Department of Political Science Chair of Geopolitical Scenarios and Political Risk Chronicle of a Catastrophe Foretold: The rise and fall of Venezuela through the path of oil Supervisor: Prof. Giuseppe Scognamiglio Candidate: Virginia Maria Resta Student: 637372 Co-supervisor: Prof. Angelo Taraborrelli ACADEMIC YEAR: 2019/2020 1 Table of contents Table of figures .................................................................................................................................................. 3 Introduction ..................................................................................................................................................... 5 Chapter 1: The oil factor during the 20th Century ....................................................................................... 9 1.1 Shaping Venezuela: from rural wasteland to petro-state .................................................................. 9 1.2 The Trienio (1945-1948) ...................................................................................................................... 12 1.3 Rise and fall of a dictator .................................................................................................................... 15 1.4 Let there be democracy ....................................................................................................................... 17 1.5 Saudi Venezuela and its demise .......................................................................................................... 22 Chapter 2: The Bolivarian Revolution ........................................................................................................ 27 2.1 The last Libertador and his revolution ............................................................................................... 27 2.2 The Constitution of the masses ........................................................................................................... 30 2.3 The Laws of discontent ....................................................................................................................... 32 2.5 Socialism of the 21st Century .............................................................................................................. 39 Chapter 3: The diplomacy of oil ................................................................................................................... 43 3.1 The international projection of Venezuela ........................................................................................ 43 3.2 Initiatives of South-South cooperation .............................................................................................. 47 3.3 The dawn of Latin American integration: ALBA ............................................................................ 52 3.4 Petro Caribe ......................................................................................................................................... 56 3.5 Assessing the financial aspects of ALBA and Petro Caribe ............................................................. 62 Chapter 4: The geopolitical implications of a crisis ................................................................................... 69 4.1 The political gridlock .......................................................................................................................... 69 4.2 The humanitarian concern for the people of Venezuela .................................................................. 76 4.3 Humanitarian aid for food and medical supplies ............................................................................. 80 4.4 The Venezuelan diaspora .................................................................................................................... 82 4.5 The impact of COVID-19 .................................................................................................................... 87 4.6 International Humanitarian Response for the region ...................................................................... 88 4.7 The economic catastrophe................................................................................................................... 89 4.8 The Venezuelan most valuable asset .................................................................................................. 93 4.9 The challenges of the Maduro government ....................................................................................... 95 4.10 The U.S sanctions system against Venezuela .................................................................................. 99 4.11 How U.S. Economic Sanctions affected the Venezuelan oil industry .......................................... 102 4.12 The Foreign allies of Maduro and their geopolitical game .......................................................... 105 Conclusions .................................................................................................................................................. 115 2 Bibliography ................................................................................................................................................. 119 Executive summary ..................................................................................................................................... 124 Table of figures Figure 1 Venezuela's oil output 1956-72 ...................................................................................................... 20 Figure 2 Inflation rate in Venezuela in 1989 ............................................................................................... 26 Figure 3 Main Missions launched by Chavez between 2003 and 2004 ..................................................... 38 Figure 4 Energy Cooperation Agreement of Caracas ................................................................................ 51 Figure 5 ALBA- TCP .................................................................................................................................... 52 Figure 6 Average oil prices 1994-2015 ......................................................................................................... 57 Figure 7Petro Caribe lines of Financing ...................................................................................................... 58 Figure 8 Petro Caribe joint ventures ........................................................................................................... 58 Figure 9 Petro Caribe Economic Zone Areas of Investment ..................................................................... 60 Figure 10 Oil booms in Venezuela................................................................................................................ 64 Figure 11 Dollars Inflows and Outflows in Venezuela ............................................................................... 65 Figure 12 Petro Caribe oil quotas and use .................................................................................................. 66 Figure 13 Indicator of democratic freedom in Venezuela in 2020 ............................................................ 77 Figure 14 Homicide rate in Venezuela ......................................................................................................... 78 Figure 15 Displacement of Venezuelan in Latin America and the World ................................................ 82 Figure 16 Proven crude oil reserves ............................................................................................................. 90 Figure 17 Venezuelan exports in 2018 ......................................................................................................... 91 Figure 18 Inflation rate Venezuela ............................................................................................................... 92 Figure 19 Crude oil prices in 2020 ............................................................................................................... 98 Figure 20 Venezuelan oil production and US imports ............................................................................. 103 3 To mom and dad, and everything they have done for me. To Carlo, my rock. 4 Introduction As of today, Venezuela is the country with the largest proven oil reserves of the world. Yet, the economy of the country has slowed down to unprecedented levels, the oil sector is decaying, and refineries stopped working. Standards of living are crippled by food and energy shortages. Around 5 million of Venezuelan citizens fled the country in recent years, hoping to find a shelter and better living conditions in neighboring counties, as well as in the United States and in Europe. How did the Venezuelan context become so tragic? The research argues that the current situation is the consequence of a deep- rooted, systemic crisis that finds its origins at the beginning of the 20th century, right after Venezuelan oil reserves were discovered. As a matter of fact, the long-term role of the oil industry in structuring the institutional structure of the country will be analyzed, underlining the determining influence that the presence of oil has deployed along the history of Venezuela. The course of history and events will be traced following the oil fil rouge and discerning how the valuable resource has been the cornerstone of policies and institutional processes that have shaped the development of the country and slowly paved the path to what it is today. The first chapter of this work