Venezuela: the development of
an oil-dependent country after
the crisis
Ilona Švihlíková
Oil
• Discovered in 20´s – Venezuela the
biggest world oil exporter
• Thanks to oil – economic and social
structure differs from other Latin American
countries
• 50-50 rule
• The founder of OPEC
• Hawk in OPEC
Top ten oil reserves
(BP statistical review)
Country
Share of total
Country
Share of total
Saudi Arabia
19,1%
United Arab
Emirates
7,1%
Venezuela
15,3%
Russia
5,6%
Iran
9,9%
Libya
3,4%
Iraq
8,3%
Kazakhstan
2,9%
Kuwait
7,3%
Nigeria
2,7%
Impacts
• Importance of state and oil company
PDVSA
• Geopolitical risks
• Position in OPEC
• Dutch disease (exchange rate, inflation,
impacts on trade flows)
– Necessity to diversify the economy
The start of Bolivarian Revolution
• Hugo Chávez Frías (1998 – 56%)
• Financing of social programmes: OIL
• 1) reviving OPEC – oil diplomacy (not
using dollars!)
• 2) getting control of PDVSA (a state within
a state)
– Organized a coup d´etat against Chávez
– Chávez returned within 48 hours
– Gained control of PDVSA
Ten years of Chávez´ reforms
(Socialism of the 21st century)
•
•
•
•
•
•
•
Oil as a geopolitical tool: ALBA, Petrosur
State involvement in the economy
Social reforms (missions)
Workers self-management
Land reforms (food sovereignty)
Direct democracy (community councils)
Internationalism (integration) against US
imperialism
Venezuela: Real GDP development
Achievements and failures
• Growth of manufacturing sector (98,1%)
• Declines in poverty and inequality
• Social missions: Barrio adentro, Robinson,
Ribas missions – increase in HDI and
Latinobarometro (positive evaluation)
• Budget surplus, decline in foreign debt
(and helping Argentina)
• High inflation (30%) – low absorption and
thus overvaluation of exchange rate
And then came the crisis
• Channel to Venezuela:not financial sector,
but oil price - dramatic decline (the burst of
the oil bubble)
• OPEC – severe cuts in quotas
• GDP (2009) – 3,3%
• Economic adjustment package: VAT
increase, cuts
• Exchange rate devaluation, high inflation,
electricity black-outs (drought)
High oil price volatility
Impacts of the crisis
• The recession was longer and deeper than
in other Latin American countries
Economic data (Eurostat 2011)
2007
2008
2009
2010
Real GDP
growth
8,2%
4,8%
- 3,3%
-1,9%
Inflation
rate
18,7%
30,4%
27,1%
28,2%
Current
account
balance (%
GDP)
8,8%
12,0%
2,6%
4,9%
Current top oil producers (JODI –
September 2011)
Country
Mb/d
Country
Mb/d
Russia
10,3
Kuwait
2,9
Saudi Arabia
9,4
Venezuela
2,8
USA
5,8
Iraq
2,7
China
4,0
United Arab
Emirates
2,5
Iran
3,6
Mexico
2,5
Where does Venezuelan oil go?
Despite diversification efforts…
• 80-90% of export revenues, 50% of
government income, 30% of GDP = OIL
• PDVSA, third biggest oil company (Saudi
Aramco, Exxon Mobile)
• 10% of PDVSA´s investment budget goes
for social programmes
• Intensive cooperation with China
• Petrocaribe initiative
• Disputes in OPEC
International dimension of
Bolivarian revolution
• Opposition towards US imperialism –
Venezuela as a model for rest of Latin
America?
• ALBA
• UNASUR
• Bank of South
• Petrosur, Petrocaribe…
• But: „the enemy of my enemy is my friend“
approach in foreign policy
Grassroot dimension
• Support by the liberation theology
• Decentralisation of economic and political
power
• Communal councils (30 000 until now)
• Cooperatives (100 000) , workers
participation (Alcasa factory)
• Community media network
• Enormous political activity + indigenous
population rights.
Criticism
• From the right: authoritarian style (top – bottom),
strong influence of the military.
• From the left: populism, emerging personality
cult (With Chávez everything, without Chávez
nothing), bureaucracy, Venezuela still a capitalist
country (private sector 70%)
• High crime, patronage and clientelism, housing
and electricity shortages remain serious
problems
• Much of the process depends on Chávez: his
illness?
Thank you for your attention