VENEZUELA, 1989-1998: Bankers Triggered Riots & CHÁVEZ’s Marxist Revolution

THE CRISIS OF THE OLD ORDER

By Sasha Alex Lessin, Ph.D. (Anthropology, UCLA)

1989-1998: INTERNATIONAL BANKERS IMPOSED AUSTERITY ON VENEZUELA, TRIGGERING CITIZEN RIOTS

By the late 1980s, world oil prices had collapsed. Venezuela carried a heavy foreign debt, its foreign reserves shrank dangerously, and capital flight accelerated. Venezuela needed urgent refinancing just to keep importing food, fuel additives, and spare parts.

The International Monetary Fund (IMF) and major U.S. and European commercial banks imposed conditional credit on Venezuela — the standard 1980s debt-crisis playbook used across Latin America.

Pérez agreed to 1) end fuel subsidies; this doubled gas prices, 2) deregulate transport fares, raising bus fares overnight, 3) remove price controls on basic goods, 4) cut public spending, 5) open markets to foreign capital, and 6) privatize state assets. The IMF viewed subsidies as market distortions; the poor experienced them as survival mechanisms.

FINANCIERS FANNED UNFAIR FARES

In Caracas, millions relied on buses to survive, people lived far from work in hillside barrios, wages stayed frozen while food prices already strained households. When bus drivers raised fares without warning, people could not get to work. The banks didn’t care because, from their perspective, social unrest was a domestic issue, loan repayment was non-negotiable, and shock therapy, which would, with short-term pain, “modernize” Venezuela. In reality, the abrogation of bank support was a debt-enforcement event that international finance institutions that Venezuela’s elitist government forced upon its poor people. This banker-imposed pain shattered the government’s political legitimacy.

1989: THE POOR RIOTED IN CARACAS

In 1989, during Pérez’s second term, the government imposed sharp price hikes and increases in transport costs. The revolt of the underclasses began at bus stops on February 27, 1989. In Caracas, Venezuela’s Capital, riots, dubbed the Caracazo, erupted. Caracas’ poor rioted in the streets. They smashed storefronts, overturned buses, and blocked highways. Security forces answered with rifles and armored vehicles, killing thousands. Pérez restored order through terror.

No charges were brought against Pérez for this, but the Supreme Court of Justice prosecuted him for misuse of a discretionary presidential slush fund, and, in 1993, the National Congress of Venezuela removed him from office and appointed an interim president. He was then tried and convicted on charges of misuse of public funds and spent time under house arrest in Venezuela until 1996. In 1998, after being released, he was elected to the Senate from his home state of Táchira. When the new 1999 Constitution dissolved the Senate, Perez lost his seat. After leaving Venezuela, Perez lived abroad in several places — including the Dominican Republic and the United States — and self-exiled in Miami, Florida.

1998: HUGO CHÁVEZ, JAILED FOR FAILED ARMED ATTEMPT AT REFORM, ELECTED VENEZUELA’S PRESIDENT

Late 1970s–1989: Chavez created a clandestine armed network

While he was a career Venezuelan army officer, Hugo Chávez quietly organized a small, secretive group of like-minded officers inside the Venezuelan armed forces. By the early 1980s, this network took the name Movimiento Bolivariano Revolucionario 200 (MBR-200), invoked Simón Bolívar, and rejected corruption, elite rule, and the exclusion of the poor. The group operated underground—no public statements, no mass organizing—studying history, debating reform, and cultivating contacts within selected units. The Caracazo of February, March 1989, when the state violently suppressed spontaneous urban uprisings against austerity, hardened Chávez’s conviction that the political system had lost moral legitimacy and that the military was being used against the people.

1990–early 1992: decision to act

After 1989, Chávez and his co-conspirators debated timing and tactics. They concluded that elections under the existing two-party order could not deliver change and that a coordinated military uprising might force a political transition. Their goal was a swift, multi-city action: seize key installations, detain the president, and announce a provisional political reset. The sitting president was Carlos Andrés Pérez, whose government had implemented the austerity measures that triggered the Caracazo.

February 4, 1992: the failed coup

In the early hours of February 4, Chávez led the Caracas wing of a synchronized military revolt.

But their communications faltered, loyalist units held decisive positions, and President Pérez escaped. Chávez chose to halt the fighting and surrendered after he gave a brief televised address in which he accepted responsibility and told his followers the objectives had not been achieved “por ahora” (“for now”). That short statement prevented further bloodshed and unexpectedly introduced Chávez to the nation.

1992–1994: imprisonment and political maturation

Chávez, imprisoned at Yare Prison, was convicted of attempting a coup. During his two years in custody, he received visitors, wrote, debated, and refined his ideas. His hitherto clandestine military project evolved into a civilian political vision. Public sympathy grew as many Venezuelans contrasted his acceptance of responsibility with the discredited political class.

