Bloomberg News

Maduro Proclaimed Venezuela President as Rival Vows Protests

April 15, 2013

Venezuela's President Elect Nicolas Maduro

Nicolas Maduro, Venezuela's president elect, celebrates following the election results in Caracas on April 14, 2013. Photographer: Luis Acosta/AFP/Getty Images

Nicolas Maduro was proclaimed the winner of Venezuela’s disputed presidential election as the opposition called on supporters to press for a recount of the closest vote in 45 years.

The government dispatched anti-riot forces in Caracas today as Maduro, who received 50.8 percent of the vote, was declared the winner by the national electoral council. National Assembly President Diosdado Cabello said no recount of the 15 million votes cast would occur and that Maduro will be sworn in on April 19.

“I am the son of Chavez,” Maduro, 50, said today during his proclamation speech. “I am the first Chavista president after Hugo Chavez and I am going to fulfill in full his legacy to protect the humble, the poor, the fatherland.”

Henrique Capriles Radonski, who took 49 percent of the vote, said that the opposition has evidence of irregularities that affected hundreds of thousands of votes. The margin of victory was the narrowest since the 1968 presidential election and may lead to political unrest as almost half the country questions the government’s legitimacy, said Russell Dallen, a Miami-based bond trader at Caracas Capital Markets.

‘Coup Plotters’

Hundreds of Capriles supporters marched along one the principal highways in eastern Caracas, waving flags and blowing horns. Elsewhere on the motorway, National Guard troops fired tear gas and plastic bullets to disperse protesting students, the Associated Press reported. Maduro, who yesterday said he would accept a recount, said today that he won’t accept “coup plotters” in the street.

“I’m not asking for them to proclaim Capriles as the winner,” the 40-year-old opposition leader told reporters in Caracas. “I’m asking that they count each vote. If as a candidate you agreed to a vote-by-vote recount you don’t go running to be proclaimed.”

Venezuela’s bonds tumbled the most in two months and the nation’s default risk climbed after results were announced and the opposition questioned the results. Bonds due 2027 plunged 2.6 cents to 98.11 cents on the dollar, boosting the yield to 9.49 percent.

The cost of insuring Venezuela’s debt against default for five years rose 41 basis points to 730 basis points.

“We had a fair and constitutional victory,” Maduro said. “This is another victory, a homage to our comandante Hugo Chavez.”

White House View

President Barack Obama’s spokesman, Jay Carney, said an audit of the results is “an important, prudent and necessary step” to assure Venezuelan voters that the results are legitimate.

The U.S. has “long desired a dialog” with Venezuela even with the differences that were evident during Chavez’s rule, Carney said in a briefing.

As a candidate, Maduro benefited from a wave of sympathy for Chavez’s March 5 death. As president, he faces accelerating inflation, shortages of consumer goods and slowing growth.

“He’ll be a weaker president,” said James Barrineau, director of Latin America at Schroder Investment Management Co., in a phone interview from New York. “The market’s perception was that he would be forced to be more pragmatic on the economy. But it’s impossible to predict how he’s going to govern given how close this election was.”

Shadow of Fraud

The margin of victory was the narrowest in a Venezuelan general election since Rafael Caldera defeated Gonzalo Barrios by 29.1 percent against 28.2 percent.

While the electoral council probably will ratify Maduro as president if a recount occurs, his presidency would be tainted by a “shadow of electoral fraud,” Diego Moya Ocampos, an analyst at London-based consulting firm IHS Global Insight, wrote in a report today.

Capriles’ vote tally leaves him well-placed to dispute for the presidency a third time should Maduro falter, said Jorge Piedrahita, president of New York-based brokerage Torino Capital LLC.

“He is the closest the opposition ever had to re-taking the country,” Piedrahita said in an e-mailed response to questions. “He might be a heartbeat away from the presidency.”

Company Takeovers

Maduro has vowed to follow the steps of his mentor Chavez, who increased state control over the economy by nationalizing more than 1,000 companies or their assets and introduced currency and price controls. Chavez also tapped the world’s biggest oil reserves to help cut poverty to 21.2 percent of the population in the second half of 2012 from 42.8 percent when he first took power in 1999, according to government data.

Chavez won his third six-year term last October when he defeated Capriles by 11 percentage points after raising salaries, building thousands of homes for poor families and increasing cheap imports to slow inflation. The spending binge helped the economy grow 5.5 percent in 2012. Chavez died from cancer March 5.

Maduro called yesterday’s election a choice between capitalism and socialism. As Chavez languished in a hospital bed in Cuba before his death, Maduro oversaw a 32 percent devaluation of the bolivar and expelled two U.S. embassy officials who were accused of plotting against the government. The U.S. denied the charges.

‘Be Careful’

Today Maduro warned Spain and Madrid-based energy company Repsol SA to “be careful” about their relationship with Venezuela, saying they could face “exemplary actions” from his government, without giving more details.

Maduro faces mounting economic challenges including dollar shortages and falling oil production that could rapidly undermine the former union leader’s support, Kathryn Rooney Vera, a strategist at Bulltick Capital Markets, said in an interview with Bloomberg Television.

Growth will slow this year to 1.9 percent, the slowest in three years, according to a Bloomberg survey. The devaluation and dollar shortages could push the economy into recession this year, according to HSBC Holdings Plc.

Inflation accelerated to 25 percent in March, the fastest annual pace in 13 months and the highest official rate in the hemisphere, the central bank said today. Rising prices are compounded by shortages of products on supermarket shelves. The central bank’s scarcity index, which measures the amount of goods that are out of stock in the market, rose to a record high of 20.4 percent in January.

Homicide Rate

Data published by the United Nations shows Venezuela has the highest homicide rate in South America, which deters companies from operating in the country, according to Nicholas Watson, Latin America analysis director at London-based research group Control Risks.

“There were many things remaining to be done,” Maduro said before the election results were announced. Chavez “left us many tasks to complete, and a legacy.”

Maduro’s narrow margin of victory is a “mortal blow to the Chavismo,” Bulltick’s Vera said in a telephone interview. “It will be very difficult for Maduro to be as immune as Chavez was from all the deterioration that the country has seen over the past 14 years.”

To contact the reporters on this story: Charlie Devereux in Caracas at cdevereux3@bloomberg.net; Corina Pons in Caracas at crpons@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net


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