Foreign Policy making in America’s back yard,

The case of Venezuela, 1936 – 1969i

Working Paper

By Rob Kevlihan

Abstract

This paper considers the degree to which Venezuela was able to exercise autonomy in
foreign political and economic spheres over a 60 year period from the 1930s to the
1960s. An oil rich but relatively weak state, Venezuela succeeded, over time, in
carving out increased levels of economic autonomy from foreign multi-nationals,
often in return for political support for the regional hegemon. Venezuela’s success in
this regard was somewhat dependent on external events; World War II and the Cuban
revolution in particular, providing changing the opportunity structures facing the
country in such a way as to facilitate economic gains by enterprising local leaders as a
quid pro quo for a relatively dependent position in the foreign political sphere.
External relations have throughout history been seen as a key issue in Latin American development

(Urquidi et al., 1973). The ability to follow an independent foreign policy is a key component of state

sovereignty. However, the inability of weaker nations to enact completely independent foreign policies

has long been recognised (Moon, 1983, 315). Venezuela in this respect, though a country endowed

with enormous oil wealth, has had to walk a narrow road of foreign policy options. In common with

most of Latin America, its relationship with the regional hegemon has defined the nature and scope of

its foreign policy.

Moon (1983, 315-340) considered the impact on foreign policy of economic dependency. He

emphasised the systemic nature of dependency status on foreign policy, rather than pinpointing

particular points where pressure has been exerted by the dominant power. This corresponds with the

dependency approach generally, its essence lying in the focus upon structural characteristics of

relationships which persist over time. He concluded that economic integration with the US implied a

greater degree of similarity of foreign policy behaviour on the part of the dependent state with the US.

The structural nature of the relationship means that external reliance does not deterministically generate

a foreign policy distortion and consequently some element of tacit bargaining may be involved in the

foreign policy process. In foreign policy terms this equates to Evans’ dependent development position

– some room for manoeuvre is available within structural constraints.

Because of its huge oil reserves, Venezuela has had a rather unique experience in Latin America, both

for good and for bad. The battle for control of its oil industry has been a key factor in the politics of the

period under review. This struggle has been to a large degree determined by events in the international

arena which have presented various Venezuelan governments with opportunities for securing greater

control. The role of the US in this respect was paramount – both due to the strategic importance of

Venezuelan reserves to the US and the economic interests of predominantly US owned concerns in the

Venezuelan oil industry. Nonetheless, its early experience in the transition from dictatorship to

democracy was regionally significant as it occurred before most other Latin American states, it having

achieved a stable democracy in 1959. Indeed, it was characterised by some as the ‘wise elder’ of Latin

America during the democratisation wave of the 1980s (Norden, 1998, p143).

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This paper will analyse Venezuelan foreign policy from 1936 to 1969, using Hey’s three building

blocks of policy formation as a framework for analysis (Hey, 1997, p631). In searching for a

discernible pattern of behaviour in the foreign policy of Latin American states, Hey postulates that

three explanatory building blocks can be used to explain their foreign policies. These are: pro-core

versus anti-core; autonomous versus dependent; and economic versus political tendencies. Each of

these blocks gives the analyst a different perspective ‘cut’ on a state’s foreign policy and may serve as

an enriched basis for understanding the dynamics and pressures involved. These building blocks will

serve to analyse the degree to which Venezuela managed to engineer and take advantage of room for

manoeuvre within its constrained foreign policy environment.

In analysing Venezuelan foreign policy from this perspective, the period since the death of long term

dictator, Juan Vicente Gomez in 1935 to the demise of the first democratic government in 1969 has

been chosen. The death in office of Gomez is considered by many commentators as the beginning of

modern Venezuelan politics. Although he was not the last of Venezuela’s dictators, his lengthy rule is

normally cited as the true line of demarcation between democracy and an authoritarian caudillo past

(Rudolph, 1993, p16) with the years between 1936 and 1958 marking a transition from dictatorship to

democracy. 1969 saw the peaceful hand-over of power from one democratic government to the next

and as such represents a useful watershed for analytical purposes.

The battle for control by the state of significant oil wealth and the transition towards, attainment and

maintenance of a democratic system are the key underlying historical trends of the period. This paper

will analyse the shifts in Venezuelan foreign policy within this context from 1936 to 1969 and

conclude on the key determinant factors of Venezuelan foreign policy of this period.

