CARACAS, Venezuela (AP) — President Nicolas Maduro weathered Venezuela's mayoral elections, winning the biggest share of votes and thwarting hopes of the opposition to undermine his rule, but now he faces a bigger challenge: fixing the economy.
Maduro's socialist party and its allies won a sizable majority of the districts up for grabs Sunday, taking 49 percent of the overall national vote compared with 43 percent for opposition candidates.
While the opposition made inroads in major cities, including taking control of the hometown of the late Hugo Chavez, it failed to capitalize on rising discontent with galloping inflation and worsening shortages to punish Maduro in his first electoral test since narrowly winning the presidency in April.
The results were no cause of celebration for Maduro, but provided a needed boost to his political standing and should quiet opponents who had hoped to gain momentum in the local elections to cut short his six-year mandate, said Diego Moya-Ocampos, a Latin America analyst at IHS Global Insight in London.
The question is for how long?
With inflation running at 54 percent, the highest in nearly two decades, and shortages of milk, toilet paper and other basic goods spreading, the risk of social unrest remains high, Moya-Ocampo said.
First on the agenda, economists say, should be a devaluation of the bolivar to help close a gaping budget deficit created by excessive spending at a time of declining oil production. Venezuela's currency is fixed at 6.3 bolivars per dollar, but it's trading at 10 times that amount on the black market.
So far, Maduro has publicly dismissed the need to alter Venezuela's strict currency controls, which economists say is fueling excessive demand for the dollar at the expense of investment and domestic manufacturing.
Consensus seems to exist within the government around the need to provide more flexibility to international oil companies that the government is working with to develop Venezuela's reserves, the largest in the world. More than 95 percent of the country's export revenue comes from oil.
After that, the policy outlook becomes murkier, as observers try to figure out who has the upper hand in Maduro's inner circle: the moderates he embraced at the start of his presidency or supporters of more radical measures that helped lift his approval rating in the final stretch of campaigning for the municipal elections.
In recent weeks, Maduro has managed to regain momentum by going after groups and businesses he accuses of waging "economic war" against his socialist government. Among the most popular were the seizure of dozens of retailers and the slashing of prices on plasma TVs, refrigerators and other appliances.
In a triumphant speech late Sunday, the president promised more measures to protect the poor in the coming days, including a drive to keep food prices low.
"Having turned a dire situation into a victory in under a month, my fear is he now will say, 'I know what works,'" said David Smilde, a longtime observer of Venezuela who is now a senior fellow at a U.S. think tank, the Washington Office on Latin America.
Associated Press writer Fabiola Sanchez contributed to this report.