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Explaining hydrocarbon nationalization in Latin America: Economics and
political ideology
Ruben Berriosa; Andrae Marakb; Scott Morgensternc
a
Department of Economics, History and Political Science, Lock Haven University of Pennsylvania,
Lock Haven, PA, US b Department of History and Political Science, California University of
Pennsylvania, California, PA, US c Department of Political Science, University of Pittsburgh,
Pittsburgh, PA, US
First published on: 19 October 2010
To cite this Article Berrios, Ruben , Marak, Andrae and Morgenstern, Scott(2010) 'Explaining hydrocarbon nationalization
in Latin America: Economics and political ideology', Review of International Political Economy,, First published on: 19
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Review of International Political Economy 2010, iFirst: 1–25
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Explaining hydrocarbon nationalization
in Latin America:
Economics and political ideology
Ruben Berriosa, Andrae Marakb
and Scott Morgensternc
a
Department of Economics, History and Political Science, Lock Haven
University of Pennsylvania, Lock Haven, PA, US; bDepartment of History and
Political Science, California University of Pennsylvania, California, PA, US;
c
Department of Political Science, University of Pittsburgh, Pittsburgh, PA, US
ABSTRACT
Recent hydrocarbon nationalizations in Bolivia, Venezuela, and Ecuador
have renewed debates about the dangers of radicals, populists, or leftists.
But, while some of these presidents have acted aggressively towards multinational owners, as a group their policies have not differed greatly from
non-leftists facing similar circumstances. To test our hypothesis, we provide a detailed three-variable coding of every Mexican and South American
president (for all countries with oil resources), as well as a coding of their
policies towards the hydrocarbons industry. The historical review shows that
political leaders from all sides of the ideological spectrum have advocated,
pursued, or sustained nationalizations, and thus there is no clear relation
between these political labels and nationalization policies. An examination
of two alternative hypotheses – timing and starting point – finds that while
nationalizations and privatizations do come in bunches, the hydrocarbon
policy and economic circumstances that presidents inherit are more likely to
determine the policy that they pursue.
KEYWORDS
Latin America; oil; gas; hydrocarbons; nationalization; populism; petroleum.
In the summer of 2005, Bolivia’s interim president, Carlos Mesa, faced mobilized and inconsolable masses demanding nationalization of the country’s gas industry to redress decades of exploitation and poverty. The
demonstrators blocked the roads into La Paz, denying entry or exit for
people and goods, even threatening the supply of water and cooking oil.
Review of International Political Economy
C 2010, iFirst Taylor & Francis
ISSN 0969-2290 print/ISSN 1466-4526 online http://www.informaworld.com
DOI: 10.1080/09692290.2010.493733
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REVIEW OF INTERNATIONAL POLITICAL ECONOMY
Vendors handed out pamphlets proposing new nationalization policies.
Before long, Mesa resigned and the leader of the movement, Evo Morales,
was elected president. One hundred days after taking office he acted on
his mandate, sending troops to take over the gas fields. His nationalization
program, however, turned out to be more rhetoric than reality. His plan
did not include expropriation of private assets; instead “nationalization”
came to mean the purchase of a majority share in the interests of the multinational firms and an increase in taxes. Further, when the state found it
had insufficient funds for the purchase of the necessary stocks, that plan
was largely abandoned, leaving nationalization to imply a simple (though
significant) increase in taxes on the companies.1
Still, recent nationalizations in Bolivia, Venezuela, and Ecuador have renewed debates among academics, entrepreneurs, and policymakers about
the threats of radicals, populists, or leftists to economic stability (e.g.
Dornbush and Edwards, 1991). Amidst this debate has emerged the idea
of two types of leftist politicians. In an influential Foreign Affairs article,
former Mexican Foreign Minister Jorge Castañeda claims: “One is modern, open-minded, reformist, and internationalist . . . The other, born of
the great tradition in Latin American populism, is nationalist, strident,
and close-minded” (Castañeda, 2006).2
This dichotomy is problematic. While some of history’s supposed
“closed-minded leftists,” “radicals,” or “populists,” have sometimes acted
aggressively towards the multinational owners of the hydrocarbons industries, their policies have not differed greatly from other presidential
types. First, like Morales, many leftist presidents’ actions suggest more of
a propensity to negotiate rather than to expropriate. Second and more importantly, our empirical investigation shows that political leaders from all
sides of the ideological spectrum have advocated, pursued, or sustained
nationalization. Presidential type, then, is a poor predictor of nationalization policy.
We support this assertion through a detailed coding of every Mexican
and South American president (for all countries with oil resources) and
their policies towards gas and oil industries over the past century. Mining,
telecommunications, and other industries have also been central to many
countries (leading us to discuss the Chilean copper industry), but we focus
on hydrocarbons because, as the recent controversies show, it has been the
industry most symbolic of foreign domination across the region.
The analysis shows that political leaders have used the term “nationalization” to describe policies that range from expropriation of private
foreign-owned firms without compensation to a simple renegotiation
of contracts with international investors. Our theoretical goal is to test
whether “leftists” or “populists” show a propensity toward nationalizing
their hydrocarbon industries. We address this concern by delineating the
range of nationalization policies, and operationalizing different aspects of
2
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BERRIOS ET AL.: EXPLAINING OIL NATIONALIZATION
populism and leftism, namely the presidents’ class-based support, their
position with regard to the role of the state in the economy, and their fealty
to elections and extant political institutions. We show that there is no clear
relation between these political labels and nationalization policies.
After demonstrating that neither populism nor ideology explains hydrocarbon policy choices, we briefly examine two alternative explanations for
nationalization policies: timing and starting point. The timing hypothesis
asks whether ideology is subsumed by general regional trends (nationalizations with the 1960s and 1970s and privatizations with the 1980s, for
example). While we do find some evidence that nationalizations and privatizations come in bunches, the most common policy choice (regardless
of the ideology of the governing party) is the status quo. The starting point
hypothesis is more promising. Our evidence suggests that economic considerations, not ideology, determine the policy they pursue. Thus, those
countries that are earning comparatively inadequate returns through royalties and/or taxes on hydrocarbon production are more likely to move
against the companies than countries that already gain significant revenues
from these industries.
This finding suggests one additional conclusion: that policy change,
rather than actual policy, drives international responses. This conclusion
is evident in a comparison between the “bad left” in Venezuela with the
“good left” in Brazil. In Venezuela, Hugo Chavez first worked to wrest
control of the national oil company PDVSA from the opposition. PDVSA
had been “internationalized” starting in 1989, such that it sold concessions
(often at very favorable terms) to foreign investors and then competed
with those firms. For our purposes, Chavez’s more important move was
to purchase a majority share in most of these foreign-owned companies.
This new system, which left up to 40 per cent of the companies in private
hands, was not unlike that already enjoyed by Luiz Inacio Lula da Silva in
Brazil, and leaves a much greater role for private capital than in Mexico
or Saudi Arabia. It is only Venezuela, however, that has received international opprobrium. This example thus suggests, then, that while presidents
who move against entrenched interests chance retribution, presidents who
come to power after nationalization can not only avoid privatization, they
can often enjoy the fruits of the nationalization without international scorn.
