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Venezuela: greater state control

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Venezuelan voters head to the polling stations on 8 December for municipal elections. The contest for 335 mayors and over 2,000 local officials comes eight months after April’s bitterly disputed presidential election, which saw Hugo Chávez’s chosen successor, Nicolas Maduro, triumph for the ruling Partido Socialista Unido de Venezuela (PSUV) – but with a razor-thin, 1.5% margin over the opposition Mesa de la Unidad Democrática (MUD) candidate, Henrique Capriles Radonski.

Citing various alleged irregularities, the MUD has continued to challenge the presidential election result. This has extended to the opposition’s ‘Birther Movement’ with claims that Maduro is of Colombian nationality and therefore ineligible to serve as president. Capriles and other high profile MUD figures have sought to mobilise regional support for their claim that the election was stolen, touring Colombia, Chile and other Latin American countries. However, this has not succeeded in isolating Maduro at the regional level: the only country sympathetic has been the United States, which has still yet to recognise Maduro’s victory.

The narrowness of Maduro’s win deprived the new president of a honeymoon period. His haemorrhaging of 603,503 votes cast for Chávez in the October 2012 hard-core chavistaspresidential contest (convened just before Chávez’s death in March 2013) raised questions as to the wisdom of his selection – particularly among supporters of his main rival to the succession, Chávez’s former vice president Diosdado Cabello, currently PSUV president of the National Assembly. That Capriles and the MUD gained 772,676 votes was a further cause of concern for the factions within the PSUV still reeling from the death of Chávez – the ideological leader of the Bolivarian Revolution and the glue that held together an eclectic party organisation and the grassroots base. However, discord was quickly papered over by the MUD’s violent challenge to the election result, which saw 11 people killed in protests encouraged by Capriles.  This unruly response served only to weld PSUV loyalty to Maduro.

Venezuela’s new president initially responded to the pressures on, and questioning of, his presidency by forging a numerically large and politically broad-based cabinet that accommodated the PSUV’s divergent tendencies. He sought to address the ambivalence of some Chavista voters and push back on the MUD by addressing critical problems such as crime, and shortages of goods and foreign currency. The Secure Fatherland programme saw the military deployed in high crime areas, while new layers of citizen policing were intended to counter violations of price controls and opposition ‘sabotage’ of supply chains. With the creation of the SICAD (Ancillary Foreign Currency Administration System), an attempt was made to to address the poor performance of  CADIVI (Commission for the Administration of Currency Exchange), the agency responsible for authorising access to dollars since the imposition of exchange controls following the 2002 coup attempt against Chávez. The appointment of Nelson Merentes as Finance Minister and others of a pragmatic predisposition raised hopes of adjustment, even if modest, to an economic strategy that has become progressively dysfunctional because, or in spite, of opposition sabotage.

Despite an energetic start premised on a consensual positioning within the PSUV, Maduro has more recently carved a narrower path. Ministers and key personnel have been chopped and changed, and the group of influence around the president has shrunk. Proponents of pragmatism have been jettisoned in favour of a stronger statist orientation, legitimised by the perpetual mobilisation of the deceased former president’s image and language.

Grassroots Chavista organisations complain that they have been side-lined, with Maduro more oriented to the pro-government labour movement as the popular backbone of his administration. Hopes of an internal democratisation of the PSUV in the post-Chávez period and of the re-launching of the Bolivarian Revolution as the ‘protagonistic’ model of community empowerment as it was originally intended have been progressively frustrated – the candidate selection process for December’s municipal elections indicative of a heavily top-down predisposition. And amid ongoing MUD protests of authoritarianism and lack of government oversight, Maduro was successful in obtaining enabling powers from the National Assembly on 19 November. This provides the President with decree powers for a 12 month period, a common mechanism of the executive in the country, but one Maduro only succeeded in obtaining after an opposition Assembly member was stripped of immunity for prosecution on corruption charges, providing the PSUV with the constitutionally required 99 votes to pass enabling legislation.

The MUD maintains that Maduro will use his decree powers to crush dissent. The reality is that the government has an arsenal of weapons it can deploy if it intends Henrique Capriles at an election meetingto launch an ‘assault’ on the opposition. Instead, the intention of enabling powers is to address serious problems of corruption and economic underperformance – problems that pre-date Chávez but which have become so structurally embedded in the Bolivarian Revolution that they threaten to offset the pro-poor gains that were made under Chávez.

Maduro’s first acts under enabling authority (The Law for the Control of Costs, Prices and Profits and the creation of the Nation Centre of Foreign Trade and the Foreign Trade Corporation) cap private sector profits at 15% and create new bureaucracies to control access to dollars – and thus, indirectly, to imports.

The extent to which deepening, rather than reining back, the state’s role in the economy will alleviate inflation (running at an annaul rate of 54.5%), a dollar black market trading at seven times the official rate, and a deteriorating balance of payments situation is contestable, but, as he now has enabling authority, success or failure will be directly attributable to Maduro.

Maduro leads the PSUV into December’s municipal contest buoyed by his extended authority but amid signs of mounting popular pessimism and the threat of significant abstention. The MUD is presenting the elections as a referendum on an ‘illegitimate’ president, with a strong opposition performance intended as a springboard for further actions to erode Maduro’s credibility, building up to an anticipated recall referendum on the president. Local issues and priorities will, as always, take a back seat, while the threat of pro – but more likely anti – government protests and disruption increases the likelihood that 2014 will be a year of yet more conflict and political turbulence.