Big Power Pressure on Venezuela (Part 1)

Yoshie Furuhashi furuhashi.1 at osu.edu
Mon Dec 16 03:14:51 MST 2002


Kelvin Singh, "Big Power Pressure on Venezuela during the Presidency
of Cipriano Castro," _Revista/Review Interamericana_, 29.1-4 (1999)

When Cipriano Castro descended from the Venezuelan Andean state of
Tachira in May, 1899, and through a combination of military and
negotiating skills won access five months later to the presidential
chair in Miraflores palace, Caracas, he was assuming the executive
power of his country in the midst of its most profound political and
economic crisis. The country had been riven during the previous forty
years by almost continuous civil war or insurgency, which made its
survival as an integrated federal state seem almost miraculous.1 This
condition was not peculiar to Venezuela, since nearly every other
Spanish American republic suffered a similar fate for prolonged
periods in the course of the nineteenth century, leading to the
negative stereotyping of the Latin American peoples as uncivilised
and unprogressive by European, North American, and even Latin
American intellectuals, diplomats, publicists and propagandists. The
country was also, like so many of its Latin American counterparts,
weighed down by a heavy external debt burden imposed on a narrow
fiscal base, consisting almost exclusively of the customs duties
collected at its two main ports of La Guayra and Puerto Cabello.
Added to its external debt burden was the accumulation of what were
referred to internationally as "diplomatic claims," which were claims
for financial compensation made by foreign residents and company
agents through their national diplomats for alleged injury suffered
by the claimants to their persons or property in the course of the
numerous insurgencies or civil wars, or for alleged illegal seizure
of, or damage to, foreign trading or fishing vessels operating in
Venezuelan waters. Soon after Castro came to power a new class of
diplomatic claim would be added -- that for alleged breach of
contractual arrangements with private foreign companies -- mostly
monopolies -- operating in Venezuela.2 These claims were distinct
from those of foreign bondholders, who had long-standing debts due
them by the Venezuelan government, but which did not occasion
diplomatic intervention except in cases of prolonged default on
interest payments and refusal by the Venezuelan government to raise
new loans to repay older ones, which was hardly ever the case since,
as in so many other Latin American countries, the raising of foreign
loans was an easy road to quick enrichment by incumbent and often
short-lived administrations.3

It was the diplomatic claims which had become a major justification
for coercion employed against successive Venezuelan administrations
by Great Britain since the mid-nineteenth century, setting precedents
which were later to be emulated by France, the Netherlands, Germany,
Italy and the United States of America. Such coercion sometimes took
the form of naval demonstrations by foreign war vessels, the
threatened bombardment or occupation of the key Venezuelan port
towns,4 or in extreme cases, as Cipriano Castro was soon to
experience, the naval blockade by one or more foreign fleets of the
most strategic points of the Venezuelan coast. The existence of
British, Dutch and French colonies, especially Trinidad, Curaçao and
Martinique served as convenient points of rendezvous and supply of
coal and war materiel for such fleets. The preferred course of
coercion by these foreign powers, however, was the destabilization of
Venezuelan administrations by the granting of asylum in the island
colonies to Venezuelan insurgents and assisting them in the
acquisition of gunboats, arms and ammunition for their armed
incursions into Venezuelan territory.5

We cannot, however, fully comprehend the dynamics of the historical
situation in which Cipriano Castro was quickly immersed without an
appreciation of the specific interests of these powers in Venezuela
in the context of an impending tectonic shift in the global balance
of forces which was threatening the British imperial hegemon, whose
global empire was now coming under challenge from the United States
in the western hemisphere, from France and Germany in Africa and from
Russia, France, Germany and Japan in the Far East. It was in this
context that British diplomacy, as indeed that of the other major
imperialist and aspirant imperialist players, became a game of global
checkmate in which strife-torn and economically weak Venezuela would
become another pawn....