THE DEPENDENT VARIABLE: CHARACTERIZING OIL
NATIONALIZATION PROCESSES
While at some points in time foreign firms have been welcomed into Latin
American countries, at other times the countries and firms have clashed
over the possibility of nationalization. While nationalization has affected
a wide range of industries,3 we have confined our focus to the nationalization of oil and gas resources in Mexico and South America, with an
emphasis on extraction (rather than the distribution and marketing aspects
3
REVIEW OF INTERNATIONAL POLITICAL ECONOMY
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Table 1 Oil and gas nationalizations
County
Year of Nationalization
Argentina
Bolivia
Brazil
Chile
Colombia
Ecuador
Mexico
Peru
Uruguay2
Venezuela
1922, 1924, 1930, 20041
1937, 1969, 2006
1953
1932, 1950
1951
1972, 1974, 2006
1938
1968, 1986
1931
1976, 2001
Source: Compiled by authors from Grosse (1976), Blaiser (1985), Sigmund (1980) and others.
1ENARSA, the state corporation created in 2004, controls concessions for off-shore rights.
The rest of the oil industry is still largely owned by a private corporation (YPF-Repsol), with
the state as a minority share-owner. The 1930 nationalization was cancelled by a military
coup.
2Refining and distribution; Uruguay has no oil for extraction. We therefore ignore Uruguay
in other parts of this paper.
of the industries). Table 1 lists the countries and the years in which their oil
and gas resources were nationalized.4 Note, for example, that Argentina,
Bolivia, Chile, and Venezuela (among others) have moved multiple times
to nationalize the same industries. The later processes either reversed privatization processes or deepened the earlier nationalizations.
While Table 1 denotes the major nationalizations in each country, nationalization is not a dichotomous variable. Nationalization can mean taking
full control of all aspects of an industry, but in most cases, countries are
not so bold.5 Recall that even Bolivia’s highly publicized nationalization
of its gas fields in 2005 largely mandated that the state acquire a majority
share. Similarly, Ecuador increased taxes and government controls in 1972,
and then took a 62.5 per cent share of Gulf Oil in 1974. When evaluating
their options for increasing revenue and exerting greater control over oil
resources, governments face numerous options (and multiple challenges).
At one extreme, the governments can expropriate foreign assets and reassert national sovereignty over subsoil resources, by claiming that the
foreign companies have exploited the country. At the other, the governments can negotiate with the foreign firms to purchase all or perhaps just
51 per cent of the company’s assets. The goal of this type of system is to
ensure that foreigners continue to invest and use their technical expertise
to develop the enterprise. A third option, perhaps not on the same continuum, would be for the government to restructure the tax and royalties
system to increase their take from the foreign enterprise.6 In this case, the
company either could be left partially in foreign hands with state and
private local interest forming a type of joint venture. Sometimes a foreign
4
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BERRIOS ET AL.: EXPLAINING OIL NATIONALIZATION
firm with only a minority share can still exercise some control if it provides
the technological know-how. Finally, there is a fourth option: governments
can set up public enterprises that compete with private companies. This
arrangement can help the government to access lucrative resources while
still encouraging outsiders to invest in the economy (though often in riskier
aspects of the business such as exploration and refining).
These options suggest a four-dimensional characterization of nationalization based on whether: (1) the government has majority ownership or
a 100 per cent share in the company; (2) the public company has at least
50 per cent (but not full) ownership of the industry; (3) the foreign firm
and the country reached agreement on compensation; and (4) the government moves for more control over oil and gas companies by significantly
increasing taxation and/or royalties. In most cases, the nationalization
processes that we have categorized are not one-shot deals; each policy
change is just another step in long-term conflict between the states and the
foreign corporations. In some countries, there had been previous attempts
to wrest some level of control over their resources, either through taking
more direct management of the industry, changing the tax structure, renegotiating royalty payments, and/or exercising greater financial control of
the multinational interests, depending on who was in office. In others
(e.g. Venezuela 1976 and Colombia 1951) nationalization was the means
by which the countries ended long-term contracts or concessions. Still, in
each country, the nationalization pressures came to a head with significant legislation that set up new state enterprises or dramatically changed
the level of control afforded the countries. Tables 2–4 focus on these laws,
using cross-tabulations to highlight the multidimensional character of the
nationalizations.
The first dimension (rows in Table 2) is whether the countries took over
complete control or whether joint ventures were formed in which the private firms continued as minority shareholders. In the clearest cases, the
nationalizing country has taken over the complete industry. Foreigners
were expelled from these countries and 100 per cent; of their assets were
transferred to the state. The second dimension of the table (columns) is
crucial, however, because in many cases the state has not tried to monopolize the industry. There is much diversity in the way that the states have
asserted less-than-full monopoly control. Cases that fall into the right column, therefore, include those where the state has taken full control of a
particular firm but not others, when they have taken over a sector of the
industry (such as extraction or distribution), or where they have asserted
ownership of resources in a specific region.
The top left box of Table 2 recalls the classic understanding of nationalization: a state enterprise with total control of an industry. Mexico’s
creation of Pemex by taking over of the foreign-owned oil fields in 1938,
Peru’s take over, and the creation of Petroperu are the clearest cases of this
5
REVIEW OF INTERNATIONAL POLITICAL ECONOMY
Table 2 Country share and company monopolies
Monopoly
industry
100% ownership
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50% < ownership < 100%
1Cancelled
Argentina 19301
Bolivia 1937
Chile 1932, 1950
Mexico 1938
Peru 1968
Uruguay 1931
Brazil 19533
Peru 19865
Venezuela 1976, 20014
Public company competes
with private firms
Argentina 1922, 1924
20042
Bolivia 1969
Ecuador 20066
Bolivia 20067
Colombia 1951
Ecuador 1972, 1974
by coup.
2The 1924 nationalization deepened the state control. See Table 1 about 2004.
3Government owned only a majority share, but only domestic investors allowed.
4In 1976 the private companies became subsidiaries of PDVSA.
5After nationalizing the industry in 1968, the state allowed some private exploration
in the
1970s. Two companies, Belco, and Occidental, struck oil in the 1970s. Occidental, however,
had been in a joint venture with Petroperu and Belco was taken over by the state in 1986
(compensation was paid several years later).
6From Ecuador’s standpoint, the dispute with Occidental that ended in the cancellation of
its contract was not a nationalization.
7Bolivia’s 2006 Hydrocarbons Law called for majority Bolivian ownership but Bolivia lacked
the capital to actually purchase majority shares and settled for a sharp rise in taxes.
box. Bolivia’s policies of 1937 also fit there.7 Other cases of nationalization
are less complete (lower left box), leaving important roles for the private
companies. In Venezuela, for example, the 1976 nationalization converted
the private companies into subsidiaries of the state corporation. These
companies, then, maintained an important role in directing the industry.
Still, this case fits under the monopoly category as the state had a stake in
all oil production.
