(above) Venezuelan President Hugo Chavez gestures during a May Day rally in Caracas. Chavez recently announced a plan to create more than three million jobs over the next eight years in Venezuela, where unemployment now hovers around 9%. Photo: Leo Ramirez / AFP/Getty Images

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Chavez’s influence wanes in Latin America

By Juan Forero

IPOJUCA, Brazil — Here on Brazil’s northeast coast, Venezuelan President Hugo Chavez dreamed of building an oil refinery and naming it after a Brazilian adventurer who had fought for Venezuela’s independence. The joint venture with Brazil, he said in trips here, would help unify Latin America against his adversary, the United States.

The $15 billion refinery is now two years away from completion, but with little input from Venezuela or its mercurial president, who for years backed projects regionwide in his drive to make Venezuela the vanguard of a new era in Latin America.

Indeed, these days Chavez’s influence is waning across the region as Venezuela’s oil-powered economy has gone bust and concerns have been raised about his governing style, which includes the jailing of opponents.

The reversal, ever more pronounced since 2009 when Venezuela’s economy began to founder, has been startling compared with the days when Chavez jetted around South America giving fiery anti-American speeches and inaugurating works funded with petrodollars.

“He’s not flying high like he used to even two years ago,” said Luiz Felipe Lampreia, a former Brazilian foreign minister. “I think he’s losing his capacity to influence people and to lead, even with his own friends.”

Ever so quietly, some of the Venezuelan populist’s biggest projects have been abandoned or mothballed, or have yet to take flight, including a pipeline from Venezuela to Argentina, a South American development bank, housing, highways and a continental investment fund.

It is unclear exactly why some projects have been discarded. Venezuelan government spokespeople did not respond to requests for comment.

But Chavez’s retreat in the region has come as Venezuela’s economy, dampened by dwindling oil production and hampered by state nationalizations of farmland and companies, contracted 3.3 percent in 2009 and 1.6 percent last year. Billions of dollars in capital have left the country, according to recent U.N. economic data for Venezuela, and the heavy consumer spending of the past has dried up.

The country’s golden goose, the oil industry, is producing 30 percent less oil than it did a decade ago, industry analysts say.

Opinion polls in Latin America also show that the president’s image has been tarnished as Chavez has resorted to a range of policies his opponents call anti-democratic, including attacking the news media and governing with decree powers. Chavez has also forged ever closer ties to iron-fisted rulers, such as Alexander Lukashenko in Belarus and Iranian President Mahmoud Ahmadinejad.

“The people of Latin America have a poor appraisal of democracy in Venezuela,” said Marta Lagos, director of Latinobarometro, a Chilean nonprofit policy analysis group that carries out polls across the region. Latinobarometro found in a February report that Latin Americans perceived Venezuela to be less democratic than other

When the group asked people to rate leaders in the Americas, Chavez finished second to last in its 2010 report. Even in Bolivia and Argentina, countries with warm relations with Venezuela, fewer than 35 percent of those polled had a favorable opinion of Chavez. “Evidently, what’s happening with Chavez is he’s not a leader of the region,” Lagos said.

The new dynamic for Venezuela is a reflection of a convergence of factors that have hampered Chavez’s objective of limiting U.S. influence. President Obama enjoys high approval ratings across Latin America, and most South American leaders are centrists who embrace globalization and trade ties with the United States. Multilateral lenders that Chavez accused of being tools of U.S. imperialism, such as the World Bank, are as active as ever and have lent record amounts across Latin America in recent years.

Some Latin American leaders, in private discussions with U.S. diplomats, have expressed distaste for what they consider Chavez’s intrusive style across the continent, according to U.S. diplomatic cables made public by WikiLeaks. Alan Garcia, Peru’s president, told the Chilean newspaper El Mercurio earlier this year that Chavez meddled in the affairs of other countries but now has less influence. “I do not respect anybody who wants to preach beyond his borders,” Garcia said.

This weekend, Ollanta Humala, a nationalist candidate for president in Peru who had been close to Chavez, said in an interview that it had been “an error” to have allied himself with the Venezuelan leader in his unsuccessful 2006 run at the presidency.

Perhaps most significantly for Chavez, there has been a political shift in Brazil, a country whose sheer size and influence make it critical to Chavez’s goals of regional unity.

Gone is popular president Luiz Inacio Lula da Silva, who had the political capital to publicly embrace Chavez and withstand criticism from the news media and opponents, said Paulo Sotero, a Brazil expert at Washington’s Woodrow Wilson International Center.

Lula’s successor, though, is Dilma Rousseff, a reserved pragmatist focused on an ambitious domestic agenda. Analysts say Rousseff is well aware of Chavez’s poll numbers in Brazil, where a Pew Research Center study in 2010 showed that 13 percent of Brazilians had confidence in the Venezuelan leader.

“Dilma has to operate in the real world and be very sensitive to public opinion, and she knows that Hugo Chavez is not especially popular in Brazil,” said Julia Sweig, a scholar at the Council on Foreign Relations who speaks often with Brazilian officials. “The melodramatic, charismatic style of Chavez is not exactly the style that, I believe, Dilma appreciates.”

Yet it was under Lula that it became clear that the refinery project would move ahead without Venezuela, said Ildo Sauer, a former executive in Brazil’s state-controlled oil company, Petrobras.

Former officials in this state, Pernambuco, said that Brazil and Venezuela initially negotiated a deal to split costs for the refinery. The Venezuelan leader brought a planeload of children to sing in honor of the new deal, to be named after the 19th-century hero Jose Abreu e Lima, and state officials gave Chavez honorary citizenship, recalled Terezinha Nunes, a former state lawmaker involved in the negotiations.

But with construction underway in 2008, two hurdles arose: reluctance by Petrobras to work with Venezuela and the Venezuelan government’s inability to provide funding, said Sauer and former state officials. Some Brazilian officials who worked on a deal recalled being put off by Chavez’s rhetoric. “His discourse was political, ideological, about the liberation of the Americas, of fighting the forces of imperialism,” said the former governor, Jarbas Vasconcelos. “He imagined commanding a revolution in all the Americas against the United States.”

With construction now in its final stage, there is still a Chavez imprint on the project. “The only thing left from Chavez is the name, Abreu e Lima,” said Nunes.