Archive for December 26th, 2010

Carlos Andres Perez dead at 88

December 26, 2010

Carlos Andres Perez, twice Venezuela’s President in 1974 and 1989 died yesterday at 88. A controversial figure, CAP, as he was known, was twice in exile as a young Adeco activist in 1948 and the 1950’s and was in charge of the fight against guerrillas during Romulo Betancourt’s presidency from 1959 to 1964, first as a Director General of the Ministry of Interior and Justice and later as Minister. He developed an image of being tough during this time. When the 1973 Presidential campaign arrived, Romulo Betancourt quickly said he would not be a candidate, leaving the field open for CAP. It was the first multimedia electoral campaign in Venezuela’s history with CAP projecting an energetic image (he was a tireless worker), visiting all corners of the country and defeating Lorenzo Fernandez of the incumbent COPEI party.

Once elected, CAP was dramatic the first few months of his presidency, nationalizing oil and iron his first day in power, benefiting from the sharp rise in oil prices. But CAP, like most Venezuelan Presidents, had no economic knowledge and his Government was a hodge podge of Cepal-like recipes and the conception that the Government could do it all. But he dazzled the population, in the first month in power, he cleaned up Caracas, froze the prize of arepas (which made areperas disappear in short order) and decreed that all elevators had to have an operator, as a way of creating employment (Pleno empleo, full employment, was his motto).

The economy boomed, thanks to the oil windfall, but the same windfall hid all of the problems as CAP developed his vision of the “Gran Venezuela”. Money was thrown at steel, aluminum and technology projects in which the Government was the owner or provided the financing, but there was little control and/or know how to make it successful. He did try to protect some of the windfall, creating the Fondo de Inversiones de Venezuela, reduced oil production because so much money was not needed and maintained the structure of the oil industry before it was nationalized, creating PDVSA and naming General Ravard to preside it.

The boom was so huge that everyone benefited, poverty reached the lowest levels in Venezuela’s history, he created the Mariscal de Ayacucho program that sent 10,000 Venezuelans abroad for mostly graduate degrees, protected wild areas in National Parks, he created the oil research institute INTEVEP, he built important hydroelectric projects.

He was a democrat and he was a populist, a bit of megalomaniac, worried about his image and his legacy. He gave a boat to Bolivia which has no ports, as a symbol of its fight to have access to the sea. He reached out to Fidel Castro, while shunning the Dictators from the South, while making it attractive and facilitating for thousands of highly educated people from the latter countries to move to Venezuela to help in his push to increase the number of university students.

But his economic policies had as their central theme the intervention by the State. He removed the independence of the Venezuelan Central Bank, while increasing salaries periodically, which debased the currency leading to inflation. Venezuela was not ready for the huge inflows and there were lots of corrupt people ready to make a lot of money off the Government. By the end of his term, corruption charges, including the infamous Sierra Nevada refrigerated boat scandal, tarnished his image. He was brought to trial because of that case, curiously, it was Jose Vicente Rangel who cast the deciding vote to exonerate CAP. That was CAP, he was capable of talking to everyone and anyone, even his staunchest enemies felt that he was someone he could talk to.

His last year in power, oil prices dropped, forcing CAP to lower the budget by 10%, Venezuelans had the feeling that things were worse for the first time in many years (little did they know!) and his party lost.

CAP spent the ten years required by law between terms, traveling around the world, involving himself with the South commission and talking to world leaders. This changed his ideas, but still, he had little economic knowledge and as he ran for President in 1988, he promised  to return to the hey day years of his first term.

But it was not be. CAP reached out to a group of well educated non-adecos, including those that were involved in studies on how to change the state. It was not until they began talking to the people of the Lusinchi Government, after CAP was elected. that they realized how dire the situation was. International reserves were less than US$400 million. After a lavish “crowning” with all of the pomposity that was simply out of place, the CAP Government realized that they needed help form the IMF and imposed an adjustment program, a “shock” program that included increasing gasoline prices by 100%, interest rate increases, the increase of public tariffs, freeing of prices that had been frozen for years, eliminating tariffs and allow the currency to float.

One month after taking power, having won with 56% of the popular vote, riots started the “Caracazo” four days of rioting and protests against the gasoline price increase that cast a shadow over CAP’s Presidency. He believed people had the right to protest, doing little the first two days and the protests and the looting go out of hand. In the end an estimated 276 people died and the looting was in the millions. His Government was a lame duck Government even before he started.

But he pressed on. His intuition was right, that he was very good at. He implemented or began to implement many of the reforms suggested by the Commission for the Reform of the State, including the election of Governors, tax reform and the general decentralization of the Government. He was changing things very fast.

But his own party AD felt it had been replaced by these “technocrats” and he had opposition from within. His cabinet was composed of very knowledgable, very well prepared people, most of which had no political experience. CAP was supposed to take care of the politics, but he did not, it was an ego thing and that was what doomed him. Policies were working, the economy grew by over 9% in 1991 after all the adjustments, CAP thought he had no worries.

A group of people the self called “Notables”, mostly intellectuals, who had always opposed CAP and envied his popularity, began calling for his removal. Chavez followed this with his coup in February 1992 (which had been in the works for a decade!), weakening the Government further. When it was discovered that CAP had used funds from the secret slush fund to provide security to Violate Chamorro in Nicaragua and exchanged it at a preferential rate when the Government was ready to devalue, he was accused and impeached. He was later sentenced to 28 months in prison and charged with other crimes. He was elected Senator in 1998, which gave him immunity, but the 2000 Constitution eliminated the Senate and this rule, removing the protection he had. He never returned to Venezuela.

He was in the end, a true democrat, too ignorant on economic matters to have a coherent plan, but smart enough to follow his instincts with his collaborators, he allowed corruption to flourish around him, there was so much money to be made. But he did many positive things, implementing changes in his second Government that were very important. Some of them even took power away from him! He was willing to change, but sadly he did not sell the change the same way he sold himself. On a relative scale, he was not that bad, better than Caldera, who would never change, better than Luis Herrera, who had no program on how to change the country, better than Lusinchi, who had no clue. Betancourt was better, because he understood economics, oil and what the country needed, he had a program. Leoni simply followed Betancourt’s plans with honesty and surrounded by many of the same people.

And of course, he was much better than Hugo, who is not a democrat and has failed at all of his economic initiatives, allowing the largest corruption levels in Venezuela’s history and failing to leverage the biggest oil boom in the country;s history for the benefit of the people.

May Carlos Andres Perez rest in peace!