In Bolivia, the state nationalized Gulf Oil in 1969 but officials allowed
other private companies to continue operating. The Argentine processes in
1922 and 1924 are similar. There, the state created a national corporation,
YPF, and then reorganized such that it would fully control some but not
all wells (Solberg, 1979).8 These cases, as well as Ecuador’s recent court
ordered takeover of Occidental Petroleum, therefore fit into the upper
right box.9 In these cases the state has typically asserted its ownership
of subsoil rights and then granted concessions to either the private or
public firms. In some of these cases, the state also asserts full control of a
part of the industry, such as extraction, while leaving downstream aspects
(processing) to private industry.
The final box in the table includes those cases (Bolivia 2006, Colombia
1951, and Ecuador 1972) where the state corporation took just a majority
share in some but not all of the natural resource companies. In these cases –
6
BERRIOS ET AL.: EXPLAINING OIL NATIONALIZATION
Table 3 Country share and compensation agreements
Compensation
agreement
>50% ownership
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100% ownership
Bolivia 2006
Colombia 1951
Ecuador 1972, 1974 /1
Venezuela 2001 /2
Bolivia 1937 /3
Chile 1950 /6
Venezuela 1976
No compensation
agreement
Brazil 1954
Mexico 1938 /4
Peru 1968 /5
/1 Unclear if the state took even a majority share in some firms.
/2 Two companies have not yet settled an agreement.
/3 Agreement signed six years after nationalization.
/4 Companies settled in 1941, but under the succeeding president (and pressure from the
U.S. government due to WWII).
/5 Some compensation six years after nationalization, though not fully public terms.
/6 In 1932 the Chilean government claimed the right to assert full control over oil resources,
but they did not do so. At that time the government did establish state control over imports,
distribution and sale of petroleum.
Sources include: Sigmund (1980) Blasier (1985), Puga Vega (1964).
as well as Chile’s 1968 nationalization of their copper fields – the state took
control of the most lucrative companies or asserted control over proven
oil (copper) fields without asserting control over exploration or more risky
ventures.10
Often the distinguishing feature between the nationalization arrangements is whether the countries and companies reached agreement on
compensation for the transfer of assets (Table 3). These agreements are
always controversial, since the multinationals are wont to claim the governments have undervalued company assets, and the host country claims
the opposite. Still, negotiations have often led to signed formal agreements.
The clearest case of a state taking over a company’s assets without reaching financial agreements was Peru in 1968, when the military occupied and
expropriated the oil fields of the International Petroleum Company (IPC).
Peru made it clear that IPC was a special case and that other nationalizations that were to follow were to be properly compensated. As a result
of economic sanctions applied by the United States and the substantial
reduction in bilateral aid, Peru provided a packaged compensation to nationalized U.S. firms, and although the details were not made public, some
funds may well have reached the IPC.11 Ecuador also took over a petroleum
company without compensation in 2006, but in this case the state justified
its action, arguing that the company violated its contract by selling stock
to a third party without state approval. Finally, the other exceptional case
of an expropriation in South America dealt with copper rather than oil.
Three U.S. companies controlled 85 per cent of copper produced in Chile
(Ingram, 1974). The main argument against compensation was that the
7
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REVIEW OF INTERNATIONAL POLITICAL ECONOMY
multinational companies had taken “excess profits” and thus deserved no
more revenues from the state.12 In most other cases, however, governments
have paid substantial sums to the companies (Sigmund, 1980). In Mexico,
for example, the oil companies were paid $47 million to settle the takeover
in 1938 (and the British industries were paid $80 million). The corporations
initially resisted this arrangement (demanding $262 million), but finally
signed the deal in 1942. In Venezuela the oil companies were paid about
$1 billion (against an estimated value of about $5 billion) in 1976, which
critics at the time, as well as today’s (Chavez controlled) PDVSA, claim is
more than the companies would have earned for the next 10 years when
their concessions would have expired.
With one partial exception, even the recent nationalizations have not
been expropriations. Venezuela’s Chavez made front-page news for nationalizing his country’s oil industry – but this was not an expropriation.
In fact, much of the controversy was whether Chavez had enough cash to
compensate the companies. Most of the companies reached agreements
with the state and converted their “strategic associations” and “operating service agreements” into joint ventures (with a PDVSA share of
60 per cent) as required in the 2001 law. As noted earlier, two companies,
ConocoPhillips and ExxonMobil, did not reach agreement, and as a result, the state took shares of 100 and 83.4 per cent respectively, while the
companies took their cases to arbitration. Similarly, Evo Morales received
international scorn for his nationalization of the gas fields in Bolivia. Here
again, however, the nationalization was not expropriation. Morales did
force the firms to sign new contracts that sharply increased taxes and royalties, and the state was supposed to purchase a majority ownership of the
stock. The tax change went forward, but the vast majority of purchases
stalled owing to a lack of state capital.
The Morales example points to the next defining variable for nationalization, the taxing scheme. In one sense, the taxing scheme is a continuous
variable defining the degree of nationalization. Any tax above zero implies
the state has a claim on the resources themselves and/or the profits obtained from the exploitation and sale of those resources. As Sigmund (1980)
argues with reference to Venezuela in the 1940s, increasing taxes (whether
on profits or a per/barrel assessment) is a good alternative to taking control
of an industry, because it increases a country’s revenues without generating threats to the supply of capital and technology, economic blockades, or
even military intervention. In most cases (e.g. Venezuela 1945, Peru prior to
1968, and Ecuador since the 1970s), the taxes have been used in the countries’ struggles against the corporations as an alternative to managerial
takeovers (Lieuwen, 1985).
Taken together, Tables 1–3 plus the taxing issue suggest a two-part 9item scale (Table 4). The first part is based on presidents’ options when
facing a privatized industry, and the second part of the scale indicates
8
BERRIOS ET AL.: EXPLAINING OIL NATIONALIZATION
Table 4 Scaling privatization and nationalization
Nationalization/Privatization Scale
Starting with a Private Industry
Monopoly Nationalization No Compensation
Monopoly Nationalization With compensation
Majority Share Nationalization No compensation
Majority Share Nationalization With Compensation
Extend government controls (or taxes)
Leave Privatized
Starting with Nationalized Industry
7 Leave Nationalized
8 Partial Privatization
9 Full Privatization
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1
2
3
4
5
6
Example
Peru 1968
Mexico 1938
Bolivia 1969
Venezuela 2001
Mexico 1920–28
Bolivia 1997–03
Brazil 1974–79
Peru 1990–92
Venezuela 1989–93
the options for a president facing a nationalized industry. For the first
part, at one extreme the president can leave the industry privatized or
move to expropriate the industry and take monopoly control without offering compensation. Focusing on these extremes, however, misses the
great variety in government petroleum industry policies. Moving up the
scale from “leave privatized,” the next theoretical category is one where
the government extends some controls or increases taxes, but leaves ownership and operations in the hands of the private companies. The next
two most severe options are for the government to purchase or expropriate majority ownership in one (or more) companies, while leaving other
companies to operate independently. The Venezuela experience presents
a subtype. Chavez entered facing a national oil company, but it operated
autonomously. There were also several private companies. Chavez moved
against both: first consolidating control of the national company, and later
purchasing (or expropriating) majority shares of the private companies.
