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October 14, 2013 6:26 pm
Hugo Chávez died six months ago, but Venezuelans are still grappling with the former president’s calamitous legacy. Shops lack basic goods because of the government’s abstruse foreign exchange restrictions. Inflation is galloping towards 50 per cent and the budget deficit shows no sign of narrowing. The man who dreamt of bringing socialism to Venezuela has delivered a social and economic nightmare.
Nicolás Maduro, Mr Chavez’s uncharismatic successor, has no new solutions to offer. Rehearsing an old classic of “chavismo”, he has accused the “fascist” opposition and the US of sabotaging the economy. Mr Maduro is asking the National Assembly for “special powers”, which would let him rule by decree. He is poised to obtain them since the United Socialist party of Venezuela (PSUV) commands a towering majority in parliament.
There are legitimate fears that, if Mr Maduro gets his way, he will abuse his newly acquired influence. In December, Venezuelans go to the polls for a round of municipal elections. In spite of widespread malpractice, the opposition came within a whisker of defeating the president in last spring’s presidential elections. Mr Maduro will be keen to stop his opponents from making further inroads.
Nor is it likely that the president will use his special powers to reform the economy. This year, Mr Maduro promised that the government would introduce a new, less stringent system of foreign exchange controls. This would trigger a devaluation of the bolivar, which is grossly overvalued on the official market. Because Venezuela’s dollar-denominated oil revenues would be worth more in local currency, this move could help to reduce the budget deficit.
Yet, in the short run at least, a devaluation would accelerate inflation. This makes it unlikely that Mr Maduro will make good on his promises before the December vote. That is especially so as the more intransigent wing of the PSUV still has huge influence in Caracas. One sign of that came with the recent sacking of the reform-minded finance minister Nelson Merentes and his replacement by Rafael Ramírez, the oil minister.
Mr Maduro may fear that the left wing of his party could oust him next if he does not show sufficient intransigence. But discontent is bubbling up in Caracas. Oil revenues – which remain hefty – can prop up the government only for so long. Eventually, voters will let the PSUV know what they really think of its economic amateurism.
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