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Analysis: Venezuela's Maduro faces tricky post-Chavez panorama

Venezuela's acting President and presidential candidate Nicolas Maduro waves to supporters during a campaign rally at the state of Bolivar,
Venezuela's acting President and presidential candidate Nicolas Maduro waves to supporters during a campaign rally at the state of Bolivar,

By Brian Ellsworth

CARACAS (Reuters) - Acting President Nicolas Maduro may struggle to advance the late Hugo Chavez's socialist policies if he wins Venezuela's election on Sunday, lacking both his predecessor's iron grip on a disparate ruling coalition and the robust state finances that cemented his rule.

Maduro holds a wide lead in opinion polls over opposition candidate Henrique Capriles for the election triggered by Chavez's death last month after a two-year battle with cancer.

Late last year, Chavez named Maduro as his chosen successor in case he did not survive his fourth surgery for the disease. That was his last public speech and Chavez died on March 5.

If the 50-year-old Maduro wins the election, he will inherit government finances strained by heavy spending during Chavez's 2012 re-election campaign, the highest inflation in the Americas, and nagging shortages of basic consumer goods.

Widely liked among Chavez supporters but lacking his mentor's charisma, the former bus driver and union organizer may also have trouble controlling "Chavismo," a movement ranging from military officers and oil executives to slum community organizers and ideologues.

Top allies have recognized the importance the politically wily former soldier Chavez had in keeping them all in line.

"Chavez was a barrier to a lot of the crazy ideas that occurred to us," said Diosdado Cabello, a powerful party leader seen by many Venezuelans as a potential rival to Maduro.

"He imposed his leadership, his prudence and his conscience, and in many cases ensured we did not carry on."

Maduro scoffs at suggestions of divisions in the coalition. As president, he would have the backing of those who over a decade benefited from Chavez's ambitious oil-funded social programs that put free clinics in slums, provided subsidized groceries and built hundreds of thousands of new homes.

Jose Albornoz, who worked alongside Maduro for years as a lawmaker before joining the opposition, said his experience as a union negotiator would stand him in good stead to forge consensus among different factions.

But he noted that Cabello has considerably greater sway than Maduro in important areas such as the military, the legislature and state governorships, and predicted that Maduro could come under pressure from inside the coalition.

"With the death of President Chavez, the struggle for leadership is starting to heat up," said Albornoz, who is now one of the leaders of a small opposition party.

Maduro served as Chavez's foreign minister for six years and, as he now campaigns for president, he is trying to elevate his former boss's image to that of a saint.

He is also portraying himself as Chavez's political "son," pulling at the heart strings of millions of rank-and-file followers who might otherwise doubt his leadership.

Despite maintaining his late boss's shrill rhetoric - including calling foes heirs of Hitler - Maduro is unlikely to maintain Chavez's torrid pace of nationalizations, his regular confrontations with private enterprise, or the diplomatic run-ins with the United States and its allies.

Maduro may be more inclined to hold discussions with the opposition or business leaders who have been at odds with the government for years.

Last year, he held informal talks with the U.S. State Department after years of bilateral tensions, although that back channel was cut last month when his government took offense at U.S. criticism of democratic standards in Venezuela.

A more diplomatic approach may lead to restlessness among ideological stalwarts, including armed groups in the slums who vow to carry on Chavez's legacy and see confrontation as the cornerstone of his "21st century socialism."

"Maduro has to stay true to Chavez's spirit, or we are lost," said lawyer and government supporter Jean-Carlos Mendoza, 32, pondering the future during a recent visit to Chavez's coffin.

ECONOMIC CHALLENGES

The challenging economic environment will likely require a reorganization of state spending and potentially an overhaul of the strict currency control system, but Maduro has offered few clues about what - if anything - he might change if he is elected.

Venezuela's oil industry still provides an enviable source of revenue, but heavy borrowing to finance home construction, pensions for the elderly and stipends for poor mothers has left the government without the abundance of 2012.

With a rising amount of oil revenue being soaked up by repayment of Chinese loans and generous assistance to allied nations including Cuba, Maduro may have less revenue available for the social programs, or "missions," that underpinned Chavez's popularity.

Currency controls have reduced the amount of dollars available to local businesses, limiting capacity to import basic goods such as wheat while preventing industry from buying machinery and replacement parts.

State-run companies such as steel and aluminum producers are operating far below capacity amid chronic labor problems.

A key bellwether for the future of the OPEC nation will be whether Maduro, assuming he wins the election, maintains Finance Minister Jorge Giordani, the architect of Chavez's steady expansion of state control into the private economy.

A more moderate finance ministry could loosen price and currency controls that local private businesses blame for shortages of products ranging from flour to medicines.

Those shortages, which the government blames on capitalist "speculators," have upset many Venezuelans including rank-and-file 'Chavistas.'

Cesar Aristimuno, an economist, said Venezuela had such abundant oil revenue in recent years that it was able to replace locally produced goods with imports, but that dollars are now scarce and the private sector considerably weakened.

"It's impossible for an economy to expand when local productive capacity is being weakened," said Aristimuno. "There reaches a point when you have to pay for past errors."

Venezuela's economy is, though, forecast to grow at a healthy 6 percent in 2013, according to the government, or a couple of points lower according to most private estimates.

It grew an estimated 5.5 pct in 2012.

While public impatience with grinding daily problems such as violent crime, power cuts and shoddy infrastructure tended not to hurt Chavez's popularity, due to his near-religious status among supporters, Maduro may not be so immune.

He is vowing to prioritize reducing crime, voters' No. 1 worry, but will also need to show progress on a host of unfinished infrastructure projects and other promises.

Local pollster Oscar Schemel predicted a comfortable win for Maduro on Sunday, but a bulging in-tray the morning after.

"Maduro is assured of the presidency," he said. "What comes afterwards is more complicated ... there are important challenges ahead. People's level of tolerance is going to go down, and their demands will become more pressing."

(Additional reporting by Marianna Parraga and Andrew Cawthorne; Editing by Kieran Murray and Jackie Frank)

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