Hugo Chávez suffers a blow to his 'revolution'

Venezuelan President Hugo Chávez faces an unprecedented defeat after voters on Sunday rejected a broad constitutional reform package that included scrapping presidential term limits and declaring Venezuela a socialist state.

It is the first electoral setback suffered by Mr. Chávez, a former military officer, since he swept into office nine years ago and the clearest sign yet that support for his "21st century socialism" is on the wane.

Buoyed by record-high oil prices, he has created allies at home and abroad as he has doled out millions in social service programs and discounted oil, at the same time becoming increasingly hostile toward the US, which he calls the "empire."

But analysts say that many of the reforms on the ballot Sunday, including defining Venezuela as a socialist state, were too radical for some voters, and that an amendment to abolish term limits was seen as a power grab. Although he remains widely popular and opponents only won by two points, Venezuelans rejected a new Constitution that would have forged the way for him to become the most powerful leader in Latin America. Now his vision for the country will be limited by this defeat and a by new class of opposition that is emerging.

"The seeds of decay of the regime are becoming more apparent," says Michael Shifter, vice president for policy at the Inter-American Dialogue in Washington. "The fundamental point is: where he wants to take the country, the country doesn't want to go."

Chávez conceded victory after official results were announced early Monday morning: The "Nos" took 51 percent of the vote, while those in support of the reforms got 49 percent, according to the national electoral commission. "I congratulate my adversaries for this victory," Chávez said on state television early Monday morning. "For now, we could not do it."

The leadup to the campaign was marked by tense protests. The opposition movement swelled as students came out to protest reforms they called undemocratic. Perhaps his biggest blow came from his former allies, such as former Defense Minister Raúl Baduel, who likened the proposals to a "coup." Chávez allies held their own big marches as they rallied in support of a deepening of their social revolution.

Leading up to the vote, Chávez had become increasingly combative. After Colombian President Álvaro Uribe cut off his role as a hostage negotiator with leftist guerrillas, Chávez recalled Venezuela's ambassador. Chávez then threatened to nationalize Spanish banks operating in Venezuela after the King of Spain told him to "shut up" during an international meeting last month. He also threatened to cut off oil to the US if Washington interfered in the referendum. Before Sunday's referendum, he

said that those planning to vote against him were "traitors" and that a defeat could put a halt to his revolution.

The 69 proposed amendments would have allowed him to personally select state and regional officials. Reforms would have dissolved the autonomy of the Central Bank, given the president direct access to the international reserves, and – among the most controversial moves – abolished term limits for heads of state.

As the Constitution stands now, he will have to step down from his post in 2013.

In the impoverished neighborhoods that are the base of his support, and those who have most benefited from literacy programs and medical clinics paid for by oil profits, support is mixed.

"I'm sick and tired of his rhetoric and speech, there's no dialogue, no substance. I don't care what happens in other countries if it doesn't affect me," says Leticia De Luna, an older housewife standing outside a voting center in El Valle, a Chávez stronghold.

Since winning the presidential election by a wide margin in December that he said gave him the mandate to more swiftly move the country toward socialism, he has made the boldest moves in his nine-year reign, closing down a popular television station and nationalizing oil companies.

Officially defining the state as socialist is what concerned many. "For me it's not important that the president can stay in power for unlimited terms, the important change is within the state and formally making it socialist," said one woman who did not want to be named and spoke in English so that she would not be understood by bystanders.

The defeat could empower the opposition, which has been fractured and defeated continuously, during a failed coup attempt in 2002, an oil strike, and a recall referendum.

"I know we won, because once the game is over no one remembers the score, only who won, and here the 'no' vote won," says Teodoro Petkoff, director of the opposition newspaper, Tal Cual.

 "The ball is in President Chávez's court, President Chávez must understand the message that the country has sent him, the message is 'enough division,' 'enough insults,' enough aggression,' he must stop considering that those who aren't in agreement with him are lackeys of the Empire, putchists, worms or serpents. Here we're all Venezuelans."