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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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