STOCKHOLM UNIVERSITY Department of Economic History and International Relations Master's Thesis in Economic History with specialization in Global Political Economy Spring Term 2021
Student: Victor Emery Trindade Supervisor: Dag Retsö
US reactions to Brazilian and Venezuelan oil nationalisation seen from the theory of Imperialism
Keywords: Imperialism; Geopolitics; Oil; Nationalization; Latin America
Abstract
This thesis presents a qualitative comparison of Brazil and Venezuela during their oil nationalization process vis à vis the interests and ideological view of the US., including the triggering factors and variables involved in the US response. It tests the theory of Imperialism, coming from two different perspectives, intending to explain the US reaction in different periods of the two oil companies nationalisation processes: in Brazil in 1953 and Venezuela (starting in 1976 and consolidating in 1999). The thesis also aims to study if the then-existing nationalist ideologies might have played a role in the direct or indirect US interventions and how the international-political reality fits into this issue. As mentioned, the theory to deal with this comparative study is the so-called Imperialist coming from North American and Latin American perspectives. The application and testing of the theory indicate that the US had an "offensive" ideological response concerning interventions in Brazil and Venezuela, especially in Venezuela. Likewise, notwithstanding fitting approaches to interpreting the data, the theory of imperialism does not thoroughly explain how ideological choices play a fundamental role in oil geopolitics and nationalisation in the investigated oil- rich Latin American countries. As the thesis shows, the perspective of the nationalisation through the selected Latin American authors differs from that of the North American ones. For the latter selected authors, the role of geopolitics and ideologies were more determinants. Through the lenses of this theory and interpreting the relevant data, this study expects to contribute to the knowledge of how oil-nationalisation, nationalist ideologies, and geopolitics in Latin America can influence one another.
Table of Contents
Abstract ...... 2 Table of Contents ...... 2 List of graphs and tables ...... 3 List of abbreviations ...... 3 1. Introduction ...... 4 1.1 Research Aim and Research Question ...... 7 2. Theoretical background ...... 10 2.1 Introduction and research propositions ...... 10 2.2 Latin American perspective ...... 13 2.3 North American perspective ...... 19 2.4 Discussion and disposition ...... 23
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3. Methodology and Methods ...... 24 3.1 Qualitative Content Analysis ...... 24 3.1.2 Data/Material ...... 27 3.2 Clarifications on the chosen measuring systems ...... 28 3.3 Critique of the Methods and material ...... 30 4. Results ...... 31 4.2 Brazilian Case: contextualization ...... 32 4.2.1 North American perspective ...... 36 4.2.2 Latin American perspective ...... 40 4.2.3 Conclusion ...... 44 4.3 Venezuelan Case: Contextualization ...... 45 4.3.1 North American perspective ...... 48 4.3.2 Latin American perspective ...... 51 4.3.3 Conclusion ...... 55 5. Concluding Thoughts ...... 56 6. References: ...... 58
List of graphs and tables
Graphs
Graph 1: Brazil's Crude Oil: Production from 1960 to 2019...... 5 Graph 2: Oil Production in Venezuela in millions of barrels (mb) 1920-2010...... 6 Graph 3: Production vs. Oil Consumption in Brazil (1965 –2015) …………………………….……32 Graph 4: Energy consumption by source in Brazil from 1965 to 2019...... 33 Graph 5: U.S imports from Brazil of crude oil from 1973 until 2020 in thousands of Barrels...... 35 Graph 6: Energy consumption by source in Venezuela from 1965 to 2019.35………………………45 Graph 7: U.S Imports from Venezuela of crude oil 1973-2019 in thousands of barrels per da……….47
Tables Table 1. The role of U.S in Latin America. Table showing some U.S interventions in Latin American in different foreign policies ideologies throughout the 20th century………………..…………………19 Table 2. Theory operationalized………………………………………………….……………………24 Table 3.Using the coding scheme from QCA…………………………………………..……………..40
List of abbreviations
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IIRSA Initiative for the Integration of the Regional Infrastructure of South America Mercosur Southern Common Market NOC National oil company OECD Organisation for Economic Co-operation and Development OPEC Organization of the Petroleum Exporting Countries PDVSA Petróleos de Venezuela, S.A (Petroleum of Venezuela) Petrobras Brazilian Petroleum Corporation ANP National Agency of Petroleum, Natural Gas and Biofuels FTAA Free Trade Area of the Americas
1. Introduction
Several authors and researchers report in empirical evidence that a state rich in oil suffers international pressure on administrating and profiting with that specific natural resource, especially when the government decides to nationalize it (see Ross, 2008; Mares, 2010; Cisneros-Lavaller 2006; Jeifets, V. L., & Pravdiuk, D. A, 2019; Vadivia & Lyall, 2018). In the case of Latin America, it is by no means different. Countries of the region, such as Brazil and Venezuela, have often dealt with this issue. Venezuela is especially an interesting case to examine since it holds the largest oil reserve in the world.1 To discover how Venezuela and Brazil have dealt with this international pressure when nationalising their oil companies or changing to a more nationalist ideology, the analysis in this master's thesis considers one widely accepted theoretical framing from one realist perspective: Theory of Imperialism with both Latin American and North American authors such as Moniz Bandeira, José Luis Fiori, Noam Chomsky, Michael Parenti, among others. The primary aim is to see to what extent can this perspective explain the two different US reactions to their oil nationalisation and explain when US interventions (be it through direct or indirect means) took effect in the country with the onset of nationalist ideologies. Throughout most of the 20th century, oil was a key source of competition and served as an ideological, political and strategic national policy for nearly all countries. It is debatable, however, that oil will continue to have equally great importance in the future. In the 21st century, the significance of oil has declined relatively with the rise of other renewable, cleaner energy sources, such as
1 Source: Which Countries Have the World’s Largest Proven Oil Reserves? By VisualCapitalist (2021). 4
hydropower and wind energy2. Despite this relative decline, Graph 1 shows the steep increase in crude oil production in Brazil since the beginning of the 1960s. Before 1960 oil production in Brazil was visibly small and did not have much impact. In the countries studied, the energy use of oil per capita from 1950 to 2015 has been steadily increasing, demonstrating the still relevance of oil to the overall development of the countries3.
Graph 1: Brazil's Crude Oil: Production from 1960 to 2019. 4
Nonetheless, the use of oil by all countries in the 21st century is still crucial for the economy and therefore an important factor for geopolitical considerations and overall political and economic independence.5 According to some studies, until up to the 2040s, the most common energy source consumption will still be petroleum and other oil liquids,
2 Source: Oil 2021: Analysis and forecast to 2026. IEA Reports
3 Source: Database from World Development Indicators. Accessed February 2021.
4 Source: CEICDATA. Accessed June 2021.
5 Source: OIL AND GAS FORECAST TO 2050. Energy Transition Outlook 2017. Dnv gl energy transition outlook – oil and gas. 5
accounting for more than one third (IEO2017).6 Graph 2 shows the steep increase in oil production in Venezuela in millions of barrels from 1920 up to 2010. The thesis demonstrates that energy is essential for every aspect related to national sovereignty and development. The creation of the Organisation of Petroleum Exporting Countries (OPEC) in 1960 has only confirmed its strategic asset.7 Besides, the geopolitical aspect is closely associated with the usage and distribution of oil, and for countries in Latin America, this relation is striking.8 The relationship between oil-rich producing countries and hegemonic interests – notably the interests of the US in Latin America – is dynamic and recurring. The investigation of changing relationships from friendly to nationalist and "strategic rivalry" is investigated and studied. Then, the thesis argues that the oil sector in Latin America is characterized by state interventions and tight state supervision in a dynamic that did not develop from liberal orthodoxy. Also, the current thesis maintains that the common ground of the studied cases is domestic nationalism and the opposition to foreign interference. The discourse of sovereignty, nationalism and nationalization beyond being seen only as an ideological concept is also a set of situated practices, constituted in and through unstable power relations and dependent on the overall international environment.
Graph 2: Oil Production in Venezuela in millions of barrels (mb) 1920 – 2010.9
6 International Energy Outlook 2017. "Although liquid fuels—mostly petroleum-based—remain the largest energy source throughout the IEO2017 projections, the liquids share of world marketed energy consumption is projected to fall slightly, from 33% in 2015 to 31% in 2040. As oil prices rise, energy consumers are expected to turn to more energy-efficient technologies and switch away from liquid fuels where possible" (EIA projects 28% increase in world energy use by 2040 (EIA, 2017).
7 Source: OPEC Plus: An Oil World Sovereignty in Making. The geopolitics (2020).
8 Source: THE GEOPOLITICS OF OIL AND GAS: THE ROLE OF LATIN AMERICA. FGV and Konrad Adenauer Stiftung. February 2016.
9 Source: Bello et al, (2011). Venezuela´s Growth Experience. 6
To better explore the previous issues and events in the referred countries, the research, encompassing the primary variables from the theory of imperialism, discusses central authors on general geopolitics of energy, ideologies and oil issues. Although geopolitics 10 related to energy in general and oil has already been investigated and accepted within the field of Global Political Economy, a comparison of Latin American countries with the introduced theory has not been the sole focus of research yet. In particular, comparative studies between Brazil and Venezuela on political ideologies and geopolitics conflicts do not appear in investigations in an in-depth way. The influence of the US in the world of energy and oil is known, but comparative studies from different perspectives of political ideologies of selected Latin American countries vis à vis a hegemon is much less studied. There might not be a complete research anomaly, but more thorough research on the topic is needed for further understanding and advancing the knowledge.
1.1 Research Aim and Research Question
10 There are a few definitions of what geopolitics is, and one fitting definition is by Robert Kaplan: Geopolitics constitutes the study of the outside environment faced by every state when determining its own strategy: that environment being the presence of other states also struggling for survival and advantage. In short, geopolitics is the influence of geography upon human division (Kaplan, R: 2012: 48). 7
The purpose is to test how the theory of imperialism, coming from two perspectives, could explain the US reaction in different periods of the two oil companies nationalisation processes in Brazil in 1953 and Venezuela in 1999 (started in 1976). The role of nationalist policies plays a seminal part in the analysis because it is one of the main variables in the research. Vargas nationalist policies diverged from those of the 1999 Venezuelan government, but they both influenced US reactions. The thesis also seeks to understand how Venezuela and Brazil managed to create and nationalise despite US interests, how they dealt with US oil policies, and competing political ideologies and alliances inside and outside the asymmetrical political system. However, there is no consensus on the role of ideologies and the nationalisation processes in Latin America. According to Monaldi (2020), ideology is a poor predictor for the rise of resource nationalist policies in Latin America. Conversely, a combination of ideology and institutions (inclusiveness) affects nationalism in different countries during structurally induced cycles (Monaldi, 2020). As we will see, the thesis studies a broader examination of the dynamics and implications of asymmetry in international relations, often defined in terms of disparities in material capabilities and resources availability (Flores et al., 2020).
I have chosen the theoretical framework of realism because many past analyses of the geopolitics of oil, nationalization and ideologies fall within the lenses of these "realists11" approaches. Even though explaining the difference between a realist versus a utopian approach is not the focus of this research thesis, this paragraph explains why I chose to answer my research question with a theory and authors considered realists and not utopians. Realists admit nation-states as the leading actors in international relations and affairs. Plus, the ideas of rationality, anarchy and power structure dominate the analysis. The lens of realism is a good starting point for the research and to explore the data in the empirical
11 "Realism, also known as political realism, is a view of international politics that stresses its competitive and conflictual side. It is usually contrasted with idealism or liberalism, which tends to emphasize cooperation. Realists consider the principal actors in the international arena to be states, which are concerned with their own security, act in pursuit of their national interests, and struggle for power" (Korab-Karpowicz et al., 2018). 8
section because it arranges adequately the factors and measures systems in which I apply these same factors.
