Organized by the Naumann Foundation for Freedom in Argentina and UCEMA, and with the collaboration of CEDICE, in this opportunity the Naumann Chair received the Venezuelan professor Alonso Domínguez, who brought us an interesting reflection about the current Venezuelan situation based on a reconstruction of the historical events that have been determinant of the current situation. 

Alonso Domínguez is full professor of the Central University of Venezuela, a prestigious political analyst, executive director of the Leadership and Passion Association and a member of the team “Un sueño para Venezuela” (A dream for Venezuela). Domínguez structured his talk in two parts, a first in which he gave us the context of what has occurred in Venezuela during the last years and a second in which he characterized the present and and presented the keys to better understand future dynamics. Domínguez was introduced by Rocío Guijarro, from CEDICE, and Juan Manuel Agüero, project coordinator of Naumann Foundation. 

“Once there was a country that thought it was rich”, this is how Alonso began his talk. According to the speaker, Venezuelans have for a long time maintained the conviction that they are a rich society. They see themselves as citizens of a country built on splendid mines and oil fields. But in reality, the speaker commented, Venezuela was a poor nation. Until 1920 it was one of the countries with the highest poverty rates in Latin America, its population was scarce and mostly illiterate. Many endemic diseases took with them great part of the economically active population. On the other hand, society was mostly rural and had precarious institutions. Oil made Venezuelans dream of progress. The discovery of oil in the subsoil of the nation meant a radical change. “Venezuelans began to aspire, not without reason, to change their luck” said Domínguez. Venezuela began to build highways, to improve its health levels, to populate its cities and to unite territorially. This process of technological modernization was accompanied by a process of democratization. 

“We wanted to plant oil” highlighted Domínguez. Venezuela created an industrial and agricultural infrastructure that allowed it to develop the different areas of its economy from the income generated by oil extraction. It then became an oil country. This model presented certain difficulties known by its Latin American friends, mainly Argentina and Brazil. The idea of import substitution coupled with an integrated industrial economy with an important export capacity destroyed any illusion of progress. This was so because Venezuelan companies were not able to integrate into international markets because they were not competitive. Therefore, the economy that was developed was protected by oil revenues. 

Towards 1989 Venezuela tried to correct its course. “An ambitious program of structural reforms was established seeking to deepen democracy, promote decentralization and put the economy in a path of healthy and sustained growth” commented Domínguez. The effort would not last to long, three years later, sustained coup attempts turned Venezuela once again away from its dream of progress. It is possible to understand this idea through the following phrase of the speaker “The aspiration for change was betrayed by the profound political crisis”. 

Domínguez recognizes this moment as “the perfect storm”. He believes, the same as many specialists in the field, that the economic success of the first years of the government of Hugo Chávez was not due to his charismatic figure, much less to his economic policies.  Wat happened, was simply that oil extraction in the region was booming and consequently the standard of living would have risen. “The Venezuelan nation was spreading its roots in an extraordinary oil boom.” commented Alonso. 

Years later, Venezuela was in free fall due to the use of state institutions to distribute the wealth generated by the oil wells.  While in other societies, the institutions and regulations encourage the generation of wealth, Venezuelan institutions have been centered in distributing oil income through the benefits and favors for some privileged and groups of interest.“ The Venezuelan rules of the game convert the State in a booty and society into a predator” added the speaker. Thus, Venezuela has been a “Petro-state”. Biased by oil wealth, it has neglected its most important functions.  The Venezuelan State has been merely occupied in creating state-owned companies, granting credits and increasing the public payroll instead of taking care of the safety, education and health of its inhabitants. This has particularly affected the poorest. Their inability to act as interest groups is one of the forms social exclusion adopts in a Petro-nation. 

Summary by Camila Barletta, fellow UCEMA