Socialist President Nicolas Maduro won another six-year term in power over the weekend in a vote that western countries have widely denounced as illegitimate.
The victory hands Maduro sole ownership of the country's worsening economic crisis, as Bloomberg put it. The socialist regime ignored calls to suspend the vote, and even tolerated a challenge from former governor Henri Falcon, who won about 21% of votes in an election that saw 48% turnout among eligible voters. That's the lowest for a Venezuelan election since Maduro's predecessor, Hugo Chavez, upended Venezuelan politics in 1998.
Critics said the government had promised voters economic rewards - like a special unspecified prize - to win support from state workers.
Mainly poor Venezuelans were reportedly asked to scan state-issued "fatherland cards" at red tents after voting in the hope of receiving a "prize" promised by Maduro.
These cards are required for people to receive what little benefits the government gives them.
Meanwhile, Maduro described accusations of forced voting as "an insult to the people."
"How many times have they underestimated me?" Maduro, 55, called out to crowd of supporters outside the Miraflores presidential palace in Caracas.
"You have believed in me, and I’m going to respond to this infinite confidence, this lovely confidence."
"They say you were forced to vote, that you were coerced into voting - it’s an insult to the people!"
In Beijing, foreign ministry spokesman Lu Kang said the Venezuelan people should be left to handle their own affairs, and that everyone should respect the people's choice.
He added that China would "handle this in accordance with diplomatic convention."
Meanwhile, Florida senator Marco Rubio, a regular critic of Maduro whose constituents include many Venezuelan migrants, urged the US to isolate Maduro's government and said he supported "all policy options" to return Venezuela to democracy, according to Reuters. President Trump has said he won't rule out military action against Maduro.
The US won't recognize Sunday's election and has said that sanctions against the nation’s oil industry are under "active review," according to Deputy Secretary of State John Sullivan. Previously, sanctions have been levied against individuals involved in the country's government. But some worry that punishing the country's lifeline industry could have devastating effects on a population that's already suffering.
Maduro has blamed falling oil prices and a foreign conspiracy led by Washington for his government's failures. But as we pointed out last week, Venezuela's failures aren't due to oil prices - they are the fault of socialism.
For any economy to thrive, production must meet consumer demand. The available goods must be affordable to potential buyers. Venezuelans need approximately $150 per month to purchase a dozen of eggs.The averagemonthly income is $2.20, with a tiny stipend of government welfare. Citizens cannot afford to buy what is needed to live comfortably and healthy. That’s socialism. No centrally-run government has ever been able to create and produce efficiently.
Many of Venezuela’s shortages have been created by price controls – another popular socialist tactic. When the government determines prices instead of market forces, prices become artificially low. This creates a greater demand for the product than the seller can deliver at any kind of a profit. The seller is losing money with each sale. The results are the empty Venezuelan supermarket shelves.
The election board said Maduro received 5.8 million votes, compared to 1.8 million for Falcon, a former governor who broke with an opposition boycott to stand for election. Two of the country's most popular opposition leaders were barred from voting. And the election board is run by socialist loyalists, according to Reuters.
The government reportedly used ample state resources during the campaign and state workers were pressured into voting, which was decried as false by the European Union and several major Latin American countries.
Chile’s President Sebastian Pinera was scathing about Sunday’s vote. "Venezuela’s elections do not meet minimum standards of true democracy," he said. "Like most major democratic nations, Chile does not recognize these elections."
Panama said it would not recognize the result. But other leftist nations like Cuba and El Salvador sent their congratulations.
While this outcome was for all intent and purpose guaranteed, what is left of Venezuela's markets are deteriorating further now the result is known, with VENZ and PDVSA bonds tumbling..
Re-election of Venezuelan President Nicolas Maduro means "a messy debt default and restructuring is now inevitable," since he is unlikely to put a credible deal on the table, Capital Economics LatAm Economist Edward Glossop writes in report. Debt repayments after July looks "extremely challenging."
And as Bloomberg points out, Capital Economics also highlights that solutions to economic and humanitarian crisis are unlikely to be forthcoming, while escalations of U.S. sanctions seem inevitable
Dollarisation or IMF deal are unlikely; deficit monetisation, ultra-loose monetary policy will continue, with possible cosmetic tweaks to currency system
Restrictions on oil sector are "obvious" way to tighten U.S. sanctions regime, though there still appears to be some resistance within U.S. administration to implement them