UPDATE 2-Venezuela opposition leader in hiding
* Venezuela opposition leader in hiding amid probe
* Rosales faces up to 10 years in prison for corruption
* Opposition says Chavez persecuting adversaries (Adds details on trial, background, context)
By Brian Ellsworth
CARACAS, March 31 (Reuters) - Venezuelan opposition leader Manuel Rosales, under investigation for corruption, has gone into hiding to escape alleged persecution by President Hugo Chavez, his party said on Tuesday.
Rosales is the most visible face of Venezuela's fractured opposition movement and he was beaten by the socialist Chavez in the 2006 presidential election.
His move to escape arrest could help the socialist Chavez consolidate his control over the OPEC nation as the government faces a tumble in oil prices that forces cuts in popular social welfare programs.
Chavez last year vowed to jail Rosales, who denies the charges against him.
Omar Barboza, an official with Rosales' party A New Time, said the opposition leader had moved to "a safe place" to avoid arrest by the government.
"It is not possible for Manuel Rosales to exercise his right to defend himself in Venezuela," Barboza said.
Critics accuse Chavez of using justice selectively in a country where corruption is rampant, but his government says it is a simple corruption investigation and wants Rosales tried on charges of illicit enrichment while behind bars.
"I don't think it does any favors to the country when people don't face justice," Communications Minister Jesse Chacon said on Tuesday after Rosales went into hiding.
Chavez's government has used the legal system to sideline other opposition leaders. Last year officials blocked the candidacy of Leopoldo Lopez, who was favored to win election in Caracas and seen as a possible future presidential candidate.
Rosales' move may lead Chavez to pursue similar legal attacks on high-profile opposition governors and mayors, who he has frequently describes as corrupt.
A state prosecutor says Rosales failed to demonstrate the origin of part of his income between 2002 and 2004 while he was governor of the state of the oil-rich state of Zulia, citing a report showing that around $60,000 could not be explained.
The court hearing the case has not yet decided if Rosales should go to trial, his attorney said. A close Rosales ally denied rumors he had fled the country, and his attorney said he has no restrictions on leaving Venezuela.
Rosales accuses Chavez of politicizing state institutions such as courts and police in efforts to build a dictatorship.
A conviction would block Rosales from running for president again and could result in a prison term of up to 10 years.
Last October. while campaigning for his allies in elections for governors and mayors, Chavez called Rosales a drug dealer and a thief. "I am determined to put Manuel Rosales in jail," he said.
Chavez won a referendum vote in February that allows him to run for re-election as many times as he wants. He still remains broadly popular even as falling oil prices have cut into vital oil revenues.
But a number of Chavez allies lost in elections last year for governors and mayors and even supporters complain of shoddy power and water systems and unchecked crime, putting opposition leaders back on the political map for the first time in years.
Chavez responded by increasing centralized control over police forces and hospitals, and this month sent troops to take over ports and airports in opposition-run states including Zulia, now governed by a Rosales protege. (Editing by Kieran Murray)
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