The Venezuelan Curse (Part 1)

For the past year, there's been a steady drumbeat of headlines about Venezuela. Now the US has invaded, arrested its president, and installed itself in charge. To understand how we got here, we talked to Venezuelan historian Alejandro Velasco, who grew up there and has spent years trying to understand why a country with so much promise has proven so difficult to govern. The Many Faces of Chavismo - Alejandro Velasco https://nacla.org/chavismo-hugo-chavez-venezuela/ Hard Fork https://www.nytimes.com/column/hard-fork with Casey Newton and Kevin Roose

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00PJ Vogt?

  Hello. Before we begin this week, an update. The very strange experiment we started last episode where, along with our friends at the Hard Fork Podcast, we decided to try to help build the Fediverse. Basically, we made a small social media website that is not particularly algorithmic, not run by tech moguls, unless you count us, that we called the Forkiverse. The Forkiverse has taken off with frankly, much more energy than I expected. And if you want to hear about what's been going on, the micro scandals, the Russian disinformation campaign, the users we've had to ban, we covered it all on today, Friday's episode of the Hard Fork Podcast, which I will include a link to in our show notes. Okay, some quick ads, then this week's story.

• 0:44PJ Vogt?

  This episode of Search Engine is brought to you in part by Toyota. Buy smart, drive for less, and trade for more. That's Toyota affordability. And it all starts with a great deal from your local Toyota dealer. Make a smart buy on an all-wheel-drive Camry, Corolla, or get a Corolla sedan packed with the latest features, advanced tech, and head-turning style. Take a test drive in two of Toyota's most popular SUVs, the spacious, family-friendly Grand Highlander and adventure-ready RAV4. And with so many hybrid and plug-in hybrid models available across the lineup, plus efficient all-electrics like the BZ, BZ Woodland, and all-wheel-drive CHR, you can drive your way and skip the pump. And, long after you leave the lot, your Toyota keeps delivering with legendary resale value

• 1:27PJ Vogt?

  built on a reputation for quality and reliability. So when it's time for your next Toyota, you can trade in for more. From a great deal today to a great value tomorrow, a Toyota is right for you. Shop toyota.com for deals and details, or stop by your local Toyota dealer today. Toyota, let's go places.

• 2:14PJ Vogt?

  One of the well documented problems with life on Earth right now, mentioned ad nauseam on this very podcast, is that it's very hard to answer the question of what any of us should be paying attention to. The internet, the news, offers so many competing stories, most of them highly emotionally charged, deeply complicated. It's sometimes hard not just to know where to look, but almost like, what exam am I cramming for this week? What is the topic that I know very little about, that I now have to rapidly fashion myself into a pseudo expert on, just to be a citizen? Last year, for me, one of the stories I chose not to dig into was Venezuela. It was there, in my peripheral vision, Trump complaining about Venezuelan migrants, actively

• 2:59PJ Vogt?

  targeting them for deportation. I noticed, of course, when we launched missile strikes against Venezuelan boats, I could tell something weird was going on, but this is America under Trump. Lots of weird things are always going on. And I was just more worried about other parts of the front page last year. But then, a couple of weeks ago, our country sent troops to arrest their president and his wife, and Trump announced we were now in charge of Venezuela, and that we were taking their oil. And that was the point where I really felt like, okay, I need to understand this. Not Trump, but Venezuela, this country we just got into a much more entangled relationship with. So, I read some books, I talked to some experts, and I have to say, I kind of wish I'd started

• 3:43PJ Vogt?

  this earlier, because the history of Venezuela is just, as a story, so compelling, so fascinating.

• 3:54PJ Vogt?

  So without further ado, I just want to introduce to you the person who will guide us through that story today.

• 4:00Speaker 01

  My name is Alejandro Velasco, and I'm associate professor of history at New York University.

• 4:05PJ Vogt?

  And what is your relationship to Venezuela?

• 4:08Speaker 01

  Well, I have two. I have a personal and a professional relationship. I was born and raised in Venezuela, born in a small town called La Victoria, about an hour and a half west of Caracas. Then my family and I moved to Caracas when I was eight, which is to say that I root for the Caracas baseball team, which is really important when you think about people's relationship to Venezuela. Who do you root for?

• 4:26PJ Vogt?

  Are they a good team?

• 4:28Speaker 01

  I would say they're the best, but you know, others may disagree. But then I also study Venezuela as a profession. I'm an historian of modern Venezuela in particular, which is to say the 20th century. And mostly I study social movements, urban politics, and democracy.

• 4:45PJ Vogt?

  And when did you you left Venezuela for the United States?

• 4:49Speaker 01

  Yes. So Venezuela has, just generally speaking, in my entire lifetime, which is not to date myself, but I was born in 1978. That was a moment of, say, peak prosperity for Venezuela. And ever since I can remember, it's been a decline. And so as a young person in the 80s, there was significant amounts of political and economic instability by the 90s, when I was a teenager, that really accentuated significantly. And then by 1994, my parents decided to leave.

• 5:24PJ Vogt?

  Alejandro's family moved to the US, to Miami. But he would return to Venezuela later, on his own, to study the place. He wanted to understand the complexities of what had happened there, the complexities that had caused his family to leave. He began his graduate studies in the year 2000, when Hugo Chavez had just entered the political scene.

• 5:42Speaker 01

  There was simultaneously lots of hope, but also lots of anxiety. But the kinds of questions that were being asked were future-looking questions without any real sense of the previous past. And so I wanted to figure out, is there anything that we can learn, not from the distant past, Simon Bolivar, or long-dead figures, but from the more recent past that could help explain why we were where we were?

• 6:08PJ Vogt?

  How do you, when this is like such a broad question to ask me who's gone so deeply into a country, but like, what do you think makes Venezuela unique? Like, how do you understand it as a country in your own mind?

• 6:24Speaker 01

  I guess I don't know that I would say that it's unique. I think that some of the patterns, especially having to do with resource dependency and the ebbs and flows of what that occasions, both in terms of economy and politics, and then how that, of course, has a broader impact on society as a whole. I think that's more generally patterns that you can find elsewhere. I think what's significant about Venezuela, especially in terms of its relationship with oil, is that, and I'm not the first one to talk about this, there's a wonderful anthropologist destroying a Venezuelan himself, Fernando Coronil, who wrote a wonderful book called The Magical State, back in 1997, in which he basically argued that what's particular

• 7:06Speaker 01

  about Venezuela is that we have this strange relationship with past and future, and oil conditions both. What do you mean? Oil induces illusions. It induces the capacity to imagine that the future is infinite in terms of possibilities. But it also, in terms of the structural dynamics of oil, induces catastrophe. But the way that you get from illusion to illusion is through collective amnesia. You have to forget the moments of catastrophe that the very state of illusion induced, so that by the time you get to the next possibility of a limitless future, you don't see what's

• 7:49Speaker 01

  right in front of you, which are all the evidence of the failures past. And by that, I don't mean metaphor. I mean, literally. If you, for instance, go to Caracas, you see, in various parts of the city, massive architectural projects that were, at one time, usually during boom times, of illusion about a limitless future. And then when the collapse came, they became dilapidated, abandoned, and the people there had to fend for themselves. And you can index...

