The Miracle Runs out in Venezuela

By Silverstein, Ken | The Nation, June 28, 1993 | Go to article overview

The Miracle Runs out in Venezuela


Silverstein, Ken, The Nation


After two coup attempts last year, it became slightly embarrassing to refer to a Venezuelan "miracle."

Yet some First World journalists were still invoking the term not long before May 20, when Venezuela's Supreme Court authorized an embezzlement trial against President Carlos Andres Perez. He stands accused of misappropriation of $17.2 million in public moneys. The Senate immediately ratified the court's decision, and CAP, as Perez is known, joined Brazil's Fernando Coilor de Mello as the second Latin American neoliberal president to be forced from office on charges of corruption. (Miami Herald reporter Andres Oppenheimer, who last year bullishly announced "Castro's Final Hour," once again demonstrated keen prognostic skills. On April 30, just three weeks before the court's decision, Oppenheimer wrote an article titled "Threats to Venezuela Presidency Fade," saying Perez was "widely expected to finish his term as scheduled.")

Perez's downfall brought a noisy celebration here. Thousands of demonstrators cheered and set off fireworks as CAP tearfully addressed the nation. "I don't know why they're doing what they're doing to me,," he said. But for the vast majority of Venezuelans any suggestion of conspiracy is risible, since CAP's administration has been rocked with dozens of other scandais, involving more than $1 billion.

On June 5 the Venezuelan Congress elected historian and former Cabinet minister Ram6n Jos6 Velasquez to serve out the rest of CAP's term as president (an election is scheduled for December).

Venezuela has been ruled by civilians since 1958, making it South America's longest continuous democracy. The key to its relative political stability is oil, which generates about 80 percent of the government's foreign exchange reserves and which helped push per capita G.N.P. up to $4,200 in 1980, the highest in the region.

Oil wealth made Caracas one of South America's most sophisticated and modern cities. Dozens of skyscrapers dot its skyline; theaters and cultural centers abound; and posh cafes serve cappuccino and pastry.

During the boom years the poor were placated via the timehonored routes of populism and clientelism. Food prices were heavily subsidized, making meat, cheese and milk somewhat accessible, and city slums were modernized. "The government didn't do much for the poor,"' Antonio Cova, a sociologist here, told me" "but if you previously had no electricity or running water, even small improvements were significant." The populist strategy was employed by all governments, with the Democratic Action and the Social Christian (COPEI) parties alternating in power since 1958 without any serious outside challengers.

This system came crashing down in the 1980s, partly as a result of the growing burden of foreign debt. Of more direct impact, though, was the sharp fall in the international price of oil. By 1989, when CAP took office for a second term (he had also served between 1974 and 1979), it was no longer possible to maintain what sociologist Artur Sosa calls a "populist system of conciliation."

Perez pledged that he would protect the poor, but his economic recipe was straight from the I.M.E cookbook. Government spending was slashed, import duties lowered and subsidies cut for food, electricity, water and transportation. That quickly provoked "27-F"--February 27, 1989, the first of four days of bloody riots in which security forces killed anywhere from 400 to several thousand people, almost all in the poor barrios.

A year of sharp recession was followed by steady G.D.P. growth during the past three years, including 10.4 percent in 1991--hence the "miracle." But the benefits of growth have been narrowly conferred. As in the United States, many have grown rich in the stock market and through shady financial transactions. The "miracle" is seen in the ten daily flights between Caracas and Miami, where the rich go to play and shop, in the chic boutiques stocked with imported clothing, and in the country's emergence as a boom market for cellular phones. …

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