Statue of Simón Bolívar Palacios in Caracas

THE TERRITORY THAT BECAME Venezuela lay outside the geographical boundaries of the great pre-Hispanic civilizations of Central and South America. And although it was the first locale in which Christopher Columbus set foot on the mainland of the New World, Venezuela was of only marginal consequence within the Spanish American empire during most of the next three centuries. It was not until the late eighteenth century that the colonial region that encompassed present-day Venezuela provoked, thanks to growing agricultural and trading activity under the auspices of the Caracas Company, more than minor interest from the Spanish crown.

Venezuela's historical significance perhaps reached its peak during Spanish America's struggle for independence during the early nineteenth century. In 1810 it became the first colony formally to declare its independence. Venezuela also provided Latin America with its greatest hero of that era, and perhaps of all time, in Simón Bolívar Palacios. Bolívar, known as "The Liberator," played the leading role in expelling the Spanish colonial authorities not only from Venezuela, but also from Colombia, Ecuador, Peru, and Bolivia. He died in 1830, tragically broken after having seen his dream of Latin American unity shattered by the realities of regional caudillismo (rule by local strongmen, or caudillos).

Venezuela remained marginal primarily because it lacked deposits of gold, silver. or the precious stones that constituted Spain's fundamental interest in the New World. No useful purpose existed during colonial times for the petroleum--dubbed "the devil's excrement" by early Spanish explorers--that oozed out of the ground near Lago de Maracaibo. Venezuela's growing prosperity toward the end of the colonial era was based instead on its flourishing production and trade of cocoa. When the ravages of Venezuela's independence struggle combined with a collapse in the international market to put an end to Venezuela's cocoa "boom," coffee became the nation's principal export. This second phase in Venezuela's agricultural export economy lasted nearly a century, until petroleum became king with the popularization of the internal combustion engine in the early twentieth century.

The petroleum industry in Venezuela began under the control of foreign firms. Beginning in the 1930s, it gradually came under the government's authority. The nationalization of the remaining assets of the foreign oil firms in 1976 represented the culmination of full government control. Nonetheless, the government had little effect on the international price of crude oil, despite the efforts of the Organization of the Petroleum Exporting Countries (OPEC), of which Venezuela was a founding member. Fluctuations in the price of oil during the 1970s and 1980s exercised a commanding impact on the political as well as the economic life of the nation.

In strictly political terms, Venezuela's republican history exhibits a seeming incongruity between the instability and dictatorial rule of the period prior to 1935 and the stability of its post-1958 democracy. Scholars have posited a variety of explanations for this fortuitous transformation, most of which cite the usefulness of vastly increased petroleum revenues in allowing the state to address the demands of virtually every politically active sector of society. The marked decline in petroleum revenues during the 1980s therefore placed significant strains on this political system, which for over two decades had been the envy of the other nations of Latin America.

Data as of December 1990