Can Venezuela Arrest its' Way into Prosperity?

from Bloomberg

(Bloomberg) -- The opposition mayor of Caracas was detained by Venezuelan intelligence police as President Nicolas Maduro, struggling to control inflation and a shrinking economy, steps up allegations of plots against his government.

Mayor Antonio Ledezma was arrested Thursday afternoon, one day after government opponents marked the anniversary of the arrest of Leopoldo Lopez, another opposition leader. Officers fired in the air and hit Ledezma before taking him away without a warrant, said Congressman Richard Blanco of Ledezma’s Alianza Bravo Pueblo, who was present when police arrived. He joins Lopez and at least two other opposition mayors who have been jailed under Maduro. Their trial is ongoing.

Caracas has seen sporadic street protests this month as opposition-affiliated students try to commemorate last year’s rallies against Maduro, which left 43 people dead. Opposition groups said they’ll hold a news conference in Caracas at 10 a.m. local (9:30 a.m. New York) to discuss the arrest.

"It’s clear that the government is no longer tolerating anything that could generate a situation of protests like last year,” Dimitris Pantoulas, a Caracas-based political analyst, said in a phone interview.

Maduro said in a televised address after the arrest that Ledezma was “captured” on the public prosecutor’s orders for fomenting a coup.

“Enough already of vampires conspiring against the peace,” Maduro said, using his frequent moniker for the Caracas mayor. “There are no untouchables in this country.”

Oil’s Collapse

Maduro is seeking to distract voters from economic problems ahead of congressional elections expected later this year, Diego Moya-Ocampos, a London-based political analyst at consultancy IHS Inc, said in a telephone interview.

A collapse in oil prices has deepened Venezuela’s economic crisis, pushing shortages of basic products to a record. The country’s economy will contract 7 percent this year, according to UBS AG. Inflation, which reached 69 percent in December, is the fastest in the world.

“The government is afraid of defeat, and will only continue with more provocations like this,” Jesus Torrealba, head of the opposition alliance known as MUD, said at a news conference in Caracas after the mayor’s arrest.

Maduro in recent weeks has also resurrected accusations that the U.S. is seeking to destabilize his government. The U.S. State Department, in a statement Thursday, called the charges “baseless and false.”

“Venezuela’s economic and political problems are the result of the policies of the Venezuelan government,” the State Department said.

Military Prison

Ledezma should be immediately freed until the government shows concrete evidence of crime, Jose Miguel Vivanco, Americas director for the Washington-based organization Human Rights Watch said in an e-mailed statement.

The 59-year-old Ledezma, who began his political career in the corn-producing heartland of central Venezuela in the early 1970s, has criticized Maduro for his handling of the economy and the detention of Lopez, who is jailed at the Ramo Verde military prison outside the capital.

The president will continue raising pressure on the opposition this year to shift the political debate away from shortages and inflation, said Moya-Ocampos at IHS.

“This is part of the government’s brutal crackdown to neutralize the opposition ahead of elections,” he said.