Column: Venezuela: Short circuited by opinion polls
EVEN UNDER the best conditions, opinion polls are deceiving. The recent United Kingdom (UK) election was a very good example.
All of the political pundits were expecting a statistical tie between the two parties. However, the Tories posted a clear victory. Had this occurred in a developing country, the losing side would have screamed fraud, and most people would have believed them.
It's not impossible to consider that voting irregularities may happen in the developed world, but the 2015 UK general election highlighted the shortcomings of the polling process. A wide range of factors affect the results, from weather to exogenous events.
Another case in point was the 2004 Spanish general election. Two days before the polling stations opened, a terrorist attack in Madrid claimed hundreds of victims. The ruling PP, which was leading in the polls, rushed to blame the Basque separatist movement ETA in order to burnish its conservative credentials. But it soon became clear that ETA had nothing to do with the attack. It was executed by Al Qaeda.
The fact that Spain suffered a major terrorist attack because of its involvement in an unpopular war that the PP had supported, only led to their defeat. Like Clausewitz's Fog of War, which imbues a great deal of unpredictability into military engagements, elections have their own impenetrable haze.
To add to the uncertainty, political machines can alter the outcomes. Political parties can mobilise parts of the electorate through positive and negative inducements, such as providing transportation, benefits or sanctions.
Last of all, political leaders often use gerrymandering techniques to redraw political maps to maximise friendly votes and minimise the power of the opposition. These are the reasons opinion polls can be so misleading. The only reliable poll is the one that is counted on election day.
Recently, there has been a great deal of enthusiasm about the opinion polls in Venezuela. President Nicol·s Maduro's popularity has been plunging. Most surveys put his support below 30 per cent, and it has been used to explain the rally in Venezuelan bond prices.
However, it is important to note that the upcoming elections are not presidential. They are congressional.
The PSUV is polling much better than the president. This puts the ruling party within reach of retaining a majority in the unicameral legislature, and it is taking measures to improve its chances of victory. One tactic is to raise the frustration factor. It is no coincidence that the date for the elections has not been set.
By creating the perception, real or false, of electoral manipulation, many people are wondering, why even vote? This is particularly the case among members of the opposition. Another tactic is the launching of third party candidates. A new crop of candidates, who ideologically lie between the opposition and the PSUV, are starting to appear. However, they are being furtively funded by the PSUV as a way to dilute the opposition's support.
Another important tactic is the gerrymandering of voting districts. More than a decade ago, then President Hugo Ch·vez took his cue from his arch nemesis. He saw that small, but powerful, political factions in the United States were able to win elections by redrawing voting districts. Employing campaign and political consultants from abroad, he pushed through an extensive campaign reform that included the use of electoral districts, locally known as circuits.
By using the National Institute of Statistics, the PSUV established a national electoral map that allowed it to design voting circuits that maximised the power of its political base. Large areas with concentrations of opposition voters were hived off and bolted onto areas with larger numbers of pro-government supporters. As a result, their ability to elect opposition representatives was diluted. Hence, investors need to be careful with the new crop of polling data.
There is a small universe of Venezuelan political scientists peddling data that suggests that the opposition will win the day. Clearly, dissatisfaction with the government is on the rise.
The draconian reduction in imports has led to shortages. Most Venezuelans associate the poor economic environment with President Maduro, but less so with the Ch·vezista movement or the PSUV. This means that the party may still do well at the polls.
None, except for one, of the polling agencies have the breadth or scope to perform an adequate sampling of the circuitsand this group is not sharing its findings.
Therefore, don't associate the improved outlook for Venezuelan bonds on a changing political environment. Rising oil prices and a strong commitment to service its debt, albeit with one-off solutions, is the reason credit conditions improved so much.
Dr Walter T. Molano is a managing partner and the head of research at BCP Securities LLC.