Caracas Chronicles

Carlos Andrés Pérez, who dominated Venezuela’s social democratic landscape for over a quarter of a century, has died at the age of 88, on Christmas day.

CAP, as he was universally known, is harder to eulogize than most. Variously described as a corruption-enabling populist, a far-sighted visionary, a proto-Chávez, a champion of third world autonomy in the Cold War, a neoliberal despot, and the godfather of Spanish Democracy, CAP was all of those things and none.

To my mind, we should remember him, first and fore most, as a man of his time…in fact, a man too much of his time.

His two presidencies – 1974-1979 and 1989-1993 – were famously at odds with one another. The determined statist of the 70s gave way completely to the liberal reformer of the 90s. There seemed to be no thread linking the two, beyond the man himself and his steely determination to bring to Venezuela the most up-to-date international thinking on development.

The result wasn’t a catastrophe: it was two catastrophes.

It’s easy to forget now, but the kinds of Big Push, import-substitution industrialization strategies that CAP implemented with such relish in the 1970s were cutting edge stuff at the time. Academics at big name think tanks, hoity toity universities and, of course, throughout the UN System were convinced that without a major state-sponsored drive to coordinate investment, third world countries would remain mired in a peripheral position in the World System, staying poor forever.

Grandiose projects, like the expansion of Sidor behind high tariff walls, were part of the standard World Bank prescription for development back then. CAP positioned himself as an international leader for this movement. Chávez, for one, can barely sleep at night knowing the history books will always credit CAP with having nationalized the oil industry.

The ISI recipe, unfortunately, was badly flawed from the start. In the 1970s, like much of the International Development community, CAP failed to foresee the intractable coordination problems involved in mobilizing the huge new resources unlocked by the 70s oil boom, and the sprawling incentives for corruption they would generate.

The outcome, in terms of Dutch Disease, wasteful investment and plain old graft is perhaps best illustrated by the heaping piles of rusting junk you can still see if you look closely by the side of the runway as you fly into some Venezuelan airports. Snow-plows and aircraft de-icing equipment have been gathering dust there ever since the late 70s, when they were bought as part of airport modernization kits. That the inclusion of Cold Weather components hiked up the price was, of course, a feature rather than a bug from the point of view of the bureaucrats taking a cut of the contract…

CAP’s big push of the 70s set in motion a chain of events that would turn Venezuela – at that point the fastest growing economy in the world over the previous 40 years – into the basketcase it would become over the next four decades.

Mutatis mutandi – and almost everything was mutandi – it was the same story in the late 80s and early 90s, when CAP drank deeply from the cup of the Washington Consensus and tried to implement it, “shock therapy” style, before there was any kind of political, well, consensus for it inside Venezuela. The outcome, in terms of political instability, wholesale delegitimation of the institutions of democracy and, ultimately, the rise of authoritarian politics is too well known to rehash in an obituary.

Once again, CAP set out to apply the recipes handed down from the big development institutions, once again he badly mangled the political economy of reform, with catastrophic results over the medium term.

An Intellectual Fashion Victim until the end, Carlos Andrés Pérez stands as an icon of Venezuela’s failed integration into the World Economy, of its inability to process the currents of international ideas into a viable recipe for broad-based prosperity. In attempt after attempt to bring the country up-to-date with the latest in development thinking, CAP sunk it deeper and deeper into a morass of economic dysfunction and moral degeneracy that was bound, sooner or later, to morph into the tragedy now all around us.

It was the Venezuela traumatized and weakened by CAP’s serial mishandling of reform that found its institutions too frail to withstand Chávez’s authoritarian onslaught. And in that sense it was CAP – far more than his pardon-wielding Christian Democratic nemesis – who is to blame for Venzueala’s relapse into dictatorship.