Hugo Chavez Suffers a Blow to His 'Revolution': Reforms Defeated in Election

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Venezuelan President Hugo Chavez suffered an unprecedented defeat after voters on Sunday rejected a constitutional package of 69 reforms that included scrapping presidential term limits and declaring Venezuela a socialist state.

It is the first major electoral setback suffered by Mr. Chavez, 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 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. The defeat may limit his reform plans and serve as a warning to other regional leaders following in his footsteps.

"Up until now this appeared to be an indestructible government, but now people realize it is possible to find its weaknesses," says Elsa Cardozo, a foreign policy expert at the Central University of Venezuela. "This can also be a lesson for the opposition in Bolivia and Ecuador. Here [the opposition] found the government's Achilles heel and attacked it democratically at the polls."

Chavez 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," Chavez said on state television early Monday morning. "For now, we could not do it."

The lead-up to the campaign was marked by tense protests as students flooded the streets to demonstrate against constitutional changes they called undemocratic. Perhaps Chavez's biggest blow came from his former allies, such as former Defense Minister Raul Baduel, who likened the proposals to a "coup."

Chavez softens combative tone

Leading up to the vote, Chavez had become increasingly combative.

After Colombian President Alvaro Uribe cut off his role as a hostage negotiator with leftist guerrillas, Chavez recalled Venezuela's ambassador. Chavez 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. …