Oct
5
2012
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Tune in to What’s Next for Election Developments

Venezuela will hold its general elections this Sunday, October 7. President Hugo Chávez, seeking re-election to a third term, faces a strong challenge from the energetic opposition candidate Henrique Capriles. The run-up to the election has already been intriguing, with concerns about the president’s health, unexpected events on the campaign trail and an innovative and impressive strategy by the opposition. Thanks to his tireless campaign efforts, Capriles has surged into the lead in the polls in the last weeks and finds himself in a good position to defeat Chávez.

The results of the election will reverberate substantially, both in Latin America and around the world. It will serve as a referendum on Chávez’s socialist policies, which still have a following in the region. It will affect global oil markets, as Venezuela controls the largest proven reserves of oil in the world. And it will impact diplomatic relations with the United States, which have been strained since the beginning of the Chávez era. Most of all, the election matters to the Venezuelan people, who continue to struggle though blackouts, food shortages, insecurity and rampant inflation.

Check out WhatsNextVenezuela.com for the latest news over the weekend, as we will be reporting on the events leading up to and during the vote this Sunday.

 
Sep
20
2012
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ICYMI: Venezuela crime out of control, imperiling Chavez re-election

Venezuela crime out of control, imperiling Chavez re-election

USA Today
September 20, 2012
By Peter Wilson

violence in venezuela 300x203 ICYMI: Venezuela crime out of control, imperiling Chavez re election

Courtesy of: AP / Fernando Llano

EL JUNQUITO, Venezuela — Margarita Hernandez has been waiting more than a year for someone to pay for the murder of her 18-year-old son, killed by thugs a few blocks from his home.

“He was visiting friends when three men approached and shot him without warning,” said Hernandez, who works in a drug store. “The police know who the killers are as my son’s friends identified them — but one of the killers has an uncle in the police, so no arrests have been made,” she says.

Venezuela under President Hugo Chávez has the fourth-highest murder rate in the world and an abysmal crime-solving rate. Police in Venezuela make arrests for only eight of every 100 murders committed in the country of 28 million.

Crime is an issue that has enabled challenger Henrique Capriles Radonski to pull closer to upsetting Chávez in his attempt to win a third term Oct. 7. Some experts blame Chávez for allowing the country to become a transit point for the South American drug trade.

“Venezuela has become a criminalized state,” said Vanessa Neumann, a senior fellow at the Foreign Policy Research Institute. “You have drug traffickers and Colombian guerrillas operating in the country, and government officials have become involved with them. That makes it difficult to combat crime.”

Crime is common in Latin America. The Mexico-based Citizen Council for Public Safety and Criminal Justice, a non-government entity that compiles homicide statistics, found that 40 of the world’s 50 most dangerous cities last year were in Latin America.

Venezuela stands apart in two important areas, said Roberto Briceño León, who heads the Observatorio Venezolano de Violencia, a non-government group that monitors crime in the country.

“First, crime here is increasing unlike most Latin countries that are experiencing a decline,” he said. “And secondly, the government isn’t making it a priority or taking the right steps to combat it.”

Instead, Chávez has made it worse by arming groups who support his presidency and taking over state and city police forces, León said.

Murders and kidnappings have soared since Chávez took office in 1999. Last year, the Observatorio, estimates 18,850 people were murdered, up from 4,550 in 1998. There were almost 16,000 kidnappings, up from a few hundred in 1998.

Venezuela now has more murders annually than the U.S. and European Union combined, and that is despite 18 government anti-crime initiatives that Chávez has introduced.

More than 9,500 murders were committed in the first six months of this year, compared with 8,830 a year agoin the year-ago period, the Observatorio reported. Most of the victims are poor, male and between the ages of 18 and 30. More than 60% are shot five times or more.

Venezuelan newspapers are full of gruesome crimes that go unsolved. Criminals have committed armed robberies in hospital operating rooms and held hostage an entire movie theater audience.

Even high-ranking government officials have been targeted with relative impunity. The father of the pro-Chávez governor of the eastern state of Delta Amacuro was kidnapped earlier this month, while the governor of the eastern state of Monagas was assaulted in January.

