Argentina & Venezuela’s Big Lesson For US Empire

The recent trajectory of Argentina and Venezuela provides a very clear lesson to US empire. It’s as close as you can get to a natural experiment with countries. 20 years ago they were both stridently left wing members of the “Pink Wave”. Now things are very different. The lessons are clear. But is Washington, DC aware enough to see them? And does it want to? These are the questions we’re diving into with this produced video. Along the way we attempt to get beyond the cliches and explain all of the history of these two very different countries.

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Video Transcript after the jump…

So have you noticed that the past 20 years of Argentina and Venezuela’s history provide a crucial lesson for Washington DC? They are two very different countries, but about 20 years ago they found themselves in a similar place, both turning strongly to the left.

Washington DC reacted to Venezuela’s turn with Maximum pressure. Threats, sanctions, and even an attempted coup or two. With Argentina we just sort of sat back and ignored their leftist turn. The results are clear.

20 years of strenuous effort and humiliation later, Washington DC is still negotiating with a socialist dictator in Venezuela. After we let Argentina make its own choices, the country has just elected a president who is so pro-US it’s almost scary. This reveals a basic lesson of US empire. When we let countries make their own choices, they eventually tend to do what we want.

Any comparison of Venezuela and Argentina has to acknowledge that they are two very different places. Most importantly, Argentina is much further away from the United States. This is true both geographically and economically. Argentina’s primary exports are agricultural, and they go all over the world. Venezuela is all about petroleum, and the United States has traditionally been the main market for Venezuelan oil.

So the biggest geopolitical event of the post world war II era hit the two countries very differently. The 1973 oil crisis worked out alright for petroleum exporting Venezuela, and nightmarishly badly for Argentina.

Argentina is a country that has never recovered from the first era of globalization. They really had it figured out under the British world system that ended with World War I. From the mid 1800s to the 1910s, Argentina went from a backwater with under a million people, to being one of Europe’s biggest breadbaskets. Argentina became one of the richest countries on the planet. Millions of European migrants and freeish Trade under British hegemony gave Argentina a golden age of prosperity and orderly government that lasted from 1870 or so all the way up until the Great Depression in 1930. Things have been a mess more or less ever since. The world economy has continued to have peaks and valleys, but it has never needed Argentina’s agricultural products as badly as it did before the world wars.

Argentina’s 20th century history, and arguably the first decades of the 21st have been dominated by one political figure, Juan Peron, and the idiosyncratic political machine that he created in the 1940s and 1950s. Peronism seemed to work for a few decades there, distributing the diminishing returns of Argentina’s agricultural bounty fairly well. Argentina continued to fall behind, but inflation and budget deficits were more or less held in check. Then came the 1973 oil crisis, a disaster that hit a lot of the world almost as hard as the great depression.

In the period after world war II, oil prices were low and stable, inflation was manageable, exchange rates were fixed. Interest rates weren’t low by today’s standards, but they were predictable, so most countries took on a lot of debt. The 1973 oil crisis broke all of this.

All countries had become reliant on cheap oil that was now at least four times more expensive. This created massive inflation everywhere, which of course hit less economically diversified countries like Argentina harder. The large piles of debt most countries had accumulated under the easier financial conditions of the 50s and 60s were now much more expensive to refinance, just as foreign money became more important for economic stability.

Argentina spiraled into chaos and then horror over the course of the 1970s. Juan Peron himself came back to power, then promptly died. His wife governed for a few years thereafter. She failed to solve anything and gave more and more power to a viciously violent military until the soldiers eventually took over entirely. The only solution the military dictatorship had was mass murder, a dirty war that killed as many as 30,000 Argentinians between 1974 and 1983.

It’s worth emphasizing how nasty this period of Argentine history was, and how heavily the United States sponsored it. The dictatorship was killing communists, and we liked that. A deep and very justified resentment of the United States is a key part of Argentinian politics, which makes their recent choice of a massively pro-US president pretty shocking.

Meanwhile, Venezuela was one of the world’s few developing countries that benefited from 1973. Enemies of Hugo Chavez overemphasize the peace and prosperity of Venezuela before 1998, but by Venezuelan standards it was pretty impressive. From independence under Simon Bolivar down to the late 1950s, Venezuela had never strung together more than a few years of stable, non dictatorial government. In 1958 however, three of the country’s political parties made a pact to work towards democratic consolidation. And thanks in large part to skyrocketing oil revenues, the pact held for four decades.