As a result, we categorize him as facing a privatized rather than a nationalized industry. The final two categories in this part of the table are when
the government assumes monopoly control of the industry – either with
or without compensation.
For the second part of the categorization, where presidents enter facing
a nationalized industry, we have truncated the discussion and just focus
on the options of leaving the industry nationalized, and partially or fully
privatizing it. The middle category, however, could include a range of
options; the government could sell control of some (but not all) oil fields, it
could keep subsoil rights but sell some portion of the national company, or
it could keep control of some aspects of the industry (such as distribution)
while selling off rights to others (such as extraction).
Many of these category definitions as well as the placement of
particular presidents require interpolation. First, it is not always clear when
a tax change is dramatic enough to imply a categorical shift in government
9
REVIEW OF INTERNATIONAL POLITICAL ECONOMY
policy. Similarly, it is frequently unclear how to judge compensation packages. To limit the bias here, we tried to judge whether there had been
significant negotiations prior to the nationalization and whether the companies accepted the new terms. Of course the companies may have been
negotiating under duress (i.e. the threat of a forced takeover), but this
should help differentiate the cases where the country takes over an industry and then later offers some compensation.
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THE PURPORTED INDEPENDENT VARIABLE: LEFTISTS,
POPULISTS, AND INSTITUTIONALISTS
Studies of populism have generally come to a clear conclusion about the
negative relation between populism and economic policy.13 In the most
influential study of this phenomenon, economists Dornbusch and Edwards (1991) focused on the macroeconomic “mismanagement” of populist regimes. A first-glance review at recent nationalizations in Bolivia,
Ecuador, or Venezuela might raise similar concerns, with the presidents
dangerously pursuing rhetorical gains while ignoring issues of efficiency
and property rights. Our evidence, however, suggests otherwise. In short,
we find that not only were the policies undertaken in Bolivia, Venezuela,
and Ecuador rather moderate (involving negotiated settlements or court
ordered cancellations rather than outright expropriations), but also that
other historical leftists and populists have not behaved much differently
from centrists or rightists.
To evaluate this hypothesis, we require operationalization of presidential
types (military or elected), ideological positions, and populism. Authoritarianism was traditionally defined by the presence or absence of elections, but recent experiences with illiberal or delegative democrats who
combine elements of authoritarianism with elections, suggest difficulties
in applying that criterion. Populism has always been a contested concept
that embodies some combination of a charismatic style with the leader’s
appeals to lower or multi-class constituencies, urban workers, nationalism, and the avoidance or manipulation of the democratic institutional
framework.14 Definitions of populism in Latin America often conflate a
ruler’s style (personalist or anti-institutionalist) and an ideology (multiclass and redistribution) (e.g. Drake, 1978; Dorbusch and Edwards, 1991).
Weyland (2001), in recognition of the problem, used Venn diagrams with
four interlocking circles to explain the multiple if not conflicting ways that
the term has been applied in a Latin American context. Many of these
defining characteristics, however, are endogenous to policy choice, and
thus the concept is still unusable as an independent variable. The idea of
leftism has similar problems because the term can imply both economic
principles (redistribution) and political views (centralization). Even more
problematic, these issues overlap aspects of populism.
10
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BERRIOS ET AL.: EXPLAINING OIL NATIONALIZATION
In order to deal with some of these issues, our approach is to classify
presidents according to three (relatively) independent and (to an extent)
measurable dimensions as shown in Table 5. We will return to the numbers
in the table shortly, but here focus on the coding system. The first variable,
depicted as the horizontal dimension of the table, is the standard class
divide; is the leader supported by lower or upper classes? Empirically
(and theoretically) the support coalition is tied to the presidents’ policy
preferences (extreme leftists are statists), but especially among politicians
supported by the middle sectors of society there is significant diversity
in the presidents’ attitudes about the degree to which the state should
insert itself into the economy. As a result, we add another dimension
to the model based on the presidents’ implementation of statist versus
neoliberal policies. In examining the statist-neoliberal scale, we tried to
evaluate the presidents’ policies without regard to hydrocarbons policy.
Of course hydrocarbons policy is often a central component of the economic policy, but we found many exceptions. Similarly, it was not always
possible to separate ideology from policy stances, but we attempted to do
so by categorizing the former according to the presidents’ support coalitions at the time they entered office separate from the actual policies they
implemented. “Switchers” (Stokes, 2001) like Fujimori (in his first term),
therefore, combine center-left and neoliberal labels in his first term but
center-right and neoliberal labels in his second. This is justified because
we are trying to understand how a president’s ideology and campaign
promises affect future policy decisions.
In coding these two dimensions, we worked from several sources. We
first consulted Coppedge’s (1998) study of expert surveys. While a useful
starting point, his study provides only a rough measure; consider that the
Peronists are classified as a secular centrist in 1946 but “other” for 1948.
Coppedge’s data also fails to help in classifying the non-elected presidents
and the time series ends in the mid-1990s. Still, the data is fairly comprehensive and provide a consistent way to judge the ideological position
of many of the presidents in our sample. To complement Coppedge’s
work and to separate the presidents’ support coalition from their policy positions, we relied on presidents’ biographies and other specialized
literature.
Next, we operationalize Roberts’ (2007a, 2007b) conception of populism.
Roberts moves beyond the conflicting (and often historically specific) definitions of populism by focusing on leaders’ connections to already established, institutionalized parties, arguing (as do we) that “leftism” and
“populism” are separate categories and that populism “refers to the topdown political mobilization of mass constituencies by personalistic leaders
who challenge established elites (either political or economic) on behalf of
an ill-defined pueblo.” We capture populism by coding whether the president created a personalist electoral machine and consequently lacked close
11
12
6 × 5,7 × 5
4,6,6
2,7,8
4,4,5,7
7
14
7
3,7
7
2
7,7,8,9,9
8
46
6,7
6,6
35
6 × 7,7 × 9,8 1,6 × 5,7 × 10
1,5,5,6 × 4,7
5,5,6 × 4
6,7,7
7,7
1
7,7
Center
1,1,7,7
Centerleft
4,6 × 10,7 × 12,8,8
6,6
49
6,7
7
2,6,6,7,7,7
5,6,6,7
5
6
6,7,7
7×4
Centerright
6,7,7
25
32
8
169
4
1
9
6,7 × 7,8
6,2
41
14
4
1
13
18
4
8
13
7
7×5
6 × 4,7,8
Right
(upper-class
Total
support; no number of
redistribution)
entries
in boxes refer to the nationalization typology listed in Table 4. When there are more than three examples in a box, we list the type of
nationalization followed by an x and the number of occurrences; 7×5 implies five examples of nationalization type seven (leave nationalized).
