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Venezuela election: Hugo Chávez's largest challenge yet

A united opposition in Sunday's Venezuela election could gain seats in the legislature and limit President Hugo Chavez's power as citizens grow weary of poverty and crime.

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But the PSUV is facing a strong challenge here in the capital of Lara State, where many former Chávez supporters have followed the lead of Gov. Henry Falcon.

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Mr. Falcon switched to the Fatherland For All party after Chávez ordered the nationalization of warehouses in Barquisimeto's industrial area, something Falcon said would hurt employment.

Despite the defections, Chávez retains support. "The number of hard-core Chávez supporters in the past was much bigger than today, but it's still a relevant group," says Luis Vicente Leon, a Caracas-based pollster.

Disillusioned supporters may not necessarily turn to opposition parties, he says, and the electoral system itself adds to unpredictability. Because of how districts are drawn, it may be possible to win up to 70 percent of the legislature with only 50 percent of the popular vote, Mr. Leon says. Jesse Chacon, Chávez's former information minister and now a pollster, has said pro-Chávez candidates could take three-quarters of the seats with 54 percent of the popular vote if the district breakdown is similar to historic trends.

Recession fallout

Fallout from the recession is also hard to gauge. The Central Bank said the economy shrank 3.5 percent in the first half of 2010, though the left-leaning Center for Economic and Policy Research in Washinton says it may be starting to expand. Inflation is the highest in the Americas, but goods shortages have declined to the lowest levels since 2006, according to the Central Bank. Unemployment is in single digits.

Such positive signs haven't made it to the dusty edge of Venezuela's fourth-largest city, where Dora Lopez sells empanadas for 35 cents apiece from a rented storefront with scuffed yellow walls.

"I'm on the edge of closing," she says, gesturing at her empty restaurant. "People don't buy much. They get an empanada and a glass of water and move along." Pulling meat off a boiled chicken, she says she may have to sell empanadas on the street instead, saving on rent, and avoiding sales taxes. The troubles have pushed her from Chávez, whom she supported when he came to power.

"I'm worried for my grandchildren. I don't want them to grow up in something like Cuba. That leads to hunger."

Chávez, however, is banking on loyalty. A mural in Barquisimeto proclaims, "We don't pardon treason – with Chávez everything! Without Chávez nothing!"