Beginner’s Guide

Some background on Venezuela before Hugo Chávez

Venezuela was a semi-functional democracy until the 1980s. The country was trying to develop a domestic industry thanks to the boom in the oil prices, but it failed, and its institutions began to show it.

In the 1980s, we were hit with a banking crisis, a foreign debt crisis, and the fall in oil prices. As a consequence, President Carlos Andres Perez tried to free up the economy in 1989, in direct contradiction to his left-leaning discourse. The experiment failed horribly, and we continued fumbling our way through economic policy. Inequality increased, and poverty doubled from 36 to 68 percent by the time 1998 came around. There was great disappointment with our political class – rightly so! – particularly in the lowest sectors of the population, but also in the middle classes, furious about legitimate corruption scandals.

The best reading on Venezuela’s deep slide is probably this book, edited by Ricardo Hausmann and Francisco Rodíguez. It’s fairly technical, but it’s all there.

A prolongued period of decay had led to discontent among the masses. This allowed outsider political players to take advantage of the situation and shine. One of them was a young distinguished member of the military: Hugo Chávez.

In 1992 Chavez led a coup attempt – two of them, actually. One of the best books on Chávez’s coup is El Espejo Roto by Gustavo Tarre Briceño.

Chávez was released from prison in 1993 by President Rafael Caldera. His discourse focused on the poor, using the key word pueblo (the people), and promoting an anti-corruption exit to decades of scandal. He won the elections in 1998 by the largest percent of votes in four decades. He did not sell himself as a left-wing firebrand, but rather an anti-system nationalist.

Why Do We Need a Beginner’s Guide to the Chávez Era?

First, caveat lector: it’s surprisingly tough to find insightful material on Venezuela online. Wild overstatement is rampant. Chávez provokes such strong emotions that both his supporters and his critics tend to check their common sense at the door. When you start out, it’s crucial to be aware that most of what you’ll find about the Chávez era online, for or against, is little more than propaganda.

This guide is Caracas Chronicle’s little attempt to push back against all that: a collection of smart, stylish, sophisticated pieces about Venezuela by genuine heavyweights in academia, journalism and the human rights community.

Of course, here on this blog we are all Chávez opponents, so the stuff we’ve put together here tends to be rather critical. What it’s not, though, is partisan pablum or unhinged polemic. Lord knows, there’s too much of that around as it is.


  1. Best Overall Introductions
  2. Journalistic Pieces
  3. Human Rights Reports
  4. From the Archives
  5. Critical Theory of Chavismo
  6. Skypecasts

1. Best overall introductions

A precise and useful who’s who deconstruction of the Venezuelan political scene can be found in the following insightful, creative, and accurately organized project featured by a group of professionals affiliated with the John S. Knight Journalism Fellowship program at Stanford University. This great resource keeps you up-to-date with Venezuelan insider news and analysis.


This research project by the Wilson Center is a helpful introduction to the Chavez era because it tries to explain the rise of a “new left” in Latin America, understanding it as a “populist left” as opposed to the “old social democratic left” characteristic of other South American countries.


Here you can find a series of interview with leading Venezuelan intellectual Edgardo Lander, on the Chavista Revolution- its aims, causes, positive and negative consequences- starting the 1992 coup to these days. The interviews are in English, and they are well done.

If you only have 90 minutes to spend catching up with the craziness in Venezuela, you can’t do better than this November, 2008, Frontline documentary for PBS. It’s simply brilliant:

In these two interviews, leading Venezuelan scholars discuss the country’s implosion following 1978.

Next, for the academically minded, there’s this piece where political scientists Javier Corrales and Michael Penfold bracket matters of discourse to focus on the way power operates in Venezuela in the Chávez era. Published in the April 2007 issue of the Journal of Democracy, this real gem will put everything else you read about the country into much sharper perspective.

This marvel-of-concision in Open Democracy by government-scourge Phil Gunson is a shorter introduction to the evidence on Chávez’s growing authoritarianism.

This piece by Caracas Chronicles founder Francisco Toro is about the subtle ways Chavismo has reversed the concepts of left and right, just like a mirror does.

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2. Journalistic Pieces

Jon Lee Anderson wrote an precise and interesting character profile of Chávez. It was published on the September 10, 2001 issue of The New Yorker.

To get a journalistic feel for Venezuela in the Chávez era, be sure to check out these two articles by Alma Guillermoprieto, which appeared in The New York Review of Books in late 2005. They’re stylish, carefully researched, and scrupulously fair. Unfortunately, they’re also subscription-only.

Just after the December 2005 parliamentary elections, Italian journalist Guido Rampoldi wrote this piercing piece for Rome daily La Repubblica.

