They can imprison a man but not his ideas.

Leopoldo López has been behind bars for over three years. Declared a thought prisoner by Amnesty International and by the very judge who sentenced him, he kept his thinking fresh and untainted by injustice from the solitude of his cell. His books were confiscated.

He wrote on walls that were painted over and used his over 80 court hearings to take what he wrote out of jail in secret.

He wrote on sheets of paper later seized by guards.

He wrote on his wife and mother, literally, so they could carry his ideas out of prison. The guards made them undress and erased the words with alcohol and cotton.

Yet somehow, Lilian and Antonieta managed to extract it all, sometimes learning it by memory, sometimes as tiny bits of paper in their hair or chewing gum.

It all got to Gustavo Baquero, a brilliant industrial engineer from UCAB, with a master’s degree from the IE Business School in Madrid and studies in the John F. Kennedy School of Government of Harvard University.

This is the product of that process Venezuela Energética, Leopoldo López’ and Gustavo Baquero’s proposal, it’s the most audacious plan to come out in years, materialized as a book. It comes right when the current regime’s policies have buried not just the country but the entire hydrocarbons sector in the deepest crisis, pushing PDVSA to the brink of destruction. The magnitude of the collapse is such that Venezuela’s oil output has dropped by 250,000 barrels per day in just two months.

After reviewing the facts, ideas and characters of our oil history, Venezuela Energética analyzes the current reality and makes its proposal through a question: If Venezuela has 20% of global oil reserves, why does it contribute only 2% of global production?

King Hubbert’s model predicted that the U.S. oil output would reach its peak in the 70s, but demand would keep growing. That model, elevated to a global industry, was the platform for those advocating output cuts based on “resource shortages.”

Hubbert didn’t predict the impact of technology, like fracking, which would allow exploitation of light crude and gas reserves contained in oil slab stones, unleashing a structural change in oil markets. Hydrocarbons, which were deemed “scarce” by definition, suddenly became abundant. Now what matters is “peak demand” instead of “peak oil.”

Oil belongs to the sovereign, which is the people, not the State. A part of oil income must go directly to citizens.

For a country like Venezuela, this new reality demands an urgent change in oil policies. Our country can’t keep losing its market participation, and López and Baquero argue that our production should be increased to five million barrels per day (environmental concerns and new technologies now limit their useful life); 10,000 conventional oil wells that are currently shut down but can be recovered and opened to a bidding process for companies capable of boosting daily production, creating about 80,000 direct jobs and nearly 320,000 indirect jobs.

But boosting production isn’t enough. We’d also need to democratize oil; López and Baquero propose the creation of a Property Fund for Venezuelans, to turn oil into a citizen property. Oil belongs to the sovereign, which is the people, not the State. A part of oil income must go directly to citizens, only to be used for specific tasks (premiums for hospitalization, mortgages, pensions), creating and enhancing a direct relationship between our main national income and what public servants do with it in the eyes of the people.

Venezuela Energética goes into great detail about how energy reforms can transform Venezuela’s future, which is the discussion nobody dares to have now. You can’t talk about national rebirth without having a clear notion of how our biggest industry will be dealt with, and this is all described for you in the executive summary attached here, a fine overview to López’ and Baquero’s achievement.

Our economic situation demands urgent national debate. Therefore, it’s imperative to open a far-reaching dialogue on the development of tomorrow’s economy, and Venezuela Energética can be the catalyst for that.

Venezuela Energética – Executive Summary by Caracas Chronicles on Scribd

Caracas Chronicles is 100% reader-supported. Support independent Venezuelan journalism by making a donation.


  1. “A part of oil income must go directly to citizens, only to be used for specific tasks (premiums for hospitalization, mortgages, pensions)”

    So a new source of distortion which only means in relative terms that cost of hospitalization, prize of houses, and what goes to the elderly and not to the younger, will be larger than if net oil revenues were shared out unconditionally to all Venezuelans…

  2. “We’d also need to democratize oil; López and Baquero propose the creation of a Property Fund for Venezuelans, to turn oil into a citizen property. Oil belongs to the sovereign, which is the people, not the State.”

    You will never get the Chavistas to go for it. They will find a way to convince the Dumb Masses who vote PSUV that they are too stupid to know what to do with monetary largesse. The major parties in the United States are fabulous at convincing the citizenry that only The State is smart enough to control the pocketbook.

    Besides, you can’t buy votes is you don’t control the wealth. Which is why we have state sponsored Ponzi scams like Social Security. God forbid the people find out that there isn’t any money in their precious “trust fund”.

  3. “If Venezuela has 20% of global oil reserves, why does it contribute only 2% of global production?”

    What does the amount of oil stuck far in the ground, inaccessible, and poor quality no less, have to do with production numbers?

  4. It is a sad business that such a prepared people still no see that without a new covenant between the people and the state, these policies will end up in no different place than the previous 50 years.

    I wish I could see that the First line is: Deep and Integral revision of the Venezuelan Judicial System in order to establish a transparent, independent and protected law enforcement entity.

