Ricardo Hausmann’s “Morning After” for Venezuela: The neoliberal brain behind Juan Guaido’s economic agenda
While
online audiences know YouTube comedian Joanna Hausmann from her
videos making the case for regime change, her economist father has
flown below the radar. His record holds the key to understanding what
the U.S. wants in Venezuela.
by
Anya Parampil
Part
2 - The wreckage of the IESA Boys
The
neoliberal Venezuelan economist Juan Cristóbal Nagel described the
neoliberal economics plan he favored for his country during the late
1980’s as “your basic Washington Consensus recipe.”
Nagel said the plan consisted of the following ingredients: an end to
price controls on basic goods and subsidies for gasoline; the
privatization of state utilities; a decision to float the country’s
exchange rate; and the lowering of tariffs. The recipe was popularly
known as “El Gran Viraje,” or the Great Turn, to radical
free-market capitalism.
While
campaigning for Venezuela’s 1988 presidential elections, Carlos
Andrés Pérez of the social-democratic Acción Democrática Party
(AD) slammed the International Monetary Fund as a “neutron bomb
that killed people but left buildings standing.” Immediately
upon taking office, however, Pérez filled the IMF’s toxic economic
prescription for Venezuela’s ailing economy, accepting a massive
loan that completed the “Gran Viraje.”
The
reforms led to a 30 percent hike in bus fares, announced in February
1989, prompting masses of workers to flood the streets in cities
nationwide to publicly reject the bitter pill Pérez was forcing down
their throats. Pérez opted to violently suppress the uprising, known
as the “Caracazo,” declaring a national emergency and deploying
the military to extinguish the revolt. By the time the it was over,
anywhere between 300 to 3,000 people were dead, with piles of bodies
discovered in mass graves outside of Caracas, the casualties of
execution-style killings.
Ricardo
Hausmann entered Venezuela’s government under Pérez, serving as
his Planning and Finance Minister from 1992 to 1993 while sitting on
the board of the country’s Central Bank. Hausman has claimed that
he was at Oxford University when the Caracazo erupted, though he had
already made his mark on the government’s economic policies.
“Hausmann
will tell you that he was abroad at Oxford during the Caracazo
rebellion,” says George Ciccariello-Maher, author of We
Created Chávez: A People’s History of the Venezuelan Revolution.
“While
this may be true” explained Ciccariello-Maher, “[Hausmann]
had already spent years in a number of government positions going
back to the mid-1980s, and as a key ‘IESA boy,’ spreading
neoliberal doctrine from his professorship at the Institute.”
Indeed,
before Pérez tapped Hausmann to serve as planning minister, the
economist had worked also as a professor at the IESA.
“It
was a classic bait-and-switch,” said Ciccariello-Maher. “Pérez
had just been elected using anti-neoliberal rhetoric, but he
immediately appointed an IESA-dominated cabinet and did the
opposite.”
In his
book Windfall to Curse: Oil and Industrialization in Venezuela,
economist Jonathan Di John wrote that “Pérez was greatly
influenced” by IESA academics, characterizing them as “an
elite group… who had no party affiliation and were champions of
radical, neoliberal reform.”
According
to Di John, this group initiated “rapid liberalization reforms,”
specifically in trade policy, including reducing the maximum tariff
“from 135 percent, one of the highest in the region, to 20
percent by 1992.” A year later, that rate would fall to 10
percent. In other words, Pérez, Hausmann, and the “ISEA Boys”
had opened up Venezuela for a free run by multinational corporations
while gutting whatever was left of the welfare state.
In 1994,
Hausmann received his golden parachute with a post as chief economist
for the Inter-American Development Bank in Washington. This
institution, which claims to “improve lives in Latin America and
the Caribbean” by providing “financial and technical
support to reduce poverty and inequality,” is just another
mechanism for imposing the Washington consensus. The U.S. controls 30
percent of the bank’s voting power over financial decisions even
though it is not situated in Latin America, where the bank is
supposed to do its work. Meanwhile, all 26 Caribbean and Latin
American member states carry only a 50 percent sway over the bank’s
decisions.
While
Hausmann perpetuated his brand of neoliberalism from Washington, a
movement was building in the barracks and barrios of Venezuela to
exert popular control over the economy. It was led by a charismatic
military man named Hugo Chávez.
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