Chavez Foe Sees Imitation as Path to Venezuela Presidency

Capriles has emerged as an unlikely electoral rival to Hugo Chavez. Source: Office of the Governor of Miranda via Bloomberg

Capriles' state government offers slum dwellers micro credits to improve their homes. Source: Office of the Governor of Miranda via Bloomberg

As Miranda state governor Capriles has embraced social work projects similar to Chavez’s “missions,” which provide slums with free health clinics, literacy classes and subsidized food. Source: Office of the Governor of Miranda via Bloomberg

Henrique Capriles Radonski, whose family members own Venezuela’s biggest movie theater chain, is emerging as President Hugo Chavez’s strongest rival in 2012 elections by copying his favorite ploy of lavishing public money on the poor.

Since defeating a Chavez ally to become governor of Miranda state in 2008, Capriles has set up more than 70 free health clinics in poor neighborhoods and provides subsidized food to poverty-stricken families. His government also offers slum dwellers micro credits to improve their homes.

These programs have helped the 38-year-old become the most popular of potential candidates in next year’s presidential race, according to a poll by Caracas-based Consultores 21. His actions exemplify a new generation of politicians seeking to defeat Chavez by emulating policies that have kept the self- proclaimed socialist in power since 1999, said Michael Shifter, president of the Washington-based Inter-American Dialogue.

“There’s clearly been an evolution in strategy,” Shifter said in a phone interview. “Before it was just ‘get rid of Chavez,’ and now there’s a recognition that there’s a reason why he has been in power for 12 years and retains considerable support despite such disastrous governance.”

Capriles last month declared his intention to represent the Justice First party in a Feb. 12 primary that will select a single, coalition candidate to run in next year’s election.

Ahead in Survey

He had a 55 percent approval rating in a survey of 2,000 people taken by Consultores 21 from March 11 to March 25. His closest rival, Leopoldo Lopez, a former mayor of the Caracas municipality of Chacao, had 49 percent while Chavez had 45 percent, according to the poll, which had a margin of error of 2.24 percentage points.

Information Minister Andres Izarra wasn’t available to comment on whether Capriles is imitating Chavez as he is accompanying the president on a trip to Cuba, Oscar Lloreda, director of international media, said in an e-mail.

No date has been set for next year’s elections.

Chavez, 56, remains the candidate to beat even as his support wanes, said Shifter. The former army paratrooper deepened what he calls his “21st century socialist revolution” after winning a second term in 2006 by nationalizing companies in the oil, food and mining industries. His policies halved Venezuela’s poverty rate to 28 percent of the population in 2009 from 55 percent in 2002, according to government statistics.

Economic Expansion

Venezuela’s economy expanded at a 4.5 percent annual rate in the first quarter of 2011, the most in almost three years, as increased public spending lifted South America’s biggest oil producer out of a two-year recession that was the region’s longest following the 2008 collapse of Lehman Brothers Holdings Inc. Consumer prices rose 2.5 percent in May from April and 22.8 percent from a year earlier, the most among 78 economies tracked by Bloomberg.

The extra yield investors demand to buy Venezuelan government bonds instead of U.S. Treasuries was 1,134 basis points at 6:15 p.m. New York time, the most of any developing nation in JPMorgan Chase & Co.’s EMBI+ index. Venezuela’s bonds yielded 963 basis points more than those of Brazil, according to the index.

Chavez, who introduced currency controls in 2003, on Jan. 1 devalued the bolivar for the second time in a year by eliminating the preferential rate for so-called essential goods such as food and medicine by 40 percent, to 4.3 bolivars per dollar from 2.6, unifying the two fixed foreign exchange rates.

Door-to-Door

Capriles said he plans to woo voters loyal to Chavez by campaigning door-to-door across the country. While Chavez used a similar strategy to confound pre-election predictions of defeat when he first came to power in 1999, Capriles said he isn’t aping his adversary.

“I’m not seeking to imitate anyone,” he said in an interview last month during a break in a tour of a poor barrio of Ocumare del Tuy, a town 70 kilometers (40 miles) southeast of Caracas. “I am who I am.”

