Recent riots in Venezuela, which left more than 200 people dead, were sobering reminders that the foreign-debt problem that looms over Latin America is a dangerous challenge, even for those countries that are relatively stable and well off.
Venezuela’s foreign debt, $33 billion, is not nearly as large or burdensome as those of Mexico, Brazil, Argentina or Peru. And the country is blessed with abundant resources, mainly oil, and a democratic and reasonably honest government. But Venezuelans also have grown used to the food and fuel subsidies that their government provided at the height of prosperity and are unhappy at now having to give them up as part of the government’s austerity programs.
That is why, when newly inaugurated President Carlos Andres Perez raised the price of gasoline, milk and other products, violence broke out in Caracas and several other cities. While there are leftist opposition groups in Venezuela, they do not have the influence or power that armed guerrillas have elsewhere in Latin America. So it appears that the rioting was spontaneous. It was likely a reaction to the poor timing of Perez’s announcement of price increases, which came on the same day that Venezuelan officials were in Washington to sign a new loan agreement with the International Monetary Fund. President Bush offered Perez a $450-million swing loan Friday, but that would only buy time, not solve the long-range problem.
During his election campaign, Perez warned that the debt problem facing Venezuela and other Latin American governments could not be dealt with simply as an economic issue because it has political ramifications as well. He is not the first Latin American leader to make that point. But no one expected that Perez would demonstrate so early in his presidency just how hard it can be for even a well-intentioned leader to impose austerity on a restive population.