*Thirty Years After the Caracazo, Neoliberalism Comes for Revenge

I. When it was time for Izaguirre to speak, that afternoon of February 28, 1989, the blood had already flowed in torrents through the streets of Caracas and in many other cities of Venezuela. The asphalt burned and the bullets jumped as if they were running away in the heat. The previous day had started a popular rebellion whose shock wave still shakes us. The fire that caused it, far from being extinguished, has only spread since then, and it has crossed borders and joined other fires.

Earlier, President Carlos Andrés Pérez had decreed a curfew and the suspension of constitutional guarantees. During the early hours of the morning he had issued instructions for the National Guard and the Army to put an end to the rebellion by blood and fire. Elements of the political police and Military Intelligence also acted at ease.

The Minister of Internal Affairs, Alejandro Izaguirre, was responsible for offering a balance of the situation of public order. The stage: the Ayacucho Hall of the Miraflores Palace. In live broadcast, with a somewhat hesitant attitude, and with his eyes fixed on the sheets he held in his hands, he began his speech:

“Venezuelans, on behalf of the National Government I am pleased to inform the public …”, he pressed the sheets, raised them a little, adjusted the view, “… that from the moment that the suspension of the constitutional guarantees was dictated …”, he made a brief pause, “… and the curfew was implemented …”, cleared his throat, “… the general situation of the country is practically normalized. Only in the city of Caracas … “, he paused longer, took a breath, his hands trembled,” … subsist … “.

And he did not read anymore. He walked away from the microphone, turned his head to the right and confessed: “I can not do this” He took his place again in front of the microphone, but only to say: “Sorry,” and abruptly withdrew.

Just twelve days before, Carlos Andrés Pérez had informed the nation of his decision to embrace the cause of neoliberalism. In other words, the IMF would grant the country a loan of US $ 4.5 billion that would eventually stabilize the economy, provided it applies “structural adjustment” measures: massive privatizations, liberalization of interest rates, elimination of exchange control, release of prices (except for a few products), increase in public service tariffs, increase in the price of gasoline, increase in public transport tariffs, elimination of import tariffs, among other measures.

The decision took by surprise the working class, that reacted enraged, and was that popular fury the one that took the streets Monday 27 of February. That night there was a party in many neighborhoods of Caracas. But the next day the massacre began.

When Izaguirre lost his voice, dozens, perhaps hundreds, had already lost their lives.

II.- Malfred Gerig (1) has made the relation of a debate between “experts” in economics that, in his opinion, would soon have profound repercussions for Venezuelan society.

On September 5, 2014, an article appeared in which Ricardo Hausmann and Miguel Ángel Santos posed the scenario of a non-payment of the Venezuelan debt service, given the difficulties of the national government to have sufficient funds. The article, says Gerig, “achieved its purpose to the extent that it established the possibility of a default in the international financial press” at a time when something like that was “absolutely unthinkable”. He also defined a route in international markets: go to the IMF and adopt an adjustment plan.

A week later, and “as if we were facing any good police scene, bad police”, Francisco Rodríguez argued that the government did not need to go into default, and listed a series of measures that would allow it to cancel his debts: “charge a price realistic for their currency, “do the same with other goods or services, such as gasoline or electricity, etc. Beyond the detail, the importance of this debate, according to Gerig, is that it defined “the deck of options that could be decided in economic policy, but above all laid the foundations for a direct transmission of resources from Venezuela to bondholders under conditions more and more pernicious for the country. ”

Gerig’s approach is that the national government fell into the “trap” implicit in this debate and, in deciding to continue canceling the debt service, entered a “dead end”: in 2016, with Miguel Pérez Abad in charge of the Vice Presidency of Productive Economy, it was decided “to privilege the payment of the external debt to the detriment of the internal consumption”, drastically reducing the imports, with the predictable result of greater damage for the population, benefiting the owners of bonds and, what is worse, without this decision being translated into the opening of financial markets. A couple of years later, the Government had no alternative but to adopt the strategy of selective default in the management of its external debt.

III.- Was it really a ruse, as Gerig puts it, against which the national government acted with little strategic clarity? The decision, adopted at the beginning of 2016, to reduce imports and therefore domestic consumption, further aggravated a situation that was already serious, largely as a consequence not of the decrease, but of the “plummeting” (3 ) of oil prices from 2014?

