Venezuela experienced its golden age starting in the 1970s. Between 1972 and 1974, world oil prices increased significantly (from $1.8 per barrel in 1971 to $11.65 per barrel in 1974) and almost quadrupled the Venezuelan government’s revenue. This caused the country to become the envy of all its neighbors, who ended up going into massive debt to cover their energy needs. The country was the largest oil exporter outside the Middle East and its production exceeded that of all other Latin American countries combined. It was capable of producing 3.3 million barrels per day, a far cry from just over 800,000 today.
In this scenario, the president at the time, Carlos Andrés Pérez, found himself with a rain of oil that he did not expect due to the rise in prices and which encouraged him to decree shortly after the nationalization of oil. He did so in 1976 and concentrated it in the state company Petróleos de Venezuela (Pdvsa). As a result, Venezuela became a developed country within a few years, thanks to import substitution (this was a popular method of industrialization in the 1970s, especially in Latin America), subsidies and protectionist tariffs. Saudi Venezuela is born.
Through this, Pérez promoted ambitious “state capitalism” and modern infrastructure was financed by oil revenues. and basic industries dedicated to metallurgy, electric power and other activities were also nationalized. This is the time when an expression still well known to Venezuelans became popular when they compared it to the poverty that the country currently experiences, going from “it’s cheap, give me two” to “c It’s like that.”
That Venezuela was a completely modern country and totally different from what you can find today. In the mid-1970s and early 1980s, the poverty rate was below 20 percent; today it is 82%, of which 53% live in extreme poverty. Today, it is infuriating how people eat out of trash cans at all hours and virtually everywhere in the country, in contrast to the times when, for example, supermarkets were overflowing with food.
The Venezuelan no longer has the privilege of choosing. Gone are the days when you could buy low-fat or lactose-free milk, regular or decaffeinated coffee, corn or soybean oil. Or even whiskey, which was the largest consumer in the world at the time. Years later, the situation has changed dramatically. “The brand of deodorant I used is no longer available, the shampoo I used is no longer available. It’s what you get, what’s available. You’re going to adapt to what’s available. available, you really can no longer choose,” recalled a citizen in statements made to AFP.
A sad sentence
During its first year of operation, Petróleos de Venezuela had three subsidiaries known as Lagoven, Maraven and Corpoven. Together, they produced a total of 2.3 million barrels of oil per day in their first year. Everything seemed to be going well. However, the arrival of so much easy money has led to certain vices and imbalances in the economy. who ended up condemning her. So much budgetary waste, added to high public spending, ended up causing a rise in prices, which had a direct impact on the poorest households. Added to this is the dreaded corruption, which leads to countless losses in the country’s public sector.
This situation continued to worsen in subsequent years, with a 30% drop in oil prices, which caused oil exports to fall from $19.3 billion in 1981 to almost $13.5 billion in 1983. All this mortgaged Venezuela, this legacy in the form of debt (a drop in GDP of 4.2% compared to the previous year) fell on President Luis Herrera Campins, who tried to correct it, but l. The inflation and social unrest caused by the adjustment stopped the leader, who did not have a majority in Congress nor the support of unions, the business world and even less of citizens to continue his reforms. People wanted to continue spending, no one wanted to hear the word austerity and it was partly because there was a belief that the economy would continue to grow regardless. Error.
Later, the February 18, 1983Campins announces measures to deal with the crisis: exchange controls and restriction of currency outflows. The result was a drastic devaluation of the bolivar during the famous “Black Friday”. Interestingly, since the 1930s, the bolivar was one of the strongest currencies in the world and a symbol of Venezuelan prosperity. A date marked for all Venezuelans and which marked the end of the period of greatest commercial and monetary stability that any country in Latin America has known. This devaluation affected employees, retirees and all those who kept their savings in bolivars, losing around 70% of their value. In addition, this also caused a disappearance of products, due to the increase in import prices.
