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Venezuela on edge ahead of parliamentary elections

Venezuela looks more and more like a powder keg as its parliamentary elections draw near.

Demonstrations have wracked the country this year in even greater numbers than normal. A government prosecutor fled the country in October and claimed that the state pressured him to falsify evidenceagainst the top opposition leader. And just last week, Luis Manuel Diaz, secretary of the opposition Democratic Action Party, was gunned down at an event in central Venezuela. Democratic Action Party leaders pinned blame on President Nicolas Maduro's United Socialist Party. The ruling party, in turn, has denied any involvement in the killing and blames gang elements.

Students take part in a rally against President Nicolas Maduro's government in Caracas on Nov. 21, 2015.
Carlos Garcia Rawlins | Reuters
Students take part in a rally against President Nicolas Maduro's government in Caracas on Nov. 21, 2015.

Events like that one, coupled with the Venezuela's shattered economy, could lead to more violent episodes, said Reggie Thompson, Latin America analyst at geopolitical advisory firm Stratfor. Maduro, the former bus driver who inherited the reins of power from Hugo Chavez after the leftist dictator's death in 2013, is fighting for his political life as supporters switch sides or lose interest in politics altogether.

"You have to remember that a lot of the groups in the past that have been a source for political violence in Venezuela have been pro-government patronage networks that are referred to as Colectivos. These guys follow a top-down structure, obeying direct orders from regional bosses," Thompson said. "It's quite plausible that the attack a few days ago was the work of one of these Colectivos."

"When you've got a situation of more people out on the streets, and you've got these guys slowly being activated ahead of the vote, then you do get the opportunity for violent incidents like this to happen."

"Maduro is known as someone who doesn't like to give up power." -Jason Marczak, deputy director, Adrienne Arsht Latin America Center, Atlantic Council

Venezuela is scheduled to hold elections on Sunday, and it may be one of the most competitive elections the country has seen recently, Thompson said.

"Opinion polls over the last year really, have shown the party trailing the opposition," he said. The opposition has "been leading in some places by as much as 30 points, so it's pretty clear at this point that the opposition stands a chance of winning quite a few seats."

The election has drawn closer as Maduro's popularity — now registering at a 20 percent approval rate — has plummeted along with the economy. Falling oil prices and mismanagement of the economy have drowned Venezuela in rampant inflation, calculated at around 100 percent, although official figures have not been published since December 2014.

Oil prices have fallen more than 40 percent in the last year amid a rising dollar and a worldwide supply glut, and sliding energy revenue has drained the country's coffers. Venezuela is a major producer and a member of OPEC, but the nature of the oil formations in Venezuela make crude more difficult and expensive to extract there than it is in most regions.

The Organization of the Petroleum Exporting Countries is scheduled to hold its annual meeting on Friday, and Venezuela is expected to try and persuade other cartel members to cut production. But Thompson said Venezuela will have a hard time doing so, since its influence over the bigger oil-producing countries is very limited and countries like Saudi Arabia are determined to keep pumping oil at a fast pace even as over-production has kept prices low.

"What's generating this political crisis is the deterioration of the economy," said Diego Moya-Ocampos, a senior political risk analyst for IHS, a Colorado-based research firm. "As the economy keeps deteriorating, the political stability will keep deteriorating."

Still, "support [for the opposition] would not necessarily translate into the number of seats won by the opposition," said Jason Marczak, deputy director of the Adrienne Arsht Latin America Center at the Atlantic Council, a Washington-based think tank.

Maduro's party has been able to gerrymander the districts so that the ones where it's strongest hold the most seats, Marczak said. Nonetheless, the coming elections will serve not just as a gauge of Maduro's popularity, but also his ability to continue Hugo Chavez's legacy, Moya-Ocampos said.

"If he doesn't show he has the capacity to keep the different 'Chavismo' factions unified, then you're going to see more noticeable divisions [within the party]," he said.

"From where Maduro is sitting, the ideal result would be to hold on to his majority in Congress or, if he loses the majority, to only lose it by a little bit. You have to remember that, depending on how many seats the opposition gets, they could get some real congressional power," Thompson said.

An opposition win could, however, would compel Maduro and his party to try and undermine the vote, Marczak said. "Maduro is known as someone who doesn't like to give up power."

'I'll sell my vote to the best bidder'

The Venezuelan political opposition is not leading because of a shift in voters' intention, but because a great number of the traditional supporters of the Chavista government are likely to stay away from the polls next Sunday, analysts say.

"The greatest threat to the government is that its supporters hide and don't get out to vote," said Oswaldo Ramirez, director at ORC Consultores, a political consulting firm in Venezuela. "They may still say, 'I am a Chavista, but I don't want to vote for you now because you're responsible for this economic crisis.' "

Venezuelan voter Javier Gonzalez is one of those members of the electorate that Ramirez refers to. He doesn't support the current government but does not like the opposition either. His vote is up for sale, he said.

"I'll sell my vote to the best bidder," Gonzalez wrote in Spanish to CNBC via email. "I am not with the Maduro government now. I was a supporter when Chavez governed. I am not with the conservative party either, but if they pay me, I will sell my vote."

Gonzalez said he doesn't believe either the current government or the opposition could fix Venezuela's economy.

"The government isn't showing much interest in taking the necessary measures, and the opposition just wants to be in power to remove Maduro through a coup d'etat, so I don't believe there will be a solution in the short run," he said.