Venezuelan President Hugo Chávez 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. Chávez, 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."
Chávez 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," Chávez 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 Chávez's biggest blow came from his former allies, such as former Defense Minister Raúl Baduel, who likened the proposals to a "coup."
Chávez softens combative tone
Leading up to the vote, Chávez had become increasingly combative.
After Colombian President Álvaro Uribe cut off his role as a hostage negotiator with leftist guerrillas, Chávez recalled Venezuela's ambassador. Chávez 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.
As the Constitution stands now, he will have to step down from his post in 2013.
In the impoverished neighborhoods that are the base of his support, and those who have most benefited from literacy programs and medical clinics paid for by oil profits, support is mixed.
"I'm sick and tired of his rhetoric and speech, there's no dialogue, no substance. I don't care what happens in other countries if it doesn't affect me," says Leticia De Luna, an older housewife standing outside a voting center in El Valle, a Chávez stronghold.
Since winning the presidential election by a wide margin in December that he said gave him the mandate to move the country more swiftly toward socialism, he has made the boldest moves in his nine-year reign, closing down a popular television station and nationalizing oil companies.
Officially defining the state as socialist is what concerned many. "For me it's not important that the president can stay in power for unlimited terms, the important change is within the state and formally making it socialist," said one woman who did not want to be named and spoke in English so that she would not be understood by bystanders.
Analysts say Chávez's electoral loss is a symbolic blow to his leftist allies in Ecuador and Bolivia, who both say they are also moving to reform their constitutions for the same reasons: to give back power to those who have long be disenfranchised.
"It is a pretty strong signal to the rest of Latin America that many people are not on board with Chávez's revolution," says Ian Vasquez, the director of the Center for Global Liberty and Prosperity at the Cato Institute, a Libertarian think tank based in Washington. "I think it's mostly symbolic at this point, but sometimes symbols have important effect in [countries like Ecuador and Bolivia]."
Defeat may bolster the opposition
The defeat could also empower the opposition, which has been fractured and defeated since they launched a failed coup attempt in 2002.
"The opposition has a new opportunity to present a serious and trustworthy proposal to the country," says Ricardo Sucre, a political scientist at the Central University of Venezuela. "Next year there will be elections to elect governors and mayors, this will be a good opportunity to regain influence in the country."
It's too early to say whether the opposition gain ground on Chávez as a result of the vote.
Still, analysts agree that Chávez will have to spend a bit more time listening to those not in lockstep with his agenda for radical change.
"President Chávez must understand the message that the country has sent him," says Teodoro Petkoff, director of the opposition newspaper, Tal Cual. "The message is: 'enough division,' 'enough insults,' enough aggression.'
"He must stop considering that those who aren't in agreement with him are lackeys of the 'empire', putchists, worms, or serpents," says Mr. Petkoff. "Here we're all Venezuelans."