∗ Numbers
Statist
Military
Dubious elected
Institutional
Non-institutional
Elected
Institutionalist
Non- Institutionalist
Regulatory Capital (Mixed)
Military
Dubious election
Institutional
Non-institutional
Elected
Institutionalist
Non-Institutionalist
Neoliberal
Military
Dubious elected
Institutional
Non-institutional
Elected
Institutionalist
Non- Institutionalist
Total number of entries
Left
(worker
support;
redistribution)
Table 5 Presidential classification scheme and nationalization types∗
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BERRIOS ET AL.: EXPLAINING OIL NATIONALIZATION
ties to existing political parties.15 To this end, we first distinguish those
leaders who were elected from those who were not, and also consider
whether elections were held in dubious circumstances. Then, among the
elected presidents, our concern is whether the leaders worked through the
existing institutional structure or created a new political party or constitutional framework. Our specific coding criteria is whether the president’s
party gained at least 10 per cent of the vote in an election prior to the
president’s campaign; if not, we label the president a non-institutionalist.
Presidents who took power via a coup or rigged elections (as in Mexico
until 1997 or in Argentina 1932–46) fall into the category of dubious institutionalists, recognizing the pro-forma nature of many of these “elected”
regimes that were nonetheless often highly institutionalized. This technique distinguishes, for example, Juan Perón, Getulio Vargas, and Alberto
Fujimori, traditional populists who took power without the aid of longstanding political parties, from Allende who won the Chilean election as
the representative of an established party. Still, some leaders are difficult to
classify, such as Ecuador’s José Marı́a Velasco Ibarra who was elected five
times from a variety of parties. As a result, specialists will undoubtedly
disagree with some of our classifications, but the large number of cases
should give confidence to the trends we have uncovered.
In sum, the three dimensions provide a more precise classification of
presidential types. We replace the vague term “populism” through a consideration of whether the leader is tied to existing parties and institutions.
As such, we can clearly distinguish between Chávez and Morales (elected
non-institutionalists with a lower-class support base) from Allende (institutionalist with a lower-class support base). We can also separate out
those leaders who are often grouped with the populists but gained power
through military intervention (Alfredo Ovando in Bolivia, Juan Velasco Alvarado in Peru, Velasco Ibarra and Guillermo Rodriguez Lara in Ecuador,
or Fujimori who imposed an auto-coup in Peru). The framework is still
complicated, however, because some leaders used the military to gain
power but consolidated that power using elections (or vice versa) and
without much resort to coercion. Further, Perón and others have moved
at different times in their careers with reference to their willingness to use
force (and on which citizens). These coding issues complicate empirical
discussions, but as we show in the next section, the classifications allows
for tests of the relation of presidential types and nationalization policies.
OIL NATIONALIZATION POLICIES
AND LEADERSHIP TYPES
To analyze the relation of institutionalism, ideology, and the policies towards hydrocarbon industries, we now combine our two typologies. If we
find that institutional routes to power and ideological categories do align
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REVIEW OF INTERNATIONAL POLITICAL ECONOMY
with nationalization processes, then we can conclude that a president’s
type is related to policy choice. If not, then economic factors, the international climate, or starting point must provide a better explanation for a
country’s move towards or away from nationalization.
Toward this goal we first categorized every president in Latin America
from the time when countries adopted oil or gas laws according to the criteria suggested in the previous section (only excepting very short-lived
presidencies). We then matched the presidential types with the presidents’ policies towards the industries. Our database, which is available
at our website <http://www.pitt.edu/∼politics/faculty/Morgenstem/
morgenstem personalwebpage.html>, includes 169 presidential terms
and is summarized in Table 5.16 The numbers in the cells refer to the
nationalization types, defined in Table 4. The top left entry, therefore, signifies that four presidents were statist-leftists from the military. Two of
these nationalized their industry without offering compensation (code 1
from Table 4) and two left their industries nationalized (code 7).
The raw data in the table gives a first indication that ideology is only
weakly related to any aspect of nationalization policy. To highlight this null
finding we conducted both bivariate and multivariate tests. First, Table 6
looks at the bivariate relation between the presidents’ left–right position
and their nationalization policies. The nine most aggressive nationalizers
(codes 1 and 2) include four leftists, two from the center-left, and three from
the center or right. As a percentage, then, the leftists have been more likely
to nationalize, but even most of these presidents have acted with prudence,
Table 6 Left, right, and nationalization
Left Ctr-left Cen-ter Ctr-right Right Total
1 Monopoly Nationalization
No Compensation
2 Monopoly Nationalization
With Compensation
3 Majority Share
Nationalization No
Compensation
4 Majority Share
Nationalization With
Compensation
5 Extend Government
Controls (or Taxes)
6 Leave Privatized
7 Leave Nationalized
8 Partial Privatization
9 Full Privatization
Sum
2
2
1
2
5
1
1
1
2
1
1
2
18
18
3
2
46
6
1
14
14
4
1
1
4
2
2
7
13
18
19
24
2
7
15
2
35
49
25
57
81
8
2
169
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BERRIOS ET AL.: EXPLAINING OIL NATIONALIZATION
offering compensation and continued private opportunities rather than
outright expropriation.
Looked at another way, among the 14 leftists, one-half of them came to
office with nationalized industries, and only one of them moved towards
privatization. Although six of the other seven moved the industry towards
nationalization, only two failed to offer compensation. This record, however, does not compare unfavorably with the center-rightists. Of the 49
presidents in that category, 24 did not privatize their public enterprises, 19
left their private industries untouched, and four moved their private companies towards the public realm, though all of these offered compensation.
The strongest objection to this conclusion is that none of those nationalizing without compensation come from the right side of the ideological
scale. There were only five presidents classified as nationalizing without
compensating the industrial owners. Two of these were leftists (Bolivia’s
Ovando Candia [1969–70] and Toro Ruilova [1936–37]), two center-leftists
(Brazil’s Vargas [1951–54] and Peru’s Velasco Alvardo [1968–75]), and one
centrist (Argentina’s Yrigoyen [1928–30]). At the other extreme, however,
most rightists and center-rightists with a neoliberal bent failed to privatize.
There is, therefore, a weak relationship between leftists and nationalization, but little expectation that putting rightists into power will result in
the return of industries to private hands.
In sum, while there is some evidence that the leftists nationalize, the
starkest conclusion is that presidents of all stripes, including those of the
center and right, have not moved to privatize state hydrocarbon industries.
To confirm this finding in a multivariate setting, we used a series of
ordered-logit regressions, conditional on the initial arrangement of the
industry (Table 7). First, for presidents facing privatized firms, we can
regress the nationalization policy (scaled 1–6) on the president’s IDEOLOGY (scaled 1–5; left to right), whether the president was ELECTED,
Table 7 Ordered logit regression; dependent variable; nationalization policies
(codes 1–6)
All
Cases
Neoliberal
Statist
Elected
Institutional
Non-Institutional
Ideology (L-R)
N
Pseudo R2
∗p
0.04
−0.77
−.61
0.25
Excluding
Far Left
Excluding
Far Right
All
Cases
1.01
0.40
−1.39
0.30
1.00
−1.92∗∗
−0.71∗
0.92
0.00
−0.84∗∗
−0.84
−.05
70
0.02
0.04
69
0.16
0.65∗∗
77
0.11
< .1; ∗∗ p < .05.
