Why Venezuela Can’t Be Like Colombia

By Allison Fedirka

 

In 2013, Nicolas Maduro succeeded Hugo Chavez as president of Venezuela. In the ensuing five years, Maduro relied on populism, much like his predecessor did, while driving Venezuela’s economy to ruin. And yet he secured a second term over the weekend.

Just next door is Colombia, a country that stands out in South America for not having had a left-wing populist leader in over three decades. It also has an economy poised to challenge Argentina as the second-largest on the continent. With all that Colombia and Venezuela share, geographically and historically, this divergence is striking.
 
The Paradox of Plenty
The Colombia-Venezuela border is one of the few places in South America without geographic barriers delineating national boundaries. To the north, they share a sliver of lowlands. Both have expansive shores along the Caribbean Sea. Just south, the Andes extend from Colombia into Venezuela. Below that, the Orinoco Basin stretches from southeastern Colombia into central Venezuela. Their geographic similarities create an expectation that they would have similar natural advantages and disadvantages.
 
Except that Venezuela has a lot of oil. The U.S. Energy Information Administration believes that at 307 billion barrels, Venezuela has the most reserves in the world. It funded the country’s economic development in the 20th century and into the 21st century. The oil business was so profitable that by the end of the 1920s, less profitable activities – even essential ones like agriculture – started to wither away. Today, the government depends on oil for about half its revenue.

More than that, the government depends on oil for its own popularity. When oil prices are high, as they were early in Chavez’s presidency, populist measures like high welfare spending are manageable. But when prices crash, they can bring down governments. The low prices of the ‘80s necessitated the austerity of the ‘90s, which Chavez capitalized on just as prices were rebounding. In mid-2014, just over a year after Chavez’s death (Maduro was his vice president), oil prices started to fall, and Venezuela has been unstable ever since.

Colombia was not blessed with Venezuela’s enormous oil reserves (though it has modest reserves of its own), something that forced the country to diversify.

To help industrialize the country, the government resorted to import substitution, a policy in which the government heavily subsidizes and protects domestic industries from more advanced foreign competition so that they can grow. Industrialization and, later, services became a large part of the Colombian economy, but unlike in Venezuela, they didn’t drown out other economic activities. In addition to its modest oil reserves, Colombia has some of the largest coal deposits in the world and arable land capable of growing cash crops like coffee. Furthermore, oil didn’t become lucrative for Colombia until the 1980s.

The absence of major discoveries in recent years has kept oil an important part of Colombia’s economy but never induced the government to abandon a more balanced approach to economic development.
 
Experiences With Colonialism
Besides their differences in natural resources, Colombia and Venezuela had vastly different experiences under Spanish colonialism, which shaped their respective visions for independence. Both Venezuela and Colombia were part of Spain’s New Granada colony. (And then, for a little over a decade, present-day Colombia, Venezuela, Ecuador and Panama formed the independent country of Gran Colombia.) In the latter half of the 18th century, Spain decided to divide its American holdings into smaller organizational territories to more efficiently govern and exploit the colonies. Venezuela was given more autonomy and military authority. And because Venezuela’s location makes it one of the first major points of contact with incoming ships on the Atlantic, it had more contact with Europe than other colonies. Colombia, meanwhile, was primarily used as a source of gold and other commodities bound for Spain. Its riches were heavily exploited, its outside interactions were more limited, and it had less autonomy than its neighbor to the east.

The initial fight for independence began with a military junta in Caracas and revolved around Simon Bolivar’s vision for a pan-American state. Bolivar’s political model combined monarchy, republicanism and federalism in an attempt to find the right balance between control, stability and unity. He feared that introducing too much liberty to uneducated masses would result in anarchy and thus believed in the necessity of a strong central authority. These were the views of a man raised in the Caracas elite. On the flip side, Colombia generally favored federalism immediately after independence, calculating that centralized control was too similar to the central control of Spain.

After independence, Colombia endured more than a century of disruptive competition between its liberals and conservatives. During a period known as La Violencia (1946-1958), political violence displaced the rural poor, who took up arms to try to defend themselves from constant aggression. These initial rural uprisings gave way to the Revolutionary Armed Forces of Colombia, or FARC, and started a domestic conflict that would last over 50 years. Since then, the Colombian government has focused primarily on bringing peace to the country. This is a cause that transcends political parties and therefore has stifled extremism and prevented left-wing populists from arising.

Venezuela was living with its own kind of violence. In its first decades of independence, various strongmen fought for the right to rule. This culminated in the dictatorship of Juan Vicente Gomez from 1908 until his death in 1935. The next 15 years featured a series of coup attempts as political activists tried to introduce democracy to the country. Democracy was finally established in Venezuela in 1958, and since then, the staying power of any government has been intricately linked to the performance of the economy, which essentially means oil prices.

Despite their comparable geography and similar origins, forces guided both Caracas and Bogota toward economic management and political structures that are very different from one another. Venezuela has been set in a cycle of boom or bust with its problems buried too deep – both in its history and quite literally underground. Meanwhile, Colombia’s need to bring about domestic political stability after decades of infighting and to seek a more measured approach to economic development has created a comparatively less volatile political and economic system.

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