Immediately post Gomez, Venezuela was ruled by first General Eleazar Lopez Contreras (1936 to

1941) and then by Isaias Medina Angarita (1941 to 1945). This period is marked by the beginnings of

attempts by the Venezuelan government to modernise its economy. Initial social improvements were

influenced and encouraged by the US, which in the 1930s was engaged in its own New Deal reforms.

Thus, an expanded role for labour, modest social welfare measures and government intervention in the

economy, in particular in utilities, were implemented. Political protests and unrest in 1936 and 1937

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placed a halt on any further potential political reforms however, and renewed emphasis was placed

upon economic modernisation (Ewell, 1996, 147).

The initially modest efforts by Lopez were soon replaced by those of the more progressive Medina.

1943 saw the imposition of a limited industrial protection policy, resulting in substantially increased

revenues and renewed development efforts. Politically, more freedom was allowed, with the major

opposition party, Accion Democratica (AD) being legalised and congressional elections held in 1944,

which were won by the party set up by the Medina government. This democratically elected

government was not to last, however, as it was toppled in an AD supported military coup in 1945.

Foreign policy in this post Gomecista period was driven primarily by internal factors and in particular

the desire of both Lopez and Medina to begin economic modernisation. The key to any such

modernisation lay in the ability of the state to secure a reasonable share of oil revenues from the

foreign, mainly American owned oil companies operating in Venezuela at the time. This policy stance

was popularised by the slogan ‘sembrar el petroleo’ of Lopez (Rudolph, 1993, p17). Initial attempts by

the state to increase tax revenues from oil companies in 1938 were largely ignored. Multinationals did

not feel themselves compelled to contribute more to the Venezuelan economy at that time. The limits

of economic autonomy can also be seen in the negotiations leading to a new trade treaty between the

US and Venezuela from 1936 to 1939. Venezuela sought an agreement that would allow an element of

domestic protectionism and development of non-oil export markets. Such a plan ran counter to US free

trade economic interests, however, and in the end the Venezuelans accepted the US draft of the treaty

after pressure from both the US Congress and oil companies (Bethell, 1996, p738).

The advent of war changed this relative balance of power. Venezuela maintained a pro-Allied

neutrality for most of the conflict, with US troops stationed in the country from 1942 onwards,

ostensibly in a training capacity (Ewell, 1996, p148). Venezuela ultimately declared war on the Axis

powers in the final months of conflict, guaranteeing it immediate UN membership. The increased

international elbow room enjoyed by Venezuela during the war can be seen in its success in securing an

increased share of oil revenues. In 1943 Medina issued a new law which required oil companies to

share profits equally with the nation through initial exploitation taxes and higher royalties. It also ended

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the companies’ exemption from customs duties and promoted domestic refining. This policy was

facilitated by the US government encouragement of greater hemispheric co-operation (driven by the

needs of its war economy). This was reinforced by the desire on the part of the oil companies

themselves for greater security for their concessions, given the uncertainty of the war and Mexican oil

nationalisation in 1938 (Bethell, 1996, 734).

Analysing the post Gomecista transitionary period using the Leys model shows a strong core emphasis

on the part of Venzuelan policy makers. Venezuela was an extremely important part of the US war

economy – being a secure source of oil, and as such, it had little choice but to support the US. It was

not alone in this pro-Allied stance, however, as all Latin American countries with the one exception of

Argentina largely followed and profited from, the same approach (Williamson, 1992, p332).

Considering the autonomous versus dependent ‘cut’, one can discern the initial stages of an

autonomous approach, driven by the overriding need to gain more control over its oil industry. The pre-

war period demonstrates clearly the weakness of Venezuela vis à vis both the US and (mostly US)

multinationals. The changed circumstances of the war offered a major opportunity for a greater degree

of economic autonomy, which was duly taken advantage of. This is significant at it represented

Venezuela’s first success in this area. Venezuela’s declaration of neutrality (albeit in reality a pro-

Allied one) also shows an element of autonomy, though tempered significantly by the presence of US

troops in the country from 1942 onwards and Venezuela’s ultimate declaration of war in 1945. Finally,

regarding the economic / political dichotomy, one can perceive a clear emphasis on economic

development during this period.