• 8:24Speaker 01

  The timeline of this tension and paradox, just by looking out into the valley of Caracas.

• 8:31PJ Vogt?

  So you're saying like, if I was in Caracas, like, I would look around and I would see these like, grand attempted pieces of architecture, like, different moments where there was a boom time and somebody was in power and they were like, this is my vision of the future. They don't work out, they're still there. And part of what makes like, this is a feature of human nature. But you're saying a feature of human nature that gets particularly expressed in Venezuela is like, the ability to like, have illusions, have them fail, and just, even if they're in your sightline, block them out and keep believing in the next thing.

• 9:04Speaker 01

  Completely.

• 9:06PJ Vogt?

  Alejandro and I ended up talking for hours. I found he did the thing I'm always hoping writers can do for me. He both told the story in a cinematic, compelling way, but also, along the way, he could explain what it all meant. So that's the conversation I'm gonna let play out from here. It is a more dense story than some we tell here, but it's worth it. I'm gonna present it to you with as little interruption as I'm capable of. And we're gonna break it into two episodes, which is how I heard it. Hanging over everything you'll hear is this phenomenon that political scientists call the resource curse. Countries with something valuable in their soil, whether it's diamonds, copper, oil, instead of that resource being a good thing, with very few exceptions,

• 9:50PJ Vogt?

  it ends up bringing devastation. A monkey's paw, wherever it's found. I've read a decent amount about the resource curse. I thought I understood it. But I'd never seen a resource curse story like Venezuela. The story of Venezuela is a story of leader after leader using oil wealth to try some of the most imaginative arrangements of government and economy I had ever heard of. The country itself almost like a laboratory for all the different ways you could try to structure a society. Okay, so we're gonna start our story in a place, I think you have to. Chapter one, I'll.

• 10:50PJ Vogt?

  So I want to dive into that history. Right before Venezuela finds oil, what is the country like? Like, the economy, the government, what does it look like in Venezuela?

• 10:59Speaker 01

  By all accounts, before 1914, when the first oil well begins pumping oil in Venezuela, Venezuela is pretty much a backwater state in the rest of Latin America. Its primary source of revenue is coffee. It had gone through first the cacao and then a coffee cycle in the 19th century after independence. There had been efforts at modernization in the late 19th century through enlightened dictatorships, some insipid efforts at urbanization, at trying to bring immigration from Europe especially, but none of those really took. And, you know, most of Venezuela was rural at the time. Its capital city, Caracas, was very, very modestly sized relative to other capital

• 11:44Speaker 01

  cities elsewhere in Latin America. And the center of its politics were not in cities, but rather in this region, in the Andes, who had had sort of control over the nation's politics for almost 40 years. A dictator named Juan Vicente Gomez, who came from this region, installed himself in power in 1908, was known to speak very little and rule very strongly, speak softly and in fulcantic terms. And his vision for the nation at the time, when it came to power in 1908, was essentially just to keep things as they are. There was no real vision of progress, growth, modernity. It was under his rule, of course, that oil then begins to become the...

• 12:28Speaker 01

  This thing that seems like it might be a ticket somewhere, but it's unclear where. And so, once people understand the power of oil, what begins to change? What happens? It took a while, right? And so, it's not like 1914, oil gushes out, everything changes. Yeah. At the time, of course, you have to remember, it's still unclear what oil is going to do to the world. Right, it's 1914. It's 1914, so it's not a sense like, for instance, Norway later in the 60s, when they discover vast reserves in the Arctic, they're like, oh, wow, this is great. Yeah. 1914, there's still no real sense of, you know, what this is going to do to the rest of the world. But really, by the 1920s is when you begin to see a tremendous insertion of capital

• 13:12Speaker 01

  from oil companies from the United States, from Britain and elsewhere, right? That it seems to be changing the dynamic of Venezuela. By the 1930s, and Gomez's dictatorship lasts 27 years, so it really coincides with these first two decades of oil production and exploitation. By the time his dictatorship comes to an end in 1935, it is unquestionable that oil not only will be the defining driver of Venezuelan economy, but every political faction in Venezuela understands that how they were going to relate to oil, how they're going to define oil, will be the hallmark feature of Venezuela's future.

• 13:58Speaker 01

  And so, what does that look like? Like, what does it mean for this one resource to be so central to the country itself? Well, even at the time, which is to say the 1920s and 30s, it's not to say that everybody saw this as an unproblematic or uncritical, simple path towards a kind of future, whether that's going to be modern or something else. As early as the 1920s, intellectuals in Venezuela are sounding some alarms about oil being the instrument of the devil, right? That if we're not too careful, this thing that seeps seemingly freely- From the ground and is viscous and inspires all these visions about,

• 14:44Speaker 01

  the darkness of the subsoil and what that means metaphorically and spiritually for Venezuela, that this may not be the bountiful resource that we might imagine. It might come with some significant strings attached.

• 14:56PJ Vogt?

  And so people are seeing this very early, even if it's more like an instinct, like just this feeling of like, oh, this goopy, black discharge from the soil that's so valuable. Like, people have a feeling that this could be a problem.

• 15:09Speaker 01

  Yes, so there are alarms raised, although they're not generalized. And really, again, what the consensus among Venezuela's political elite, intellectual class, including its cultural elite, who begin to write novels and, you know, poetry and plays and music around oil.

• 15:30PJ Vogt?

  They're writing poems to oil?

• 15:31Speaker 01

  Well, not to oil, but about oil and about what it might mean for Venezuela. Because it also just becomes a question of culture more broadly. But again, where you feel the most impact is in the country's economy and politics. As oil becomes this fantastic resource and the riches of it come to Venezuela, even though they're indirect, because it's mostly owned by foreign oil companies, even though there are treaties that are signed by successive Venezuelan governments. Even that spillover wealth induces moments of tremendous growth and tremendous riches. You see that in the 1940s, you see that in the 1950s. There is a real general sense that Venezuela is changing.

• 16:15Speaker 01

  The cities are growing, that people are leaving the countryside, because now there's nothing really there for them. And what's there is this both, you know, service economy that's rising to support the oil industry, its executives, its immigrants, et cetera. But also that we don't want to be left behind, right? And so you have this massive urbanization that happens between the 1950s and 1960s.

• 16:39Speaker 01

  And in the 1960s, you have the return of democracy in Venezuela after a dictatorship that lasted 10 years and was overthrown in 1958.

• 16:55PJ Vogt?

  Chapter 2, Venezuelan Democracy.

• 17:16Speaker 01

  The first president who becomes democratically elected after 1958's dictatorship is Rómulo Betancourt, who had written a book called Venezuela, Oil and Politics. I mean, doesn't get as, you know, more on the nose than that. And in that book, basically what he argues is that the way in which Venezuela can control its own natural resource is going to inform how its politics can be defined as democratic or not.

