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Venezuela's Opposition Candidate Begins Fight Against Chávez

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Capriles has won the opposition primaries which brought out three million voters, a figure that may worry the president.

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While the forever buoyant President Hugo Chávez would never admit it, it's been a tough week for his socialist government.

The election of the country's first serious opposition leader on Sunday with an overwhelming turn out of 3 million does much to demonstrate that a mobilzation against President Hugo Chávez is on the cards and perhaps able to build momentum before October's election.

On top of the build up to the presidential election later this year, Reuters revealed that officials of one of the country's biggest companies is taking the Venezuelan government to court – via a holding company – and that the country is sending oil to war-torn Syria.

Opposition Win
The opposition finally elected Henrique Capriles Radonski to lead it against Chávez in October's presidential election. Capriles won with 64%, more than double the number of votes of his closest rival. The big news, however, was the turnout. More than 3 million Venezuelans voted – around half of those who associate themselves with the opposition and double analysts' expectations.

"The high turnout should provide momentum to Capriles increasing the possibility of a democratic transition, even though the opposition still faces difficult hurdles." wrote Alejandro Arreaza and Alejandro Grisanti of Barclays Capital in New York in a note to investors earlier this week.

Capriles is currently polling around 20 percentage points behind Chávez and will have to battle a considerable state machinery to have a serious hope against the president in October. However, his landslide victory has confirmed Capriles as the legitimate opposition leader.

In a victory rally on Sunday night, the candidates and former rivals gathered on stage behind Capriles in a show of much-needed unity. "If we don't unify," Capriles said recently, "then it's game over."

For the first time in the opposition's history, Capriles has been able to unite the many factions behind his more moderate criticism of Chávez. He is smart enough to understand that direct confrontation with the socialist president is a no-go; in fact, Capriles rarely mentions him by name.

Capriles knows that he will always have the hardcore opposition behind him. Now, he must convince the so-called "ni-nis," those unsure of who to vote for, as well as pull Chávez's own supporters away. According to one Venezuelan pollster, these number around 36% and will decide the winner in October.

Pro-Chávez forces have begun their assault on Capriles, focusing on his Jewish roots and sexuality, as well as questioning the legitimacy of Sunday's election. That fire is stoked by the flames of the ballot papers which have been burnt by the opposition.

This was to ensure that the vote was kept secret, given a history in Venezuela of anti-Chávez voter lists being allegedly used to fire government workers who appear on them, notably in a 2004 failed recall against Chávez.

One of Capriles' biggest challenges is the state machinery Chávez has at his disposal. There are rumors that Venezuela is to sell more bonds in the coming weeks. Last year total bond issuance was greater than the rest of Latin America combined. The money is to be spent on social projects, which critics say is just a method of buying votes.



Polar
Reuters revealed this week that a Barbados-based holding company, led by the same executives of one of the country's largest companies, is filing an arbitration claim against the Venezuelan government over the nationalization of a fertilizer project.

While US giants such as ExxonMobil (XOM) and ConocoPhilips (COP) have been battling against Venezuelan authorities for years in attempts to claim back billions of dollars worth of compensation for the nationalization of their assets, the newly unearthed case could set a precedent for Venezuelan companies seeking to settle similar disputes in international courts.

Beermaker and food producer Polar is Venezuela's biggest company and Chávez has long threatened to nationalize it. But its products are so popular in Venezuela that it could be a politically difficult move.

Oil to Syria
Reuters also revealed this week that Venezuela is shipping oil to Syria, helping the government crack down on civilian protests and offsetting sanctions from Western nations.

Chávez has long supported the world's pariah governents, from Libya's Muammar Gaddafi to Iran's Mahmoud Ahmadinejad, who recently joked with Chávez about building a nuclear bomb.

Chávez, standing next to ally and actor Sean Penn at the Presidential Palace yesterday, commented that Venezuela was free to sell oil wherever it liked. "Have we accepted that anyone impose conditions on us for selling oil to the United States, or anyone else in this world? We're free," he said.

Twitter: @jammastergirish
No positions in stocks mentioned.

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