Chavez Names Loyalist Heir as Venezuela Eyes Succession

Venezuelan President Hugo Chavez named a longtime ally with close ties to Cuba his heir apparent as the cancer-stricken leader prepares for a potential departure after almost 14 years in power.

Chavez, in a nationwide address over the weekend, said he was throwing his “irrevocable, absolute” support behind Vice President Nicolas Maduro to lead his 21st century socialist revolution should he be unable to carry out his duties. Chavez made the comments before flying to Cuba before dawn today for surgery, his fourth in 18 months, to treat an undisclosed form of cancer that reappeared after winning re-election in October.

Maduro, a former bus driver and union leader, has been one of Chavez’s closest civilian allies since the then-tank commander first attracted national attention by leading a failed 1992 coup. While the president’s endorsement carries weight with Chavez’s base among the poor, a succession battle involving the more business-friendly, military wing of his movement and against a revitalized opposition is only beginning as the strongman’s grip on power weakens.

“In the short-term, Maduro is empowered but we don’t know what will happen afterwards,” Luis Vicente Leon, president of Caracas-based polling firm Datanalisis, said in a telephone interview. “It’s one thing for Chavez, alive and in power, to exorcize internal arguments, but we’ll have to see how the infighting can be covered up without him there.”

Call for Unity

The 50-year-old Maduro is one of the president’s longest-serving aides, having been head of the National Assembly before becoming Foreign Minister in 2006. As Venezuela’s top diplomat, he traveled frequently to Cuba while building Chavez’s anti-American alliance with countries including Iran and Nicaragua. He continues to hold that post even after Chavez named him his vice president following his larger-than-expected victory over opposition presidential candidate Henrique Capriles Radonski.

“It’s my firm opinion, clear like a full moon, irrevocable, absolute, total, that in a scenario that would oblige new presidential elections that you should elect Nicolas Maduro,” Chavez said Dec. 8, while calling upon Venezuelans to show “unity, unity, unity” in the days and weeks ahead.

Bonds Surge

While the 58-year-old Chavez didn’t reveal any plans to cede power, investors are increasingly convinced he will. Yields on the dollar debt of South America’s biggest oil producer plunged 60 basis points today to the lowest since November 2007 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.

Maduro, who today inspected a new cable car transport system under construction in Caracas, didn’t comment on his anointment as successor and instead wished Chavez a speedy recovery.

“Chavez has been and is a father for us,” Maduro said. “He’s educated us in the fight, in anti-imperialism and in the ideas for a socialist society.”

Pre-recorded images broadcast on state television today showed Chavez kissing a crucifix and waving to members of his cabinet as he boarded a plane at Caracas airport.

‘Good Hands’

“I’m leaving and even though I’m not handing over the high political command, I know I’m leaving it in good hands,” Chavez told top military generals at the presidential palace earlier. “There’s Nicolas,” he said, gesturing to Maduro, who was sat next to him.

In addition to Capriles, who was favored to defeat any pro-government candidate in polls taken earlier this year, Maduro also faces a potential challenge from another key Chavez ally: National Assembly President Diosdado Cabello. A former lieutenant who fought alongside Chavez in the 1992 army rebellion against then-President Carlos Andres Perez, the 49-year-old is in line to become caretaker president should Chavez fail to take the oath for a third, six-year term on Jan. 10. Under the constitution, he’d have 30 days to hold elections.

Chavez’s decision to break a 21-day silence and return last week from Cuba, where he’s been undergoing hyperbaric oxygen therapy, may have been prompted by a need to rein in Cabello, said Vladimir Villegas, who served as Maduro’s deputy foreign minister between 2006 and 2007 before leaving the government in protest over Chavez’s policies.

Military Connections

Cabello’s military connections afford him “a lot of power although he’s more feared than loved both within and outside the government,” Villegas, who writes a column for the Caracas-based daily El Nacional, said in phone interview.

In a sign of unity, Cabello sat next to Chavez and Maduro as the president announced his endorsement over the weekend. Still, underscoring how messy any succession battle could become in the polarized country, he held out the prospect of violence should Chavez step down.

“Even the opposition should be praying that Chavez gets better,” Cabello said on state television after Chavez’s address. “He is the guarantee of peace in the country.”

Thousands of Chavez supporters gathered in squares across Caracas yesterday to pray for their president as he prepares to leave for Cuba, while leaders across the political spectrum in Latin America sent message wishing him a quick recovery.

Chavez has reduced his public appearances since being re-elected, fueling rumors that his health was worse than he was letting on after he claimed during the campaign he was “totally free” of cancer.

Opposition’s Chances

Chavez’s decision to name a successor also increases the importance of regional elections Dec. 16, where the man Maduro replaced as vice president, Elias Jaua, is pitted against Capriles for the governorship of Miranda state. A win for Capriles 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.

Polls before this weekend’s announcement showed mixed results, with one taken Nov. 21 to 26 by Caracas-based polling companying Ivad predicting a landslide win for Capriles and another taken this month by Hinterlaces favoring Jaua by 49 percent to 44 percent.

Capriles, while wishing Chavez a swift recovery yesterday, questioned his decision to name a would-be replacement.

‘Not Cuba’

“Venezuela doesn’t have succession,” Capriles, 40, said in comments broadcast on Globovision. “This is not Cuba nor is it a monarchy that has a king. Here in Venezuela, when someone leaves a position, the people get the last word.”

One way Chavez may try to solidify backing for Maduro is by pushing for a constitutional amendment to allow him to serve out the remainder of his third term, said Leon. Under the nation’s charter, elections must be held within 30 days if Chavez steps down within the first four years of his new term. Chavez, before going to Cuba last month, ruled out any constitutional reform.

“Maduro is a guy with lots of political experience and it would be a mistake to underestimate him -- that’s why Chavez chose him,” said Villegas, who as a teenager attended the same high school as Maduro in southern Caracas. “Chavez wants someone who can guarantee continuity to his fundamental ideas for the country but also a person who as a former union leader is capable of negotiating.”

While Maduro could scale back some of Chavez’s more radical policies he’s unlikely to be market-friendly and will likely spook investors, said Bret Rosen, a Latin America debt strategist at Standard Chartered Bank in New York. Bank of America-Merrill Lynch expects Venezuela’s economy to contract

3.6 percent next year as a result of an expected devaluation of the bolivar needed to close a fiscal gap widened by Chavez’s pre-election spending boom.

‘The Devil You Know’

“Maduro is not Chicago School of Economics by any stretch,” Rosen said in a telephone interview. “Sometimes the devil you know is better than the one you don’t.”

By contrast, business leaders see Cabello as more of a pragmatist than members of the civilian, pro-Cuban wing of the government that Maduro leads. In 1999, as Chavez’s chief telecommunications regulator, he ended Cia. Anonima Nacional Telefonos de Venezuela’s monopoly on fixed-line phone service.

Whoever has the upper hand, the time for Chavez to step aside appears to be nearing.

“Whatever happens with the operation, Chavez is clearly signaling that he won’t be able to complete his term,” said Villegas. “Everyone is starting to see that Chavez is becoming a thing of the past.”