It’s not just Chavez’s folksy style that Capriles is emulating. As Miranda state governor he has embraced social work projects similar to Chavez’s “missions,” which provide slums with free health clinics, literacy classes and subsidized food. He also joined Chavez last month in condemning U.S. sanctions against state oil company Petroleos de Venezuela SA for doing business with Iran.

Nabisco, Cinemas

Little in Capriles’ upbringing would suggest he’d identify with ordinary Venezuelans or champion the poor. His Jewish grandfather, who emigrated to the overwhelmingly Catholic country from Poland after World War II, founded the local unit of East Hanover, New Jersey-based Nabisco Inc. Members of his family also own Suramericana de Espectaculos SA, or Cinex, the country’s largest cinema chain by number of theaters, he said.

As he stumped in Ocumare del Tuy clad in jogging pants, sneakers, a baseball cap and with rosary beads round his neck, Capriles said that he would end Chavez’s expropriation policies and foster economic growth by giving workers stakes in state- owned enterprises. His policies to eradicate extreme poverty are modeled on those pioneered in Brazil by former President Luiz Inacio Lula da Silva, he said.

Twice mayor of the predominantly middle-class municipality of Baruta, in Caracas, Capriles became the youngest president of Venezuela’s Congress at age 26. He was jailed for four months on charges of leading a mob that attacked the Cuban embassy in the capital during a failed coup against Chavez in 2002.

‘Flagrant Violation’

Capriles said he was trying to calm demonstrators by acting as an intermediary. His case was thrown out for lack of evidence and reopened four times by lower court justices. It remains open. The Caracas-based Venezuelan Program for Education-Action in Human Rights, or PROVEA, said his case is a “flagrant violation of the right to a speedy trial.”

Capriles’ presidential bid comes as Chavez’s approval rating is at its weakest point in eight years, according to Consultores 21.

Still, Chavez remains a formidable campaigner and is already boosting spending made possible by higher oil prices and a rebound in economic growth, said Asdrubal Oliveros, director of Caracas-based economic research firm Ecoanalitica.

A new windfall tax on oil companies may raise as much as $16 billion, and if oil prices remain high, Chavez will have as much as $45 billion to spend on social programs, salary raises and public works in the next two years, he said.

The average price of Venezuelan crude oil has risen 33 percent this year to $96.68 a barrel from $72.69 a barrel in 2010, according to the Energy and Oil Ministry.

Extra Spending

Lawmakers approved Chavez’s request today to extend Venezuela’s debt ceiling for 2011 by 83 percent to $23 billion to boost spending on housing, job creation and responding to damage caused by heavy rains.

“If Chavez loses it won’t be for lack of money,” Oliveros said in a phone interview.

On April 30, Chavez initiated a mission to eradicate a housing deficit estimated at 2 million units. More than 1.2 million families have signed up, according to the government.

The extra patronage may help Chavez repeat the feat of 2006, when he won re-election with 63 percent of the votes after seeing his approval rating sink to as low as 36 percent in 2003 when a nationwide strike caused the economy to shrink by 27 percent in a single quarter.

The contest for the presidency will be tight and there are growing indications Chavez is losing credibility, even among his sympathizers, Daniel Kerner and Risa Grais-Tragow of the New York-based political risk research firm Eurasia Group wrote in a report circulated yesterday.

Crime, Inflation

“Since the country’s main problems, including crime, inflation, deteriorating economic conditions and a polarized political environment are unlikely to improve, it is unlikely that Chavez can significantly reverse these trends,” the report said.

Chavez, who has accused the opposition of being “lackeys of the U.S. empire,” may try to exploit Capriles’s family wealth to discredit him with the poor, said Shifter.

So far, though, Capriles’s background hasn’t distanced him from the townspeople of Ocumare del Tuy, where dozens of women mobbed him as they clamored for him to sign letters endorsing his promise for micro-credits.

So popular has the program become, said Capriles, that after his walking tours of poor neighborhoods “I sometimes even find letters stuffed down my underpants.”