Notebook: Venezuela: An Experiment in Democracy

...By 1984, the date when all concessions expire, the major part of Venezuelan oil will undoubtedly already be produced by the Corporation, either directly or through private groups tied to the government by contracts of public service—a plan which will permit the Corporation to limit the profits of foreign firms and to impose on them financial control...

...The valleys have been monopolized by large proprietors, while farmers on the hills have practiced a primitive agriculture that has aggravated erosion and soil depletion...

...To relieve congestion in the capital and its environs, the government has created several new areas of industrial growth...

...The exodus from the land was precipitated by a boom in the oil industry caused by investment of foreign capital and equipment...

...Apprenticed in the school of reality, Venezuelan reformers are perpetually correcting themselves...

...83 a dauphin who still lacks the means of power—equipment, troops, tanks...

...In Venezuela, as in all former Spanish colonies, usable land is rare, and consequently easy to buy or sell at a large profit...

...Half-naked children and emaciated donkeys wander aimlessly in front of the ranchitos...

...Here, as 4 In this total is included 36 million bolivares for roads of access and 33 million for housing...

...The uprooted population, which lives in brightly-colored wooden ranchitos on two mountainsides overlooking Caracas, is not integrated into the urban population...

...The representatives of the new industries are resolved to protect a new prosperity which they owe in large measure to credit advanced by the Minister of Development and to private foreign tariffs and quotas...

...3 The Leoni plan for the coming five years will further accelerate land reform...

...Six hundred layoffs are expected shortly...

...But in the interval 90,000 new families will have been formed...

...The judicious application of these provisions reduced to 8,015,502 acres (as of December 84 31, 1964) the total area of concessions, which had risen in 1948 to 41 million acres...

...Fear of both the political Right and of Betancourt's plans combined to throw a crowd of rioters temporarily into the pro-Castro camp...

...Each of the village's 86 families received ten acres of land...

...Here and there, a black stain on the ground marks the site of an oil well abandoned after careless exploitation of the surface layer...

...On the other bank of the Orinoco, the llanos—vast prairies on which graze herds of cattle, chased now by the rising of the river, now by the November-to-April drought—are scarcely more populated...

...235-236...

...the sudden appearance of the future aggravates the evils of the past...

...88 and solvents), which the national industry will produce from now on...

...His abandonment of the Larrazabal plan was one of the causes of the sudden rise in unemployment...

...A significant percentage of the Caracas ranchitos is made up of single women who, as maids or laundresses, support themselves and their four or five children born of ephemeral unions...

...The War Against the Cartel Betancourt's reform program rested entirely on an oil policy which he had developed over more than twenty years...

...Since 1957, the production of fruit juices has doubled, as has that of cigarettes...

...If this policy is pursued in years to come, the decrease in conceded area, plus taxes on the oil wells, will steadily reduce the cartels' role in the country's total production...

...These payments, intended to provide the government with the means of reform and to stop the loss of dividends, were first (in 1945-48) fixed at 50% of the net profit of the cartels, then at 66% after Betancourt's return to power...

...To sum up, from 1958 to 1963 the value of industrial production rose by 39% (in terms of 1960 bolivares) and imports fell by 30...

...53% of the population is less than nineteen years of age...

...The most recent bans affect parts and accesories (tires, batteries, windows, paints, 6 Other members of the A.L.A.L.0 are Colombia, Ecuador, Peru, Chile, Paraguay, and Uruguay...

...In this place, as in many others, the administration suggests, orients, but does not impose its solutions...

...Nevertheless, in the spring of 1965, protests caused by the rising cost of consumer goods forced the Leoni government to devise a plan for cutting down the activity of the middlemen...

...Furthermore, the uprooting of ranchitos has disrupted family and social structures and caused a disturbing rise in the number of illegitimate births...

...In the face of these realities, nationalization of the oil industry by decree would have been a mortal pirouette into the void.2 Having no way to declare war on the international oil cartel, the Venezuelan government began a more subtle war whose instrument was the Venezuelan Oil Corporation (CorporaciOn Venezolana del petrdleo), created in 1960...

