The Global Financial Crisis Batters Chávez - BusinessWeek

"But while (Venezuelan President Hugo) Chávez built his 'Socialism for the 21st Century' on a foundation of crowd-pleasing gestures, he scrimped on traditional investments—the ones that pay economic returns. So traffic crawls on Caracas' crumbling highways. An overtaxed power grid has led to three nationwide blackouts this year. Businesses, fearful of revolutionary taxes and confiscation, have trimmed investments to the bare essentials. And while the government says oil production tops 3 million barrels per day, industry sources think it's fallen to a mere 2.4 million barrels, down by a quarter from 1999.

As long as the price of oil rose, none of this bad news held back Chávez or his revolutionary ambitions. He was flush. As it turns out, it took the Wall Street collapse and the specter of the worst global recession in decades to drag down the oil market and hit Venezuela where it hurt.

The question now is how Chávez will respond to the economic constraints. Will he trim back his revolution and warm up to private investors—perhaps using the arrival of the Obama Administration to seek détente with the U.S.? Or will he bull ahead, seizing on economic unrest to nationalize more industries and establish authoritarian rule?"