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What's ahead for crisis-hit Venezuela after Maduro's contested re-election

© AFP | The bitterly divided opposition has vowed to "up the pressure" on Maduro

CARACAS (AFP) - 

Following the disputed re-election of Nicolas Maduro, the future looks bleak for Venezuela, already mired in the worst economic crisis in its history that has left dire shortages of food and medicines and led to violent protests.

Amid heightened instability, new international sanctions and escalating economic woes, here is what the immediate future could hold for the formerly wealthy oil-producing nation:

- 'Further instability' -

For Maduro, the biggest risk now is an "implosion" if government officials are cornered and pressed by the international sanctions, said analyst Luis Vicente Leon.

For now, the president can count on support from the military, but "the crisis is so severe that it could provoke either friction within the ruling civilian-military alliance or social breakdown on a much greater scale," said Phil Gunson, senior analyst with the International Crisis Group.

"It seems likely that the longer the government is unable or unwilling to tackle Venezuela's crisis, the more likely it is to provoke further instability, potentially even among civilian or military elites."

Analyst Diego Moya-Ocampos of London-based IHS Markit said "regime change is only possible in the unlikely event that the military, still loyal to Maduro, withdraws support given escalating protests."

For political analyst Michael Penfold the high abstention rate in the election is also evidence of "the collapse of the Chavist system... in the face of the people's discontent with Maduro."

According to the Venebarometro polling institute, 76 percent of Venezuelans disapprove of Maduro.

Meanwhile, the bitterly divided opposition has vowed to "up the pressure" on Maduro.

The first step may be to reconcile with Henri Falcon, Maduro's main rival in the election who distanced himself from the Democratic Unity Roundtable (MUD) opposition coalition, which boycotted the "fraud" vote.

- Isolation and sanctions -

Venezuela is facing increasing international isolation, with a growing list of countries joining the United States in refusing to recognize the election result.

The 14 countries of the Lima Group, including Argentina, Brazil and Canada, said Monday they were recalling their ambassadors from Venezuela to protest what they called an illegitimate presidential election.

Several G20 countries announced on the sidelines of a meeting in Buenos Aires that they were mulling sanctions.

Hours after Maduro's victoy, President Donald Trump tightened financial sanctions against Venezuela, making it harder for the government to sell off state assets.

The financial response to the vote was accompanied with diplomatic efforts to further isolate Caracas.

London-based Capital Economics said that after Maduro's win "an escalation of US sanctions seems inevitable."

"The US State Department has already announced that it won't recognize the election result," it added. "With aggressive financial sanctions on Venezuela now in place, the obvious way to tighten the sanctions regime from here would be to impose restrictions on the oil sector."

- Escalating economic crisis -

The economic outlook is bleak for a country that is already isolated and ruined.

Venezuela is facing the worst crisis in its history: the IMF estimates its GDP will continue to shrink this year, with the inflation rate expected to reach 13,800 percent, the highest in the world. Its oil production is at its lowest level in 30 years.

"Real solutions to the economic and humanitarian crisis are unlikely to be forthcoming," said Capital Economics.

"At best, we are likely to see further cosmetic tweaks to the convoluted currency system."

And it predicted that "a full-blown debt default is only a matter of time."

For the Eurasia Group, the isolation, "along with collapsing oil production, hyperinflation, worsening scarcity and the resulting fragile social dynamics, will continue to undermine Maduro's ability to protect the privileges of key stakeholders, making it difficult for him to survive beyond next year."

© 2018 AFP