15
−0.74
0.62∗∗
77
0.11
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REVIEW OF INTERNATIONAL POLITICAL ECONOMY
dubiously elected, or took power through a coup (scaled -1, 0, 1) and a
series of dummy variables indicating (a) whether the president’s general
policies were STATIST, NEOLIBERAL, or a mix and (b) whether the president was the head of an INSTITUTIONAL party or not. In our descriptive
table our variable distinguishes institutionalists, non-institutionalists, and
military leaders. In the regression, however, we could not include a second
dummy due to the very high correlation between ELECTED and the second dummy. A final regression, therefore, uses a NON-INSTITUTIONAL
dummy in place of the INSTITUTIONAL variable.
Supportive of our hypothesis, the first regression shows that neither
a leader’s electoral status, whether or not they lead an institutionalized
party (in contrast to a new movement or the military), nor their economic
policy has a statistically significant impact on their nationalization policy.
The last regression confirms the finding, though it suggests the statists are
less likely to nationalize. Contrary to the bivariate analysis, the ideology
variable does reach statistical significance. The result, however, is tenuous,
since it is predicated on the few outliers on either side of the spectrum.
The second and third regressions show that if we drop the seven leftists or
eight rightists, ideology is no longer related to nationalization policy. The
finding that outliers drive the regression implies a need to investigate them
in more detail. As we noted above, there were only a handful of leftists
(seven who entered when the gas industry was in private hands), and
although all of them did move towards nationalization, five compensated
the companies. On the right, seven presidents left the industry in private
hands and one partially nationalized the industry (Urdaneta Arbeláez,
Colombia 1951–53).
The poor relation of ideology and nationalization is further evident
if we consider cases where presidents enter facing already-nationalized
industries. The regression (not shown) indicates that presidents on the
right are even less likely to privatize industries than are leftist presidents.
Stated in reverse, presidents on the right tend towards the “leave nationalized” side of the scale. These relations hold if we drop the far left from
the regressions (the ordered logit does not converge if we drop the far
right).
Alternative explanations
If ideological leanings fail to fully explain nationalization policies, the
alternative hypothesis is that economic pressures and constraints drive
presidents. When presidents consider nationalizing petroleum or other
large industries, they must address four central questions: First, how will
a country finance the takeover of the industry? Second, after the takeover,
will the country have enough access to capital to finance continued
investment in the industry? Third, will the United States or other affected
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BERRIOS ET AL.: EXPLAINING OIL NATIONALIZATION
countries impose an economic squeeze or other sanctions that would affect
access to either finance or technology? Fourth, how well will a nationalized
firm compete with private enterprises?
Nationalization projects are very costly, and Latin American countries
have generally lacked capital necessary to purchase foreign-owned assets.
When countries negotiate with firms rather than expropriate assets, the
country must finance the purchase through a combination of international
loans if available, domestic budget allocations, domestic bonds, and levies
on future income from the nationalized industries.17 Where funds are not
easily available, nationalizations have sometimes been slowed or stopped
(e.g. Bolivia 2006).
Investment capital is a second concern. Countries may not be able to
count on accessing international financial markets; private investors would
likely be wary about putting their money in an industry where there is the
potential for further nationalization.18
Third, how will the United States or other countries respond to the
nationalization? In some cases, the United States has not responded with
more than offers to negotiate settlements, but in other cases the responses
have included military intervention, economic sanctions, rhetorical threats,
and the suspension of aid (Blasier, 1976).
A fourth consideration is how well the state enterprise can compete with
private firms. Efficiency, investment, costs, and U.S. responses will be involved in this decision. When countries lack sufficient investment funds to
develop a full industry or are unwilling to make risky investments in particular areas, a potential strategy is to allow private investment by forming
joint ventures. Regarding the oil industry, this might imply allowing private firms to become involved in explorations, refining, or the distribution
but not the extraction of the resource. By allowing public–private partnerships, such a scheme can facilitate technology transfers and the marketing
end of the business.
These concerns explain why some presidents who may be predisposed
to nationalization do not move far in that direction. An additional hypothesis, then, is that the leftists and/or non-institutionalists nationalize
industries only when the international environment is more supportive
of statist policies. There was a wave of nationalizations in the 1960s and
1970s, followed by some retrogression in the 1980s, and then a return of
nationalizations in the last few years. These waves, however, have not
swept in all countries. Table 8 tests whether the relation between ideology
and institutionalism with nationalization is time bound.
The figures in the table divide the presidents by their left/right ideology
and whether they were institutionalists or not. For example, there were six
institutionalist and five non-institutional presidents from the center and
right who left their industries private in the 1990s and 2000s, but 14 who
left them nationalized.
17
18
1990–2000s
1960–70s
1980s
0/1
1/0
1/2
9/3
7/0
4/0
1/0
Starting with Nationalized Industry
1/0
1/0
4/1
4/0
1/0
2/0
0/1
0/1
Starting with Privatized Industry
0/1
1980s
12/3
6/1
1/1
2/0
3/1
1990–2000s
Center-left
first number is the quantity of institutionalists and the second is the number of non-institutionalists.
2/3
Totals
∗ The
1/2
1/0
0/1
Leave Nationalized
Partial Privatization
Full Privatization
Monopoly Nationalization, No
Compensation
Monopoly Nationalization, With
Compensation
Majority Share Nationalization,
No Compensation
Majority Share Nationalization,
With Compensation
Extend Government Controls
(or Taxes)
Leave Privatized
1960–70s
Left
Table 8 Timing and nationalization/privatization policies∗
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22/15
13/8
0/2
7/4
0/1
2/0
1960–70s
13/5
11/3
2/2
1980s
22/6
14/1
2/0
6/5
1990–2000s
Center and Right
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BERRIOS ET AL.: EXPLAINING OIL NATIONALIZATION
While the table does reflect the waves, the most common policy is the
status quo in all periods; regardless of the ideological position of their
presidents, countries with privatized industries leave them privatized,
and those with nationalized industries leave them nationalized,. Since the
1990s, Latin Americans have elected three leftists, 15 from the center-left,
and 28 presidents from the center or the right. Of these 46 presidents, 15
inherited a private industry and did little to move towards nationalization.
Another 23 inherited a nationalized industry and stood pat with the extant
policy. Only eight tried to change the extant policy; two moved towards
some nationalization and six moved towards privatization. These patterns
are not dissimilar from those in the 1960s–70s.
What does seem to separate the non-institutional left from other presidents is the process by which they have moved against foreign companies.
The two institutional centrist presidents that moved their countries to nationalize their industries – Carlos Andrés Peréz in Venezuela (1976) and
Eduardo Frei in Chile (in regards to copper in 1968) – used less contentious
methods than have recent presidents in Venezuela and Bolivia. Sigmund,
for example, describes the Venezuelan nationalization of 1976 as “peaceful
and relatively free of conflict” (p. 226) and the Chilean policy under Frei
was termed “negotiated nationalization” (Girvan, 1972). There is also the
case of a center-right non-institutionalist, Velasco Ibarra, who moved so
cautiously towards nationalizing the Ecuadoran industry in 1972 that the
military overthrew him in part to speed the process (Martz, 1987). This
is eerily similar to the case of Belaunde in Peru, who was deposed in a
military coup by Velasco Alvarado in order to nationalize the U.S.-owned
International Petroleum Company.