    Second line is: The issue of new organic laws that will address the function of the parliament, the electoral system and the Supreme Court in order to eliminate the re-occurrence of the current legal dictatorship and the exploitation of the legal gaps in the benefit of the ruling class.

    Third Line: The reduction, professionalization and des-politization of the Armed Forces with strict separation between the military and the civil.

    Fourth Line: The establishment of people oversight agency to all national economic and environmental aspects (similar to the TX Railroad commission, BSEE, BOEM, AER etc.) in order to integrate strategic economic sources with long term sustainability.

    Fifth Line: Establishment of a law whereas a minimum of third of the oil revenue is invested in alternative economic sources through Public-Private joint ventures with the vision of phasing out oil as the primary revenue stream.

    Sixth: The re-establishment of an independent PDVSA (with state oversight) whereas the focus of the company is the discovery, development and production of hydrocarbon resources both national and international.

    ….then you can produce all the oil you want and perhaps give people profit shares, or claps or retirement name it. There is a very fine line with the concept of populism that I wish is addressed in the book.

    This book or manifesto is just a surrender to the idiosyncrasy and the culture of our corruption. It is almost a slap in the face to make us believe that it was oil mismanagement that brought us here. Further to that it is based on the premise of “peak demand” and concept that it is as unproven and potentially as erroneous as “peak oil” was.

    It continues with the disconnect of the economic from the political and the social which should be a hard earned lesson from the CAP II government and its application of the economic package. Mr. Naim should remember this very well, the ruling class was completely blindsided with the social unrest this economic package brought to Venezuela. It could have been the best thing of paper but it was oblivious of the people…and that people mindset is not the current people mindset.

    It is granted that the current state of affairs in PDVSA require a significant revision. But it is unacceptable that the focus is a new deal with oil stewardship without changing the fundamentals.

    The fundamentals are very simple, our country is not and was not prepared to absorb the influx of cheap money. The political immaturity, the culture of impunity and the complete lack of social welfare mindset created a cast of few wealthy individuals that eventually destroyed the potential by waste, corruption, hubris and lack of accountability. It happened to the so called fourth republic and it is happening to the fifth..and it will happen to the sixth if we continue to think like this.

    • Nunca veras nada tan articulado ni tan moralmente y ´´políticamente correcto“ no sabe como hacerlo ni puede hacerlo y peor aun, no quiere hacerlo.

      A veces me sorprende que tenga un titulo de una universidad norteamericana. Pero cuando recuerdo que es de la Government Schoool recuerdo que solo es un empowered pretentious prick 🙂 y lo que salga de su boca solo son mas propuestas populistas y superficiales.

  5. If people are given direct income from oil royalties to spend on schooling and health and housing a prosperous new industry will be born , that of fabricating fake and or inflated schooling health and housing bills for people to get the money and spend it on whatever takes their fancy ……..!! also the fabrication of fake ID cards for people who dont exist and for peoples pets ……to open an account with .
    I agree that traditional govt bodies dont make a good job of spending the money but then what we must think is of the possibility of creating autonomous funds , technocratically run , independently monitored ,institutionally separated from meddling by populist politicians, who are entrusted with specific jobs having to do with economic growth or an efficient system of health coverage or raised educational standards , jobs which are set out in detailed plans and programs which results can be measured graded and monitored by independent bodies NOT chosen by political parties or their followers. Politicians can take big policy decisions but only after they have been vetted by autonomous tax supported think tanks and experts associations …..including, why not ?foreign experts chosen for their proven credentials at doing the job that these funds must achieve..Much more can be done to prioritize needed programs . We must create a State that is not totally subservient to the interests of partisan politics and demagogues who play with peoples credulity and toxic passions , we must think of policies and implementation activities has having to pass an experts scrutiny before and after they are implemented and only later given to the politicians to approve or reject on grounds that can be objectively verified by non partisan expert bodies . The Norwegian Fund and the UK;s office of fiscal responsability or US congress budget office can to mind…!!

  6. “Oil belongs to the sovereign, which is the people, not the State. A part of oil income must go directly to citizens.”

    Sure. But it’s the Venezuelan people, aka “el pueblo”, that has been stealing that income for decades, directly or indirectly, incalculable fortunes or smaller amounts. Not just the “government”, mind you. Not just the genocidal Chavista crooks, nah.. Decades before that, and including Millions of average people, from the top thieves like today’s Pinos or Ramirez, to the typical PDVSA “upper, middle and low-level “ejecutivos” to the lower “gerente de cuadrilla” and field supervisors, to the lowest workers or obreros, every misplaced tool that was misplaced.. disappeared. At every level. (Same for Corpoven and every other industry). And not just in “public” industries like PDVSA, nope. In “private” ones too, the thousands of Oderbrechts or Derwicks that have always existed since the 1ra Republica, the infamous “contratistas”..

    Unsupervised, give more oil income to “the people”, and they will steal more. The only question is how much would the “autoridades”allow them to steal, under any new Kleptozuelan energy policy.

