I come here not to praise Sembrar el Petróleo, but to bury it. Venezuela’s oldest, most widely cited work of petroleum strategy and its call to ‘sow the oil’ is also among the most misunderstood texts of Venezuela’s 20th century. But I’d go further, Arturo Uslar Pietri’s short 1936 essay has caused untold damage to the country’s development. The time has come to put a skewer through this sacred cow.

Arturo Uslar Pietri was the first major Venezuelan intellectual to comment on the potential perversions that finding oil could bring into our economy and public life. His essay long since attained the feel of sacred scripture: it somehow floats above critical reproach. Screw that. Let’s do some critical questioning, shall we?

What did Uslar actually say in Sembrar el Petróleo?

I’m going to go ahead and flesh out Uslar’s four core ideas for you, although it’d be best if you took the time to read the essay yourself. According to AUP:

  1. Oil wealth is temporary and destructive. Uslar thought oil exploitation would turn out to be some gold-rush type fever, at least in 1936 when he wrote this piece. He got this idea from his mentor, Alberto Adriani. Both of them had lived their early adulthood in Europe -Adriani in Switzerland, Uslar in France- where they learned that agroindustry was the true path to development. It’s not that during the 30’s there was a world-wide confusion over what the oil industry was and how important it quickly became wherever it boomed, he and Adriani were simply ignorant on the matter. Considering oil developments a transitory episode of our history, his early work played down the role of oil: why bother making large investments and draft specific regulations, if was going to run out quickly anyway?

Furthermore, Uslar also picked up from Adriani the notion that oil was a destructive and immoral source of wealth. In years to come he would elaborate on this. For Uslar, oil reserves represented “natural capital”, an initial endowment which embodied the country’s original wealth. If you extracted the mineral for consumption or exports you’d be decapitalizing the economy. That’s why in his conception, all of the income derived from oil extraction had to be reinvested back into the domestic economy to create an alternative type of capital, or else its value would be lost forever.

  1.     Fiscal dependency on oil rents had become alarming. Within the first decade of petroleum development, oil rents came to represent over half of the government’s income. This posed serious concerns to those who paid attention to fiscal accounts, particularly to those who, like Uslar, thought oil would quickly run out. Given his scant understanding/knowledge of petroleum resources and reserves, he concluded that the government should not grow used to operating out of oil rents. Had Uslar Pietri bothered to take a look at Gumersindo Torres’ notes, pass by the Hydrocarbons Technical Office at the Ministry of Development, or talked to someone at the Shell Company he would have quickly changed his mind. As far back as 1916 —twenty years before Sembrar El Petróleo— a group of geologists had put together a report detailing the huge resources known to be deposited beneath Venezuelan soil.
  2.     The oil industry was some sort of foreign enclave. An “enclave” in the sense of a foreign province within the national territory that had no connections with local economy or livelihood in general. He thought the oil business was unrelated to Venezuelans, and that oil exploitation only served foreign interests. This again is one of Adriani’s concepts. Such near-sighted vision completely ignored important issues happening in Venezuela at the moment. For instance, campesinos were already leaving coffee and cocoa plantations to go work in the oil fields; foreigners were arriving in the country along with their culture and products, changing the ways Venezuelans ate, shopped, danced, and dressed. AUP’s vision ignored that the oil rents were flowing within the economy, fostering a new consumption surge, not to mention the way it was financing the first large public spending program: Gómez’s roads and military expansion. Oil was very much present in Venezuela’s life, Adriani and Uslar just failed to notice it from exile.
  3. Venezuela must “sow its oil”. There are two underlying ideas to his proposal: on the one hand, he meant to sow the oil in the most literal way, which is to use oil rent to boost the agriculture sector. In his opinion, agriculture was the only sector capable of offering the country a sustainable growth path. On the other hand, and that has to do a little more with AUP’s philosophical beliefs –early century Latin American positivism– la siembra petrolera had to be directed by an elite-run state, the best suited group within society to make decisions in the name of the nation; the poor were yet incapable of making the right decisions. They had to be educated, washed and fed first.

Whether you agree with these ideas or not, this is what he said and meant.

80 years’ time (1936-2016) give us enough perspective to see that he had some valid points, and that he was wrong about others. The idea is not to judge Uslar with the benefit of hindsight. Uslar himself would transform some of his ideas throughout his career. But this phrase, Sembrar el Petróleo, would stick around and be bent and twisted by pretty much every politician thereafter.

