Originally inhabited by Carib and Arawak Indians, Venezuela was claimed as a Spanish territory by Christopher Columbus in 1498. Spanish rule was administered from a distance, leaving the various regions to develop separately from the capital, Caracas, which was founded by Diego de Losada in 1567. In the 18th century, an attempt to inject a measure of unification by the Spanish was met with widespread resistance and uprisings led by Simón Bolívar (after whom the currency is named). In 1830, Venezuela became a sovereign state, led by José Paéz. The precise territorial
limits were not, however, well defined and Venezuela’s borders have since been the subject of periodic disputes with its neighbors.
The dictatorship of Juan Vincente Goméz, between 1909 and 1935, was a period of rapid economic development. This was largely driven by the exploitation of the country’s substantial oilfields, which began in 1918. Venezuela is now essentially an oil economy and the national producer, PDVSA, is one of the world’s largest companies (see
Economy). In 1936 and 1937, Venezuela held democratic elections for the Presidency and National Assembly for the first time but the experiment in pluralism lasted only until 1945. The first of a rapid succession of military dictatorships lasted until 1961. That year, the current Venezuelan constitution came into force.
From then until the 1990s, Venezuelan politics were dominated by the struggle between the
Partido Social Cristiano, known as COPEI, and the social democratic
Acción Democrática (AD). Following the 1973 price hike, Venezuela had enjoyed the benefits of large oil revenues accruing throughout the 1970s, and ran up a substantial overseas debt (although not on the scale of those burdening other Latin American countries). The country’s oil wealth was far from evenly distributed – a relatively small section of the population enjoyed the benefits, while the vast majority was excluded. In the 1980s, successive Governments struggled to stabilize the country and the economy in the face of persistent social and labor unrest, as well as external pressure from creditors pursuing scheduled loan repayments. At the turn of the 1990s, the Government’s opponents found support from sections of the army who considered themselves ill-equipped and badly paid. In February 1992, a number of army units launched a completely unexpected military coup. It was suppressed by loyal army units but the Perez Government was fatally undermined and it was little surprise when Perez was removed from office by Congress the following year, before completing his term. Elections at the end of 1993 resulted in Rafael Caldera, who had served as President in the mid-1970s, assuming the post once again.
Meanwhile, the leader of the 1992 coup attempt, Colonel Hugo Chavez, was seeking to establish himself as a national political figure, drawing on the support of millions of disaffected poor people, who had been disregarded during the oil boom. The established parties, dominated by wealthy and increasingly corrupt interests, held little attraction for them. In 1997, Chavez announced the formation of his own party, the
Movimiento Quinta República (MVR, the Fifth Republic Movement), and his candidacy at the 1998 Presidential election. He won, while his party – with the support of other smaller groupings – was able to take control of the National Assembly. Further polls in July 2000 secured his position and, de facto, an endorsement of the constitutional changes that he planned to increase Presidential powers.
Chavez’s problems now began in earnest. Always a controversial figure, as a result of the 1992 coup attempt and his courting such Heads of State as Iraq’s Saddam Hussein and Cuba’s Fidel Castro, Chavez has attracted powerful enemies both inside and outside Venezuela. In April 2002, a right-wing alliance of dissident military officers and prominent businessmen led by Pedro Carmona failed in a coup attempt against Chavez. Many believe that the United States had a hand in the plot: while that remains unproven, there is no doubt that the Bush administration would be happy to see the back of Chavez.
The Government was certainly shaken by the coup. The economy was in serious difficulty following a currency collapse in February 2002 and remains so two years later (see
Economy). In December 2002, the opposition tried a different strategy. With the support of key union leaders, especially in the all-important oil industry, Venezuela was brought to a virtual standstill by a general strike. However, after more than two months, the strike petered out. The anti-Chavez alliance now turned to a constitutional device, exploiting a clause which allows for a referendum requiring a Presidential election, before the end of the normal six-year term, on the basis of a petition signed by at least 20 per cent of the electorate (about 2.5 million people). Such a petition was submitted in August 2003 but controversially rejected by the national electoral commission. A second petition was drawn up in December 2003, containing 3.4 million signatures. This tension culminated in clashes in between opponents and supporters of Chavez in March 2004. A referendum was triggered in August 2004, which Chavez won, with 59 per cent of people agreeing that he should serve out his remaining two-and-a-half years of term. The opposition is driven exclusively by its dislike of Chavez: with his removal, the alliance of business, unions, the old political parties (COPEI and AD) and assorted interest groups will fragment. However, for now, Chavez's future is secured. In the 2005 parliamentary elections, Chavez's party won 114 seats in the 167-seat National Assembly. Voter turnout was low and the main opposition parties boycotted the elections, protesting against what they saw as a biased electoral board. However, despite the opposition's doubts regarding the election's legitimacy, a two-thirds majority in parliament now paves the way for Chavez to alter the constitution, which currently limits a President to two terms in office.
GovernmentA ‘national constitutional assembly’ was convened in July 1999 to rewrite the country’s constitution. Executive power is vested in the President, who is popularly elected for a six-year term. The legislature is the unicameral
Asemblea Nacional, whose 165 members are directly elected to serve a five-year term
EconomyVenezuela was a primarily agricultural country until the discovery and extraction of oil began in the 1920s. Oil is now dominant, providing 50% of government revenue and 70% of export earnings. The national oil corporation, PDVSA, is one of the world’s largest companies. Venezuela has some of the largest known reserves in the world. There are long-term plans to introduce greater diversity into the economy but little change in its basic structure may be expected in the near future.
Agriculture’s share of the workforce has now fallen to 4% of GDP, but the sector remains important by providing a non-oil export income in the form of its dairy and beef produce. Some cash crops (mostly rice, sugar and coffee) are grown. Most of the other farming activity is devoted to staple crops for domestic consumption.
As well as oil, Venezuela has substantial deposits of iron and aluminum ores, plus gas, coal, diamonds, gold, zinc, copper, titanium, lead, silver, phosphates and manganese. The processing of these ores and the country’s agricultural products account for the bulk of the industrial sector. However, over-dependence on oil income has meant that Venezuela’s industries are suffering from a historic failure to modernise.
Venezuela was a prominent founding member of the Organization of Petroleum Exporting Countries (OPEC) and the current president, Hugo Chávez, has played a leading role in the revival of the organization’s fortunes since the late 1990s.
Since the beginning of 2002, Venezuela’s recent economic performance has been severely affected by the turbulent political situation. After the currency crisis of February 2002 came an attempted coup. That December large parts of the economy (including the all-important oil industry) were affected by a two-month-long strike. This had a devastating impact: the economy is believed to have contracted by around 10% during 2003. In 2004, the decline was reversed with a growth rate of 17.4%. The economy then grew by around 9% in 2005.
Venezuela belongs to the Asociación Latinoamericana de Integración (ALADI), which seeks to promote a common market for Latin America, and to the Inter-American Development Bank.
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