Hugo! (16 page)

Ibáñez accumulated tremendous power, was implicated in several
corruption cases, and usurped the role of first lady, even using her position
to harass Lusinchi's wife, who had filed for divorce. "Blanquita," as
she was known, often attended state functions and even accompanied
Lusinchi on official trips overseas. On one to Spain their illicit relationship
provoked a public scandal. Officials refused to allow them to stay
in government facilities and sent them packing to a hotel.

As Lusinchi's presidency drew to a close in 1988, the financial system
was on the verge of collapse. His rob-the-piggy-bank policies gained
him popularity points for the moment, but left a disaster looming for
the next president. Hoping to return to the good times of the 1970s oil
boom years, Venezuelans turned again to Carlos Andrés Pérez,
el gocho
,
who promised a "great turnaround" in the nation's fortunes. As political
scientist Daniel Hellinger has noted, "Lusinchi's policies probably
helped his fellow
adeco
win the December 1988 elections, but he left
Pérez an economic time bomb to dismantle."

Hugo Chávez arrived in Caracas as the time bomb was ticking.
Unfortunately for him, his Bolivarian movement had reached one of its
low points. Arias Cárdenas had left for two years of study in Colombia
shortly after the 1986 meeting in San Cristóbal in which he formally
joined the movement. He had not played a key role in developing the
group, which by now had changed its name to
MBR-200 thanks to the
growing incorporation of civilians like Marksman.

For his part, of course, Chávez had been isolated in Elorza. He
found it difficult to maintain his contacts. Even the newspaper the civilians
at the meeting in San Cristóbal agreed to publish turned out to be
a disappointment. A couple of months later, a package of two hundred
copies arrived in Elorza for Chávez. When he opened it he was horrified.
The newspaper was supposed to emphasize Bolívar, Rodríguez,
and Zamora. Instead, staring out from the cover was an
image of Ernesto
"Che" Guevara. Inside, the articles had a similar bent. Chávez admired
Che, but knew the Cuban revolutionary hero would never be accepted
in the armed forces or even among most of the general population. He
took the newspapers out back and burned them.

As the 1980s came to a close, Chávez thought his movement might
die out completely. "The process went advancing from 1982 with ups
and downs until 1991, and there were times I thought it was going to
end." The rebels needed a dramatic event to revitalize the conspiracy.
One would not be long in coming.

Carlos Andrés Pérez wanted to make his
inauguration an unforgettable
affair. He won the December 1988 presidential election decisively,
riding a wave of expectation that he would return the country to the
heyday of the oil boom years he'd presided over during his first term in
the 1970s when billions of petrodollars seemed to fall out of the sky like
rain. After a decade of economic retrenchment,
"Venezuela Saudita"
was making a comeback, or so millions of Venezuelans hoped. CAP,
as he was known, was the first president elected to a second term in
Venezuela since democracy had been established in 1958.

Chávez was a front-row witness to his comeback. He was now stationed
at the Palacio Blanco, across the street from Miraflores presidential
palace, working in the national security office. But he was to
miss the traumatic events that soon followed Pérez's swearing-in and
changed the country forever. While Caracas was burning, Chávez was
confined to bed with the chicken pox.

Until Chávez came along, Pérez was the principal figure of the
country's democratic era. A
charismatic and demagogic politician who
at sixty-six could still stir crowds at campaign rallies into a frenzy and
make women faint, he wasn't popular because of his good looks. "Tall,
balding, and with a spreading nose and a receding chin, he is no movie
star,"
The Atlantic Monthly
said in a profile. "Nor is he a great orator.
CAP's appeal is CAP himself."

Like Chávez, he was a workaholic who slept no more than four or
five hours a night. Up before dawn every day for another dizzying round
of meetings, phone calls, and trips, Pérez was a globe-trotting whirlwind
of activity. At rallies he flailed his arms overhead like two windshield
wipers and could work crowds into near hysteria with phrases as
mundane as "Let's Get to Work! Let's Get to Work!" A political animal,
his lust for the limelight was legendary.

He hailed from the small border
state of Táchira, which had two
principal products: coffee and autocrats. It produced all three military
dictators in twentieth-century Venezuela; all told, they ruled the
country for forty-six years. Pérez entered politics at fifteen, landed a
job eight years later as private secretary to the patriarch of Venezuelan
democracy, Rómulo
Betancourt, and fled into
exile in 1949 for nine
years after General Marcos Pérez Jiménez seized power. He served as
interior minister in the early 1960s when Betancourt became the country's
first popularly elected president, and eventually took the country
by storm during his own 1974-1979 presidency. He nationalized the oil
industry, established diplomatic relations with Cuba, lobbied the US
Congress to turn over control of the Panama Canal to Panama, and
supplied the
Sandinistas with guns as the US-backed Somoza regime
wobbled in its final days.

