In 1939 ANCAP's refinery-- emasculated shorstly after birth, as we have seen, but still an example of defiance to cartel pressure-- was operating successfully. The chief of Brazil's Conselho Nacional del Petroleo, General Horta Barbosa, went to Montevideo and was exhilarated by what he saw: the Uruguayan refinery had paid off almost all of its installation costs in a single year. Thanks to the efforts of Barbosa and the enthusiasm of other nationalist military men, the Brazilian state enterprise was able to get under way in 1953, to the cry of "The petroleum is ours!" Today Petrobras is the biggest concern in Brazil.17 It explores, extracts, and refines Brazilian petroleum. But Petrobras was also emasculated when the cartel appropriated two of its big sources of income. First, the distribution of gasoline, oils, kerosene, and various fuels, an enormous business which Esso, Shell, and Atlantic manage effortlessly by telephone and so profitably that it attracts more U.S. investment than anything in Brazil except the automobile industry. Second, the lush petrochemical industry, which the Castelo Branco dictatorship denationalized a few years ago.
Recently the cartel started a loud campaign to take the refining monopoly away from Petrobras. Petrobras's defenders recall that before 1953, when the Field was wide open, private industry paid no attention to Brazilian petroleum,18 and remind the short-memoried public of an episode that illustrates the goodwill of the monopolies. In 1960 Petrobras assigned two Brazilian technicians to head up a survey of the country's deposits. As a result of its reports, the little Northeastern state of Sergipe took the lead in 161
Petroleum production. Shortly before, in August, U.S. technician Walter Link, who had been chief geologist for Standard Oil of New Jersey, had received $500,000 from the Brazilian state for a pile of maps and an extensive report belittling the Sergipe deposits as "unviable": until then they had been rated "Grade B." and Link demoted them to "Grade C"; it was subsequently established that they were Grade A.19 According to Harvey O'Connor, Link was said to have worked the whole time as a Standard Oil agent, intending in advance not to find any petroleum so that Brazil would remain dependent on Imports from the Rockefeller affiliate in Venezuela.20
Likewise in Argentina, the foreign concerns and their native echoes have always insisted that the subsoil contains little petroleum, although investigations by technicians of Yacimientos Petroliferos Fiscales (YPF), the state organization, have established beyond doubt that deposits exist beneath almost half of the national territory and the Atlantic coastal shelf. Each time talk of the Argentine subsoil's poverty becomes fashionable, the government makes a new concession to some member of the cartel. YPF has been the target of continuous and systematic sabotage since its inception. Until a few years ago, Argentina of the last historical settings for the interimperialist conflict between declining Britain and the ascendant United States. Cartel agreements did not prevent a dispute, sometimes involving violence, between Shell and Standard Oil over Argentina's petroleum: the coups d'etat that have followed one after the other in the past forty years provide some eloquent coincidences.
The Argentine Congress was ready to pass the oil nationalization law on September 6, 1930, when Jose Felix Uriburu's barracks Putsch ousted nationalist leader Hipolito Irigoyen from the presidency. The Ramon Castillo government fell in June 1943 when it was signing an agreement to promote oil extraction by U.S, capitalists. In September 1955, Juan Domingo Peron went into exile when the Argentinian Congress was about to approve a concession to Standard Oil of California. Arturo Frondizi set off more than one acute crisis in the three branches of the armed services by announcing that the country's entire subsoil would be put up for bids by concerns interested in extracting petroleum.
In August 1959 the offer was called off for lack of bidders. The plan was promptly revived and again called off in October 1960. Frondizi made various concessions to U.S. members of the cartel, and 162
British interest-- decisive in the navy and inone political group in the army--
played a part in his fall in March 1962. Arturo Illia annulled the concessions and was overthrown in 1966; Juan Carlos Ongania's hydrocarbons law the following year showed the United States to be the final victor in the internal struggle.
Petroleum has not only sparked coups d'etat in Latin America: it also set off a war--the Chaco War of 1932-1935--between South America's two poorest peoples. Rene Zavaleta called the mutual massacre of Bolivians and Paraguayans "the war of the naked soldiers."21 Louisiana Senator Huey Long shook the United States on May 30, 1934, with a violent speech accusing Standard Oil of New Jersey of provoking the conflict and of financing the Bolivian army so that it would appropriate the Paraguayan Chaco on its behalf.