    Answer: they would probably steal even more. History shows that a brighter minority, an Elite should manage the wealth of the less intelligent, less educated majority, like it or not. Like it or not, “the people” are not equal. Especially in 3rd world kleptomaniac tropical countries like Cubazuela, where massive Corruption will always be prominently pervasive, at all levels of society. It’s only a matter of finding ways to allow “the people” to steal a little bit, or a lot less, knowing trillions will still be stolen. And that “people” is your typical Venezuelan Criollo guy, ese pana, esa chama, from the top government crooks, to the mid-level players, to the lowest participants in the industry; “el pueblo”, top to bottom. Try giving the least educated, equally corruptible even more money and more resources, and therefore even more Guisos. Good luck.

  7. Either Leopoldo is going stir-crazy and a little punch drunk in his thinking after such imprisonment and house arrest.

    Or he’s just presenting this as a plan that he knows he can sell to the pueblo, but he has totally different ideas.

    Which would make him brilliant on a political level.

    I can’t discount this possibility. He’s just too well educated in economics, not to mention familiar with the VZ mindset, to take this idea seriously.

    I’m probably wrong, but damn, it would be great if I wasn’t.

    • Yeah, I read it the same way. There’s something fundamentally not right with just giving people something for nothing; the “entitlement” lie.

      Let charities and human nature provide some emergency temporary relief. Their lives are aligned to that work, they know they have limited funds, and they are in immediate direct contact with the people they are trying to help back onto their feet. They can explain to someone directly that they can give them the essentials they need once, maybe twice, give them time to breathe, food, a decent night’s sleep, laundry, but the individual has to get moving on their own.

      The “oil wealth” blabber just tells people to relax and not worry and not work – it’s all taken care of, or should be, or will be, and if it isn’t all taken care of, then obviously there’s someone to blame. There it all goes into even more political mess about whom to blame and obviously the people who told you it “should be” are not the ones at fault.

      An empty stomach is immediate, and does not care about planning the color scheme of furnishings matching the flowers in the yard of the house you will buy ten years from now. That’s way too far off. The immediate is how to rid the country of its murderous oppressors. That’s Stage One. Then Stage Two is reestablishing some kind of stability – no one really cares about the form of it, just as long as it is some kind of stability. Only then will it be possible to talk, on a public political platform addressing the entire population, about Stage Three, of growth and overall direction. Even then, there will be the really bad hangover of the horrible experience, and a huge amount of apprehension, mistrust, and clamor for “oil wealth”.

      The Stage Three is a hard sell to Venezuela because the mindset accepted the “oil wealth” story. How do you tell that mindset that free market capitalism is not “planned for you”, that it is indefinite, and it brings prosperity? Stage Three has to be the development of the wealth of the country, excluding oil. Right now, the country has full potential to be a bread basket food exporter. There are a lot of things that can be produced in Venezuela, and exported. Maybe the way to sell it is some cute little mantra like, “Oil is not forever!” Or “You can do it!”

      From what I’ve been reading, prices are already moving towards an equilibrium with world markets – discounted for the conditions in the country. Meat at a dollar a pound is still way below developed countries, and gasoline is still basically for free, as is transportation, relative to world prices. Currency is already moving to replace the bolivar with something that will hold value for more than a month.

      I do not believe there is any population which will not move to ensure its own survival, given freedom from lies and oppression and criminality. But it is necessary to stop lying to it about not having to worry because there’s “oil wealth”. Smart people have been saying the same thing for decades – almost a century. But the politician types can’t get away from it because it is so easy to buy votes that way. In the end, all they have “bought” is making people believe it, and the development of a strong and diverse economy has not happened. If you are poor, and some politician tells you you can have money because he will give it to you, why wouldn’t you vote for him? You have to be strong and diverse and smart to not fall for that lie. One politician sells that lie, so the next politician sees that, and tries to sell the same lie. Then the guy that gets elected has to deliver the lie, and a dependency is created. What has happened is that those at the top selling the lie have trickled off small percentage of the profits, and siphoned off and squandered the “oil wealth” for themselves.

      How “should it have been” is only useful in planning for the future development, and it seems to me that it “should” be allocated to making it easy for people to establish agricultural and industrial production. There IS plenty of go-for-it initiative and talent in Venezuela. But the huge difference is that providing favorable conditions for economic activity IS NOT AT ALL THE SAME as giving stuff away “for free”, on the excuse that people are “entitled to it”. That wealth of comparative advantage and mineral resource of oil could have translated into very low tax rates, a strong currency, construction of infrastructure (such as the Guri dam) and highways, all of which would have contributed to the favorable conditions for economic activity.

      All of this is just my take on it – subject to revision – but I think it’s sound economics.

  8. This article and LL’s book just make me more depressed.
    And believing that corruption is so accepted that there is no hope.

  9. The patronizing attitude of most here is more disgusting than the corruption you seem to so despise.

    If you natural wealth of the country belongs to the citizens and not the State it should be distributed as such, to do with what one chooses or pleases no strings attached. Make the State dependent on the citizens for the funds it needs to function, recollect a portion of distributed wealth through taxes. Make the State accountable to citizens and not the citizens dependent on the State.

    • That certainly is a very reasonable suggestion.

