TIME: Almanac 1990/1990 Time Magazine Compact Almanac, The (1991)(Time).iso/time/031389/03138900.066

Text File | 1990-09-22 | 5.5 KB | 100 lines

WORLD, Page 36

VENEZUELA

Crackdown in Caracas

Austerity measures provoke an orgy of rioting and murder


    At his Feb. 2 inauguration, President Carlos Andres Perez
warned Venezuelans that hard times were ahead for their heavily
indebted, oil-exporting country. Even he had no idea how hard --
or how soon. Last week the citizens of one of Latin America's most
stable democracies were in shock after a social explosion that tore
apart downtown Caracas, the capital, and shattered the peace in at
least 16 other cities. Government-imposed austerity measures had
ignited a three-day free-for-all of rioting, looting and killing
that left an estimated 300 people dead, 2,000 injured and another
2,000 in jail.

    Venezuela had not seen such mayhem since 1958, when a popular
insurrection toppled dictator Marcos Perez Jimenez and ushered in
democracy. Overnight, Venezuelans faced martial-law restrictions,
including a 6 p.m.-to-6 a.m. curfew. When the riots ended, severe
food shortages in the capital threatened to stir more disquiet. The
most important victim of the upheaval was probably President Perez
himself, who had begun his second term in office (the first was
from 1974 to 1979) with a huge margin of popularity. That goodwill
was suddenly forgotten when the rattled leader failed to stop the
violence with a rambling, sometimes angry television address.
Meantime, Venezuela had provided the world with an ugly example of
the trials Latin America faces in trying to step out of the debt
quagmire.

    Perez, who has long inveighed against his continent's onerous
financial burden, had finally found austerity unavoidable.
Venezuela owes foreign creditors, largely U.S. commercial banks,
about $33 billion. In the 1970s, when the country was awash with
petroleum revenues, the government that Perez headed spent lavishly
on social-welfare projects and industrial schemes. But as oil
prices took a dive in the 1980s, so did the economy, which earned
90% of export revenues from petroleum. Hard-pressed for cash,
Venezuela last Dec. 31 suspended payments for 90 days on the bulk
of its foreign obligations.

    Last month the government signed a letter of intent with the
International Monetary Fund (IMF) in return for $4.32 billion in
new credits through 1991. Among other things, the agreement
promised an end to Venezuelan subsidies on an array of products,
including imported raw materials and gasoline (at 13 cents per
gal., perhaps the cheapest in the world). Exempted from the price
hikes were 18 staples, including bread, rice and chicken. Perez
also promised to raise fees for government-provided goods and
services and to allow the bolivar to float downward on
international currency markets, a move that would boost import
prices.

    With the initiation last week of the first of the new measures
-- an increase in the price of gasoline to a still indulgent 25
cents, plus an average 30% hike in bus fares -- Venezuelans went
wild. In Caracas and the provinces, unruly mobs torched cars and
buses. They quickly turned to looting stores, stealing everything
from legs of beef to stereo components. Angry merchants defended
their shops with gunfire in an orgy of crime and spontaneous
punishment.

    At 2 a.m. the following morning, Perez ordered the army and
National Guard to occupy the capital and several other cities.
Later that day he went on national television to announce a curfew
and suspension of constitutional guarantees such as freedom of
speech and assembly. In a disorganized, unimpressive speech, the
President blamed the unrest on "subversive sectors" seeking to
"take advantage of difficult times." "This is a popular protest by
the people," replied Luis Fuenmayor, the rector of Venezuela's
Central University. "To view it any other way is to fool oneself."

    The chaos continued and grew uglier. A police commander was
shot dead in West Caracas. Downtown, armored personnel carriers
rushed fatigue-clad National Guardsmen to the myriad scenes of
continued looting. Virtually the entire city was shut down by the
violence.

    By the third night, order had been restored, except for a few
isolated areas of Caracas. Interior Minister Alejandro Izaguirre
then announced wage increases of about $54 a month for some 5
million private-sector workers. Critics lambasted Perez for having
imposed price increases before announcing the hikes and for signing
the IMF agreement without consulting opposition parties or labor
leaders. Perez himself struck an oddly optimistic note. "We managed
to get out of this relatively well," he said, adding that austerity
had to continue to "get Venezuela out of economic insecurity."

    But Perez's image had been tarnished. Since his Dec. 4
election, he had spent much of his time abroad, pursuing his vision
of creating a united debtors' front that would stand up to the IMF
and other creditors. Publicly, Perez disclaims any interest in
fathering such a group, but those closest to him say it is his
passion. At his swearing-in, the President had boasted of elevating
Venezuela's profile in world affairs; his domestic troubles may now
stunt those vaulting ambitions.

    On the other hand, the Caracas affair could advance the case
for a debtors' cartel. In the future, Perez and fellow Latin
leaders may point to last week's carnage as a reason to avoid
additional austerity programs. On Venezuelan streets that glistened
with blood and broken glass, that argument looked sadly compelling.