...But the planners reasonably estimate that future stages will be less difficult...

...The Venezuelan Treasury draws 70% of its returns from oil...

...The other 80% were concentrated in the Andes of Merida, on the slopes and in the valleys near the oil wells., The mountain regions, the only usable space, necessarily include much unarable land...

...Upon their arrival, the farmers even found houses built and ready for them...

...The Corporation has been unable to eliminate entirely the fiscal fraud and exploitative methods of the cartels...

...Overdevelopment obstructs the solution of problems of underdevelopment...

...They were forced to innovate, as their predecessors had left only a negative fund of wisdom...

...Taking into account the "demographic explosion," landless workers will have disappeared only after fifteen years of continuous agricultural reform...

...But this second influx of a modern technology—which, on the whole, is still undeveloped in Venezuela—enormously aggravated the country's economic imbalance, since of all industries oil is the one in which the percentage of workers is lowest in relation to production and invested capital...

...85 from extensive to intensive cultivation, and consolidate these gains by building roads of access, canals, houses, sewers, schools...

...she now furnishes 80% of her domestic consumption...

...The percentage of active workers in Venezuela (32%) is one of the lowest in Latin America...

...the other workers were fired...

...In the southern half of the country, the savannahs on the Orinoco and its swampy delta are, for all practical purposes, deserts, exactly as in Guiana...

...It provides for drainage of the swamps at Maracaibo (1,240,000 acres), the irrigation of 250,000 acres of arid land, and the settlement there of 2,200,000 families...

...This requires a great deal of time, and delays are multiplied by financial difficulties...

...The Sowing of Oil Petroleum receipts have served to finance agrarian reform...

...Each family has, beyond its expenses for housing and food, a monthly income of 300 to 400 bolivares ($94.00 to $125.00...

...By 1969, nine years after the passage of the agrarian law of March 5, 1960, 76% of the workers numbered in the 1960 census (226,000 of 350,000) will have been given land...

...Unable to obtain new land, the company resigned itself to accepting the Corporation plan...

...The community has already repaid its entire loan (a maximum of 5,000 bolivares per family...

...The Spanish invasion suddenly introduced a European way of life into a country in the same latitude as Guinea—that is, into an environment that by nature is not hospitable to it...

...Toward a Ministry for the Uprooted During the same period, the number of industrial workers increased by only 14...

...A choice had to be made between a social policy that would leave a mass of uprooted people to 82 vegetate in poverty, and a program to root out this poverty by reforming structural imbalances in the Venezuelan economy...

...There are great differences between Mexico's situation at the time when she nationalized oil and our situation...

...This small percentage can be explained in part by the "demographic explosion...

...Communities made up of farmers only are usually more prosperous...

...Betancourt's immediate predecessor, Admiral Larrazabal, head of the provisional government in 1958 after the fall of the dictator Perez Jimenez, left behind him heavy liabilities...

...In 1961, two and a half years after Betancourt took power, the first of nine blast furnaces in the iron plant was lit...

...Dropping the custom barriers would then result in an invasion of the Venezuelan market by the products of neighboring countries...

...The total number of unemployed workers has remained nearly constant since 1959...

...The present population of Caracas (1,632,000) is larger than Venezuela's entire urban population in 1941...

...High iron production the year around will not be possible until 1970, when the Gun Dam will double Venezuelan hydroelectric production...

...In countries which have evolved slowly and regularly, the survival of an important percentage of outmoded equipment requires a large labor force and thus contributes to continued high employment...

...But the earth, containing 40% saltpeter, yields only small harvests of maize...

...The government could not meet these social expenditures and also make the investments necessary for fundamental reforms in the economic system...

...Thus, Guiana and the llanos, which represent 80% of Venezuela's land area, were in 1960 inhabited by only 20% of the population...

...Mobil had foreseen, for 1965, only insignificant investments, for its concession had by that date reached the optimum point in its development...