It needed the Chaco--which was also thought to be rich in petroleum--for a pipeline from Bolivia to the river. "These criminals," Long charged, "have gone down there and hired their assassins."( Long took off the adjectival brakes regarding Sandard Oil, calling it "criminal... evil ...wicked ... domestic assassin ... foreign assassin international nonspirator... a gang of rapacious highwaymen and thieves... a bunch of vandals and thieves."22) At Shell's urging, the Paraguayans marched to the slaughterhouse: advancing northward, the soldiers discovered Standard Oil's perforations at the scene of the dispute. It was a quarrel between two corporations, enemies and at the same time partners within the cartel, but it was not they who shed their blood. In the end Paraguay won the war but not the peace. Spruille Braden, the notorious Standard Oil agent, chaired the negotiating commission which retained for Bolivia and for Rockefeller thousands of square miles claimed by the Paraguayans.
Close to the battlefields of that war lie the oil wells and great natural gas deposits which Gulf Oil, the Mellon family concern, lost in Bolivia in October 1969. "The days of indignity for Bolivia are ended," cried Alfredo Ovando in proclaiming nationalization from the Quemado Palace balcony. Two weeks earlier, before he had taken power, Ovando had sworn to a group of nationalist intellectuals that he would nationalize Gulf; he had drafted the decree, signed it, and kept it undated in an envelope(Five months earlier, Rene Barrientos's helicopter had tangled fatally with telegraph wires in the Arque ravine. Human imagination could not have conceived of a more perfect death. The helicopter was a personal gift from the Gulf Oil; the telegraph wires belong to the state. Burned up along with Barrientos were two suitcases full of money he was taking to distribute among the peasants, as well as some machine-guns which 163
began spraying bullets around the flaming helicopter, preventing anyone from coming to the rescue as the dictator was roasted alive.)
In addition to decreeing nationalization, Ovando annulled the Petroleum Code, called the "Davenport Code" in homage to the lawyer who drafted it in English. In return for accepting it Bolivia had obtained a U.S. loan in 1956; on the other hand, Eximbank, private New York bankers, and the World Bank had always turned down requests for credit to develop YPFB, the state petroleum organization. The U.S. government always makes common cause with private oil corporations. (Examples abound in recent and remote history, Irving Florman, U.S.
ambassador to Bolivia, reported to the White House's Donald Dawson on December 28, 1950: "Since my arrival here I have worked diligently on the project of throwing Bolivia's petroleum industry wide open to American private enterprise, and to help our national defense program on a vast scale." He went on: "I knew that you would be interested to hear that Bolivia's petroleum industry and the whole land is now wide open for free American enterprise. Bolivia is, therefore, the world's first country to denationalize or to have nationalization in reverse, and I am proud to have been able to accomplish this for my country and the administrator."23) Under the Code, Gulf received a forty-year concession to the country's richest fields. The Code provided for ridiculously low state participation in the companies' profits: for many years, a mere 11 percent. The state became a partner in the concessionaire's expenses but had no control over the spending, making this the last word in giveaways: the state took the risks, Gulf took none. In the "letter of intention" sig
ned by Gulf at the end of 1966, during the Barrientos dictatorship, it was even provided that in joint operations with YPFB, Gulf would recover 100 percent of the capital it invested in exploration of an area if petroleum was not found. If it was found, expenses would be recovered through later exploitation, but meanwhile would be charged to the state organization as liabilities. And Gulf would appraise the expenses to its own taste. 24 In this same "letter of intention," Gulf appropriated ownership of gas deposits which had never been conceded to it--the Bolivian subsoil contains much more gas than petroleum.
The parry was not yet over. A year before Ovando expropriated Gulf in Bolivia, Velasco Alvarado had nationalized the deposits and refinery of Standard Oil of New Jersey's Peruvian affiliate, International Petroleum (IPC).
