Venezuelan Caesar: Chavez Defending His Power from the Inside

Street cleaners in red shirts lead the way through a labyrinth of narrow streets in "23 de Enero," a slum near downtown Caracas, where houses are covered with revolutionary slogans. The street turns a sharp corner and ends in a small square with a glorious view of the Venezuelan capital. This is where the Tupamaros, a radical group of supporters of President Hugo Chavez, had their headquarters until recently.

Five armed men sit next to a small guardhouse with a portrait of Che Guevara on the wall. When the visitor asks for the Tupamaros office, the leader tightens his grip on his pistol while the other men reload their guns. "Everyone on alert," one of the men hisses into his radio.

"The Tupamaros are gangsters and criminals," growls the group's leader, a muscle-bound man wearing combat boots and an olive-green Vietnamese army cap. "We are now defending the revolution here." He eyes the visitor suspiciously, glances at his papers and orders one of his men to make copies, while the others search the vehicle. "The imperialists want to bring down our president, which we will not allow," says the leader.

Paramilitary groups dominate the streets in most Caracas slums. They are the revolutionary guards of a president who trusts them more than he trusts his armed forces or the police. The pistoleros do the dirty work, intimidating rival politicians and journalists, guarding the entrances to the slums and keeping tabs on their residents.

The "23 de Enero" neighborhood was once a bastion of the Tupamaros. But last week the group unexpectedly withdrew its support for the president, angry over the constitutional reforms Chavez wants Venezuelans to vote on in a referendum on Sunday. In response, pro-Chavez militias have driven the Tupamaros out of the city's slums.

'Socialism or Death'

The new constitution, drafted in large part by Chavez, is meant to transform oil-rich Venezuela into a "socialist state." It provides the president, who already controls the judiciary and the country's parliament, with the powers of a Roman emperor. It eliminates term limits, gives the president authority to declare a state of emergency and access to the still-independent central bank. The proposed constitution would also introduce a new form of government: a system of municipal councils that would no longer be elected, but appointed by the central government in Caracas.

"Chavez is staging a coup against democracy," says former Defense Minister Raúl Baduel. The fact that Baduel, one of his closest supporters until only a few months ago, has now turned against the president is a severe blow to Chavez. Baduel was one of the sponsors of the country's 1999 democratic constitution, and in 2002 he led a company of paratroopers that rescued Chavez from a coup and returned him to the presidential palace. Baduel is a general. He's also a thoughtful, devout man who listens to Gregorian chants on a CD player in his office. He clashed with the president in July when Chavez ordered the military to adopt the slogan "Socialism or Death" as its official salute. "Our constitution bans the politicizing of the military, and yet the administration is seeking to bring it in line with its ideology," says the former defense minister.

After Chavez forced him to resign, Baduel decided to embark on a political career. He's venerated by ordinary people and as well as soldiers, and author Alberto Garrido, an expert on Chavez, says, "it is unlikely that the general's views are unique in the military."

For the first time since he won power nine years ago, Chavez has encountered opposition within his own ranks. Even his political base is beginning to crumble. The Podemos Party recently withdrew from Venezuela's coalition government. Party leader Ismael Garcia, a loyal Chavez supporter in the past, now says: "Chavez is gambling away the future of the nation."

Students have been particularly vocal critics of the proposed constitutional reform. They began protesting in May, when the president shut down RCTV, a television station critical of the government. The protests have since expanded into a nationwide civil rights movement. "We don't want to overthrow the president," says 23-year-old student leader Yon Goicoechea. "We want to save democracy."

Returning from World Tour

Chavez has staked his political future on Sunday's referendum. Unless he wins with a significant majority, new elections will be unavoidable, writes Heinz Dieterich, a German-born professor and top advisor to Chavez who is gradually distancing himself from the president. But the narcissistic president -- who considers himself a reincarnation of South American revolutionary hero Simon Bolivar -- is increasingly losing touch with reality. Surrounded by loyal supporters, he no longer permits criticism, while his excessively generous self-image borders on the grotesque. "Venezuela is a world power," he told tens of thousands of his supporters at a rally in front of the presidential palace last week. He had just returned from one of his world tours.

Chavez's track record belies his posturing. His recent attempt to convince the Colombian insurgent group FARC to agree to a hostage exchange was a failure. He showed up empty-handed to a meeting with French President Nicolas Sarkozy in Paris last week, even though FARC had promised him that it would provide proof that Ingrid Betancourt, a French-Colombian politician kidnapped five years ago, is still alive. Politicians in the Colombian capital Bogotá criticized Chavez, claiming he had used the sensitive mission to boost his own popularity. Colombian President Álvaro Uribe ended the Venezuelan president's role as a mediator in the hostage swap negotiations, and Chavez petulantly put relations with Colombia "in the freezer."

But Chavez's foreign policy escapades have had little effect on his standing at home. The "socialism of the 21st century" he hopes to establish in the new constitution is more likely to fail as a result of the age-old ills of socialist planned economies: corruption and incompetence. Milk has been scarce in Chavez's oil-rich nation for weeks. A liter of milk now sells on the black market for more than a bottle of whiskey in a restaurant. Shoppers stand in line for hours to buy staples like chickens, sugar and meat.

The shortages are a result of Chavez-instituted price controls for food staples, which have prompted producers to smuggle goods to neighboring Colombia. The market for cars and other luxury goods, meanwhile, is booming. The exchange rate has been fixed since 2003, and yet inflation has surged ahead. US dollars are traded on the black market at three times the official exchange rate. "People are buying cars as an investment, to protect themselves against deterioration of the currency," explains economic expert Orlando Ochoa.

'Crash by the Middle of Next Year'

Only the high price of oil has kept the country from collapsing, as the government pays for food imports with its petrodollars. But the end of the bonanza is already on the horizon, as last year's decline in oil production levels indicates. Government investment programs are beginning to feel the pinch as Chavez diverts more and more of the country's oil revenues into social programs.

Has Chavez gone too far this time, with his constitutional referendum? His opponents find it hard to believe that he will respect a failure at the polls -- they say he could try to ignore a less-than-favorable outcome. Nevertheless, economist Orlando Ochoa is firmly convinced of one thing: "Economically speaking, there will be a crash by the middle of next year."

Translated from the German by Christopher Sultan