Thursday, April 17, 2008

Venezuelan oil tax

The Venezuelan legislature approved “windfall” taxes on oil profits. From the BBC:

They face a 50% tax when a barrel of crude is priced at $70 or more, rising to 60% when average prices tops $110.

It is President Hugo Chavez's latest attempt to get greater control over his country's oil.

Two things come to mind. First, windfall taxes do not give the Venezuelan government any more control over oil. They give it more profit, which is different.

Second, the 60% rate is actually identical to what the Venezuelan government was getting in 1959 for all oil profit regardless of price. Coincidentally, I just finished reading a book chapter on U.S.-Venezuelan relations as part of a big Latin American Research Review multi book review I am doing on U.S.-Latin American relations.* Despite its title, the chapter focuses primarily on the 1940s-1960s, arguing that the U.S. government—even in the face of the treatment Richard Nixon received in 1958—accepted Venezuelan nationalism with regard to state control over natural resources. In addition to oil, a 1965 law required majority Venezuelan ownership of insurance companies.

Obviously, the context is quite different. At that time, harsh criticism of the U.S. government came from civil society rather than the presidency (which generally followed U.S. cold war policies). Nonetheless, it is worth keeping in mind. Even in the 1960s, in the wake of the Cuban revolution, the U.S. government and companies accepted the measures.

*Darlene Rivas, “Patriotism and Petroleum: Anti-Americanism in Venezuela from Gómez to Chávez.” In Alan McPherson (ed.). Anti-Americanism in Latin America and the Caribbean (New York: Berghahn Books, 2006): 84-112.


Justin Delacour 10:37 PM  

Even in the 1960s, in the wake of the Cuban revolution, the U.S. government and companies accepted the measures.

But notice that you leave out a key piece of information in your post. The United States accepted the measures because Rómulo Betancourt and Acción Democrática were anti-Communist and accepted U.S. political leadership of the hemisphere. Basic quid pro quo.

You're not telling us anything new if you're saying that, in the midst of the Cold War, the United States gave some leeway to its allies on questions of economic policy. That was true in Western Europe. That was true in Korea, Taiwan and Japan. And, of course, it was true in parts of Latin America.

That tells us nothing about (1) how the United States looks upon "resource nationalism" today (under different geopolitical circumstances) and (2) how the United States acts towards states that don't accept its leadership of the hemisphere.

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