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Economic, Political Challenges Facing Chavez After Terms Limits Victory

A referendum victory in Venezuela has opened the door for President Hugo Chavez to seek indefinite re-election and forge ahead with his socialist-inspired policies.

Critics say he is unprepared for looming economic troubles which could challenge his hold on power.

President Chavez did not give up after the defeat of a 2007 referendum to end term limits for elected officials.

He called for a new ballot and earlier this month, which would allow him to remain in office as long as he wins re-election.

Chavez stated, "With today's victory, we start the third cycle of the Bolivarian revolution, from 2009 to 2019."

In his victory speech, Mr. Chavez said, if elected in 2012 to a third term, he will work to rebuild all of the government's institutions.

In the past 10 years, Mr. Chavez has built broad support among Venezuela's poor, thanks to extensive social spending.

Government oil revenues are used to provide healthcare, cheap food and jobs to scores of people.

Michael Shifter of the Inter-American Dialogue says people in those programs gave the needed votes.

"This demonstrates that despite the problems in Venezuela, he still has support. He still has connections to a lot of Venezuelans, and he still has enough money to distribute to make people feel that their situation is getting better," he said.

Oil prices, however, are down. Industry experts say those losses will especially hurt Venezuela, which relies on oil for 90 percent of its foreign trade.

Some opposition leaders say the dip in oil revenues may lead to a economic crisis, cutting political support for the government.

Pedro Mena campaigned against the referendum in Miami. He predicted that, "The economic crisis will be so severe that many sectors that traditionally voted for Chavez will have no choice but to back the opposition in the future."

Opposition leaders say political support for the president already has begun to erode. Opposition candidates won several state and municipal elections last year.

Now, opposition leaders are looking forward to next year's elections in the National Assembly, where the government holds a strong majority. Mena says an opposition victory could derail Chavez's hopes for re-election in 2012.

Mena added, "The future of Venezuela is at stake in the national assembly elections, because the outcome of each assembly seat will reflect whether the government or opposition has more support."

The Chavez government has forged ties with leftist leaders in Latin America, and allied itself with Iran and Russia. Critics say Mr. Chavez is a polarizing force in the region.

He was a vocal critic of former President George W. Bush, but he has used a softer tone with President Obama.

Shifter says Caracas will pose a serious challenge for the new U.S. president, especially if Venezuela's economy begins to sour.

He stated, "I think the underlying problems are serious and likely to get worse. The United States should pursue its relationships and alliances with other countries in Latin America."

The first show of President Obama's approach to Venezuela will come in April, during a summit of American heads of state.