Conversely, utopian ideas, propose an alternative view of society. According to Paul Goodman (2010), an idea is utopian when it proposes an alternative to the status quo. Utopian thinking is convenient when addressing power accumulation because it helps change the locus of the problem, which could not be solved in the usual terms. Examples of utopian thinking are equity and cooperation instead of competition, inclusion, strengthening of countervailing power such as social movements, among others. These conceptions are applicable in addressing systematic power accumulation, for they show alternatives methods in how society could organize itself. The Resource Wars and Imperialism do not question these beliefs of society thoroughly. Hence, they are not considered to be utopians.
According to some realist authors, such as Edward Carr, the creation of international institutions hides gross interests based on utopian ideas - dear to the public opinion, such as the search for peace - to maintain the privileged position of power and wealth of hegemonic powers, such as the US. Further, Carr harshly condemned the liberal theory - to which it refers as utopian -, because it considers that there is an alleged harmony of interests between the states when the economic system would be based on divergences, given that each nation seeks to increase its relative economic position (Reis, 2020).
Utopian approaches, with their respective authors, are not capable of fully mobilizing the factors of the thesis since most of them do not consider necessary states as the principal actors in IR. Furthemore, utopian authors fail to adequately conceptualise the interplay among ideologies, political alliances and nationalization processes. Koch and Perreault affirm, that the existence of natural resources can be viewed as inherently political and as both a material and an ideological force, in which resource struggles are never only (or even primarily) about resources themselves, but instead encompass an array of social and political concerns including political and ideological ones (Koch & Perreault; 2019, 617). Therefore, the purpose and goals of the study are the following:
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1. To what extent can the theory of Imperialism explain two different reactions of the USA to oil nationalization processes in Brazil (1953) and Venezuela (1976-1999)?
As I later explain in the methodology section, what this research aims to do is to use a combination of specific authors and two perspectives (both from Latin America and the US), applying later the data and the factors to help understand the relevance of the theory of imperialism as a research lens. The thesis likewise addresses variables such as ideologies, the international system and the international reality during their oil nationalization. In the methodology section, I explain that the central methodology used is qualitative content analysis (QCA) because it is suitable for materials requiring some degree of interpretation. The following section is a discussion of the theory used in the thesis. I explore Moniz Bandeira, José Luis Fiori and Miguel Salas, emphasising the geopolitics of energy, ideology, imports of oil, analysis of speeches during the creation of the oil company, among others. The section finishes with Noam Chomsky and Michael Parenti's perspectives, providing an enriching angle to study the problem.
2. Theoretical background
2.1 Introduction and research propositions
In simple terms, “imperialism” might be defined as a system involving a hierarchy of states in which dominance is exercised by extending the stronger state’s relatively greater economic and political power against the weaker state (Feldman, 2020: 23). In the economic aspect, imperialism is related to extracting resources from the weaker state to benefit the stronger state (Ibid, 2020). This theory has several subcomponents, and, as I later explain, I
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concentrate on the economic perspective, but I use other components, such as resource wars. Imperialism is at the precise foundation, historically and conceptually, of the discipline of IR, for most of the earlier texts reflect a shared preoccupation with imperialism (Long et al., 2006). Even though this theory can be better understood in broader terms, the structure of imperialism has to be run from the Northwestern corner of the world, rooted in a triangle with the US at one corner (Galtung, 1980). This triangle has a centre of gravity by which it has been moving in a relative sense of the proportionate distribution of control over decisions (Ibid, 1980). A vital component of this theory (or world view) is the assumption that the disharmony in the countries in the periphery (Brazil and Venezuela, for example) is larger than the disharmony in the centre (Ibid, 1980). Hence, as it becomes clearer, the idea of a system constituted of countries in the centre, and periphery dominates in the analysis, whereby the motivation (of the US in that matter) would be to control the periphery. In this system, the defining end is domination on the part of some few, whether a conscious strategy or the unplanned result of many contingent interactions among system units (nations, corporate entities of any sort, human individuals) (Onuf, 2017).
I decided to test this theory because such theory should be evaluated according to its potential as a reservoir of hypothesis implications against the present reality and as a reservoir of policy implications against potential reality (goals, values) (Galtung, 1971). Thus, this theory fits the overall methodological goals, for it can potentially explain US reactions to oil nationalization in Brazil and Venezuela, despite some years apart.
Johan Galtung, a scholar from the University of Oslo on his paper A Structural Theory of Imperialism (1971), defined the theory as follows:
This theory takes as its point of departure two of the most glaring facts about this world: the tremendous inequality, within and between nations, in almost all aspects of human living conditions, including the power to decide over those living conditions; and the resistance of this inequality to change. The world consists of Center and Periphery nations; each nation, in turn, has its centres and periphery (Galtung, 1971).
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For Galtung, the theory of imperialism must be understood in a more general structural relationship between two collectives. Hence, the theory of imperialism (or imperialism system as such) is a perspective that relates some of the parts to each other in a relation of harmony of interest, and other parts in relations of disharmony of interest, or conflict of interest (Galtung, 1971). The theory of imperialism has two defined seminal mechanisms. The first one is of a pattern that the dominating nation enriches itself more than the dominated one, being possible to see this pattern in economic relations among developed and developing countries. The second key mechanism is where the subjugated nations in the periphery are kept apart, with little communication and trade among themselves (Galtung, 1971: 117). These two mechanisms are more easily seen in economic imperialism, but it can occur the spill-over effect, manifesting a political, military, communication and cultural imperialism (Galtung, 1971). As later Nicholas Onuf, an American scholar that developed Galtung’s theory wrote, this relationship of dominance can occur in more ways and take place in different mechanisms, such as:
1. Domination takes place by means, or use, of force—threatening the use of force often suffices, but only if the threat is periodically carried out. 2. Domination takes place by use of rules— including legal rules. 3. Domination takes place through speech—as when assign value to people or institutions and give reasons for doing so. 4. Domination takes place through intimidation and incitement—through the manipulation of emotions (Onuf, 2017: 9)
Most past research and studies of geopolitics and oil within Global Political Economy use accepted and well-known theories to explain the role of competition and interests for oil. Accordingly, abundant energy resources and international political alliances can be synonyms if there is an alignment of worldviews, ideologies and power politics. There are, nevertheless, alternatives theories and would be more "utopians" , backed by authors such as Geroge Monbiot or Seymour Melman, for example. As previously mentioned, since the two latter 12
authors encourage a redesign of society and an alternative vision, the thesis focuses uniquely on the "mainstream realist" theories because it considers more acceptable the observance of case studies, in addition to empirical data.
One dependent variable is the nationalist ideological choice when the nationalization process of the oil companies in Brazil and Venezuela occurred (despite the natural difference in nationalist scale and differences in the two countries and periods), vis à vis US direct or indirect responses. As it is further explained in the methodology section, to answer the research question – which is, as a reminder: “To what extent can the theory of Imperialism explain two different reactions of the USA to oil nationalization processes in Brazil in 1953 and Venezuela in 1976-1999)? " –, the chosen independent variables to address the research question are from the authors and theory. The intention is to create a deductively rooted set of the above-mentioned theory from both Latin American and North American perspectives that are later empirically explored.
I start with Moniz Bandeira, and to some extent, José Luis Fiori (among other Latin American authors) studying the theory of Imperialism from a Latin American perspective. They thoroughly research the relationship between the US and Latin American countries (especially Brazil and Venezuela) regarding oil geopolitics and nationalist ideologies. Furthermore, their framework is useful to analyse political parties, geopolitical development, oil companies, international alliances, among other geopolitical concerns. Thus, I focus primarily on institutions, contrasting ideologies and organizations, changes of political parties and systems in power, and analysis of trade relations after and before the nationalization.
2.2 Latin American perspective
This section explains and clarifies how selected LA authors are engaged to answer the research question through an imperialist perspective. I explain which factors from their theoretical understanding help answer the research question.
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Both Luiz Moniz Bandeira and José Luis Fiori extensively discuss the interconnection between natural energy resources, such as oil and gas, ideologies and the overall geopolitics in Latin America vis à vis the US. According to Moniz Bandeira, the main objective of the Great Powers (such as the US) concerning the states of the periphery (such as Brazil and, to a certain extent, Venezuela) is to ensure that their political, military and economic development does not affect their local, regional and global interests (Bandeira, 2014: 44). Hence, the creation of national oil companies of oil-rich nations in the periphery, in his view, can pose a national threat (for the security of the US). For him, American ideological and economic strategies in South America are intertwined and mutually reinforcing (Ibid, 2014). As I later discuss, throughout most of the 20th century – until Hugo Chávez came to power in 1999 – Venezuela had peaceful cooperation with the US, for it had a subordination status. Bandeira affirms that the great powers try to convince the population and co-opt the (local) elites for a project of an international community in which the states on the periphery (including Brazil) are content with a subordinate position and in which the privileges enjoyed by commercial interests, financial and foreign investment in these peripheral states are maintained (Ibid, 2014: 45).
For Bandeira, the US strategy for the Americas developed, in several phases, the permanent objective, clearly defined and pursued, of establishing and consolidating its hegemony in the continent (Ibid, 2014). The US ideological stance towards Latin America throughout the last century can be divided into three main phases. One of the most important phases was the exclusion of European political and economic influence in Central America and the Caribbean, essential areas to guarantee the inviolability of the US and the security of the economic integration of its continental territory (Ibid, 2014: 49). Relating to this idea, the same book by Bandeira Brazil, Argentina and the United States: Conflict and Integration in South America: From the Triple Alliance to Mercosur, 1870-2001 states that the reduction of Brazilian external dependence – such as the strengthening of nationalist ideologies via the creation of national oil companies – would affect the influence of US political, military,
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economic and ideological influence in the region and, consequently, its ability to act on a global level (Ibid, 2014).
Due to the strong wave of nationalization in Mexico during the 1920s and 1930s, the Standard Oil of New Jersey and other North American oil companies concentrated their interests in South America, especially in Venezuela, and later during the 1960s in Brazil. The US, above all, had been concerned since 1925 with the depletion of its oil, and the Washington government had guided US companies towards appropriating reserves in all parts of the world, especially in Latin America (Ibid, 2014: 443). After the II World War, the political and ideological conflict of the period moved to the interior of each country in Latin America, which partially explains the strong ideological division during the creation of the Brazilian oil company in 1953, culminating, eventually, with the suicide of the Brazilian president in 1954. In addition, the Brazilian military dictatorship, which started in 1964, was guided and oriented by the US. After breaking diplomatic relations with Cuba, it started to support the redraft of the concept of sovereignty, which would no longer be based on the geographical limits and borders of the States, but on the political and ideological character of the regimes (Ibid, 2014: 965).
Concerning Venezuela, with Chávez’s tendency towards left-wing nationalism, he created yet another obstacle to negotiations for establishing the Free Trade Area of the Americas (FTAA). He placed the United States, of which it was the main oil supplier, facing the problem of respecting the popular will, maintaining consistency with the policy of promoting democracy, undertaken in the 1990s (Ibid, 2014: 1418-1419). With the delicate economic and security situation at the beginning of the 21st century in Venezuela, Bandeira states that the Bush administration tried to take advantage of the growing chaos in Venezuela to unite opposition forces and provide them with planning and intelligence resources to turn the strike of workers in the oil industry into a movement to overthrow Chávez from the presidency (Ibid, 2014: 1534). Even more notorious is that the Venezuela petroleum company PDVSA was responsible for around 80% of the country’s exports and almost 15% of US oil imports. This percentage is higher than that of Saudi Arabia. For this reason, the role of 15
Venezuela, with the world largest oil and gas reserves, has become crucial to US energy security (Ibid, 2014).