...but in an era of automation they are not sufficient to solve, at least in an acceptable period of time, the social problems already created by underdevelopment...

...2 op...

...The beneficiaries merely passed from famine to want, and some are close to giving up...

...Protection has been practiced with particular effect in the automotive industry...

...The village which was the heart of Venezuelan industry is now an encampment of the unemployed...

...And the Federation of Oil Workers has just asked the government and Congress to intervene to stop these practices...

...They will undoubtedly have to tighten their tutelage over the farming collectivities and to absorb and re-educate unadapted bembers...

...In 1965, the government collected 47% of the total value of Venezuelan oil production, the highest percentage so far...

...According to plans, the complex should produce 3,860,000 tons of cast iron and acid in 1975—two-thirds for the internal market, one-third for export...

...In applying Venezuela's agrarian law, the directors of the National Agrarian Institute have tried to balance freedom and authority...

...The officials of the Agrarian Institute and of the Plan suggest setting up a cooperative store, but here they confront the resistance of individualism...

...In certain fields (paper, razor blades, beer) production is already keeping pace with demand...

...Oil production has almost tripled since 1948, but the number of oil workers has decreased from 55,170 to 33,472...

...The construction of acid-producing plants, begun in 1957, a few months before Jiminez' fall, was pursued by Larrazabal and Betancourt...

...The redress of structural imbalance in the economy has not led to a proportional redress of social imbalances The rupture of the traditional link between production and employment has been caused by automation...

...At Maracaibo, where oil wells stand along the banks of the lake like an army of derricks, one need only cross the half-mile bridge to discover, at Cabimas, a spectacle of desolation...

...Its role is to verify the cartels' transactions and to enforce their payment of financial obligations imposed by the government...

...The search for new markets will then force Venezuela to adhere to the Latin American free trade zone (A.L.A.L.C...

...It seems more difficult to regulate agricultural production than to send rockets to the moon...

...But the remarkably fertile land (it had once belonged to the brother of one of Betancourt's ministers) yields four harvests of maize a year and permits the cultivation of vegetables and fruit trees...

...But we must remember that the cost of an agrarian reform is not measured solely by the number of beneficiaries, but also by the nature of the soil, the amount of work necessary before it can be used, the means of cultivation available to the new occupants, etc...

...To combat the cartels' cupidity, the government and the Corporation have one effective weapon: the refusal of new land concessions to the cartel—a refusal sometimes accompanied by the revocation of previous concessions that have not been worked after a fixed period of time...

...Oil was then, and continues to be, an important factor in Mexico's economy, but it was supplemented by other industries which had been appreciably developed...

...In addition, Venezuela's rate of demographic growth is one of the highest in the world (3.37% in 1964...

...The Venezuelan oil industry, third largest in the world, with a daily output of 31/2 million barrels, employs only 33,472 people...

...Between 1959 and 1962, oil production had a mean annual increase of 2.7%, but other industries and agricultural production increased by 8% and 6.3% per year respectively—Oil, which in 1959 accounted for 29% of the gross national product, today makes up only 22%, and was reduced to 20% in 1966, the last year of the plan's four year cycle...

...In 1944, the year preceding the October revolution, 92% of the funds with which Venezuela paid for her imports was provided by the oil industry...

...The farmers complain, however, of the camioneros (middlemen), who profit exorbitantly at the expense of both producers and consummers...

...5 During a conference in April, 1964, near Caracas, spokesman for the Administration tried to plead the cause of "Latin American integration" to representatives of both small and larger industry who feared that Venezuela's high salaries and high prices would discourage exports and favor imports...

...The urban 81 population, which in 1936 constituted 35% of the total, today makes up 63...

...Wealth has engendered poverty and unemployment is aggravated by automation...

...Latin American governments will perhaps decide someday to create ministries for the uprooted which will work out extra-economic or anti-economic measures (job training, education for women, public works, etc...

...Venezuelan life, like that of all the Latin-American world, is mountain life...

