"As early as 1522 Spanish invaders reported that the Carib tribes in Venezuela used a black, gooey substance for many purposes. The viscous material was crude oil. It was not until the 1950s, however, that oil production began in Venezuela. Oil accounts for a quarter of the nation's gross domestic product and three-quarters of export earnings, and Venezuela is South America's leading producer and one of the few non-Arab members of OPEC. There are also substantial coal reserves, and exploitation of the recently discovered Guasare Basin field is expected to add 10 million tons to annual production. The political instability of the early 1990s shook foreign investor confidence, but Venezuela has emphasized trade links with other South American countries. The mid- to late 1990s saw a series of public and private sector strikes for higher wages. In addition to participation in the G-3 agreement with Mexico and Colombia, Venezuela has a free trade agreement with Colombia and has expressed the desire to become part of the North American Free Trade Agreement between Canada, Mexico, and the United States.
             The election of Hugo Chavez as president of Venezuela raises the question of the unraveling of the political system in all of Latin America and reveals the disillusionment some are feeling about worsening social conditions that have not improved under democratically elected governments. Venezuela began its democracy 40 years ago with an unusual pact between the country's principal parties that guaranteed an institutional stability not known in the region at that time. But, at the same time, the leaders of the country never diversified the country's economy, instead choosing to rely heavily on its oil revenues. As a result, the Venezuelan economy is highly susceptible to the world market's price fluctuations and has not diversified enough to create jobs and allow for funds for programs of social support to combat the rising unemployment...