Velasco had taken power at the head of a military junta and on the crest of a political scandal: the Belaude administration had "lost"
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the last page of the Talara agreement between the state and IPC. The vanished page contained the guarantee of the minimum price to be paid by IPC for crude petroleum produced at its refinery. The scandal did not end there. It was also disclosed that the Standard Oil subsidiary had swindled the state out of more than a billion dollars in unpaid taxes and other kinds of fraud and corruption over half a century. The head of IPC had had sixty interviews with President Belaunde before reaching the agreement that sparked the military rising; for two years the U.S. State Department had suspended all aid to Peru while the negotiations proceeded, were broken off, and reopened.( When the scandal broke, the U.S. embassy failed to observe a prudent silence. One of its officials even said that no original copy of the Talara agreement existed.25) There was hardly time to restore the aid since the submissive president's surrender seated his fate. When the Rockefeller concern protested before a Peruvian court, people threw coins in its lawyers' faces.
Latin America is a Pandora's box; the torture subcontinent's capacity to spring surprises is never exhausted. In the Andean region, military nationalism has come impetuously to the surface like a long-hidden subterranean river. The same generals who today are pursuing a contradictory but well-aimed policy of reform and patriotic affirmation were only yesterday mowing down guerrilleros. Thus many of the banners of the dead have been picked up by those who killed them. In 1965 the Peruvian officers were spraying guerrilla zones with napalm, their know-how supplied by IPC at the Las Palmas air base near Lima. The corporation could not foresee what lay in store for it.
VULTURES OVER LAKE MARACAIBO
Though its participation in the world market has dwindled by half in the past decade, Venezuela is still the top petroleum exporter. Almost half the profits U.S. capitalists take from Latin America come from Venezuela. One of the world's richest countries, it is also one of the poorest and most violent. It boasts of Latin America's highest per-capita income and most complete and up-to-date highway network, and no country consumes as much Scotch whiskey per inhabitant. Immediately
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exploitable iron, petroleum, and gas reserves in its subsoil could multiple by ten the wealth of every Venezuelan; the population of Germany or England could fit into its enormous virgin lands. In half a century, oil rigs have extracted an income double the resources of the Marshall Plan. Since the first well blew, the population has multiplied by three and the national budget by 100, but most of the people scramble for the plush minority's leavings, still as poor as the country depended on cacao or coffee. The capital, Caracas, has grown 700 percent in thirty years: the old city of airy patios, central and silent cathedral is covered with skyscrapers as Lake Maracaibo covered with oil wells. Today it is a supersonic, deafening, air-conditioned nightmare, a center of oil culture that might pass as the capital of Texas. Caracas chews gum and loves synthetic products and canned foods; it never walks, and poisons the clear air of the valley with the fumes of its motorization; its fever to buy, consume, obtain, spend, use, get hold of everything leaves it no time to sleep.
From surrounding hillside hovels made of garbage, half a million forgotten people observe the sybaritic scene. The gilded city's avenues glitter with hundreds of thousands of late-model cars, but in the consuming society not everyone consumes. According to the census, half of Venezuela's children and youths do not go to school.
Every day Venezuela produces 3 .5 million barrels of petroleum to move the capitalist world's industrial machinery, but four-fifths of the concessions owned by Standard Oil, Shell, Gulf, and Texaco are untouched reserves and over half the value of the exports never returns to the country. Creole (Standard Oil) publicity brochures point with pride to the corporation's Venezuelan philanthropies much as the Royal Guipuzcoan Company proclaimed its own virtues in the eighteenth century; the profits milked from this wonderful cow, in proportion to capital invested, are only comparable with those obtained by old-time slave merchants and pirates. No country has yielded as much for world capitalism in so short a time: the wealth drained from Venezuela, according to Domingo Alberto Rangel, exceeds what the Spaniards took from Potosi or the English from India. Some estimates put the real profits of Venezuelan oil concerns at 38 percent in 1961 and 48 percent in 1962, although the profit rates announced in their balance sheets were 15 percent and 17 percent respectively. The difference is attributable to the juggling of accounts and to hidden transfers. In the complex 166
mechanism of the oil business, with its multiple simultaneous price systems, it is hard to estimate the profits hidden behind the artificial reduction of the price of crude oil-which from well to gasoline pump always circulates through the same veins--and the artificial raising of production costs which include fancy salaries and inflated publicity expenditures. But by official figures, Venezuela, far from receiving new investments from abroad, has experienced systematic de-investment in the past decade. It suffers an annual bloodletting of more than $700 million, "convicted and confessed" as "interest on foreign capital." The only new investments are provided by the country itself. Meanwhile, oil extraction costs are falling sharply as the companies use less labor. From 1959
to l962 alone, the work force was cut by 10,000; somewhat more than 30,000
workers remained active, but by the end of 1970 petroleum only employed 23,000. Yet production has greatly increased in the decade.
