The election in 1973 of Carlos Andrés Pérez coincided with an oil crisis, in which Venezuela’s income exploded as oil prices soared; oil industries were nationalized in 1976. This led to massive increases in public spending, but also increases in external debts, which continued into the 1980s when the collapse of oil prices during the 1980s crippled the Venezuelan economy. As the government started to devalue the currency in February 1983 to face its financial obligations, Venezuelans’ real standards of living fell dramatically. A number of failed economic policies and increasing corruption in government led to rising poverty and crime, worsening social indicators, and increased political instability.
During the presidency of Luis Herrera Campins (1979–1984), important infrastructure works were completed, such as the Parque Central Complex (which became the largest housing complex and the tallest towers in Latin America), Teresa Carreño Cultural Complex (the largest cultural center in South America at that time), the Brígido Iriarte Stadium and the United Nations Park. Most of these works had been previously planned. Until the mid-eighties, the Venezuelan economy showed a very positive behavior, characterized by the absence of internal or external imbalances, high economic growth, largely due to the sustained and very high gross fixed investment of those years, 10 under unemployment and great price stability. This translated into sustained increases in the average real wage and an improvement in the condition of life.
The bolivar was devalued in February 1983, unleashing a strong economic crisis, which hit investments in the most important financial centers of the Venezuelan capital, such as Sabana Grande. In the government of Jaime Lusinchi (1984–1989), an attempt was made to solve the problem. Unfortunately, the measures failed. After a long period of accelerated economic expansion that lasts for six decades (value of the stock of homes by families), an extreme higher value is reached towards 1982. From this historical value begins then a systematic fall that mounts to 26 hundred up to 2006, and that configures a genuine unique experience in contemporary economic life. However, the economic deactivation of the country had begun to show its first signs in 1978.
In the 1980s, the Presidential Commission for State Reform (COPRE) emerged as a mechanism of political innovation. Venezuela was preparing for the decentralization of its political system and the diversification of its economy, reducing the large size of the State. The COPRE operated as an innovation mechanism, also by incorporating issues into the political agenda that were generally excluded from public deliberation by the main actors of the Venezuelan democratic system. The most discussed topics were incorporated into the public agenda: decentralization, political participation, municipalization, judicial order reforms and the role of the State in a new economic strategy. Unfortunately, the social reality of the country made the changes difficult to apply.
Economic crises in the 1980s and 1990s led to a political crisis in which hundreds died in the Caracazo riots of 1989 during the presidency of Carlos Andres Pérez (1989–1993, his second time), two attempted coups d’état in 1992 (February and November) by Hugo Chávez, and the impeachment of President Carlos Andrés Pérez (re-elected in 1988) for corruption in 1993 and the interim presidency of Ramón José Velásquez (1993–1994). Coup leader Hugo Chávez was pardoned in March 1994 by president Rafael Caldera (1994–1999, his second time), with a clean slate and his political rights reinstated. This let him later get the presidency continuously from 1999 until his death in 2013, winning the elections of 1998, 2000, 2006 and 2012 and the presidential referendum of 2004, with the only exception in 2002 of Pedro Carmona Estanga as a two-day de facto government and Diosdado Cabello Rondón as a few-hours interim president.
Bolivarian government: 1999–present:
The Bolivarian Revolution refers to a left-wing populism social movement and political process in Venezuela led by Venezuelan president Hugo Chávez, who founded the Fifth Republic Movement in 1997 and the United Socialist Party of Venezuela in 2007. The “Bolivarian Revolution” is named after Simón Bolívar, an early 19th-century Venezuelan and Latin American revolutionary leader, prominent in the Spanish American wars of independence in achieving the independence of most of northern South America from Spanish rule. According to Chávez and other supporters, the “Bolivarian Revolution” seeks to build a mass movement to implement Bolivarianism—popular democracy, economic independence, equitable distribution of revenues, and an end to political corruption—in Venezuela. They interpret Bolívar’s ideas from a populist perspective, using socialist rhetoric.