We use cookies for site personalization and analytics. You can opt out of third party cookies. More info in our privacy policy.   Got it

The spoils of oil

Ivan Briscoe

Somewhere between the oil riches gurgling from the earth and the desperate poverty of the people who live on it, something has gone terribly wrong in Venezuela. This, at least, is the conviction of President Hugo Chávez and his supporters. At the heart of their programme of social transformation lies the oil industry, the source of more than half the Government’s budget. Paradoxically, this same industry has fostered a mentality that ignores all sense of public interest and treats the land like local people do their empty coconut husks.

It took neither a feat of science nor a stroke of luck to find the riches sitting under Venezuelan soil. Indigenous people and Spanish colonialists had for centuries scooped up the dark liquid bubbling through mangroves around the vast lake of Maracaibo, using it for medicinal ointments or candles. When an oil company first arrived in 1914 it discovered that carbon molasses spouted from its first well without any need for drilling.

A century later and the lake is infested with the refineries and pipelines of a high-tech oil industry, crossed by a sparkling suspension bridge, its shores dotted with sprawling concrete cities. No longer is the oil so easy to find. But its imprint remains everywhere. ‘We came to look for work,’ explains Gilberto Paz as he lies in a hammock on a stiflingly hot afternoon, gazing at the shreds of weed and the dust rising from his front yard. ‘But nothing happens round here.’

The 27-year-old, a Wayuu Indian, occupied the plot of land two years ago. He and his young girlfriend have installed two massive refrigerators and a television inside their tin-built sheds. But there is no electricity. Neither is there running water. A barrel containing 200 litres of water costs $0.50 – money they do not always have. One single connection is assured – a flame of natural gas, stolen from a nearby pipeline, burns constantly in the kitchen, even when there is no water to boil.

Their tale of escaping a hard life in the countryside – made harder in recent years by the incursions of Colombian armed forces and guerrillas from across the nearby frontier – is not uncommon. The Mara district of Maracaibo where they now live is rife with unemployment, poverty, dengue fever and tuberculosis. Three years ago it emerged that, on average, a child was dying here every day from malnutrition. Though Mara is only 10 miles from the city’s latest air-conditioned shopping mall, the authorities ignore the shack-dwellers.

‘Oil is an enclave economy. It doesn’t incorporate labour – it saves it through technology. And all the extraordinary profits flow away to the centre of the country,’ explains Bolívar Sáenz, deputy head of Rafael María Baralt University in Cabimas, one of the region’s premier oil towns. Legend has it that this lakeside settlement of 200,000 people sits atop a vast seam of oil. ‘Maybe we will all have to move. Or blow up,’ muses Sáenz.

For the moment, however, he is trying his best to make the town a bit more habitable. He is busy getting 2,000 doctors trained. They will eventually replace the Cubans in the Barrio Adentro health programme. He is considering taking out a loan to buy some farmland, enough to employ 15 people in a co-operative.

But he worries about the violence of his students, brought up by big families in small, lushly painted bungalows that catch the stench of gas and sulphur from the oil. Lemon and mango trees hang over narrow streets. This looks like a Caribbean idyll – but it is also the town’s most dangerous suburb, Tierra Negra (‘Black Earth’). Two or three people, says Sáenz, are murdered each weekend in rivalries sparked by drugs, prostitution or revenge.


Not far away, beyond a tall wire fence, the streets widen and grass lawns replace littered patches of waste ground. Hollywood, as the suburb is known, rolls out in an ordered procession of green-roofed, whitewashed villas. The buildings belong to PDVSA, Venezuela’s national oil firm. Each employee is assigned a flat or a house, one or two storeys high, maybe a garden, depending on their rank.

Yet all is not well in Hollywood. In early March judges and police began to evict residents who had been sacked from PDVSA during a two-month strike that began in December 2002. Many left the country, but others stayed on, clinging to the last relic of privilege – their company homes.

‘The nobles left the company. The workers and the technicians kept on,’ argues Rafael Parra Zabala, head of oil studies at Zulia University and an ardent supporter of the Chávez revolution. ‘The economists and the children of so-and-so, who knew how to prepare dinners with 24 places and select the finest wines, they left. It was a revolt of the slaves.’

Thousands of fervent opponents of Chávez gathered at the Maracaibo lakeside when the tanker Pilín León – named after a Venezuelan Miss Universe – with 44,000 million litres of oil aboard, dropped anchor across the sole exit to the sea during the strike. Over in Caracas, mass protests, shootouts and a vicious media war mirrored the strife in the corridors of PDVSA, where strikers – allegedly co-ordinated by Intesa, a firm with connections to the CIA – sabotaged the company’s vital computer systems.

Juan Fernández, one of the strike leaders and a former top financial manager in PDVSA, vividly recalls those febrile weeks. ‘We had gone to speak with the head of the company, Ali Rodríguez, to express our concerns about political surveillance within PDVSA and the likelihood of a strike. He said that if blood had to flow, then let it flow.’

In the end, Rodríguez – a former guerrilla leader and one of the Government’s most respected intellects – was proven right. Decisive action by the security forces, and sheer exhaustion, sapped the protesters’ morale. Fernández was among 18,000 fired employees. Charged with treason and incitement to rebellion, he left to work in Europe.

For those who protested, the fall in oil production – still below pre-strike levels – has vindicated their warnings against political meddling in the delicate work of exploration and extraction. They berate ‘politburo-style’ management, gross underinvestment and a string of accidents resulting from the incompetence of newly drafted employees.

‘At present, showing loyalty to the supposed revolutionary process is the way to get into top and medium-level posts,’ argues Fernández. ‘Talent and knowledge are not necessary.’

The praise heaped by these critics on the traditional corporate practices of PDVSA sits oddly with the sights of Maracaibo: famished indigenous people, outrageous inequality, a magnificent lake contaminated with oil slicks, untreated sewage and a plague of duckweed.

Back to the people

Although nationalized in 1976, the oil industry had been taught to work with its back to the people. From the 1980s until the arrival of Chávez, PDVSA devoted itself to building a formidable international network of subsidiaries and refineries, as well as a chain of 14,000 Citgo service stations across the US. Its philosophy was that of voracious big business.

The rise of Chávez, the trauma of the strike and a wholesale change in personnel have shattered the old customs. Money from PDVSA – estimated at around $4 billion a year – now pours, unaudited, into social missions. Pledges to clean up Lake Maracaibo multiply.

Yet, even in the midst of radical change, the long shadow of Venezuela’s cultural and industrial heritage is apparent. It is still not clear how the largesse of oil will generate stable, lasting employment, or reach men like Gilberto Paz. He remains jobless, languishing in his hammock, breathing in incessant fumes from passing trucks that service the nearby Guasare coal mines.

‘It’s a perverse thing,’ says Bolívar Sáenz as he watches the lake’s dazzling afternoon sheen. ‘People see no interest in working for anything but the oil industry, even when it doesn’t have any work to give.’

*Ivan Briscoe* is editor of the English edition of _El País_ newspaper in Madrid, and an expert on Latin American current affairs. Email:

Subscribe   Ethical Shop