According to Bandeira’s theoretical view, the US government usually denials all foreign intervention in Latin America and tries to appear as defending democratic values. The Bush administration convincingly denied the responsibility and complicity of the US with the coup d'état, a norm by which the US governments often guided their intervention policies in other Latin American countries (Ibid, 2014: 1539). In parallel to this, Bandeira likewise states that the foreign policy of the US, vis-à-vis Latin America, was never, in reality, consistent with American democratic principles, which have always been a marginal element for rhetoric. According to this theoretical view, nationalist ideologies, through the nationalization or creation of oil companies, do poses a threat to US security and its role in the region. The election of Chavez in 1999 and other South American presidents nicknamed “populists” by conservative ideologues does not mean that the continent has tended even further to the left. It reflects the enormous erosion of the influence of the US in the region, the increasing decline of its dominance, the tensions and uncertainties related to the process of economic globalization, which the governments of Washington tried to promote after the collapse of the Soviet Union and the Socialist Bloc (Bandeira, 2008: 32).
The Brazilian political scientist José Luis Fiori, having lived and studied in several Latin American countries, also studies the interplay between ideologies, oil and the overall geopolitics of Latin American countries concerning the US, departing from a Latin American perspective. He affirmed that a new "imperialist race" is underway (he wrote that a bit before the Shale Oil Revolution) among the great powers which are fighting for their energy and food security. According to this perspective, historically, what made petrol and other liquids the cornerstone of the word geopolitics, including the US role in Latin America, was (and still is) their military relevance, especially after World War II. Petroleum was present in almost all international conflicts, in which nationalism and nationalisation played an important role, namely the strategic control of the main production sites, distribution and petroleum reserves (Fiori: 2004). Especially concerning the US, he states that oil was, is and will continue to be 16
an important item in the US national security agenda, in which, from 1985 onwards, a new system of ordering the international oil market started to be based on its financialization, in an environment marked by the resumption of American hegemony (Ibid, 2004: 315).
As I later explain, and Fiori also states, Venezuela played a seminal role during the II World War for the US because it had secured its supply during the conflict (Ibid, 2004). Further, the overall oil nationalizations, such as the one in Brazil and later in Venezuela, made the last of the three economic pillars of the post-war ordering system disappear: the stability of concession contracts that guaranteed companies (including the American ones) the power to fix quantities and prices (Ibid, 2004). Oil is not the cause of all conflicts in the international system. But Fiori believes that there is no doubt that the great centralization of power that is taking place within the interstate system is also transforming the permanent struggle for "energy security" of the national states into a war between the great powers for the control of the new energy reserves that have been discovered in these last years (Fiori, 2019). The nationalist ideology expressed through the oil nationalization plays a seminal role in the reactions of the US towards the oil-rich Latin American countries.
The second Vargas' government was characterised by pragmatic nationalism because his government sought to provide a technical approach to the nationalisation and monopolisation project, avoiding further politicization (De Almeida, 2013). Also, the nationalism in his government is often characterised as "nacional-desenvolvimentismo populista" or "populist national developmentalism", which defends the resumption of a national development project backed by populism. It is within this framework that Vargas sought to implement a nationalist bargain, by supporting the US in the political-strategic plan of the Cold War, in exchange for aid to Brazilian economic development (Vizentini, 1994). Thus, this second government can be understood to be pragmatic for it had to act actively in negotiations with the Brazilian National Congress (and with parties at that time with opposing ideological views concerning the nationalization – for almost two years (since December 1951) – which eventually became Law No. 2004 of 3 December October 1953. As Vizentini asserts and I later comment in the contextualisation section, the overthrow of the 17
Vargas government demonstrated that the nationalist bargain had become an uncomfortable policy for the international status quo hegemonized by the United States (Vizentini, 1994).
The creation of Petrobrás, due to the importance of the controversies it engenders, would contain indications of leverage to heavy industrialization and national affirmation (Fiori and Lessa; 1991). The format given to Petrobras (monopoly from the time of its creation until 1997) responds more to the traditional nationalist vision of the indispensability of national control of foreign natural resources as an essential requirement of sovereignty. Fiori and Lessa see in this episode more the crowning of a nationalist project — in the sense previously given to the theme — than the fervour for industrialization under the command of national capital (Ibid, 1997: 187). Yet, Vargas also had a more prudence stance with Petrobrás creation. Even concerning the control of natural resources, the Vargas government was less nationalist than the one advocated for a long time by the Tenants, practised by Varga's first government and defended in the 40s and 50s (Ibid, 1997: 194). Fiori argues, thus, in this context of the political crisis in 1954-1955 and the political reading of economic data, there are no clear articulations or clear interests (Ibid, 1997). After World War II and even after the end of the Cold War, foreign policy in Brazil was fickle and fluctuated over time, changing its goals and strategies, according to the moment, the government and the dominant ideology (Fiori, 2013).
The Venezuelan historian Miguel Tinker Salas affirmed that the election of Hugo Chávez in 1998 promised the completion of the Venezuelan nationalization process, which had started back in 1976. Despite its oil nationalization in 1976, this law remained filled with loopholes allowing foreign companies to continue to operate in the country through service contracts or in advisory roles (Salas, 2015: 148). According to Salas, differently as before, Chávez adopted a model of participatory democracy to empower sectors that had been historically marginalized. Nonetheless, nationalization confronted strong resistance, including a failed coup in 2002 and a subsequent lockout in 2002 and 2003. The government gained control of the oil industry in 2004, starting a series of influential social programs funded largely by redirecting oil profits (Salas, 2017: 419). 18
Silas likewise stated that starting in 1999 the Venezuelan government had pursued new foreign policy initiatives, advanced the idea of a multipolar world, assumed a greater role on the international stage and promoted Latin and South American hemispheric integration (as a policy to promote South-South relations). These positions clashed with long- held assumptions about the nature of Venezuela’s relations with the world (such as the one with the US). Yet, this clash created a contrast for the Venezuelan oil economy that required good relations with the US (Salas, 2015: 141). Since Chávez came into power, the US perceived Venezuela’s social programs and foreign policy initiatives as a “destabilizing force” and proposed to "vaccinate” Latin America from Caracas to stop the spread of the purported “contagion” (Ibid, 2015). Hence, Chávez Bolivarian ideology contrasted with the US long-lasting foreign influences in the region.
US strategy towards petroleum right after WW II was and continue to be one of hegemony and domination due to its high economic, political and ideological values, and remains a leading focus of global energy geopolitics. For this and other reasons, researching the role of the Brazilian and Venezuelan nationalist ideologies through nationalization remains an alluring and puzzling issue to research. The period of this type of ideology in Latin American countries around 1930 to 1980 contrasts with the neoliberal period and with the replacement by a common program of monetary stabilization policy and deregulation and privatization of the region's national economies from the 1980s until the end of the 1990s. Hence, the contrasting Venezuelan and Brazilian nationalist policies and the consequent US response endure a chief issue to research.
2.3 North American perspective
Noam Chomsky investigates the part that hegemonic powers possess in the world, including their international relations. In other words, one of his research is concerned with the USA’s influence on third (mainly developing) nations and how the USA has used both
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direct and indirect means to destabilize countries to its benefit. As he affirms, Washington’s primary concern is Venezuela, the leading oil producer in the Western hemisphere. The largest gas reserves in South America are in Bolivia, which now follows much the same path as Venezuela’s. Both countries pose a problem for Washington in other respects (Chomsky, 2007). Seen through the lenses of Chomsky, it is argued that the creation of Petrobrás (the Brazilian oil company) in the 1950s was one of the most ideological disputes surrounding the oil problem. This dispute was translated around the ideologies of Americanism versus state technical groups. In Venezuela, on the other hand, it is argued that the ideologies brought forward by Chavez had a confrontation with US ideologies and interests. The international context during the 21st century is also different.
Chomsky affirms that the world is too varied and complex to have a definite answer to the question of who rules it. Nevertheless, there are certain identifiable prominent actors, such as the U.S., Russia, or China. Since the end of the II World War, the U.S raised by far to a leading position. It sets the terms for most global problems, ranging from concerns such as Israel-Palestine, Iran, Latin America, the “war on terror,” international economic organization, rights and justice, to ultimate issues of survival of civilization like nuclear war and environmental destruction (Chomsky, 2014: 5). Differently from the argument of Parenti, as the next section explores, Chomsky believes the main concern for the U.S is national independence, and not necessarily opposing left-wing ideologies, as he says:
No (the primary concern is not to destroy left-wing governments), the primary concern is to prevent independence, regardless of the ideology. Remember, we’re the global power, so we have to make sure that all the various parts of the world continue serving their assigned functions in our global system. (…) The nationalism we oppose doesn’t need to be left-wing —we’re just as much opposed to right-wing nationalism. So, despite what you always hear, U.S. interventionism has nothing to do with resisting the spread of “Communism,” it’s independence we’ve always been opposed to everywhere (Chomsky, 2002: 149). Thus, national independence through the analysis of Chomsky is a critical factor in investigating the expropriation of oil in Brazil and Venezuela. Political alliances and ideologies also demonstrate the possibilities of nationalizing oil companies by their respective governments. As he argues in a later paper, the new mission (of U.S military interventions in Latin America) is to combat “radical populism”– the term that is regularly 20
used for independent nationalism that does not obey orders (Chomsky, 2007). As the next section shows, Chomsky’s ideas help explore the political alliances during the nationalization processes of the two Latin American states during the 20th century.
Michael Parenti writes within the imperialism theory since he analyses mainly US relations with third countries. Michael Parenti, differently from Chomsky, argues that the US enjoys attacking left-wing regimes. In other words, according to him, the critical point is not that a country is a democracy or oil-rich, but that it has a left-leaning government. Nevertheless, for the thesis, we can rearrange his argument affirming that the similarities among the two Latin American countries are that they have all practised nationalist governments policies and are not necessarily left-wing. Table 1 below shows some of the US (direct and indirect) interferences in Latin America throughout the 20th century, divided into three central foreign policy or ideologies: Big Stick Ideology (some authors say it is a corollary of the Monroe Doctrine of 18212), Good Neighbour Polic13, and the return of the Monroe Doctrine, with a new name as Truman Doctrine.14
Table 1: The role of U.S in Latin America. Table showing US interferences in Latin American according to foreign policies ideologies throughout the 20th and 21st centuries. 15
12 irst conceived as a statement in opposition to European intrusions in the Americas, it became under President Theodore Roosevelt a justification for U.S. intervention. To cultivate Latin American trade and goodwill during the Great Depression and the Second World War, Franklin Roosevelt’s administration accepted the principle of non-intervention. Later with the onset of the Cold War, perceived international imperatives led to a series of new interventions in countries such as Guatemala, Cuba, the Dominican Republic, and Chile. Though typically couched in idealistic rhetoric emphasizing Pan-American commitments to solidarity and democracy, the various versions of the Monroe Doctrine consistently served U.S. policy makers as a means for advancing what they understood as national strategic and economic interests (Gilderhus, 2006: 5).
13 The central feature (of the Good Neighbour Policy) committed the United States to the principle of non- intervention, affirming that no nation has the right to intervene in the domestic affairs of another for any reason. Another called for Latin American cooperation in efforts to uphold peace, maintain security, and expand commerce (Ibid, 2006: 13).
14 Some authors say the later ideological foreign policy with steadfast control of geographic-ideological areas starts in the 1950s. During the presidency of Dwight D. Eisenhower, the era of the Good Neighbor formally came to an end when Cold War imperatives came into conflict with the principle of non-intervention (Ibid, 2006:14).