Cipriano Castro, however, proved in many respects to be the most
nationalist of the Venezuelan presidents so far encountered by
foreign powers in Venezuela. He intended to be the restorer of
Venezuelan unity and pride, and very quickly decided to deal with the
perennial diplomatic claims with which foreign diplomats harassed
nearly every Venezuelan administration. Since most western historians
who have written on this period of Venezuelan history seem to accept
without reservation the view that Castro was simply a notorious
dictator who was unwilling to meet his legal obligations to
foreigners, we must at this point comment on the nature of these
claims. Undoubtedly some of the claims were legitimate, but in the
second half of the nineteenth century they were increasingly used in
a cynical fashion by foreign diplomats and consular agents both to
fill their own pockets and to apply pressure on an incumbent
administration. As one of the writers on this subject, Miriam Hood,
herself of Venezuelan ancestry, has taken the view that in contrast
to the diplomatic claims of other foreign powers, British claims were
"clean," it is worth referring to an interesting dispatch in 1865
from Richard Edwards, the successor to Doveton Orme as British
Minister in Caracas. Bombarded by claims of "British subjects" for
compensation from the Venezuelan government for alleged injury to
persons and property in the course of civil strife, Edwards conducted
an investigation lasting several months into some of these claims and
concluded it was a "matter of speculation" encompassing both "persons
without principles" and the British legation in Caracas. It involved
the following: a Venezuelan gets a foreign resident to claim he is
the proprietor of a property; the foreign resident then goes to the
British legation claiming to have suffered losses or damages caused
by government or insurgent troops; he is advised by the British
legation to make his financial claim as high as possible; appropriate
witnesses are found; and the claimant is then asked by the legation
to accept fifty per cent since the Venezuelan government is so
exacting! If the claimant demurs, a little more is offered him and
the necessary documents are drawn up, with a florid diplomatic Note
being sent to the Venezuelan Minister for Foreign Affairs beginning:
"The UndersignedŠ." Edwards proceeded to give several specific
examples of shady deals and concluded that "the natural consequence
of such a system was to bring great discredit upon the English
name."15 But by the end of the century the situation had not improved
and even the anglophile, Miriam Hood, cites a later British Minister,
W.H.D. Haggard, as confessing that a member of the British legation
was involved in a swindle with two Venezuelan ministers to the tune
of one million francs. Later in 1905 the American Minister to
Caracas, Herbert Bowen, would expose the involvement of his
predecessor, Francis Loomis, in shady financial dealings.16

The diplomatic claims, especially in the context of the penury of the
Venezuelan exchequer, became a matter of great concern to Castro, as
it had been to Guzmán Blanco. In February, 1873, Guzmán Blanco had
sought to bring some order into the claims business by issuing a
decree outlining procedures to be adopted by both Venezuelans and
foreigners for the presentation of claims against the Venezuelan
government before the Venezuelan High Federal Court. Article 8 of the
decree prescribed penalties (fine or imprisonment) for presenting
exaggerated claims.17 But strong resistance from the United States
and other foreign governments and the subsequent prolonged period of
civil strife made the decree a dead letter. Cipriano Castro on
January 24, 1901, declared Guzmán Blanco's decree to be in force.
Effectively, the enforcement of the decree would mean that diplomats
could no longer intervene on behalf of claimants, who henceforth
would have to seek redress on an equal basis with Venezuelans in
local courts, as advocated by the Argentine jurist, Carlos Calvo (the
so-called Calvo Doctrine).18

Every major power regarded the law as a threat to the interests of
their nationals, the more so as Castro also began to address the
issue of monopoly claims by foreign companies which had been granted,
or more often, had bought out concessions in Venezuela from the
individuals who were the original concessionaires. Among these
companies was the New York and Bermudez Company, to which had been
transferred a concession granted by the Venezuelan government in 1883
to an American, Horatio R. Hamilton, to exploit the forest resources
and asphalt in the Venezuelan state of Bermúdez. Following a series
of corporate manoevres, the New York and Bermudez Company became a
subsidiary of the Asphalt Company of America, which in turn was
absorbed in 1900 by the National Asphalt Company, also American
based. The issue became further complicated when in May 1900 two
other Americans, C.M. Warner and P.R. Quinlan, both of New York,
purchased a property in the State of Bermúdez known as "La
Felicidad," which led to litigation with the New York and Bermudez
Company, the latter claiming that "La Felicidad" was within its
concession. The matter was scheduled to be heard before the district
court of Cumaná, when news reached Castro that the New York and
Bermudez Company's manager, whose operational headquarters were in
Port of Spain, Trinidad, had arrived at Cumaná aboard a steamer with
$10,000 in gold, with the intention of influencing the three judges
in the district court. Castro responded by ordering the dismissal of
the court and the transfer of the case to the High Federal Court in
Caracas. The latter eventually rendered its decision on January 28,
1904, in favour of the New York and Bermudez Company, following which
the company's managing director, Robert K. Wright, immediately
congratulated Castro on the "triumph of justice" and begged for an
audience with the Venezuelan president so that he could "salute" him
personally.19