So what’s the problem anyway?

Sembrar el Petróleo is a poetic phrase, metaphoric and imprecise by nature. That’s why it’s been easy to reinterpret its meaning so many times. Virtually every government since has tried to retread it. Even the PDVSA roja-rojita has its own Plan Siembra Petrolera.

At first, when Uslar sat in the cabinet during the López Contreras and Medina administrations, he made sure that the siembra was carried out in his terms. But when the Trienio Adeco (1945-1948) came along, so did its first revision.

Betancourt’s government would argue that oil-sowing should not only be used to invest in agriculture, but also to build human capital through public healthcare and universal education.

Perez Jiménez and Co. (1948-1958) would later reinterpret the siembra petrolera as a call to create public infrastructure, such as highways, ports and government buildings.

Early Puntofijismo (1958-1974) would then try to merge all of the above, creating the illusion of political stability based on oil rent distribution. In addition, a new layer was to be added by this group’s plantation: state-owned equity in heavy industry and mining, and preferential loans to local agriculture and industrial sectors.

Then saudi-wannabe CAP I (1974-1979) would take this type of siembra into the oil business with the nationalization process, and broadly expand central government’s spending in all the mechanisms mentioned above, plus the Fundayacucho Scholarship Programme. All this under one flag: the siembra petrolera.

With every reinterpretation, Venezuelan realpolitik transformed the siembra petrolera into a synonym for “government spending program”, regardless of their various ideologies.

Still, all of them were based on Uslar’s original standpoint: oil rents must be spent within the economy as soon as they enter, because oil will run out and soon we’ll need to replace it with something else. Make no mistake; oil was sowed in many different guises throughout the 20th century, and also in the 21st.

But more than anything else, Sembrar el Petróleo tattooed one idea in Venezuela’s collective thinking: that we had to walk away from oil ASAP. And with that, we became self conscious of being an oil economy. We kept thinking that if the state managed to reinvest oil rents into the correct non-oil productive sectors, we’d suddenly become less dependent of oil, and enhance the ultimate utopia: diversification -whatever that meant.

And this, I find wrong on so many levels. Mostly because it ignores all fundamental elements of Venezuela’s contemporary politics and economics.

For one thing, Venezuela is —and has always been— sitting on the largest hydrocarbons resource base in the planet; we’ve been ignoring it for decades because we’ve never bothered to look at the data. So, whenever someone says we should just ignore our oil extracting potential to focus on some non-oil-shenanigan, what they’re really saying is that if you’re born rich, you should give away that money and work hard to make a living because it’s a terrible thing to deal with rich-people’s problems.

Doesn’t that sound insane? You can’t just ignore your comparative advantages in a world that puts a nice price tag on the minerals that happen to be under your feet.

Second, since it makes economic sense to produce oil, you have to realize you are going to have a constant inflow of hard currency, and yes, that will appreciate your exchange rate. Stop daydreaming about fostering tradable-goods industries that require a depreciated exchange rate to be competitive. It ain’t gonna happen.

A classic example would be agriculture. You’ve got the entire world producing food, the competition out there is fierce. And guess what, countries that are competitive at selling food are only competitive because they don’t have much of higher value to sell or because they have abundant cheap labour, and so their currencies aren’t worth much. But your currency is worth a lot — bizarrely, this is considered a problem, and called Dutch Disease.

Dutch Disease is a problem when the rent-making industry appears for the first time, because it starts to kill other sectors via exchange rate. This is what happened in Venezuela during the 1920s, when our coffee and cocoa export sectors shrivelled up and died. But it’s a century later and we’re still talking about this?  

Some people might be moaning at this point, realizing their dream of Venezuela being capable of exporting agricultural goods is salt in water. But hey, it’s not up to me to decide, it’s up to the market and there are economic sectors that can work with an appreciated exchange rate, like banking, high tech, logistics hubs or fashion. The normal thing to do would be to let private initiative tell you what can be prosperous under the new conditions, but no. We don’t like private investment in Venezuela, which takes me to my third point.

When the central government took control of the oil industry, it put itself in control of the commanding heights of the economy. That gave it the upper hand over society. Our political traditions kept liberal capitalism at bay. Both major political parties in the 20th century profoundly believed in central planning: on one hand we had elitists and military governments, and on the other one we had a pseudo-democratic group whose political philosophy was founded on soviet socialism.

