The blockade saw Venezuela's small navy quickly disabled, but Castro refused to give in, and instead agreed in principle to submit some of the claims to international arbitration, which he had previously rejected.

This led to the signing of an agreement on 13 February 1903 which saw the blockade lifted, and Venezuela commit 30% of its customs duties to settling claims.

When the Permanent Court of Arbitration in The Hague subsequently awarded preferential treatment to the blockading powers against the claims of other nations, the U.S. feared this would encourage future European intervention.

[2] The revolutionary turmoil of the last decade of the 19th century in Venezuela saw these suffer, and send "a stream of complaints and entreaties for protection" to Berlin.

[4] In 1893 the French, Spanish, Belgian and German envoys in Caracas had agreed that joint action was the best route for settling claims from 1892's civil war, but in the event reparations in that case had been paid.

[12] Nonetheless, in late 1901 a renewed demand for reparations was backed up by a show of naval strength, with SMS Vineta and Falke sent to the Venezuelan coast.

[11] In January 1902 the Kaiser declared a delay to any blockade due to the outbreak of another civil war in Venezuela (led by financier Manuel Antonio Matos) which raised the possibility of a more amenable government.

[12] In late 1901, the British Foreign Office became concerned that Britain would look bad if it failed to defend its citizens' interests while Germany took care of theirs, and began sounding out the Germans about a possible common action, initially receiving a negative response.

In June 1902, Castro seized a British ship, The Queen, on suspicion of aiding rebels, in another phase of the Venezuelan civil war.

This, together with Castro's failure to engage with the British through diplomatic channels, tilted the balance in London in favor of action, with or without German cooperation.

[17] On 11 November, during Kaiser Wilhelm's visit to his uncle King Edward VII at Sandringham House, an "iron-clad" agreement was signed, albeit leaving key details unresolved beyond the first step of seizing Venezuela's gunboats.

[18] The British press reaction to the deal was highly negative, with the Daily Mail declaring that Britain was now "bound by a pledge to follow Germany in any wild enterprise which the German government may think it proper to undertake".

The gunboat was towed at anchor and put into service by the German Captain-Lieutenant Titus Türk with crew members of Gazelle as SMS Restaurador.

[21] On land, Castro arrested over 200 British and German residents of Caracas, prompting the allies to deploy soldiers to evacuate their citizens.

[21] The same day, London and Berlin received from Washington a request forwarded from Castro to submit the dispute to arbitration, which neither power relished, because of concerns over enforceability of any settlement.

[d] The threat of arbitration made London move to the next stage in order to negotiate from a position of strength,[29] and 20 December was set for the beginning of the official blockade.

[28] In the meantime, whilst London and Berlin considered Castro's offer, American public opinion increasingly turned against the action, and there were references to the nearby presence of Admiral George Dewey's U.S. fleet, which was conducting long-planned exercises at Puerto Rico.

[32] This was exemplified by Rudyard Kipling's polemic poem "The Rowers", published in The Times on 22 December as a response to the crisis; it included the words "a secret vow ye have made with an open foe ... a breed that have wronged us most ... to help them press for a debt!

[36] Castro's failure to back down left limited options in the face of the Monroe Doctrine, which would make any seizure of Venezuelan territory, even temporarily, problematic.

[43] The incident caused "considerable negative reaction in the United States against Germany";[7] the Germans said that the Venezuelans fired first, which the British concurred with but declared the bombardment "unfortunate and inopportune" nonetheless.

[45] Subsequently, Roosevelt informed the German Ambassador that Admiral Dewey had orders to be ready to sail to Venezuela from Puerto Rico at an hour's notice.

[50] Venezuela agreed in principle to pledge 30% of its customs income at its two major ports (La Guaira and Puerto Cabello) to the creditor nations.

[29] In 1906, Castro punished the international firms involved in the Revolution to the point that diplomatic relations were broken with the United States and then with France due to debt differences.