Business risks remain high following Chavez’s death

Long-term political instability is expected to mar Venezuela following the death of its president Hugo Chavez (pictured) this week, according to forecasters.

A new risk report from Maplecroft states that business risks are expected to remain high though short-term political risks are low.

Vice-president Maduro is “highly likely” to win a snap election and serve out the current presidential term (2013-2019), according to the report. This will ensure the formal emergence of ‘Chavismo without Chavez’, which may even evolve into a longstanding political movement akin to Peronism in Argentina.

The report also said that the PSUV (the United Socialist Party of Venezuela) has the potential to fracture without Chavez’s unifying authority, and warns the emergence of internecine conflict within the government should not be ruled out over the medium to long term.

While Maduro’s leadership appears to have been widely accepted, there are three distinct factions within the PSUV – the military wing, the labour movement, and the left-wing hard-core ideologues – that may compete for increased influence over the party should Maduro’s popularity begin to wane.

“A significant improvement in the business environment is therefore unlikely in the short to medium term, as the government is highly likely to maintain its strong stance on economic intervention and asset expropriation,” the report concludes.