The one premise no one ever challenged is that the state had the duty to direct oil-sowing by planning which sectors of the economy should and shouldn’t grow, as if they had God taken by the beard.

I don’t have to tell you about the widespread failures of central planning, but in addition to that economic view, there was an underlying problem: no political consensus was achieved between political forces, so regimes kept overthrowing each other, and every time government changed they would modify the game rules for sowing oil rents, and thus, alter the incentives for private initiatives. So, both economic growth alternatives became unsustainable: public spending kept shifting, making every government program unreliable, and private initiatives were systematically killed off by economic policies that favoured the state.

We trapped ourselves into this corner thinking it would all go away when we ran out of oil.

***

But the oil never ran out. It kept flowing and so did government spending based on oil rents.

This didn’t seem like a problem at first, when oil could foot every bill. But after CAP’s first government it became clear that oil rents were no longer enough to sustain the country’s spending needs. Yet we failed to see that the siembra petrolera development model, as we understood it, was no longer viable.

Instead, Sembrar el Petróleo’s popular mystique kept it current. The idea turned into a handy crutch, surfacing again and again in every politician’s discourse. Every new leader promised they knew how to “correctly administer” the oil rents to finally get this oil-sowing business right.

This argument allowed governments to shift public spending from one portfolio to the next, creating a never-ending cycle of instability in public programs and investment. This crippled efforts to protect ourselves from oil price fluctuations because the siembra petrolera mental model is based on spending, not saving.

So the siembra petrolera model makes Venezuela’s economic growth pattern unsustainable for two reasons.

First, it allows every incoming government to reinterpret how oil rents should be prioritized, with the incentive to use it to its advantage (think of Chavez’s misiones, for example).

Second, it enables the central government to remain as the dominant actor in the economy, making all the key allocation decisions, picking winners and losers and attracting corruption along the way.

Since, in practical terms, we still have infinite hydrocarbon reserves, we’d do well to revise what we are doing with our oil rent situation.

What could be done about it?

We are used to thinking we have to reinvent the wheel every time a public policy problem comes up. Truth is, these challenges are not exclusive to Venezuela, and we could learn certain lessons from other resource-rich countries. Some of the most used ones are:

1) If we want to avoid exposing ourselves to external shocks when oil prices go down –like the one we are in now–, we have to stop thinking we need to spend every dollar that comes in from oil exports. A sovereign fund with stabilization and saving purposes has worked like a charm for other countries.

2) The Constitution must establish where and how oil rents should be spent, instead of leaving it to the magnificent ideas of the next government administration. Many oil countries have a pre-designed mechanism for oil rent distribution; usually something related to retirement pensions, healthcare, education and housing. This allows citizens to count on public benefits indistinctly from what type of government takes office.

3) Smart petrostates separate the state’s interest in oil revenues from operational decision-making. As long as the government in office controls the business, it will have incentives to prioritize political decisions instead of operational and investment decisions.

4) If you don’t want to socialize the risks, you have to encourage locals to make private investments in the national oil sector. Private stakes create a tangible interest in policies that favor the long-term stability of the business; also, it functions as a wealth and job-creating sector.

5) Finally, I’d root out the hideous Sembrar el Petróleo phrase out of the public conversation. Its ambiguity allows for every person to interpret some idealized version of its believes, instead of promoting one concrete and coordinated oil distribution policy for the long-term.

Sembrar el Petróleo might have been a great conversation starter. The idea long since outlived its usefulness. Until we understand the way this slogan has distorted and maimed our thinking on oil policy-making, we’ll keep reliving failed experiences again and again indefinitely.  

29 COMMENTS

  1. Although very well written – congratulations – this essay is over long and gives the impression to have been somewhat manufactured, designed to provoke discussion, going beyond what the author herself believes to be the case.
    Its two basic propositions is that we should forget about “sowing the oil” because this concept has been misused. This is like saying “let’s abolish the automobile because it has generated many deaths on the road”, Oil was not our enemy, we were and the concept of using it to develop the country was and still is valid, although the role of our oil is in its way out.
    The second proposition is that since, for all practical purposes we have, “an infinite amount of oil” we should, from now on, act differently regarding its use and taking steps 1-5 to make it a more efficient source of income. But…. isn’t this to say “Sow the oil” , just in a different manner ?
    Furthermore, Amanda’s recommendations come a bit late. What we have is not an infinite amount of oil but a lot of gunk , in the way out as a usable source of energy, due to the environmental realities now prevailing in our planet. This gunk is not going to do for us what the past 60 billion barrels of better oil did not do and I am afraid ( or relieved) that much of it will be left in the ground, as stranded assets.
    Tarde piaste, Amanda.

