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History, Nationalization Measures

Luis Herrera Campins, Jaime Lusinchi, Rafael Caldera, Banco Latino, COPEI

Toward the end of the decade, the political life of the nation gained some tranquility. In 1968 Rafael Caldera Rodriguez, leader of COPEI, won a narrow election victory over Leoni, largely because of a split in the AD. Despite his narrow support, Caldera governed effectively and virtually eliminated the guerrilla and terrorist activities of the late 1960s. Economically, he pursued a policy of nationalizing foreign enterprises. In 1973 Venezuela joined the increasingly effective Andean Group, an organization of South American countries located along the Andes Mountains, whose aim is to facilitate development of member nations through economic and social cooperation.

Political activity was brisk in 1973 as the presidential elections neared. In May the congress ratified a constitutional amendment barring the candidacy of former president Perez Jimenez. In the December elections, the winner was Carlos Andres Perez, the leader of the AD. He attempted to improve relations with Venezuela’s neighbors but took an increasingly independent line from the United States. He expressed open hostility to the military dictatorship that had gained control of Chile in 1973 and resumed diplomatic relations with the Communist government of Cuba. Perez nationalized the iron and steel industry in 1975 and the oil industry in 1976.

The 1978 elections were won by COPEI and its presidential candidate, Luis Herrera Campins. Under the Herrera government the economy entered a long recession, despite a near doubling of the country’s income from oil exports. Venezuela’s foreign indebtedness tripled, to more than $34 billion, and the cost of living nearly doubled. The 1983 elections resulted in a sweeping victory for the AD, and its candidate, Jaime Lusinchi, took office as president. Confronted by falling world oil prices and heavy obligations to pay interest and principal on the foreign debt, Lusinchi initially followed austerity policies that prolonged the recession. However, these policies enabled Venezuela, alone among Latin American countries, to pay its foreign creditors in full and on time. Nevertheless, the country was unable to get new loans from foreign bankers. When economic growth resumed in 1986 it was accompanied by domestic inflation, which doubled the cost of living within two years.

The AD also won the 1988 elections, resulting in a second presidency for Carlos Andres Perez, who faced a serious economic crisis. Venezuela’s national income per person was less than 75 percent of its 1977 level, and the international value of its currency had fallen by almost 90 percent in five years. In February 1989 consumer price increases imposed as part of an austerity program triggered violent protests in Caracas that were suppressed by the authorities, causing at least several hundred deaths. Emergency loans from the United States and other countries helped ease the crisis, as did increased revenue from oil exports. However, continued popular discontent with government policies, including attempts at selling government-owned industries to private companies, led to defeats of the AD in local elections. In 1991 Venezuela and the other members of the Andean Group signed a treaty that would establish the Andean Common Market.

In 1992 two military coup attempts were crushed, one in February and another in November. Perez was suspended from office in May 1993, after the Senate voted unanimously to have him stand trial on charges of embezzlement and misuse of public funds. Senator Ramon Jose Velasquez was elected interim president, pending elections in 1993. In December 1993 Rafael Caldera was again elected president.

In January 1994 the nation’s second largest bank, Banco Latino, collapsed, precipitating an economic crisis. The crisis affected several other banks, prompting a strong response from the central government. By August, 13 banks had been nationalized, including several of the largest in Venezuela. Citing immediate necessity and coup rumors, President Caldera announced the suspension of some civil and economic rights in order to help the government arrest those responsible for the banking collapse and to prevent speculation and inflation.

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