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Venezuela Riots Not Political, Perez Says : President Blames Unrest on Foreign Debt, Confirms 300 Killed

Times Staff Writer

President Carlos Andres Perez on Friday characterized the bloody price riots that took more than 300 lives in this once tranquil and wealthy nation as a largely spontaneous and nonpolitical outburst of the poor against the rich.

He blamed Venezuela’s foreign-debt crisis for creating the conditions that sparked the violence.

“It did not have the political overtones of a protest against the government or against political parties,” said the president, who only the day before had implied that leftist revolutionaries were at least partly responsible. “It was an action against wealth, against the rich.”

But without naming such major creditor countries as the United States, he blamed them for not doing their share to ease the country’s $33-billion debt burden and the resulting hardships that, he said, brought about the crisis.

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“The disturbances are a consequence of the deterioration of the economy due to a crisis whose name I write in capital letters--foreign debt,” Perez told a press conference in Caracas at which he confirmed the death toll.

He said he warned then-Vice President George Bush last September that democracy in Latin American countries was in peril unless something was done soon to soften debt repayment terms.

"(The year) 1989 will be the year of new definitions in the treatment of foreign debt, or it will be the year of the destruction of the democratic process in Latin America,” Perez told the press conference.

Confusion over some of the president’s remarks at the press conference caused a flurry of concern in international financial markets when news agencies reported that Perez said Venezuela was suspending all payments on its foreign debt.

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Venezuela suspended principal payments on most of its $27-billion public-sector foreign debt Jan. 17, and last Sunday, Central Bank President Pedro Tinoco said principal payments would also be suspended as of March 1 on the country’s $6-billion private-sector debt.

Conflicting Statements

In response to reporters’ questions Friday, Perez seemed to indicate at one stage that the country had also suspended interest payments on the foreign debt, but this was later denied in Caracas and by the nation’s chief debt negotiator in New York.

The government’s imposition last weekend of tough austerity measures, including sharp price increases on gasoline, transportation and basic food items, sent thousands into the streets in a wave of looting; the economic damage still has not been totaled. The austerity package, shaped in response to the debt crisis, was demanded by the International Monetary Fund as the price of a credit package totaling nearly $5 billion over the next three years.

Perez suspended civil rights and called out 22,000 troops and police, who were still searching out snipers and running house-to-house searches for looted goods five days later. But with the disturbances all but ended, the government eased dawn-to-dusk curfew hours Friday, reducing them from 12 hours to the nine hours between 8 p.m. and 5 a.m.

The Venezuelan president predicted that as a result of the disturbances, “the country will live through about six months of serious difficulties, but then there will be a period of expansion.” He stressed that he will stick to the IMF-imposed austerity plan, which he said “is indispensable in its entirety if we want to establish a solid base for our economic development.”

Later Friday in Washington, officials said the Bush Administration is preparing to offer Venezuela a $450-million temporary “bridge loan” to tide the country over until it gets the expected larger, longer-term loan from the IMF.

The new line of credit, which officials said may be backed in part by several other countries as well, is expected to be announced publicly in Venezuela over the weekend or early next week.

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The “bridge loan” would be repaid as soon as Venezuela can draw on the IMF money, probably in mid- or late April.

As life throughout the nation and in all but three small slum areas of the capital city returned to near normal Friday, Perez’s poor-versus-rich characterization of the price riots struck a sensitive chord among social scientists and foreign economic specialists, who criticized many upper and upper-middle class Venezuelans for flaunting their wealth.

“They’ve been living in a fool’s paradise,” said a foreign economist. “Now they must pay the price of being the highest per capita consumers of . . . Scotch (whiskey) in the world.” Whiskey, along with new automobiles at half the U.S. price and many other luxury goods, receive the same preferential import treatment as medicines which, in effect, produces a state subsidy on luxury items that mainly benefits the well-to-do.

“The elite have not lived up to the economic realities,” said Jose Gil Yepes, a Caracas political economist, sharply criticizing the conspicuous spending of some.

Champagne for Some

Gil particularly cited a million-dollar wedding party two weeks ago that was billed on the front page and on nine inside pages of the local newspaper, Diario de Caracas, as “The Wedding of the Century.” The newspaper reported that 5,000 guests, including hundreds flown at the host’s expense from as far away as Tahiti, Italy and the United States, consumed thousands of bottles of vintage French Champagne and ate from “a buffet overflowing with caviar, lobster and salmon.”

The wedding of Gonzalo Fernandez Tinoco y Zingg and Mariela Cisneros Fontanals united two of the country’s richest families. The family of the bride’s father, Oswaldo Cisneros, has huge holdings, including the principal soft-drink franchise here, a television network and a chain of supermarkets.

“Whether this event helped pave the way for the riots no one can say, but like a lot of things that rich Venezuelans do, it was obscenely ostentatious,” said a foreign economic specialist.

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“Even ordinary middle-class people here like to say that every Venezuelan has a right to two cars, and this sort of talk is bound to make poor people angry.”

40% Below Poverty Line

Economists and social scientists estimate that 40% to 50% of Caracas’ 3.7-million people live below the official poverty line of 5,000 bolivars (about $143) per family per month.

As the economic situation worsens, the plight of the poor can only grow worse, said one of several economic specialists who are predicting 100% inflation in Venezuela this year.

“In the past five to 10 years since oil prices turned down, Venezuelans have refused to believe they are no longer the wealthy country they were during the oil boom,” said a foreign specialist. “With prices of 15 cents for a gallon of gasoline and cars at half the U.S. price, who’s going to pay the difference? The treasury of Venezuela, which translates into the man in the street and he’s mad as hell about it.

“They’ve postponed biting the bullet so long that it’s no longer a bullet--it’s a bomb.”

Times staff writer Art Pine, in Washington, contributed to this story.


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