Furthermore, how can we talk about the situation of the Venezuelan economy without referring, as Steve Ellner points out, to the permanent hostility of the US government towards Venezuela, which does not begin, far from it, with Nicolás Maduro, but dates from the first Times of the Bolivarian Revolution? The latter does not imply, in any way, exempt the Chavista political leadership from responsibility. But if it can be affirmed, as Gerig correctly does, that the “central problem” of the national economy is not the “restriction of its income caused by the decrease in oil prices”, but “its metabolic relations with the world market” and its internal concomitants “(4), it is not possible to affirm, as many” progressive “analyzes seem to suggest, that the most recent American aggressions are explained by the inability of the Venezuelan Government to overcome its dependency relationship, by its decision to reproduce extractive logics or simply by its incompetence in economic matters. The aggression against Venezuela obey the imperial vocation of the United States.

In short, how can we avoid the devastating effects of US sanctions against Venezuela, especially from August 2017, and in particular its direct relationship with the collapse of Venezuelan oil production (5), a circumstance, of course, that frequently used as an example of government incompetence?

Put these questions on the table, among others that can be formulated, and made the conceptual precisions of rigor, corresponds to warn about the existence of another possible trap, which involves practically the same actors.

On July 9, 2018, in an article published in The New York Times (6), Ricardo Hausmann, Miguel Ángel Santos and Douglas Barrios referred to the Venezuelan situation as one of “the greatest economic catastrophes of the last sixty years” . Similar phrases are repeated again and again: “Twenty years of Chavismo have left Venezuela in a condition of invalidity such that rescuing it will require international assistance in the most classic sense of the term”; “The tragedy that today scourges Venezuela is one of the greatest contemporary human disasters.” What to do? The authors state: “The fact that the Venezuelan tragedy is the product of the gradual implementation of a model of social domination through repression and hunger, it imposes on the international community the obligation to intervene to prevent a greater humanitarian catastrophe. ” In economic matters: “To begin to recover, Venezuela will require a program of reforms that restore property rights, personal and legal security and market mechanisms.” Then the social: “Assistance programs will also be needed to cover the huge social attention deficit inherited from the Bolivarian revolution.” The route is laid out in a transparent manner, and passes first through the political solution, then the central, which is the economic, and finally the social: “humanitarian intervention”, neoliberalism and assistance.

The same day that Juan Guaidó proclaimed himself “President in Charge”, The New York Times (7) published an article by Miguel Ángel Santos and José Ignacio Hernández arguing that, given that the National Assembly is the only legitimate power in Venezuela, and having been recognized as such “by the majority of the countries represented in the Organization of American States (OAS) and the European Parliament, in addition to a group of bondholders gathered in the Committee of Creditors of Venezuela” , this circumstance “opens up the possibility of executing acts of government abroad”. Identify as background the National Transitional Council of Libya, recognized by the United Kingdom as the “only government authority” in 2011, and the National Coalition for the Revolutionary and Opposition Forces of Syria, that in 2012 it was also recognized by the United Kingdom as the sole representative of that country. Anticipating in five days the Treasury Department’s actions against PDVSA’s assets and interests in US territory (8), they stated: “the actions of the assembly could go further: they could range from taking refineries and other assets owned by the State Venezuelan, through the appropriation of liquid assets and oil sales events that circulate in those countries, to legal representation in proceedings against the Venezuelan State. ” The close imbrication of these characters with the decision makers of the US Government is more than evident.

On January 27, 2019, Jeffrey Sachs writes on CNN (9) that, contrary to the position of Hausmann and company (to which he does not explicitly refer), he disagrees with the US policy of “regime change” (regime change) and with his habit of bullying Latin America. He expresses concern over what he considers an imminent “catastrophic conflict” in Venezuela and suggests that the United States’ decision to recognize Guaidó as “internal President” further complicates the situation. It does not find it feasible to hold elections in the short term and believes that “the two parties should temporarily share power, until new elections, perhaps in 2021.” He adds: “It seems inconceivable, but history shows that it can be done.” He gives Poland as an example in 1989. During the transition, the “communists” had control of the Presidency, while the opposition (with a majority in the parliament after the June 1989 elections) appointed the prime minister, who in turn had the power to form a cabinet. Meanwhile, the “communists” retained the ministries of Defense and Interior, but had no connection with the management of the economy. Sachs believes that the formula is applicable to Venezuela: Maduro continues as President, the military maintains the ministries of Defense and Interior, the opposition takes control of the rest of the ministries and the Central Bank of Venezuela, Guaidó or someone else assumes the role equivalent to prime minister, leading the civil cabinet and defining economic policies. while the opposition (with a majority in Parliament after the June 1989 elections) appointed the prime minister, who in turn had the power to form a cabinet.

