4. The Caracazo , Chávez and the 1998 Presidential Election¶
Core Argument¶
On 27 February 1989, a spontaneous uprising of the poor, sparked by bus fare hikes, convulsed Venezuela. The Caracazo, as it became known, was met with a brutal state response: the army killed protesters for a fortnight. This massacre radicalised a cohort of officers within the Bolivarian Revolutionary Movement – 200 (MBR-200), among them Major Hugo Chávez, convincing them that only the regime’s overthrow could remedy such injustice. Their failed coup of 4 February 1992 saw Chávez surrender, but his televised declaration that he had only failed “por ahora” transformed him into a national figure. From prison, he composed his manifesto and received a stream of visitors. A second coup attempt in November 1992 also failed, but President Pérez was subsequently impeached. Rafael Caldera won the 1993 election on a platform promising Chávez’s release, a pledge he honoured.
Caldera’s neoliberal administration, however, proved devastating. Privatisation and bank bailouts drove real wages down by a quarter and poverty skyward, while the income share of the top ten per cent surged from 21.8 to 32.8 per cent. Chávez, building support among the poor—particularly women in the barrios—stood for president in 1998 and won with 56 per cent of the vote. Yet he lacked a strong party apparatus, relying instead on bourgeois figures like Luís Miquilena. The MVR’s programme was radical but not socialist. A Constituent Assembly, overwhelmingly pro-Chávez, drafted a new constitution that guaranteed private property alongside social rights, ended state funding of parties, introduced unicameralism and recall provisions, and purged over three-quarters of the judiciary. The constitution also denied abortion rights. Chávez placed 70,000 of Venezuela’s 120,000 soldiers into social work and appointed some 200 active-duty officers to key ministries—many university graduates from working-class backgrounds who backed ‘Plan Bolivar 2000’, drawing criticism from the bourgeois media.
The state oil company PDVSA, formally nationalised in 1976, operated almost independently. Its executives paid themselves exorbitant salaries and channelled company funds to themselves, their families, and associates. PDVSA oil was carried in tankers owned by the company president; its computer services were supplied by a board member’s firm. It employed two to three times as many administrators as rivals but fewer total workers, outsourcing fieldwork to associates’ firms or those providing kickbacks. PDVSA’s leadership bitterly opposed paying increased royalties to the state. They bought refineries in the US and Europe, selling oil below market price to their own subsidiaries, which held profits in overseas trusts. Between 1981 and 2000, royalties paid to the state fell from seventy-one cents per dollar of gross earnings to thirty-one cents. Minister Araque was determined to end these practices; PDVSA managers were equally determined to prevent him.