While nationalization was a theme of the 1960s and 1970s, the 1980s
brought privatization to the Americas. After the so-called “lost decade,”
however, many countries have reevaluated the role of the state in the
economy, and three countries have made sharp moves to re-nationalize oil
industries: Bolivia, Venezuela, and Ecuador. It may be no coincidence that
two of the countries have been led by non-institutionalists with agendas
focused on the poor. But, there have been other non-institutionalists in this
period, and they have either privatized industry or maintained a privatized status quo. Further, one institutionalist–Palacios in Ecuador–further
nationalized his country’s industry. None of the remaining institutionalist presidents have nationalized their industries, though two of them
have maintained their previously nationalized industries under state control. Argentina is a partial exception, in that their president Nestor Kirchner created a new national corporation, ENARSA, but this was a vehicle
to control off-shore concessions rather than already established operations. YPF, which was sold off under Carlos Menem beginning in 1991,
is now a subsidiary of the Spanish firm Repsol and one of the largest energy companies in the world. Further, though Kirchner is a member of
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the long-running Justicialista (Peronist) party, that party has broken into
fractions.
Given that neither presidential types nor time periods provides a thorough answer to why some presidents move toward nationalization and
others do not, what might better explain this phenomenon? One possible
explanation, which we cannot fully test here, regards the “starting point.”
Both Chávez and Lula entered office overseeing state oil companies that
their predecessors had partly privatized. These two leaders perhaps reacted differently from one another because they faced very different types
of situations. In 1983, PDVSA executives feared that politicians might use
company profits to subsidize government expenditures, and they thus
“internationalized” the company by off-shoring profits through transfer
pricing with their American affiliates. Then, in 1989, company executives
won further concessions, which lowered taxes and royalties on the profits
that could not be internationalized. PDVSA also shifted types of production from high yield to low yield fields (allowing private investors with
guaranteed lower tax rates to work the higher yield fields) to further limit
the federal government’s ability to tax. The result was that the federal
government’s take on rents, royalties, and taxes fell from 71 cents on the
dollar in 1981 to 39 cents on the dollar in 2000 (Mommer, 2003; Parker,
2007).
By contrast, when Lula entered office in 2003 he enjoyed high rates of return from PETROBRAS. The 1997 “privatization” left the government with
55.7 per cent of the company (including voting rights), and the company
retained a near monopoly of production (Brandão, 1998). The government
also charges a 10 per cent tax on royalties and received about $2 billion
from a special tax on exploitation of large oil fields. The government, however, has considered substantially raising these rates (Alexander’s Gas and
Oil Connections, 2008).
In sum, economics rather than ideology seem to explain these presidents’
reactions. Brazil’s president Lula has done little to change their policy
because his revenue stream has been very good. Chavez, by contrast,
faced a situation where he was not receiving significant benefits from
the oil industry, and thus changed the law in the government’s favor. In
addition to the nationalizations we have discussed, he pushed a change
in 2001 that required the PDVSA to own at least a 60 per cent share of
any joint venture. This is a similar percentage to that stipulated in the
Brazilian constitution with regards to PETROBRAS and slightly less than
the percentage that the Venezuelan government had captured prior to the
1983 internationalization. The 2001 policy thus moves Venezuela’s revenue
and control functions close to that enjoyed by Lula. Chavez’s problem,
however, was that he needed to confront the oil companies to gain that
more advantageous position, while Lula was able to enjoy the fruits of
earlier battles.
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CONCLUSION: TWO LEFTS?
Exploitation – of oil resources and by foreign firms – has been a continuous
concern of the Latin American governments. Our concern here has been
whether the conflict with private and generally foreign investors has been
conditioned on presidential type; in short, are what others have called
“leftist populists” predisposed to expropriate hydrocarbon resources? Our
most basic finding has been negative; we have shown that neither ideology
nor ties to existing institutions does a good job of explaining the type or
extent of the nationalization a country may carry out.
While we have focused this study on petroleum policies, an important
goal has been to reflect on the debates that divide current leftists into
“good” and “bad” camps. Our analysis would suggest that this debate
should focus less on ideology and rhetoric and more on the policy and
economic situation that has driven presidential decisions. That is, while
we cannot directly test the suggested counterfactual, it seems plausible
that more “moderate” leaders such as Brazil’s Lula and Chile’s Michelle
Bachelet would have moved hydrocarbons or mineral policies in ways
similar to those implemented by Venezuela’s Chavez or Bolivia’s Morales
if all had faced similar situations. The “good left” regimes in Brazil and
Chile came to power following privatization trends in their countries, but
neither Pinochet in Chile nor Cardoso in Brazil fully privatized their key
natural resource industries. The result has been large revenues for the
countries’ coffers; Codelco, for example, earned over $9 billion for Chile in
2006.19 In turn, neither Lula nor Bachelet had any reason to re-nationalize
their industries, earning them the “good left” label.
At one level, Bolivia and Venezuela are very different, in that their
“radical-populist” leaders carried out highly publicized and perhaps
destabilizing nationalization campaigns. These presidents, however, faced
different circumstances and the resulting policies have brought these countries into situations that are now comparable to those of Chile and Brazil.
The leaders of Bolivia and Venezuela claimed that their states were receiving very little benefit from their country’s resources. Chávez built support
by arguing about the disconnect between the country’s oil wealth and
high levels of poverty. Bolivians attacked the very low tax rates paid by
the multinational gas companies (just 18 per cent royalties). These issues
led to Morales’s successful campaign that was largely focused on the issue
of nationalization. Although Morales failed to nationalize the majority of
foreign hydrocarbon companies, the increase in taxes and royalties have
resulted in an almost ten-fold increase in government revenues, from just
$170 million in 2002 to 1.5 billion in 2007.20
In Venezuela, Chávez’s strident anti-Americanism has not been fully reflected in his petroleum policies either. He made three important changes.
First, as noted earlier he fought striking workers to gain control over
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PDVSA. Second he increased taxes (royalties increased from just 1 per cent
to 16.6 per cent in 2004 and then, in 2006, to 33 per cent for most firms,
but from 34 to 50 per cent for production of some types of crude), and
third he forced the major private corporations to sell the state a majority
share of their stock and convert their “operating service agreements” to
joint ventures.21 Two of the private companies refused to accept the terms,
and thus, pending arbitration, Chávez has taken control of them. Still,
Chávez has successfully wooed foreign investors, new deals have been
signed, and oil and other goods continue to flow. In these two countries,
then, the rhetoric has been strong and the policy changes have been significant, but they have not been as radical as campaigns or critics would
suggest.
