While investors had largely given Venezuela's economic catastrophe the benefit of the doubt for the past two years as crude collapsed and the country's CDS soared to record highs only to normalize subsequently, yesterday bond investors got very nervous for the first time in a while, as the Venezuela 9.25% of 2027 bonds crashed on fears a presidential coup may be imminent after Wednesday's decision by the pro-Maduro supreme court to assume the functions of congress, in effect making Venezuela a Maduro dictatorship. The opposition promptly slammed the decision as a "coup" against an elected body and demanded army intervention, and the tipping point came when even a formerly pro-Maduro Attorney General, Luisa Ortega, slammed the "unconstitutional" usurpation of power.
One day later, the bond selloff, coupled with a dire surge in domestic anger and protests, as well as international condemnation, appears to have been sufficient to spook Maduro that this may be one of his last (bad) decisions because on Saturday morning, Venezuela's Supreme Court reversed its decision to strip congress of its legislative powers.
"This controversy is over ... the constitution has won," Maduro said in a televised speech just after midnight to a specially convened state security committee that ordered the top court to reconsider its rulings. The Supreme Court duly erased the two controversial judgments during the morning, the information minister said.
In an amusing twist, Maduro tried to cast the U-turn as his own personal achievement, one of a wise statesman resolving a power conflict, everyone and certainly his opponents said it was a hypocritical row-back by an unpopular government that overplayed its hand.
"You can't pretend to just normalize the nation after carrying out a 'coup,'" said Julio Borges, leader of the National Assembly legislature, quoted by Reuters. He publicly tore up the court rulings this week and refused to attend the security committee, which includes the heads of major institutions.
While the Supreme Court flip-flop may take the edge off protests, Maduro's opponents at home and abroad will seek to maintain the pressure. They are furious that authorities thwarted a push for a referendum to recall Maduro last year and also postponed local elections scheduled for 2016. Now they are calling for next year's presidential election to be brought forward and the delayed local polls to be held, confident the ruling Socialist Party would lose.
"It's time to mobilize!" student David Pernia, 29, said in western San Cristobal city, adding Venezuelans were fed up with autocratic rule and economic hardship. "Women don't have food for their children, people don't have medicines."
Venezuelan Bolivarian National guards officers are confronted by university students
during a protest outside of the Supreme Court in Caracas, on March 31, 2017
As mentioned yesterday, today the National Assembly plans an open-air meeting in Caracas, while South America's UNASUR bloc was to meet in Argentina with most of its members unhappy at Venezuela. The hemispheric Organization of American States (OAS) had a special session slated for Monday in Washington.
As Reuters adds, even before this week's events, OAS head Luis Almagro had been pushing for Venezuela's suspension, but he is unlikely to garner the two-thirds support needed in the 34-nation block despite hardening sentiment toward Maduro round the region.
That said, Venezuela can still count on support from fellow leftist allies and other small nations grateful for subsidized oil dating from the 1999-2013 rule of late leader Hugo Chavez. Maduro accuses the United States of orchestrating a campaign to oust him and said he had been subject this week to a "political, media and diplomatic lynching."
A woman wears a banner over her mouth with a message that reads in Spanish:
"Venezuela lives in a dictatorship" during a protest, in Caracas
Serious criticism even came from within government, with Venezuela's attorney general Luisa Ortega rebuking the court in an extremely rare show of dissent from a senior official. "It constitutes a rupture of the constitutional order," he said in a speech on state television on Friday.
The Supreme Court's decision helped to further galvanize resistance to Maduro, Pockets of protesters had blocked roads, chanted slogans and waved banners saying "No To Dictatorship" around Venezuela on Friday, leading to some clashes with security forces. Given past failures of opposition street protests, however, it is unlikely there will be mass support for a new wave. Rather, the opposition will be hoping ramped-up foreign pressure or a nudge from the powerful military may force Maduro into calling an early election.
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Meanwhile, the nation continues to disintegrate, with Reuters reporting that Venezuela's murder rate rose to an average 60 per day last year, up from about 45 per day in 2015, the attorney general's office said on Friday, as the country's worst economic and political crisis in history continues to claim victims Official data put the murder rate at 70.1 per 100,000 inhabitants last year, one of the highest in the world and up from 58 in 2015.
Violent crime is one of the most pervasive anxieties for Venezuelans, especially in poor slums dominated by gangs and rife with guns. Numerous state security plans and disarmament drives in recent years have failed to curb violence given easy access to weapons, police participation in crime, and high levels of impunity in the nation of 30 million people.
A brutal economic recession that has millions skipping meals has pushed more Venezuelans towards crime, according to officials, rights groups and neighborhood organizations. Recently, Venezuela - the country's with the world's largest proven oil reserves, ran out of gasoline.