    • Gustavo, excellent comments. The problem isn’t the phrase “sembrar el petroleo”, it was/is the way in which the siembra was effected. Natural economic advantage wasn’t pursued, at least to its full extent (petrochemicals/natural gas/even international tourism), and natural disadvantage was (SIDOR, for example, when we could have imported steel from Japan for less than half the cost). Oil was sown to grow a bloated Government bureaucracy for political reasons, with its increasingly rampant corruption. Now, 100 years after oil was first discovered and mis-sown, Venezuela has a 30 mm hungry/un-/undereducated population, lacking elementary medicines/medical care, with inadequate electricity/water/infrastructure, the world’s highest homicide rate low international monetary reserves, $250 bill. total country debt, decimated agriculture/industrial/oil production, and a dim oil price future. Even with the best non-politicized economic management, and no Leftist/Chavista subversion, Venezuela faces a long slow upward row to hoe (couldn’t resist the simile/pun) to a state of normalcy

  2. Very interesting article, thanks for posting it. I had understood that Carlos Andres Perez did create a Sovereign Wealth Fund, though. Yet it played no role in the recent boom in prices.

    It’s almost as if the oil profits are so….Precious….that no government can keep its hands away. One wonders whether constitutionalizing these flows would keep Golum at bay.

  3. Then your article is less about Sowing the oil and much more about criticizing key aspects of what every government has done with oil rents.

    Yes, of course, we cannot go out there with a strong agricultural sector (if we had it) thinking we may generate comparable rent in oil exports, that’s evidently, insane. And i agree that “Sembrar el petróleo” was an out of date phrase even on Medina Angarita’s first term.

    I applaud the idea of making law of process and procedure when it comes to the oil sector, that, should leave $RANDOM government out of the precise details of operating it and deciding where rents should go, “maybe” stabilizing it’s function on the long term, but on the short term, we need to generate cold, hard cash, because chavismo has left us a barren Oil sector, gutting it to the extreme. And with no money to spend (well, unless you say the chinese “pretty please” and beg they listen to you, wich is not gonna happen anymore, luckily)

    Just to be clear: We’re running out of oil, that is, oil that’s cheap to extract, so we’re trapped now in a situation that even left out our own “orimulsión” out of the market (this is a cheap way to extract and monetize our “Faja” Crude), this of course forces us to buy lighter crudes from abroad to water down our messy Faja Crude (thinking that it generates more profit in the mid/long term), instead on spending on fresh water (dirt cheap) and some other low price chemicals to produce it, wich is of course a cheaper product but can be selled faster and in more quantity that merey or blended crudes (even if we could crack it ourselves with low investments)

    All in all, a good article, but we need a current context and not a “te lo dije”.

    • Buying light crude from abroad for blending with Faja’s oil has not impact in revenue (except maybe the transportation cost). The only problem is cash flow.

      ex: Suppose you import one barrel of light oil at 50$, and you blend it with four barrels of extra-heavy oil. You can sell now five barrels of the blend at 35$. Your get 5 x 35$ – 50$ = 125$ (25$ per barrel). How much can you obtain selling four barrels of Orimulsion?

  4. Yeah, i don’t want to sound like a crybaby deffending a sacred dogma (but please read this in a crybaby-deffending-a-sacred-dogma voice):

    But! But you just gave us a new oil-sowing plan!

    I get that questioning a decades old belief has to happen, but this one haven’t lost it’s meaning, as Gustavo said, our problem is the people, not the dogma.

    I agree that it should be somewhere in the bicha some kind of at least mention of how to save and invest this (actually to some extent again agreeing with Gustavo) fleeting wealth, and make stupid and populist spending illegal in a way (and i mean psuv and adeco alike).

