The results of the September 26, 2010, National Assembly elections in Venezuela were very interesting for the country’s future. Although claiming over 52% of the votes, the opposition managed to obtain only 38% of representation in the Assembly. This disparity was a result of the new electoral law, which re-allocates vote representation in the different states. Without two thirds of the Assembly, President Hugo Chavez will have to reach consensus with the opposition in order to approve major laws, enhancing political debate in the country and addressing concerns of a greater share of the population.
However, the new Assembly will come to power in January 2011, so Chavez will enjoy three more months to pass any legislation he sees fit to enhance his socio-political project. Furthermore, the drop in popularity of the government will incentivize an increase in social spending ahead of the presidential election in 2012. However, we see the election results as a positive dynamic for Venezuela, as it shows a greater share of the population is clearly dissatisfied with the current management of the country and perhaps, through one sector or another, the implementation of long term structural changes may be on the books.
Editor’s Note: This post is excerpted from a much longer analysis available exclusively to RGE Clients, LatAm Focus: Brazil’s and Chile’s Authorities Show Discomfort with FX Dynamics
All rights reserved, Roubini GlobalEconomics, LLC