chavez is gambling that he can survive as leader if he maintains the support of poor Venezuelans (80% now live below the poverty line).  To do this, he must be able to deliver grand gestures and promise a better future.  Philosophically, he has expressed admiration for the examples of Mao’s China and Castro’s Cuba.  In both cases, a strong national party suppressed dissent and mobilized the people to overcome obstacles to modernization.  The trouble is that the United States is vehemently opposed to seeing this model spread in South America, so Chavez must find ways to overcome this opposition.  His main advantage is Venezuela’s oil industry, but it is tied to international capital and investors.  In addition, this could trigger further opposition from oil workers, including acts of sabotage.  Finally, Chavez is in many ways opposed to the whole process of globalization, which he sees as a threat to working people and Venezuelan culture.  Chavez is considering a range of policy options, most of them controversial:

• Nationalization.  Chavez can declare private industries to be nationalized – now the property of the government.  This can be done with or without official compensation.  Foreign governments and financial institutions dread nationalization, and would likely retaliate by cutting off foreign direct investment in the country, slowing future growth.   Chavez can also merely threaten this.
• Guest Workers.  Many other countries have oil industries.  Venezuela can hire workers from some of them, particularly in the Middle East.  Of course, bringing in workers from Iran and other anti-US countries could provoke a reaction from Washington.
• Security Ties with Havana.  Cuba has a strong military independent of American influence.  Chavez is trying to build a loyal military capable of resisting pressure from the US or its allies.  One option is to bring in Cuban advisors to train a new officer corps.  This would also raise concerns in the White House.