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Venezuela's emboldened opposition renews challenge to Maduro



By Argus

Petroleumworld 01 21 2019

The opposition will lead protests this month, but its ability to challenge Caracas depends on firmer support at home and abroad

Venezuela's emboldened political opposition is seeking to leverage newfound international recognition to pursue state assets abroad and possibly intervene in debt disputes against the government.

The opposition-controlled National Assembly, headed by the newly elected Juan Guaido, is moving swiftly to consolidate its constitutional authority having won widespread recognition as Venezuela's only legitimate governing body following the controversial re-election of autocratic president Nicolas Maduro.

Guaido is seen by some countries as an interim president who will usher in fresh elections. He was briefly detained by Venezuela's intelligence agency Sebin on 13 January, which the government denounced as a rogue operation. The incident further galvanised Maduro's opponents in the run-up to a planned 23 January national protest aimed at compelling the president to resign.

The assembly has approved a resolution that would seek to "guarantee the protection of the assets of the Venezuelan state" by petitioning foreign governments and financial institutions. It ultimately aims to redirect oil revenue away from the Maduro government, but only appears viable if the US formally recognises the assembly's executive authority.

Washington has called Maduro's regime illegitimate and expressed support for Guaido after he declared he is ready to assume the presidency under the constitution's authority until new elections are held. A formal withdrawal of recognition of Maduro's government would give the opposition pretext to claim Venezuela's assets in the US but Washington is yet to take that step.

The opposition is starting to approach creditors in anticipation of possible judicial interventions or even a debt restructuring proposal. But such overtures are premature without official international recognition of Guaido's claim. The assembly's resolution seeks to block the Maduro government from refinancing debts and securing new loans, but both of these abilities are effectively already thwarted by US financial sanctions.

The assembly's measure also aims to prevent Caracas from awarding upstream contracts and transferring or selling overseas assets, such as state-owned PdV's US refining arm Citgo. Such moves are already supposed to require legislative approval under the 1999 constitution that Maduro has ignored. Among the many obstacles blocking the assembly's authority is its lack of control over Venezuela's official gazette, where all government acts are published.

Suffer little children

Assembly leaders hope that an amnesty decree will encourage elements of the armed forces and national security services to turn against Maduro. But the senior ranks are not expected to flip. Military officers hold almost half of Maduro's cabinet posts, and the military has a firm grip on strategic sectors such as the oil industry, gold, diamonds, coal, metals, agriculture and construction.

Maduro dismisses the new opposition leadership as "little children". He has announced a slew of economic measures since his 10 January inaugurationthat appear likely to exacerbate the economy's freefall. These include increasing the minimum wage to the equivalent of $5.50/month at the current black market exchange rate, revaluing pseudo-currency the petro, increasing mandatory capital reserve deposits at the central bank, and vowing to maintain across-the-board price controls. He has also pledged to hike taxes on wealthy individuals and large corporations. And Maduro reiterates a longstanding official target of Venezuela hitting 5mn b/d of crude production capacity by 2025. Output is currently around 1.1mn b/d, after falling by 900,000 b/d over the past year.



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