In this 2006 Sunday Times opinion piece, Ian Buruma nails Chavez in one of the  (in our humble opinion) most clear-headed and digestible-to-foreigners anti-Chavez polemics seen in print.

In May 2006, this lucid feature on Chávez by The New Republic’s Editor Franklin Foer appeared in The Atlantic. The focus here is more on what Chávez means to US foreign policy, but the overall reportage is excellent as well:

A feature detailing Chávez’s takeover of the Venezuelan State and its implications appeared in the January/February 2006 issue of Foreign Policy. Written by Amherst political scientist Javier Corrales, it argues that Chavez invented a new form of authoritarianism for the democratic age. Sadly, subscription only:

In 2007, Wesleyan University’s Francisco Rodríguez, a one-time Chávez official, wrote these two pieces on the Chávez-helps-the-poor myth:

In January 2007, The New Yorker published this piece by James Surowiecki about Chávez’s contradictory relationship with global capitalism:

In March 2009, distinguished Mexican historian Enrique Krauze wrote this piercing intellectual history of chavista authoritarianism. The piece, which summarizes Krauze’s book “El Poder y El Delirio”, is a real eye-opener:

The following two are The Economist pieces on Chavez’s Venezuela after his death in March of 2013.

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3. Human Rights Reports

In this 2004 report, Human Rights Watch documents the way Venezuela’s Supreme Court was politicized and stripped of its autonomy.

The Interamerican Commission on Human Rights – an official, intergovernmental body under the Organization of American States – has carefully documented the government’s Human Rights’ record. Its 2005 and 2006 reports – though admittedly written in the worst sort of plodding, lawyerly bureaucratese – provide a systematic dissection of the a number of troubling tendencies:

In this April, 2007 report, the Committee to Protect Journalists published this report on the government’s decision to shut down opposition TV-network RCTV:

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4. From the archives

At this point, my archive contains well over a thousand posts stretching back to late 2002. Here are just a few posts I think might be useful to someone coming to the crisis without much prior knowledge.

It’s impossible to understand the Chavez era without a minimum of historical context. Most foreigners, for perfectly understandable reasons, just don’t have it. This essay is meant to fill in the more important gaps:

One of the most confusing and misunderstood chapters of the Chavez saga is the brief coup that saw him kicked out of office for 48 hours in April 2002. The vast majority of the material available on the internet about the 2002 coup/countercoup is aggressively propagandistic and often plain wrong. In this essay, which I spent months researching, I try to summarize the baffling, fascinating story without airbrushing out inconvenient facts:

In this short essay, I set out to explain why Chavez’s vision of revolution is incompatible with democracy as usually understood:

It’s not that often that I blow my top at a piece of net-bound pro-Chávez propagandizing – there’s just too much of it around for me to go after all the targets – but for some reason this piece by Johann Hari in The Independent really set me off, goading me to write a detailed response. I’m kind of proud of it.

No archive selection could ignore the biggest of the many scandals chavismo has caused over the years. In this case, I’m picking a kind of voyeuristic reportage from just one tiny little piece of the sprawling Maletagate scandal that rocked Venezuela from August 2007 on.

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5. Critical Theory of Chavismo

In trying to understand some of the stranger aspects of what’s happened in Venezuela over the last seven years, I ran accross the writings of Jose Manuel Briceño Guerrero, a Venezuelan philosopher/critical theorist/poet who wrote this fascinating essay, way back in 1980, about some aspects of Venezuelan culture. Briceño Guerrero is, erm, not exactly light reading, but I still think this essay in particular is one of the most useful texts out there for understanding the Chavez phenomenon:

Later, I tried to write an essay specifying how Briceño Guerrero’s writing can inform an understanding of the Chavez era. It’s part effort to bring Briceño Guerrero up to date, part effort to place chavismo in cultural and historical context…I’m not really so happy with the finished product, but other people have found it helpful:

That’s a lot of reading, I realize, but work through this list and you’re pretty much a Chávez expert.
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6. Skypecasts

Sometimes you don’t want to read about Venezuela, you want somebody to tell you. In these two interviews, two of the leading Venezuela scholars discuss the country’s economic growth implosion after 1978:

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Added bonus: WTO Stuff

When I’m not rambling about Chavez, I’m preparing a doctoral dissertation about the World Trade Organization. Here are a few posts on that entirely unrelated topic.
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24 thoughts on “Beginner’s Guide

  1. Also, in her own discussion of ways that you can build your blog audience, marketing expert Heidi Cohen notes that your buddy can help you brainstorm topics. There are twelve standard color schemes available that vary from theme to theme.


