Venezuela's Downfall Isn't About Socialism — It's About Oil

Venezuela's Downfall Isn't About Socialism — It's About Oil

By Philip Kowalski

Victims of the wave of state violence unleashed during the Caracazo protests run in the streets.


Thirty-year-old lessons of the massive Caracazo protest can point to Venezuela’s real policy failure.

By Philip Kowalski

The ongoing economic and political crisis in Venezuela — with its massive inflation, food shortages, outflux of refugees and challenges of leadership to Nicolás Maduro by the American-backed Juan Guaidó — is often regarded in American political discourse as a cautionary tale on the dangers of socialism. On Feb. 18, President Trump offered his take on the crisis: “Years of socialist rule have brought this once-thriving nation to the brink of ruin.” He and others blame Venezuela’s decline on the socialist policies of two consecutive presidents: Hugo Chávez and Maduro.

The “once-thriving” part is correct: According to economists Ricardo Hausmann and Francisco Rodríguez, by 1970 oil revenue had made Venezuela the richest nation in Latin America. But the rest of Trump’s statement, not so much. The Venezuelan crisis predates Chávez by at least 21 years … and its most violent and polarizing consequence, the Caracazo protest, can be laid at the feet of austerity-advocating President Carlos Andrés Pérez. 

The Caracazo protest is unique in Latin America due to its massive scale, extremely high death toll — which some estimates place upwards of 2,000 — and subsequent polarization of society. (To compare, the 2019 protests have seen an estimated 43 casualties.) It’s now seen as the violent conclusion to more than a decade of severe economic and political mismanagement by an insatiably corrupt Venezuelan elite. According to Margarita López-Maya, a sociologist at the Central University of Venezuela, “The Caracazo protests showed everyone that democracy and the model of [relying on] oil revenues was simply not working anymore.”

Gettyimages 50590370

Inaugural-sashed President Carlos Andrés Pérez embracing Nicaraguan President Daniel Ortega, among heads of state attending the taking-of-office fete.

Source Cynthia Johnson/The LIFE Images Collection/Getty

At the beginning of February 1989, after celebrating his re-election with an extremely lavish ceremony, President Pérez — who in his first term of presidency became so notorious for his reliance on oil that he was dubbed the Saudi Venezuelan — promised to reject the prospect of an International Monetary Fund and never subject Venezuelans to austerity measures. Yet on Feb. 17, he shocked both his party and the nation with his announcement that Venezuela was about to experience El Gran Viraje (the Great Turn), the IMF-recommended liberalization of its economy and an end to the great social projects of the state. Austerity was to be the rule of the day as the government attempted to pay off Venezuela’s massive debt incurred when oil prices fell in the mid-1980s. No mention was made of curbing Venezuela’s massive corruption, which the populace was well aware of thanks to Pérez’s liberalization of the press.

Unwilling to conduct business in such an uncertain economy, grocery stores refused to sell their products, making already furious people hungry as well. On the morning of Feb. 27, Venezuelans arriving at bus stations for their commutes were shocked to learn that the price for public transportation had doubled. By 5am, Caracas and other major cities were paralyzed by massive protests. Unable to purchase food, people began looting, stealing food and redistributing it across Caracas’ poorest neighborhoods. The police were unable and unwilling to maintain order. President Pérez, whose aides simply dismissed rumors of discontent as nothing important, did not even learn of the protests for a full 24 hours.


Fearing for his political future, Pérez announced the suspension of constitutional rights and a curfew. Even Pérez’s own cabinet was shocked by the move — when Interior Minister Alejandro Izaguirre appeared on TV to urge the restoration of order, he broke down and refused to complete his speech. The president ordered tens of thousands of troops stationed at the Colombian border to be airlifted into Caracas. Many of the soldiers had never been to the city and feared the dangerous reputation of its poorer neighborhoods. What unfolded next was slaughter on the streets as the military used whatever means necessary to quell discontent, even using long-range artillery against the slums on the hillsides of Caracas. The slum residents, many of whom had no idea there was a curfew, were shot as they went about their daily business. According to modern scholarly estimates, thousands were killed — though official government estimates still admit to only 276 deaths. The morgues became so overcrowded that it was necessary to transport unclaimed dead to an unmarked mass grave on the periphery of the city. Pérez remained in power until 1993, when he was forced out over an embezzlement scandal. 

According to the late Venezuelan anthropologist Fernando Coronil, the ultimate result of the Caracazo protest was the rupturing of the bond between the state and the masses. It left Venezuelan society wounded and polarized, something that Chávez would take advantage of in his populist campaign for the presidency in 1998. Ironically, President Maduro sought to mobilize voters by recalling the mismanagement of the ’80s, when his regime faces similar problems.

According to López-Maya, “Inflation, corruption and food scarcity is worse now than ever before, and Caracas has become the most violent capital city in the world.” Maduro, she explains, is clearly eager to avoid another such mass demonstration. But his response to unrest is more than a little reminiscent of Pérez’s: “Any sign of protest is met with an immediate and repressive crackdown,” she says, “and heavy censorship ensures that the masses will not see discontent.”