The word caracazo is the name of the city plus the suffix -azo, which implies a blow and/or magnitude. It could therefore be translated as something like "the Caracas smash" or "the big one in Caracas". Sacudón is from sacudir "to shake", and therefore means something along the lines of "the day that shook the country". (See Spanish nouns: Other suffixes.)
The words are pronounced kaɾa'kaso (American Spanish) or /kaɾa'kaθo/ (European) and saku'ð̞on, respectively.
In the context of the economic crisis that Venezuela had been going through since the early 1980s, President Carlos Andrés Pérez proposed to implement free-market reforms in his second presidential term (1989–1993), following the recommendations of the International Monetary Fund (IMF). Pérez belonged to the Acción Democrática (AD) party (social-democrat). This programme was known as the paquete — the "package".
Measures taken by Pérez included privatising state companies, tax reform, reducing customs duties, and diminishing the role of the state in the economy. As a result of his economic measures, petrol prices rose by 100%, and costs of public transportation rose by 30%. He also took measures to decentralize and modernise the Venezuelan political system by instituting the direct election of state governors (previously appointed by the President).
The protests and rioting began in Guarenas (a town in Miranda State, some 30 km east of Caracas) on the morning of 27 February 1989, due to a steep increase in transportation costs to Caracas. They quickly spread to the capital and other towns across the country. By the afternoon, there were disturbances in almost all districts of Caracas, with shops shut and public transport not running.
In the days that followed there was widespread international media coverage of the looting and destruction. For many months, there was discussion about how something so violent could occur in Venezuela.
Overwhelmed by the looting, the government declared a state of emergency, put the city under martial law and restored order albeit with the use of force. Some people used firearms for self-defence, to attack other civilians and/or to attack the military, but the number of dead soldiers and police came nowhere near the number of civilian deaths. The repression was particularly harsh in the cerros — the poor neighbourhoods of the capital .
The initial official pronouncements said 276 people had died; however, the subsequent discovery that the government had buried civilians in mass graves and not counted those deaths raised the estimates. Unofficial estimates of the death toll go as high as 3000.
Congress suspended constitutional rights, and there were several days during which the city was in chaos, with restrictions, food shortages, militarisation, burglaries, and the persecution and murder of innocent people.
The clearest consequence of the caracazo was political instability. Next February state called to the army to contain sequel to "Caracazo" in Puerto La Cruz and Barcelona and again in June, when new rising of transportation costs ended in riots in Maracaibo and some other cities. The free-market reforms programme was modified. In 1992 there were two attempted coups d'état, in February and November. Carlos Andrés Pérez was accused of corruption and removed from the presidency. Hugo Chávez, an organiser of one of the coups, was found guilty of sedition and incarcerated. However, he was subsequently pardoned by Pérez's successor, Rafael Caldera, and went on to be elected president after him.
In 1998, the Inter-American Commission on Human Rights condemned the government's action, and referred the case to the Inter-American Court of Human Rights. In 1999, the Court heard the case and found that the government had committed violations of human rights, including extrajudicial killings. The Venezuelan government, by then headed by Chávez, did not contest the findings of the case, and accepted full responsibility for the government's actions.