15 Table made by the author with the help of Parenti's arguments and the author's own research on the topic. 21
Theodore Roosevelt’s Good Neighbour policy – U.S. foreign policy after foreign policy: Big stick 1930 to 1948 and during the Cold War ideology – 1903 to 1929 (Truman Doctrine) – 1947 to present days Panama (1903) None Brazil (1964) Mexico (1914-1917) Bolivia (1971) Haiti (1915) Argentina (1976) Dominican Republic (1916) Costa Rica (1948) Cuba (1906-1909) Dominican Republic (1961) Nicaragua (1912) Venezuela (2002/ Honduras (1900-1920) 2013-2020) Guatemala (1954) Paraguay (1954) Uruguay (1973) Cuba (1961) Guyana (1961–64) Chile (1973) Nicaragua (1981–90)
From the table above, a correlation between US national foreign ideologies/doctrines and foreign interventions in Latin America is apparent. The next step is to investigate the political alliances and ideologies in Brazil and Venezuela when they proceeded with the nationalization and if they had any effect on the nationalization. Other authors affirm that the 1929 economic crash might have also been influential in fostering a distinct ideological foreign policy that attenuated Latin American interventions between 1930 and 1948. Others affirm that the interlude of the “Good Neighbour Policy” was the continuation of the “Big Stick” Ideology in Latin America by alternative means. Parenti argues that the dominant paradigm is the prevailing ideology or mode of thought that explains how and why society functions as it does (Parenti, 2011). Specifically, on Venezuela, Parenti affirms that because of using the wealth – natural resources reserves – of the nation to serve the working populace instead of the favoured few (as well as being a government that represents an entirely contrasting mode of social organization), Venezuela’s president, or any other leader with such 22
an egalitarian agenda, is immediately listed in the “enemy” column by the ever-vigilant empire builders (Parenti, 2011: 2016). In the theory and empirical part, I further elucidate his theory’s dependent variables, discrete measures, and factors. Thus I intended to use the one theory (Imperialism) to test it with the selected authors in the chosen cases.
2.4 Discussion and disposition
The previous chapter on selected theory tried to show that the US reaction towards the Brazilian creation of its national oil company and the solid Venezuelan push towards anti- Americanism ideology, starting with Chávez, can be studied and tested singular perspectives. As already stated, I deploy a realist approach to the understanding of the research problem. The thesis proposes to use a combination of perspectives in order to test and understand them. The second key point is that the thesis encompasses both a North American and Latin American perspective when studying the proposed research question. I believe that by isolating the authors, the explanatory variables are enhanced and enriched.
As a quick recap and outlook of what comes later, the background theory section is first debated with realist selected authors. Afterwards, before writing the discussion and the empirical part, I explain the main methods used in the following section. After this, I discuss the results with the data inspected. The aim is, through investigating multiple forms of information, to measure contrasting perspectives of the theory. The methodological ambition of this research is to use a combination of dependent variables and authors to apprehend further the interplay of nationalizations and ideologies in the two selected Latin American countries in the 20th century. The period of the analysis stretches from the 1950s until the beginning of the 21st century.
Nevertheless, I concentrate on specific time frames within this overall period in Brazil and Venezuela. To allow a comparative study, I research the two countries in specific timeframes. Therefore, I use both an anachronic and diachronic comparison, researching distinct objects in specific time frames. After initially debating the research question, the
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theoretical framework, authors, and theory to answer it, I develop and explain the contrasting geopolitical and economic realities of Brazil and Venezuela in the empirical part. After looking into different articles, the central research gap was a thorough comparative analysis among Brazil and Venezuela regarding oil and relations with hegemonic powers. A further gap is that the authors' analysis in the present empirical part – such as Moniz Bandeira, Noam Chomsky and Michael Parenti, among others – does not often appear in previous research. Besides, in these former cases, the focus on political ideologies and alliances mainly occurred indirectly..
3. Methodology and Methods
This section of the thesis clarifies the research method, theory, and operationalised factors, including data collection. Possible limitations and criticisms of the methods and theory used are also forwarded. In other words, this section aims to demonstrate what I did, why I did it, and how I arranged the thesis.
3.1 Qualitative Content Analysis
First of all, I chose qualitative methods because qualitative research contributes to understanding the human condition (and my research is geopolitical analysis) in different contexts and of a perceived situation (Bengtsson 2015: 8), which is precisely the design of this study. Also, all qualitative research deals with interpretation, which can vary in depth and level of abstraction, depending on the method of analysis and the researcher’s ability to distance him (Ibid, 2015). As it is later explained, my self-reflection is an essential part of qualitative research, whatever chosen qualitative method. I considered my “pre- understanding”, both in the planning process and during the analytical process, to minimize any bias of my influence (Ibid, 2015). The leading research method is qualitative content analysis (QCA) because I must engage in some degree of interpretation to arrive at the
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meaning of the data (summarise and describe critical aspects of my material), apart from being systematic, flexible, and data reducing. The success of this method depends significantly on the coding process, and the basic coding process in content analysis is to organize large quantities of text into much fewer content categories. This text data might be in verbal, print, or electronic form. They might have been obtained from narrative responses, open-ended survey questions, interviews, focus groups, observations, or print media such as articles, books, or manuals (Shannon et al., 2005: 1278).
As QCA can acquire various research methods, one that I use is by studying many quotes and speech analysis because it is a research technique for making replicable and valid inferences from texts (or from verbal, visual, or written data) that describe and quantify specific phenomena (Ibid, 2015). Hence, as a researcher, I tried to “stay true” to the text. Since I am studying the US reaction of two selected Latin American countries during two different time periods, QCA fits into my research designs and aims because QCA comes into its own when we are dealing with meaning that is less obvious and the overall context of the issue studied is needed. With QCA, my research question specifies the angle from which I can examine the data. Apart from being applicable to answer casual mechanisms and, mainly, my research question, when we are engaged in qualitative research, QCA is also suitable for the research because it can be applied to a wide range of materials (Schreiner 2012: 2). It is also reflexive, in a way that the reflexivity of the researcher is acknowledged (Ibid, 2012: 28), and I consider how, as a researcher, I co-create my data. Hence, the end goal of QCA is to go beyond individual understanding and interpretation (Ibid, 2012). Adding up to that, as Salim Nefes in his paper "Using Content Analysis to Study Political Texts: Notes on Turkish Parliamentary Debates" affirms, QCA affords advantages of generalization and triangulation because the former is the method’s greater ability to draw evidence from different contexts by adding up more analyses than single-method studies. Triangulation, on the other hand, using different sources to test the validity of results, stimulates researcher creativity and enables the studies to be more accurate in their analyses (Nefes, 2020: 3).
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I use QCA by evaluating the data from discourse content analysis from more than one database and applying the measurements of the theory in the two cases during the oil nationalisation. Thus, QCA is more about summarising what is in the data and less about looking at data in new ways or creating theory. The focus of QCA is on how the data and theory relate to each other (Ibid, 2012: 41). As table 2 below shows, the methods test out a theory from contrasting perspectives by using their factors and measuring system in the empirical reality of the chosen Latin American countries. As it becomes clear, the methodology ambition is not to discuss 16 or the possibility of discarding alternative explanations, but only to mention that I am naturally aware of them. The research tries to minimise these issues by combining the theory's perspectives and authors coming from different perspectives. As stated, the methodology ambition is to test selected theoretical lenses and use QCA through data analysis. As later seen in the empirical part, I deploy the utilisation of many written quotes through speeches about the nationalisation processes by crucial people. As qualitative methods are expressed in words (and not in statistical models), in my case, content analysis is suitable to test the imperialism theory by studying speeches and other approaches. Hence, QCA can be defined as a research method for the subjective interpretation of the content of text data through the systematic classification process of coding and identifying themes or patterns (Shannon et al., 2005: 1278).
Table 2: Theory operationalized. 17
Authors Theory Main Factors Measuring Systems
16 "Verificanionism" or confirmation bias connotes the seeking or interpreting of evidence in ways that are partial to existing beliefs, expectations, or a hypothesis in hand (Feldman, 2020: 4).
17 Source: own elaboration. 26
Noam Chomsky, Imperialism through Foreign influence; Energy dependency Michael Parenti a North American Political Affinity; on oil; US. oil perspective Opposition to companies in LA; nationalist statement by leaders; governments; Percentages of oil Resources as imported and ideological forces exported; production and dependency; of oil; Production of Militarism. oil compared to other energy sources. Moniz Bandeira, Imperialism through Foreign influence; Energy dependency Luis Fiori. a Latin American Political Affinity; on oil; US. oil perspective Opposition to companies in LA; nationalist statement by leaders; governments; Percentages of oil Resources as imported and ideological forces exported; production and dependency; of oil; Production of Militarism. oil compared to other energy sources.
3.1.2 Data/Material
The database comes mostly from sampled material from sources such as newspapers, speech analysis or secondary research archives, world development databases, websites, textbooks, among others. I analyse discourse analyses because they rest on the assumption that language does not represent reality but contributes to the construction of reality (Schreiner, 2012: 45). As a researcher, I am aware that I can never be sure that the data collection method can capture the actual context of reality. The words used by the informants may not correspond to the researcher's view of their meaning (Bengtsson 2015: 11). That being said, and as it is later explained in the critique section, the priority was to use the most telling quotes capable of explaining the country's reality during that nationalisation to render
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the telling quotes testable in the empirical part. Other main tools of collecting data that I used were document-based research and internet-based research. The selection of databases and discourse analysis was relevant to answering the research question and testing the theory. QCA is suitable for dealing with relevant selected data that I have sampled from other sources, which requires interpretation. Hence, the data and methods for the methodological ambition match. As Schreier affirms, the combination of QCA with discourse analysis is possible because of the vital concern of the latter with the relation between language and social reality, especially when it comes to issues of power and ideology, which is the case of the thesis (Ibid, 2012: 49). Finally, the material also comes from online databases, such as "Our world in data", World bank data or "The global economy", for example.
3.2 Clarifications on the chosen measuring systems
The current and following paragraphs critically justify why I used the above- mentioned measuring systems. Since imperialism is a theory that explains that nations constantly try to achieve a favourable change in the international reality to better fit their status quo - besides being intimately related to overseas expansions, geopolitics, energy and social conflicts in general – the measuring system of energy dependency on oil can adequately apprehend all this interplay. Naturally, there are other possible measuring systems if we test other theories, but I had to choose these measurements due to space concerns. The presence and activities of US oil companies in the production chain and prices in the two countries studied can equally capture the relationship between nationalization and geopolitics and test the imperialism theory. Lastly, statements by critical leaders during the nationalization are likewise able to inform us about the relations of the variables studied and adequately test the theory. In addition, and in a way more dominant, these measurement systems can answer the research question.
Concerning the theory of imperialism from a Latin American perspective, the measurements can apprehend the interconnection of nationalisation, ideology and oil 28
geopolitics during Brazil and Venezuelan oil company nationalisation. Bandeira and other LA authors, such as Luis Fiori, can provide us with meaningful insights departing from researchers and scholars that are Latin American themselves. In this sense, the combination of both perspectives, namely a North American perspective with Chomsky and Parenti and a LA with selected authors, provide us with relevant scrutiny to answer my research question. The measuring systems such as energy dependency on oil, the role of US oil companies in these LA countries, for example, can grasp the general pattern during the nationalisation process. The percentages of oil imports and exports to the US and oil production are also essential to test this theory. I have chosen this measurement because since the theory is linked to resources as ideological and material forces, scarcity-induced conflicts, securitisation, vulnerability, oil nationalisation, violence regarding resource control and overall power relation, they apprehend this interplay during the nationalisation. The production of oil vis à vis other energy sources and the share of energy coming from oil can reasonably be used to test the theory and the research question. As Koch and Perreault affirm, resource nationalism provides an ideological frame, which naturalises US energy consumption patterns and casts US lifestyles as vulnerable to the violence and unpredictability of global energy markets (Koch et al., 2019: 624). Hence, imperialism theory can be linked to nationalist ideology, for it may serve as an ideological resource to mobilise contrasting agendas. In other words, it serves as a material basis for state power (Ibid, 2019).
I have thus used an interpretivist research design, investigating how Brazil and Venezuela could nationalize their natural oil reserves and how they have dealt with US pressures. The following part is around the analysis of the empirical part: the Brazilian case with the creation of its national oil company in the 1950s Petrobrás, as well as with the discovery of new oil reserves in 2006; and lastly, the case of Venezuela with the governments of Hugo Chavez and Nicolás Maduro will be examined. In these two cases, a study is presented on the US's economic and social policies, geopolitical and foreign relations, and other measures developed to answer the research question.