Surrounded by a group of high-rolling cronies dubbed
"the Twelve
Apostles," Pérez saw his presidency end in scandal when he was accused
in a kickback scheme. It involved a frigate, the
Sierra Nevada
, bought
for twice its value and given to landlocked Bolivia. The ethics committee
of his own Democratic Action Party sanctioned him and tried to
toss him out of the party.

But a decade later, after Venezuela's descent into economic morass,
all that was long forgotten, or at least forgiven. So was the healthy
bank account he had somehow amassed on modest government salaries.
Pérez blew across the country during the 1988 campaign like a
human tornado, striding through barrios as he shook hands, kissed old
women, and promised prosperity. His
slogans were "The Man Who
Really Walks" and "The Man with Energy."

He'd spent fifteen years crossing the globe on behalf of
Third World
causes. Like Chávez years later, he envisioned himself a modern-day incarnation
of
Simón Bolívar, uniting Latin America to take on the crushing
foreign debt crisis of the 1980s Lost Decade and becoming the official
spokesman for the Third World in general. As he prepared to assume the
presidency again, he wanted to mark the day with a spectacle heralding his
emergence as a full-fledged world leader and savior of Latin America.

Critics dubbed it a "coronation." The guest list included twenty-four
heads of state, half a dozen ex-presidents including Jimmy Carter
and Julius Nyerere of Tanzania, five OPEC oil ministers, and hundreds
of foreign dignitaries.
Fidel Castro came, ending intense speculation
over whether he would make his first appearance in Venezuela since
his triumphant visit thirty years earlier after taking power in Cuba.
The United States dispatched Dan Quayle, making his maiden diplomatic
trip overseas as vice president. Both Nicaraguan contra
leaders and the country's Sandinista president
Daniel Ortega — still
at war with each other — flew in. Middle Eastern oil sheiks rubbed
elbows with Latin American guerrilla leaders from the
Faribundo
Martí National Liberation Front. The shining Hilton Hotel in central
Caracas where many of the high-powered guests checked in was
transformed into a "gun-bristling militarized zone," with Soviet KGB
officers, US Secret Service agents, and Cuban security agents staking
it out along with hundreds of Venezuelan soldiers. Some seven hundred
journalists from around the world flocked to the city to witness
the spectacle.

They weren't disappointed. Pérez and his cronies put on a show
not often seen in the region — "one of the grandest celebrations
Latin America has ever known,"
The New York Times
reported. By
some accounts it was the largest assembly of foreign leaders ever in
Latin America. A total of ten thousand guests invited to ostentatious
inaugural parties reportedly drank twelve hundred bottles of scotch
and consumed 650,000 hors d'oeuvres, twenty sides of beef, and 209
sides of lamb, washing it down with champagne. "It's like a coronation,
something an emperor would do," one South American diplomat
said. "You would think he was Hirohito or something."

The crowd of special guests invited to the swearing-in was too
large for the congressional building. So for the first time it was moved
to the elegant Teresa Carreño Theater, the city's largest performing
arts center, located across the street from the Hilton.

The invitations to Castro and Ortega had fueled speculation that
Pérez, who had nationalized foreign oil companies in 1976, was going
to make a radical announcement about Latin America's ballooning
foreign debt. It was provoking what many economists and political
analysts called the worst crisis in the region's history. Many expected
Pérez to announce the creation of a debtors' cartel to pressure foreign
banks and the United States to grant the countries relief.

At 10:30 A.M. on February 2, 1989, Jaime Lusinchi finally passed
Pérez the presidential sash. Venezuela's new president launched into
a forty-minute address, invoking Bolívar's dream of a united Latin
America and appealing to its leaders to form a common front against
the "onerous" debt burden. He didn't refer much to Venezuela specifically,
but did hint at something to come.

Two weeks later the country and the world found out what he was
talking about. Even as Pérez was publicly denouncing foreign capital
in the weeks leading up to his inauguration while he crisscrossed the
globe, he had been privately sending a message to the International
Monetary Fund and the World Bank that Venezuela would comply
with their stringent requirements for a desperately needed $4.3 billion
in loans over the next three years, including $1.5 billion immediately.

The conditions were part of what was known as the Washington
Consensus. Viewed as the bible of the emerging "neo-liberal" free-market
economic policies sweeping
Latin America in response to the
debt crisis, the Washington Consensus called for reducing the government's
role in the economy, slashing state spending and subsidies, lifting
price controls, reducing government bureaucracy, privatizing state-owned
enterprises, opening economies to foreign investment, floating
currency exchange rates in the free market, reducing trade tariffs, and
deregulating the economy. In sum, unfettered free-market capitalism
with little of the social safety net of European-style socialism.

