04/17/2013 04:22 pm ET Updated Jun 17, 2013

Are Maduro's Days Numbered After the Election?

The April 14th presidential election ended up being a close-run contest, with the government candidate Nicolás Maduro securing a narrow victory against his rival, the opposition's Henrique Capriles. With the official vote count now complete, Maduro secured 50.8 percent, barely ahead of Capriles' 49 percent. The results were much closer than the opinion polls had suggested. With Hugo Chávez imploring the public to vote for Maduro shortly before his death from cancer last month, most pollsters had predicted that he would breeze through with a cushion of at least ten percentage points. So why was the margin of victory so slim and what does this tell us about Maduro's chances of hanging on to power once the memory of Chávez fades?

The fight continues but for how long?

If the president-elect is worried about his diminished political mandate, he is not showing it. Celebrating his victory, he vowed to continue Chávez's legacy, declaring that "the fight continues". But behind this facade, Maduro has serious cause for concern. His predecessor typically won presidential elections with a margin of over 20 percentage points over his various rivals; even in last October's contest - the closest of Chávez's political career - he still won by over 10 percentage points. To add insult to injury, voter turnout was high. This usually benefits the government, with the large pool of 'undecided voters' that are neither hard-line chavistas nor pro-oppposition tending to vote for the ruling PSUV. But this time around, greater numbers shifted to the opposition camp.

Perhaps inevitably, the opposition is taking advantage of these developments by urging a full re-count, claiming that voting irregularities in thousands of polling stations have brought the official result into question. These efforts are likely to fall on deaf ears. The official electoral agency, the CNE, is politically independent in name only and is highly unlikely to bow to the opposition's demands. Reports that ballot boxes are being burned already will only fuel the opposition's anger and raise serious doubts among Venezuelans about the legitimacy of Maduro's victory. Large demonstrations across the country are likely in the coming days, although these will not delay Maduro's scheduled inauguration this Friday.

A bulging in-box

The most pressing problems facing Maduro are related to the economy. While some of Chávez's social programmes helped reduce poverty and income inequality, the oil bonanza was not efficiently managed amid widespread corruption and weak institutional capacity. Oil revenue was channelled off-budget and spent at the government's discretion and with no institutional oversight. This created massive captive liquidity in the domestic economy, which fuelled inflation. The authorities responded by putting in place capital controls (essentially to prevent the currency from weakening) and price controls on basic food items. In turn, this has spawned a massive black market and has resulted in food shortages. And with the government nationalising key industries, investors have run a mile. In an era when funds have flowed rapidly into emerging economies, Venezuela stands apart, recording year-after-year of large-scale capital flight.

There are no quick fixes for the Venezuelan economy and putting it on the road to recovery would test even a popular leader with ample political capital. It remains unclear how Maduro intends to tackle these challenges in the months ahead. The only promise he made during the presidential campaign was for a 40% increase in the minimum wage, which will further fan the inflationary flames. He has spoken repeatedly about continuing Chávez's legacy, but the problem is that it was never particularly clear what '21st century socialism' constituted, even when Chávez was alive.

Puppet on a string

Complicating matters, Maduro's fellow party members are acutely aware of their leader's innate vulnerability and will be jostling for position. On the right of the PSUV, the chairman of the national assembly, Diosdado Cabello, is a powerful figure and wields significant influence over the economy, including both nationalised companies and private industry. On the left of the party, Elias Jaua (vice president until Chávez's death) is another powerful figure. Together with other senior party figures, they will seek to extract concessions from Maduro, who risks becoming a puppet leader. However, with deepening divisions within the PSUV, it is hard to see how he will be able to placate the entire party.

Capriles will also have a key role in determining how long the new administration lasts. His standing -- and that of his party, the unfortunately-named MUD (Mesa de la Unidad Democratica, or Democratic Unity Roundtable) -- has risen sharply in recent weeks. Many would even go so far as to say that Capriles has come out of the election as more of a winner than Maduro. Going forwards, rather than solely criticising the new administration, the opposition needs to portray itself as a government-in-waiting. During Chávez's tenure, this is something that it patently failed to do, partly reflecting deep divisions within its own ranks. But now there is more incentive than ever for the opposition to stay united behind Capriles. Even if there is no election before 2018, it is clear that 'chavismo' will not outlive its name-sake for long. The opposition may have to play the waiting game for just a little bit longer.

Kate Parker is Senior Editor/Economist Latin America for the Economist Intelligence Unit.