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3.3 Critique of the Methods and material
As with all research, a critical reflection of materials, methods and limitations is required. This section has the aim and purpose of allowing the reader to find alternative interpretations. There is no consensus on which concepts should be used or how to best judge the quality of research based on content analysis (Bengtsson, 2015: 13). A possible criticism or limitation with this method is that some factors could also be used in other theories, such as militarism. Nevertheless, isolating them makes it more interesting to explore the cases since the explanatory power of the perspectives is more evident, and the investigation and application of the theory can be confirmed. Another possible criticism is the fact that there can be other possible alternative explanations and even better ones. Nevertheless, by using the previous theoretical lenses, I believe I can exclude at least some alternatives explanations. Besides, to mitigate other possible criticisms or issues, such as "verificationism", I sought to use different methods and approaches to explore the cases.
A possible weakness is related to the RQ and its relation with diachronic versus anachronic comparison. As stated, to mitigate this problem, I also studied the US reaction in Brazil later on, especially when Brazil found vast oil reserves. Also, one of the methodological and research ambitions was to test the theory of imperialism precisely in two different periods to understand to what extent it could explain the contrasting US reactions to the nationalisation processes in Brazil and Venezuela. Hence, I am aware of this issue, and I mitigated it as much as possible. Therefore, the results were not remarkably affected by this matter.
Another possible criticism is that I might not use enough authors from Latin America to enhance our understanding of their ideological perceptions regarding the US during the nationalization. With this respect, as I have mentioned above, one of the methodological ambitions is to use a combination of authors coming both from Latin America and North America to give a contrasting perspective on the issue. The leading Latin American authors studied are Luiz Alberto Moniz Bandeira and Luis Fiori. However, I also indirectly compare 30
other critical scholars studying energy geopolitics in Latin America and ideologies, such as Miguel Tinker Salas. When selecting American and LA authors, the main prerequisite was their profound knowledge on the topic related to oil geopolitics and ideologies. It might also be clear that there are not many authors that investigate both ideologies and oil geopolitics. I amended this difficulty by using a combination of authors to later render them testable in the empirical section using QCA.
A third criticism is that the availability and access to the data material might not be sufficient. Due to time and space restrictions, the possibility of doing more practical methods, such as field study, became an impossibility, also due to covid-19. That said, I believe that with secondary research, discourse analysis and publicly available databases, the nuisance of lack of data availability might diminish. As with most qualitative research, using QCA and discourse analysis, my subjective interpretation and influence could somehow influence the main findings and analysis on the empirical part. I am equally aware that the suppression of all subjective influences of the researcher is hard to erase but could still be reduced as much as possible by using a combination of perspectives. As with many research and thesis, also the present one contains weaknesses concerning methods and materials. As we have seen, these imperfections have not gone unnoticed by the researcher and are not regarded as affecting the results and distorting the conclusions. A final refection relates to whether using more quantitative methods and methodology would noticeably affect the results. As mentioned in the conclusion section, I believe this would, in fact, strengthen the study and complement it with an enlightening and particular point of view.
4. Results
This section explores and examines the main findings, applying the theory of imperialism previously presented. I operationalise the chosen factors and measures of the theory by looking into the data found. It is first investigated the Brazilian case, with its oil
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company created in the 1950s, up until the 1990s. Nevertheless, to make it a broader comparative study, I also discuss how the reality of Brazilian oil during the 1950s presented itself. Then, I discuss the Venezuelan case, with the development of the relationship with the US that occurred throughout most of the 20th century and how it changed at the end of the 20th century and the beginning of the 21st century, with the election of Hugo Chávez in 1999. I am applying mainly deductive (theory-driven), but I also use some inductive (data- driven) approaches. The results and analysis depart mainly from the studies of speeches from the nationalisation processes and through studying the data gathered from unconnected databases, such as the World in Data, among others. Since QCA is a flexible and pragmatic method generally described as appropriate to analysing text data and that it focuses on the characteristics of language as communication with attention to the content or contextual meaning of the text (Shannon et al., 2005), the usage and study of distinct quotes and databases are considered appropriate to deploy the method.
4.2 Brazilian Case: contextualization
Brazil created – credit to the then Brazilian president Getulio Vargas, and in some ways analogous to Lázaro Cárdenas – its oil company (Petrobrás) in October 1953. During the beginning of the Cold War, the company's creation was, to a great extent, made possible due to an intense campaign launched in 1946, called "The oil is ours". In 1938, during the first Vargas government, the National Petroleum Council (Conselho Nacional do Petróleo or CNP) was created, representing the first consistent initiative of the Brazilian state to regulate the oil sector. The Mexican nationalist policies on the oil sector in 1938 influenced the increasingly nationalist Brazilian position (Almeida, 2013). By that time, the ideological- political conflict was between Brazilian businessmen (Americanism) and state technical groups (Nationalism) over oil exploration in the country and culminated – 15 years later – with the victory of nationalist positions by the second Varga's government in 1953 (state monopoly over-extraction and refining), supported mainly by segments and well-wishers of 32
the army. Also, during this period, there is evidence of constant pressure by the North American government on Latin American governments so that oil exploitation would not be nationalized in defence of the free action of multinational companies (Schutte, 2016). The evolution and outcome of the oil issue, with the creation of Petrobrás in 1953, would affect foreign policy, in particular relations with the United States.
Aside from the nationalist campaign launched in 1946, the foreign policy of Vargas during the second half of the 1930s was also more prone to a pragmatic nationalism, known as Equidistância Pragmática (Pragmatic Equidistance), due to an international context of crises, such as the Second World War and the onset of the Cold war. The objective of the foreign policy – practised between 1935 and 1942 – was to obtain the most significant and best possible advantages aiming at national development, and that was what Brazil put into practice through a “bargaining policy” (Neves, 2016: 84). Despite differences between the US and significant Second World War European belligerents, Brazil took advantage of the favourable international context for better conditions for its alignment. Thus, Brazil acted autonomously, obtaining concessions and concrete benefits (Ibid, 2016). Conversely, others say that the less ideological and more independent Brazilian position of the 1930s was made possible directly because the US was more willing to accept it. In parallel, the alleged “Pragmatic Equidistance” thesis exaggerates Germany’s actual economic and political bargaining power over Brazil and, consequently, underestimates the North American weight (Abreu, 2014: 89).
Nevertheless, despite the somewhat steadfast nationalist view of the petrol, the liberal wing, which advocated the participation of foreign capital, to the detriment of the State’s action, has always had notorious political strength. In the end, Petrobras creation process (1951-1953) was one of the most controversies of the second Vargas government (1951-1954) and the outcome of a long debate political-ideological that mobilized Brazil for more than a decade around the “Oil problem” (Martins, 2008). Furthermore, increasing urbanization and industrialization was reflected in Brazilian foreign policy, which
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progressively became the subject of ideological disputes and rose to an important position in the national political debate (Visentini, 2013).
In the international context of the Second World War, there were around seven prominent oil companies – known as "seven sisters" – in the world that dominated the oil scene. They dictated their rules and reproduced, in a certain way, the new power framework with the consolidation of the USA as the leading global actor (Machado; Reis, 2011). The consolidation of the hegemony of the "Seven Sisters" was a geopolitical and strategic process, with the support of the respective governments, based on the exercise of enormous influence over the countries where "Seven Sisters" operated (Sauer et al., 2016: 189). However, nationalist movements carried out and influenced by the decolonization in Africa, the Middle East, and the Arab world helped dismantle these companies' privileged position (Ibid, 2011). Further, until the First World War, State actors were merely supporting actors in the oil business. Nations began to enter the industry as protagonists only when animosities between European territories intensified (Pinto, 2015).
Petrobrás is part of a selected few global players of the strategic oil sector, especially after the company discovered vast new oil fields in 2007, in an area of the earth known as the pre-salt layer, within the Brazilian maritime territory. Apart from being the largest oil company of the energy sector in Latin America, the company is roughly half state-owned (48%), and, for this reason, it is very much associated with the performance of the overall Brazilian economy. Like in Mexico, the company's creation was linked to national sovereignty and remained as a state monopoly until the 1990s, when the then-president Fernando Henrique Cardoso led to its partial privatization, with the opening of its capital to private investments, starting in 2000 (Ibid, 2011). Still, the resumption of the Brazilian energy nationalism, with the discovery in 2007 of the pre-salt layer, was interrupted because of the Federal Government's political and ideological changes after 2016 (Pinto, 2020).
The international sphere of when the pre-salt layer was found in 2007 is different from that of Vargas in the 1940s and 1950s. On account of this discovery, Brazil is the
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country with the second-largest oil reserve in Latin America, behind Venezuela. Since its discovery, Petrobrás has provided countless direct and indirect jobs, boosting places, cities and municipalities in Brazil and several South American countries (Machado; Reis, 2011). In Latin America, and more specifically South America, in the past recent years, due to the differential of resources and for having more to gain with the integration, Brazil has been seeking to strengthen regional integration bodies such as Southern Common Market (Mercosur) and Initiative for the Integration of the Regional Infrastructure of South America (IIRSA). As the company is closely linked with the Brazilian state, there is a good political, social and economic responsibility (Ibid, 2011: 14).
The usage of oil revenue to generate wealth and goods for the population is not trivial. It is a real concrete promise, but the way to transform it into wealth is still uncertain because the compelling debate takes place in the political/ideological field. There are conflicts of interest between the various actors involved (Sauer et al., 2016). Nowadays, the petrol industry possesses international or independent companies and companies controlled by national states. These latter produce about 75% of global oil and hold about 90% of proven reserves. The former group is called NOC (National Oil Companies), and, outside OPEP countries, Petrobrás is considered a NOC. As becomes clear, the disputes of these two groups reflect, on the one hand, the current national interests of the countries of origin of the oil companies and, on the other hand, the countries where the oil reserves are located (Pinto, 2020).
Differently from when the Organization of the Petroleum Exporting Countries (OPEC) was founded in 1960 when the control of the petrol reserves was under the international oil companies by 85%, in 2010 the control was under the NOC 88%. Presently, the new "Seven Sisters" oil companies are all state-owned, such as Petrobras in Brazil or PDVSA in Venezuela. According to the Financial Times in 2007, the new Seven Sisters are Saudi Aramco (Saudi Arabia), Gazprom (Russia), China National Petroleum Corporation (China), National Iranian Oil Company (Iran), PDVSA (Venezuela), Petrobras (Brazil), and Petronas (Malaysia). All of them are either state-owned or government-linked. With the onset 35
of the 21st century, precisely when Petrobras found new oil reserves in 2007, there have been increasingly geopolitical disputes between blocks with antagonistic interests in the oil price. The leading group, chaired by the U.S. with the OECD plus China, while the other is OPEC plus Russia. The U.S. government, for example, launched in 2011 a document called "Blue Print for a secure energy future", in which there are seven main objectives, being one of them to broaden development, negotiations and policies throughout the world, such as in Mexico and Brazil. Nonetheless, the participation of the Brazilian State in the oil started with Vargas's government, since it was with him that a sharp change in the ideological terrain from cultural and political nationalism to economic nationalism began to occur (Araújo, 1996).
4.2.1 North American perspective
The following measures are analysed: Energy dependency and export; statements by leaders related to US interventions and foreign presence, such as by Getúlio Vargas and Roosevelt's administration. Further, the following measures are also used to test the above- mentioned theory with two authors: percentage of oil imported and exported; production of oil; the number of oil conflicts in Latin America; percentage of GDP expended on armaments; Share of energy coming from oil; Absolute amount of Brazilian oil imported each year to the US; Militarism and military bases in regions close to oil supplies; Attack on Brazil; Production of oil compared to other energy sources. The following graph shows the increasing importance of oil production and consumption in Brazil from 1965 until 2015. In addition, from the year 2000 onwards, there was an evident increase in oil revenues in the Brazilian national income (from less than 0.5% to 2.5%), especially around 2006, when, as seen, the Brazilian national company, Petrobrás, found vast oil reserves. Graph 3 below shows the increasing oil production and consumption in Brazil between 1965 and 2015.
Graph 3: Production vs. Oil Consumption in Brazil (1965 -2015)18.