On the staff of Pérez's new administration were two young US-trained
economists well versed in the disciplines of the Chicago School
of neo-liberal economics:
Moisés Naím, the trade and industry minister,
and
Miguel Rodríguez, the minister of planning — whiz kids
from MIT and Yale. They helped put together an economic "shock
package" that other countries in Latin America, such as Bolivia, had
already implemented to try to tame hyperinflation, stoke economic
growth, and attack foreign debt.

The idea was simple: Short-term pain to correct "economic imbalances"
would lead to long-term prosperity. No matter that Pérez had
denounced the
IMF package as an "atom bomb that kills only people
and leaves buildings standing" and IMF economists as "genocide
workers in the pay of economic totalitarianism." In his mind, he now
had little choice. The debt-saddled country was close to broke thanks
to Lusinchi, who had raided the foreign reserves to pay the debt service
and left
Pérez with almost nothing. His predicament was captured in
a scene by Venezuela's leading playwright,
José Ignacio Cabrujas, who
imagined a conversation between Pérez and banker Pedro Tinoco, who
has just informed the president-elect, "There are $200 million":

P
é
rez:
To buy paper clips, Tinoco?

Tinoco:
No, no. In general, Mr. President.

P
é
rez:
I assume you're referring to the petty cash box, Dr.

Tinoco.

Tinoco:
No. No. I'm talking about the general treasury. That's
all we have. There's nothing else.

P
é
rez:
But Jaime . . . he didn't . . . he didn't tell me anything
about this . . . Call Jaime!

Tinoco:
Jaime is in Miami, Mr. President.

On February 16 Pérez announced the new
paquete.
He didn't call it
a
"shock package." Instead, he declared it part of
El Gran Virage
—
the great turnaround — that would return
Venezuela to prosperity. It
was an orthodox IMF austerity package, along with a few specific measures
aimed at Venezuela's economic peculiarities. Gasoline prices, for
instance, among the cheapest in the world at 13¢ a gallon, were to nearly
double, followed by two more increases in subsequent years. The idea
was to bring them to world market levels.

The government didn't think it had to prepare the population for
the measures, which included drastic hikes in the price of bread, milk,
pasta, and other
subsidized foods. Naím, Rodríguez, and the others
simply assumed people would accept them as commonsense steps to
correct economic imbalances.

The package went into effect the weekend of February 25-26, as
workers quietly changed price signs at gas pumps. The country was
already tense. During the electoral campaign, Democratic Action's
Lusinchi had kept price controls on a wide variety of products intact to
ensure his own popularity and boost Pérez's chances of winning in early
December. Anticipating that the controls would be lifted, the bolivar
would be devalued, and prices would rise after the new president took
office, merchants hoarded rice, black beans, corn flour, pasta, powdered
milk, soap, toothpaste, shampoo, deodorant, even cars.

For weeks, the country was hit with food shortages. People who
went to small neighborhood bodegas or larger supermarkets to buy
commodities that made up the standard Venezuelan diet were told
No hay
(there isn't any), even though many of the items were hidden
in storage rooms. Unable to buy even the most basic necessities,
Venezuelans' patience was wearing thin. In mid-February isolated food
riots started breaking out in Caracas and sections of the interior.

On Monday morning, February 27, the dam broke. While Pérez's
new shock program called for boosting
gasoline prices by 100 percent,
it restricted increases for bus and jeep fares to 30 percent. The drivers
were unhappy. That morning they simply ignored the new regulations,
doubling their fares to match the gasoline hike and refusing to
accept 50 percent student discount cards.

The increase was a shock to millions of poor people who relied on
the buses and jeeps to get to work. Many woke up at 4 A.M., left their
hillside shacks by 5, and then stood in long lines for an hour or two to
get a place on vehicles so packed, passengers often hung out the doors
or shoved one another to get on. In the evening they repeated the
same humiliating routine, arriving home around 8 or 9 P.M. Bus companies
that monopolized the business refused to put more vehicles on
the road to reduce the lines because it would cut into their profits.

For frustrated commuters barely scraping by economically, an
unannounced, overnight doubling of transportation fares was too
much to take. In some outlying areas of the capital, the new fares ate
up a quarter of the typical worker's monthly salary.

The first signs of trouble broke out in Guarenas, outside Caracas.
As dawn broke and commuters lined up at bus stops, they were hit with
the 100 percent fare hikes. They argued with drivers, tossed stones at
the vehicles, and took to the streets to protest. By 7:30 A.M. two cars
were ablaze. About the same time, disturbances erupted in Caracas
near the Nuevo Circo (new circus) bus terminal.

A few hours later protestors moved from Nuevo Circo to the six-lane
Avenida Bolívar. They built a barricade, cutting off one of the
main traffic arteries of the capital. Nervous store owners lowered their
santamarias
(holy Marys) — the corrugated steel curtains or iron gratings
businesses normally used at night to protect their shop windows.
Others left their
santamarias
half down and their stores partly open,
not sure what was happening.