The struggle for the nationalization of natural resources

Latin American anti-imperialist movements

      In previous commentaries, I drew upon the classic work of Eduardo Galeano to describe the exploitation of natural resources in Latin American and the Caribbean (see “The Open Veins of Latin America, Part One: The forced exportation of gold, silver, sugar, coffee, and rubber,” June 8, 2021; and “The Open Veins of Latin America, Part Two: The forced exportation of coffee, bananas, petroleum, and minerals,” June 11, 2021).  I today return to Galeano to describe the efforts of the peoples of Latin America and the Caribbean to control their natural resources, which for the most part took the form of a struggle for the nationalization of foreign companies.

     During the twentieth century, the transnational petroleum companies exploited the petroleum of Latin America in an abusive form that did not recognize the right of Latin American governments to control their natural resources and to utilize them for the long-range economic and cultural development of the nation. The oil companies defied efforts of Latin American governments to apply national labor laws to the foreign petroleum companies operating in their countries. In addition, the foreign companies drained oil deposits rapidly, without concern for the long-term development of the industry. And they sold Latin Americans their own oil at prices higher than those for consumers in the United States and Europe. Any effort by governments of Latin America to control their petroleum resources were greeted with aggressive resistance by the companies and the U.S. government.

     Venezuela has the largest oil deposits in Latin America and the Caribbean. Prior to the popular movement for petroleum nationalization of the 1960s, Galeano reports, the governments of Venezuela for the most part granted to foreign oil companies the rights to extract the oil, with terms that were favorable to the oil companies and that undermined the potential to use the petroleum to promote the independent economic development of the nation. The government of Juan Vicente Gómez, a dictator who ruled from 1908 to 1935, was particularly known for granting favorable terms to Shell, Standard Oil, and Gulf, and for enriching himself and his family and friends as a result of the shares granted to him in exchange. The Venezuelan petroleum law of 1922, edited by representatives of three U.S. firms, established a separate police force, which prohibited entrance to oil lands by anyone not authorized by the companies. During the period of the initial penetration by foreign oil companies, indigenous communities were dislodged from their lands, and independent family farmers lost their property.  

      After Galeano published Open Veins of Latin America, there were significant developments with international implications with respect to Venezuela and petroleum.  The petroleum nationalism movement culminated in the nationalization of the foreign petroleum companies and the establishment of a state petroleum company, Petróleos de Venezuela, Sociedad Anónima (PDVSA), in 1976.  However, prior to 1976, the petroleum companies had been managed by Venezuelans, in concession to popular demands.  These Venezuelans continued as managers in the new era of state ownership.  Inasmuch as they had been socialized into the norms of the international oil industry, they continued to manage the companies as before, and they failed to transform the companies toward the fulfilment of a new role in a Venezuelan national plan for economic development.  The ineffective state control of the petroleum was a central issue for Hugo Chávez, who was elected President of Venezuela in 1999, bought to power by a popular movement in reaction to the neoliberal project.  Seeking to reduce the autonomy of PDVSA and to incorporate its resources into a project of national development, Chávez appointed new directors of PDVSA, replacing the directors appointed by previous governments.  This action produced hostility from the U.S. government, which has launched various projects to destabilize the country and overthrow the government.  The U.S. destabilization and regime change project continues to this day with respect to the Chavist government of Nicolás Maduro.

     U.S. interference in Latin America with respect to petroleum also occurred in Uruguay.  Galeano reports that, in response to the history of abuse of petroleum resources by foreign companies, the government of Uruguay in 1931 established a state-owned company, which was dedicated to the refining and sale of petroleum, and which was the first state-owned refinery in Latin America. At the same time, the government of Uruguay contracted with the Soviet Union the purchase of cheap Soviet crude oil for refining in the Uruguayan state-owned refinery. The international oil cartel reacted swiftly and aggressively, threatening to impose an embargo on Uruguayan purchase of crude oil or machinery. In March 1933, a coup d’état occurred, and the new dictator annulled the right of the state company to monopolize the importation of crude petroleum. The country eventually became obligated to buy forty percent of its crude oil from Standard, Shell, Atlantic, and Texaco, at prices set by the oil cartel.

     In Mexico, Galeano informs us, twenty years of foreign ownership of the oil industry had left the country with exhausted fields and antiquated refineries by the 1930s. In response, Mexican president Lázaro Cárdenas “converted the recuperation of the petroleum industry into a great national cause.” In 1938, he nationalized the foreign companies and formed Petróleos Mexicanos (Pemex), which assumed control of the production and marketing of Mexican petroleum. The global powers reacted by imposing an international embargo from 1939 to 1942 on Mexican petroleum exports and on the importation of supplies necessary for wells and refining. The dispute was resolved by the Mexican government paying compensation from 1947 to 1962. In spite of these penalties, Pemex became a successful company during its first thirty years.