The Trienio period of 1945 to 1948 remains a controversial period of Venezuelan history. Presented by

some as a significant step on the road to democracy, the AD led government of the time nevertheless

came to power as a result of a military coup. The US recognised the new government quickly, after

receiving assurances of their ‘realistic’ approach to the question of the oil industry (Ewell, 1996, p149).

AD itself presented a nationalistic social democratic programme, despite the more left wing

communistic background of its leading members. On foot of this nationalism, AD immediately adopted

a firmer public line with the oil companies, securing a 50/50 profit sharing arrangement, announcing its

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intention not to grant any further oil concessions to foreign multinationals and expanding refining

capacity in Venezuela. While portrayed by AD as a tremendous leap forward, these changes were in

reality little more than a continuation of Medina’s policies (Bethell, 1996, p744).

AD did however, adopt a more aggressive foreign policy stance, with Betancourt, a leading figure in

the administration, condemning dictators and countries withholding democratic elections. What

became known as the ‘Betancourt Doctrine’ led to Venezuela breaking relations with Franco’s Spain

and withdrawing ambassadors from the dictatorial governments of Somoza of Nicaragua and Trujillo

of the Dominican Republic (Bethell, 1996, p746). This increasingly combative approach on the part of

the Venezuelan leadership gave rise to US concern. In particular, a threat by Betancourt to cut oil

supplies to Brazil because of an agreed arms sale to the Dominican Republic was viewed with alarm as

a threat to US control over the Venezuelan oil industry (Ewell, 1996, p152). US policy under Truman

was also changing, with an increased emphasis on anti-communism, rather than support for democratic

governments. This also led to an increasingly negative attitude in US circles towards the Trienio

government. The modest social reforms of AD, together with perceived rising expectations of the

masses and the left wing background of the leadership cadres meant that the Trienio government

ultimately came to be considered a threat to US interests (Ellner, 1992, p167). When the government

was eventually overthrown by a second military coup in 1948, the US was quick to legitimise the new

military junta through diplomatic recognition.

Analysing Trienio foreign policy initiatives, one begins to perceive an increasing tension between core

and non-core. The position of the US remains important, with attempts by the AD government to

articulate a foreign policy in other areas resulting in US concern, particularly when the threat of oil

sanctions is introduced. On the autonomy front, the advantages secured in relation to the oil industry of

the war years was built upon; however this change did not represent a radical departure from previous

policy. Finally, from a political versus economic perspective, this period is significant in giving rise to

a new political emphasis to foreign policy. The role of a particular individual - Betancourt, in

articulating this policy appears as a significant causative factor.

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The immediate post coup period saw Venezuela ruled by a military junta, composed of Delgado

Chalbaud, Perez Jimenez and Luis Felipe Llovera Paez. The more moderate Delgado was assassinated

in 1950, leading to a consolidation of control in the hands of Perez. This period saw the country slide

back to the worst excesses of the Gomez period, with the government ruling through repression and

fear.

On the foreign policy front, it is unsurprising to find that diplomatic relations were renewed with

Franco, Trujillo and Samoza. The government maintained close ties with other military leaders,

including Peron of Argentina and Odria of Peru. The period also saw a closer alignment with the US,

with Venezuela hosting the 1954 Inter-American Conference and co-operation with US efforts to

overthrow the reformist government of Jacobo Arbenz in Guatemala. Venezuela also co-operated

closely with the US in defence matters, strongly aligning itself in the anti-communist camp. Increasing

oil revenues, cold war pressures and military control of the government resulted in increased military

expenditure and a higher profile for the armed forces. This was reinforced through US military training

and assistance which emphasised the strategic importance of Venezuelan oilfields to the Western

hemisphere (Ewell, 1996, p160).

Venezuelan dealings with other Latin American governments were not so amicable, however, as

relations were broken with Chile over the mistreatment of a Chilean citizen by Venezuelan security and

with Argentina after the overthrow of Peron in 1955 (Bethell, 1996, p 752).

Ultimately, attempted electoral fraud in 1957 by Perez led to his downfall in early 1958, as a result of

an attempted coup followed by massive civilian demonstrations. The electoral campaign of December

1958 was distinguished by the Pact of Punto Fijo, whereby the leading parties agreed to a common

policy agenda and a division of cabinet posts, no matter the electoral result – the establishment of

Venezuelan democracy was guaranteed (Rudolph, 1993, p23).