Finally, on February 3, 2019, Francisco Rodríguez and Jeffrey Sachs write in The New York Times (10): “The record of the United States as an agent that contributes to regime change is very poor.” Referring to the sanctions against Venezuela, and approaching positions that may seem “progressive,” they affirm: “The result is likely to be an economic and humanitarian catastrophe of a dimension never before seen in our hemisphere.” They raise the need for “an alternative strategy, one that starts with a transition of negotiated power”, firstly because “the people of Venezuela should not be the victims of a struggle for power between Maduro and the opposition, nor between the external actors who support both parties “, a statement that flirts with a certain” progressivism “. They insist on the historical example of Poland and finally propose: “both parties should accept that an interim government of experts help to end the economic collapse and the hyperinflation of Venezuela. This interim government must have a limited mandate until economic stability and recovery are achieved, in order to bring the country to new elections within one or two years. The leaders of the current government, perhaps including Maduro, would have a limited and predetermined role in the interim government – for example, maintaining control of national defense – but their powers would be circumscribed and would not include the economy and the reform of the electoral system ”

IV.- On what terms would this new scheme be proposed? At first glance, the debate is basically about the most appropriate way to politically solve the Venezuelan “problem”: is it through “humanitarian intervention”, which does not exclude the holding of “free and fair” elections in the short What is the term, or what is convenient for all parties, including the United States, Russia and China, is a peaceful and negotiated transition, with the temporary coexistence of chavismo and antichavism in the Government?

However, the central thing is the economy. The trick would be to deliberately hide the fact that all the participants in the debate are supporters of “free market” policies, which invariably translates into privatization, deregulation / flexibilization and cuts in “public spending”. It may even be that one of these “experts” is competent enough to “stabilize” the national economy, with little help from multilateral agencies, but above all without the pressure of the permanent economic aggression of US imperialism and, more important still, with the advantage that means the truce that would be granted by the global powers. The truth is that in such circumstances it is really difficult to be incompetent. But the price to pay would be nothing less than our existence as a free nation,

Of all, perhaps Ricardo Hausmann is best known to the Venezuelan people, who remember him as Minister of Planning during the second term of Carlos Andrés Pérez, a position he held between February 1992 and June 1993, replacing Miguel Rodríguez. He currently directs the Center for International Development at Harvard University, an institution with which Santos, Barrios and Hernández are related in one way or another. For his part, Francisco Rodríguez, who also went through Harvard, is currently at the head of the firm Torino Capital.

Jeffrey Sachs deserves a separate comment. In “The Doctrine of Shock,” Naomi Klein calls him “the new Doctor Shock” (the “original” is Milton Friedman). Sachs became world famous after passing through Bolivia in 1985, a story that Klein details in his book (11). On August 6 of that year, Víctor Paz Estenssoro assumed the Presidency of the South American country. Four days later, he appointed Gonzalo Sánchez de Lozada (the infamous “Goni”) “to lead an emergency bipartisan (and top secret) economic team charged with radically restructuring the economy. The starting point of this group was Sachs shock therapy. ” The resulting project “consisted of such a radical and generalized revision of a national economy as had never before been attempted in a democracy,” and included: “Elimination of food subsidies, the cancellation of almost all price controls and a 300% rise in the price of oil” (or gasoline). It also contemplated “freezing for a year the salaries of public officials”, “hard cuts in state spending”, “completely open the Bolivian borders to imports without limits of any kind”, “reduction of the workforce of companies state as a step prior to its privatization. ” The plan was executed, and indeed the Bolivian government managed to control hyperinflation, but the social cost was extraordinary (increase in unemployment, loss of value of the real wage, increase in poverty, hunger, inequality).

For supporters of the “free market” around the world, Sachs “had achieved what so many had deemed impossible: it had helped to organize a radical transformation of a neoliberal sign within the confines of a democracy and without a war.” The New York Times described him as an “evangelist of democratic capitalism.” Klein points out: “shock therapy could finally shake off the stench of dictatorships and death camps that had adhered to it” since Milton Friedman, spiritual leader of the neoliberal crusade, advised the dictatorship of Augusto Pinochet in Chile . “Bolivia had introduced Pinochet-style shock therapy without the need for a Pinochet and under a center-left government, nothing less.” Now, contrary to the dominant story, “Bolivia showed that shock therapy could be imposed in a country that had just held an election, but it did not show that it could be accepted democratically or without repression; in fact, it was again an evident proof of the opposite. ” The part of the story that is not told is that the neoliberal plan was executed in a context of state of siege, decreed by Paz Estenssoro to try to stop the popular fury in the streets. The following year, when the Government proceeded with the mass dismissal of workers, it decreed again the state of siege to contain the protests. Really, “Bolivia provided a model for a new, more digestible class of authoritarianism: a civil coup carried out, not by soldiers in military uniform,

