The Fourth World War Started in Venezuela

Posted by balkanbalkan

Those seeking the origins of the global rebellion against neoliberalism will need to look further back than Seattle 1998 (U.S.-centric activists are notorious for claiming that the movement began in Seattle), and before London’s J18 protests earlier the same year. We would need to look before even the public emergence of the Zapatista movement on January 1st 1994. Before all these events, there was the Caracazo. On this, the 18th anniversary of this epic struggle, it is worth looking back at this singularly important but oft-overlooked event which has been described by Fernando Coronil as “the largest and most violently repressed revolt against austerity measures in Latin American history.”

Carlos Andrés Pérez was inaugurated on February 2nd 1989 for his second (but non-consecutive) term, after a markedly anti-neoliberal campaign during the course of which he had demonized the IMF as a “bomb that only kills people.” In what has since become a notorious example of “bait-and-switch” reform, Pérez proceeded to implement the recently-formulated Washington Consensus to the letter. The precipitous nature of this about-face is evident from the fact that Pérez’s neoliberal economic “packet” (the “paquetazo” as it is called) was announced scarcely two weeks after the inaugural speech which had attacked international lending institutions and preached debtor-nation solidarity. The country must prepare itself, Pérez warned in this later speech on February 16th, for a “Great Turnaround.”

While Venezuelan elites had been toying with neoliberalism for several years, and president Jaime Lusinchi had even enacted a heterodox neoliberal package in 1984, Pérez’s package was notable for its orthodoxy. In a Letter of Intention signed with the IMF on February 28th, while most large Venezuelan cities were in the throes of generalized rioting and looting, the basic premises of the Pérez plan were laid out as follows: government spending and salaries were to be restricted, exchange rates and interest rates were to be deregulated (thereby eliminating what were essentially interest rate subsidies for farmers), price controls were to be relaxed, subsidies were to be reduced, sales tax was to be introduced, prices of state-provided goods and services (including petroleum) were to be liberalized, tariffs were to be eliminated and imports liberalized, and in general, foreign transactions in Venezuela were to be facilitated.