For six months, the Caribbean Petroleum Company had been drilling exploratory wells in the savanna-like Mene Grande region between the marshy shores of Lake Maracaibo and the Andean foothills of western Venezuela. The yield: a measly 10 barrels per day. Then, on July 31, 1914, the wildcatters hit a gusher, and black gold began roaring out of Zumaque No. 1.
When the news reached President Juan Vicente Gómez in the capital city of Caracas, 420 miles east, the dictator, bewhiskered as a catfish, didn’t hear a description of the country’s first commercial oil well. Instead, he heard the tidings of a magnificent economic bonanza that would consolidate his absolute rule for years to come.
And that’s what happened. The same month that Zumaque No. 1 blew, World War I broke out, and “crude was a prized resource that brought Venezuela instant wealth and gave Gómez enough power to rule the country in one form or another for 27 years,” writes Raúl Gallegos, economist and author of Crude Nation: How Oil Riches Ruined Venezuela.
For the next century, other strongmen followed the precedent set by Gómez, Venezuela’s original oil-soaked gangster.
But you know what they say about absolute power. Gómez granted oil concessions to foreign companies in exchange for a personal cut of the royalties, and helped those entities skirt a law that gave mineral rights to private property holders, according to Gallegos.
Those illicit oil gains enabled Gómez to develop a portfolio of businesses that monopolized paper, soap, cotton and other commodities in Venezuela. His economic and political power meant no one dared to go up against him. He assassinated opponents and menaced protesters with torture. For the next century, other strongmen followed the precedent set by Gómez, Venezuela’s original oil-soaked gangster.
Born in 1857 into a large, land-owning family, young Juan Vicente grew up watching his father trade cattle around the far-western Andean state of Táchira, south of Lake Maracaibo. He joined the military at a time when the country, which had declared its independence in 1811, was less a nation state and more a realm of fiefdoms run by local bosses known as caudillos, who used private armies to vie for control of territory. After one skirmish between caudillos, Gómez found himself standing over the body of a fallen friend named Evaristo Jaimes. While watching the burial, Gómez met one of Jaimes’ friends, a man named Cipriano Castro.
Castro invited Gómez to join his army. The goal: Overthrow President Ignacio Andrade. In 1899, with a private army strong enough to be a national military force, Castro and Gómez marched on Caracas and drove Andrade out of power. For the next nine years, Castro governed Venezuela as a military general with Gómez as his civilian vice president. Then in 1908, syphilis sent Castro to Germany for treatment. Back home, Gómez lined up support from the United States and then snatched Caracas from the absentee president in a coup d’état.
Although Gómez ruled the country with an iron fist, the despot loved his own personal liberties and exercised them however his macho ego pleased. “He was a bachelor … [who kept] two mistresses with whom he fathered 16 children,” writes Gallegos. “By some counts he fathered as many as 73 [children] with several more women; no one really knows for sure.”
But the bachelor tyrant could also be an effective leader and innovator. He paid off Venezuela’s debts and created a central bank. “Gómez’s beloved hacienda, La Placera, ended up in state hands — decades later it became the home of Venezuela’s mint, charged with printing the country’s currency,” writes Gallegos. Perhaps more significantly in a country that was still a mess of caudillos, he established the first national army. “In many ways,” Gallegos tells OZY, “modernity came to Venezuela during the time Gómez was in power.”
At a cost: When Gómez died in 1935, he was one of the richest men in Latin America. And then there’s a far darker legacy. Decades of corruption and mismanagement of Venezuela’s oil-dependent economy have rendered the currency worthless and forced many to flee abroad for medical treatment they can’t get at home. Venezuelans are starving.
And yet, one of the first things left-wing authoritarian Hugo Chávez did during his 14 years in power was to consider establishing a sovereign fund akin to Alaska’s Permanent Fund as a way to redistribute Venezuela’s oil wealth. He scrapped the idea when he saw that his key social projects would get squeezed. Chávez’s successor, President Nicolás Maduro, hasn’t taken up the cause: He squanders oil wealth in much the same way as Gómez did — using it as his personal piggy bank. Unchecked.
Guillermo Zubillaga, a Venezuelan senior policy analyst at Americas Society, fears that Chavez’s abandoned idea may have been the last chance to enshrine into law a sovereign wealth fund that would act to curb corruption and save Venezuela’s future institutions from the Gómez effect. But, as Zubillaga notes, for wealth redistribution to work, the state has to have the upper hand over the oil companies, and that’s not the case in Venezuela going forward. “As much as I would have liked Venezuela to have been like Alaska or Norway,” says Zubillaga, ”I think we have spoiled our chance.”
Correction: An earlier version of this story misstated Raúl Gallegos’ nationality and profession.
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