Grupo La Colina

THE ECONOMIST INTELLIGENCE UNIT

Venezuela politics: Earlier to the polls

President Hugo Chávez has tripped up his opponents by bringing forward the 2010 legislative elections from December to September 26th The move is designed to damage the opposition's prospects by ensuring that the final weeks of the campaign will take place when many Venezuelans are on their summer holiday. On the assumption that the public needs greater persuasion to vote for the opposition, advancing the elections could benefit the president’s allies. At the same time, the government may be speeding things up because its own woes are mounting, and include an economy still in recession, high inflation and a growing banking sector scandal.

With the polling date less than ten months away, both the opposition Mesa de Unidad (Unity) coalition and the ruling Partido Socialista Unido de Venezuela (PSUV) have taken steps towards selecting their candidates. On November 15th the PSUV elected 774 delegates to a party congress, which opened six days later, and whose tasks included renewing the party’s national leadership and defining the strategy for the next three years (including the 2010 legislative election). Given Mr Chávez's strong influence over the congress (20% of the delegates were hand-picked by the president), it was always unlikely to steer policy away from the executive's line. The party declined to make public the election results or the level of abstention, which some sources estimated at 80-90%.

On November 19th the opposition coalition announced that it had agreed to select all candidacies by the end of April, holding primaries where necessary in February and March. Leopoldo López, a popular leader outside the party system, who had originally insisted on universal primaries in all cases, signed up to the deal. However, many members of the opposition harbour serious doubts about the efficacy of the electoral route, believing the government will bend the rules in order to hold on to power.

Opponents under siege

There are also concerns that there is considerably less scope for anti-government protests than there was in the run-up to the 2005 legislative election. In recent months, several prominent anti-Chávez politicians have either been arrested and imprisoned, or have fled into exile.

Protest action is increasingly taking the form of hunger strikes. On November 21st student activists (including Julio César Rivas, a student leader detained in September after protests related to an education reform) began a hunger strike outside the Caracas offices of the Organisation of American States (OAS), in a bid to publicise the plight of the country’s political prisoners and oblige the government to allow a delegation from the Inter-American Human Rights Commission to examine in situ the country’s performance. They were briefly joined by the daughter of Richard Blanco, the city administrator of Caracas, who has been in jail for three months on charges of causing bodily harm to a police officer.

Trouble in Chávez-land

There are also signs of strains within the chavista camp. These emerged with the arrest on November 20th of a food and banking magnate, Ricardo Fernández, a close ally and alleged business partner of Adán Chávez, governor of Barinas state and the president’s brother. The case relates to flagrant violations of banking regulations by the four banks that Mr Fernández has bought during the last two years. On November 30th the president announced a government takeover of the four banks, and within less than two weeks took over four other institutions on the grounds that they were illiquid and because of alleged improprieties. In addition, he arrested Arne Chacón, the president of two of the banks. Mr Chacón is brother of the science and technology minister, Jesse Chacón, who has resigned his post.

Another 30 bankers have been subject to arrest orders. At least 10 people have been jailed, including the recently dismissed president of the National Securities Commission, Antonio Márquez Sánchez. The government also has taken over an insurance company and a brokerage, and raided two others.

It remains unclear why Mr Chávez would seek to crack down on political allies from the so-called Bolivarian elite—a new business class enriched thanks to its ties to government. It may be that problems in the banking system, particularly among smaller banks, were becoming obvious and action had to be taken. But opposition commentators, including Ismael García—leader of the Podemos party—have claimed that there is a power struggle taking place among the business elites and their political allies that support the president.

Thus far, the banking scandal has affected institutions that account for less than 10% of total deposits in the system, and the government says that federal deposit insurance will cover most bank customers. But the issue promises to be a damaging political topic in 2010, particularly if more banks are closed or nationalised. Mr Chávez, as he usually does, is trying to spin the latest events to his advantage, claiming decisive action to preserve confidence in the banking system. But the scandal is likely to raise more questions about corruption and patronage, and further erode confidence in Mr Chávez.