US keenly, but discreetly watches Venezuela vote

Washington (AFP) - The outcome of Venezuela's legislative elections on Sunday, when the political left is in real danger of losing its majority for the first time since 1999, could greatly impact ties with the United States.

How will depend on the extent of the opposition's gains and how the socialist government of President Nicolas Maduro reacts to it, observers say, amid fears that violence and unrest could break out.

Surveys show that opposition candidates are likely to make substantial inroads in Venezuela's single-chamber National Assembly, where all 167 seats are in play.

US officials are keeping a discreet eye on developments, but are wary of giving Maduro an excuse to rally support by railing against US "imperialism" -- even if the US is Venezuela's main export market.

In many ways, Sunday's vote is a referendum on Maduro -- the handpicked successor to late president Hugo Chavez -- and his economic policies.

Maduro has just a 22 percent approval rating, according to a Datanalysis survey, and Venezuela is enduring a 200 percent annual inflation rate (only 85 percent, according to the government), a contracting economy and a shortage of basics that range from toilet paper to canned goods.

Venezuela may have the world's largest proven oil reserves, but its oil hit a seven-year low of $34.05 a barrel this week. The country relies on oil exports for 96 percent of its hard currency.

- Margin of victory key -

"The opposition's margin of victory will define what will happen after the elections," both internally and regarding the United States, said Peter Schechter at the Atlantic Council think tank, based in Washington.

Given the sweeping powers granted to the executive, Maduro's grip on power would not be directly threatened even with a loss of the Assembly, experts say -- and could even be a blessing in disguise for him.

"Losing control of the National Assembly could provide Maduro's government and Chavismo a partner in governing at a time when difficult choices will need to be made," said John Walsh with the Washington Office on Latin America (WOLA).

A darker scenario would occur if the opposition makes especially strong gains and the government hunkers down, radicalizes, and claims that the gains are due to US support.

If the Venezuelan government believes "that a real crisis they can generate with the US would help them through a volatile period," then relations with Washington "will deteriorate quite rapidly," said Eric Farnsworth with the Council of the Americas, a pro-free trade and democracy business group.

Equally important is any power shift within the leftist government following an especially strong opposition victory.

For Schechter, "a redistribution of power" within Maduro's socialist party "could be stormy" if their leaders panic.

- Close observer -

Washington and Caracas have had frosty ties ever since Maduro's late and more popular predecessor Chavez came to power in 1999. The two countries have not exchanged ambassadors since 2010.

Despite years of sometimes angry rhetoric Venezuela is an important source of oil for the US market, and the United States is the country's most important oil customer.

Over the past year both sides have quietly sought to defuse tension.

President Barack Obama briefly met Maduro at the Summit of the Americas in April, and later sent diplomat Thomas Shannon to Caracas to open a direct communications channel that both sides appear willing to keep open.

It would be a "mistake" for Washington to show favorites in the vote, Schechter said.

US officials "will say that democracy includes different points of view, and that an assembly dominated by the opposition formalizes the expression of multiple opinions."

"To say more than this would be a mistake," Schechter said.

For Farnsworth, Washington "will also be forced to say something if the elections are clearly stolen or clearly there are cases of fraud."

The US State Department's comments on Friday were fairly neutral.

"All Venezuelans deserve to have full confidence in the important elections on December 6 and their outcome," said Elizabeth Trudeau, head of the State Department Office of Press Relations.

"The US government supports free and transparent elections so the will of the Venezuelan people is reflected in the final results. It is up to the people of Venezuela to elect their parliamentary representatives."