...His "emergency plan" of large public works was intended to provide employment for a certain number of the unemployed...

...This liberal method has encouraged a sharp rise in production: for the first time in history, an agrarian law has been immediately translated into larger harvests...

...Venezuela has twice suffered an abrupt intrusion of the technology and culture of more highly developed societies...

...Contrary to the assertions of certain sources, the reapportioned land comes in large part (56%) from private properties subject to expropriation...

...In 1958 Venezuela relied on imports for 85% of her pharmaceutical needs...

...The stroke of the pen that expropriates the proprietor and provides land for the farmer is never more than a starting point: one must make the land habitable, pass 3 Of 4,175,000 acres allotted, during the Betancourt mandate, 2,253,474 acres were drawn from private property and 1,873,542 acres from the public domain...

...It is said of the Venezuelan reform—the cost of which for five years of the Betancourt regime rose to 485 million bolivares (2611/2 million for the purchase of land and 2231/2 million for "consolidation" work4)—that it is "the most expensive in the world" in relation to the number of people who benefit from it...

...In his Politica y petrOleo, Betancourt explained the reasons he had rejected, at the beginning of his first administration (1945-48), 1 "the idea of possible nationalization by decree": We have always avoided, in the early stages of an administration of revolutionary orientation, a measure similar to that upon which the Mexican administration of Lazar° Cardenas could pride itself...

...And workshops are beginning to turn out standardized radio and television sets, and air-conditioning apparatus...

...freedom, without which success is impossible, includes the freedom to fail...

...4,175,000 acres of land were redistributed in lots of 71/2 to 750 acres (depending on the nature of the soil) among 66,428 farming families totaling 350,000 persons...

...Such a reform program would be fatally burdensome...

...6 This social imbalance is not present in Cuba because a large part of the uprooted population has been enlisted in the militia...

...Profits from oil, soon to be superfluous in a world of nuclear energy, were to give the state the financial means of building more diversified types of industry to assure Venezuela's survival in a post-oil world...

...After Betancourt became the first freelyelected President of Venezuela in 1958, the recorded number of unemployed workers in Venezuela rose to 260,000...

...To this figure we must add the farm emigrants who have never found steady employment...

...While understanding the need of a democratically elected government like that of Venezuela to protect itself against the various authoritarian groups which seek by force to overthrow it, one is still disturbed by the measures it has announced...

...Lands in the public domain accounted for only 44% of the area allotted to workers who benefited from the agrarian law...

...They have tried to temper the authoritarianism of a government which designates both expropriable land and the beneficiaries of reform, and gives the latter the means to work the land...

...Here is an example of such failure: a community situated near Maracay in the state of Asagua, settled in a fertile valley between two mountain ranges...

...This vast plan to develop Guiana was originally a much more modest project conceived during the dictatorship of Perez Jiminez...

...The city of Santo Tome de Guiana which has sprung up around the iron complex will number 415,000 people by 1975...

...which already draws together Mexico and eight other South American countires, including Brazil and Argentina...

...And in almost all other branches of activity there is a certain disproportion between production and employment...

...The most spectacular is an immense iron manufac87 turing complex in Mantanzas, on the Orinoco, at the point where semi-equatorial Guiana (savannahs and virgin forests) meets the llano, the semidesert prairie...

...After encouraging the establishment of production plants (for General Motors, Ford and Volkswagen), the government in 1963 forbade the importation of vehicles...

...Oil was "sowed" in the fields: 703 villages sprang from nothing during the five years of Betancourt's mandate...

...At Julia, another community in the fertile valley of Aragua, the farmers received only 71/2 acres each...

...It may be reassuring to know, however, that once before, under the Betancourt administration, similar emergency steps were taken to cope with terrorists and democratic rights were then restored.—En...

...In the new countries, industry is born under the auspices of automation at a time when the national economy has not yet absorbed a mass of unemployed, uprooted persons...

...From the moment he is set up on a lot, the beneficiary is forbidden to sell his lease, but he may choose the produce he wishes to raise...

...Mexico, 1956...