      That it is reasonable, logical and well thought out is exactly why it will never see the light of day. Governance as we know it, is immune to reason and logic. The prima facie reason it will never fly is the very reason we have in income tax in the United States. They take it from us (withholding) before we ever see it… if we had to pay them at the end of the year, there would be an open rebellion.

      If there is ONE THING the Government knows, its revenue and how to collect it without someones head getting put on a pike.

      In all honesty, the Government believes that the wealth you create belongs to them first and foremost, and you should be grateful to get so much of the Governments money. After all, in their esteemed and well learned opinion, it is Government that creates an atmosphere that allows you to earn!

      • Any direct transfer could be lessened by the amount taxed. The citizens would still be able to judge the gov’t by their accomplishments versus the amount reduced from their transfer.

        Honestly, at this point, how much would each citizen actually receive? With the amount owed to MNC’s and the deferred maintenance/investment that needs to be updated, I doubt this would actually be a windfall for years to come. My support of such an idea is that it could change the relationship between the citizen and the State.

        • I agree 100%. I doubt that the citizen would see anything for the next ten years, as the infrastructure has been so neglected (and the national pocketbook picked clean) that any sort of payout in untenable.

          I think direct subsidies to the citizenry can be done, it just won’t be done. That kind of control (revenue) cannot be trusted to anyone outside of the political whores who infect every nations capitol. (God forbid any citizen use their money to buy food, medicine, washing machine, automobile or take a vacation!)

          • El Guapo,
            Did you say that your wife is an MD?
            I desperately need a little help from a US doctor for one of my projects.
            Caracas Chronicles has my permission to provide you with my contact details.
            I only need a few minutes of her time to make a difference for many people.

    • I take issue with your usage of “patronizing” in your post. I don’t see how a definition of this word can be applied here.

      But more important is your usage of “natural wealth,” as if B’s or American $s just shoot up from the ground.

      Wealth is created.

      • Ira—On your second point, you are entirely correct, I should have said the wealth available through natural resource extraction.

        As for the first point, it is my opinion that when many posters here state that “el pueblo” is too un/undereducated and corrupt to receive a direct transfer from the State. They are actually saying to stupid/ignorant to manage their own affairs, if this is not the definition of patronizing I do not know what is. If the natural resources of the country belong to the citizens and not the State then they should be allowed to use the proceeds as they see fit. Turn the current relationship on its head and make the gov’t dependent on the citizens by the collection of taxes.

        • • Big business organizations are better than isolated individuals in making the most productive use of resources , not so long ago US agriculture depended on millions upon millions of small farmers to produce the countrys needs , now a relatively limited number of large agrobusinesses produce more than was produced by those millions , more efficiently and productively with only a tiny fraction of the workforce. If resources are scarce the rational thing to do is to concentrate them where they can be best used and render the biggest yield , i.e among organizations that are handled by teams of experts that are skilled at making the best most productive use of such resources. To fritter them away distributing them wholesale among all individuals is irrational . If one big well run farm can produce more than a hundred small farms then the economically rational thing is to do is to favor the former. We are sometimes too sentimentally attached to the virtues of favouring the ‘little guy’ , the common individual as the mainstay of economic or other social processes . unfortunately that doesn’t always work out so well …….!!

          • Bill—yours seems to be an argument based on efficacy and efficiency, I do not disagree with anything you said (other than the sentimental quip).

            My argument is that many of the citizens of Venezuela belief themselves to live in a rich country and that the government should thus provide them with nearly everything at zero to little cost. This makes the citizens dependent on the State. All the money that goes toward fuel subsidies, Clap bags, currency sales and a thousand other things should go to the citizens in the form of dividends coming from PDVSA. From this amount taxes would need to be “recouped” to fund the gov’t, making the State dependent and accountable to the citizens.

            I am not arguing against your goals, only that I believe there to be a more fundamental issue that needs to be addressed at the same time. In the current context clearly this dividend would be miniscule and show the citizenry that the situation is bleak and Venezuela may not so rich after all.

  10. Between the 1st WW and the 2nd WW the advent of the tank and other armoured vehicles gave rise to a discussion in military circles on what was the best way of using tanks in a future war , the germans led by General Guderian thought that batallions of tanks and armored cars should be formed so they might use their concentrated fire power and movility to break thru lines and execute lightning maouvers to destroy the enemy …the french (with the solitary exception of General De Gaulle) believed that a future war would be a trench war and that the best use for the tank was not to concentrate them but to spread them among all infantry units to provide support to the men who occupied the trenches , when war broke , the germans used their massed tank batallions to destroy and side step the french armoured lines and encircle the french army ………

    The strategy of dispersing resources to accomplish a difficult task is fraught with weaknesses while concentrating scarce resources on focused targets makes for much better results ……., both in the pursuit of war as in the pursuit of economic and development objectives .

    Part of the problem in understanding this issue lies in our confusing the government with the state . the government is composed of those elected officials who through the exercise of political activities come to be voted to lead the state , the state is composed of all those organizations which have as their institutional meta political function to serve the people of a state regardless of political affiliation . The govt and the politics that it must engage in corrupts and impairs its activities decisions and policies , so that they become corrupt and inept and instead of serving the state , i.e the totality of the peoples interest , it mostly serves the private and factional interests of its leaders and allies which means engaging in irresponsible demagogic policies that harm the common weal but keep them in power …….