    Maybe when the dust has settled it would be a great time to make that happen, since this is the epitome of a century of cautionary tales, that doesn’t mean it will happen and the circle will not just continúe…

  5. I view a strong agricultural industry as the backbone of any country. A country that cannot feed itself during bad times is doomed to a fate of all oppression and interference by others. Venezuela’s economy is now so convoluted that it can hardly feed itself during good times.

    My entire life was spent in both the agricultural and oil industries. The oil industry for many individuals, corporations, and governments is a fast-track to wealth, but agriculture has the lasting effect of building communities, meaninful jobs, and self-reliance.

    It’s a shame that the agricultural sector of this country has all but been destroyed.

  6. It’s too late for that. I’m also displeased how, in order to lift spirits, people keep using past personalities. It’s time to create new slogans and new role models in order to contrast the Psy War inflicted by Castro Chavismo.

  7. Curiously though, the one reliable macroeconomic constant throughout these last three to four decades is a depreciating (real) exchange rate. I know this wouldnt be as true if we didnt have ER controls — but more in my favour: they were always put in place to avoid impending capital flight/depreciations.

    Our land and labour costs are increasingly becoming some of the cheapest in the region, meaning we could in fact become quite competitive in the non-oil sector export market (as we, in fact, at one point were until CADIVI brought in a titanic susidy to all things imported).

    The backbone of your thesis relies on the assumption that Venezuela has been continuously prioritizing sectors in which have absolute disadvantage in detriment of the single one where we do have an absolute advantage, using the tools of classical trade models as it were. Yet truth is that, despite oil becoming increasingly THE only export we have nowadays (93% if I remember correctly?) there has been a comparative decline in productivity across all sectors of the Venezuelan economy throughout these last decades — oil included.

    In short: our non-oil industries havent been dying of Dutch Disease, but of the government’s central planning infaticide called capital control-import orientation.

    Though this does contradict your argument (which starkly put precludes an increase of non-oil industries) it does not arise necessarily from it. The model does not betray you, that is. Though unsound, your argument is valid.

    Thing is, Venezuela is increasingly untranslatable into economic logic. Ive long ago given up on the subject.

    Those things in which no sane mind would disagree with you (that oil rents have been mispent every, single, time and in different pathetic colours in each ocassion) have nothing to do with what AUP could have said in his essay. That was just a banner under which each government could excuse their own iteration of the pharaonic syndrome. And that syndrome is more cultural, sociological, psychological than economic or ontological.

  8. So, a two-page editorial, written from the perspective of the time of a predominantly rural economy, with a basic and sound piece of advice (re-invest the profits from an industry based on a non-renewable resource into other forms of production to ensure a sustainable economy) is now a “bad essay that came to blight Venezuelan development for the next eighty years” because the metaphor of “sowing the oil” is imprecise. Oh, please!

    If our governments were not able to see past the metaphor, that’s not the fault of the essay. it is our own lack of imagination.

  9. Something left out in this piece or perhaps not made explicit is the notion that the reserves were limited. At the production rates people thought that there wouldn’t be much oil and at the production rates of the time, we would exhaust them.

    Effectively, policy makers were racing to have something to replace oil with. To Uslar it was aggro, to CAP it was the steel. And yes, they all failed in one way or another. We are today in a similar conundrum. Today reserves are basically infinite but they carry an expiration date (using Baquero’s wording here). Oil won’t have value in some distant-but-not-so-distant future.

    That of course drives an oil policy that should have first and foremost maximizing production as a goal. Things like OPEC don’t matter any more.

    What will Venezuelans do after oil has no value? Markets will tell. And yeah, meanwhile all the things like a fund for future generations and all kinds of nifty things but unless we first figure out how to fix the institutional framework required, all this proposal don’t have any clear foundation to stand on.

  10. Uslar was a man of his age , he had a primitive view of what makes a modern economy , including a sentimental attachment to the virtues of agriculture over other economic activities , he never understood the modern oil business seeing it as bringing only ‘temporary riches’ , similar to any XIX century gold find , his outlook was antagonistic to a Venezuelan oil business because he had no notion how such oil resources could be run advantageously in the long term. Still his call to ‘sow the oil’ is valid , in the sense that oil by itself is no longer enough to sustain Venezuelans need for economic growth , we have to diversify , create other sources of permanent wealth which together with oil can help fuel our development, and to do that we have to use whatever oil wealth can be salvaged from the current catastrophe in Pdvsa’s to help develop other economic activities beyond the oil industry……

    Lets get it straight, agriculture in Venezuela is not going to substitute oil as the mainstay of our economy , it must be developed so that to the extent possible it allows the country to feed itself and provide for some secondary exports but our agricultural resources are such that we cannot hope to compete with truly rich agricultural countries like argentina , uruguay etc. Also agriculture (look at international trade statistics ) doesnt make as much money as oil and manufacture …….

