Venezuela: Maduro’s Narrow Victory Could Lead To Early Exit

Acting President Nicolás Maduro’s narrow victory over opposition candidate Henrique Capriles Radonski in Venezuela’s April 14 presidential election will heighten social and political tensions in the country.

Raw Deal

As things stand, it is far from clear that Maduro will be able to serve out his six-year term to 2019. He will inherit a highly dislocated economy marked by the recent devaluation of the bolívar, above 20% inflation, high levels of goods scarcity, and a record high government fiscal deficit. Maduro’s narrow lead was based on his close association with the late President Hugo Chávez before and after his death in March. I expect this factor to be gradually replaced by Maduro’s handling of Venezuela’s severe economic challenges. Consequently, Maduro’s popularity will probably decline significantly.

Red Heat

This increases the probability of an internal struggle for power within the ruling PSUV party, particularly between Maduro and the hardliners headed by National Assembly President Diosdado Cabello, who holds significant influence over the armed forces. Any indication that Maduro’s declining support would jeopardise the continuity of the PSUV’s dominance could trigger an intervention by Cabello’s faction.

Total Recall

Capriles’s demands for a full vote recount, if successful, would likely reveal an even closer presidential race than the preliminary results show, as votes from abroad are incorporated and electoral irregularities are exposed. We believe this would further motivate the opposition to demand a recall referendum, an option the opposition pursued in 2004 against Chávez, albeit unsuccessfully. Indeed, under article 72 of the constitution, once the first half of the presidential term elapses, the opposition may petition a recall referendum with signatures from 20% of registered voters. While the probability of a successful recall referendum by the opposition has increased significantly since 2004, under such scenario, we would not rule out an intervention by the PSUV hardliners to negate the possibility of an opposition presidency.

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