The blood bath triggered by Venezuela's attempt to revive its economy underscores the gravity of Latin America's $420 billion foreign debt.
Venezuela, the world's eighth-largest oil producer, has long been regarded as an oasis of prosperity and stability in a region swamped by poverty and political upheaval.But last week, rioting left at least 300 people dead. Venezuelans, accustomed to three decades of democratic rule, witnessed the specter of soldiers and tanks patrolling the capital under martial law.
The disturbances broke out Monday when bus fares rose 30 percent by government decree. At the same time, prices on a range of basic goods and services such as gasoline, bread and electricity rose sharply under the government's economic-adjustment program, which also provided for a rise in interest rates and a currency devaluation.
To offset price increases, the government doubled the mininum wage to the equivalent of $110 a month. But for many Venezuelans, the wage increases were cut in half by higher transport fares alone.
President Carlos Andres Perez announced the measures Feb. 16, two weeks after taking office, to satisfy requirements of the International Monetary Fund and Western creditor banks. The main requirement was that Venezuela lift government subsidies that had kept prices artificially low for years.
Had the government not imposed the price increases, Perez said Friday, it would have had no chance of obtaining $4.8 billion in loans from the IMF.
He linked the civil unrest directly to Venezuela's $33 billion foreign debt, saying interest payments were consuming 70 percent of oil revenues and undermining the nation's ability to provide for its 18 million people.
Moreover, the president said, debt-burdened nations throughout Latin America were vulnerable to similar uprisings spawned by economic hardship.
"I hope this painful sacrifice by our country will cause the leaders of the industrial powers to reflect that we are not exaggerating when we say the crisis is serious," Perez said.
According to a study last year by the Caracas-based Latin American Economic System, a regional think tank, the region spent $139 billion from 1982 to 1987 in servicing foreign debt. Not only did that not dent the obligation, debt actually grew over the period, mostly because of more loans just to pay interest.
If the trend continues, the organization said, the standard of living of Latin Americans will not return to levels of the 1970s until the year 2000.
Venezuela is the region's fourth-largest debtor behind Brazil, at $114 billion; Mexico, at $106 billion; and Argentina, at $54 billion.
Venezuela, however, is one of the few developing countries that has been trying to repay debt, dipping into reserves built up before the collapse in world oil prices in 1986. The others simply reschedule their debt.
Peru, with a foreign debt estimated by the World Bank at $19 billion, has paid almost nothing on its debt since President Alan Garcia in 1985 imposed a ceiling on debt payments of 10 percent of the nation's export income. Its foreign reserves have since run out, and the country has entered into a steep recession.
Venezuela's government is seeking to defer further interest payments on its foreign debt until September. Perez said any decision on delaying payment beyond that will depend on the success of his new economic program.
The major debtor nations have been urging creditor nations for years to come up with a comprehensive plan for solving the debt crisis, but no formula has emerged.
A U.S. banker based in Caracas said the Latin debt crisis could be traced mainly to ill-conceived government economic policies.
He said Brazil had dealt with its huge debt by printing more money, creating an annual inflation rate of 3,000 percent.
In Venezuela, the banker said, successive governments have tried to win popular support by maintaining low prices through subsidies.