1994: release and transition to electoral politics

Congress appointed Ramón José Velásquez to run an election for a new President. Rafael Caldera, a former establishment figure who ran outside the old party system won the election. Caldera issued a legal pardon to Chávez and other coup participants, aiming to defuse military unrest and channel opposition back into civil politics.

Chávez emerged from prison committed to pursuing change through elections rather than armed action—setting the path that would lead to his 1998 presidential victory.

Venezuelans dropped the principles of the old Punto Fijo Pact order, which, like the U.S. Constitution, failed to mitigate the suffering of the underclasses. Venezuela experienced debt, inequality, and political exhaustion. Corruption, debt, and inequality hollowed out its two-party pact. The Pact had promised stability but instead delivered austerity. Under President Carlos Andrés Pérez, the elite had benefited from oil-generated wealth, while the poor in the barrios went hungry and resentful.

In 1989, in Pérez’s second term, the government imposed sharp price hikes and transport increases. In Caracas, Venezuela’s Capital,riots, dubbed the Caracazo, erupted. Caracas’ poot surged into the streets, smashed storefronts, overturned buses, and blocked highways. Security forces answered with rifles and armored vehicles, killing thousands. Perez restored order through terror.

1989: The CARACAZO RIOTS ERUPTED

In February 1989, residents of Caracas and nearby cities surged into the streets. They smashed storefronts, overturned buses, and blocked highways after the government imposed sharp price hikes and transport increases.

Security forces answered with rifles and armored vehicles. Gunfire echoed through barrios. Bodies fell. The state restored order through terror.

No more bread, a protester thinks. No more lies.

PUNTO FIJO FRACTURED

The two-party system unraveled. The parties–Democratic Action and COPEI–bickered, deflected blame, and protected privilege. Congress lost credibility. Presidents stumbled. Institutions answered markets faster than citizens. The Caracazo revealed a regime that governed without consent.

They never hear us, a neighborhood organizer thinks. They never listen.

THE COLLAPSE OF PUNTO FIJO POLITICS
Corruption, debt, and inequality hollowed Venezuela’s two-party pact. After 1989, legitimacy drained away and authority fractured.

CHÁVEZ EMERGED (1992)

In February 1992, Hugo Chávez, a lieutenant colonel, led a military rebellion against corruption and oligarchic rule. The uprising failed. Troops surrendered. Chávez appeared on television and accepted responsibility “por ahora.” That brief admission transformed defeat into recognition.

We rise, Chávez thinks. We do not disappear.

THE SOLDIER WHO SPOKE

Though his 1992 rebellion failed, Hugo Chávez’s televised acceptance of responsibility turned him into a national figure.

FROM PRISON TO POPULAR MOVEMENT

After release from prison, Chávez traveled across barrios and rural towns. He spoke plainly, listened carefully, and rejected elite language. Crowds gathered. Supporters followed. He framed politics as a struggle between the forgotten majority and entrenched privilege. By 1998, the protest matured into an electoral force.

This is ours, a supporter shouts. We take it back.

FROM PRISON TO POPULAR MOVEMENT
Chávez converted grassroots anger into organized political support, rally by rally, barrio by barrio.

IDEOLOGY: BOLIVARIAN MIX

Chávez drew from Simón Bolívar, Ezequiel Zamora, and Venezuelan nationalism. He rejected neoliberal economics and promised participation, sovereignty, and social justice. He blended populism, military discipline, and mass mobilization into a new political grammar.

Power belongs here, a campesino thinks. Not above us.

BOLIVARIAN IDEOLOGY
Chávez fused nationalism, social justice, and popular participation into a new political identity.

OIL, PEOPLE, AND EVERYDAY LIFE

Oil wealth still shaped daily reality. Families lived beside glowing derricks. Prices climbed faster than wages. Parents taught children caution. Progress arrived loudly. Security did not.

Speak softly, a mother thinks. Walls listen.

LIFE BESIDE THE DERRICKS
Oil transformed Venezuela’s economy, not everyday stability for most families.

CONCLUSION: FROM RIOT TO REVOLUTION

Between 1989 and 1998, Venezuela moved from spontaneous rebellion to organized political transformation. The Caracazo cracked the system. Chávez entered the breach. The old order collapsed. A new, turbulent era began.

We remember another way, the land whispers.

SUGGESTED VIDEOS (ENGLISH)

“The Caracazo Explained” — Overview of the 1989 uprising and its consequences.
“Hugo Chávez: From Coup to President” — Chávez’s rise from 1992 to 1998.
“Venezuela Before Chávez” — Context on Punto Fijo collapse and neoliberal crisis.

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