• 17:41PJ Vogt?

  What is his prescription for the relationship between how Venezuela controls its own oil and whether or not it's democratic?

• 17:49Speaker 01

  In two ways. The first one is, we need to assert more control, literal control of our oil. It cannot just be completely given up to foreign oil interests or companies. We have to be able to assert a kind of independence and sovereignty over this resource in a way that it hadn't been the case in the first decades of the oil industry.

• 18:05PJ Vogt?

  Because what you have in the early decades is essentially like dictators making deals with foreign oil companies, like, "I will violently subjugate people here and I'll make sure the oil flows."

• 18:15Speaker 01

  Exactly right. And so, you know, they would give extremely generous concessions to these companies to come and extract oil. And what Betancourt and others, you know, came up with was this formula that in Venezuela, it's called el 50/50. 50/50, right?

• 18:32PJ Vogt?

  Yeah.

• 18:33Speaker 01

  Like, 50% goes to the companies, 50% comes to Venezuela. Let's just split it down in half. That acknowledges that you're putting this tremendous investment, but it also acknowledges that what comes out of the subsoil is ours, right? But that's, in some ways, going to change significantly with the oil shock, that is, the 1973 oil embargo.

• 18:51PJ Vogt?

  Before the oil shock, because it seems like it's kind of a very, I don't want to say utopian moment, but like, just paint me a picture of what life looked like when everything was going really right.

• 19:04Speaker 01

  Well, I mean.

• 19:05PJ Vogt?

  Or was it? Is that like a?

• 19:06Speaker 01

  Yeah, I guess I would temper that a little bit, right? Not, everything was going better.

• 19:14Speaker 01

  Whether everything was going really right is more of a subjective question.

• 19:20Speaker 01

  Even as the political system was stabilized and democratic system really entrenched itself in the 1960s and by the early 70s, there were still those who had not seen the desired effects of this democratic system being able to distribute the wealth of oil in a way that seemed fair and equitable, right? There were still significant amounts of inequality. And in part, that's also because even though in the 1950s, there was a period of oil boom, in the 1960s, coinciding with this incipient democratic experiment, it was also a period of lower oil prices. And so those governments, as they were trying to consolidate, also simultaneously were

• 20:02Speaker 01

  making the discursive promise of greater, more fair distribution of oil wealth, but with fewer resources to be able to distribute. But they did distribute it. They distributed it in the context of building an educational system that eventually became a real envy of many parts of Latin America. Social services that were also increasing in terms of its capacity as well as its efficiency, building new cities that were meant to extract other resources like steel in the southern part of Venezuela, and building infrastructure beyond just the major cities to try to link up the country. And so there was a palpable sense of progress, but not quickly enough to satisfy everyone, right?

• 20:47PJ Vogt?

  So it's like, it's too simple to say, oh, like, life was great for everybody. But the more, the truer thing to say would be. Like, things were relatively stable. There were a lot of people in Venezuela for whom life was good, but there were also have-nots. And part of the problem was, just in a given year, no matter who's in charge or what their ideology is, what is the price of oil? And so even if you're making promises about fair redistribution, if the price of oil goes down, what you have to redistribute is less, and people who aren't getting anything might not be very patient about that.

• 21:22Speaker 01

  And that is key, to understand the balance between dictatorship and democracy in Venezuela. Patience, which is to say, one of the things that the boom and bust cycles of oil generates is, in moments of bust, the breach between those who have and those who have not accentuates and extends and grows. But then that means that when the next boom period comes, you have a choice to make, whoever is in power. You can either try to close that gap, and you have the wherewithal to do so with petrodollars coming from abroad. But you don't know how much time you have in power, right? And so the question for you

• 22:05Speaker 01

  is, do you spend conservatively to try to slowly but concertedly close this gap, or do you spend lavishly what you have coming in in order to try to be able to secure and close that gap very quickly and then get the political benefits of having done so, especially in a democratic regime?

• 22:33Speaker 01

  The problem, of course, is that in a dictatorship, you don't have to worry about what the population thinks. You're just the dictator. You can do whatever you want. In a democracy, you have to worry about the ballot box. And so your time horizon for results is much shorter. Therefore, the incentive, if, for instance, you're in a period of boom, to spend all the money that you're getting right away, and in fact, more even than you're getting right away, is much greater. But of course, then that ties you to the whims of the international oil market. And if a boom comes, a bust comes, as it always does, then you're left holding this bag of not only promises, but investments that you can no longer pay.

• 23:13PJ Vogt?

  It's a very hard country to govern.

• 23:16Speaker 01

  Exceptionally.

• 23:23PJ Vogt?

  We're going to take a short break and then all the people who've tried to govern this exceptionally difficult place and what befell them.

• 23:42PJ Vogt?

  This episode of Search Engine is brought to you in part by Viori. I have been living in my new gear from Viori and honestly, it has completely transformed my daily routine. I picked up the Sunday Performance Jogger from their Sunday Collection and they've quickly become my absolute go-to pants, whether I'm heading out for an early morning run, working from home, or grabbing coffee with friends. The soft, lightweight, four-way performance stretch gives you total freedom to move without feeling restricted. Plus, their website makes finding your exact style and size ridiculously easy, so you can check out the rest of the Sunday Collection, including their incredible hoodies, shorts, and jackets. Viori is an investment in your happiness. And for our listeners, they're offering 20% off your first purchase.

• 24:23PJ Vogt?

  Get yourself some of the most comfortable and versatile clothing on the planet at viori.com PJ. That's V U O R I dot com slash PJ. Exclusions apply. Visit the website for full terms and conditions. Get 20% off your first purchase at viori.com PJ and discover the versatility of Viori clothing. Exclusions apply. Visit the website for full terms and conditions. This episode of Search Engine is brought to you in part by Xero. Okay, you're a great small business owner, but math was never your thing. Totally get it. But if you run a small business, you know how important it is to run your numbers. Enter Xero.

• 25:04PJ Vogt?

  That's X E R O, as in X marks the spot for the perfect platform that puts accounting, payments, payroll, and analytics in one place. So you always have one clear picture of your business. Xero is more detailed than spreadsheets and just as powerful as other leading software, but it's simpler and easier to use. With visual dashboards, Xero makes it easy to understand your cash flow. You know exactly what's coming in and what's going out, so you make smarter decisions that can help grow your business without feeling overwhelmed by the numbers. Join 5 million customers worldwide who use Xero to manage their finances. Learn more at xero.com. That's X E R O.

• 25:50PJ Vogt?

  Welcome back to the show. We're in the 1970s now. Venezuela, at this point, has a democratic government. And crucially, this decade, the price of oil is going to skyrocket.

• 26:04Speaker 02

  This is NBC Nightly News, Wednesday, October 17th. Reported by John Chancellor.

• 26:11Speaker 03

  Good evening. The Middle East war produced developments all over the world today.

• 26:16PJ Vogt?

