- Anaysts see three possible outcomes as Venezuelans vote
- Polls show opposition set to obtain at least simple majority
Venezuelans head to the polls on Dec. 6 to vote in congressional elections, and if the polls are right, the opposition is set to take control of the national assembly for the first time since former President Hugo Chavez came to power in 1999.
Understanding the results won’t be easy though as a majority of the popular vote doesn’t necessarily translate into more seats in the assembly. Some seats are awarded by direct voting, some through party lists. It may take several days before a clear picture of what’s to come emerges.
There is a lot riding on the result. The country’s dollar bonds could rise or fall as much as 15 percent if the vote opens the way to economic reforms, or leads to a political crisis and policy paralysis, Bank of America said last month.
If the opposition wins, investors will be paying close attention to how Maduro handles the loss. He’s given conflicting messages so far, saying that while he’d respect the results he’d never “hand over the revolution.”
“I know that we’re going to win, but if a negative circumstance occurs, I’ll go to the streets to fight with the people,” he said this week. “And the revolution will pass into a new stage.”
Here are the three most likely scenarios:
Opposition Wins Simple Majority
While a simple majority in congress would give Venezuela’s opposition more negotiating power, they need more than 60 percent of the 167 seats to make genuine change, according to Bank of America. The opposition may be able to slow things down in Congress without a three-fifths majority, but the executive branch will still hold most of the power.
A slim majority could bring policy making to a halt, said David Smilde, a sociology professor who writes about Venezuela at Tulane University in New Orleans. The opposition will name the president of the assembly and set the agenda for discussions, stalling the budgetary process.
Barclays Plc is equally concerned by this outcome, saying it would combine a weak president with an opposition unable to unseat him, producing “the lowest probability of a coherent economic program.”
Opposition Wins Majority of 60% or 67%
This is the scenario for a political shakeup. A majority of three-fifths would clear the way for congress to censure the vice-president and the ministers. Three censures and they are out, said John Magdaleno, head of Caracas-based consulting firm Polity and political science professor at Central Venezuela University. In return, President Nicolas Maduro could then dissolve congress, sparking another round of congressional elections.
With a big majority, the opposition may also push for a recall referendum, constitutional amendments or the resignation of President Maduro, according to Barclays. Radicalization and a governability crisis could result, the bank said. A two-thirds majority would give them widespread power, including the ability to call a Constituent Assembly to change the constitution.
Still, radical change may be blocked by the Supreme Court, which is backed by appointees of Maduro and Chavez. Congress could try to overturn the Supreme Court, and Maduro could dissolve congress.
“If I’m a foreign creditor, what should I make of all this?” said Luis Vicente Leon, head of Caracas-based polling firm Datanalisis.
A win by the government would mean more of the same. Maduro has even promised to “radicalize” the revolution starting Dec. 7 -- though what that means is not clear. Barclays said such a win could give him the strength to take “some of the economic measures that the country needs and increase the chances of completing his term.”
Investors will watch for any signs that the government is willing to make FX adjustments or raise gasoline prices. Yet the outlook remains complicated next year if oil prices stay low and country struggles to pay its foreign debt.
With polls predicting an opposition victory, the only result of a win for the government may be unrest on the streets.
“Only a grotesque fraud could stop the opposition from winning a simple majority,” Magdaleno said. “Never before in 17 years have we seen a gap of 20 percent or larger in voter intention so close to election day.”