Several diplomats assigned to Caracas, including the Mexican Ambassador, have been kidnapped or robbed. Caracas’ once thriving nightlife has gone quiet because many people are afraid to leave their homes after dusk.

Chávez has blamed the upsurge in crime on capitalism, poverty, the breakdown of families and American culture, which he says glorifies violence. His Interior and Justice minister, Tareck El Aissami, said earlier this month that the government has spent more than $500 million in the past few years on crime-fighting measures. A newly created police force, for example, has had marked success in zones where it has been deployed, he claimed.

Briceño disagrees, saying Chávez’s own revolutionary and socialist rhetoric has made things worse.

“The government is confused as to how to respond to the upswing in crime,” he said. “They view using the police as a bourgeois and repressive measure that was used by their predecessors. They want to use new solutions, but they just aren’t working.”

Capriles has capitalized on the crime issue, which surveys show is the voters’ most pressing issue this election.

Besides promising to fire corrupt police officials and deploy more than 20,000 more officers throughout the country, Capriles said he would launch an immediate campaign to disarm the country.

“Whoever has an illegal weapon will have to turn it in, or we will come for it,” he told cheering supporters at a recent rally. He also promised to clean up the country’s prisons, from which criminals direct kidnappings and robberies.

Hernandez voted for Chávez in each of his presidential campaigns. She said she will vote for Capriles this time.

“We deserve better than to live like this,” Hernandez said. “We deserve to live in peace. My son deserved better.”

To read this article on USA Today, please click here.

 
Sep
17
2012
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ICYMI: Venezuela Risks Default If Chavez Wins, Morgan Stanley Sa

Bloomberg
September 14, 2012
By Charlie Devereux

i2CwsOAj.qb8  ICYMI: Venezuela Risks Default If Chavez Wins, Morgan Stanley Sa

Courtesy of: Bloomberg

Venezuela could default on its debt as early as the second half of 2013 if President Hugo Chavez wins re-election next month and fails to shore up the oil- producing nation’s “increasingly fragile” balance sheet, Morgan Stanley said.

One “tipping point” could be the $4.3 billion in external debt payments that come due between August and November 2013, Morgan Stanley analyst Daniel Volberg wrote in a note to clients today.

Chavez, who is seeking to extend almost 14 years in power with another six-year term, has damaged Venezuela’s balance sheet through the nationalization of key sectors of the economy, endemic inflation and a lack of fiscal discipline, Volberg said. The policies are an “unsustainable” mix that heighten the risk of default on Venezuela’s $110.6 billion stock of debt, especially if oil prices tumble, Volberg wrote.

Government actions “may be taking Venezuela towards a crisis and potentially even a debt event that could come as early as the second half of 2013,” the report said. “Venezuela’s debt is no longer with large bank lenders as much as publicly traded bonds held by a dispersed group of creditors, which could make restructuring more challenging.”

At 11.6 percent of gross domestic product, Venezuela has the largest fiscal deficit in Latin America, while its international reserves have fallen by $17 billion since 2008 to $25.6 billion, Volberg said. Output by state oil company Petroleos de Venezuela SA fell to 2.72 million barrels a day in 2011 from 3.48 million barrels in 1998, according to British Petroleum’s statistical review.

Bond Yields

The yield on Venezuela‘s benchmark 9.25 percent bonds due in 2027 fell 11 basis points, or 0.11 percentage point, to 10.77 percent at 11:27 a.m. in Caracas, according to data compiled by Bloomberg. The bond’s price rose 0.74 cent today to 88.80 cents on the dollar.

The cost of insuring Venezuelan bonds against default for five years rose four basis points to 737 basis points, according to prices compiled by Bloomberg. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to comply with debt agreements.

Chavez said Sept. 11 that he had 43.1 percent support against 30 percent for opposition candidate Henrique Capriles Radonski in the latest poll conducted by Datanalisis. He didn’t give details of the survey.

The two previous Datanalisis polls showed Chavez with a lead of 12.1 and 14.3 percentage points respectively, he said. In an August Consultores 21 poll of 1,000 people, Chavez trailed Capriles by 47.7 percent to 45.9 percent.

To contact the reporter on this story: Charlie Devereux in Caracas at [email protected].

To contact the editor responsible for this story: Joshua Goodman at [email protected].

To read this article on Bloomberg, please click here.