Again, we shouldn’t romanticize Venezuela’s 1958-1998 period. Inequality skyrocketed, poverty persisted, and there were multiple guerilla insurgencies and financial crises. But by the standards of Venezuelan history it was a pretty miraculous forty years.


Argentina’s military had failed to solve any of Argentina’s economic problems. Their policy of mass murder was also not popular. So they tried to solve their problems by starting a war with the UK over the Falkland Islands. In what is probably her greatest contribution to humanity, Margaret Thatcher beat Argentina’s dictatorship soundly, prompting their fall from power. Raul Alfonsin, a left leaning politician was elected president in 1983. Over six years in power he helped Argentine politics and society recover from the horrors of the military junta. Unfortunately he failed to solve any of Argentina’s steadily mounting economic problems.

In the late 1970 and early 1980s, the United States, the world hegemon, finally got its act together. It decided to solve inflation by massively jacking up interest rates. Most agree that this did work, but in the process it made things much more difficult for countries like Argentina, that now had to pay even more money to roll over its debts. And post oil crisis US policy managed to hurt Venezuela as well. The developed world’s massive drive for fuel efficiency, and to develop new fossil fuel sources like the North Sea, managed to crash oil prices in the 1980s. The prices wouldn’t fully recover until the China shock in the first decade of this century.

Venezuela and Mexico are both big oil producers, so they had decent decades in the 1970s while all their neighbors suffered. Unfortunately Venezuela and Mexico also took on a ton of debt in the 70s on the incorrect assumption that oil prices would be high forever. The 1980s are seen as a lost economic decade for pretty much everyone in Latin America, thanks to debt crises brought on by interest rates set by the United States.

Venezuela began to fall into the same sorts of spiraling debt and financial crises that faced Argentina. Oil revenue kept things from being as severe, but in some ways this was worse in Venezuela. The country had never really been as broadly prosperous as Argentina had once been. Venezuelans knew their country had lucked out during the 1970s, but hadn’t seen many benefits before being placed on the same austerity merry go round that the non Petro-state developing world had to deal with. This led to a great deal of resentment of Venezuelan elites, exemplified by the 1989 Carazco riots, which saw Venezuelan security forces kill hundreds, possibly thousands of their own citizens.


Strangely, 20 years after very different 1970s experiences, Argentina and Venezuela found themselves in a similar spot in the 1990s. The United States had just won the cold war, history was over, and the world was out of alternatives. So both countries looked to go-go US capitalism for their answers.

Argentina’s Carlos Menem was a Peronist, but he was also one of Latin America’s most prominent standard bearers for the Washington Consensus. He was all about privatization, a currency pegged to the dollar, neo liberalism, and rolling out the red carpet for big business. In Venezuela the ancient Rafael Caldera was trotted out to attempt to make similar Washington Consensus policies palatable to a Venezuelan political scene that was already seeing renewed coup attempts. Both men failed pretty miserably. Menem’s financial management in Argentina led to unsustainable debt levels and default in 2001. Caldera failed to deal with inflation, low oil prices and a related banking crisis, but he did at least manage to keep the country together enough to lose power democratically.

You can’t understand the two countries turn towards anti-US leftism in the 2000s, without seeing how pro-US their policies were in the 1990s. Both countries were led by men who promised salvation through business magic and cozying up to the hegemon. Both men failed pretty spectacularly.

2000s The Pink Wave

Venezuela turned left first. By 1998 oil prices were in the toilet, after failing to impress for most of two decades. According to the New York Times, 80% of Venezuelans were living in poverty, and 40% were malnourished. In a situation like that it’s not particularly surprising that Hugo Chavez was able to win the December 1998 election with a promise to overturn the quasi-democratic oligarchy that had stolen Venezuela’s oil bounty.

Chavez’s victory in Venezuela was a revolution at the ballot box, but it was calm and orderly compared to what happened in Argentina. The pro-business policies of the Menem government led to complete disaster. US and IMF recommendations led to an economic period so bad that it’s known as the Argentine Great depression of 1998-2002. December 2001 saw food riots in Argentine cities, limits on the amount of money individuals could take out of their bank account, and a full-on debt default. December and January 2001 saw Argentina cycle through five presidents, mostly selected by the legislature.

Argentina finally began to emerge from the crisis with a massive devaluation of the currency. In 2003, Carlos Menem, the architect of the disaster, ran for the presidency again but pulled out when it was clear he would lose. Nestor Kirchner, confusingly representing a different wing of the same Peronist party, won the election and took the country in a stridently left wing direction. Kirchner and then his wife held power for the next 12 years.

