Carlos Andrés Pérez

EVER since 1922, when the first gusher at Maracaibo roared up with the noise of “a thousand freight trains”, the history and destiny of Venezuela has been tied fast to oil. “Black gold” has brought highways, schools, shipyards, hydroelectric plants and the skyscrapers of Caracas. It has also brought economic collapse, political repression and thoroughgoing corruption. Not for nothing is it also known in Venezuela as the excrement of the devil.

Carlos Andrés Pérez, born the very year the gusher erupted, knew all about both sides of oil. He led Venezuela through both the boom years of 1974-79, when prices had quadrupled after the Arab oil embargo, and, in a second term, through the bust of 1989-93, when they had dived so steeply that Venezuela ended up borrowing $4.5 billion from the IMF. In the late 1970s his long-time mistress, Cecilia Matos, would appear in a necklace from which hung a small, gold, oil derrick. The necklace fell out of favour, though she did not; wife and mistress still battled over Mr Pérez as he lay in his coffin, elegant as ever in suit and white silk tie.

Flash, energetic, full of sound political instincts but economically challenged, Mr Pérez rode the oil boom like an old-fashioned populist caudillo. His proudest stroke was to nationalise the oil industry in 1976, buying up the foreign companies for $1 billion and signing the papers with a showy gold pen. Huge public works were started, at a cost of $53 billion: housing projects, industrial parks, a subway in Caracas and El Sistema, a music-teaching programme for the poor. Venezuela Saudita (Saudi Venezuela) seemed to be doing so well that in 1989, even with oil prices dipping, Mr Pérez invited 27 heads of state and 800 foreign dignitaries to dine on lobster and bubbly at his second inauguration.

Some policies were sensible. The newly nationalised oil industry kept the structure of the old, and production was limited to try to moderate the flood of money into a country ill-equipped to handle it. An investment fund was set up, too. But Mr Pérez never thought to pay off Venezuela's external debt, which rose from $0.7 billion in 1974 to $6.1 billion in 1978, or to stem the flight of $35 billion in capital out of the country. A man of ambitions as big as his sideburns, Mr Peréz seemed to think the oil price would never go down.

By 1989, the year he went begging to the IMF, this fervent socialist—a man whose first instincts in government in 1974 had been to freeze the price of arepas (Venezuelan tortillas) and to insist on an operator in every lift in Caracas—had become a reluctant Thatcherite. He raised interest rates, removed customs dues and liberated petrol prices, which promptly doubled. The result was rioting in and around Caracas in which some 400 people died, mostly shot by the national guard.

Mr Pérez's moral authority never recovered. He made a poor salesman for his austerity programme; though it did Venezuela good in the end, the gap between rich and poor yawned as wide as ever, and many also assumed that the president was stealing. In 1993 Congress impeached him for diverting $17m of public money to a secret fund; he said it had gone to help Violeta Chamorro win the presidency of Nicaragua, but the Supreme Court nonetheless removed him from office and put him under house arrest.

From coffee to petroleum

He was noisy even then. Politics was always his life and soul. It represented his ticket out of Rubio, in the Andes, to a life of glamour, fame and ever-attentive women. But Rubio, a coffee town, also shaped his deepest political instincts. His father owned a small finca there and, when the world coffee price collapsed in the 1930s, he died of stress and despair. Young Carlos realised then the reality of Venezuelan life: because his country was underdeveloped, it could neither control the price of its resources nor run its own affairs.

A half-hearted try at lawyering therefore didn't work; he was too busy reading leftish books. As a teenager he joined the National Democratic Party, then the socialist Acción Democrática, then in 1945 became private secretary to Rómulo Betancourt, AD's founder, which got him into national politics in risky opposition to a series of military rulers. For ten years he was exiled, but came back strongly, and campaigned village-to-village for the presidency like an American congressman.

Once ensconced in the Miraflores palace, he determined to make his country speak for the commodity-rich but less developed world. As a member of OPEC (as he declared in an open letter to America's president, in 1974 in the New York Times), Venezuela intended to counteract the “economic oppression” of the industrialised countries, and the “outrageously low” prices they paid. He saw himself as a voice for the South against the North, as a pillar of the Non-Aligned Movement and a supporter of any country, such as Cuba, that got up the nose of the first world.

In that sense he paved the way for Hugo Chávez, the current president, who had tried to remove him in a coup in 1992, and whom he hoped would “die like a dog” before too long. Like Mr Chávez, he believed that oil gave Venezuela a passport to greatness and a mandate to annoy. He did not believe it allowed him to play quite so fast and loose with democracy.