  There will be a series of oil shocks, huge spikes in the international oil price. The first big one is intentionally caused by OPEC, an alliance of oil-selling countries that Venezuela is a part of.

• 26:28Speaker 03

  The oil-producing countries of the Arab world decided to use their oil as a political weapon. They will reduce oil production by 5% a month until the Israelis withdraw from occupied territories. If the Arab countries keep that pledge, it would reduce their production by almost 50% in one year. They were diplomatic.

• 26:48PJ Vogt?

  This big reduction in oil raises prices precipitously. And later, there's a second oil shock during the Iranian Revolution. The revolution craters Iranian oil production. The 1970s in general, a time that was as economically good for Venezuela as it was bad for the US. Here is Alejandro Velasco with chapter three of our story, Petrostate.

• 27:16Speaker 01

  So my parents are both from Colombia. And they immigrated to Venezuela in the 1970s. In that moment, Colombia was racked by civil war. Its economy was really in tatters, lots of instability. And this neighboring country seemed to be doing pretty well, relative to other parts of Latin America, where they had dictatorship, civil war, et cetera. This seemed to be a pretty stable political system, where there were opportunities for economic growth, not just at the level of the oil industry, but really, as we were talking about before, potentially at the small and middle-sized industrial level. So. One of the major challenges of all Venezuelan governments have been to diversify

• 27:59Speaker 01

  the economy, to make it less completely dependent on this single resource. And the idea is to then direct some of the wealth coming from the oil industry, not just into services and social programs, but rather into productive, alternative, non-hydrocarbons related sectors of the economy, right? Steel, for instance, was one, but what that does is generate other kinds of derivative industries. My father, for instance, he started a company manufacturing nails, screws, bolts, and things like that, which, of course, then become the thing that literally tie other things together.

• 28:38PJ Vogt?

  Yeah.

• 28:39Speaker 01

  And so there was a real moment in the 1970s where the government was investing, but that investment was in part also founded on this sense of an illusion about a limitless future. And what I mean by that is, I'll give you one example.

• 28:54PJ Vogt?

  Yeah.

• 28:55Speaker 01

  One of the dreams of the president in the 1970s during the oil boom was to have cars made in Venezuela, like have a Venezuelan-made car, like a Venezuelan branded car. Now, the market in Venezuela does not sustain a locally-made car.

• 29:18PJ Vogt?

  Because it's too, just the population is too small?

• 29:21Speaker 01

  Too small.

• 29:22PJ Vogt?

  Yeah.

• 29:23Speaker 01

  Especially for the investments required to mount something as large as a car. But of course, in the logic of limitless wealth, we can do all of the industry required and all of the infrastructure required to create that car. But in order to make sure that people buy it domestically, especially if the competition is Ford, Chrysler, et cetera, we're going to also have to impose high tariffs on those exports and then basically get people to buy the local cars opposed to the imported car.

• 29:53Speaker 01

  But people may not want it because its quality is not assured, right? And so the viability and certainly the profitability of that national car is tied to a long-term reality that, as we talked about in a democratic context, is really difficult to see bear out. And so they tried to start this. First, they tried it through a tractor company. The company was called Finatracto. They built the infrastructure, they built the warehouses, they bought the machines, and there wasn't a single tractor that left the production line before the oil money evaporated. God. And so, you know, again, these are, you can go and see the warehouse and it's, you know, dilapidated.

• 30:35Speaker 01

  But again, at the time, yes, there were lots of different opportunities and lots of excitement about how to start companies that are not tied to oil, which then creates for Latin America what is a very robust middle class. This is a middle class who is benefiting from access to cheap dollars, and they use these cheap dollars to travel internationally. This is the period of, as you know, we remember it in Venezuela, "Tá barato, dame dos," which is to say, "It's cheap, give me two." Right? And so you like hop on a flight to, you know, to Miami on a Friday and come back on a Sunday night. And people are just like Venezuelans, they're just, they're using cheap dollars to just shop internationally.

• 31:18Speaker 01

  Shop internationally, but of course, that's at the individual level. This is also happening structurally. And this is, you know, I don't know how in the weeds you want to get into the dynamics of a petrostate, but- Let's go in the weeds into the dynamics of a petrostate. Okay, okay. Into the weeds we go. So the major problem of a petrostate, it's not just dependency on a single resource which is volatile in an international marketplace. The major problem of a petrostate is that it creates perverse incentives. And so- When, for instance, you have a period of oil boom,

• 31:59Speaker 01

  especially as massive as the one induced by the oil crisis of the mid 1970s, and Venezuela was just reaping massive amounts of petrodollars. The incentive to invest those petrodollars in domestic industry in order to induce import substitution industrialization, which is to say, to substitute our dependence on imports by industrializing our economy so that we can domestically produce what we would otherwise import. The mass availability of petrodollars makes it far cheaper and far quicker to just continue importing rather than investing those resources in the domestic economy

• 32:44Speaker 01

  and therefore create a different industrial apparatus that could generate independence, economic independence, away from imports.

• 32:53PJ Vogt?

  And what you're trying to do, you're trying to convince people, while the dollar is very strong, to domestically start to make goods that they can get very, very, very cheaply internationally. And it's just like, it's very hard to do that.

• 33:07Speaker 01

  It's incredibly hard to do that, right? It's sort of like saying, you know what? You're sitting on a winning lottery ticket. Don't really spend it, just save.

• 33:17PJ Vogt?

  Yeah.

• 33:18Speaker 01

  I mean, it's in some ways that simple, but the psychology of it is really hard, especially, of course, if you have a country where there's inequality, right? And then the incentive is to spend not on the long-term industrialization that might generate some stability, but rather on the quick import that can satisfy the immediate needs of X person at any given time, right? And that translates from anything to, you know, medicine, to basic goods, to luxury items like cars or electrodomestics, et cetera, et cetera, right? And so the availability of cheap dollars in an oil economy in the midst of a boom.

• 33:59Speaker 01

  Makes the dependency not on oil, but on imports, all the more pronounced. And that ultimately is the crisis of a petrostate, that the dependence on oil generates the vast availability of cheap dollars, which then creates an additional dependency on imports, which then, when the bust comes, you can no longer buy those imports cheaply, and you have nothing domestically to replace it with.

• 34:43PJ Vogt?

  Chapter four, the crisis years of the eighties and nineties.

• 34:48PJ Vogt?

  Your family ends up leaving the country. What was your understanding of what was going on then? I mean, you were extremely young. What was your family's understanding?

• 34:57Speaker 01

  Um, so I left when I was 16. And as I said, you know, when we started, you know, you can sort of, this will sound very social scientific, but of course, living it was a different story. You can index, you know, my youth and adolescence in terms of successive dramatic moments of crisis. Just give you three examples.

• 35:21PJ Vogt?

  Yeah.

• 35:22Speaker 01

  So the first one was in 1989 in February.

• 35:29PJ Vogt?

  So you're like 11?

• 35:31Speaker 01

  Yes. And so I was in school and this is a Monday. You know, my mom had dropped my sister and I off at school. And suddenly, parents started coming to school, pulling their kids out.

