Petroleumworld 10 18 2017
The Venezuelan opposition has been boxed in.
The socialist regime's sweeping victories in elections marred by fraud accusations left opponents with scant hope of a fair 2018 presidential vote. International pressure has failed to move President Nicolas Maduro. Nor have months of street protests. Now, opponents are splintering over the basic question of whether the ballot box is the proper place to resist Maduro's government.
“People will believe that neither peaceful protests nor voting can make any change, and so they will either resign themselves, many will try to leave the country or some, the more desperate, will turn to the last resort of taking up arms,” said Jennifer McCoy, a political scientist at Georgia State University and former director of the Americas Program of the Carter Center, an election monitoring group.
Maduro presides over an oil-producing nation, once South America's richest, that tumbled into ruinous inflation and hunger when crude prices plunged. In coming weeks, Venezuela must pay billions in maturing debt, but Maduro has increasingly turned to Russia to ensure the bills are paid and his power perpetuated in the face of bitter and sometimes violent dissent.
Investors sold Venezuelan bonds following Sunday's elections as questions over the legitimacy of the results increased the risk of further sanctions from the U.S. and even the European Union against the oil producer. The extra yield investors demand to hold Venezuelan debt over U.S. Treasuries widened to 32.32 percentage points on Monday, the highest in the world.
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Casey Reckman, Credit Suisse Securities director, discusses the surprising results of the Venezuelan election with Bloomberg's David Gura and Shery Ahn on "Bloomberg Markets: Balance of Power." - Watch video
The aftermath of Sunday's 23 governor races -- and 17 regime victories -- casts further doubt on opponents' ability to remove the president through the machinery of democracy. The alliance had approached the long-delayed elections warily after Maduro convened a legislative super-body to rewrite the constitution and hound opponents.
The regime responded by moving polling places into hostile areas and holding the vote open late into the evening. The results dramatically contradicted opinion surveys predicting an opposition landslide.
On Tuesday, Maduro downplayed accusations of fraud.
“It's impossible,” he told reporters at a news conference, pointing to his country's automated voting system. “No one can commit fraud.”
However the surprising results came about, the socialists' democratic commitment has been called into question repeatedly.
The government claimed more than 8 million Venezuelans voted July 30 to elect delegates to the all-powerful constituent assembly. The opposition boycotted the election. Accusations that the socialists cooked the books gained traction when the voting services firm Smartmatic , which provided software and machines, said the regime's numbers were overstated by at least a million votes.
This time, the opposition debated whether to participate. Graffiti appeared in neighborhoods it controls imploring citizens to stay home rather than risk legitimizing Maduro. But the alliance's leaders said entering would let them monitor polls for cheating. They argued that a strong showing might lead to talks over restoring a full democracy, and could spotlight candidates who might unseat Maduro next year.
The results left them blindsided.
After tallies were announced late Sunday night, the opposition waited more than an hour before an official delivered a half-hearted statement to an angry crowd, saying that it refused to recognize the results.
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On Monday, leaders spent most of the day out of sight, before reading a communique in the evening that accused the government of rigging the vote. But the remedies were couched in the language of bureaucracy.
“We will undergo a deep evaluation of the policies and structures of the alliance to explore areas where we can improve,” said Angel Oropeza , the coalition's political coordinator.
Earlier, some in the opposition cast the blame for Sunday's drubbing on weak efforts to turn out the vote. Others said that despite attempts to monitor polls, they were unable to effectively counter the government's version of events.
“There have been situations that have never happened before,” said Carlos Ocariz, a Caracas mayor who lost a gubernatorial race in an opposition stronghold. He said his team lost contact with more than third of the voting centers in Miranda state, which includes about half of Caracas. Phones went down, he said, preventing the opposition from communicating with monitors.
A disillusioned electorate was left with more questions than answers.
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“It was a given they were going to be tricked again,” said Alfonso Rovira, 54, a Caracas language school manager, who reluctantly voted Sunday. “All this time and still no plan B?”
Facing such skepticism, opposition officials are cowed by their own supporters.
“They are divided, confused and some of them are unwilling to tell their voters they failed twice,” said Francisco Monaldi , a fellow at the Baker Institute at Rice University in Houston. “On one hand you failed to mobilize people and, on the other, if there was fraud, to either to prevent it or and very quickly identify evidence.”
“The truth is, they don't know and that's the worst thing.”
Even as the opposition flounders, Maduro's power is reinforced by Russia, which has loaned the regime money and prepaid billions for crude as other investors balked. Russia and Venezuela may agree on a debt restructuring by the end of the year, Russian Finance Minister Anton Siluanov has said.
“Venezuela will meet its international commitments with the criteron of responsibility,” Maduro told reporters Tuesday.
Russia's help and the election wins will strengthen both the president and the bottom line before $3.5 billion in bond payments come due over the next month, according to Ray Zucaro, chief investment officer at Miami-based RVX Asset Management, which holds securities of the state oil company.
“At this point, we are fully in Never Never Land,” Zucaro said. “Money issues won't take him down, elections won't take him down. That leaves us all wondering what will."