Venezuela’s Chavez May Not Recover in Time for New Term

Venezuelan President Hugo Chavez is facing a “complex” recovery from cancer surgery and may not be well again in time to be sworn in for a third term next month, Information Minister Ernesto Villegas said.

“We trust that, with the love of millions, the comandante will recover soon and take command before Jan. 10,” Villegas said, referring to the scheduled inauguration date for Chavez’s third term. “But if that’s not the case, people should be ready to understand. It would be irresponsible to hide the delicacy of the current situation and the days that lie ahead.”

Chavez in Cuba yesterday underwent his fourth surgery in 18 months for an undisclosed form of cancer, after telling Venezuelans they should vote for Vice President Nicolas Maduro in case he’s forced to step down after 14 years in power.

Maduro, flanked by National Assembly President Diosdado Cabello and Oil Minister Rafael Ramirez as he addressed Venezuelans in a nationwide broadcast today, didn’t provide updated information on Chavez’s health after saying last night that the six-hour operation had been successful.

“It’s very clear that our people need to accompany him in his treatment process but also that our people are serenely prepared to face these hard, complex and difficult days we are living,” Maduro said.

The vice president led a late-night vigil attended by hundreds in downtown Caracas yesterday, asking Venezuelans to light candles for Chavez to give him strength. He said the 58- year-old Chavez is being attended by Cuban and Venezuelan doctors and experts from other countries he didn’t name.

Current ‘Recovery’

Rumors that Chavez has died following the cancer surgery aren’t true, Cabello said today.

“The comandante’s status at this moment is one of recovery,” Cabello said at a mass held at the Fuerte Tiuna army base to pray for Chavez’s health broadcast on state television. “It was a long and complicated operation, but there he is, fighting, fighting, fighting. We’re sure he will triumph. Chavez is a conqueror, Chavez is a patriot, Chavez is invincible.”

Before departing for Cuba on Dec. 10, Chavez said he was delegating and leaving the country in the “good hands” of Maduro, a longtime ally and Venezuela’s foreign minister. Chavez won re-election to a third six-year term in October.

Under Venezuelan law, if Chavez steps down tomorrow, Maduro would see out the rest of the current term which ends Jan. 9, when he would hand over power to the National Assembly president who must call for election within 30 days. If Chavez assumes power for a new term Jan. 10 and steps down within the first four years of that period, the vice president takes over while elections are arranged within a month.

Unknown Cancer

Chavez first told Venezuelans he had cancer in June 2011 after undergoing surgery in Cuba to drain an abscess from his pelvic area during which he said doctors discovered a baseball- sized tumor in the same area. The tumor was excised in a subsequent operation, Chavez said, without specifying the exact location or type of cancer.

After four bouts of chemotherapy, he returned to Cuba in February for a third operation after his medical team discovered a second tumor and underwent several rounds of radiation therapy over the following months. While campaigning for re-election in July, he said he was “free, totally free” of illness, echoing words he said in October 2011 after completing chemotherapy treatment.

While Venezuela’s president hasn’t yet ceded power, investors are increasingly convinced he will stand down. Yields on the dollar debt of South America’s biggest oil producer plunged to the lowest in almost five years as investors bet a change in government would augur a reversal of nationalizations and currency and price controls that have stoked 18 percent inflation and driven away investment.

Opposition Candidate

Maduro last night called on Venezuelans to unite and pray for their president and said they shouldn’t be deterred by the hatred “anti-imperialists” hold for Chavez. He said he’ll give daily updates on the leader’s health and said Chavez had “overcome the first obstacle.”

“Comandante, we’re waiting for you here, you need to return,” Maduro said. “The sadness of the hour is giving us strength.”

Chavez’s decision to name a successor before he traveled to Cuba increases the importance of gubernatorial elections Dec. 16, where the man Maduro replaced as vice president, Elias Jaua, is pitted against opposition candidate Henrique Capriles Radonski for the governorship of Miranda state, said Luis Vicente Leon, president of Caracas-based polling firm Datanalisis.

A win for Capriles, who was defeated by Chavez in Oct. 7 presidential elections, would boost his chances of holding together an unruly anti-Chavez alliance and mounting a successful presidential bid, while a defeat would be “disastrous” for the opposition’s chances, said Leon.

Bond Yields

“In this next phase the question is whether opposition takes over,” Siobhan Morden, the head of Latin America fixed- income strategy at Jefferies Group Inc., said today in an e- mailed response to questions. “This weekend’s elections will be a barometer of whether sympathy vote influences better outcome of Chavistas in Miranda and Zulia” states.

The government’s benchmark 2027 dollar bond rose 0.08 cent to 102.53 cents on the dollar after falling to as low as 100.95 cents earlier. The bond’s yield fell one basis point, or 0.01 percentage point, to 8.94 percent.

Venezuelan dollar bonds have returned 49.66 percent in 2012, the second-biggest return in emerging markets after the Ivory Coast, according to JPMorgan Chase & Co.’s EMBI Global index.

Maduro called on Chavez’s followers to vote in the Dec. 16 elections and said he was sure they’d see Chavez on Venezuelan soil again.

“We’ll continue to face this complex, hard and difficult process we’re experiencing with strength, truth and love and with the confidence that God willing we will win and sooner rather than later we’ll have our president here in this house of the people,” Maduro said.

To contact the reporters on this story: Charlie Devereux in Caracas at cdevereux3@bloomberg.net; Corina Pons in Caracas at crpons@bloomberg.net

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

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