    The one big problem we have is that most of us dont really see our oil resources as a BUSINESS which needs a lot of management ability and commercial acumen to exploit to optimal standards but as a sort of golden MANA from the skies that rains limitless riches on all of us without us having to do anything to keep the business going………..!!

    One phrase not made by Uslar but which was as common in the past was DONT KILL THE GOOSE THAT LAYS THE GOLDEN EGGS , so pols (up to a point) were careful to limit their interference in the running of the Oil Business, allowing a corporate meritocracy to manage it according to the best rational standards , When that phrase got replaced with the phrase NOW THE OIL BELONGS TO THE PEOPLE …..and the meritocracy was destroyed , Pdvsa was converted into just another POLITIZED GOVT MESS..

    The other problem we have is that even if we had a perfectly run oil business , the money which the State recieves from it is utterly wasted , looted , misspent by a corrupt and incompetent State Apparatus bent on using it to advance its political agendas and feathering their leaders own nests……

    This is a different problem…. one which requires the reform of our state apparatus to render it technocratically functional and efficient by making it autonomous from fickle or corrupt politically partisan interference ……..!! The result of an inmature conception of democracy and its LIMITATIONS…..but this is the subject of a different comment .

  11. Additionally, I do think you make a lot of the “sowing the oil”. How much was it really sow? Really? As in percents of the total spending.

    I mean, we did get some extraordinary things out of oil. We eradicated many diseases. Expanded life expectancy over three decades. Increased literacy to over 90%. We built infrastructure. All of these happened within a generation. We forget far too easy the gigantic leaps that Venezuela made in terms of development.

    I would attribute our failures not to the failure of things like Sidor, but more so to the fact that we never embraced liberal markets (until it was too late).

  12. Its not sow vs not sow. We all obviously agree: sow. In fact, if I remember right, back in Caldera days, that phrase was used as a chastisement for commie-leaning instant relief spending instead of long term economic plans.

    I think it’s about dream a future or act like a street person and grovel for food. Not only oil, but the way we deal with lower and higher education, economic planning and public discourse in general show that we somehow don’t trust the future. Because those commie bastards kept coming at us with “you cant dream while there are people on the street.”

    The oil must be used, with pride and with ambition.

  13. ” And guess what, countries that are competitive at selling food are only competitive because they don’t have much of higher value to sell or because they have abundant cheap labour, and so their currencies aren’t worth much.”

    Well, USA, France, Netherlands, Germany and UK are the top 5 list of agricultural export countries (in this order). All of them export a lot of high value industrial goods, have expensive labour and strong currencies.

    • Agriculture stopped being a manpower intensive activity long ago. It is capital intensive and pretty high tech. That is why those countries are so productive at it.

    • Fertile soils , well watered flatlands , mild climates , not too extreme rainy seasons, etc etc are abundant in the most rich agricultural countries . Add to that people who take farming seriously as a business and as an occupation and who use advanced technological methods and you have a rich agricultural country …….. . Venezuela is far from being an ideal agricultural country , Guayana has very acidic soils ( half the country) , weather turns from very dry to too wet , The Llanos soil except for areas close to certain river systems are very poor, (30% of the country) , mountain areas in the Andes and elsewhere are not easy to cultivate because of the lands irregularity …….The richest areas in the most urbanized sections of the country ………we can develop an agriculture that feeds the country but not easily one which brings in import money , agricultural exports would be constrained by fierce competitions from countries that have greater agricultural resources…….!!

  14. I don’t know about enshrining economic policy in a Constitution. Venezuela has constitutionalized just about everything, and the constitution means nothing. I don’t know about saying the government should save more. Sure it should save more, but that won’t make the currency more conducive to economic diversification. And it won’t save, in any event. It’s not Norway. Only Norway is Norway. I don’t believe Venezuela has a fundamental moral or cultural problem, as many suggest. It has a geological problem. In that I agree with Mr. Pietri.

