becoming a one-party governmental system, the unions and business community joined together to call a general strike in order to try to force Chávez into a referendum on his governance.
Much of the country shut down. PDVSA just stopped working. Over the next few weeks, the country’s oil output plummeted from 3.1 million barrels a day to around 200,000 barrels a day—perhaps even less. Venezuela was forced to import gasoline on an emergency basis. The loss of almost three million barrels a day shifted the world market from surplus to shortage. Oil prices, which had been declining, started to rise sharply again and soon were higher than any prices seen since the Gulf crisis in 1990.
In Washington, the disruption ignited a sharp debate within the U.S. government as to whether to release oil stored in the U.S. Strategic Petroleum Reserve to compensate for the oil lost from one of America’s biggest suppliers. The Department of Energy recommended use of the SPR. But the final decision was not to do so. The oil in the strategic reserve needed to be retained, it was said, for the possibility of a much greater disruption that could occur somewhere else—in the Middle East.
Meanwhile in Caracas, Chávez would not budge: as the weeks went on, the general strike eroded; people drifted back to work and after sixty-three days, the strike ended altogether. By mid-February 2003, PDVSA was back up to about half its prestrike level. In the aftermath of the shutdown, Chávez was now even more intent on eliminating any political opposition to his march toward his “socialism for the twenty-first century.” He was determined to end whatever independence PDVSA still had left. About twenty thousand workers—almost half the workforce—were summarily fired and replaced with less-experienced workers; from then on, the company would be operated not as a state-owned company, but as an arm of the state. The vast amounts of money that the company generated would become inseparable from the state.
The crisis of production was over. But due to the haphazard way in which production was shut down, and the inexperience of many new managers brought on after Chávez’s purge, Venezuela would not regain its prestrike levels of output, let alone approach what had been its ambitious expansion goals. Still by mid-April 2003, enough oil was being produced and refined that Venezuela could once again start exporting petroleum to its customers. But by then supply was being disrupted elsewhere on the world market.
NIGERIA: “YOU’RE A PETRO-STATE”
Nigeria, the eighth-largest exporter in OPEC and one of the major sources of U.S. petroleum imports, certainly has the attributes of a petro-state. Oil and natural gas account for 40 percent of GDP.
As finance minister from 2003 to 2006, Ngozi Okonjo-Iweala sought to set the budget based on a lower oil price assumption, impose fiscal discipline, and build up the government’s financial reserves. All that made her highly unpopular—and a political liability. “The pressures were enormous, which is part of the reason I’m not there today,” she later recalled. “Politicians were not happy with me. I was quite controversial for maintaining discipline. I’m sure that on the day I resigned there were more than a few high-fives.”6
ETHNIC CONFLICT
But oil is only part of the picture. Nigeria is a dominant force in Africa. With 155 million people, it is the most populous country on the continent; one out of every seven Africans is Nigerian. But many of them do not think of themselves as Nigerian but rather define themselves by language, religion, and tribal group.
Nigeria is a country of 250 ethnic groups, split among an Islamic north and a Christian south, with further divisions between east and west in the southern part. It was defined as a unit by the British colonial administration, but is a nation tied together with weak institutions and a weak sense of national unity, and divided by strong religious and ethnic identities. Nigeria became independent in 1960, four years after the discovery of oil there. Its history has thereafter been defined by violent conflict over the distribution of power and resources and over the state itself. In 1967 the southeastern part tried to secede and become a separate nation of Biafra. After three years of civil war, and the loss of more than three million lives, the north won, and the country stayed whole.
Nigeria has gone through five constitutions and seven military coups. The country’s experience demonstrates the Dutch disease in many ways. The once-vibrant agricultural-export sector has collapsed, and the country is a net importer