    The state is what we mean when we talk of an independent judiciary, of an army a central bank and civil service that acts independently of the political interests of the political factions that from time to time come to be elected as the government , and are totally dedicated to accomplishing the best for the people of a country regardless of who rules it . Problem in latam is that govts colonize the state making it serve its purposes which leads to its corruption and degradation so we tend to confuse both.

    This of course is an aberration, and the cause of our rejection of that kind of state that is simply an adjunct of a politically motivated government ……we have become accostummed to an oversized govt that takes up functions that should belong to the state understood as a technocratic a political system for the pursuit of the public businesses of a country ..

    The question is of course how do we make the govt less intrusive of the technocratic functions of the state , in corporate practice and law there is an important distinction between shareholders and the professional management that runs a company , shareholders dont run the company they own , they set up basic guidelines and rules and give management an orientation of where they want the company to go , but the day to day operational decisions are taken by an expert professional organization , this is the way the best most reputable modern companies are governed .

    Why not do the same with the public governance of a country , let state bodies be professional and a political in what they do , seeking specific results that can be gauged planned and measured with business like precision and pragmatism while letting govt provide the overall direction based on the expert advise of the company managers , ??

    If the problem is the corruption and incapacity of professional politicians of running efficiently the apparatus of the state , lets keep them separate , letting the pols provide oversight and general guidelines but leaving the handling of resources to a technicratic structure trained and prepared to do it professionally .!!

    What comes to mind is an isntitution like harvard or oxford or other great universities which are not govt controlled but neither are they owned by shareholders whose main interest is in making those institutions profitable ……….

  11. “In the 1970s, the theory that the world was running out of oil was used as an excuse to nationalize the energy sector before our resources were “stolen” by international corporations.”

    This is a humongous amount of bullshit. So, LL is indeed challenging the value of the nationalization? or he forgot that as Venezuelans mastered the resource, we were ready to handle it ourselves. Perhaps he does not yet understand that oil production is a liquidation of assets hence other companies/countries pursue that liquidation outside their frontiers. Would that be possible without a strong native industry?.

    He perhaps forgot the challenges and ultimate push back of Exxon to provide our fair share. Or the general reticence of the international producers that used political maneuvering and pressure to keep the return on concessions as low as possible. Did he forget that the first country to bring the 50/50 was Venezuela and that we are not only funder members of OPEC but the actual mastermind behind it?.

    Mr. Lopez suggestion that we are guilty of the cluster fuck we are in because the oil nationalization is grossly wrong. It was among many other things the over commitment of the economic resources combined with an almost insatiable corruption, a continued policy of feeding the population a false sense of an economic power house (nod to you Mr. Toro), the import of almost everything we consume and the hubris of the big Venezuela that brought us down.

    Yes, you may say that by keeping the international producers it could have been a lot harder to squeeze them and collusion may have not been an issue. But, Venezuela was hardly the only country that went down in the downturn of the 80s with or without NOC (National Oil Companies). And thinking that keeping international producers in Venezuelan soil would have spared our fate is just a neo-liberal illusion.

    I challenge these authors to explain how the oil nationalization brought us here. This is fucking depressing (pardon my French).

    • “I challenge these authors to explain how the oil nationalization brought us here.”

      Having went from taking about 70% of what transnationals earned from selling oil without having to spend a nickel on that infrastructure to turning the state into the juiciest reward for corruption explains pretty much why oil nationalization was one of the worst moves in Venezuela’s history and what ultimately brought chavismo to power.

      • I beg to differ here in the sense that it was the corruption and the inability to administer the windfall that brought us here. That corruption and waste could have happened with or without the nationalization hence the question.

        Venezuela economy was working out more or less all right when PDVSA was independent. But as soon as Chavestia put the military in the oil business (where are you hiding Guaicaipuro Lamerda?), well it went down hill afterwards.

        I am surprised that Naim’s prologue (and hence he is influence in the book), who was the Economic Minister of CAP II in 1989 and was the executor of the FMI economic package that sparked El Caracazo and gave a sense of purpose to the MBR to attempt a coup three years later, writes so naïvely and seemly impervious to the deaths of so many people due to the application of economic measures oblivious to social, justice and political repercussions. So, Naim reads that line about the nationalization, a former key CAP minister – the man that nationalized the oil industry – he does not even try to address the point. No to mention the total annihilation on addressing the lessons on the failure of the 4th republic.

        Their “visionary” thesis is that demand will fall so lets produce que jode (by any means) and if there is any money left will give it to the people so we won’t steal it.

        Like that guy in the Chiguire Bipolar “Pero Tenemos Patria” – Naim, Baquero Lopez y F Toro & J Toro – NO ME JODAS

        • Holy cow, I’ve read many wrong things, but it seems that you took today’s prize to the typical creyón of the day.

