February 16, 2009 / 2:13 PM / 10 years ago

UPDATE 2-Chavez hails Venezuela vote win slammed by rivals

(Recasts first paragraph, adds debt trade paragraph 17)

By Saul Hudson

CARACAS, Feb 16 (Reuters) - Hugo Chavez and his supporters celebrated an election victory that allows him to seek another term as president in polarized Venezuela, as opponents complained on Monday that his use of state funds had made the campaign unfair.

Chavez, who has been in power for 10 years and vows to rule for decades, pledged to repay his poor backers for Sunday’s victory by combating their No. 1 concern — crime that has given the OPEC nation one of the world’s worst murder rates.

The fragmented opposition, which was spearheaded by an inexperienced and underfinanced student movement, said the former paratrooper’s win was secured with huge government funding and blanket state television coverage.

“Another sham” was the editorial headline of leading opposition newspaper El Nacional, which complained that Venezuela’s electoral commission favored “a military regime that promotes hatred and divides Venezuela in two halves.”

Popular for spending freely on clinics, schools and food hand-outs in city slums and remote villages, Chavez won 54 percent of the vote, allowing him to stand for office as long as he keeps winning elections.

His red-clad faithful partied in shantytowns around the capital Caracas with chants of “Heh-ho, Chavez won’t go.”

Veteran rival Teodoro Petkoff denounced Chavez’s “illegal and unscrupulous” use of state funds but also captured the mood of defiance in an opposition that must now seek to defeat him in a presidential vote in just under four years.

“They can celebrate today, but on the horizon of 2012 looms a ghost of his inevitable defeat,” Petkoff wrote in a front page editorial in his Tal Cual newspaper.

After a loss in a similar referendum proposal in 2007, Chavez’s victory showed his resilience and solidified his position as both the most dominant figure in Venezuelan politics and the leader of Latin America’s hard-left.

Chavez, who has survived a coup, a recall referendum and national strikes, retains the loyalty of many Venezuelans who depend on him for jobs, pensions and welfare benefits.

ECONOMY SHADOW

But with the global economic crisis overshadowing his larger-than-expected win, the anti-U.S. Chavez was cautious, telling his supporters that the government will not be able to accelerate its drive to create a socialist state this year.

“If we reinforce what we have already done, then starting next year, we will be in a much better position to open new horizons,” he told flag-waving supporters from his palace balcony in a victory speech on Sunday.

The Cuba and Iran ally also promised to combat crime and corruption.

He read a congratulatory message from his mentor, former Cuban leader Fidel Castro, but refrained from his usual diatribe against the “evil empire” of the United States and the “Yankee-lite” Venezuelan opposition.

Investors worry that Chavez will spend too much to maintain social programs despite falling revenue, and that the value of Venezuela’s currency and sovereign debt could fall further. Both have slumped this year on low oil prices and concerns that Chavez may last a long time in power.

Chavez says Venezuela has been shielded from the world financial crisis, but his government took $12 billion from the central bank’s reserves last month to shore up spending.

On Monday, Venezuela’s sovereign debt prices were little changed in low volume due to a markets holiday in the United States.

Chavez’s win could provide political capital to make decisions such as raising taxes to stanch falling revenue from oil exports whose value is $100 a barrel lower than last year.

“The government could feel more keen to embrace needed but unpopular measures to deal with growing macro imbalances, and a slowing economy driven by lower oil prices and the weight of inefficient public policies,” Goldman Sachs economist Alberto Ramos said.

Additional reporting by Brian Ellsworth; Editing by Patricia Zengerle

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