Chavez Rivals Use Primary to Gain Advantage in Venezuela Vote

Opponents of Hugo Chavez, after years of infighting and political setbacks, are banking on a fresh strategy to break the Venezuelan president’s 13-year grip on power: staging the nation’s first-ever presidential primary.

The 30 or so parties ranging from communists to free market advocates say the Feb. 12 vote will refute Chavez’s frequent taunt that they are a “nest of vipers.” It will also showcase policies that they say aim to protect gains by the poor over the past decade, while opening up the state-dominated economy.

All three leading candidates are below the age of 45, which the opposition says will make it harder for the 57-year-old Chavez to portray them as the old guard who want to return South America’s largest oil producer to the cronyism and corruption of the past. The ability to form a united front means Chavez, who says he recovered from cancer last year, is facing his biggest challenge yet after three consecutive electoral victories, said Saul Cabrera, vice president of the Caracas-based polling firm Consultores 21.

“Today, the opposition has a different face than the old opposition,” said Ramon Guillermo Aveledo, executive secretary of the Democratic Unity Table, as the opposition alliance is known. “Before the only thing that united us was our opposition to Chavez.”

In the last election in 2006, anti-Chavez leaders rejected a proposal to hold a primary, instead selecting behind closed doors Manuel Rosales, then-governor of Zulia state, as their candidate. A supporter of the government that took power after Chavez was briefly toppled in 2002, Rosales ended up losing to Chavez by 63 percent to 37 percent.

Opinion Poll

The favorite to win the primary is Henrique Capriles Radonski. The governor of Miranda state was backed by 61 percent of those surveyed, compared with 16 percent for Pablo Perez, the 42-year-old governor of Zulia, and 5 percent for lawmaker Maria Corina Machado, 44, according to a survey by Datanalisis, a Caracas-based polling company.

The survey of 1,000 people, taken between Jan. 25 and Feb. 3, had a margin of error of 2.6 percentage points.

Capriles has set up more than 70 free health clinics in poor neighborhoods of Miranda state and provided subsidized food to low-income families. The 39-year-old says he favors former Brazilian President Luiz Inacio Lula da Silva’s mix of market- friendly economic policies combined with income redistribution.

No Shocks

Chavez accuses the opposition of using undemocratic methods, citing the failed 2002 coup and an attempt to oust him through an oil lockout that paralyzed most of the country’s economy from December 2002 to January 2003.

Determined not to repeat the mistakes of the past and emboldened by a strong showing in congressional elections in 2010, the opposition has organized the primary to boost its democratic credentials. It also tried to make its economic policies more palatable to Venezuela’s poor majority, who are accustomed to the welfare benefits of Chavez’s “21st century Socialism.”

For the first time, it has produced a policy manifesto that calls for maintaining currency controls temporarily to prevent a slump in the bolivar and to honor oil contracts signed by Chavez with China, Russia and Cuba.

Capriles, whose Jewish grandfather arrived in Venezuela from Poland after fleeing Nazi persecution and founded the local unit of East Hanover, New Jersey-based Nabisco Inc., said the opposition has undergone a steep learning curve.

“We now have a clear proposal for what a government should be and we’ve made an enormous effort to understand that unity should transcend all Venezuelans,” Capriles said in an interview in Caracas Jan. 31.

Economic Model

The government’s economic model of nationalization, currency controls and price regulations show it’s Chavez who is harkening back to the failed, state-dominated policies from the mid-20th century, not the opposition, Aveledo said in an interview at his office in Caracas.

Since 2002, Chavez has expropriated more than 1,000 companies and assets, leading to shortages of basic staples like milk that are aggravating 26 percent inflation that’s the highest among 78 countries tracked by Bloomberg.

“The president remains tied to a dogmatic vision on such things,” Aveledo said. “He is the candidate of the past.”

Chavez can point to an economy that is picking up after contracting in 2009 and 2010. Record revenue for state-owned Petroleos de Venezuela SA of $128 billion in 2011, after Venezuelan crude prices rose 40 percent to an average of $101.06 a barrel from the year earlier, allowed for a surge in public spending that helped gross domestic product expand 4 percent. The average crude price for the week through Feb. 2 was $107.06.

Borrowing Costs

Venezuelan bonds have rallied in the past year on speculation that Chavez’s battle with cancer may lead to a regime change and the reversal of his economic policies.

The yield on Venezuela’s benchmark 9.25 percent bond maturing in 2027 fell 6 basis points yesterday to 12.08 percent, bringing the decline this year to 1.33 percentage points, according to data compiled by Bloomberg. Venezuela still pays the highest borrowing costs in the Americas after Belize.

Chavez, who says he’s cured of cancer after doctors in Cuba removed a tumor from his pelvic area in June, warned that an opposition victory will mean Venezuela is once again subjugated to the interests of the U.S.

“Whoever it is, it’s all the same to me,” Chavez said in comments broadcast on state television Jan. 31. “Let Venezuelans decide: independence or colonialism, the future or the past.”

Opinion Poll

Chavez is leading voter preferences with 47.3 percent of support, compared with 44.9 percent for the opposition candidate, according to a December poll by Consultores 21, published by Barclays Capital in a note to clients. The report did not specify dates or a margin of error for the survey.

The presidential race remains wide open, said Cabrera, the polling company’s vice president.

“February 12 is going to be an important moment for the opposition,” he said “It could be the launch pad for a campaign that has a real chance of winning the presidential elections.”

To contact the reporter on this story: Charlie Devereux in Caracas at cdevereux3@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.

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