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Venezuela Constitutional Crisis Looms With Chavez in Cuba

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Jan. 7 (Bloomberg) -- Venezuela is heading toward a constitutional crisis as allies of Hugo Chavez and the opposition accuse each other of using the socialist president’s battle with cancer to plot a coup.

At issue is whether Chavez, who was re-elected Oct. 7, will appear in Caracas this week to be sworn in for a third, six-year term. While the constitution mandates Chavez take an oath before Congress on Jan. 10, it also allows for the Supreme Court to administer the oath in exceptional circumstances, a fact that Vice President Nicolas Maduro says makes the scheduled ceremony a mere “formality” that can be delayed.

The Supreme Court is controlled by the government and will almost certainly rule that Chavez can continue in power even if he can’t be sworn in because of ill health, said Diego Moya-Ocampos, a Venezuelan political analyst at IHS Global Insight in London. Such a move could be considered an “institutional coup” and may generate instability within factions of Venezuela’s armed forces and the government, he said.

“We’re going to see a breach of the constitutional order and an institutional coup where state institutions are used to undermine the democratic order,” Moya-Ocampos, a former chief secretary to the Venezuelan Attorney General’s office, said in a phone interview from London. “Venezuela’s armed forces act as a form of constitutional police. If such a blatant breach of the constitutional order takes place, it would create behind-the-scenes tensions.”

‘Determinant Date’

Opponents of Chavez, who is recovering from cancer surgery in Cuba, are distorting the constitution by saying that he must show up for the Jan. 10 swearing-in ceremony or be declared ineligible to govern, Maduro said Jan. 4. That criticism was echoed by Attorney General Cilia Flores, who said yesterday that the former paratrooper’s landslide election victory holds sway over the Jan. 10 inauguration date.

“The important and determinant date here is Oct. 7 in which the people expressed their sovereignty and that has to be respected,” Flores said in an interview with Telesur network. “We have a president that’s been re-elected and holds the office. He already has the presidential sash and the symbols of power.”

Chavez will still be recovering in Cuba from his operation on Jan. 10, said Flores, who is also Maduro’s partner.

Bond Rally

Venezuelan government bonds returned 51 percent in the last year, the most in emerging markets after Ivory Coast, as investors bet that Chavez’s health will force elections and a new government that could introduce more market-friendly policies. Yields on state oil company Petroleos de Venezuela SA fell to a record low last week.

Yields on Venezuela’s 9.25 percent dollar-denominated bonds due in 2027 rose 17 basis points, or 0.17 percentage points, to 8.95 percent at 12:26 p.m. in Caracas, according to data compiled by Bloomberg. The price fell 1.43 cents to 102.45 cents on the dollar.

On Jan. 10, Chavez “remains in power and will be sworn in whenever possible,” Maduro said in an hour-long interview broadcast on state television Jan. 4. He warned the opposition against trying to carry out a “coup” by interpreting to its advantage the constitution’s provisions for a presidential succession.

Opposition Fears

Ramon Jose Medina, the deputy head of the opposition alliance, warned Jan. 3 that the National Assembly president must take over the presidency if Chavez’s health impedes him from being sworn in. If Chavez’s absence is deemed permanent, new elections must be held within 30 days.

“We’ve seen that by talking about the continuity of Chavez’s government they’ve been openly talking about a theory that in my opinion is unacceptable because it doesn’t respect the constitution,” Medina said in a phone interview. “That would be a coup d’etat.”

While the opposition has little room for maneuver, regional leaders such as Brazil could play a key part in negotiations during an institutional crisis, Moya-Ocampos said.

Chavez, 58, is experiencing a “severe” respiratory infection that is making it hard for him to breathe after undergoing his fourth surgery in 18 months, Information Minister Ernesto Villegas said late Jan. 3.

Maduro said he’ll remain in his post together with Chavez even if the cancer-stricken leader isn’t sworn in this week.

“The inauguration of January 10 is a mere formality,” Maduro said at a rally Jan. 5 in Caracas. “One day when there is an opportunity, it’ll be done.”

To contact the reporter on this story: Jose Orozco in Caracas at jorozco8@bloomberg.net

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

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