          “…it was the corruption and the inability to administer the windfall that brought us here. That corruption and waste could have happened with or without the nationalization ”

          No, it was the corruption what drove the nationalization in the first place.

          “Venezuela economy was working out more or less all right when PDVSA was independent.”

          Venezuela’s economy was going downhill since the 80s because the party-driven government’s enchufados sucked all the country’s reserves who did exactly the same that they are doing today: Through rampant corruption.

          It was the enchufados who put shiabbe in power, and the enchufados are the ones who made a killing out of chavismo, stealing not hundreds of millions of dollars, but BILLIONS of dollars instead.

          “FMI economic package that sparked El Caracazo”

          Well, I can’t blame you for believing the greatest FALLACY of all Venezuelan history: The caracazo was orchestrated by the communist, castrista marxist vendepatrias who wanted to oust CAP’s government to put a cuban puppet there, which was the SAME strategy and goal that pursued the 92’s coups.

          As I said before, I can’t blame you for having lived your life believing a crass fallacy that was injected through the cuban-controlled brainwashing propaganda machine that the media in Venezuela were in the 80s and 90s.

          “…writes so naïvely and seemly impervious to the deaths of so many people…”

          It seems that you went into rabid chavista mode here, first, he isn’t writing anything naively nor impervious, he KNOWS that the deaths and murders were caused by the MARXIST CUBAN VENDEPATRIAS that started to spray gunfire to everybody THEY sent to burn Caracas to the ground.

          Did you live those times? I fucking bet you did NOT. But my family DID, I almost lost my parents countless times when the s**t-filled soon-to-be chavistas enjoyed driving past people in lines in front of the markets while SHOOTING THEM, trying to kill as many people as possible, THANK GOODNESS THAT THE NATIONAL GUARD AND THE ARMY DID THEIR WORK, DAMMIT.

          “…due to the application of economic measures oblivious to social, justice and political repercussions. ”

          What the hell are you talking about, man? What were those so-called APOCALYPTIC AND WORLD-RENDING MEASURES that would have WIPED OUT the “poor innocents” from the face of the planetand tearing Venezuela asunder in the evil hans of capitalism?! Raising the bus fare? Oh, that’s right: We’re still paying the same bus fare today than 29 years ago, you genius, did you know that the average short-bus fare is on the 2.000Bs mark (TWO MILLION OLD BOLIVARS)??

          If your only references for the so-called caracazo are wikipedia and this site, then good look believing those lies, because that’s what those articles are, a huge load of bulls**t that don’t even try to delve in the ACTUAL reasons and actions behind that event and the following coups against CAP and how they’re the work of the cuban invaders hellbent in the same goal that castro had since DAY ONE when he took the island: SEIZE CONTROL OF VENEZUELA’S OIL TO FUND HIS DICTATORSHIP.

          • The whole movement to communism started well before the nationalization of 1975 that led to the exit of the hated Imperialistas. It just officially surfaced in 1975. They had that much con-artist power by then. If it had not been Chavez, it would have been somebody else. If it had not been the Caracazo, it would have been the Maracaibazo or the Valenciazo. CAP was a populist leader – at least that was my impression of his campaign for CAP II, but he had the right economic moves. The problem *may* have been that he was given bad advice on how to implement it. In retrospect, it did not work. *Who* – by mistake or deliberately – gave him that advice on how to implement, is open to speculation. Pinochet, unlike CAP, was a general, and he had the army behind him and used military force to overthrow Allende. With explosions, he did it all at once. You do not Santiagazo against tanks and planes that have just bombed the Presidential Palace unless you have a visible death-wish. I am just speculating, but if Castro was behind this big socialist shift in Venezuela – certainly communist influence in LatAm is very well known – that may have been a motivating force to seek some kind of revenge, in Venezuela, for the resounding defeat in Chile.

            Venezuela nationalized oil in 1975 – I don’t see why no one here wants to recognize that. I was there, so it isn’t anything I’m reading in Wikipedia. The follow up was easily foreseeable. And that’s why I left when you could still have a marron grande in peace at the airport (Bs.5 – outrageous) while you were waiting for the lady: “Viasa anuncia la salida de su vuelo 1801 con destino a Nueva York. Pasajeros por favor abordar el avion por la puerta numero ocho [repeated twice].” And for many, “Ultima llamada para Viasa vuelo 1801 con destino a Nueva York, abordando por la puerta numero ocho. Ultima llamada … todos pasajeros por favor abordar el avion por la puerta numero ocho.” Already, it was getting sticky, with the exit fees, armed guards; and the new, depersonalized, plastic and formica terminal had none of the flavor of the old one.The marron was no longer served in a ceramic cup. I knew it was all over. Free market capitalism had lost, and a dark era was directly ahead.

            Henry Ramos Allup said he saw the future of Venezuela as “la oscuridad”. I don’t know exactly what he had in mind, or how deep his sentiments run for the suffering the population currently endures (it must be very painful for him to witness, and I am sure he tosses at night over his failures, wondering if it would have made a difference if he had done differently), but Venezuela is now at the bottom of the dark era – in socio-economic-geological time. There may be hard times worse than now, but this is the bottom, I believe. The “socialist experiment” in Venezuela is a total failure.