Looking again to Leys model, a shift to a more pro-core position can be observed, with the military

junta identifying itself more readily with US interests in the region. No further progress was made

towards economic autonomy, with the economy remaining dependent on revenue earned by foreign

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owned oil companies. Finally, what focus there is in foreign policy terms is on the political side,

supporting US initiatives and like minded Latin American military governments.

The AD led government of Betancourt that can into power in 1959 was to rule Venezuela until 1969.

By far the most significant international event that the government had to face was the Cuban

revolution, with Fidel Castro coming to power less than one month after the Venezuelan elections.

During this period, Betancourt in particular, strove to maintain the legitimacy of democratic

government, trying to avoid the mistakes that led to the fall of the Trienio government. Maintaining

this legitimacy meant balancing AD’s commitment to greater social equality with keeping conservative

elites and military on board.

Paradoxically, the threat of communist subversion assisted Betancourt in this respect, as it gave the

military a role in protecting the existing state from the Fuerzas Armadas de Liberacion Nation

(FALN), a Cuban inspired guerrilla group. The FALN threat also guaranteed the qualified support of

the conservative elites as AD represented the best of a bad lot. Reintroducing the Betancourt doctrine,

the Venezuelan government broke relations with Castro and Trujillo. After a Trujillo backed

assassination attempt on Betancourt himself, Venezuela was successful in implementing OAS

sanctions against the Dominican regime. Venezuela was also a strong supporter of OAS sanctions

against Cuba. Further calls from Venezuela to isolate other non-democratic governments were rejected

by OAS fellow states, as an unwarranted interference in the affairs of neighbouring countries. The

isolation of Cuba and the Dominican Republic were justified on the grounds of their threat to regional

security, rather than on internal factors.In the area of principle concern to Venezuela – the oil industry,

a more aggressive approach was taken by the Betancourt regime. 1958 saw a new tax law, giving 65%

of oil profits to the government. More significantly, a longer term strategy was being developed for

ultimate Venezuelan ownership of the industry. The Corporation Venezolana del Petroleo (CVP) was

formed in 1960 and given authority to explore, exploit, refine, transport and market oil as well as to

acquire shares in other companies. While the CVP was little more than a training ground for

Venezuelans during its first decade of existence (Bethell, 1996, p759), it nonetheless signalled an

important step towards ultimate national control of the industry.

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Of global importance was Venezuela’s participation in the First Arab Petroleum Congress in Cairo in

1959. It was Venezuela who introduced the concept of an oil producers organisation, which ultimately

formed as the Organisation of Petroleum Exporting Countries (OPEC) in 1960. Again, while the

immediate impact of this grouping was not significant, it signalled an international initiative of some

importance to Venezuela. Indeed, the alliance did not live up to initial Venezuelan expectations as the

goal of Arab states at the time was price increases, while Venezuela was more firmly committed to

national ownership and control of the industry (Bethell, 1996, p759).

The ongoing limits of AD scope for action is illustrated by Venezuela’s failure to join the Latin

American Free Trade Association (LAFTA) – joining was strongly opposed by sectors of the business

community strongly tied to foreign capital who perceived a threat (Bethell, 1996, p761). Potential

advantages to be gained in diversifying the economy away from its near total reliance on oil were

therefore lost.

1963 saw the withdrawal of Betancourt from national politics and his replacement by Raul Leoni, the

victorious AD candidate in the elections of that year. The demise of Betancourt saw a resultant toning

down of Venezuelan foreign policy for the remainder of the AD period to 1969. The holding of the

initial UN Conference on the Law of the Sea in Caracas in 1968 saw some increased interest in

territorial rights to adjacent waters and stirrings of a dispute with Columbia. Relations with its other

regional neighbour, Guyana were stabilised by an agreement reached with Britain to suspend territorial

claims for 12 years from 1966, while a Venezuelan-Guyanese committee considered the issue (Bethell,

1996, p763).

Taking up Leys’ analytical tools once more, the Betancourt years of the AD administration signal a

stronger anti-core, autonomous foreign policy stance than ever before from Venezuela. This stance was

confined largely to the economic sphere, with ongoing efforts to gain more control over the oil industry

internally bringing some success through increased government revenues and the building of national

capacity to run the industry. Internationally, Venezuela’s key role in the formation of OPEC is

noteworthy. OPEC would later become a key player in the global economy of the 1970’s.

