Introduction
No country achieves authentic economic and social progress without
strategic planning focused on sustainable development. Likewise, a democracy
cannot consolidate or endure without such long-term vision.
Following the overthrow of Marcos Pérez Jiménez's
dictatorship on January 23, 1958, Venezuela experienced 40 years of
representative democracy. During this period, visionary and sustainable
management of oil resources—which accounted for nearly 80% of exports and the
main source of foreign currency—should have strengthened democratic
institutions. Regrettably, this vision was not consistently realized, creating
economic vulnerabilities that weakened the system.
Venezuela largely lacked leaders capable of transforming oil
rents into a diversified development engine. This structural dependence limited
institutional strengthening and paved the way for later crises.
Evolution of Oil
Production and Its Impact: From Boom to Collapse
Figure 1: Evolution of Oil
Production in Venezuela (1917-1998)
Boom 1958-1970: Welfare Funded by Oil, Without Diversification
Under multinational oil companies, production grew steadily
to a historic peak of 3.75 million barrels per day (b/d) in 1970. These massive
revenues funded advances in infrastructure, education, and health, placing
Venezuela at its highest living standards and prominent in human rights
indicators.
Decline 1970-1989: OPEC Cuts, Production Drop, and Currency Crisis
From Rafael Caldera's government onward, policies like
disproportionate OPEC cuts halted growth without balancing technical
capacities, reserves, and fiscal needs. Production fell from 3.7 million b/d in
1970 to under 2 million in 1984—sometimes below 1950s levels. Demographic
growth (from 5-6 million inhabitants in 1950 to over 20 million in the 1990s)
diluted per capita benefits. Poverty rose from low levels in the 1970s to
40-50% in the 1980s, reaching 52-65% in the 1990s (World Bank and local sources).
Figure 2: Poverty in Venezuela, 1976-2006 (% of poor households or individuals)
Black Friday (1983)
and RECADI: The True Origin of the Crisis and Democratic Erosion
Black Friday on February 18, 1983, shattered the bolívar's
historical stability (pegged at 4.30 per dollar since the 1920s) and triggered
the economic collapse that irreversibly eroded Puntofijo democracy.
The public sector held 25-30 billion dollars in external
deposits (BCV: 12-15 billion; FIV: ~9 billion; PDVSA: ~9 billion), exceeding
total external debt (15-20 billion) by 1.5-2 times. As Miguel Rodríguez noted
in “The True Origin of the Debt,” the issue was not a lack of resources, but their
mismanagement.
Under Luis Herrera Campins
(1979-1984), oil prices initially surged due to the 1979 energy crisis (Iranian
Revolution), peaking above $35–$36 per barrel around 1980–1981 before declining
toward 1983–1984 due to oversupply and weaker demand. This fall in oil prices,
combined with excessive external borrowing and expansionary policies, sparked a
capital flight of $8–20 billion. As a result, BCV reserves dropped from $19
billion in 1981 to $4–8 billion in 1983, necessitating currency controls.
This led to RECADI (February 28, 1983-1989), which managed
~50 billion dollars via multiple exchange rates. In practice, it bred massive
corruption: over-invoicing, shell companies, and bribes. 1989 investigations
uncovered colossal embezzlement, dubbed by El País a
“50 billion dollar currency trafficking scandal.”
The 1981-1983 flight—not spending on projects like
Guayana—accelerated indebtedness. By late 1981, external deposits totaled 30
billion against 15 billion in debt. Erratic policies and free convertibility
fueled outflows, deepening corruption under Lusinchi (1984-1989).
Consequences included over 50% devaluation, eroded purchasing
power, stalled investments, and institutional distrust. As Revista
SIC (1984) stated: “The true origin of external debt was not
Guayana enterprises or infrastructure spending, but massive capital flight
under free convertibility and erratic policies. By late 1981, the public sector
held approximately thirty billion dollars in international banking.”
Period 1989-1998:
Temporary Recovery Under Carlos Andrés Pérez's Second Term
In 1989, with Miguel Rodríguez as Planning Minister
(Cordiplan) and Andrés Sosa Pietri at PDVSA, a Development Program achieved the
only sustained production growth under full state management.
Investments, private sector opening, and expansion raised
output to 3.4-3.5 million b/d by 1997-1998, sparking a brief boom (top global
growth in 1991). Yet political opposition, sectoral blockades, and 1992 coup
attempts derailed reforms, preventing diversification and macroeconomic
stability.
Dr. Miguel Rodríguez,
Planning Minister during Carlos Andrés Pérez's second government
This era proved visionary management could bolster democracy,
but it was cut short, paving the way to 1998.
Conclusion: Lessons
from the 40 Democratic Years
Oil rents sustained Puntofijo democracy by funding welfare,
but poor management—lack of diversification, excessive OPEC cuts, price
volatility, and no sovereign stabilization funds—bred a vulnerable rentier
state.
The missed opportunity of 1989-1993 fueled democratic
fracture and post-1999 oil collapse. Venezuela must reclaim strategic vision:
leveraging oil for sustainability, not as the sole rent source.
MAIN REFERENCES
HISTORICAL EVOLUTION OF OIL PRODUCTION IN VENEZUELA (1917-2023)
BRIEF HISTORY OF DR MIGUEL RODRIGUEZ
"SPECIAL EXIT FROM VENEZUELA`S CRISIS"
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