Venezuela Back From Brink as Top Court Reverses Shock Ruling

by Andrew Rosati , Noris Soto , and Fabiola Zerpa

March 31, 2017, 12:13 PM GMT-4 April 1, 2017, 11:51 AM GMT-4

• Move may tamp down fears oil producer sliding to dictatorship
• Maduro rejects overseas ‘meddling’ into Venezuela’s affairs 
   
  Venezuela’s top court reversed its decision to strip power from the opposition-led National Assembly in favor of the ruling socialist party, a move that critics say had driven the oil-producing nation to the brink of dictatorship.
  President Nicolas Maduro announced the court’s move -- statements that removed earlier rulings transferring the assembly’s functions to the court -- on state television on Saturday. The decision came a day after the nation’s top prosecutor, a Maduro ally, labeled the Supreme Court’s March 29 move unconstitutional.
  Maduro applauded the decision while warning regional leaders he wouldn’t accept any “meddling” into domestic affairs. He said he rejected “vulgar interventions” by foreign governments “that make demands on Venezuela while their countries are up in flames,” an apparent reference to protesters in Paraguay setting that nation’s congressional building on fire Friday night.
  The court’s reversal came as small demonstrations flared across the capital for a second day amid calls from opposition leaders for the military to step in and “restore” constitutional order. “Here there was a coup d’etat and the streets must not go silent given this action that cannot be erased by a stroke of a pen,” National Assembly Vice President Freddy Guevara said in an emailed statement.
  

  Ravaged by an economic depression and food shortages for years, Venezuela has been on tenterhooks since the Supreme Court’s ruling further stoked claims by the opposition and foreign countries that Maduro is moving the government toward a dictatorship. Worried investors have dumped the government’s bonds, and opposition leaders sought to capitalize on the chaos by calling on the military to  “restore” constitutional order.
  

  

  Anti-government student demonstrators clash with national guard officers during a protest on Friday, March 31.

  Photographer: Carlos Becerra/Bloomberg

  The top court’s earlier move drew criticism from the U.S., Brazil, Colombia and Argentina, among others, while the Organization of American States labeled it a “self-coup.” Washington-based OAS scheduled a special meeting on Monday to review the events in Venezuela, convened at the request of more than a dozen member states.
  Guevara called for Saturday’s demonstrations to become the beginning of “non-violent, organized and sustained protest with which we exercise the necessary pressure to achieve change.”
  Friday’s comments by prosecutor general Luisa Ortega Diaz -- that the court ruling “ruptured” Venezuela’s constitutional order -- were an almost unheard of public condemnation by a high-ranking government official of the direction the faltering country is heading. Maduro has long sought to use the courts to prevent congress from challenging his rule.
  

  

  Luisa Ortega Diaz

  Photographer: Juan Barreto/AFP via Getty Images

  “It’s my duty to manifest concern of such event,” Ortega Diaz, who was appointed to her post a decade ago by the late Hugo Chavez, said to applause at a press conference in Caracas on Friday. Clutching a copy of the constitution, she called on Venezuelans to overcome political differences “so that democratic paths can be taken that respect the constitution and foster an atmosphere of respect and rescue plurality.”
  The public rebuke by the nation’s top prosecutor was, perhaps, the clearest sign yet that support is eroding for Maduro within the dominant socialist party that his mentor Chavez assembled over the last two decades. Analysts noted that high-ranking ruling party members have long presented a unified front, despite years of political unrest and economic hardship.
  “This clearly constitutes a milestone in recent political Venezuelan history,” said Angel Alvarez, a political consultant.
  Facing mounting criticism at home and abroad, Alvarez said Ortega Diaz’s comments suggest “there are much deeper internal conflicts within Chavismo than we are able to see.”
  

  

  Friday’s events heightened investor concern that the fractured country is headed for default. Some said they worried that while Maduro has so far insisted on meeting foreign bond payments amid the economic collapse, a further escalation of the crisis may erode that determination. The government’s benchmark bond due in 2027 declined 3.3 cents to 46.2 cents on the dollar in, the biggest decline in two years, according to data compiled by Bloomberg. Bonds issued by the cash-strapped state oil company PDVSA, which has $2.5 billion of debt maturing next month, also fell. Its securities due in 2035 sank to 43.2 cents on the dollar.