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The ability of the Venezuelan government to adopt this stance was undoubtedly aided by its strong pro-

core, dependent political position, where both the Betancourt and Leoni administrations adopted a

strong anti-Castro / anticommunist line. Similar to the war years, Venezuelan policy makers can be

seen carving out elements of an independent economic policy – gaining more control over its oil

industry, as a result of external US political concerns. The Leoni government did not succeed in

building on the progress made during the Betancourt administration, being content instead to

consolidate gains already made, rather than continuing to push for further progress.

To conclude, one can clearly see the limited scope that Venezuela had in the exercise of foreign policy

during this period. While the role of a particularly committed individual, such as Betancourt clearly can

make a difference to the ability of Venezuela to express an independent foreign policy, real constraints

existed – in particular the attitude of the US. Betancourt’s first attempts at an independent foreign

policy in the Trieno government ultimately ran contrary to US political interests. Equally, the growing

expectations of the Venezuelan masses potentially ran against US and certain vested Venezuelan

interests. The resulting coup was quickly legitimised by US recognition. On the other hand, the

Betancourt government post 1959 was perhaps the most successful in articulating an independent

foreign policy. Its increased room for manoeuvre was directly as a result of external US cold war

concerns. Betancourt’s newly acquired anticommunist credentials meant greater autonomy in other

areas. Venezuela also showed tremendous vision in its key role in the formation of OPEC, which it

construed as another step towards securing full control of its oil industry.

In Strangian (Strange, 1994, 22-42) terms, Venezuela’s foreign policy during the period can be

construed in terms of relational power. Venezuela’s relative ability to exercise a non-core, autonomous

foreign policy in either political or economic spheres being defined by the relative importance of

Venezuelan political support for the US against external threats to the US national interest. In the

absence of such external threats (or the absence of Venezuelan leaders willing or capable of taking

advantage of the opportunities such threats presented), Venezuelan foreign policy regresses towards a

core, dependent approach in both economic and political spheres.

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Looking more broadly, however, one can clearly discern that Venezuela’s room for bargaining and

domestic gains was fundamentally restricted by the rules of the game as set by its regional hegemon.

The modest gains and room for manoeuvre engineered most successfully by Betancourt still represent a

foreign policy shaped by the dependent position of the country vis à vis the US. Perhaps the most

significant foreign policy initiative instigated by Venezuela throughout the period under review was the

establishment of OPEC as it was characterised an attempt to fundamentally alter structural relationships

both in the region and globally, rather than merely bargaining in a constrained dependent environment.

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Bibliography

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Ellner, S., 1992: ‘Venezuela’ in Bethell, L., and Roxborough, I. (ed.s) Latin America
between the Second World War and the Cold War, 1944-1948, Cambridge:
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Evans, P.: ‘Dependent Development: The Alliance of Multinational, State and Local
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Ewell, J., 1996: Venezuela and the United States: From Monroe’s Hemisphere to
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Hey. J.A.K., 1997: ‘Three building blocks of a theory of Latin American foreign
policy’, Third World Quarterly, Vol. 18, No. 4, pp 631-657.

Moon, B.L., 1983: ‘The Foreign Policy of the Dependent State’ in International
Studies Quarterly (1983), Vol 27, 315-340.

Norden, D.L., 1998: ‘Democracy and Military Control in Venezuela: From

Subordination to Insurrection’, Latin American Research Review, Vol. 33, No. 2,
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Rudolph, J.D., (1993): ‘Historical Setting’ in Haggerty, R.A. (ed.), Venezuela: A

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Strange, S. (1994): States and Markets, London:Pinter.

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Williamson, E., (1992): The Penguin History of Latin America, London: Penguin.

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This paper is heavily indebted to a number of key texts cited herein which provided the empirical
meat upon which the analysis rests, in particular Bethell (1996); Ellner (1992), Ewell (1996), Norden
(1998) and Rudolph (1993). The paper has its roots in an assignment completed for a course in Latin
America taught by Prof Peadar Kirby as part of a Masters in International Relations at Dublin City
University. The author would like to acknowledge his debt to Peadar in this regard.

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