            As the saying goes, the darkest hour is just before dawn. May you folks in Venezuela find some peace and reason for hope and joy in this holy Christmas Season.

      • By the way, I am not against opening the oil sector. On the contrary, it is required for us to strive and help (god knows when) pay off our humongous debt and eventually move towards sustainability (and that is a big word).

        My point is to remind the Toros, the Naims, Capriles and the Lopezs that conform our hopes for a better Venezuela that their solutions need to be wholesome.
        That you won’t be able to fix the economy if you continue the current (and past) relationship with corruption, that you won’t achieve a developed Venezuela without having the population on board with your plans, that it is necessary to recognize that the days of the Punto Fijo Pact are well over thus you need a new covenant that includes the Chavistas and the left, that it is required to recognize that the advent of Chavez was a direct consequence of the ideological and political execution failures of the parties and ideologies they represent, that oil production is a liquidation of an asset that will not come back thus it requires the most committed management and that every other country in this world have their own agendas hence our solutions need to include geopolitical maneuvering and other pressures.

        Unfortunately, as my keyboard warrior allows me to participate, I have not seen the aforementioned reflections on any of the hopefuls and that is at best disappointing and at worst very very worrisome.

  12. The last time I found estimates of lift costs for PDVSA, it was a little more than $27 per barrel. PDVSA has the highest lift costs of any OPEC member. The collapse of the Bolivar has changed that but I have no access to PDVSA expenditures for labor and I’m assuming that in relation to the Dollar labor costs may have decreased substantially.
    This article in lapatilla claims that 600,000 barrels per day are exported to China for debt relief and an additional 500,000 barrels per day are sold for 1 Bolivar per liter for domestic consumption.

    That accounts for 1.1 million barrels per day from a reported 1.8 million barrels per day. There are still more deductions to make from the oil available for market. Russia, Cuba and the PetroCarib members receive oil that brings no money back to Venezuela.
    I estimate that less than 1/3 of oil production is available for sale to generate foreign currency.
    The lift costs must be paid on 3 barrels for every 1 barrel available to generate cash for the regime.
    This would mean that around US $81 is being spent for every barrel that can be sold for around US $50.
    At best, with the reduced labor costs PDVSA may be breaking even.
    There is no way that this can continue. The lack of investments in maintenance and drilling will eventually cause the complete collapse of the oil industry.
    The decline is accelerating. Venezuela will end up with a collapsed oil infrastructure that owes tens of billions of Dollars.
    New ventures will be less expensive than trying to dig out of this hole.

  13. Very interesting and very cogent dissertation. Some people posting, and some people writing articles about some people’s thoughts, seem to make some distinction between “the citizens” and “the government”, or “the people” and “the state”. It is citizens who run the government, and who run the state, as you accurately describe each. It is the government, and the state, and its individual citizens, which make a nation an international identity as a country.

    In the U.S., I believe the U.S. Constitution, based on very solid philosophy, informs the government as to policies and direction. The Framers of the U.S. Constitution sought out universal truths, as in, “We hold these truths to be self evident …”. (

  14. The human body is ultimately made up of cells , same as a nation is made up of individuals , but just as the body is more than the mass of its cells , a nation is more than than the cumulus of its individuals, what makes those cells into a body is that they are organized into organs and it is those organs that allow the body to function as a living entity ……., one primary organ of the body is its nervous system connected to a brain from which springs the mind , the mind itself is divided into various interconnected parts , one which operates automatically to run processes like the digestive system another which thinks and makes decisions.., yet another than dreams and fantasyses and every so often becomes intoxicated and runs wild .

    The part of the brain that operates the body’s automatic processes and instinctive reasons in tune with the bodys basic needs is the equivalent to a country’s State , one part of the state however exercises a guiding function over the rest , acting as the states supreme directive organ , taking the highest decisions while formulating our dreams and loftiest desires , this part of the State is its government .

    Thus to assumme that to help a sick or deranged body we must provide each of its cell with a certain nurturant substance is as absurd as attempting to remedy the flaws of a deficient form of government by giving the resources it feeds with to each and every individual that it rules over…….!! Instead we have to feel the state and other social organs of the nation with those resource without allowing the ideologically deranged or inept govt to monopolize its use and waste it in the feeding of irresponsible populist projects or in the corruption of its leaders.

    • I had really missed your interventions Bill, indeed you are raising an excellent point. In theory distributing to each person sounds great, but in practice it won’t make such a great impact. The question as you have highlighted is who/how then do we decide to distribute these oil rents?

    • So, if I am understanding you correctly: “Continue on the same path only do it better”. Let the State capture all of profits and decide what should be done with them. Because, of course, the people are too crude to determine that on their own.

      Sorry, I disagree, the citizens should have influence based on how they vote.

  15. The oil does “belong” to the people.

    Because things were fucked for the poorest even before this latest, disgusting mess, I hope that some day perspectives do shift. It’s a way/a time to start “from scratch.” And I’m happy about this output and another glimmer of hope.

    I wish us luck.