18 Source: Ribeiro et al., (2019). The irrationality of Petrobras’ divestments in refining. 36
Unlike the Mexican case that started oil production during 1920 and the Venezuelan case, which is considered a Petro-state19, Brazil only found oil during the 1950s, together when the state oil company was founded. The analysis of data and graphs of the variation of oil consumption, production, and imports from 1955 onwards shows the steady increase in oil production and consumption, with a steep enlargement in oil production during the end of the 1970s. Yet, oil consumption in the country was already high – comparing with oil production – at the end of the 1960s20. The next graph shows the energy consumption by energy source from 1965 until the present day. Contrarily to Venezuela, Brazil oil consumption accounts for less than 50% of the total energy consumption by energy source, going from 66% in 1965 to around 38% in 2019. In addition, there has been an increased oil production in the country since the creation of the company at the beginning of 1950 21.
19 A petrostate is a nation whose economy is heavily dependent on the extraction and export of oil or natural gas, such as Venezuela.
20 Source: Cepa, USP.
21 Source: Lucchesi, C (1998). Advanced Studies. 37
Graph 4: Energy consumption by source in Brazil from 1965 to 2019.22
Concerning international oil companies present in Brazil, analysing through the lenses of the imperialism theory (Chomsky and Parenti), until 1934, the (Brazilian) constitutional regime was in force, the wealth of the subsoil belonged to the landowners. At that time, Brazil's petroleum possibilities were barely suspected; therefore, even foreign companies were not interested in the problem (Miranda, 2004: 34). Oil exploration and production in Brazil can be divided into three phases: the pre-monopoly phase (1858-1953), characterised by concessions made by the federal government and modest production results; the phase of Petrobras' monopoly (1953-1997), characterised by the effective implantation of the Brazilian oil industry; and that of free competition, which began in 1997 (Da costa et al., 2010:806). However, since the 1990s, with the company's partial privatisation, more foreign companies are in Brazil, with an exploration model through the concession of exploratory blocks. As some Brazilian authors affirm,
The oil and gas exploration model through the concession of exploratory blocks is one of the most used by producing countries. The blocks are offered at international auctions, thus creating a market full of opportunities, which are geographically distributed and, at the same time, allow the existence of a schedule of activities for the sector. It is in this scenario that the major players operate, that is, in the world market, where large companies play the role of competitors, at the same time that they can associate locally, depending on specific objectives or legal requirements established by local regulatory agents (Da costa et al., 2010:804).
22 Data from: Our World in Data. 38
Thus, the opening of the Brazilian oil sector began in 1997 with Law 9,478 (1997), known as the Oil Law, which ended Petrobras' state monopoly, created the National Agency of Petroleum, Natural Gas and Biofuels [ANP] and established the area concession model. In 1998 the ANP was implemented, and on 06/15/1999, the first auction of blocks was held. This opening enabled oil companies to access reserves in Brazil (Da costa et al., 2010).
Furthermore, US oil imports from Brazil and Brazil oil imports from the US have been volatile through the years. The following graph shows a steep US import of Brazilian crude oil around 2009, shortly after the discovery of vast oil reserves in 2006.
Graph 5: U.S imports from Brazil of crude oil from 1973 until 2020 in thousands of Barrels.23
Nevertheless, from the Latin American countries, Mexico and Venezuela are still the countries that the US imports most of its oil from, accounting for 7.5% imports from Mexico and 5.9% from Venezuela. Thus, understood from the lenses of the imperialism theory, with Chomsky's and Parenti's optics, it can be argued that oil plays a security and nationalist role in Brazil since it is a vital energy resource for every type of usage in the country. The US does possess a military base in Brazil, but it is not clear if it has a role in the oil issue.
23 Source: U.S Energy Information and Administration. 39
Nevertheless, the increasing oil imports from 2009 onwards show that the US is interested in Brazilian oil production. Therefore, the creation of the Brazilian state-owned oil company in 1953 was controversial due to the inexistence of a favourable international environment, like in Mexico in 1938. However, similarly to the previous case, Brazil is within the top 5, where the US exports its oil. The top five destination countries of US total gross petroleum exports, export volume, and share of total petroleum exports in 2019 were Mexico—14%; Canada— 12%; Japan—7%; South Korea—7%; Brazil—6%.
According to some US scholars such as Fitch, the US military had long been influencing LA militaries, in which the 1960s was at its highest total of US military aid. They affirm that ideological influence is defined as impacts on Latin American officers' attitudes, values, and belief systems, which lead them to behave differently than they would have without those impacts. In this view, the effects of US military assistance programs are indirect and long-term (Fitch, 1993: 16).
4.2.2 Latin American perspective
Analysing the creation of the Brazilian oil company in 1953 and its relationship with the US during the 20th century through the theory of the Brazilian Moniz Bandeira as well as other Latin American (LA) authors, the main measures that are useful are according to the theory of Imperialism but from a LA perspective. Thus, factors such as foreign interventions; Political Affinity; Opposition to nationalist governments and the overall geopolitical interplay are key to apply the theory in the Brazilian case. Similar to the previous theory, the following also applies: number of oil conflicts in Latin America during the nationalisation; percentage of GDP expended on armaments; Absolute amount of Brazilian oil imported each year to the US; Militarism and military bases in regions close to oil supplies; Attack on Brazil; Production of oil compared to other energy sources, analysis of speeches by leaders during the creation of the company. Since QCA is suitable for different data analysis methods, I am using databases and speeches from key people during the nationalisation.
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As previously discussed, oil production and consumption have increased continuously since the 1950s, when the national oil company was created, and even more with the recent discovery of vast oil reserves in 2006. During the II World War, and in the 1950s, Brazil already was a key country for the US concerning supplying natural resources and geopolitical location (Bandeira, 2008). Brazil supplied the United States with agricultural products, rubber, manganese, iron and other strategic minerals. Nevertheless, its position in the subcontinent, South America, was of greater geopolitical relevance thanks to the immense territorial space, resources and the fact that it had borders with all countries in the region (except Chile and Ecuador) (Bandeira, 2008: 12). In addition, Brazil supplied the US with military bases in the country's northeast region, in a strategical geographical area to US military investments during the war. Right after the US victory, the ideological influence in LA started. Through Art. 52 of the San Francisco Charter, the United States reaffirmed the Monroe Doctrine, reserving the right to unilaterally deal with issues that might eventually arise in Latin America without submitting to a possible veto in the Security Council of the UN (Ibid, 2008: 13).
Right before the nationalization of Brazilian oil, Brazil and the US participated in a commission (based on the Truman Doctrine) called Brazil-United States joint commission (CMBEU) in 1951, in which the main goal was to assist Brazil in the development of its economy. At that time, Vargas' nationalist position on oil issues, with the submission of the bill regarding the nationalization of oil and the creation of Petrobrás in December 1951, and the change in the profit remittance law in January 1952, were considered hostile to the North Americans and corroborated for the end of the CMBEU (Skielka, 2020: 56425). Nevertheless, oil contributed to only 10% of Brazilian energy expenditure during that period, and its use in Brazil was relatively low (Martins, 2015).
Concerning military bases, percentages of GDP expended on armaments as well as conflicts during the creation of the Brazilian oil company in 1953, it is noteworthy that the US do possess large military bases in South America, especially in Colombia, Peru and Ecuador. US military presence in South America enables it to exert strong political and 41
ideological influence and contributes to its goal of regional leadership and control (Figueira: 2018). Around 38% of US global trade takes place with countries in the southern hemisphere, 34% of the oil imports come from the region, and two-thirds of the ships transiting the Panama Canal are destined for US ports (Bandeira, 2008: 31). Washington's main interest, among other things, in the Andean states are the energy sources that exist there and the guarantee of oil supplies from Ecuador and Colombia, which are currently the third-largest oil exporter to the United States among the Latin American countries, second only to Venezuela and Mexico (Ibid, 2008: 21). Also, the US, with control of the seas and space, never ceased to have warships in the international waters of South America, although the IV Fleet, created in 1943 during World War II, had been officially extinct in 1950 (Ibid, 2008: 31).
Examining the leaders' speeches during the company's creation (Petrobrás), a solid ideological divide is noticed, including beliefs concerning critical organizations. The following are fragments of a few speeches of leaders and journals in 1948:
allowing our oil to fall into the hands of foreigners or foreigners camouflaged in nationals is tantamount to handing potential enemies the best weapon of our defence and security, military and economy (Arthur Bernardes). it is a crime against our country, an attack and a threat to national existence, given the disastrous examples of other countries, to hand over to the foreign trusts the exploration and exploitation of Brazil's oil wealth (General José Pessoa).24
Nationalist ideologies is present during the creation of the company through the inspection of Varga's speech and his last suicide speech:
The Brazilian government and people want the cooperation of the initiative foreign in the country's economic development but prefer reserve the oil field to the national initiative (...). faithful then to the nationalist spirit of the current oil legislation, this will be a genuinely Brazilian company, with capital and administration nationals.25
24 Source: Ibid, 2004. My own free translation.
25 Vargas, 1954. 42
I wanted to create national freedom in the potential of our wealth through Petrobras, as soon as it starts to work, the wave of unrest builds26. The discussion of the nationalization of the oil involved, in addition to an ideological conflict over the best alternative to solve the oil problem in Brazil, a symbolic struggle over the image of the Vargas program as a “nationalist solution” to the oil problem (Martins, 2015:421).
Despite these speeches from 1948, the ideological divide continues until the present day, especially when Petrobras was created in 1953, which shows how the reality of international affairs and ideological beliefs influenced the company's creation, which culminated with the suicide of Vargas in 1954. The US government's response to the monopoly of the Brazilian company in 1953, shortly after Vargas suicide, through the US ambassador at the time, was to invite the then next Brazilian president, Café Filho, to the United States. According to Wall-Street Journal at the time (1954),
not only would foreign investors find a cordial welcome in Brazil in the months to come, but also the new president could" open up the possibility of investments of foreign interests in the oil and electricity industries (Miranda, 2004: 377)
Analysing trade relations between Brazil and the US since the 1930s, changes are significant, especially with the decline of British influence and the takeover by US markets. Ideological preferences and fights also had an impact on trade relations. As a Brazilian scholar (Moura) affirms,
In Latin America the interregnum of 1919-1939 was characterized by a decline in British influence and a growth of German and North American influence. From the ideological point of view, three main currents – liberalism, fascism and socialism – fought for control of the hearts and minds of the Latin American peoples (…) in a time of radical political polarization, ideological affinities or similar economic policies tended to be seen as political alignments on the international stage (Moura, 2013: 48).
Thus, US trade relations with Brazil and the Latin American region were dependent on the reality of the post-1929 crash, especially with the emerging fears of the ideological,
26 Getúlio Vargas' testament letter is a document addressed to the Brazilian people written by Getúlio Vargas hours before his suicide, on August 24, 1954. 43
authoritarian governments in Europe. Therefore, studying the Brazilian nationalist ideology from a LA perspective, through the theoretical understanding of Imperialism theory, seems to be a good starting point in broadening the issue and catching up on the nuances of the period. Table 3 below shows the coding scheme from the speech analysis, being either positive or negative regarding the nationalisation process.
Table 3: Using the coding scheme from QCA (table made by the author)
Negatively: Positively: Brazilians’ perception of US presence in Brazil. Perception and description Perception and description of US identity, existence or of US identity, existence or actions towards Brazil actions in Brazil during the during the nationalisation in oil nationalisation in unfavourable terms. favourable terms.
This group negatively This group positively Brazilians' perception of perceive the Brazilian oil perceive the Brazilian oil their oil nationalisation. nationalisation process. nationalisation process.