• 35:50Speaker 01

  You know, and you could hear it on the loudspeakers, like, you know, so-and-so, your parent is here, please report to the office to to return home. So-and-so, your parent is here, please return to the office, so-and-so. And it was like one after the other. It was like, what is going on? And then finally, it was my turn, like, Alejandro Alasko, your mother is here, please come to the office to be picked up. And she was in a state of panic. She's like, get in the car now. And like, we'll get in the car and we sort of rush back home. And what had been happening was a started as a small protest over a hike in public bus fares. But it was part of this much, at the time, I didn't understand it,

• 36:33Speaker 01

  but part of this much larger structural adjustment package, which had been announced by the recently re-elected president, who had presided over the oil boom of the 1970s and who was elected largely on the promise of returning to that period of oil boom. But of course, with none of the oil boom and with many of the accumulated debts of that earlier period. And so he, even though he had denied it during the campaign trail, pacted with the International Monetary Fund to get an influx of cash for Venezuela, but with extremely severe conditions for how that cash was going to be used. Social services needed to be slashed, public companies needed to be privatized,

• 37:17Speaker 01

  and subsidies to things like, for instance, public transportation needed to be cut. And that was the first thing that happened, that people felt, the Monday that the policies went into effect, the hike in the price of of fares, and people started to protest.

• 37:45Speaker 01

  And that protest quickly grew massive and uncontrollable.

• 38:02Speaker 04

  ...

• 38:02Speaker 01

  And then the government first deployed the police, which was very quickly overrun, and then deployed the military. They called the curfew and everybody has to stay home. And again, this is all happening during that Monday. This is February 27th of 1989. And so we get home and we don't leave home for two weeks. And during those two weeks, you're like trying to watch the news, but you're also at the same time hearing gunfire from the military that's trying to quell these protests.

• 38:43Speaker 01

  Later on, we discover that what had happened was what the Inter-American Court of Human Rights called a state-sponsored massacre. Hundreds of people died, upwards of perhaps as many as a thousand. You know, mass graves were discovered later. And so this really, you know, as an eleven-year-old child, you're like, the only, the primary thing you worry about is like, am I going back to school? Right. But then you realize something seems very different. You know, that kind of the state of anxiety of my parents, of my friends' parents, of the adults in school. It's very different, that sense of, you know, a stable country that had, you know,

• 39:24Speaker 01

  enjoyed, even if it was under some kind of economic duress during the previous almost 10 years, that seemed no longer tenable.

• 39:33Speaker 01

  Example one. Yeah. Example two.

• 39:37Speaker 01

  So it was 1992, in February also. There's something about February in Venezuelan history, which is kind of curious to think about. But again, you know, early in the morning, this is before we were going to school. But, and my mother obviously has a role on this. She wakes me up very early and says, you gotta come and watch what's going on. And so we turn on the television set and what you see on the image on the screen is this grainy, I mean, I know that it seems weirdly cinematic. But that's the way that my mind remembers it. It's a grainy image of a military officer backed by two other ones holding large rifles.

• 40:21Speaker 01

  And this guy was reading a statement saying that there is a coup that is taking place. We are seizing control over the state in order to bring about democracy to Venezuela, which has been trampled by the corrupt regimes that have been in power. And that's the first thing. And then you start to hear the fighter jets flying overhead. Oh, my God. And then you start to hear, you know, bombs going off. And then you start to see, as dawn turns into into morning, other images come forward. And, you know, this was a very famous image, but I remember watching it live, which was of this person that at the time none of us knew. His name turned out to be Lieutenant Colonel Hugo Chávez.

• 41:06Speaker 05

  Y este mensaje bolivariano va dirigido a los valientes soldados que se encuentran en el regimiento de Paracaidas.

• 41:12Speaker 01

  Coup had come out after surrendering, after unsuccessfully trying to take over the presidential palace and arrest the president at the time, Carlos Hernández Pérez. And he was given this period of time to speak to the nation, primarily to tell the troops elsewhere that were loyal to him to lay down their arms. Yeah. But he used the time that he had to also, in a very subtle but extremely effective way, talk about two things. First, why they undertook this coup attempt.

• 41:44Speaker 05

  Ya es tiempo de reflexionar y vendrán nuevas situaciones y el país tiene que enrumbarse definitivamente hacia un destino mejor. Así que hoy...

• 41:51Speaker 01

  And also to take responsibility for it. And those two things were astonishing to hear, even for me as a 14-year-old, because no one had taken responsibility for what, by that point, was very clearly an economic crisis that had come about to Venezuela. Everyone blamed somebody else, oh, the IMF, or the prior presidents, or, you know, this person or that person, etc.

• 42:13Speaker 05

  Y yo ante el país y ante ustedes asumo la responsabilidad de este movimiento militar bolivariano.

• 42:21Speaker 01

  Here he was saying, "I'm responsible for this movement. I take responsibility, accountability for what happens next. This is a movement that is really meant to bring about a change that Venezuela so desperately needs." I mean, it wasn't profound, it wasn't dramatic, it wasn't certainly a policy statement, but it seemed to be enough to generate a sense of, "I don't agree with what happened, but the dude's not entirely wrong."

• 42:49PJ Vogt?

  It's where you, like, knowing where Chavez's story goes, you describing that moment, it gives me chills. It makes me feel the feeling of like, I don't know, like adrenaline or something.

• 43:00Speaker 01

  Imagine living it, right? So, of course, that was dramatic. The third example happens a little bit later, in 1992. This will tell you something else about me. So, on November 25th, I believe it was November 25th, Guns N' Roses played in Caracas.

• 43:25PJ Vogt?

  Wow.

• 43:35Speaker 01

  And this is-

• 43:36PJ Vogt?

  Were you a big GNR?

• 43:37Speaker 01

  Oh, yeah. I was Appetite for Destruction days GNR fan, okay? I'm talking like, old school, you know, Roxy Live type of situation. And so, this was the first time that Guns N' Roses had played in Latin America.

• 43:52PJ Vogt?

  Oh, wow.

• 43:53Speaker 01

  And it was at the Use Your Illusion Tour.

• 43:55PJ Vogt?

  Oh, that's a show.

• 43:56Speaker 01

  It was a show. And so, of course, you know, I did everything that I could to convince my, you know, my mom and friends, like, "We gotta go!" And got tickets to go. And then, like, we organized this, like, group of us to get to the concert. And, you know, we went and there's all sorts of speculations. Is Axl gonna show up? Is Slash gonna play with his back to the audience? How late are they going to be on stage? Like, all the things, right? Just eating it up. Show was amazing. Unbelievable. So fantastic. You know, I still get chills thinking about that. So, you know, we basically kind of sleep through the whole next day, and then the day after that-

• 44:42Speaker 01

  We wake up to another coup.

