Venezuela Celebrates Chavez Return, Plans Economic Policy

Venezuelans prayed and set off fireworks yesterday after President Hugo Chavez returned to Caracas after two months of cancer treatment in Cuba.

Vice President Nicolas Maduro and government ministers held hands in a prayer service broadcast on state television late yesterday and said new measures would be announced today against speculators. The government seeks to fight black-market currency trading that has driven the unofficial exchange rate to more than 23 bolivars per dollar, according to, a website that tracks the country’s currency in the black market. The government on Feb. 8 devalued the regulated rate 32 percent from 4.3 bolivars per dollar to 6.3 bolivars.

“The corrupt right wing wants to damage the republic by attacking its currency,” Maduro said, without providing further details. He said Chavez was being held in a military hospital “like just another man of the people.”

The former paratrooper arrived in Caracas at 2:30 a.m. local time yesterday and was immediately taken to the hospital near the capital’s downtown to continue treatment, government officials said. Supporters massed outside the hospital to celebrate the leader’s arrival. His surprise return touched off speculation he’ll soon step down and hand power to Maduro.

Political Uncertainty

Officials have been struggling to run affairs in South America’s biggest oil exporter since Chavez missed a scheduled Jan. 10 swearing-in ceremony, plunging the nation into a period of legal and political uncertainty. Chavez is now likely to take the oath in a private ceremony, clearing the way for him to hand power to Maduro while elections are organized within 30 days, as mandated by the constitution, said Margarita Lopez Maya, a historian at Central University in Caracas.

“It’s possible this return will be the beginning of a transition process,” she said yesterday in a phone interview. “From the photos it’s clear that he isn’t in a condition to govern.”

Chavez’s return “significantly increases the possibility of elections,” Diego Moya-Ocampos, a political risk analyst at IHS Global Insight and a former top aide in the attorney general’s office under Chavez in 2000, said in a phone interview from London yesterday. “Elections are a given this year.”

About 100 people gathered across the street from the military hospital in Caracas to celebrate Chavez’s return with chants and vuvuzelas. Hundreds of supporters also gathered in Caracas’s Plaza Bolivar central square.

Photos, Twitter

Apart from photos released last week and yesterday’s Twitter messages in which he proclaimed he was returning to the “Venezuelan fatherland” and “clinging to Christ,” Chavez hasn’t been seen or heard from since traveling to Cuba Dec. 10 for his fourth surgery in 20 months.

“We wanted him back so bad,” Susana Velasco, a 56-year-old radiology student, said outside the military hospital yesterday as she waved a Venezuelan flag. “The opposition wanted him to return in a coffin, but here he is. We haven’t seen him but we know he’s back.”

Asked if the government would provide new images of Chavez, Information Minister Ernesto Villegas said photos and news have so far been criticized by the political opposition.

“First they’d ask for the photo, then you present the photo and it’s false. If you present a video, they’ll say it’s old or false,” Villegas, who said he hadn’t seen Chavez yet, said in an interview yesterday on Union Radio. “If you bring Chavez, they’ll say it’s not Chavez. They’ll say it’s a clone, they’ll ask for the finger print or a blood test to verify if it’s Chavez.”

Difficult Recovery

Questioned on plans to swear in Chavez for his new term, Villegas said the government is focused on celebrating the return of Chavez, whose recovery continues to be “complex” and “difficult.”

“I want him to hit the streets and put people on alert, let them get to work,” said Fanny Gutierrez, a 57-year-old former store owner, who wore a Chavez pin on a necklace around her neck. “If he hasn’t died, then he’s going forward. If God sent him again, it’s for a reason. He came here because he’s getting better.”

Maduro Support

Maduro had 50 percent support compared with 36 percent for opposition Governor Henrique Capriles Radonski, according to a survey by Caracas-based polling company Hinterlaces published yesterday on the front-page of state-run newspaper Correo del Orinoco.

The poll, whose margin of error is 2.9 percentage points, was taken Jan. 30 to Feb. 9. That’s mostly before the Feb. 8 devaluation of the bolivar. While the currency measure seeks to close a budget deficit larger than that of the U.S., it also entails risks for Maduro as he tries to solidify support with Chavez’s base among the poor. Economists expect the devaluation to pressure inflation, already running at 22 percent, and worsen shortages of goods from toilet paper to cars.

The yield on the government’s benchmark dollar bonds due 2027 fell one basis points to 8.92 percent at 12:55 p.m. in New York, according to data compiled by Bloomberg. The bond’s price rose 0.07 cent to 102.67 cents on the dollar. Markets in the U.S. were closed yesterday for the Presidents’ Day holiday.

“The return of Chavez is a non-event,” Victor Sierra, managing partner and head of sales and trading for emerging market fixed income at Torino Capital LLC in New York, said today in an e-mailed response response to questions. “We still don’t have any further information on his health or transition process.”

Bonds Gain

Chavez’s absence and deteriorating health triggered a 35.4 percent rally on Venezuelan dollar bonds over the past year as investors boosted bets he’ll be unable to complete another term, opening the door for a new regime that will introduce more market-friendly policies.

Venezuela’s bonds had the third-best performance among emerging markets in the past 12 months, after the Ivory Coast and Belize, according to JPMorgan Chase & Co’s EMBIG index.

“It’s hard to know what’s next,” David Smilde, a sociologist at the University of Georgia who wrote a book about Chavez’s rule, said in a phone interview. “Chavez supporters may think it’s a new stage in his recovery while the other side may think that Chavez has come back for his last weeks.”

Before flying to Cuba, Chavez urged Venezuelans to vote for Maduro, a 50-year-old former bus driver and union leader, should he die or step down because of ill health.

Maduro has been running affairs in Chavez’s absence amid charges by the opposition that the government is riding roughshod over the constitution, which it says requires National Assembly President Diosdado Cabello to serve as a caretaker until Chavez is able to resume his duties.


“It would be disingenuous to think that Chavez is in a full recovery because he came back to Caracas,” Nicmer Evans, a self-professed socialist and political scientist at Central University, said in an interview broadcast on Union Radio yesterday. “His health continues to be delicate.”

The government on Feb. 15 released pictures of Chavez in a hospital reading the Cuban Communist party Granma newspaper with two of his daughters. Villegas said on the same day that Chavez is suffering from a “delicate” respiratory infection that has left him speechless and requires the use of a tracheal tube.

Unlike the government’s procedure after past medical visits to Cuba, no images of Chavez’s return to Venezuela have been released or broadcast.

The president is in communication with Cabinet members by writing and made the decision to devalue the currency this month, Technology Minister Jorge Arreaza, who is also his son-in-law, said Feb. 15.

“Hopefully the president’s return means that Mr. Maduro and his ministers can get to work,” Capriles wrote in a Twitter message yesterday. “There are thousands of problems to resolve.”

Before it's here, it's on the Bloomberg Terminal.