    I think Venezuela should explore more economic and political integration with its neighbours. So it is like Alberta, within Canada. Texas within the USA. That may help buffer some of the substantial negative effects of being atop an oil bonanza, contribute to better long-range decision-making and political stability. That’s my pie in the sky theory, anyway. And wasn’t that what Simon Bolivar was all about?

    • Constitutional reform will never be a remedy for bad public policy. By specifying this sort of things in the Constitution you could en up like Brazil that can’t even reform its pension system because parts of it are constitutionally mandated.

  15. This is a good article from which a meaningful debate could be generated. Of course oil can’t be managed by an elite. Of course agriculture is perhaps the least sector to which oil richness should be directed. There are countries importing the water they need. Still this does not represent a problem for its citizens or its economy. I do think oil is an “enclave” perhaps not in the way Uslar said but in the way it’s a sector with few links with the rest of the economy…just take a look at the “Atlas of economic complexity” created by Ricardo Haussmann. Required skills and resources for oil production can’t be shared or used for other industries. So by nature oil can’t produce development in this sense.

    Problem is not the phrase on its own but how the governments put in practice their ideas. For example supply-side subsidies are terrible. Demand-side ones are great. Just ask Iran and how they raised the price of subsidized gas. The second one just after one we perfectly know. We are not Norway and we have to create effective and viable enough policies given the reality of our country. Policies guaranteeing accountability and transparency. Private sector must be involved.

    From the 60’s Venezuela followed different models which the world has come to find highly imperfect. We see how Democratic Socialism does not fully work. We see how capitalism at its extreme has its faults. (though it’s fair to say Venezuela has tasted Socialism at a higher degree than Capitalism). It was just the oil which magnifies intrinsic mistakenly ideas. The path now then is to create policies in line with our reality (which doesn’t mean to put in our beloved Constitution “no robar” !!!)

    • Weve given the oil industry to the People , anyone with the right political loyalties gets a job doing what formerly was done by proven experts , the results are the disaster we now witness in Pdvsa……. We got rid of an meritocratic elite and substituted it with a throng of shrieking redshirted baboons representing ‘The People’ . Indeed we think of elites as a bunch of people but it goes beyond that, elites are organizations that have developed a work culture and expertise where those that work in it have to be highly competent performers or they lose their jobs .Organizations that get jobs done …….., Where selection processes are constant and tough and not linked to any kind of partisan patronage or political favouritism ……!!

      Elite meritocratic organizations are needed not just to run oil companies they are needed to run any business and any govt agencies and public services , until we understand that we will remain incapable of achieving anything ….!!

  16. tdt ,Televisión digital terrestre, a lo ciudad de dios; para cada proyecto de gobierno y mas. How It’s Made, kind of shows, documentaries, mucho ojo, que se vuelvan journalists, the new generation, where they follow around with the cameras, where every resource is traded, and the dealings, thats a bunch of channels for eyes to learn and witness, thats a small stepping stone to salvation.

  17. Great essay Amanda!

    I’ve read with interest the comments, and I find that the “sacred cow” nature of AUP’s original essay still transcends, even after so many years of failed policies. Which is -I believe- exactly your point.

    We need more thinkers like you, logical and analytical, rather than the usual dogmatic and traditionalist ones.

  18. Great essay, though, it seemed for me this centennial for Venezuela was just an illusion which was still on going, and yet to last a few decades or centuries more until the end comes which is inevitable and might be faster than ppl think due to the technological developments.

    My confidence that Venezuela won’t acquire competitiveness in the market in any industry in near future other the oil is strengthened reading her article.

    What she wrote seems to accurately summarize the Venezuela and a lot of the problems of the country.
    “You’ve got the entire world producing food ((or other products)), the competition out there is fierce. And guess what, countries that are competitive at selling food ((or other products)) are only competitive because they don’t have much of higher value to sell”

    The author seems to be a quite intelligent, capable and highly educated person, who seems to belong to the elite class in the society, but upon seeing her conclusion, sorry to say but Venezuela won’t change in near future.

    To add, she has the title of “energy specialist” and probably has deep knowledge in the niche OIL ENERGY field, but it is also really important to follow the developments and regulations in the general energy market in the world, like EURO, US etc., and to be open mined to learn from other countries which are “only competitive”.

    But hey, I enjoyed her article a lot.

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