Venezuela to Keep Opposition Leader Jailed Amid Protests

Venezuela is bringing criminal charges against opposition leader Leopoldo Lopez for organizing protests that have left at least five dead as violence escalated across the country amid anti-government marches.

A judge ruled there’s enough evidence to keep Lopez, who surrendered to police Feb. 18 amid a crowd of cheering supporters, in jail for as long as 45 days after President Nicolas Maduro accused him of fomenting violence, his lawyer Bernardo Pulido said on Twitter. The arraignment took place behind closed doors at a military prison outside Caracas after midnight, Pulido said.

Opposition Mayor David Smolansky called for “massive” demonstrations tomorrow and Saturday and said arrest warrants had been issued for other leaders of Lopez’s Voluntad Popular party. Shots were reported throughout Caracas last night as Maduro addressed the nation. Videos on social media and local press showed national guard troops smashing car windows and firing tear gas canisters into apartment buildings. The videos could not be independently verified.

“Yesterday was a night of terror and barbarism,” said Smolansky, mayor of El Hatillo, at a press conference in Caracas today. “We must maintain strength to stay in the streets and keep protesting.”

Burnt Trash

Mounds of burnt trash were piled up in the Caracas neighborhoods of Los Palos Grandes, Chacao and Altamira this morning and streets were quieter than normal. Subway service in the city of 2.1 million continued and most businesses were open, though many workers chose to stay home and school activities were canceled.

Maduro, in a nationally broadcast speech, accused the opposition and neighboring Colombia of being behind the violence and called on other opposition leaders to join him for talks Feb. 24. He said opposition leaders should accept his call to meet and that it was their “last chance” to do so. He also vowed to go after “infiltrators” posing as government supporters whom he said were trying to scare the population.

‘Path of Violence’

“You are either for the constitution or you are for violence,” Maduro said. “Unfortunately, Leopoldo Lopez took the path of violence and immersed the country in problems.”

Opposition Governor Henrique Capriles said today that the government needed to disarm paramilitary groups and pursue talks with protesters. He said he wouldn’t be “forced” to talk with Maduro.

Maduro is fighting to contain the biggest challenge to his government since he was elected to succeed the late President Hugo Chavez in April. Inflation has more than doubled to 56 percent during his term, and shortages of goods from basic food items to medicine have frustrated residents of a country with the world’s biggest oil reserves.

“The government is still united around the figure of President Nicolas Maduro, but the escalation of protests puts the stability of his government at risk,” Carlos Cardenas, a Latin American analyst at IHS Country Risk, said in a report today. “IHS expects the protests to escalate over the coming days.”

U.S. President Barack Obama, on a visit to Mexico yesterday, condemned the violence in Venezuela.

“The protests in Venezuela are anarchic and based on the frustration of the population,” said Colette Capriles, a political science professor at Simon Bolivar University in Caracas, who isn’t related to opposition Governor Henrique Capriles. “There isn’t any clear leadership in the government or the opposition able to control this situation.”

Medicine Imports

After he said Feb. 18 that the government would import $1 billion in food and medicine, Maduro yesterday signed a new currency law he said would boost the supply of dollars in the $380 billion economy, allowing importers to purchase more goods and alleviate shortages at an exchange rate weaker than the official rate of 6.3 bolivars per dollar. On the black market, the bolivar trades at a rate of about 88 per dollar.

The move signaled a second partial devaluation this year, creating a controlled swap market known as Sicad 2. Companies and people would have access to Sicad 2 and the rate will fluctuate daily, Economy Vice President Rafael Ramirez told reporters today. The currency law will be published tomorrow, he said, adding that the government will intervene in the market.

Weaker Currency

Bank of America Corp analyst Francisco Rodriguez said Feb. 17 that companies will probably sell dollars for 20 to 30 bolivars on the new system, a weaker rate than two existing official rates. The Sicad 1 system last sold dollars at 11.70 bolivars, nearly twice the official rate for essential imports.

Amid the political uncertainty, Venezuelan bonds have posted the biggest losses in emerging markets this year after Ukraine, losing 12.4 percent, according to JPMorgan Chase & Co.’s EMBIG index. The yield on Venezuela’s benchmark dollar bond fell 23 basis points, or 0.23 percentage point, to 15.64 percent at 2:02 p.m. New York time.

It’s unlikely the protests will force Maduro’s government to collapse the way public demonstrations did in Egypt and Tunisia, said Vladimir de la Cruz, a former Costa Rican ambassador to Venezuela.

“Protests still seem to be supported by opposition voters, and do not seem to have spread beyond this group,” Daniel Kerner, an analyst at the Eurasia Group in Washington, wrote in a report yesterday. “The most likely outcome is that the situation will get worse but that Maduro will be able to contain it and protests will probably die down in a few weeks.”