CARACAS, Dec 3: President Hugo Chavez crashed to an unprecedented vote defeat on Monday as Venezuelans rejected his bid to run for re-election indefinitely and accelerate his socialist revolution in the OPEC nation.

Despite an oil-financed, state-backed campaign, Chavez narrowly failed to muster enough support for a constitutional reform package that would have scrapped term limits on his rule and given him broad new powers.

The US government, opposition groups and investors cheered a defeat that curbs for now his plan to control foreign currency reserves, erode private property rights and enshrine socialism as a state priority in the constitution.

Venezuelan debt prices jumped on Monday, helped by Chavez’s defeat and a concession speech that was unusually conciliatory.

The country’s currency and debt prices had both fallen sharply in recent weeks on fears that a victory for the anti-US leader would both increase tensions in Venezuela and lead him to intensify his assault on ‘evil’ capitalism.

Election officials said the ‘No’ camp won with about 51 per cent of the vote against the reform package, while Chavez scored around 49 per cent support.

Chavez quickly accepted defeat and called for calm. The fiery leftist, who remains popular and powerful, said the people had spoken and he heard them, but he also pledged to find another way to pass his reform plans.

“I will not withdraw even one comma of this proposal, this proposal is still alive,” he said. “For me, this is not a defeat.”

Along with the controversial measures expanding his powers, his package also included popular moves – especially among his poor support base – to reduce the workday to six hours and give pensions to street vendors and housewives.

Student protests spearheaded an opposition campaign with rights and business groups, opposition parties, the Roman Catholic Church all lined up against him. They accused him of pushing the constitutional reforms to set up a dictatorship.

The US government has branded Chavez a menace to democracy in Latin America and welcomed his defeat.

“We felt that this referendum was a referendum to make Chavez president-for-life, and that’s not ever a welcome development in a country that wants to be a democracy,” Nicholas Burns, the US undersecretary of state for political affairs, told reporters in Singapore.

One of Venezuela’s leading opposition newspapers, El Nacional, dubbed the result the “First Victory” on Monday.

“Apart from shelving a package of undesirable reforms indefinitely, the defeat should revitalise the opposition,” Gianfranco Bertozzi of Lehman Brothers said.

But opposition groups still have to overcome divisions that Chavez, a former paratrooper, had exploited to win all previous national votes since he swept to power in a 1998 election.

“This does not represent a dramatic turnaround for the political opposition, they still have a long way to go,” said Patrick Esteruelas, Latin America analyst at Eurasia Group.

“What was really lost? Chavez still wakes up in the presidency, with tight control over the institutions and with no major figure to challenge him,” he said.

Some said Chavez has also burnished his democratic credentials by quickly accepting defeat.

Recalling a phrase he used after leading a failed military coup in 1992, the former paratrooper said he had fallen short “for now” and vowed to push ahead with a socialist revolution that has already seen him nationalise parts of the economy.

Chavez is buoyed by high world oil prices that allow him to finance popular social programmes and backers control Congress, the courts and Venezuela’s electoral authority.

But he can no longer count on a majority of Venezuelans backing him. Even some supporters, including one allied party and a former defence minister who helped return him to power after a 2002 coup bid, split with him over the proposals they branded undemocratic. He is certainly going to have to slow down and reassess. —Reuters