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Maduro tested as Venezuela's economy worsens

Jordi Miro
Venezuelan President Nicolas Maduro (right) and his Colombian counterpart Juan Manuel Santos during a joint press conference in Puerto Ayacucho, Amazona state, on July 22, 2013. A hundred days after taking office, Maduro has withstood opposition challenges to his election but is now being put to the test by a deepening economic crisis.

One hundred days after taking office, Venezuela's President Nicolas Maduro has withstood opposition challenges to his election but is now being put to the test by a deepening economic crisis.

"Maduro has won the battle of legitimacy with the opposition," said political analyst John Magdaleno, who said the president's political standing is secure both inside and outside the country.

The hand-picked successor to the charismatic Hugo Chavez, Maduro boasted of his government's staying power this week at a celebration marking the birthday of Simon Bolivar, the 19th century South American independence hero Chavistas revere.

"It's not 100 days. It's 100 years that the revolution will be here: 100 years of the Bolivarian, Chavista, socialist revolution," Maduro declared.

The street violence, marches and counter-marches, and bitter exchanges of insults that followed Maduro's slender victory in the polls now appear to be behind him.

Though the election results are still disputed by opposition rival Henrique Capriles, tensions have eased in Venezuela.

"The intensity of the confrontation, the frequency of the verbal disputes, have gone down," said Magdaleno.

But the president still must show he can keep the Chavista ranks united and assert control over the decision-making process, he cautioned.

Since coming to office, Maduro has met with representatives of the business sector, owners of private media companies, and labor and religious leaders.

He has also visited various Latin American countries, and assumed the rotating leadership of Mercosur, a South American trading bloc that Venezuela recently joined as a full member.

"Maduro has been gradually steadying himself, using stagecraft and propaganda, but he still must take concrete steps," said Maxim Ross, an economist at the Universidad Monte Avila.

Pollster Luis Vicente Leon said that, strikingly, Maduro has dared to involve himself in two issues that Chavez had always managed to avoid: corruption and crime.

"Chavez could avoid the issue because he did not pay a political price for the insecurity: he wasn't seen as responsible for it, and he just didn't talk about the noose in the hanged man's house," Leon wrote in the local press.

Over the past weeks, Capriles, the young opposition leader who galvanized the opposition in two election campaigns after years of losses to Chavez, has pursued a "crusade for the truth" both inside and outside the country, with mixed results.

He was received by the presidents of Colombia and Chile, to the fury of the Maduro government, but not by those of Mexico and Peru.

As he awaits a Supreme Court decision on his three month old challenge to the election results, the Miranda state governor faces an uphill battle in keeping his base motivated.

But he did succeed in creating doubt about the honesty of Venezuela's election authorities.

"Although the electoral challenge no longer has the same relevance, the doubt did take hold. About half the country did not think the results were correct," Magdaleno said.

"He will continue making charges, probably going to international fora, but I don't think this will have enough of an impact to turn the legitimacy of the Maduro government, which is calculating the exact timing to produce the sentence of the Supreme Court so as to undo the opposition electorate," he said.

What could put Maduro at risk is the deepening impact on Venezuelans of a worsening economy, which experts say is rooted in stringent exchange controls in place since 2003 in an oil-exporting country that relies heavily on imports.

The burdensome red tape and restrictions on businesses seeking dollars delay imports, generate shortages of stapes and raw materials, and at the same time exert powerful inflationary pressures.

The first quarter closed with record inflation of 25 percent, which exceeded pay increases, and shortages of basic goods are the worst they have been in recent years.

"There is erosion of salaries and jobs, there will be inflation, the problem of food shortages will continue. The coming months will be ones of economic deterioration that could lead to social conflict," said Ross.

The government has responded by opening somewhat the spigot through auctions of dollars, but experts say it has not been enough.

Venezuela also has taken actions to crack down on price gouging and has arrested some public officials for corruption, but at the same time has continued to run up deficits and engage in expropriations.

A poll by Datanalisis published this week found 58 percent of Venezuelans view the economic situation negatively, and more than 52 percent of Chavistas believe the government should work with the private sector to reactivate the economy.