It’s worth considering how many more reasons Argentina had to be angry at the US than Venezuela did. The horrific US-sponsored military regime of the 1970s had murdered thousands. Argentina’s strict adherence to US economic policies in the 1990s had led to complete catastrophe. Venezuela, by contrast, mostly knew the United States as the place where the oil money came from, and rightly blamed local politicians for mismanagement rather than US policies. At the beginning in 1998, Venezuelan president Hugo Chavez’s Bolivarian Revolution was much more about attacking local corruption than the United States. It was US aggression that would change the focus of Venezuelan revolutionary politics, and give it the fuel it needed to survive a full quarter century.

As a grim side note, there are many reasons why Venezuelan leftism pissed the US off more than the Argentinian version. But it’s hard to shake the suspicion that Argentina’s politicians were safer… because it’s just a whiter country. Washington DC might be more comfortable plotting coups against indigenous looking presidents than Swiss looking ones.

Hugo Chavez was elected in 1998, quickly put a new constitution in place and was reelected under the new rules in 2000. In April 2002 he was briefly ousted in a coup that pushed him in a much more stridently Anti-US direction. Now I don’t want to go full Chavista and say that the Bush administration in the US planned this coup. It’s still a controversial question. There were plenty of powerful Venezuelan elements, from the state oil company to parts of the military that wanted him gone. But regardless, Chavez had a right to be pissed off. It’s undisputed that the US had full knowledge that the coup was about to happen. After the coup’s failure Washington, DC claimed they warned Chavez, and tried to discourage the multiple Venezuelan forces that let us know the coup was going to happen. These claims are hard to believe, when you consider how fully the Bush administration embraced the two day anti-Chavez government. We recognized the fake 48 hour president, and pretty openly gloated about the fall of Chavez. When the coup quickly disintegrated, US-Venezuelan relations were in the toilet, and they have been there ever since.

Between 2002 and 2008, thanks primarily to Chinese growth, world oil prices had their best stretch since the 1970s, more than tripling in dollar value. This gave Chavez endless opportunities to express his displeasure over US support for the failed coup. This video’s main lesson is that if the US wants friendlier governments it needs to be less aggressive, but we do need to acknowledge just how stupid Chavez, and especially Maduro’s policies have been. In the first decade of this century Venezuela had high oil prices, but even in that period their main customer was the United States. Biting the hand that feeds you is never wise.

Argentina in the 2000s was also angry at the US, but in very different ways. Interminable battles with New York bankers over defaulted debt, plus lengthy negotiations with US controlled institutions like the IMF, kept relations sour for years. But there were no coup attempts. No economy killing sanctions. There were no threats of invasion or other forms of violence. So eventually Argentina just got sick of the Kirchners. And that wasn’t just a few months ago, it was almost a full decade ago.

In 2015, after spending 15 years negotiating with international bankers, Argentina went ahead and elected an international banker. Mauricio Macri was an Argentinian rich kid who had been educated in the US and done a stint with Citibank before going to work with his family real estate company. His center right pro-business policies were trusted abroad, and Argentina was allowed to borrow large amounts of international money for the first time since 2001.

So as early as 2015, Argentina and Venezuela presented a clear lesson in how to deal with hostile governments. Support a coup and make constant threats, and you make the regime you don’t like more powerful. Step back and let a government fail on its own, and you are likely to get somebody you like better. Hugo Chavez died of cancer in 2013, and was replaced by Nicolas Maduro, a politician with none of Chavez’s virtues, and all of his flaws. Maduro is a terrible president, but the US has been kind enough to provide him with the perfect enemy, which has kept him in power. The Kirchner’s who did actually manage to stabilize the country after 2001, couldn’t blame a big US imperial enemy as plausibly as the Maduro could, so they were out of power by 2015.

Unfortunately for Argentina, the Macri government wasn’t any better at solving the country’s problems than the Kirchner’s were. In fact, he may have been even worse. Much of Argentina’s current debt crisis stems from Macri’s borrowing a bunch of foreign money to do a tax cut. Timid Reaganism has already been tried and has already failed in Argentina. In 2019 Macri lost an election to Alberto Fernandez, a close ally of the Kirchner wing of Peronism.