It is very likely that few people remember where Jeffrey Sachs ended up four years later: yes, to Venezuela. Sachs was an advisor to Carlos Andrés Pérez, and of course it is not by chance the astonishing similarity between the package of neoliberal measures applied in Bolivia and the tax in Venezuela. Hugo Chávez refers to those circumstances in the following terms: “And on February 16, to the surprise of his own followers, [Pérez] declared that he would apply immediately to the country, without anesthesia, a neoliberal ‘shock therapy’ demanded by the IMF. Relying on his Minister of Development, Moisés Naím, and his Minister of Planning, Miguel Rodríguez Fandeo, and advised by Jeffrey Sachs, one of the great fans of ultraliberalism then, Carlos Andrés, that day, announced the ominous measures of the ‘neoliberal paquetazo’ :

The Venezuelan people were still mourning the death of thousands of their own at the hands of the brutal state repression, and were getting ready to star in new rebellions, when Jeffrey Sachs arrived in Poland, converted into the “Indiana Jones of the economy”, as he called it Los Angeles Times Again, Naomi Klein tells the story in sufficient detail (13): Sachs travels to Warsaw under George Soros, and there they meet both with the “communists” and with the Solidarity movement. After the overwhelming victory of the latter in the June 1989 parliamentary elections, “Sachs began its close collaboration with the movement.” He told his leaders that, as he had achieved in Bolivia, he could get the IMF to provide significant help (some 3 billion dollars), but that this happened by adopting what the Polish press called then the Sachs Plan. Klein points out: “The trajectory marked in it was even more radical than that imposed in Bolivia: in addition to the elimination of overnight price controls and the drastic reduction of subsidies and subsidies, the Sachs Plan advocated the sale of mines, shipyards and state factories to the private sector. That went directly in contradiction with the economic program defended by Solidaridad (based on the property of the workers). ” Sachs and David Lipton, then an IMF official, wrote the plan in one night, after which they held numerous meetings with the leadership of Solidarity, to convince them of the need to apply it.

When, on September 12, 1989, Tadeusz Mazowiecki, Polish Prime Minister, took the floor before Parliament, very few knew what had been the decision finally adopted by the Solidarity central committee regarding the direction the economy should take. “Mazowiecki was about to announce the verdict, but, in the midst of his momentous speech, before he could address the hottest issue facing the country, something started to go wrong. The prime minister began to wobble, clung to the lectern and, according to a witness, “he turned pale, breathing hard, and was heard whispering: ‘I do not feel very well'”.

As it had happened with Alejandro Izaguirre, the Interior Relations Minister of Carlos Andrés Pérez, one hundred and ninety-six days before.

An hour later, and after receiving medical attention, Mazowiecki was able to make his speech: “And, finally, the verdict: Poland’s economy would be treated for its own acute fatigue with shock therapy of a particularly radical kind that would include” the privatization of state industries, the creation of stock and capital markets, a convertible currency and a conversion from heavy industry to the production of consumer goods “, as well as” budget cuts “, all practiced as soon as possible and simultaneously. ”

V.-When Jeffrey Sachs, along with Francisco Rodríguez, gives the example of Poland as a formula “to reach an agreement in Venezuela,” he very conveniently omits what, however, Naomi Klein relates in detail: “Maybe, in Poland, the therapy of shock was imposed after the elections, but, in reality, it was a mockery of the democratic process, as it directly contradicted the wishes of the overwhelming majority of the voters who had supported Solidarity. ” As a direct consequence of the measures included in the Sachs Plan, unemployment and poverty increased. Only the intense popular mobilization prevented the effects were even worse: “The fact that Polish workers managed to stop the full privatization of their country means that, hard and painful as the reforms were, they could have been much worse. The wave of strikes undoubtedly saved hundreds of thousands of jobs that would have been lost if all these supposedly inefficient companies had closed or had been subjected to employment regulation and drastic reductions of staff for their subsequent sale to private hands. More importantly: “Interestingly, it was from then on that Poland’s economy began to grow rapidly, which showed, according to the prominent Polish economist (and former member of Solidarity) Tadeusz Kowalik, who seemed so eager to demonstrate. the inefficiency and obsolescence of state enterprises were “obviously wrong”.