  2. Fascinating FT article:

    Guest post: Venezuela’s Citgo and the revolution’s Praying Mantis School of Business

    Guest writer

    By Russ Dallen of Caracas Capital Markets

    Investing in Venezuela has always been like praying mantis love. On first acquaintance, Bolivarian Venezuela has those big, beautiful Miss Venezuela eyes and those angelic clasped praying hands inspiring trust and confidence, all backed up by glorious profits and yields. But while other investors in Venezuela – from oil companies, to airlines, to consumer products corporations – have been lured to their demise, bondholders have until the past two years been spared from most praying mantis cannibalism, and the action for bondholders has been great! Even if Venezuela has not paid shareholders of ExxonMobil, ConocoPhillips, or the Koch brothers’ Fertinitro, Venezuela paid the bondholders handsomely! Always! But then came the first sign of trouble, from steel company Sidetur, which the Venezuela government expropriated in 2013 and then didn’t pay its bondholders (or shareholders).

    Subsequently, over the past year, Venezuela bondholders have finally gotten their heads ripped off. Now the Praying Mantis School of Business is landing on American shores. (For those unacquainted with the sexual cannibalism of the praying mantis, you can watch a two-minute video here.)

    In July, Citgo, the US refining subsidiary of PDVSA, Venezuela’s state oil group, issued $650m in new debt with seemingly strong covenants to protect bondholders. The first hint of doom should have been the identity of the lawyers who wrote Venezuela’s side of the Citgo bond offering memorandum – Curtis, Mallet-Prevost, Colt & Mosle. George Kahale III, Curtis Mallet’s chairman and former managing partner, is the ace in Venezuela’s arsenal and has been the Bolivarian Republic’s chief defender in its multitude of expropriation cases. The guy is better than good – he is the Red Baron of their legal defence.

    The bond prospectus seems to have some pretty strong covenants to protect existing lenders and bondholders from just the sort of thing that Citgo is now trying to do:

    The New Senior Credit Facility will also be governed by a financial covenant providing for an indebtedness to total capitalization ratio of no more than 60%, to be calculated on a consolidated basis and for each consecutive four fiscal quarter period.
    Payments of Dividends. The New Senior Credit Facility will allow us to pay dividends equal to 100% of our cumulative net income (commencing from April 1, 2014 and excluding the aftertax effect of gain on sales of assets) plus net after-tax proceeds from certain permitted assets sales. The New Senior Credit Facility will prohibit us from paying dividends during the existence of an event of default and to the extent payment of dividends would trigger an event of default, and further restrict our payment of dividends by instituting a number of debt incurrence tests, including the following:
    • minimum liquidity of $500 million post-dividend; and
    • maximum indebtedness to total capitalization of 55% post-dividend.
    Incurrence of Indebtedness. The New Senior Credit Facility will allow us to issue the notes offered hereby. In addition, the New Senior Credit Facility will allow us to issue up to $1,000 million in additional secured and unsecured indebtedness, a portion of which indebtedness may be incurred in the form of fixed rate IRBs. To the extent we issue additional secured indebtedness, it may share in the collateral securing the New Senior Credit Facility and the notes offered hereby on a pari passu basis. We currently have $108 million IRBs outstanding. All but $3 million of our outstanding IRBs will be secured on an equal and ratable basis by the collateral securing the notes and the New Senior Credit Facility.”

    How is Venezuela able to get around these rules, which restrict the ability of PDVSA to dilute Citgo’s credit quality and the ring-fencing which includes a debt/cap maximum of 60 per cent, with a lower 55 per cent test for purposes of making distributions to the parent?

    Two major moves:

    1. They are taking PDV America, Inc and changing its name to Citgo Holding, Inc, which will issue the debt above Citgo Petroleum Corporation. Here is the ownership structure before the name change:

    2. They are taking the terminals (East Chicago, Linden, Albany, Toledo and Dayton) and pipeline assets – which, though mentioned in the prospectus, were not security for the original bondholders – and getting them out from underneath the bondholders by borrowing billions in the name of this new holding company and selling the assets to their own new holding company for $750m as they suck out the money, since they are allowed to repatriate profits from sales of assets.

    Previously, Venezuela was trying to sell Citgo but that looks to be effectively blocked by ongoing legal actions and threatened legal actions from creditors like ConocoPhillips (no judgment yet, but estimated at $4.5bn), ExxonMobil (has ICSID judgement for $1.7bn) and Gold Reserve (has ICSID judgment for $745m). Texas judge Caroline Baker has not yet ruled on ConocoPhillips Petrozuata’s discovery request on Citgo’s sale, where ConocoPhillips said it would try to prevent the proceeds of a Citgo sale from leaving the country, but the writing was on the wall and buyers are obviously worried about being caught up in years of legal wrangling.