     Coups d’état, like the one in Uruguay, were common.  Galeano reports that from 1930 to 1966, seven coups d’état occurred in Argentina as governments were about to sign a petroleum agreement in which the interests of the international cartel were at stake. In Peru, one year after nationalizing the reserves and refinery of an affiliate of Standard Oil of New Jersey, the nationalist general Alfredo Ovando was overthrown by a military junta.

     The U.S. government supported the international petroleum companies in their aggressive pursuit of interests in Latin America. As Galeano writes, “The North American government always makes their own the cause of the private petroleum companies.”  In 1950, the U.S. ambassador in Bolivia, in his report to the White House, expressed pride in his accomplishing the denationalization of Bolivian petroleum industry, which he described as “nationalization in reverse.”

     And then there was copper, iron, and nitrate in Chile.  Just as Open Veins of Latin America was coming to press, Salvador Allende was elected President of Chile.  He had been the candidate of the Popular Unity, a multiple-party coalition consisting of the Socialist, Communist, and Radical parties as well as former members of the Christian Democratic Party who, influenced by liberation theology, had formed a separate organization.  Nationalization was central to the Popular Unity program, and in its first year, the Allende government nationalized copper, iron, and nitrate industries, all of them previously owned by U.S. corporations.  The Allende government was brought to an end by a coup d’état on September 11, 1973.  Army Commander Pinochet was named President, beginning a brutal and repressive dictatorship that lasted nearly 20 years, before it was cast aside by the “transition to democracy” that swept Latin America in the 1980s and 1990s.  Under Pinochet, Chile was the first country in Latin America to impose the neoliberal project.  Much has been written over the role of the United States in trying to prevent Allende from assuming the presidency in 1970, in seeking to destabilize the Allende government, in supporting the September 11 coup, and in supporting the Pinochet dictatorship. 

     There was, furthermore, iron in Brazil.  Galeano informs us that a 1952 military accord between Brazil and the United States prohibited Brazil from selling strategic raw materials, such as iron, to socialist countries. In 1953 and 1954, Brazilian President Getúlio Vargas ignored the agreement and sold iron to Czechoslovakia and Poland at prices higher than those being paid by the United States. This defiance culminated in the president being deposed in 1954.

     The conflict continued in the early 1960s, as Galeano describes. The U.S. company Hannah Mining sought to obtain the rights to mine and export Brazilian crude iron in the late 1950s and early 1960s. By pressuring the Brazilian government, including the incorporation of high officials of the Brazilian government as directors and advisers of Hannah, the company was able to obtain in 1961 authorization of the right to exploit iron deposits that belong to the government. However, considering the authorization to be illegal, the President of Brazil cancelled it, restoring the iron deposits to the national reserve. Four days later, the president was forced to resign. But a popular uprising frustrated the coup d’état, and Vice-President João Goulart assumed the presidency. The Goulart government put into practice the cancellation of the illegal authorization in July 1962. However, Goulart was overthrown in a July 1964 coup d’état that was supported by the United States, establishing a repressive dictatorship that adopted economic policies consistent with the interests of the U.S. steel giants.

     In addition, there was the struggle for the control of tin, natural gas, petroleum, and lithium in Bolivia.  A popular movement in Bolivia first emerged in the 1930s.  By the early 1950s it had become an advanced revolutionary movement under the leadership of the Revolutionary Nationalist Movement.  Its social base consisted of mine workers, peasants, and factory workers, all of which were well organized.  It reached its zenith in 1952, when the Bolivian government nationalized the mines and distributed land to peasants.  However, the nationalization of the tin mines did not change the situation.  Galeano reports that, in the first place, the tin mines had been exhausted.  In the mountain where the rich vein had been found by Simón Patiño in the 1870s, the degree of purity was reduced 120 times from what it had once been.  For every 156,000 tons of rock, only 400 tons of tin were obtained.  And in the second place, Antenor Patiño, son of Simón, charged considerable compensation for the nationalization, and he continued to control the price and the distribution of Bolivian tin.  The nationalization “had not modified the role of Bolivia in the international division of labor.  Bolivia continued exporting the crude mineral, and nearly all the tin is refined still in the ovens of Liverpool by Williams, Harvey and Co., which is owned by Patiño.  The nationalization of the sources of production of any raw material, as is taught from painful experience, is not sufficient.”

     With the exhaustion of tin mines, Bolivia increasingly turned to the extraction of natural gas and petroleum for exportation to the industrialized economies of the North.  These industries were under foreign ownership, and Bolivia continued to fulfill its historic peripheral role in the world-economy, a supplier of raw materials for industrial economies, leaving the nation in a condition of poverty and underdevelopment.