Growing unemployment sharpened the crisis in the Lake Maracaibo oil camps. The lake is a forest of towers. Within these iron structures the endlessly bobbing pumps have for half a century pumped up all the opulence and all the poverty of Venezuela. Alongside, flames lick skyward, burning the natural gas in a carefree gift to the atmosphere. There are pumps even in houses and on street corners of towns that spouted up, like the oil, along the lakeside-towns where clothing, food, and walls are stained black with oil, and where even whores are known by oil nicknames, such as "The Pipeline," "The Four Valves," "The Derrick," "The Hoist." Here clothing and food cost more than in Caracas. These modern villages, of cheerless birth but quickened by the euphoria of easy money, have discovered that they have no future. When the wells die, survival becomes something of a miracle: skeletons of houses remain, oily waters lick abandoned shores and poison the fish. Mass firings and growing mechanization bring misfortune, too, to cities that live from exploiting still-active wells. "Oil has come and gone for us here," people were saying in Lagunilllas in 1966. "It would have been better for us if these machines had never come... " Cabimas, which for fifty years was Venezuela's biggest oil source and brought so much prosperity to Caracas and the oil companies, does not even have privies. It has two asphalt streets.
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The euphoria began in the 1920s. Around 1917 oil coexisted in Venezuela with traditional latifundas, those enormous extensions of thinly populated or idle land where hacendados kept up production by whipping their peons or burying them alive up to the waist. At the end of 1922 the La Rosa well started gushing, 100,000 barrels a day, and the petroleum orgy was on. Lake Maracaibo sprouted rigs and derricks and was invaded by helmeted men
; peasants swarmed in to build plank-and-oilcan huts on the bubbling ground and offer their muscles to petroleum. Plains and forests resounded for the first time with Oklahoma and Texas accents, and in the bat of an eye seventy-three companies were born. The carnival king of the concessions was Juan Vicente Gomez, an Andean cattleman who spent his twenty-seven years as dictator (1908-1935) making children and business deals. While the black geysers spouted on all sides, Gomez took petroleum shares front his bursting pockets to reward his friends, relations, and courtiers, the doctor who looked after his prostate, the generals who served as his bodyguard, the poets who sang his praises, and the archbishop who gave him a special dispensation to eat meat on Good Friday. The great powers covered Gomez's breast with gleaming decorations: the automobiles invading the world's highways needed food. The dictator's favorites sold concessions to Shell or Standard Oil or Gulf; the traffic in influence and bribes provoked speculation and set mouths watering for subsoil. Native communities were robbed of their lands and many farm families lost their holdings in one way or another. The petroleum law of 1922
was drafted by representatives of three U.S. firms. The oilfields were fenced in and had their own police. No one could enter without a company pass, and even the roads on which the oil was transported to the ports were barred to other traffic. When Gomez died in 1935, oil workers cut the barbed wire surrounding the camps and proclaimed a strike. The following years were dangerously explosive.
The fall of the Romulo Gallegos government in 1948 ended three years of reform. The victorious military brass rapidly cut state participation in the petroleum extracted by cartel affiliates. Tax cuts in 1954 afforded Standard Oil $300 million additional profits. A U.S. business man had said in Caracas in 1935: "Here you have freedom to do what you like with your money; for me, this freedom is worth more that all political and civil freedoms put together."26
Open Veins of Latin America Page 22