    • The “people” have owned the oil since when, 1976 or so, and how has that worked out.
      Let the private sector “own” it and tax it at a good rate.
      Let everyone quit looking for their piece of the oil and start working for themselves.
      But it will never happen.

  16. It is an interesting idea: try to engineer the distribution of oil rents so that it replicates the beaviour of a taxpayer and his or her income.

    I think it is broadly accepted that a big problem with petrostates is a disconnect between revenue and representation.

    However, I wonder if this scheme, notwithstanding its cleverness, would achieve the desired behavioral effects. It is one thing to make regular contributions to the government off one’s paycheque or income statement, and another to pay taxes from a “personal” account to which individuals have no access, or limited access. The latter is really just the government moving oil rents between various accounts, which the current regime already does (with varying degrees of lack of transparency). Isn’t what the authors are suggesting just a more transparent version of social security?

    On a different tangent, while there are many things that government does better than the private sector, I am not convinced that resource extraction is one of them. I’d never heard this argument about state oil companies and “peak oil”. I don’t understand why they need to exist at any time. You don’t need state oil companies to ensure the training of local professionals and workers. You don’t need state oil companies to ensure the resource is not “stolen” by foreigners. If you have companies competing to extract the oil that can be held accountable in countries where there is rule of law, isn’t that an added safeguard?

    The authors have the diagnosis spot on. It is not fundamentally an ideological problem that Venezuela faces. It is not a cultural problem. It is a geological and distributional problem. That Mr. Lopez can turn his mind to these things under such extremely difficult conditions is incredible, and it is important that Venezuela has leaders with a vision of what happens after the current regime is gone.

    • People are getting well ahead of themselves here,
      “It is a geological and distributional problem.’ where does this bollocks come from.

      “The authors have the diagnosis spot on. It is not fundamentally an ideological problem that Venezuela faces. It is not a cultural problem.” Am i living in an alternate reality.
      Canucklehead you talk the utmost bollocks. Its now not a ideological problem because you are a socialist that supports this regimes politics but now its going soooo wrong.

      Lets start with petrol at the petrol stations, and electricity in our homes, food in the shops, security on our streets and democracy that follows the will of the majority.
      When “we” have that, lets talk about Plato and Aristotle.

      • Using the analogy of someone with HIV or another illness that compromises the immune system, corruption is the root cause of the troubles in Venezuela.
        Many AIDS patients die of pneumonia. The cause of death may be pneumonia but the weakened immune system is what allowed the disease to flourish.
        Corruption is the HIV of Venezuelan society and government. Curing the Venezuelan society of corruption may be more challenging than finding a cure for AIDS.
        Eliminating corruption and restoring democracy are the only solutions.
        Everything else, food security, access to health care, economic prosperity, reduction of crime and safety of one’s person are all secondary to removing the corrupt government and restoring democracy and the rule of law. As long as the criminal regime maintains power, there will be no type of security for the populace.
        The idea that increased oil revenues are the answer, makes the connection to reduced oil revenue being the problem.

        • And this is the problem
          “Eliminating corruption and restoring democracy are the only solutions”
          Then there are no solutions here.
          The funny consequence of Chavismo is how they have allready created a dollarized economy (but not by design). Something the opposition would never have had the balls to do.
          Certainly in Margarita the black market dollar is the normal price in the shops now. So maybe that form of corruption is seeing its last days, as the access to government dollars is very scarce.
          In my opinion a dollarized economy would be the only cure for this country, not just for corruption but monetary rules and IMF/World Bank future intervention. More important than oil right now, especially as Maduros plan with the ABC islands and the closure of the refinery will be the death of PDVSA and it will not be able to recover from that.
          The problem is as you know Chavismo will hold hard and fast to the very end as the inside of a prison cell is not very appealing to people so use to a gilded life.

        • John, Crusader, I recommend that you both read and consider the first paragraph of the first page of Lopez and Baquero’s Executive Summary, which is helpfully provided with this CC post.

          If you are tempted to read even further, all the better.

          According to Lopez and Baquero, you are both talking about symptoms, not causes -to use John’s metaphor.

  17. This blog has become just a dumpster of un-hinged opinions from individuals self-indulged in their own intellectual narcissism and cognitive confusion (I am purposely avoiding to type in ignorance). As in any situation, there are exceptions. I commend Waltz and Canucklehead for some of their comments. I also commend highly the CC editors for their efforts to create a forum for discussion, unfortunately gone stray due to the mantra-cism of professional opinionators who preclude the editors goal. So long guys, if I learned something here is why our country is in the gutter. I hope that some of you like Gringo write your own ideas and solutions in a book, and subject them to the same standards you do so hold to others, and then take the book Norway; I understand Scandinavians are very polite when it turn to laugh about others.

  18. Brito
    “This blog has become just a dumpster of un-hinged opinions from individuals self-indulged in their own intellectual narcissism and cognitive confusion (I am purposely avoiding to type in ignorance).”
    Its perfect for Venezuela then.
    ‘Free speech’ is to me sacrosanct, to socialists maybe not, and there in lies your very own problem.
    You are one confused little puppy.


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