October 05, 2012 8:40 AM
CARACAS - As Venezuela gears up to vote in what is being described as one of the country’s most important presidential elections in a generation on Sunday, lawyers in Caracas say they are optimistic that a change of government is on the horizon, but note that a pro-Chávez majority in the legislature means that any legal reforms are likely to be slow-paced and difficult.
Capriles says he will open Venezuela to foreign investment should he win Sunday's election.
With less than 48 hours to go until voting booths open across the country, the majority of polls still give incumbent socialist president Hugo Chávez a slight lead over presidential challenger Henrique Capriles, although many onlookers are not ruling out a late surge of support for 40-year old lawyer – which could see the first change in government in 14 years.
“What we have seen from the campaign of Henrique Capriles, the candidate of the opposition in Venezuela, is almost unprecedented in terms of popular enthusiasm and national reach,” says Araque Reyna Sosa Viso & Asociados partner Manuel Reyna, who points to Capriles’ final rally in the north-western city of Barquisimeto, which attracted tens of thousands of his supporters. “In stark contrast, the campaign of President Hugo Chávez has been unusually erratic, presumably due to his well-known health issues.”
With Chávez’s widely-publicised battle with cancer limiting the telegenic president’s public appearances, Capriles’ coalition of more than 30 opposition parties has been able to launch a nationwide campaign that has contributed to one of the tightest presidential races in Venezuela in over a decade.
Capriles, a self-described “centrist” and “humanist”, says he would actively court foreign investors – a huge shift in direction from the state intervention seen in Venezuela under the banner of Chávez’s socialist Bolivarian Revolution. Chávez, meanwhile, has promised to end homelessness in Venezuela, tackle inequality and become number one in health and education in Latin America if he is elected for his third consecutive term.
Should a change of government occur on Sunday, Venezuela’s lawyers warn of a difficult time ahead in reshaping the country’s legal landscape after 14 years of unprecedented government intervention that has seen Chávez expropriate a host of foreign companies in Venezuela and withdraw from ICSID, the World Bank’s investment dispute centre.
“Mr. Chávez has promulgated hundreds of laws, many of which are unconstitutional or have unconstitutional provisions,” says one law firm partner who declined to be named for fear of becoming "cosmic dust" should Chávez be reelected. “I believe that a new government will try to manage without changing legislation as far as that may be possible, because the National Assembly is controlled by the current government, even though the opposition got more votes in the election of deputies, it got less seats through massive gerrymandering”.
But he also thinks that Capriles’ encouragement of foreign investment will have an “immediate positive effect”, that will see public projects that have been delayed or suspended restarted, alongside increased transparency in the government procedures. “A moderately efficient and honest administration should be able to put order into the country’s finances and Capriles has proved, as governor of one of the largest Venezuelan states…that he knows how to do it,” he adds. Capriles is the former governor of Miranda state and has also practised as a lawyer at Hoet Peláez Castillo & Duque and Nevett Mezquita Abogados (now Bermúdez Nevett Mezquita López).
With investors confident that a change of government would lead to increased economic opportunities in Venezuela, many firms are already reporting a slight increase in work driven by increased interest from multinational companies about the potential economic gains that could arise by Capriles’ pledge to open up the country to foreign investment.
Another senior partner who declined to be named, says that many of his long-term clients have already expressed interest in boosting investment in the country should legal stability be re-established.
“A large majority of our clients have had excellent results until two years ago until the “crisis” started affecting the economy,” he notes, pointing to a wave of foreign expropriations that discouraged investment. “Over the last 14 years we have seen old players in areas such as infrastructure be replaced by new players, mostly Chávez’s friends,” he says, a development that has led that has led to a fall in large-scale infrastructure projects.
The increased confidence displayed by members of Venezuela’s business and legal communities has been demonstrated by law firms investing in advance of the elections. Monday saw Hoet Peláez announce the appointment of new tax partner Jesús Sol Gil, while Hogan Lovells (Venezuela) hired Diogenes Bermudez as counsel from Petrobras’ in-house team. Both firms say the hires are strategic moves to take advantage of increased workflow and future growth should Capriles be elected.
In August, Araque Reyna added two partners and an associate to its public law department from disbanded firm Bolinaga Levy, Márquez & Canova, two weeks after D'Empaire Reyna Abogados hired three new partners from the same firm to boost its tax, labour and environment practice areas.
“Our firm has led a conscious and well planned restructuring effort aimed at being in the strongest possible position when facing potential political changes in Venezuela,” says Araque. “If there is a new government in place, political evolutions are expected, and changes in legislation may come sooner than estimated.”
How such strategies will play out will be clearer come Sunday.