• 44:43Speaker 06

  Pueblo venezolano, en nombre del movimiento 5 de julio, les hago un llamado para que salen a la calle y terminen de derrumbar este gobierno que solo ha dejado miseria para ustedes. A mis compañeros de armas los invito a que se unan en esta lucha para terminar de derrotar el gobierno de Carlos Andrés Pérez. Repito, al pueblo...

• 45:06Speaker 01

  There's another coup attempted. And this one was far bloodier, far louder, far scarier. Also unsuccessful. But I think for me at that moment, I realized, and I'm sure my parents made the same calculation, which is why even then they started making plans to leave, which we did a couple of years later. This isn't just a flash in the pan. Now, we had this thing that happened in 1989, which was eventually known as the Caracaso, which, if you think about it in social, scientific, or historical terms, you can really think that it ruptured the social pact between the government and the population, really large. And then you have the coup of Chavez in February of 1992, which gives a sense that, OK, the government itself is not stable.

• 45:49PJ Vogt?

  Yeah.

• 45:50Speaker 01

  And then this additional coup while Chavez is in jail, right? So clearly, it was a sense not only that the government was unstable, but that anything can happen and who knows what the future brings.

• 46:11PJ Vogt?

  We're going to take a short break. When we return, we arrive at the most formative era in modern Venezuelan history. Hugo Chavez takes over.

• 46:48PJ Vogt?

  This episode of Search Engine is brought to you in part by Bombas. Cozy season is here, which means it's time to bring out the movie marathons, crisp morning walks, and super soft layers. Once fall hits, I genuinely just want absolute comfort on my feet, and Bombas have become a go-to for me. Their new suede moccasins are a total game changer for this weather, packed with water-resistant suede, ultra cushy soles, and a plush shearling lining. On those busy days, or whenever I have travel coming up, I've reached for their compression socks. They offer specialized support that actively fights fatigue and aches, keeping my legs completely energized no matter how long I'm on my feet. And best of all, for every item you purchase, Bombas donates an essential item to someone experiencing homelessness, with over 200 million items donated so far.

• 47:32PJ Vogt?

  Head over to Bombas.com/Engine and use code ENGINE for 20% off your first purchase. That's B-O-M-B-A-S dot com slash ENGINE, code ENGINE at checkout.

• 47:46PJ Vogt?

  This episode of Search Engine is brought to you in part by the new book from Michael Lewis, Blockers. For 30 years, Michael Lewis has written about the people behind the stories in character-driven bestsellers like The Big Short, Moneyball, and The Fifth Risk. Now, in his new book, Blockers, Michael Lewis tells the story of six civil servants who devoted their lives to public service that matters. One kept Americans' most sensitive tax data out of the wrong hands. Another made sure that politicians and civil servants played by the rules. One figured out how to stop wildfires from destroying suburban neighborhoods. Another helped uncover the mysteries of cystic fibrosis. There was also a security guard. In the new Washington, these federal employees discovered that their high standards were their greatest liability.

• 48:29PJ Vogt?

  If these public servants can't survive in government today, what does that say about us? I am so excited that this new book is out. Michael Lewis is one of my favorite authors. I read everything he writes, and I'm very excited for this one. Blockers by Michael Lewis. Available wherever books are sold. Learn more at blockersbook.com.

• 48:51Speaker 07

  Retire Path Virginia is a convenient way for Virginians to save for retirement, giving employees an easy option to help build long-term financial security. State law requires certain Virginia employers to register and facilitate the program if they meet eligibility criteria, and recent changes mean more businesses are now included. Retire Path is simple to administer, integrates with most existing payroll processes, and has no employer fees, making it an efficient way to meet state requirements. Take the employer eligibility quiz and register at retirepathva.com.

• 49:33PJ Vogt?

  Welcome back to the show. We're now in chapter five, the origin story of Ugo Chavez.

• 49:42Speaker 01

  So, Ugo Chavez was born in 1954 in Barinas, in the plains region of Venezuela. The reason why it's significant is because that's a region known as sort of the heartbeat of the country. It's where most of like the folkloric music comes from, some of the folkloric like literature comes from. And so it's really a kind of a nationalist core of the country. And that deeply informed his sense of self. Some people have said he's like hardscrabble, super poor. That's not quite the case. His parents were schoolteachers. He had several siblings, and so it's not like they were doing well, but it's not like they were living in misery, right? His upbringing in the 1960s was really just, you know, kind of a impoverished but not

• 50:28Speaker 01

  miserable in that sense sort of life. Part of what's significant about his biography is that much in the way that, and I'm not comparing myself to Chavez. But much in the way that I was narrating, you know, my own upbringing and life history, both in Venezuela and since I arrived in the United States, is one like that is indexed by these moments, dramatic moments in Venezuelan history, so too was it for Chavez, right? He was born in 1954 during that, you know, period of dictatorship that I talked about before the advent of democracy, but his youth was in the formative period of democracy. When he became an adolescent, he joined the military academy at a moment when the

• 51:12Speaker 01

  military academy, in the context of democratic stability, had become really professionalized and was seen by many as a pathway towards upward mobility. But also, as somebody from the poor sectors, popular sectors of Venezuela, you know, he had interest in the kinds of things that all of us do in Venezuela, which is baseball. And he was actually a standout baseball player and had dreams of becoming a major league baseball player in the United States. And so that's all to say that, of course, we now remember Chavez as a kind of stridently anti-American figure. That is not the case, right? There wasn't kind of this, you know, breeding animosity towards the United States.

• 51:57Speaker 01

  And that's generally true in Venezuela. Venezuelans are not, by and large, an anti-American population, in part because of this long history of relationship with the United States. But he joins the military, and a couple of things happen that are really significant. The first is, as a cadet, he is sent to different countries of Latin America to observe governments and militaries. He goes to Peru, where the military dictator, and no relation, Velasco Alvarado, is experimenting with a different approach to military rule than had been the case elsewhere in Latin America, which had been much more tightly wound around elite control of resources

• 52:40Speaker 01

  and repression, and more about, well, the institutions of the state are already captured by the elites, and the military is the only one that can project any kind of... Social benefit. And so this was more of like a socially conscious military dictatorship.

• 52:56PJ Vogt?

  Wait, so the idea is that you have like, the haves are the elites and they're sort of capturing the resources and the military are going to be a counterweight that stands for the people?

• 53:08Speaker 01

  Yes, exactly. But then the second thing that happens during that time is that his brother, Alan Chavez's older brother, is a radical Marxist. He is lining up with the guerrillas. He is very much, you know, in line with the idea that only armed revolution is going to bring us to paradise. And so that's what begins this process for Chavez. And it's in 1982 that he begins this movement called the Movimiento Bolivariano Revolucionario.

• 53:39PJ Vogt?

  What does that mean?

• 53:41Speaker 01

  Revolutionary Bolivarian Movement 200. And the 200

• 53:45PJ Vogt?

  200 year anniversary of Bolivar?

• 53:47Speaker 01

  Right. And the idea is that, you know, on his 200th anniversary, the vision that Bolivar had had for not just Venezuela, but Latin America more broadly will come to fruition and we will be the people who marshal that into into reality.

