Caracas, Venezuela. Feb 24 (Venezuelanalysis.com).- According to a report by Wall Street firm Bear Stearns, Venezuela's President Hugo Chavez is increasingly likely to finish his term, surviving a possible recall referendum on his mandate this year.
Venezuela's National Electoral Council (CNE) is currently reviewing petition forms with signatures collected by opponents of Chavez to demand his recall, as well as those collected to recall lawmakers from both sides. If the requirements are fulfilled, the referendum could be held as early as June. The CNE is expected to report on its findings on February 29.
The Bear Stearns report issued on February 19 and titled "Venezuela: Two Scenarios for CNE Signatures Count", argues that the opposition movement in Venezuela has lost momentum, after losing important political battles with the government in the past two years, such as the 2002-2003 oil strike. The lock-out and strike caused 10 billion dollars in losses and a historic 29% drop of the country's GDP in the first trimester of 2003.
"The latest developments in Venezuela suggest that the prospects for the referendum are quite poor and it is actually unlikely to take place as proposed this summer," says the report, recommending investors to wait for the referendum issue to be sorted out before purchasing Venezuelan government bonds.
International observers are key
As hundreds of thousands of petition forms present irregularities and are currently under review, the Bear Stearns report argues that the fate of the referendum process depends heavily on what international observers from the Organization of American States (OAS) and the Carter Center will tell the CNE with regard to how to proceed with those signatures.
Dead people appearing as signers, persons not registered to vote, minors, foreigners who don’t have the right to vote, individuals who signed more than once, and petition forms filled and signed by a single individual (dubbed by the government as "writing exercises") are among the irregularities being investigated by the CNE. A lawmaker close to President Chavez appearing as signer of the petition against the President, also gives credibility to claims of bank records used by the opposition to get people's data and enter them as signers.
Bear Stearns believes that the number of signatures that the CNE will eventually deem to be valid on February 29 will be approximately between 1.2 and 1.5 million, and the number that will probably remain unconfirmed and requiring additional verification will likely be between 1.7 and 2.0 million signatures. 2.5 million valid signatures are needed to trigger the recall.
Due to the high number of petitions with irregularities, and how critical the decision is, the CNE could decide to ask individuals to re-confirm that their signature and identity are correct. However, the CNE could choose to decide on whether to accept or reject those irregular signatures based on data already available.
Bear Stearns argues that if signers are asked to reconfirm their identities and signature, it is unlikely that the referendum against Chavez could be approved as the 10 days the CNE would give for such process seem to be insufficient for all borderline petition signers to go to the CNE and re-confirm.
However, if the CNE decides to do a final determination on the irregular petitions, Bear Stearns believes that the chances for the referendum being approved are much higher, as the CNE would have to determine that more than 50% of those suspected signatures are in fact invalid, something that, according to Bear Stearns, the CNE is unlikely to justify without losing its international credibility.
The CNE is currently Venezuela's public institution with the highest credibility among the people. Its members were chosen by the Supreme Court last fall, pleasing both the opposition and the government of Venezuela. International observers have publicly expressed satisfaction at the level of access that they have to CNE installations to do their job as observers.
Good chances for Chavez re-election in 2006
"Not only is President Chavez likely to finish his term in office, but recent polls suggest he has excellent chances to win re-election in the next presidential election, scheduled for 2006," says the report.
Bear Stearns argues that the outlook for Venezuela's fiscal sustainability remains "quite favorable" as long as oil prices remain high. Bear concludes that no matter the result of the referendum, the outlook for Venezuela will be more stable and more attractive for bondholders than the current more volatile political and economic situation.
Chavez's popularity, has gone from around 31% in Feb. of 2003, to as high as 50% according to recent independent polls. With the economy expected to grow more than 6% this year, Chavez's popularity could be expected to grow.
With this report, Bear Stearns joins Wall Street global ratings agency Fitch Ratings in predicting that the south American president will remain in office until 2006.
The complete report is available at www.aporrea.org