Three Events that shook Venezuelan pacted democracy: El Caracazo

Part I

(Recommended to watch El Caracazo)

In 1958, Caracas (Venezuelan capital) witnessed a popular revolt (influenced by a revolt in Maracay) unseated military ruler Marcos Perez Jimenez. Outcome was the Punto Fijo pact (1958) which was signed by Accion Democratica and COPEI (social Christian) to ensure the power will be alternating between these two parties. As time went, corruption became pervasive in the Venezuelan state (especially party leaders, banking/commercial community etc.). 1970s was boom period as the oil prices shot up (Venezuela was and is today an oil dependent economy). The president at that time was Carlos Andre Perez (known as CAP) and he ruled from 1974 till 1979. The period was known as Venezuela Saudita (Saudi Venezuela) where Venezuela could have been rich as in West. Foreign oil companies were nationalized and new oil revenues flowed to development of industries. Ciudad Guayana (industrial city) is a testament of 70s industrialisation. It was said that $300 billion dollars Venezuela has earned from oil during Punto Fijo pact of 1958-1998 (20 Marshall Plans).  As time went, the state sector began to degrade, industrial sectors began to slow down and projects being abandonment. In 1983, due to oil glut, the national debt began to rise up as the oil revenues could not support government subsidies and state institutions.  Federal budgets began to show deficits (though there was brief economic recovery in mid 80s). Fomr 1984 to 1995, poverty went up from 36% to 66% and extreme poverty: 11% to 33% (worst was in 1989).

Caracazo

Background

Venezuela became the target of Washington Consensus implementation as it was accumulated huge debt at high interest rates. Twenty years leading to his presidency (CAP), wasteful spending and staggering corruption dried up the foreign reserves. In January 1989, then president Lusinchi suspended debt payments. CAP once denounced World Bank economists as ‘genocide workers in the pay of economic totalitarianism’. IMF was denounced CAP as “a neutron bomb that killed people, but left buildings standing” (in Spanish, la-bomba-sola-mata-gente). This rhetoric manage to lure in some left-wing parties to his side. Venezuelans voted CAP back to power on the belief CAP might fix up the problems (52.89% of the vote). CAP became the first president to be elected twice in Venezuela. He was inagurated on 2nd February 1989 in Terese Carreno Theatre instead of usual National Congress. His maiden speech stated that sacrifices were required from the population and involves harsh measures.  Venezuelan oil prices this time round was half of during CAP’s first term. The accumulated debt was around $35billion.

To suprise of his supporters, he appointed figures from IESA (Insitute of Upper Admnistration Studies- business school in Caracas & bastion to the Caracas elite and powerful business interests) to head up his economic team.CAP was surrounded with US-trained economists (under discipline of Chicago school) and announcing neoliberal package within two weeks of inauguration. Among these economists, they were two key figures behind this programme: Moises Naim (development minister) and Miguel Rodriguez (planning minister)-‘principal author’- who were educated in famous universities of MIT and Yale. Both were well-versed with neo-liberalism but lacked understanding of Venezuelan politics. For some weeks, CAP, as president elect, he visited OPEC countries of Saudi Arabia, Kuwait and Algeria. According to Gott, once CAP returned, he made up his mind of implementing this package, to many surprise. His Economic Adjustment Plan was simply known as Economic Package.  The package would have meant privatising the state enterprise (state was principal participant of economic/politics for half century). Government will rely more on dramatic private sector growth. Prices & interest rates will be liberalised and variable exchange rate will be abolished. Price of electricity,water,telephone and sanitation. Industrial efficiency wwas to be increased by industrial reconversion. The package was implemented to refinance the debt (in exchange of IMF loan US$ 4.5 billion).

Implementation

On February 16th 1989, CAP announced neo-liberal economic ‘packet’ (‘Great Turnaround’) which includes the dramatic rise of petrol price & basic necessities. Originally, the petrol price should shoot up by 100% on February 26th (Sunday). To prevent trouble, the government decided instead to increase the price of bus fare (possible face-saving measure). The first 30% hike by the bus owners (National Transport Federation) was to be implemented on 27th February 1989 (Monday). The next 30% hike will be scheduled three months later. The DISIP (Venezuelan Intelligence body) failed to expect this future outburst while DIM (Military Intelligence) warned the government that February 27th will be difficult day (only to fell on deaf ears or failed to be transmitted).

Reaction

On that day, the bus commuters realised in morning that their fares have doubled dramatically (30%) and refused to pay. For poor commuters, their money is short by month’s end. The student’s half price concession was also withdrawn, burdening the students. Protests emerged quickly, buses were overturned and burnt before 6 a.m. and within hours, rebellion (Caracazo) has emerged. Through television, protests flared up in Valencia, Maracay, Merida, and Barquismeto & Ciudad Guayana by mid morning. Other cities like Maracaibo, Puerto La Cruz, Barcelona, La Guaira, Caricuao and San Cristobal experienced similar protests. Looting shop/supermarket destruction later occurred.Students occcupied the bus terminal to protest the new fares and later blockaded the entrance. Students occupied a train station in Caracas, publicly denouncing the drivers. From the train station, more workers and other people joined the protests and barricading streets in Caracas. The initial anger towards the drivers changed to general anger at the Presidential neo-liberal package.People carried slogans- ‘The people are hungry’,’The people are angry’ &’Enough of the deceit’. Young people formed gangs (from suburbs) also proceed to loot wealthy housing area of slopes of Mount Avila. Looting was assisted by the police too and in one day, 1000 shops in Caracas were burnt. On 27th, a section of Metropolitan police went on strike (for pay rise) thus no prompt intervention to disturbance were performed. Stealing and rioting persisted the whole day and on Tuesday. Looters were reportedly distributing basic necessities to the disadvantaged barrio (slums) people. Accoding to Kozloff, one account stated that the looting was done in organized manner as people lined up for goods. Briefly, barrio people manage to taste some form of luxury in the process.