In sum, the two types of leftists do not divide clearly in terms of the
preferred role of the state, but rather the starting point from which the
leaders have had to evaluate their industries. Nationalization is not a
significant (or attractive) possibility for Brazil and Chile because their extractive industries are already partially controlled by the government and
provide significant funds to the government. The governments of Bolivia,
Venezuela, and Ecuador, by contrast, had limited control of their industries and had seen few benefits from them. Recognition of this situation
has given rise to fiery rhetoric, but economic realities have led these leaders to choose policies not too distinct from those already in place where
their “good left” colleagues govern. This is not to say that politics are fully
subsumed by economics. Economic conditions, however, do condition political responses.
NOTES
1 Bolivia did take control, with compensation, of two small oil refineries owned
by Petrobras in addition to renegotiating operating contracts with some foreign
investors. See Business Latin America (2007: 5).
2 Others have also adopted the “two lefts” argument. See, for example, Shifter
(2006) and Mohr (2007: 17–19).
3 See Kobrin (1980, 1984) for an analysis of all types of nationalizations.
4 See Grosse (1989) for a complete list of nationalized industries across Latin
America.
5 Kobrin (1984) for example focuses on “expropriation,” which he defines as
forced takeover of a single firm or the entire industry. Even this more specific
focus, however, is problematic since it fails to account for the difference between taking of a single firm versus a full industry, whether the country took
majority control or 100 per cent of a firm or industry, and whether there was a
mutually agreeable compensation agreement or not.
6 Taxes on profits imply different symbolic control from royalties on resources,
and they can change incentive systems, too. In this paper, however, we treat
these changes together, since they still leave management control in private
hands.
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BERRIOS ET AL.: EXPLAINING OIL NATIONALIZATION
7 We have also placed Uruguay in this box, but ANCAP (Administración Nacional de Combustibles, Alcohol y Portland) was given a monopoly on importation, production, and distribution of gas and oil (but not extraction); it lacked
the refining capacity to meet this mandate until 1937.
8 The 1930 reform went further, giving the state full control of the industry.
Parts of that reform were repealed by the military that ousted Yrigoyen in
1930.
9 The 2006 “nationalization” of Occidental was in actuality a court ordered cancellation of a single agreement for exploration coupled with a newly established
windfall tax on oil and gas profits. (Business Latin America, 2009, 1).
10 Though Chile’s 1968 copper nationalization process would fit here, it would
better fit in the monopoly box after 1970.
11 There is some dispute about compensation for the nationalization of US firms
in Peru. In 1974 Peru and the US government agreed to an overall compensation of $76 million, but some sources indicate that some of the money ($23
million) likely went to the oil company. See Sigmund (1980) and Schwalb
Lopez-Aldama (1979).
12 Even under Allende, however, a constitutional amendment was passed to
provide some compensation for nationalized firms. See Sigumnd (1980).
13 For an exception, see Kobrin (1984) who states that ideology “affect[s] the circumstances of the takeover – such as timing, negotiating, and negotiating posture – [rather] than . . . whether the expropriation takes place or not” (p. 337). The goal of his paper, however,
was more to document waves of nationalization rather than test this
hypothesis.
14 See Schamis (2006) for a review of populism, leftism, and policy stances in
Latin America.
15 Roberts also notes that personalistic leaders who subordinate themselves to the
will of autonomous social movements, such as Evo Morales, are not populists.
Our operationalization of populism, however, focuses specifically on political
parties.
16 A term is defined as a continuous term in office. Reelection does not add another
term, but in a few cases when a president has either changed his ideology
between elections or converted himself between institutional types, we have
included more than one observation for that president. Those with more than
one observation are: Alessandri (Chile 2), Banzer (Bolivia 2), Barrientos Ortuno
(Bolivia 2), Belaunde (Peru 2), Betancourt (Venezuela 2), Caldera (Venezuela
2), Fujimori (Peru 2), Lleras Camargo (Colombia 2), Paz Estenssoro (Bolivia 2),
Peron (Argentina 2), Perez (Venezuela 2), Siles Suazo (Bolivia 2), Sanchez de
Losada (Bolivia 2), Velasco Ibarra (Ecuador 4). The Argentine generals from
1966–73 and 1976–83 are entered once each.
17 International loans are not usually forthcoming to support nationalizations,
but Mexico, for example, did receive credit guarantees in the amount of its
payouts to the US companies (Sigmund, 1980).
18 In some cases (e.g. Peru, Ecuador, and Chile) the state has successfully maintained investment flows by encouraging private firms to work in particular
sectors of an industry.
19 Statistics from Bloomberg.com “Chile Copper Windfall Makes Bachelet Unable to Placate Laborers,” <http://www.bloomberg.com/apps/news?pid=
20601086&sid=aKuaKcxM9gHc&refer=news> (accessed on 21 July 2010).
20 Cited at http://www.petroleumworld.com/SF07112501.htm, but similar figures given elsewhere (accessed on 21 July 2010).
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REVIEW OF INTERNATIONAL POLITICAL ECONOMY
21 Information about the tax increase comes from two BBC reports, “Venezuela
raises oil drilling tax,” by Iain Bruce, October, 11, 2004, http://news.bbc.co.uk/
2/hi/americas/3732224.stm, and “Chavez doubles tax for oil firms,” May 8,
2006, http://news.bbc.co.uk/1/hi/world/americas/4750473.stm. The latter
article also reports that Chavez raised the tax on production of heavy crude
from 34 to 50 percent (both accessed on 21 July 2010).
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NOTES ON CONTRIBUTORS
Rubén Berrı́os is assistant professor of economics at Lock Haven University. He is
the author of Contracting for Development (Praeger, 2000) and has published more
than two dozen articles in refereed journals and chapters in books. His main interest
is in international development and comparative economic systems. His current
research focuses on distinguishing between extractive economies and productive
ones.
Andrae Marak is the interim director of the honors program and an associate
professor in the Department of History and Political Science at California University of PA, and is an associate of the Center for Latin American Studies at
the University of Pittsburgh. He has published articles in Paedagogica Historica,
the New Mexico Historical Review, the Journal of the West, and the Journal of the Southwest on the centralization of education and the creation of the corporatist state in
post-revolutionary Mexico, borderlands schooling, the gendering of public school
teachers, the Tohono O’odham, and education in the Sierra Tarahumara, and has
presented on Mexican electoral politics and the impact of NAFTA on U.S. elections.
His book, From Many One: Indians, Peasants, Borders, and Education in Callista Mexico, 1924–1935 was published in 2009 by the University of Calgary Press. He has
two books currently under contract with the University of Arizona Press, one on
transnational contraband, crime, and vice and the other on the Tohono O’odham
Indians.
Scott Morgenstern is an associate professor of political science at the University
of Pittsburgh. Among Morgenstern’s publications are Patterns of Legislative Politics:
Roll Call Voting in the United States and Latin America’s Southern Cone (Cambridge
University Press, 2004), Legislative Politics in Latin America, (coeditor and contributor; Cambridge University Press, 2002), and Pathways to Power (coeditor and contributor, Pennsylvania State University Press, 2008). His articles and book chapters
have appeared in the Journal of Politics, Comparative Political Studies; Comparative
Politics, Party Politics, Electoral Studies, and other journals.
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