4.2.3 Conclusion
With the Brazilian case and the oil company creation in 1953, the Imperialism theory might not be necessarily the best theoretical explanation to understand how the US government reacted during the Brazil oil company creation. This unsuitability is because, among other reasons, the US did not intervene nor reacted directly to interfere in the oil issue, but mostly indirectly. With the onset of the new foreign policy known as the “good neighbour policy” during the beginning of the 1930s, the US could abandon its policy of interference and, above all, of military intervention since new framework relations and guidelines with LA
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countries were implemented (Moura, 2013: 50). Still, understanding the ideological underpinnings from Roosevelt’s and Vargas governments is a helpful starting point to grasp the oil problem. Washington did not employ armed force against Latin American countries as a “big stick” or in terms of “dollar diplomacy”. However, it used other instruments of political and economic pressure to attain its goals (Ibid, 52). The perspectives coming from both LA authors and North America provided an insightful understanding of the issue. Varga’s choice of a more pragmatic nationalist ideology, mainly through the creation of Petrobrás (among other actions), happened because of a more favourable international environment. Like the Venezuelan case, as we will see, LA authors emphasise the ideological and geopolitical interferences of the US. In contrast, North American (NA) studied the issues from a US security point of view. However, Chomsky and Parenti’s studies move closer to Bandeira and Fiori’s perspective on the relevance of geopolitics and ideologies.
4.3 Venezuelan Case: Contextualization
As an oil nation, Venezuela was seen as having two bodies, a political body made up of its citizens and a natural body made up of its rich subsoil. By condensing within itself the multiple powers dispersed throughout the nation’s two bodies, the state appeared as a single agent endowed with the magical powers to remake the nation (Coronil, 1997: 4)
Throughout most of the 20th century, Venezuela had peaceful relations with the US. The latter imported without barriers the oil of the South American country. The bilateral relations were based on a unique partnership in which one of the promises was the strategic importance of Venezuela within the hemispheric context as a trustworthy partner and supplier of oil (Mignone; Costantini, 2020). However, bilateral relations between Venezuela and the USA maintained a pattern of veiled subordination. The first country should essentially play its role of supplier of oil to the second and import the remaining majority of the goods needed by its population. Furthermore, throughout the 20th century, since Venezuela discovered its oil reserves, it has been growing economically at different rates. The country has often dealt
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with significant crises, especially during the beginning of the 21st century. Shortly after Hugo Chávez’s victory for the presidency, “cordiality” relations declined with the United States, which began to find it more difficult to impose its interests in Venezuela (Nunes, 2019).
Unlike previous Venezuelan presidents, Hugo Chavez policy widely appealed to the impoverished masses. He reached power under an electoral platform of radical change, which would become self-styled as the “Bolivarian Revolution” (Andrade, 2020: 6). Many scholars believe that Chavez was a polarizing figure since his political views and ideologies were defined against a specific policy. In the mid-2000s, Chávez began to expand his reach, emphasizing his ‘socialism of the twenty-first century” (Kruijt, 2017). As an example, by 2006, Chavez had signed oil deals favourable to Cuba and had accepted the influence of Cuban advisors (in a time when the U.S. had still international trade embargos against Cuba). Nevertheless, there is still a tight international embargo on Cuba strengthened during Trump’s administration. Chavez had also begun more aggressive policies of wealth redistribution.
Despite being a military himself, Hugo Chavez had a left-wing political ideology and affinity in a region where most military are generally perceived as within the bureaucratically autonomous and politically interventionist military (right-wing). Still, Chavez himself also attempted an (unsuccessful) coup in 1992 to gain power. Due to this political-ideological view, Venezuelan President Nicolás Maduro and his predecessor Hugo Chavez have used harsh rhetoric against the United States and their ‘imperialism’ in the Americas. Not only, but most importantly, Chavez started to claim sovereignty over the Venezuelan oil reserves, and the US-Venezuela relationship changed. In response to these two developments, the U.S government has imposed extensive economic sanctions (Brown, 2020).
Some analysts – such as Brown – say that the Venezuelan relationship with the US turned worse after an attempted coup in 2002 backed by the Bush administration. To make matters worse for the US., during Chavez's government, the relation with Cuba received significance increasingly, as already mentioned. Cuba's president at the time, Fidel Castro, helped improve Venezuela's education and health sectors and the provision of military and
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intelligence officials in exchange for oil (Ibid, 2020). Nonetheless, after the failed attempted coup by the US, Chavez's government managed to find stability because, among other reasons – such as the support of the Venezuelan citizens towards Chavez's administration –, the Venezuelan government benefited from an increase in oil prices from an average of $ 19.3 per barrel in 1999 to $ 99.7 per barrel in 2008 (Mignone; Costantini, 2020).
By the time Nicolás Maduro entered power in April 2013 (with a difference in the votes against the opposition candidate of 7,587,579 votes against 7,363,980), Venezuela had faced severe economic problems, mainly because of oil prices had dropped in 2014 and because of the devaluation of the Bolivar currency. On this account, inflation rose, GDP plummeted, and prices of basic daily necessities began to soar. To maintain its position, Maduro replaced judges in the supreme court with those loyal to him, created a new National Constituent Assembly to re-write the Constitution in his favour, and continuously imposed military measures to suppress the opposition (Brown, 2020: 30). Internal protests in Venezuela increased during 2015, and according to some, these protests arose from the middle and upper-class neighbourhoods of Venezuela (Mignone; Costantini, 2020). Nonetheless, to respond to Maduro's economic and political actions, the US imposed severe economic sanctions on Venezuela.
Apart from the fact that Venezuela possesses immense oil wealth (which would explain the interest in the dynamics of world hegemonic powers, such as the United States and Russia), Venezuela has also been through its own “culture war”, and this also forms part of the political problem (and ideological). In other words, it is a conflict between internal social groups, who dispute the dominance of their views, beliefs, and practices. Mainly, for this reason, nationalists’ symbols – such as flags, banknotes etc – have become micro-cosmos of Venezuela’s larger confrontations: populism versus elitism, socialism versus capitalism, and authoritarianism versus democracy (Andrade, 2020; 17).
Finally, several American governments have implemented economic sanctions due to this international political conflict with the US. As we will see, sanctions have occurred under
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the presidencies of George W. Bush, Barack Obama and Donald Trump. Particularly during the Obama administration, to justify the different sanctions performed during Maduro’s government, he implemented law and targeted those who undermine democracy, violate human rights, limit the freedom of expression and assembly, or participate in corruption within the government of Venezuela. Similarly, by the time Trump arrived in power, the sanctions increased. They began to target Nicolás Maduro, his supporters, and his financial resources, including PDVSA, Venezuela’s state-owned oil company (Brown, 2020: 31). Behind these sanctions was the attempt to cut off Maduro’s financial resources, and consequently, he would be forced out of power (regime change) (Ibid, 2020).
One of the main variables or perspectives to explain the Venezuelan case is the foreign influence because energy resources are highly strategic in global terms: the distribution of hydrocarbons can define the maintenance or expansion of a country's economic strength. As some researchers affirm, they are essential to maintaining the population's quality of life within nations. Therefore, the countries' oil supply is a security issue. The more a country consumes oil and natural gas, the more likely its leaders will pay attention to this industry (Pinto, 2015: 34).
4.3.1 North American perspective
As in the previous case, the following items are analysed: Energy dependency and export; international and US. oil companies; statement by leaders related to US interventions and foreign presence, such as by Hugo Chávez and Roosevelt's administration. Further, the following are also used to test the theory of imperialism: percentage of oil imported and exported; production of oil; the number of oil conflicts in Latin America; percentage of GDP expended on armaments; Share of energy coming from oil; Absolute amount of Venezuelan oil imported each year to the US; Militarism and military bases in regions close to oil supplies; Attack on Venezuela; Production of oil compared to other energy sources.
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Venezuela possesses the largest oil reserves in the world. As mentioned, throughout most of the 20th century, it had peaceful cooperation with the US until Hugo Chávez in 1999. To understand why the country had a drastic change in ideologic view, the current section analyses the lenses of Imperialism theory, applying the respective measures. For example, there was a steep increase (1.15% in 1913 to 55.34% in 127 in US nominal investment in most Latin America, especially in Venezuela, from 1913 to 1929. Also, in 1929 over two-thirds of the Venezuelan exports were oil exports, which partially could explain the US oil import changing from Mexico to Venezuela during the end of the 1920s, especially after the Mexican expropriation in 1938.
Despite being heavily dependent on oil for its revenues, Venezuela has been decreasing its share in total energy consumption since the 1960s, from more than 90% to around 75%. There has been a relative decline in the share of primary energy coming from fossil fuels., despite still being the primary energy source by 28 Seen through the lenses of the imperialism theory, the energy cooperation and investments between Venezuela and the US are essential factors. Since Chávez's election in 1999, he repeated his critique of the US power, and he admitted his intent of liberation from the American imperialism. Due to the increase in ideological and political disagreements between Chávez's government and the US, some American oil companies, including Exxon Mobil and Conoco Phillips, abandoned the Venezuelan market at the beginning of the 21st century (Mignone; Costantini, 2020).
Figures relating to energy in Venezuela show a relative decline in energy consumption coming from oil and the notorious increase in hydropower since 1965, which might justify interest and intention in diversifying the energy source consump29. Possible explanations are related to political clashes and the downturn of international oil prices. The crisis worsened because of American sanctions, first in 2017 by limiting business exchanges between the United States and Venezuela and then, in 2018 by stopping the country from
27 Source: Rubio, Mar (2003)
28 Source: Our World in Data.
29 Source: Our World in Data (2020). 49
exporting oil to the U.S. Besides, Venezuela had to cope with a reduction in profit revenue from the unfavourable situation of the international oil market. The oil price has decreased from 100 $ in 2014 to around 30 $ in 2016 (Ibid, 2020). Domestically, a factor that pushes Maduro toward anti-Americanism is his ruling party, which is characterized by its leftist, anti-imperialist philosophy. Internal turmoil has forced Maduro to devote less attention to foreign policy, and especially to the complicated policy of balancing the United States (Romero et al., 2016: 9-10).
Graph 6: Energy consumption by source in Venezuela from 1965 to 2019.30
By examining qualitative and quantitative data through the lenses of the Imperialism theory, it can be concluded that it is a good starting point in understanding issues concerning the political and ideological clashes that started to occur by 1999. Parenti's argument, together with Chomsky, might be a proper theoretical perspective to comprehend how the US government reacted when Chávez was elected in 2020. Understood through the US hegemony perspective, the US influence in Venezuela and the coming of a left-wing
30 Source: Our World in Data. 50
government in the South American country also greatly affected the worsening of the crisis. The US then has used indirect means to destabilise the country (Ibid, 2020: 318). As Venezuela possesses the largest oil reserve globally, and since the 1930s US had peaceful relations importing their oil, by the time of Hugo Chávez arrival, this ideological and political equilibrium has drastically changed to a much more confrontational way. Therefore, since the end of the 1920s, Venezuela exported oil to the US, a situation that severely changed by the end of the 20th century. As it is noticeable, political ideologies, alliances and an international reality played a vital role in this change.
4.3.2 Latin American perspective
Analysing the Venezuelan export and energy relations – through the theory of the Brazilian Luis Moniz Bandeira among other LA authors – throughout the 20th century with the US and especially by the time of Hugo Chávez election, the main valuable measures are like the theory of imperialism but from a Latin American perspective. Similar to the Brazilian case, the following measures are advanced and applied to test the theory: the number of oil conflicts in Latin America during the nationalisation; percentage of GDP expended on armaments; share of energy coming from oil; the absolute amount of Venezuelan oil imported each year to the US; militarism and military bases in regions close to oil supplies; direct and indirect interventions on Venezuela; production of oil compared to other energy sources, analysis of speeches by leaders by the time of Chávez coming into government.