...Therefore, the normal development of the country was not seriously disturbed when the international oil cartel decided to boycott nationalized oil...

...This paradoxical Venezuelan Ruhr in the desert can be explained by the presence of iron deposits which put Venezuela in fifth place among iron-producing countries, and by nearby waterfalls along the Rio Caroni, a source of hydroelectric power that will soon be harnessed by the giant Guri Dam...

...Driven off by the land's sterility, the farmer soon resumes his destructive labor elsewhere, until one day he decides to look for work in the city...

...This segment of the population has been roughly estimated at a halfmillion persons...

...Besides housing and food each family has, on the average, a monthly income of 100 bolivares, about $35.00...

...Tradesmen who depended on the community of oil workers are in danger...

...Practicing this policy of reduction, the Corporation also offers the cartels an alternative, the public service contract, which the Mobil Oil Company has recently agreed to sign...

...Venezuela's pilot experience shows that in a young country where the problem of an uprooted mass is severe (and such is the case in the majority of Latin American nations), structural reforms of the economy are certainly a necessary base...

...In 1959 ROmulo Betancourt chose the more orthodox economic solution...

...The introduction of vaccination and sanitation has caused a decline in infant mortality and a rise in life expectancy, while the high birth rate common to all underdeveloped countries remains constant in the rural areas and among the uprooted ranchitos...

...A more important cause, however, was a recession precipitated by a withdrawal of foreign capital following the government's announcement of projected reforms...

...Indeed, no state could at one time handle all the expenses—labor, indemnities, provision of livestock, manure, tractors,—demanded by agrarian reform on this scale...

...86 everywhere, the land was free, and the state provided the public works —roads and canals...

...When we compare the development of the oil industry to that of other branches of the economy, we find that this annual tapping of the cartels' revenues made it possible for the government to "sow" other industries...

...Growing charges of exploitation will probably cause certain proprietors to sell their land, lowering the value of it in the long run and thereby helping to broaden land distribution through purchase by the state or by the farmers...

...In spite of a rise in the gross national product twice as great as the rate of demographic growth (6.70% as against 3.37%), the country cannot cope with its unemployed work force...

...The navigability of the Orinoco enables large cargo ships to unload their coal on pontoons at Puerto-Ordaz and leave loaded with finished or half-finished iron products...

...Agrarian reform is a matter of time...

...In addition, the real estate tax on all oil lands, whether or not presently in use, encourages voluntary withdrawal...

...The companies have now removed their activities and their best workers to another area...

...Already, in certain regions, the development of reform and the shortage of hired hands have caused the large proprietors to raise their workers' salaries...

...And this boom is the first condition for the success of the reforms...

...The Ruhr in the Desert Agrarian reform in Venezuela's most important decentralization measure, but not the only one...

...This Corporation, intended ultimately to replace the cartel, is like 1 Brought to power by the revolution of October, 1945, Betancourt's democratic regime was overthrown by a military coup in 1948...

...But this condition, though necessary, is insufficient...

...This article, which first appeared in the French magazine Preuves, was written before the recent announcement by the Venezuelan government that, in order to cope with terrorists of both the Right and Left, it was "temporarily suspending" certain civil liberties...

...But only considerably increased international aid would permit this to happen simultaneously with structural reforms...

...All of Latin America has experienced the exodus of farmers to the city, but in Venezuela this problem is especially acute...

...But, in contrast, when we assumed power, almost the entire Venezuelan economy and an appreciable part of its fiscal activity revolved around oil...

...The failure of authoritarian methods seems particularly to have struck Venezuelan technicians...

...The spectacle of Mexican agrarian reform, ineffectual even fifty-five years after the revolution, and the spectacle of Russia, a wheatland which, forty-eight years after the revolution, has been forced to import wheat from Mexico, Argentina, Canada and the United States, both suggest a bitter conclusion...

...They built their houses and a school with their own hands, from materials provided on government credit...

...The cultivation plans of the Agrarian Institute are suggestions, not commands...