    The Bolivian popular movement re-emerged in the 1990s, with mass mobilizations in opposition to the government’s neoliberal policies.  The Movement toward Socialism (MAS) was established in 1995 as a federation of social movement organizations and unions.  Evo Morales, an indigenous coca farmer and leader in the coca farmers’ union, emerged as the leader of MAS, which put forth proposals for a new constitution that would give emphasis to Bolivian control of natural resources.  Elected president on December 18, 2005 with 53.72% of the vote in the second round, Morales demanded and obtained the renegotiation of contracts with foreign companies, which had terms more favorable to Bolivia, including the development of Bolivian capacities for the processing of natural gas and petroleum.  The Bolivian government directed funds obtained through the new contracts with foreign companies toward social programs in benefit of the people, especially the poorest.  A new constitution was approved in popular referendum on January 25, 2009, with 61.4% of the vote.  Morales won elections under the new constitution in 2009 with 64.22%, and he was reelected in 2014 with 63.36%.

     Meanwhile, lithium in Bolivia acquired importance in the world-economy.  Lithium is an ideal material for the fabrication of electric batteries and for the storage of energy; it plays an indispensable role in manufacturing electronic devices such as cell phones and tablets, as well as electric automobiles.  The “Lithium Triangle” that Bolivia shares with Chile and Argentina has 70% of the world’s reserves of the mineral.  The Morales government began to industrialize the production of lithium, thus defying the interests of the transnational corporations in controlling its production.

     In the presidential elections of October 20, 2019, Morales was re-elected to a third term on the first round with a plurality of 47% of the vote; with a ten percent margin over his nearest rival, sufficient for not requiring a second round.  The softening of support for Morales in comparison to 2014 was the result of a decline in the prices of raw materials exports in Latin America, breaking the economic expansion of the previous decade.  And it was a result of an international and national campaign, directed by the United States, against the Morales government, in which the Bolivian Right, led by owners of large estates, large-scale business persons, and leaders of the traditional political parties, had been able to influence citizens who had been supporters neither of the revolutionary government nor of the Right.  Their gains with this neither-nor popular sector may have been a result of the widely disseminated but not necessarily correct belief that presidents ought to be limited to two terms; and the general tendency of the people to expect too much from revolutionary processes, as a result of not sufficiently understanding the obstacles that revolutions confront.

     On November 10, 2019, there was a coup d’état that overthrew the Morales government.  Not a conventional coup carried out directly by the military, but an unconventional coup d’état carried out by fascist gangs financed by leaders of opposition parties, one representing the landowning oligarchy and another representing neoliberal interests; the joining of fascist gangs by police; and the denial of the military to support the constitutional order, leaving the people at the mercy of the fascist gangs and police violence, thereby compelling the president and other high government officials in the executive and legislative branches to resign.  The process had the backing of the United States, the Organization of American States, and the international media.  Planned well before the elections, the coup was staged on the basis of a false claim of electoral fraud. 

     New elections were held in 2020, through which MAS regained power with a majority in the first round.  Luis Arce, Minister of Economics in the Morales government, was elected president with 55% of the vote.  MAS retained control of the legislative branch.  The policies of the Morales government are being re-established.  Morales returned to Bolivia from exile in Argentina.  Participants in the coup are being prosecuted by the judicial branch, with charges including the sacking of the public treasury for personal gain during the illegitimate de facto government.

     Recent events in Bolivia illustrate a general pattern in Latin America.  Since 2014, the United States has intensified its destabilization and regime change campaign against socialist/progressive governments, including Cuba, Venezuela, Bolivia, Nicaragua, Ecuador, Brazil, and Argentina.  When the campaign has had success and the Right is able to recapture previously lost political space, the Right again in power demonstrates that it does not have a national project to offer for the future of the nation.  It merely returns to the sacking of the nation, which previously had been rejected by the majority of the people.  Seeing this, the neither-nor popular sector returns to support the process of change led by the socialist/progressive movements.

     In the Latin American struggle for the nationalization of natural resources, the efficacy of state ownership as against private ownership is a secondary question.  The primary issue is the right of nations to exercise control over their natural resources.  When large estates, mines, and big industry are owned by foreign companies and by a national elite aligned with foreign interests, the government has no option but to nationalize these properties, if it seeks to implement a plan for independent national development.  Such nationalization does not necessarily mean permanent state ownership.  In the case of Cuba in 1959, for example, much of the nationalized agricultural lands were converted into cooperatives of agricultural workers or were distributed to independent small farmers.

      The rights of the formerly colonized peoples of the Third World to nationalize property was proclaimed by Fidel Castro on September 26, 1960 before the General Assembly of the United Nations, where he declared: 

We want to express here another right, a right that has been proclaimed by our people in a recent mass assembly of several days: the right of the underdeveloped countries to nationalize without compensation the natural resources and the foreign-owned companies in their respective countries.  That is to say, we propose the nationalization of natural resources and foreign companies in the underdeveloped countries.

       The right of the underdeveloped countries to nationalize foreign-owned companies was a principle that was expressed in the New International Economic Order, proposed by the Non-Aligned Movement, supported by the G-77 and socialist nations, and adopted by the General Assembly of the United Nations in 1974. 

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Preface - April 6, 2021


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