Unlike Sachs and Rodriguez, and also Hausmann and company, neoliberalism is far from being the solution for Venezuela. Quite the opposite: this kind of fanaticism of the market would produce a huge loss to Venezuelan society, much more than it has already produced in recent years, although right now it may be inconceivable.

But perhaps there is no more timely reflection, when thirty years of the Sacudón (Caracazo) are completed, that the following: in general, the Chavista people, but above all those who have Government responsibilities, and specifically in the management of the economy, are obliged to avoid the neoliberal trap. Because it is absolutely true that neoliberalism has been progressively gaining ground as common sense. The case of Poland teaches us that the strength of the national economy depends directly, among other things, on the strength of its public companies. Advance in the privatization of the same without even taking stock of their performance, which must be public, is politically dangerous and irresponsible, and is something that seriously compromises our sovereignty. If that were the case, for example,

The same case in Poland also reminds us of the decisive importance of popular mobilization. Of course it is possible to defeat neoliberalism in all its expressions (the threats and aggressions of the US imperial state are an expression of disciplinary neoliberalism) (14), but that requires mobilization and programmatic unity from us. Stand firm against the neoliberalism that, thirty years later, comes for the revenge, and not like the police Izaguirre, staggering in front of the Venezuelan people.


(1) Malfred Gerig. Speeches about a false election: debt, imports and metabolism in the Venezuelan economic crisis. ALAI, March 22, 2017. https://www.alainet.org/article/184296

(2) Malfred Gerig. The impasse of Venezuela’s external debt. ALAI, November 5, 2018. https://www.alainet.org/en/article/196319

(3) Steve Ellner. How Much of Venezuela’s Crisis is Really Maduro’s Fault? Consortium News, February 15, 2019. https://consortiumnews.com/2019/02/15/how-much-of-venezuelas-crisis-is-really-maduros-fault/

(4) Malfred Gerig. Speeches about a false election: debt, imports and metabolism in the Venezuelan economic crisis. ALAI, March 22, 2017. https://www.alainet.org/article/184296

(5) Alexander Campbell. What’s the Deal with Sanctions in Venezuela, and Why is It So Hard for Media to Understand? CEPR, February 4, 2019. http://cepr.net/blogs/the-americas-blog/what-s-the-deal-with-sanctions-in-venezuela-and-why-s-it-so- hard-for-media-to-understand

(6) Ricardo Hausmann, Miguel Ángel Santos and Douglas Barrios. How to save Venezuela. The New York Times, July 9, 2018. https://www.nytimes.com/en/2018/07/09/opinion-salvar-venezuela-crisis-economica/

(7) Miguel Ángel Santos and José Ignacio Hernández. Why the National Assembly should represent Venezuela abroad. The New York Times, January 23, 2019. https://www.nytimes.com/en/2019/01/23/juan-guaido-nicolas-maduro/

(8) Reinaldo Iturriza López. Venezuela and the “capitalism of disaster”. Telesur, January 31, 2018. https://www.telesurtv.net/bloggers/Venezuela-y-el-capitalismo-del-disastre-20190131-0001.html

(9) Jeffrey Sachs. Here’s how Venezuela can achieve a peaceful resolution to the crisis. CNN, January 27, 2019. https://edition.cnn.com/2019/01/26/opinions/heres-how-venezuela-can-achieve-a-peaceful-resolution-to-the-crisis-sachs/ index.html

(10) Francisco Rodríguez and Jeffrey Sachs. An urgent call to reach an agreement in Venezuela. The New York Times. February 3, 2019. https://www.nytimes.com/en/2019/02/03/venezuela-juan-guaido-maduro/

(11) Naomi Klein. The doctrine of shock. The rise of disaster capitalism. Paidós Ibérica. 2007. All the quotes about Bolivia correspond to chapter 7 of the book, entitled “The new doctor Shock. The economic war replaces the dictatorship. ” P. 193-209.

(12) Ignacio Ramonet. Hugo Chavez. My first life Vadell Hermanos Editores. Caracas Venezuela. 2013. Page 492.

(13) Naomi Klein. The doctrine of shock. The rise of disaster capitalism. Paidós Ibérica. 2007. All the quotes about Poland correspond to chapter 9 of the book, entitled “Slam to history: crisis in Poland, massacre in China”. P. 231-260.

(14) Reinaldo Iturriza López. Venezuela: form ranks against disciplinary neoliberalism. Telesur, February 13, 2019. https://www.telesurtv.net/bloggers/Venezuela-formar-filas-contra-el-neoliberalismo-disciplinario-20190213-0001.html

Source URL: El otro Saber y Poder

Translated by JRE

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