But by that time Venezuela had just emerged from its gravest crisis,
an orchestrated, multi-pronged insurgency lasting one and a half
years and known as "La Revolución Libertador," followed almost
immediately by an Anglo-German blockade of Venezuelan ports. Unknown
to Castro at the time, the New York and Bermudez Company, fearful
that the litigation in the High Federal Court would be adverse to its
interests, helped finance the insurgency in which British and French
interests were also implicated, as was the Colombian government, then
in the throes of its own civil war which it thought was being
fomented by Castro. The insurgency was led by the reputedly richest
man in Venezuela, Antonio Matos, a banker and son-in-law of former
president Antonio Guzmán Blanco. Matos and a group of other bankers
had been humiliated by being temporarily imprisoned and publicly
paraded by Castro shortly after the latter captured the presidency.
The alleged reason for this dastardly act by Castro was that the
bankers refused to extend a loan to help bail out his financially
strapped administration.20 Matos shortly afterwards headed for
Europe, commissioned in Aberdeen a war vessel named the "Ban Righ,"
hired a British captain and crew, and flying the British flag, made
for Antwerp, where arms and ammunition were received, much of it
coming from France through a special Paris agent.21 It was the most
powerful and best armed insurgency prepared abroad against an
incumbent Venezuelan administration. Finance came via bank transfers
from New York organized by agents of the New York and Bermudez
Company. Leaving Antwerp on November 23, 1901, the Ban Righ sailed
for the Caribbean, arriving at Martinique on 22nd December, 1901. At
Martinique the British crew was paid off, though a few elected to
stay with the vessel in the service of Matos. Venezuelan
revolutionaries were then taken on board and ownership of the vessel,
renamed "Libertador," was formerly transferred to the Colombian
government. From January, 1901, Matos and the revolutionaries on
board made a series of forays along the Venezuelan coast, depositing
arms and ammunition at strategic points to be picked up by
revolutionary contingents coming from the west, north and east of the
country.22 While in Venezuelan waters it flew the Venezuelan flag,
but sometimes entered into naval battles with Venezuelan government
gunboats, which frequently trailed her. The nearby British colony of
Trinidad provided a safe anchorage for the vessel, whenever it needed
to re-supply its stock of provisions and ammunition. In March, 1902,
suffering partial damage in a skirmish with a Venezuelan government
gunboat, it anchored at the Port of Spain harbour for several months.
It still had on board over five thousand rifles and large quantities
of ammunition, while more munitions remained stored in a Port of
Spain warehouse.23 There could hardly be any doubt about the
complicity of the colonial authorities in Trinidad and the British
Minister in Caracas, W.H.D. Haggard, in the attempted revolution, the
principal objective being to detach from effective central control
the Venezuelan state of Guyana, whose Orinoco port city of Ciudad
Bolívar was the major entrepot between Port of Spain and the gold
districts of the Yuruari region in Venezuela.24 The establishment by
the Trinidad authorities in August, 1902, of a guard station on the
disputed island of Patos, less than three miles off the northeastern
coast of Venezuela, and known to be a haven for smugglers and
insurgents, occurred in the context of this prolonged multi-pronged
insurgency.25

Castro, showing his characteristic grit and determination and ably
assisted by Andino loyalists like Juan Vicente Gomez, was able by
November, 1902, to break the back of this "Revolución Libertadora."
But it was also just at this time that the British government had
invited to Sandringham the German Kaiser, Wilhelm II, following which
the "iron-clad" agreement was concluded between the British and
German governments for a blockade of Venezuela ports in order to
enforce their diplomatic claims.26

