Venezuela Opposition Picks Leader Ahead of Congress Takeover

  • IMF estimates GDP shrank 10% last year as oil prices fell
  • Newly empowered coalition calling on Maduro to reform economy

Venezuela’s newly elected opposition lawmakers have chosen Henry Ramos Allup as president of Congress, as they prepare to take power with a legislative majority in the recession-battered country for the first time in sixteen years.

The legislators, who are set to take control of Congress on Tuesday, voted in a secret ballot, said Jesus “Chuo” Torrealba, secretary of the anti-government coalition. Ramos Allup, 72, heads the Democratic Action political party that is part of the coalition.

“We’re going to legislate,” Ramos Allup said Monday, promising to probe allegations of corruption within President Nicolas Maduro’s government. “We’re going to regulate. Many ministers and government officials will be called in for questioning.”

Opposition leaders want to give Maduro six months to take painful economic measures or face removal. The government denies allegations of corruption and says the opposition wants to turn back its accomplishments in social policy and use its majority to regain the presidency.

“Maduro should be thinking about the possibility of resigning,” Ramos Allup said. “If that’s one way to solve the political crisis, it shouldn’t be ruled out.”

Congress will offer a “democratic and constitutional solution” for a change in government in the first quarter, he said Sunday, after being selected as head of Congress.

Supermajority Imperiled

The outgoing congressional leadership who supports Maduro’s government has sought to undermine the new legislature. They named more than a dozen justices to the Supreme Court, which subsequently stripped the opposition of a two-thirds supermajority by barring three of its newly elected lawmakers from taking office. The high court is set to rule on the cases of four others.

A supermajority would give the opposition powers to change the constitution, impeach ministers and push for a referendum to remove the president.

To make matters worse for the embattled government, oil prices fell in December to their lowest level since 2004. That deprives the Maduro administration of funds and threatens to exacerbate shortages of everything from corn flour to birth control pills. Oil accounts for 95 percent of Venezuela’s exports.

The International Monetary Fund estimates the economy contracted 10 percent in 2015, while economists polled by Bloomberg saw consumer prices rising by about 124 percent. The central bank hasn’t published data on inflation or gross domestic product since the end of 2014.

Gunned Down

Venezuela’s dollar bonds fell Monday as traders speculated there would be confrontations when the opposition takes power in Congress Tuesday. The yield on the benchmark note due in 2027 rose 21 basis points to 24.8 percent at 10:03 a.m. in New York.

In the run-up to congressional elections, Democratic Action party candidate Luis Manuel Diaz was gunned down at an event attended by Ramos Allup, who accused government supporters of the murder. Maduro said the killing was committed by criminal groups.

Ramos Allup led his party even before former President Hugo Chavez first won election in 1998. When the opposition gathered signatures in 2003 for a referendum on Chavez, Ramos Allup claimed the leader would be “swept out by a landslide.” Months later, Chavez won with 59 percent of the vote.

As Chavez amassed power, Ramos Allup backed the opposition’s call for a boycott of the 2005 congressional elections, saying the country’s electoral council was biased. The government went on to win all 167 seats.

The opposition is now calling on supporters to accompany newly elected lawmakers Tuesday in a short march to Congress as it takes power. Opposition coalition secretary Torrealba vowed over the weekend that all 112 of its deputies, including the three barred by the high court, will be sworn in.

Jorge Piedrahita, the chief executive officer at Torino Capital LLC in New York, said there’s speculation government elites would exit Venezuela if political turmoil increases.

"Several high-ranking officials of Chavismo have contingency plans in place to leave the country,” he wrote in a note to clients, without saying where he obtained the information.

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