1941: Venezuela

The liberal administration of President Eleazar López Contreras came to an end on May 5, when General Isaías Medina Angarita, Minister of War and Navy in the López Cabinet, was inaugurated, following his indirect election on April 28 by a very comfortable majority. The new President promised, in his inaugural, to carry on the 'Bolivarian' ideals and democratic policies of his predecessor, who had his term of office constitutionally reduced from seven to five years, a move unique in Latin America and for which Venezuelan history certainly provided no precedent, since Sr. López Contreras succeeded the 27-year dictator, Juan Vicente Gómez. A further new departure in Venezuelan politics is the organization of a legally incorporated 'opposition' party, called Acción Democrática, which held its first public meeting in September. It is headed by the well-known novelist and educator, Rómulo Gallegos, who was the unsuccessful presidential candidate, and includes the leftist Rómulo Betancourt, who returned from exile in February. The new administration has indicated no opposition to the new party, thus following the lead of López Contreras, who tried to encourage the development of free political parties.

The foreign policy of Venezuela has been anti-German and Nazi influence in the country has been relatively weak. This may be explained, in part, by the nation's long experience with dictatorship; in part by the oil monopoly which the Anglo-Dutch-American petroleum interests enjoy. The rupture of diplomatic relations with the Axis powers, following the opening of hostilities in the Pacific, puts Venezuela, along with Colombia, on a different footing from any of the other South American nations regarding the second World War. Venezuela also has taken special measures to safeguard vital North American properties, such as oil wells.

A century-old frontier dispute with Colombia was settled in April by an agreement delimiting the Rio de Oro and Oira-Arauca regions and providing for free navigation on rivers common to both countries, principally the Orinoco. Negotiation of a trade treaty is contemplated.

A most-favored-nation agreement was concluded in the spring with Canada, which has increased its petroleum imports from Venezuela. This rise in Canadian oil purchases is one of the chief reasons for the rapid recovery Venezuelan petroleum production showed in 1941, indicated by the 10 per cent gain in the first seven months of the year over the corresponding period of 1940, and a rate of production about equal to that for the peak year, 1939. Not only did Canada and the United States increase their demand for Venezuelan oil but Great Britain, confronted with the difficulties of transportation from the Middle East, was forced to shift its purchases from the sterling area to the Western Hemisphere. A substantial improvement in the foreign exchange position and a more satisfactory fiscal condition are the direct results of this revival, since over 90 per cent of the country's foreign exchange income and about 35 per cent of its revenues come from petroleum. It has not been necessary, therefore, to draw on the $10,000,000 credit made available by the National City Bank of New York to ease the exchange situation. In order to strengthen the national economy, the Government this year borrowed $3,600,000 from the United States. Until then Venezuela had the distinction of being without an external debt.

Venezuela has the record of being the world's greatest oil exporter as well as standing third as petroleum producer. The country depends so heavily and so unsoundly on oil, however, that it must import a high percentage of its food. This has strengthened efforts to revive agriculture and cattle-raising. Better organization of farming and marketing is a prime necessity. See also PAN-AMERICAN AFFAIRS.