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Referendum
nears but outcome remains more uncertain
The
National Electoral Council (CNE) is well underway in organizing the recall
referendum over the Chávez Presidency, which is scheduled for 15 August.
The current conditions for a recall of the president require that a
minimum of 15% of voters participate, that the votes in favour exceed the
votes against the recall the president and that the total votes in favour
of the recall exceed 3.8 million (total votes received by President Chávez
in the 2000 election).
If one of the three conditions is not met, President Chávez will
complete his current term, which ends in January 2007.
Both the government and the opposition have been involved in
mobilizing voters for the referendum and the likelihood that the turnout
is above the stipulated minimum is high.
Furthermore, the most recent survey from May by local polling firm
Datanalisis shows that the percentage of the voters in favour of a recall
was at 57.4%.
However, the figure has declined consistently since February, when
it was still at 60.1%.
Finally, the strong division between political forces and the
likelihood of a close vote speak for a higher probability of a strong
turnout.
If the president is recalled, the CNE is required to hold
presidential elections within 30 days.
The current make-up of the Supreme Court, which is likely to decide
the issue of whether the president can run in the follow-up elections, is
strongly in favour of Chávez and would probably decide in favour of a Chávez
candidacy.
The new president would complete the current mandate until 2007.
In
the event that Chávez wins the recall, the government is likely to
interpret the voter’s decision as a confirmation of current policies.
A Chávez victory would be likely to prompt the government to
deepen its ‘revolution’ and power could become even more centralized
in the executive at the expense of other institutions.
Moreover, the current unorthodox mix of economic policies with
price and exchange controls, government draw-downs of international
reserves and fiscal profligacy are likely to proceed unabated.
The margin of victory would only determine the pace and ambition of
the ‘revolution’.
If
the opposition is victorious, then a change in economic policy still
appears unlikely, especially given the high likelihood that Chávez would
be elected to carry out the current term.
The lack of opposition cohesiveness and firm leadership will
undermine the chances of a change in government.
Therefore, a resolution to the current social and political
polarization is only likely to materialize with new elections in December
2006 and further confrontation following the new presidential elections in
September and a Chávez victory cannot be ruled out.
The probability of a maintenance of the current status quo,
therefore, is high and as a result the economy is unlikely to embark on a
more sustainable growth path for the medium-term.
Economic
rebound on track, as oil booms
The
oil economy is likely to have continued its strong growth surge, as prices
remained on an upward trend, amid ongoing tensions in the Middle East and
concerns about the fate of Russian oil giant Yukos.
According to the Ministry of Energy and Mines, the price on the
Venezuelan basket of crude oils rose by 14.8% in July over the prior month
to close at US$ 35.71 per barrel on 30 July – a historical high.
The July figure raised the average oil price this year to US$ 30.92
per barrel, which is 18.7% above the price registered for the same period
last year.
Similarly, the most recent oil production data from the
Organization of Petroleum Exporting Countries (OPEC) indicate that
Venezuelan oil output rose again in June, which brought the annual average
production to 2.7 million barrels per day – 13.2% above the same month
last year.
The favourable oil sector results will benefit the economy overall
in terms of robust foreign exchange inflows and rising government revenues
in royalties and dividends. |
