Caracas Chronicles

As we reach the final of February’s three unavoidable political aniversaries, here’s a question you seldom hear raised: what was Venezuela like on February 26th, 1989?

Well, lets see. We had an economy that had stagnated for years, reversing most of the gains achieved from 1958 to 1980. The economy lumbered under massive microeconomic distortions created by an arbitrageur’s wet-dream of a policy-mix: with a multiple exchange rate regime operating alongside complex price controls and selective trade protection that benefited mostly the politically connected. The whole package was administered by a massively bloated public sector more concerned with its own prerogatives than with serving the needs of the population. And we had a popular, newly elected president who had recently announced a far-reaching program to try to confront this situation. 

By the following day, the country had gone over the edge.

That the orgy of anarchic looting that spread from city to city over the following days has been retroactively fitted out as a popular revolt against neoliberalism must count as chavismo’s founding fib.

It’s easy to forget – and, indeed, largely forgotten – that at the time the riots started, the reform program announced by Carlos Andrés Pérez hadn’t been implemented yet. Aside from a rather meek hike in deeply subsidized gasoline prices, by February 26th, 1989, the paquetazo was little more than an announcement.

When the looting started, trade had not been liberalized, none of the hundreds upon hundreds of loss-making State-owned enterprises had been privatized, no public services had been cut, food and other essential items’ prices had not risen, health and education spending had not been cut…in fact, none of the standard repertoire of left-wing bogeymen policies had been enacted at that point, save for the gasoline price hikes. 

The whole story-line of 27-F as revolt-against-neoliberalism is ahistorical and silly. Unless you credit the population with preternatural powers of foresight and posit that they were somehow  rioting  pre-emptively, in protest against what they calculated would be the future consequences of policies announced but not-yet enacted, you have to agree that the 27-F riots were the result of mass discontent caused by the problems that CAP’s reform package was seeking to solve, not by the solutions CAP had proposed for dealing with them.

Which is ideological heresy for chavismo in more ways than one, because the widespread social misery resulting from economic stagnation brought about by the layers upon layers of distortions arising from an ever more cumbersome set of economic and administrative controls enforced by an increasingly bloated, inefficient, bureaucratic state that crowds out private investment and entrepreneurship as it devotes more and more of its scarce resources to plugging the financial shortfalls generated by an ever increasing list of loss-making SOEs whose lips are virtually welded to the petro-rent teat…well, that describes Venezuela today just as well as it described it on February 26th, 1989.