• 54:03PJ Vogt?

  So Chavez persuades his followers, people in the military, to read up on these 200 year old ideas about revolution and a united Latin America. And unlike most book clubs, his goes somewhere. It leads to his famous failed coup, the one that ends with him live on national TV telling his followers that he's stopping for now. Chavez leaves prison in 1994. Four years later, he uses his new national profile to run for president. He wins.

• 54:42Speaker 08

  Hoy es un día para la historia. Yo, ustedes saben que yo lo que soy es un soldado.

• 54:55Speaker 08

  Eso es lo que yo soy.

• 54:58Speaker 08

  Y ahora como presidente de Venezuela, pues para nada va a cambiar mi condición. Soldado de un pueblo, hombre de un pueblo, el caballero de un pueblo.

• 55:14Speaker 01

  Chavez was a gifted communicator, although now we know, not now, we've known for a while, that he also took classes in communications. And that was coupled with, as I mentioned before, this really dramatic moment after his failed coup where he goes on television and delivers this message. And so he knew from an early moment that television specifically was an extremely important communicational vehicle and medium. And so one thing that he does early in his presidency is he starts this talk show.

• 55:48Speaker 08

  RNB, La Voz de Venezuela presenta...

• 55:58Speaker 08

  ¡Aló, presidente! El programa del presidente Hugo Chávez Frías, en vivo.

• 56:05Speaker 01

  So every Sunday, it's called "Aló, presidente", to reflect that you could just call up the president, like, "Aló, aló, aló, presidente", right? And when the phone lines were open? Initially. Wow. Yes. Not later, but initially the phone lines were open.

• 56:22Speaker 09

  Buenos días, señor presidente.

• 56:24Speaker 08

  Buenos días, Ayde, buenos días a tu familia, en el Valle.

• 56:26Speaker 09

  Estoy tan emocionada como el día que yo votar.

• 56:29Speaker 08

  Bueno, que Dios te bendiga. Saludos a tu familia. ¿Vives en el Valle, en qué parte?

• 56:33Speaker 09

  En San Antonio.

• 56:34Speaker 08

  En San Antonio.

• 56:35Speaker 01

  And this is really, really central to understanding, or even trying to understand Chavez, Chavismo, where we are right now in Venezuela. It is not only not accurate, but it is willfully false to suggest that Chavismo was a cohesive political project from the start.

• 56:59Speaker 01

  The primary hallmark of Chavez is adaptation over time. And so Chavez, at the moment, when he's elected, has a particular project in mind, but it is neither socialist nor anti-American, quite the opposite. His primary vision for Venezuela at the moment was we are going to expand participatory democracy. So we're going to try to create mechanisms for people who have felt left out of the political system to have more direct engagement with the political system. And we're going to rebuild state capacity by rebuilding our oil industry, which in

• 57:39Speaker 01

  the 1990s had undergone a process of re-privatization, even though it had been nationalized in the 1970s, under that period of, you know, oil boom. And so those were the two primary hallmarks of the early Chavez's vision for Venezuela.

• 57:58PJ Vogt?

  And so part of the story of Chavez, even in the beginning, is going to be about his relationship to the country's oil reserves and the price of oil when he takes power. Can you tell me about that?

• 58:08Speaker 01

  The price of oil when Chavez is inaugurated into office in 1999 is $8.

• 58:16PJ Vogt?

  Very low.

• 58:17Speaker 01

  I mean, I'll give you the contrary example. At the height of peak oil, the price per barrel of oil was around $160.

• 58:26PJ Vogt?

  Jesus.

• 58:26Speaker 01

  So if you think about the difference between $8 and $160, it's a lot.

• 58:32PJ Vogt?

  Yes.

• 58:32Speaker 01

  You know, right now, for instance, if you look at oil prices, they're around $60. The historic average has been between $45 and $50. So $8 is not just low, it is visibly low. And so one of the things that Chavez tries to do in terms of building state capacity by revitalizing, not just revitalizing, but capturing more of Venezuela's oil revenues, is to bring OPEC, that long, kind of toothless, yet seemingly very powerful, you know, global cartel, together to say to them first, listen, we gotta get, we have to get this house in order.

• 59:19Speaker 08

  El ingreso del país se basa fundamentalmente todavía en el ingreso petrolero. Y el ingreso petrolero del país depende del potencial de producción, de la capacidad de producción del país, y del precio del barril de petróleo, y del manejo.

• 59:39Speaker 01

  El precio del petróleo aumentó en los primeros años en el cargo. Creo que llegaron a 22 dólares por barro justo en 2001. Pero algo dramático cambió en la relación entre Estados Unidos y Venezuela en ese momento, y en particular, en la relación entre Estados Unidos y Hugo Chávez. Obviamente, las atacas del 11 de septiembre de 2001 son extremadamente traumáticas para Estados Unidos y el mundo. La campaña de bombardeo en Afganistán es un momento en el que, usando sus habilidades

• 1:00:20Speaker 01

  comunicativas y acceso a los medios, Chávez publicamente desprecia la campaña de bombardeo como una respuesta cruel y exagerada a un acto vicioso.

• 1:00:32Speaker 08

  Nosotros apoyamos la lucha contra el terrorismo, pero no se entienda esto como una carta blanca para que se haga cualquier cosa.

• 1:00:44Speaker 01

  Por supuesto, la administración de Bush que viene es en ningún estado, y tampoco, debo decir, el público estadounidense en ese momento, en gran medida, en ningún estado para ser criticado por su respuesta a 9/11.

• 1:00:56Speaker 08

  reclamamos por eso. Lo vuelvo a repetir después de más de un mes. Aquí lo dije, no se puede responder al terror con más terror.

• 1:01:09Speaker 01

  Pero lo que hace es poner a Chávez en los ojos de Estados Unidos. Sí. Algunos meses después, en abril de 2002, Hugo Chávez es brevemente derrotado después de una serie de protestas populares, todas ellas teniendo que ver con el control sobre la compañía petrolera de la nación llamada Pedabesa y lo que iba a hacer en este momento. Esto llevó a confrontaciones en las calles, lo que dejó a varias personas muertas, lo que luego provocó un golpe de Estado que deshizo a Chávez de poder.

• 1:01:46Speaker 01

  Then, the United States and the Bush administration openly said, "This was great, and we absolutely support this coup, and we're ready to work with the new government in Venezuela, and it's fantastic that Hugo Chavez is no longer in power."

• 1:02:02PJ Vogt?

  But isn't the new government in power for like, three days or something?

• 1:02:07Speaker 01

  Yes.

• 1:02:12Speaker 01

  In the most improbable and truly unprecedented turn of events, Hugo Chavez returns to office within 72 hours.

• 1:02:23PJ Vogt?

  Oops.

• 1:02:24Speaker 01

  Oops is right. And so, when he returns, you see all sort of pack pedaling on the part of the White House, but really, by that point, I think, the damage is not only done, but irreparable.

