Why Americans Should Be Watching Venezuela

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Although a rising Venezuelan radical may hardly register on the radar of post-Cold War Washington, Hugo Chavez may soon make his presence felt with regular Americans — at the gas pump. Chavez, elected president last November by an overwhelming majority, is moving quickly to consolidate control of his nation’s political institutions, and from there to use the nation’s considerable oil revenues to finance populist spending. This may sound merely like some improbable '60s flashback, but Venezuela’s state-owned oil company is the largest oil supplier to the U.S., and that –- together with Chavez’s attempts to breathe new life into the decrepit international oil cartel, OPEC –- could spell trouble for American consumers.

Chavez scored an important victory Monday when the Constitutional Assembly, elected in July to draw up a new constitution, effectively dissolved the country’s center-right-controlled parliament. The protests of opposition legislators won’t resonate with the electorate, who are still overwhelmingly behind the 45-year-old former paratrooper and failed coup leader. "Most Venezuelans support Chavez because the country’s traditional parties were so corrupt," says TIME Latin America bureau chief Tim McGirk. But enthused though they may be by Chavez's promise to share the country’s oil wealth with the impoverished majority, they may be disappointed in him in the long run. "Chavez may be able to use oil revenues to provide health, education and social services to the poor, but at the end of the day he still has to find jobs for them," says McGirk. "And that requires foreign investment." By tearing up the constitution, dissolving parliament and threatening to review contracts made by his predecessors, Chavez isn’t exactly going to have investors banging down his door.