Parallel government emerging in Venezuela: Update

Adds bondholders' statement.

A parallel opposition government is emerging in the wake of Venezuelan president Nicolas Maduro´s disputed re-inauguration yesterday in Caracas.

Juan Guaidó, who was elected president of the opposition-controlled National Assembly on 5 January, declared at a public rally today that he is assuming the executive powers of the presidency based on three articles of Venezuela´s 1999 constitution.

Today´s development compounds pressure on western oil companies that have oil and gas assets and operations in Venezuela. The Opec country´s oil production has plummeted over the past year, but the state-owned industry is seen as a central component of a future reconstruction campaign.

Venezuela's many jilted creditors are hoping that a transitional government will implement a comprehensive debt restructuring. In a statement issued today, New York-based bonderholders´committee said it considers the assembly to be "the only legitimately elected body in Venezuela and wishes to underscore its position that, consistent with OFAC sanctions, it will not negotiate with the current regime," adding that it plans to keep channels of communication open with "all non-sanctioned stakeholders" in anticipation of a restructuring and economic reform program "under a domestically and internationally legitimate government."

Maduro´s re-inauguration to a second six-year term was condemned as illegitimate by over 50 countries including the US, Canada, EU, the Lima Group and the Organization of American States (OAS). The ceremony officiated by the government-controlled Supreme Court, rather than the National Assembly as instructed by the constitution, triggered more targeted international sanctions on senior Venezuelan officials, on top of US financial sanctions imposed in August 2017.

"I invoke Articles 233, 333 and 350 of the constitution of the Bolivarian Republic of Venezuela to call immediate free elections, and for the unity of the people, armed forces and international community to end the usurpation" of Maduro, Guaidó declared at the rally of hundreds of Venezuelans held outside the UN office in Caracas today.

Article 233 says the head of the assembly will assume the presidency until new elections are held whenever the sitting president is incapacitated, abandons the presidency or the popular will revokes his mandate.

The assembly already has declared Maduro's second government to be illegitimate, but likely will issue more resolutions to that effect before a scheduled 23 January march aimed at forcing Maduro out of office. The evocative date recalls the 1958 ouster of Venezuela´s former dictator Marcos Pérez Jiménez.

Article 333 says the constitution is valid and prevails even when it is ignored or revoked unconstitutionally.

A legislative aide to Guaidó said his declared assumption of executive powers is intended to block any attempt by the government-controlled National Constituent Assembly (ANC) and Supreme Court to replace the 1999 constitution with a new charter and dissolve the assembly before its constitutional term ends in 2021.

Article 350 says the people of Venezuela will disavow and reject any government contrary to Venezuela's democratic values and principles.

The opposition is hoping the march will compel Maduro to peacefully resign and transfer power to the assembly until new elections are held in a 30-day period.

Guaidó emerged from relative obscurity in recent weeks, the latest in a long line of opposition figures, many of whom are behind bars or in exile. Guaidó is younger and is seen as less encumbered politically than his predecessors.

The military´s stance will be critical to determining the fate of this latest effort to dislodge Maduro. Guaidó called on the armed forces to support the people's march and urged Venezuelans to take the streets to reclaim their democracy.

Venezuela´s top military brass holds senior positions in the Maduro government and has been loyal to him since he came to power in 2013, following the death of former president Hugo Chavez. But rank and file troops suffer the same deprivations of food, medicine and basic services as ordinary Venezuelans do.

Guaidó's announcement could spark another violent government crackdown on the long-divided opposition.

There was no immediate response from the presidential palace to Guaidó's announcement.

Constituent assembly president Diosdado Cabello, part of Maduro´s inner circle, has threatened physical harm against Maduro's opponents, warning last week that anyone who tries to force Maduro from power will be treated as "an enemy invader and traitor."

A senior member of the Voluntad Popular (Popular Will) party tells Argus that Guaidó is aware of the "life-threatening" risks of his initiative, but said it was his "only option".

"Keeping silent and not invoking the constitution's authority to strip Maduro of his executive powers would have been a surrender to the dictatorial status quo and would have buried any chance of restoring democracy for years to come."