• 1:02:53Speaker 01

  I think by that point, it really convinces Chavez that there's no possibility to think about the United States government as anything other than this kind of, that if anyone steps outside of what the US government, especially as a, at the time, a unipolar power in the world, that there's nothing that they won't do to try to countermand that.

• 1:03:36PJ Vogt?

  And then, the other big thing that changes is just the price of oil, which, as you said, at the beginning of his presidency, it was at $8 a barrel. It just shoots up. Like, at one point, it's at $100 a barrel. I mean, it rises as high as around 160. How fast does that happen?

• 1:03:54Speaker 01

  So it takes a little bit of time. It really begins to surge after 2003 and the US invasion of Iraq. That takes a significant player out of the picture, at least for some time. It also, of course, creates instability in neighboring oil-producing nations. But that couples with the rise of China, an industrialization that at the time is going to require massive amounts of natural resources to underpin.

• 1:04:23PJ Vogt?

  So you have this like huge, huge, huge. You both, the supply gets restricted a little bit by the US entering Iraq, but what you really have is like a huge demand surge because of China.

• 1:04:33Speaker 01

  Massive. And so both of these things kind of coincide right around 2003 to induce this massive boom in oil prices.

• 1:04:44PJ Vogt?

  Chapter seven, Total Power.

• 1:04:48PJ Vogt?

  Alejandro says that Hugo Chavez did not immediately use the immense gusher of money pouring out of Venezuela's oil business. There were other matters to attend to. One, the military. While the coup against Chavez had been unsuccessful, it had revealed the members of the military who were disloyal. So he purged them, which meant he now controlled the military. Chavez also set about bringing Venezuela's national oil company, Petavesa, completely under his thumb, something no president before him had really done.

• 1:05:20Speaker 01

  The entire premise of the national oil company Petavesa, after it was founded in the wake of the nationalization in 1976, was that it was going to run as an oil company, not anything else, right? It was going to be free of politics. It was going to provide a subsidy to the state, but its primary mission is only and exclusively to pump oil from the ground and to export it abroad and to hopefully generate market share, especially in the United States. Chavez was trying to change that. Chavez was trying to exert actual direct control over the oil industry because the oil executives in Petavesa were resisting the idea of like, you know, let's cut back on production.

• 1:06:04Speaker 01

  Let's not flood the market with oil. And so what he wanted to do was change the governing board of Petavesa and appoint loyalists. To his vision of the oil company and therefore of the country. They resisted that and then the coup happened. But then he tried again in late in 2002. And then the oil industry, most of the engineers and all of the executives conducted a lockout. They went on strike. But what it did for Chavez, he had already again purged the military after the coup. What it did is identify very clearly for Chavez, who in the oil industry was not supportive. So he fired them.

• 1:06:48PJ Vogt?

  Just to pause on this for a moment. Chavez conducted these firings live on TV. This was during an episode of Allo Presidente. With Chavez calling out the employees by name and blowing a soccer whistle to celebrate each termination.

• 1:07:05Speaker 08

  Upside. No, están comprometidos con el país serio. Con el país que somos y sobre todo con el país que vamos a hacer. Con el país que podemos ser. Un gran país va a ser Venezuela.

• 1:07:20Speaker 01

  He fired 18,000 oil industry workers.

• 1:07:23Speaker 08

  Han sido despedidos de sus cargos. Ya está bueno. La siguiente persona. Eddie Ramírez. Director gerente hasta el día de hoy de Palma Ben. Pa' fuera.

• 1:07:38Speaker 01

  These were executives, engineers, the people with the most technical know how, lots of history with the company. Which then meant that to jumpstart the company again, he had to find people from other parts of the world. And then also train a new cadre of engineers, et cetera. But of course, now he was doing so in a way that he could refashion the oil industry to serve the vision that he had laid out, which is there's no longer going to be this firewall between the national oil industry and the state. The national oil industry will serve the interest of the people represented by the state, which is represented by me.

• 1:08:20Speaker 01

  And so now the direct flow of Petro dollars to the executive is complete.

• 1:08:28PJ Vogt?

  There is one final part of Hugo Chavez's consolidation of power here. It comes out of a real miscalculation by the opposition parties. The opposition decides in 2005 to fully sit out the parliamentary elections as a protest against fraud they believe took place in an earlier election.

• 1:08:46Speaker 01

  So they boycott the parliamentary elections in 2005 and Chavez says, "Thank you. Great. If you're giving me the legislature on a silver platter, I will take it." And so unsurprisingly, the legislature elections of 2005 happened and now Chavez has control over the military, control over the national oil industry, international credibility, democratic credibility, and control over the Congress, just at the time when oil prices are hitting their peak.

• 1:09:21PJ Vogt?

  Just immense amount of power.

• 1:09:23Speaker 01

  It's complete power is what it is. It is total power, which eventually will be the Achilles' heel and the reason why Chavezmo fails.

• 1:09:46PJ Vogt?

  So how does Venezuela go, really, in just a decade, from an oil-rich democracy with a popular, democratically-elected president to just abject disaster? That story continues in our next episode, which will be out after the weekend. In the meantime, you can read a great article that Alejandro wrote, which is about Chavez and his political movement, which outlived him, Chavezmo. We'll have a link in the show notes. We'll see you next week.

• 1:10:43PJ Vogt?

  Search Engine is a presentation of Odyssey. It was created by me, PJ Vogt, and Trudy Benmanini. Garrett Graham is our senior producer. Emily Malter is our associate producer. Special thanks this week to Miguel Santiago Colon. Theme original composition and mixing by Armin Bezarian. This episode was fact-checked by Piper Dumont. Our executive producer is Leah Reese Dennis. Thanks to the rest of the team at Odyssey. Rob Morandi, Craig Cox, Eric Donnelly, Colin Gaynor, Moira Curran, Josephina Francis, Kurt Courtney, and Hillary Schaff. If you'd like to support our show, get ad-free episodes, zero reruns, and bonus episodes, please consider signing up for incognito mode at searchengine.show. Thanks for listening. We'll see you in a few days.

• 1:11:57PJ Vogt?

  This episode of Search Engine is brought to you in part by VistaPrint. As a small business owner running a podcast, I'm always looking for authentic ways to connect with listeners, which makes VistaPrint such a valued expert partner for us. I was on their site the other day, brainstorming new things we could make for our show, and the creative momentum took over. I ended up designing Search Engine stickers, and I tried to make a sign for our office. When your physical branding looks this sharp and professional, it immediately communicates credibility and shows your audience that you mean business. VistaPrint truly helps every dollar go further, delivering premium quality and design support that make your company look established without breaking the bank. Whether you need your design tweaked or a total rebrand, Vistaprint has you covered with the expert service small businesses deserve.

• 1:12:42PJ Vogt?

  That's why over 17 million businesses trust them every day to bring their ideas to life. Vistaprint, print your possible. Right now, new customers get 20% off with code NEW20 at Vistaprint.com. That's 20% off at Vistaprint.com using code NEW20.