Venezuelan president Nicolas Maduro is kind of a mystery. He is largely seen as a thug who lacks Chavez’s flair for publicity, public speaking skills, and creativity. Maduro certainly lacks Chavez’s petroleum luck. He took power in 2013, just in time for world oil prices to crash in 2014. Despite small spikes over the past decade, those oil prices have never really recovered. Venezuela has a vibrant, if chaotic opposition scene, both abroad and within Venezuela. Yet despite all of this, a full decade later, Maduro is still in power. How? I think the answer is Donald Trump and the ludicrous program of maximum US pressure he inaugurated, and Biden has mostly continued.

In 2017, things were already falling apart in Venezuela. Maduro looked very shaky. But then Trump stepped in and gave him the perfect enemy. In August of 2017, the Trump administration introduced sweeping sanctions blocking the Venezuelan government and the state oil company from most interactions with the US financial industry. Because the United States has always been Venezuela’s main customer, and owns most of the refineries that can handle Venezuelan oil, this quickly led to starvation, and a massive refugee crisis.

I have to tell on myself a bit here. In prior coverage I fell for the US media lie that the horrific state of Venezuela in 2019 was mostly due to socialist mismanagement. Maduro and Chavez are horrible at government, but there wouldn’t have been anywhere near as large a starvation or refugee problem in 2019 without the 2017 Trump sanctions. Most people in the United States aren’t aware of this. Everybody in Venezuela is.

So US aggression took a thuggish and failed leader and turned him into a hero against US imperialism. In 2019, surprised that their starvation program hadn’t worked, the Trump administration’s approach got even more ridiculous. From January 2019, we worked with the Venezuelan opposition to just pretend that Maduro was no longer the President of Venezuela. That’s right, we just decided that some other guy, Juan Guiado, was the real president, and we forced like 60 of our allies to recognize him as well, assuming that we could make something real, just by wishing it. Nobody talks about this farce any longer, and for good reason, it’s one of the most humiliating episodes in US Imperial history.

The Trumpers anointed Guiado at the same time as they inaugurated a raft of new murderous sanctions against Venezuela’s oil industry, essentially barring anybody else in the world from buying oil from the country. Unsurprisingly to anyone other than official foreign policy morons like John Bolton and Eliot Abrams, there was no Venezuelan uprising in favor of the US Starvation and poverty President. Trump and company turned Maduro into an anti-imperial hero, so the US still has to negotiate with him down to today.

This script was already long enough, so I won’t go into Maduro’s ridiculous threats to invade and take over large parts of Guyana, Venezuela’s neighbor. If you’re interested in a full hour of history and predictions on the Venezuela-Guyana-Essequibo situation, you can check out our recent podcast episode.

Meanwhile, Mauricio Macri, a pro-US president who, unlike Juan Guiado, was actually elected, failed to solve any of Argentina’s problems. He was voted out in favor of the Fernandez-Kirchner left wing bloc that had once been so closely allied with Chavez’s Venezuela. So what did the US do? Did we sanction Argentina, try to starve its public, threaten an invasion or just pretend that Macri was still the real president. Nope. We did nothing to Argentina’s renewed left-wing government, and it succeeded beyond our wildest dreams.

Between 2015 and 2019, Argentina tried wimpy Reaganism and it failed. The Argentine public gave the Leftists another four years in power and they didn’t fix anything either. The US didn’t give those leftists a convenient enemy to blame, so in 2023, they in turn got kicked out of power. And the new guy is so pro-US it’s honestly a little insane. They have gone from tepid Reaganism to Chainsaw Reaganism.

Javier Milei is likely to fail as President, but it’s honestly amazing to see Argentina even entertain this radical pro-US agenda, a mere 40 years after kicking out a savagely murderous pro-US dictatorship. If the US wants more friendly governments in Latin America, or anywhere we just need to stop attacking governments.

Most of Latin America now rotates between left and right leaning governments through the ballot box, which strikes me as pretty damn healthy. There are three big exceptions, where left-wing authoritarians still retain serious power. These three countries are Cuba, Venezuela and Nicaragua. At this point it probably shouldn’t surprise you to hear that those three countries are the exact ones that have been subjected to the most vicious US pressure over the past half century. The more aggressive we are, the more excuses the crappy governments of these countries have to hang on.

If we really wanted to have a universally free and prosperous hemisphere, we would change course. We would tell Cuba, Venezuela and everyone else they can do whatever they want, though there’s a bigger pot of gold available to those who adopt policies we like. It’s an easy, cheap strategy, that only works everywhere we try it. But I am not sure Washington, DC wants the easy peaceful option. I suspect they are happier to have the enemies to sell weapons around.