Venezuela Opposition to Wall St.: It’s Referendum or Crisis

  • Recall vote on President Maduro ‘is an escape valve’: Falcon
  • Opposition governor has met with investors in U.S. this week

One of Venezuela’s top opposition figures is warning Wall Street that a recall referendum is the only way of staving off a full-blown crisis in the South American nation already gripped by deep recession, runaway inflation and chronic shortages of basic staples.

Henri Falcon, governor of Lara state, has met with with investors in the U.S. this week, as Venezuela’s opposition ramps-up its efforts to oust President Nicolas Maduro from office before his term ends in 2019. In those meetings, Falcon was accompanied by Francisco Rodriguez, a Harvard-trained, Venezuelan economist formerly with Bank of America Corp.

“The referendum is an escape valve," Falcon said in an interview Thursday in New York. “We are not only betting for the referendum, we understand that is the only democratic, constitutional way out.”

Accusing the government of intentionally dragging its feet, Venezuela’s opposition has staged a slew of nationwide demonstrations in recent weeks, demanding authorities activate a recall vote against Maduro’s rule. The rallies have further fueled tensions in South America’s largest oil exporter, already struggling to contain a spat of looting and protests over acute food shortages and shaky public services.

Facing triple-digit inflation and an economy that’s expected to contract for a third consecutive year, Venezuelans have grown increasingly angry over the government’s stewardship of the economy. The opposition says nearly 2 million people signed a petition to activate a recall referendum against Maduro, yet authorities have not completed the verification process.

Maduro has denounced the initiative as an attempted “coup,” and repeatedly said there is no chance of a vote being held this year.

On Friday, Venezuela’s electoral board announced that only about 1.35 million signatures collected by the opposition were deemed to be valid and that it would it begin a nearly-month-long confirmation process on June 20. After initial verification procedures are complete, the opposition must collect signatures from 20 percent of the electorate -- or almost 4 million citizens -- in a second petition phase before a recall referendum process can be activated.

‘Back to the Wall’

One of only three opposition governors, Falcon was a member of the military and the ruling socialist party but broke ranks with the late Hugo Chavez in 2010. He says the current social crisis will obligate the to government to “reflect and rectify” toward an electoral solution, or risk a “social explosion.”  

Given an opaque timeline and an increasingly irate electorate, many observers see a government that’s seeking to delay the referendum as long as possible.“The government is using its institutional control to leave the referendum in limbo,” Barclays Plc analyst, Alejandro Arreaza wrote in a research note to clients.

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If a referendum does not take place before year end, the Venezuelan constitution states the vice president would take over, rather than hold fresh elections. Falcon insisted that the conditions are there for the referendum to take place this year and that facing a simmering crisis the government will be forced to hold elections in 2016.

“The government has its back to the wall,” he said.

Still, his comments come on a day of violent protests throughout the capital, that saw one prominent lawmaker assaulted in front of the National Electoral council headquarters in downtown Caracas.

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