Sputnik Escalates the Cold War
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Venezuela

South American nation covering 352,143 square miles, roughly a third larger than the U.S. state of Texas. With a 1945 population of approximately 4.25 million, the Republic of Venezuela is located on South America's northern coast and borders the Caribbean Sea to the north, Guyana to the east, Brazil to the south, and Colombia to the west. In 1830, Venezuela was proclaimed a republic. However, a string of dictatorial regimes followed that crippled the country's development. Under the government of Antonio Guzmán Blanco (1870–1888), a modern infrastructure was constructed, while foreign investment increased. During 1908–1935, Venezuela was governed by the brutal dictator Juan Vicente Gómez, who developed the nation's oil-exporting industry. Following his death, a military junta took control until the leftist Rómulo Betancourt and his Acción Democrática (AD, Democratic Action) party seized the political initiative beginning in 1945.

During 1945–1948, the reformist government in Venezuela enacted policies that hurt U.S. economic interests. However, Washington supported the regime because it seemed a bulwark against economic nationalism and communism. Because the United States became a net importer of oil in 1947, interest in Venezuela was all the more pronounced.

In 1948, conservative military leaders overthrew the populist government. With Colonel Marcos Pérez Jiménez as head of state, the Venezuelan government suppressed popular dissent and became one of Washington's staunchest regional allies. As such, the U.S. government extended substantial military and economic support. Despite Washington's backing, however, a coup toppled the regime in early 1958, and elections were scheduled for the next year. Nevertheless, the Pérez Jiménez regime cast a long shadow on Venezuelan relations with the United States. In May 1958, anti-American riots erupted when U.S. Vice President Richard M. Nixon arrived on a state visit. Angry protestors practically overturned his car. After he returned home to a triumphal greeting, Washington accelerated the process of focusing more attention on the region.

Both a majority of Venezuelans and U.S. officials hoped to put the repression of the Pérez Jiménez years behind them and welcomed the election of Betancourt of the AD in February 1959. Betancourt had cut his political teeth as a student in the late 1920s when he had actively supported the ouster of Gómez. Betancourt's reformist vision resonated with New Deal liberals in the United States.

Although U.S. President John F. Kennedy's record of supporting democracies in Latin America was spotty, Kennedy supported Betancourt because he was a moderate reformer who led an oil-rich nation and valued harmonious relations with the United States. Indeed, reformist pro-American governments seemed the best antidote for preventing the spread of Fidel Castro's brand of communism. As Betancourt's tumultuous tenure in office proceeded, the U.S. government offered increasing support as part of the Alliance for Progress, despite the implementation of state-capitalist policies. A hotline was even set up between the White House and the Venezuelan presidential residence in Caracas. Betancourt served as president until 1964.

Of particular importance to U.S. officials was the Venezuelan military. American leaders perceived strong anticommunist militaries as the only sure defense against radical or communist takeovers in Latin America, and Venezuela was no different. During Betancourt's time in office, military aid accounted for $64.5 million of the $180.1 million in U.S. assistance. U.S. military assistance to Venezuela was critically important, because the fear of Castroism spreading to Venezuela seemed more tangible compared to the risk to the rest of the region. In 1963, the Venezuelans discovered a small cache of Cuban weapons hidden on an isolated stretch of coastline. The uncovering of this clumsy attempt to aid pro-Castro insurgents in Venezuela prompted the Organization of American States (OAS) to apply economic sanctions against Cuba. In 1966, Venezuelan officials also captured four Cuban officers who were apparently training Venezuelan guerrillas.

There was one persistent sticking point in U.S.-Venezuelan relations. From the U.S. point of view, free trade and private investment were to be the engines of economic growth in Venezuela and ultimately of pro-American stability. But from Venezuela's viewpoint, free trade translated into lower prices for oil, its principal export, and thus deteriorating terms of trade for the import of finished goods. To garner additional income from oil exports, in 1960 Venezuela helped to organize the Organization of Petroleum Exporting Countries (OPEC). Although OPEC did not register on U.S. policymakers' radar screens until the 1970s when it burst on the world scene as a major economic player, its formation and maturation (aided by Venezuela throughout the 1960s) represented a significant challenge to U.S. influence in the world economy.

For years, Venezuela had sought a hemispheric preference for its imports to the United States, which the United States refused because worldwide oil supplies were plentiful. This preference would have allowed Venezuela to estimate the revenue flow from oil and create long-term economic development plans. Thus, once the energy crisis of the mid-1970s hit the United States, Venezuelan officials expressed little sympathy for their major purchaser of petroleum. However, because of the historically close relationship between Venezuela and the United States, Venezuela stepped up exports of oil to a grateful United States during the 1973–1974 Arab oil embargo.

Relations between the United States and Venezuela cooled somewhat with the December 1973 election of the AD's Carlos Andrés Pérez. Arguing that the industrial world had used its economic power to take advantage of third world producers of primary products, Pérez took action to garner greater income from Venezuela's sale of oil and steel. These industries were nationalized on 1 January 1975.

Expropriation with an indemnity was made possible with the run-up in oil prices starting in late 1973. The higher prices gave Venezuela the capital to offer compensation for the nationalization. Despite the AD's leftist rhetoric, Venezuela (most particularly the elite) thought it important to offer compensation to the oil companies in order to stay on good terms with them and with the United States. Cordial relations with the companies and the United States were important because the South American nation was still dependent on the United States for high-technology items, finished products, and technicians. Although the expropriated companies were not entirely happy with the settlement, they ultimately accepted Venezuela's offer of compensation.

The early 1970s marked an important turning point in contemporary Venezuelan history. With increased revenue from oil sales, Venezuela transformed itself from a relatively impoverished nation to an important contributor of foreign assistance, even donating up to 12 percent of its gross domestic product (GDP) for foreign assistance to the developing world.

As petroleum prices slid in the mid-1980s and the Latin American debt crisis reverberated around the hemisphere, Venezuela entered a time of economic and political crisis, which included rioting in 1989 and two political coups in 1992. Venezuelan relations with the United States, however, remained close during the 1980s and early 1990s. In fact, Venezuela was the only developing nation to secure F-16 fighter aircraft from the United States in the 1980s. Although Venezuela worked with Mexico, Colombia, and Panama in the Contadora Group to help resolve deepening tensions between the United States and Nicaragua, the Venezuelans downplayed their participation by playing a quiet role in the process, as the U.S. pointedly frowned upon the Contadora Group.

Lower oil prices meant that Washington officials were less concerned with U.S.-Venezuelan relations. Crises in the Middle East in the early 1990s, however, again highlighted the importance of a large Western Hemispheric source of petroleum. Even as the Cold War faded away, and in part because of the large amount of U.S. investment in the nation and the continuing importance of a close supplier of petroleum, Washington officials and Venezuela still valued close relations.

James F. Siekmeier


Further Reading
Ewell, Judith. Venezuela and the United States. Athens: University of Georgia Press, 1996.; Levine, Daniel. Conflict and Political Change in Venezuela. Princeton, NJ: Princeton University Press, 1973.; Rabe, Stephen G. The Road to OPEC. Austin: University of Texas Press, 1982.
 

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