If we study the Venezuelan relations with the US since the 1920s, it is conspicuous that they used to have peaceful talks. In addition, the rise of the oil industry influenced Venezuelan nationalism, the relations with the United States and alliances that developed between classes (Salas, 2006). As already mentioned, by the time of Mexican oil nationalization in 1938, Venezuela acquired greater importance for the US in importing its oil. In other words, after the Mexican nationalization of oil, Venezuela achieved political and economic importance to the US and its oil companies. Therefore, opting not to deplete its strategic reserves, the US government considered Venezuela the "key-stone" of its "petroleum 51
war production needs outside of the US in WW II" (Ibid, 2006: 42). This and other facts indicate that both ideological and political conversion and cooperation were present since the starting of the Venezuelan oil production and the increasing American oil import shifting from Mexico to Venezuela at the end of the 1920s. Bandeira mentioned in one of his papers that US foreign policy has traditionally focused on promoting specific private interests. Its global strategy has always been determined by the interests and needs of its production process and its society, i.e., ensuring the sources of strategic materials, such as the oil fields in Venezuela (Bandeira, 2008: 14). As noted, the extremely antagonistic relations between President Hugo Chávez (1999) and the government of President George W. Bush did not affect trade between the two countries, not least because the US, on the other hand, is the main market for energy production in Venezuela (Ibid, 2008: 26).
Concerning trade relations, and more specifically relations to oil, graph 7 below showing US imports from Venezuela of oil from 1973 until the present days demonstrates a decline of imports since Hugo Chavez's election in 1999 and with a steeper drop in oil import with Nicolás Maduro's election in 2013. International oil embargos, the increasing clashing views of ideologies, politics and economics between the Venezuelan government and the US and falling off in a trusted political ally. Further, if we are to analyse speeches of the US and Venezuelan governments, they display increasing divides and conflicts in ideologies and political views. In one of these speeches, for example, concerning foreign interventions, Maduro affirmed, "Our country hopes to receive the solidarity and full support of the member countries of OPEC and its ministerial Conference, in the fight we are currently having against the illegal and arbitrary intrusion of the United States in the internal affairs of Venezuela" (Mignone; Costantini, 2020). By the same token, in one of Obama's order, he affirmed that Venezuela is "an unusual and extraordinary threat to the national security and foreign policy of the United States," (Munoz, 2015). Thus, by Hugo Chávez's passing in 2013, political relations between the two countries were possibly the most distant and antagonistic of the entire hemisphere (Romero et al., 2016).
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Graph 7: US Imports from Venezuela of crude oil 1973-2019 in thousands of barrels per day.31
Despite political and ideological differences, trade relations kept somewhat within a stable development, mainly because neither Venezuela nor the US had much choice but to keep trading. As Romero and Corrales affirm, the relationship between the United States and Venezuela during the Chávez years supports one of the most important theories of International Relations: neoliberal institutionalism. The two countries’ prioritization of economic over political concerns illustrates the concept that trade can restrain animosity. This is particularly the case, given that Venezuela and the United States are both dependent on oil (Romero et al., 2016: 5).
During the Chávez mandate, at the beginning of the 20th century, the US tried to overthrow the Venezuelan government indirectly. Bandeira affirmed that in late 2001 the government of George W. Bush sought to take advantage of the growing chaos in Venezuela to unite opposition forces and provide them with planning and intelligence resources to convert the oil industry workers' strike into a movement to overthrow Chávez of the presidency, even though this meant a break with constitutional legality and the democratic regime (Bandeira, 2003). Both directly and indirectly, US interventions were present during the Chávez government, according to Bandeira. For example, in 2001, the US channelled
31 Source: U.S Energy Information and Administration. 53
hundreds of thousands of dollars to US and Venezuelan groups adverse to President Hugo Chávez, including CTV, through the National Endowment for Democracy, an agency created by Congress, which quadrupled increased donations, raising its budget to Venezuela and more than $877,000 as conditions in Carcasses worsened (Ibid, 2003: 6). During that period, around 15% of US oil imports were coming from Venezuela, which was greater than Saudi Arabia. Hence Venezuela had become crucial to US energy security (Ibid, 2003). As mentioned, direct interventions were also present during Chávez presidency because the US not only encouraged and financed the coup d'état against Chavez, but US military personnel also participated directly in its execution and support for the Venezuelan militaries that were against Chávez (Ibid, 2003).
The discourse analysis, coming both from Venezuela and the US, shows the antagonistic division of both countries. The US publicly backed the opposition in Venezuela by urging President Chávez to call early elections the only way to peacefully and politically resolve the crisis (Ibid, 2003: 13). During Bush's administration, the US government spokesperson said, " The United States is convinced that the only peaceful and politically viable path to moving out of the crisis is through the holding of early elections”. According to Bandeira, the US denied every accusation of intervention. The White House Press Secretary Ari Fleischer mentioned on April 16, 2002:
El prolongado resentimiento que causó en algunos venezolanos el régimen cada vez más antidemocrático de Chávez movió a centenares de miles de manifestantes desarmados a reunirse en la capital venezolana el 11 de abril para llevar a cabo una protesta pacífica.32
32 Source: Embassy of the United States, Caracas, Venezuela, Informative and Cultural Office - Press Bulletin - The US response concerning the Venezuela crisis was appropriate, say senior officials (Initial response was based on the best information available). By Lauren Monsen, Washington News Service Writer April 19, 2002. Free translation: The long-standing resentment of some Venezuelans by the increasingly undemocratic Chávez regime prompted hundreds of thousands of unarmed protesters to gather in the Venezuelan capital on April 11 for a peaceful protest. 54
Further, according to a Brazilian and Argentinian newspaper, the US army helped and backed part of the Venezuelans against Chávez33. Likewise, despite a solid political- ideological divide, as Bandeira and other LA scholars show, the Venezuelan percentage of GDP spent with armaments has been steadily falling since 1960 (before that, data on that specific measure was not readily available). It went down from a bit more than 3% to less than 0.5% in 2017.34
4.3.3 Conclusion
The analysis of the Venezuelan case with the coming of Chávez and Maduro governments registers that ideological and political affinity plays a vital role in the decision to intervene (directly or indirectly) in the country. North American perspective varied greatly from the ones coming from Bandeira, Fiori and other LA researchers. The latter put greater emphasis on US interventions and geopolitics, whereas the formers come mostly from the US security point of view. Contrary to the Brazilian case, Venezuela ideological approach towards the US by the end of the 20th century was much more decisive. Unlike the Mexican case in 1938, in which international reality was favourable to the company's nationalisation, the coming to power of a left-wing government during the beginning of the 21st century was not accompanied by a welcoming foreign reality. The 1990s in the Latin American region was the hegemony of the Washington35 free-market policies, which is the opposite of
33 Denunciation links US to coup plotters - Attaché accused of anti-Chávez articulation”, Jornal do Brasil, Rio de Janeiro, 19.04. 2002. “The crisis in Venezuela: revelation in Caracas – Implicating US officials in the coup against Chávez”, La Nación, Buenos Aires, 23.04.2002. Campbell, Duncan – “American navy 'helped Venezuelan coup'”, The Guardian, London, 29.04.2002 (Bandeira, 2003).
34 Source: Stockholm International Peace Research Institute ( SIPRI ), Yearbook: Armaments, Disarmament and International Security.
35 The Washington Consensus refers to a set of free-market economic policies supported by prominent financial institutions such as the International Monetary Fund, the World Bank, and the U.S. The Washington Consensus recommended structural reforms that increased the role of market forces in exchange for immediate financial help. Some examples include free-floating exchange rates and free trade. Critics have pointed out that the policies were unhelpful and imposed harsh conditions on the developing countries (Agarwal, 2018).
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Chavez's views. Also, differently from the Brazilian case, the theory of imperialism, and especially the ideological understanding of Moniz Bandeira and Chomsky, for example, were all good departing points to a better understanding the complex and conflicting economic, political and ideological differences between Venezuela and the US starting in 1999. The theory of imperialism explains the logic as to why Chávez opposed every military intervention supported by the US and why Venezuela established close alliances with direct enemies of the United States.
5. Concluding Thoughts
The primary research goal of this study was: (1) To what extent can the theory of Imperialism explain two different reactions of the USA to oil nationalization processes in Brazil in 1953 and Venezuela in 1976-1999? To answer it, I have tested this theory from US and LA perspectives through empirical qualitative data. I have used QCA as a methodology to understand either their oil creation companies and the nationalization process. Besides, I better operated them in the empirical part through chosen factors – ideologies, national independence and a favourable international environment, with possible nationalisation process, which eventually lead to foreign interventions. I have also used different data and graphs. The answer to the question rests on the assumption that a nationalist ideology could have elicited US interventions, depending on the theoretical perspective and author. In general terms, LA scholars believe that the US had a more robust negative response to changing ideologies. At the same time, NA ones had more critical standpoints on nationalization tendencies in the region, which explained US concerns. As seen, the international reality during the 1950 and 1990 was different and played a role in it. Also, US adverse solid reactions to Brazilian and Venezuelan nationalization were appropriate to some US scholars given the security energy threat to US policies. Whereas for LA scholars, such as Miguel Salas and Bandeira, the excessive US response only demonstrated the heavy clout it had (and still has) on the region.
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Moreover, the investigation of the data in the empirical part shows that the US had an "offensive" political ideology regarding interventions in Brazil and Venezuela. The investigation results indicate that political ideologies were preponderant for interventions because that was the start of the Cold War. Besides, the thesis's results justly demonstrate that despite appropriate theoretical explanations to answer various oil, geopolitical and energy issues, the theory of imperialism could not convincingly answer the research question regarding the selected countries. As mentioned, the points of view from LA and NA varied greatly, but even within the NA perspectives, they equally varied, especially coming from Chomsky understanding of US geopolitics in Latin America. In some cases, the US has not responded (the nationalisation process) with more than offers to negotiate settlements. However, in other cases, the responses have included military intervention, economic sanctions, rhetorical threats, and aid suspension (Barrios et al., 2011).
The creation of the Brazilian national oil company materialized in 1953 during the cold war. The theory of imperialism is not necessarily the best theoretical framework to comprehend US reaction and Brazilian reality at the time. Part of the indicators of this theory – such as the presence of foreign companies and % of oil imported and exported, for example – do not provide sufficient explanations to interpret the political-ideological reality at the time. The theory of imperialism could still prepare a pragmatic framework to perceive the dividing groups such as state nationalist technical groups against the US versus the Brazilian liberal wing during the 1950s, which intensified after the Brazilian participation in WWII. Also, the theory of imperialism coming from a LA perspective provided us with an exciting insight into how LA scholars perceive US interventions in Venezuela and Brazil.
The imperialist theoretical framework was an appropriate lens to apprehend the Venezuelan energy issue. The variables of the Imperialism within IR show the opposing principles and views between the US and Venezuela that intensified with Hugo Chávez in 1999. Liberalism with the Washington Consensus was the norm during the 1990s in Latin America, which partially explain why the US had a more offensive policy towards Venezuela.
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Also, the opposing ideological nationalism of Chávez vis à vis those of the US were sufficient causes to explain the belligerent reactions of the North American government.
The thesis had the aim to enhance the understanding of how international reality, ideological choices and the drive for national independence in Latin America influenced one another and provoked different reactions from the USA. The research demonstrated that favorable geopolitical circumstances from the perspective of the US could lead to interventions if the government opportunistically used the ideological public opinion to its benefit.. The oil nationalization processes, including the ideological choices, was dependent on the given international reality throughout. Hence, the universal variable among the countries studied is the interconnection with the international perceptibility, which could be acknowledged as both a dependent and independent variable. Given the answers to the research question in the empirical part through comparative and case studies and some content analysis, the thesis testifies that both goals were met and answered.
Nonetheless, I endorse further research by selecting other oil-rich Latin American countries, such as Ecuador or Guyana. After the results from this study, I also suggest that future work utilize contrasting methods and methodologies. By employing quantitative methods instead of solely qualitative, a prospective investigation could provide an important dimension related to the theme. Applying other theories related to energy and geopolitics may also help generate insights and strengthen future inquiry. Finally, considering the relations of other equally pivotal countries such as China or Russia vis à vis oil-rich Latin American states in the 20th century provide a contrasting perspective on the issues studied and would complement the study. The interdependence of domestic policies, the international environment and political choices should be further tested with a broader set of cases, historical circumstances, and issue areas relating to asymmetrical power relations.
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