A few days earlier, Chávez announced plans to nationalize companies in the telecommunications and electricity industries, and called for greater government control over natural-gas projects and the media.
For years, Chávez has been known around the world for his anti-American and socialist bluster, but until now it's been mostly talk. While Chávez made headlines last September by calling President Bush "the devil" during a speech at the United Nations, until now he has generally let most of Venezuela's private companies go about their business. But his plans to nationalize key industriesboth of which happen to be controlled by American companiesseem to signal Chávez's intention to follow through on his promises of socialism.
"Chávez is to be taken seriously in what he says, and he's been explicit in talking about 21st-century socialism for a long time," says Ian Vasquez of the Cato Institute, a Washington think tank.
Since he was re-elected in December by a wide margin, Chávez's policies have turned sharply to the left. In the tradition of many Latin American strongmen before him, he seems to be consolidating his power and moving to suppress any opposition, including refusing to renew the license of a TV station that has criticized him.
This shift, which Chávez is calling the "new era," has alarmed American officials and some of Venezuela's neighbors. (Only 28 percent of Latin Americans have a positive image of Chavez, according to a 2006 poll of 18 countries; President Bush had a 30 percent positive rating.)
Chávez intensified worries by persuading Venezuela's Congress to give him vastly enhanced authority. He now has the power (for 18 months) to make laws by decree, bypassing any debate in the legislature. He is also seeking to abolish the autonomy of Venezuela's central bank, which would give him more control of the economy.
Castro As Role Model
And all the while, Chávez has kept up his antagonistic talk toward the U.S. After American officials voiced concern about his moves to increase presidential power, Chávez told U.S. officials, "Go to hell, Gringos!" and referred to Secretary of State Condoleezza Rice as "missy."
Chávez seems to be styling himself after longtime Cuban leader Fidel Castro, who has spent decades preaching radicalism across Latin America and defying the U.S. The two countries, and the two men, have forged close ties. With Castro gravely ill, Chávez seems to see himself as Castro's heir in his role as the leading Latin American radical.
There are, however, other left-leaning Latin American leaders, especially after some recent elections (see map below). So why do Washington, and the world, seem to pay so much attention to Chávez?
His headline-grabbing rhetoric aside, Chávez heads a country that has 7 percent of the world's oil reserves (about 80 billion barrels worth) and is the fourth-largest oil supplier to the United States. Oil exports provide more than 50 percent of Venezuela's federal budget.
Higher oil prices have funded an array of social-welfare programs for Venezuela's poor, including health care, education, and food subsidies. The impact has been significant, and helps explain Chávez's broad support at home: Ten years ago, 67 percent of the population lived below the poverty line. Today, 38 percent live in poverty, and a large middle class has developed.
To wield more influence outside Venezuela, Chávez has been conducting "oil diplomacy"making deals with Bolivia, Cuba, and Nicaragua to supply cheap oil and support their socialist governments.
"Venezuela is not just any Latin American country," says Vasquez of the Cato Institute. "It's a country that is rich in resourcesnot just natural resourcesI mean cash. So it carries a lot of weight in the region. It has disproportionate influence in the region because of the money they're receiving from oil."
To promote his socialist ideology, and some say to spite President Bush, Chávez has even supplied sharply discountedheating oil to poor neighborhoods in Boston and New York. He has also aligned Venezuela with other countries which the U.S. considers rogue nations. In addition to visiting Syria, Chávez has been to Iran five times, and President Ahmadinejad came to Caracas last month.
The nationalization announcements have prompted alarm among international investors, who worry about which industries Chávez might target next and whether they'll be compensated. (Chávez is also eyeing foreign oil-company assets.)
The Bush administration condemned the nationalization plans. "Nationalization has a long and inglorious history of failure around the world," says White House spokesman Tony Snow. "We support the Venezuelan people and think this is an unhappy day for them."
Trend Across The Region
Chávez's recent left turn in Venezuela seems to be part of a trend across the region: · In Nicaragua, Daniel Ortega was re-elected President after 16 years out of power. (In the 1980s, President Ronald Reagan funded an opposition group known as the Contras, who tried to overthrow Ortega's left-wing government.)
· In Bolivia, Evo Morales, the country's first indigenous President, was elected in 2005. Morales has partially nationalized Bolivia's energy industry and, like Chávez, has been an outspoken critic of the U.S.
· Brazil recently re-elected Luis Inácio Lula da Silva, a former labor leader. Lula's anti-poverty programs have won him support among the poor, but his overall approach to Brazil's economy, South America's largest, has been moderate.
Chávez's effort to transform Venezuela into a Socialist state is a setback for the U.S. policy of promoting democracy and open markets across Latin America. But the U.S. may have limited options. "It's not clear," Vasquez says, "other than protest, what the United States can do to convince someone as determined as Chávez."