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Venezuela's Maduro to raise pressure on business after local vote

A man casts his ballot in a box during a municipal elections in Caracas December 8, 2013. REUTERS/Carlos Garcia Rawlins
A man casts his ballot in a box during a municipal elections in Caracas December 8, 2013. REUTERS/Carlos Garcia Rawlins

By Brian Ellsworth

CARACAS (Reuters) - Venezuelan President Nicolas Maduro pledged to deepen his "economic offensive" to force businesses to cut prices after his ruling Socialist Party won most votes in Sunday's municipal elections.

A partial count showed government allies won 49 percent of the votes in 337 mayoral races, compared to 42 percent for the opposition coalition, derailing efforts by Maduro's critics to turn the vote into a plebiscite on his government and the legacy of late socialist leader Hugo Chavez.

Maduro's candidates benefited from his crackdown in November to force merchants to slash prices of goods such as TVs, car parts and home hardware.

"This week we are going to deepen the economic offensive to help the working class and protect the middle class," Maduro told supporters in a rally after the results were announced.

"This week it's going to be the housing and food sectors. We're going in with guns blazing, keep an eye out."

Maduro's personal approval rate jumped sharply after the economic measures that won over consumers weary of the country's 54 percent annual inflation, which Maduro blames on an "economic war" he says is financed by political adversaries.

The initial steps focused on home appliances, and later extended to controls on rent of commercial buildings such as shopping malls, to try to lower prices.

Sunday's election was the biggest political test for Maduro since he narrowly won a presidential election in April following Chavez's death from cancer. He called the results a tribute to the late leader whose 14-year rule polarized the OPEC nation.

"Here it is, commander, the gift of your people ... the gift of loyalty and love," he told a crowd, whose mostly bored and listless expressions broke into joyful chanting at the mention of Chavez's name.

The results may help Maduro to enact unpopular economic measures such as a currency devaluation that Wall St. investors call widely necessary to close the government's fiscal gap and reduce capital flight.

But extending the price cuts may worsen product shortages and reduce the productivity of a private sector already battered by years of nationalizations.

Nor does the majority in the local polls help him address the structural imbalances of a state-driven economy struggling with slowing growth, the highest inflation in the Americas, and embarrassing shortages of goods such as toilet paper.

Critics say he needs to scrap exchange controls and lift restrictions on private businesses.

OPPOSITION GAINS

The Socialist Party had been widely expected to win a majority of the total number of seats because the distribution of voters makes it dominant in rural, sparsely-populated constituencies.

But opposition leader Henrique Capriles had previously said the opposition would win a majority of the total votes. The results showed the continuing division over Chavez's legacy, he said.

"Nobody should feel defeated, we have a country that is divided and we want Venezuela to be united," a crestfallen-looking Capriles said in a late-night press conference.

The Socialist Party's majority overshadowed opposition gains in crucial areas such as the industrial city of Valencia, where the party's mayor was recently arrested on corruption charges.

The opposition also won in Barinas, capital of the late Chavez's home state that has for years been dominated by his family - even though Maduro had decreed December 8 a day of "Loyalty and Love" to the former president.

The opposition is also expected to increase the total number of mayors' seats it controls. Full results have not yet been released.

With no obvious threats to Maduro completing a term that ends in 2018, even a better showing for the opposition would have been largely symbolic. The next polls are for a new National Assembly in late 2015.

Despite an unexpectedly strong showing in the April presidential vote, Capriles has struggled to influence national politics. Some anti-government activists are pressing for more action, such as street protests.

(Reporting by Brian Ellsworth; Editing by Daniel Wallis and Matthew Tostevin)

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