The Anglo-German blockade of Venezuelan ports which began on December
9, 1902, and was lifted on February 14, 1903, has been discussed by
several writers and we therefore need not detain ourselves on its
details. We merely look at the points of significance. The local
factor was the serious reverses Castro was beginning to inflict on
the Matos-led insurgency. The hemispheric factor was that the United
States was beginning to entrench itself in strategic areas of the
Caribbean. It had imposed the Platt Amendment on Cuba, making it a
virtual protectorate and an economic dependency of the United States;
Puerto Rico was being made into a de facto colony and negotiations
were proceeding with the beleaguered Colombian government for a
treaty that would cede control of the French canal project in Panama
to the United States. The fundamental question is, however, why did
British government decide in December, 1902, to enter into an
alliance with Germany when Britain had the naval capacity to blockade
Venezuela's key ports unilaterally and when Theodore Roosevelt had
made it publicly known in his December, 1901, presidential message
that the United States government would not under the cover of the
Monroe Doctrine object to "punishment" of a Latin American state if
the latter "misconducts itself" provided that such punishment did not
take the form of the acquisition of territory by a non-American
power.27 Perhaps the answer to this question was provided by the
Daily Telegraph when the Anglo-German alliance was coming under
bitter opposition attacks in the British parliament and in the press
both in Britain and in the United States. It was a classic statement
of realpolitik on the global chessboard and therefore deserves an
extended quotation:

Lord Salisbury, during his long tenure of the post of Foreign
Secretary invariably acted upon the principle that politics --
especially international politics -- are matters of business and not
of sentiment. If our foreign policy were dependent upon the veerings
of the sympathies and antipathies of other European powers, it would
indeed be as unstable as waterŠ Temporary or provisional combinations
such as were necessitated two years ago in China, and today by common
injuries in Venezuela, commit us to nothing when the joint object has
been obtainedŠ The policy of watching every rival power as though it
were a potential enemy is quite sound, but this does not involve, as
the extreme anti-Germans seem to imagine, the adoption of a
distinctly hostile or provocative attitude.28

Apart from economic stakes in Venezuela, Britain still had unsettled
issues with the United States itself. These were the Alaska boundary
dispute with Canada, the Newfoundland fisheries dispute and the
Bering Strait fur seal dispute. The Americans had refused a formal
alliance with Britain in the Far East, and while preaching the
virtues of the "open door" in China, they were using their coastwise
shipping laws to prevent an open door in the Philippines and Puerto
Rico, while they were in the process of giving the United States
privileged access to the Cuban market through a reciprocal commercial
treaty. Britain had signed the Second Hay Pauncefote Treaty with the
United States under the pressure of the Boer imbroglio. With the Boer
War now concluded, and with arrangements in hand for Japan to
checkmate the Russians in China and Korea by November, 1902, the
British Foreign Office was at least temporarily free from diversions
away from western hemispheric concerns. If inducing the Americans to
take and keep the Philippines was intended to create a new element in
the balance of power in the Far East and the Pacific, containing
American expansiveness in the Western Hemisphere was still on the
British agenda. The Germans, though much disliked because of their
support for the Boers during the early phase of the struggle in South
Africa, could be tempted into a joint demonstration of European
power. They were not as yet a significant colonial power, were
longing for an imperial place in the sun, and were prepared to
acquire international prestige in association with Britain.29 The
fact that neither power gave priority to the foreign debt, but to the
diplomatic claims when they decided to put pressure jointly on the
Castro administration -- in which they were later joined by Italy --
might have been partly influenced by the need to punish a
"degenerate" Latin American "rogue" president,30 who had no naval
power to match that of the advanced northern industrial nations, for
resisting their diplomatic claims and insisting that his nation's
courts must first judge these claims. But when it is considered that
Castro made some effort to pay up to fifty per cent of the foreign
debt out of his government's meagre revenues, had paid more than half
the debt owed to the German railroad company, had arrived at an
amicable settlement with the French on their debt claims and had
withheld further debt servicing only after the Matos-led insurgency
had begun, necessitating a large expenditure of the government's
scarce revenues,31 we must conclude that the diplomatic claims were
only part of a much larger objective behind the blockade of
Venezuela's ports, and that it was intended to demonstrate to the
Americans that Europeans could join forces to contain American
expansion if need be....

[Endnotes omitted.  The full text of the article is available at
<http://www.sg.inter.edu/revista-ciscla/volume29/singh.pdf>.]
--
Yoshie

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