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On the occasion of the centenary of the birth of Carlos Andrés Pérez on October 27, those of us who knew him and accompanied him in his administration are reliving the days of foolishness and political short-sightedness that put an end to his second term, opening the doors to destructive populism. Those were the days when Venezuela’s leadership preferred to make democracy collapse rather than assume the responsibility of abandoning a rent-based economy and joining forces in the creation of wealth and the deepening of democracy.They were the days when Latin America seemed to have come of age. With the sole exception of Cuba, the entire continent was flying the flags of democracy and all nations had put their houses in order after the debt cyclone that engulfed the region in the 1970s and 1980s. For the first time in their history, Latin American nations had almost simultaneously chosen development above power ambitions. And they all shared the vision of the transformative power of free trade.
In this context, Carlos Andrés Pérez set about the task of inserting Venezuela into the Latin American current of transformation. It was the agenda of rationality. Rationality indicated that development was unattainable without fiscal discipline; defense of the rule of law; economic freedom; substantial improvement of public services, and competition.This agenda, however, was a declaration of war on the vested interests surrounding Venezuela’s political institutions. Heirs of the Spanish Middle Ages, they promoted the state creation of artificial monopolies throughout independent history in order to facilitate the extraction of rent. And the entire society derived its livelihood from rent-seeking operations.
Hence, a program that promoted the creation of wealth and allowed for economic competition was seen as a projectile launched against the waterline of a system whereby businessmen did not compete; politicians did not work; the military did not fight, and universities did not produce concepts worthy of appearing in the world’s citation indexes. Carlos Andrés Pérez’s program sought to put an end to the medieval culture of rent-seeking, and instead, sow the plants of individual freedom and the creation of wealth.
The counteroffensive of vested interests was put into place really quickly. Taking advantage of the disappointment that the people felt with democracy as a consequence of the lack of economic progress that had characterized “the lost decade,” and the expansion of corruption, the institutional leaders of Venezuela grouped themselves behind the project of getting rid of the leader who promoted change. And as this popular dislike surfaced in the polls, the elites began to use the argument to create a goal that placed the people of Venezuela as the protagonist of the counter-reform. It was essential to preserve the status quo that prevailed before the debt crisis because it guaranteed control of the economy and, by doing so, political power.
And we began to observe unnatural alliances. The Venezuelan Communist Party, for example, opposing the financial reform that sought to place banking under the control of effective regulatory bodies. Venezuelan businessmen, who for years had raised the banners of free trade, opposing the country’s entry into GATT. Both were united in denouncing a government corruption that could never be proven because it was a cabinet populated by young talents with no ties to political parties and with no interest in making a political career after the government experience, which was seen in Weberian terms.And today we are living with the consequences of those actions, because they opened the door to two enemies of freedom. A domestic one represented by the interests of the rent-based system that preferred to open the door to populism rather than expanding freedom. The other one, an external enemy, which for many years had been contemplating the idea of using Venezuela as a platform to finance its revolutionary delirium. And between them they managed to defeat Carlos Andrés Pérez and bury Venezuela.
This article is part of an agreement between El American and the Interamerican Institute for Democracy.
Beatrice Rangel es directora del Interamerican Institute for Democracy, Managing Director de AMLA Consulting, responsable de negociar e implementar estrategias y adquisiciones de inversión corporativas en América Latina y el Caribe. Exmiembro ejecutivo de Wharton School de la Universidad de Pennsylvania // Beatrice Rangel is Director of the Interamerican Institute for Democracy, Managing Director of AMLA Consulting, responsible for negotiating and implementing corporate investment strategies and acquisitions in Latin America and the Caribbean. Former Executive Fellow of the Wharton School of the University of Pennsylvania.