VENEZUELA'S riots last week were a somber reminder of the depth of Latin America's economic problems. But they were hardly a surprise. Even though Venezuela, with its oil wealth, has weathered the debt crisis relatively well, always managing to pay its creditors, standards of living have plummeted there, too. Food was getting harder to afford; a 30 percent hike in public transit fares ignited the discontent.
But President Carlos Andr'es P'erez had little choice in implementing the gas price increases that jacked up the transit fares. His austerity program includes deep cuts in a wide range of government subsidies, as well as currency reform. These steps would be needed even if they weren't tied to further loans from the International Monetary Fund.
Many Latin American countries, Venezuela among them, are suffering from years of economic mismanagement. Governments absorbed billions in external loans, but have little to show for the money in terms of diversified economies and added productivity. Inefficient state-run industry has remained the norm; government spending has too often gone unchecked.
That's now changing in places like Venezuela and Mexico. But so is the political climate. People who have already experienced financial shipwreck are being told to get ready for more rough weather in the form of austerity measures. They are easy marks for politicians promising deliverance. Extremists of the left and right are quickening their pace.
All the more reason why those concerned about the political and economic health of the region should move more quickly to address the major irritant - foreign debt. Plans abound for debt relief. What's needed, now, is continued reform by the debtors, teamed with cooperative action by industrial nations and commercial banks to reduce the overall amount of debt.
Without this, political leaders like P'erez are going to have a hard time persuading their people that economic reform will indeed have a pay-off.