    So, because they owed so many people, they were unable to sell Citgo, which we had estimated could realize $5bn to $7bn when oil was at $100 a barrel. Instead, they are getting around bondholder and lender protections and sucking the money out of it by forming a new company called Citgo Holdings, Inc above existing bondholders and loading it up with new debt of $2.5bn, with “$1.5 billion as a high yield offering” and a “$1 billion senior secured first lien five-year term loan B.”

    As of December 31, 2014, Citgo’s total debt was already $1.91bn.

    In the new structure, Citgo Holding, Inc will own 100 per cent of Citgo as well as the new owner of five oil products terminals, Citgo Holding Terminals, plus two pipeline companies, Southwest Pipeline Holding and Midwest Pipeline Holding. During the last 12 months ended in September 2014, these assets generated just $40m in EBITDA – not even enough to pay half of the interest on the $1bn Term Loan B, much less the interest on a $1.5bn bond!

    The new Term Loan B and the secured notes will only be guaranteed by the terminal and pipeline companies; Citgo is not a guarantor of the proposed transactions. As Moody’s notes:

    The security package for the Term Loan B and the notes is weak as it will only include the terminals and pipelines to be acquired from Citgo plus 49% of the capital stock of Citgo.

    Citgo Holding, Inc will also maintain a reserve account for the benefit of the creditors. The reserve account will be funded on the issue date with funds sufficient to cover one semi-annual interest payment on the debt; the issuer will be obligated to maintain at least such level in the reserve account until the maturity of the loan and the notes. Of course, Sidetur also had such a covenant, and Venezuela defaulted on that in 2013.

    Citgo is having to offer over 10 per cent on the loan and is still not finding many takers. Current price talk is about 800 basis points over Libor on the five-year senior secured first-lien Term Loan B, according to lead manager Deutsche Bank. There is a Libor floor of 1 per cent – meaning that the interest paid on the principal would be at least 9 per cent – and it will be issued at a discount of 96–97 (ie not 100, par) to bring the yield above 10 per cent. Meanwhile, Venezuela and PDVSA debt is offering yields of as much as 63 per cent in two years and still having trouble finding takers.

    As is apparent, Venezuela is starved for cash. The country must pay a total of $11bn in US dollar/euro maturities, amortization and interest this year. In February alone, Venezuela, PDVSA and Citgo have to pay over $750m in interest payments on bonds. In March, they have to retire the 1 billion euro Venezuela 7 per cent of 2015.

    Venezuela’s oil basket averaged $39.52 a barrel this week. According to December’s Opec statistics, Venezuela is producing 2.33m barrels a day, but 800,000 barrels are used in domestic consumption, Cuba gets some free (it was 100,000), China was getting 450,000 barrels a day of their 650,000 in imports as payments toward the $50bn they have already loaned Venezuela. In short, Venezuela only realizes cash from 1.2m to 1.5m barrels a day. At 1.5m bpd at $39.52, it gets $59.3m a day, or $21.6bn for the year. For 1.2m bpd at $39.52, it is just $47m a day, or $17.3bn for the year – barely enough to cover the $11bn in debt, much less pay your oil providers, suppliers and personnel, not to mention imports and everything else.

    Source: Opec

    Addendum – Maduro’s dog & pony show
    One other thing: like many analysts and masochistic observers, I sat through the five hours of the Dog and Pony Show that was Maduro’s Annual Address to the National Assembly last Wednesday night. I must say that I had a moment of positive thought when the cameras showed banners of Maduro with China’s Xi Jinping – Maduro had promised to reveal all the details of all the money he had gotten on his Beg, Borrow or Steal Tour, so I thought “Oh, maybe he really did get the $20bn from China or maybe even the billions from the Qataris and he is going finally tell us about it! Wow!” So, what did Maduro say about the so-called billions he said he had gotten on his tour from China and Qatar? Nothing. Crickets. He said nothing at all. Almost like it had never really happened. Welcome to the Praying Mantis School of Business.

    Russ Dallen is managing partner of investment bank Caracas Capital Markets in Venezuela and publisher of the Latin American Herald Tribune.

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    ere’s a fascinating Financial Times article about how the US lawyers/financial advisers of the chavista regime are extracting short term wealth from Citgo:


  3. Interest Rates in Venezuela – Is there any business or personal credit in Venezuela for those without government contacts?

    Know inflation and lack of certainty makes it difficult but surely there is some credit but I cannot find any information and would appreciate information on rates/availability and where I can find this information.

    Also, have to say thanks for those of you blogging and commenting. The comments from those who live in or have lived in Venezuela give the articles substance unlike those that appear in the mainstream press in the U.S.


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