Consequences

The morning of Tuesday witnessed mixed reactions from the police agencies. Some of them conducted indiscriminately while others assisted in controlled looting.Initially, CAP, during visit to other province, he ignored the ongoing situation but things changed.CAP convened his cabinet on Tuesday afternoon and imposed a state of emergency at 6pm during TV address. The army imposed curfew from 6 p.m. to 6 a.m. On Tuesday, the government signed a Letter of Intention with IMF in which government spending will be restricted, relaxation of price controls, reduction of subsidies and liberalisation of foreign trade.

Subsequent military repression ensured Caracas returned normalcy at high cost. National Guard, Army and different police agencies implemented ‘Plan Avila’ to restore order and officials estimated 327 dead and 1931 wounded. Soldiers from lower class strata actually refused to fire during repression. However, other estimates, nearly 2000 died with many disappeared (no exact figure for deaths). The country was placed in order in 3 days while Caracas took 5 days.  On March 1st, twenty killed in barrio Petare due to army firing on crowd.Repression was severe in barrio areas as the organizers of the rebellion were dragged from their homes and executed /’disappeared’. Many innocent people and children were killed when their homes were fired on by the Venezuelan government. In 23 Enereo barrio, predominantly working class, Venezuelan troops position themselves on top of the buildings with snipers and residents were killed by inexperienced recruits. Sniper bullets on houses during the repression are still visible today. Unknown numbers of bodies were buried in mass graves in Caracas southern cemetery. Well-off areas increased their security, reinforcing steel fence and felt lucky for that moment. While the poorer areas, impression created on poor was deep grievance against government. Suspension of selected Constitution articles (due to emergency law) was restored on 22nd March 1989.

 

 Long Term Implications

CAP later rescinded some of the controversial parts of the package. According to Gott, thanks to Caracazo, there was no privatisation of state enterprises. Venezuelan Congress unable to pass Perez privatisation policy due to difference in definition of ‘basic and strategic enterprises’. CAP economic package did reduce inflation (though accumulated inflation of 1989-91 was 150%) and deficits. However, it came with high unemployment and poverty. Poverty soared in 1989 from 46% to 62%. Extreme poverty increased from 14% to 30%. Gulf War 1991 did gave some respite to CAP as Venezuelan oil production increased.

CAP later said that he knows the typical degeneration of state institutions and his government want to abolish all elements related to corruption. To reduce corruption, he decided to free up the exchange rate and abolishing licenses of ‘foreign trade operations’. In 1990, an interview with Gott, he admitted his decision was unpopular (People resent the harsh measures we have taken). On 18th May 1989, there was a general strike against economic policies.In June 1990, there was violent demonstrations against hike of gasoline prices. In December 1989, first gubernatorial elections in Venezuela saw Left-wing parties like Moviemento al Socialismo (MAS) having strong lead in mayoralties and challenging bipartisan parties dominion over states.

Former vice-president under Chavez, Jose Vicente Rangel commented on Caracazo, ‘Venezuelan history split into two’. Hugo Chavez stressed the importance of this rebellion as critical event for next two coup attempts against CAP.

References:

1)  Hugo Chavez and the Bolivarian Revolution, Richard Gott, Verso, 2005, Great Britain (the core of this article is based on selected chapters of this book)(pp.21,43-48,49-55)

2)  Hugo Chavez: Oil, Politics and the Challenge to U.S., Nikolas Kozloff, Palgrave Macmillan,2006, United States of America (pp.43-46)

3)  The battle of Venezuela, Michael McCaughan, Open Media & Seven Stories Press, UK, September 2005 (pp.63-65)

4)  The history of Venezuela, H. Michael Tarver & Julia C. Frederick, Palgrave Macmillan,2006, United States of America (pp.137,142)

5)   Los Angeles to Caracas: Examining Neo-liberal polices leading towards rebellion,Venezuela Analysis, Aashiq Thawerboy, 22nd October 2009,

http://venezuelanalysis.com/analysis/4833

6)  The Fourth World War Started in Venezuela, Venezuela Analysis, George Ciccariello-Maher,5th March 2007,

http://venezuelanalysis.com/analysis/2253

7)  Venezuela Issues Arrest Warrant for Former President Carlos Andres Perez, Venezuela Analysis, Jonah Gindin,25th February 2004, http://venezuelanalysis.com/news/964

8) El Caracazo Case, Judgment of November 11, 1999, Inter-Am. Ct. H.R. (Ser. C) No. 58 (1999), University of Minnesota Human Rights Library,http://www1.umn.edu/humanrts/iachr/C/58-ing.html

9) Wikipedia

10) Country Studies, Library of Congress

AUTHOR’S NOTE: 100% CREDIT TO ALL THE REFERENCES ABOVE. NO OWNERSHIP OF INFORMATION BY AUTHOR

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One response to “Three Events that shook Venezuelan pacted democracy: El Caracazo

  1. Pingback: Venezuela – Otra Malasia & Quick History | leftpolitico

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