CARACAS: It was approaching midnight and something was wrong at Miraflores Palace. Thousands of people in red T-shirts were gathered outside the balcony waiting for Hugo Chavez, waiting for another victory, but the hours dragged by and he did not appear.

This had been the scene of his every triumph since 1998. The president would appear on the balcony, salute the country and proclaim another leap forward in the revolution. The throng would explode in joy and celebrate until dawn. Not this time. At 1.20am the script changed. Election officials appeared on television to announce that the proposal to change the constitution had been defeated. Chavez had lost.

The crowd collapsed into stunned silence. Some began to sob. The leader, a man with an almost mystical connection to el pueblo, the people, had been rejected. “How?” cried one woman. From the Caribbean to the Amazon and the Andes television sets glowed, and everybody asked the same question.

This was supposed to be the night Chavez won a sweeping endorsement to change the constitution so he could run for continuous re-election and lead South America’s oil giant towards what he termed “21st-century socialism”.

Instead, it shattered his invincibility and slammed the brakes on his revolution. His state-funded formidable electoral machine was beaten by a ragtag coalition of students, minnow political parties and defectors from his own movement. They had persuaded soft chavistas — people who like the president but are wary of his radicalism — that he was moving too far too fast.

As the crowds melted into the night middle-class areas of Caracas erupted in jubilation. Housewives leaned out of windows banging pots, cavalcades of cars honked horns and couples danced salsa in the streets. “Unbelievable! We won! My God, we won!” shouted one man. A significant minority of Venezuelans loathe Chavez. They call him a demagogue, a dictator and worse, but never before had they been able to call him a loser.

The president had declared the referendum a plebiscite on his own rule. “A vote against the reform is a vote against Chavez,” he had said. By Venezuelan standards turnout was low, just 55 per cent, and the margin was razor-thin, 51 per cent against the changes, 49 per cent in favour.

It was a severe blow, but far from a knockout. Chavez has five years left at the helm of a government awash with oil revenues. He controls most institutions of state and can rule by decree. And he has mesmerising political talent.

It was on display moments after election officials announced the result. Instead of a triumphant balcony address he sat behind a desk in Miraflores and, in a live broadcast, conceded defeat.

“I thank you and I congratulate you,” Chavez said, addressing his opponents. “I recognise the decision a people have made. Those of you who were nervous I wouldn’t recognise the results, you can go home quietly and celebrate.”

The conciliatory tone was a seamless change of gear from campaign rhetoric which had denounced opponents as “fascists”, “traitors” and “mental retards”. He said he would continue his battle to build socialism and that the proposed changes had failed “for now”.

When he was in the army the former lieutenant colonel specialised in tanks and communications and here you could see that: withdrawing from the field of battle and salvaging what he could for a future counterattack

“I will not withdraw even one comma of this proposal, this proposal is still alive,” he said. Turning to supporters, he added: “Don’t feel sad.” But they were distraught. Cabinet ministers looked pale. State television presenters quavered and stumbled. Just days earlier Chavez had spoken of leading the country until 2050, by which time he would be 95, and had electrified a monster rally in downtown Caracas.

Yesterday the barrios, the hillside slums which is chavista heartland, were quiet. It had been a long night and people were tired. And ambivalent. It was the failure of the slums to come out in force which sank the referendum.

Opinion polls suggest Chavez remains popular with the poor majority, who are grateful for his social programmes, but that many moderate supporters have a desire to clip his wings.

“I like my president,” said Ricardo Pena, 42, a stallholder in Petare. “I’ve always voted for him. But this time ...” His voice trailed off. Behind him was a mural of a familiar figure in a beret and a slogan exhorting “fatherland, socialism or death”. On the ground were discarded pamphlets urging people to vote yes.

Pena was glad the commandante had been sent a warning but felt a pang of guilt. “Things are better thanks to him but he has to know we’re not happy about everything.”

Other supporters were frustrated over shortages of eggs, sugar and especially milk, which producers blame on price controls.

In the town of Sabaneta last week a rare consignment of 18 milk cartons to a shop was snapped up in less than four minutes. A mother, alerted by a friend’s text message, jumped off her moped and ran into the store but was too late. An elderly man held the last carton like a trophy. She stalked back to her moped, asking no one in particular how she was supposed to provide for her children.

Asked if she would vote, she hesitated. Sabaneta is the president’s hometown and is soon to get a museum dedicated to its famous son. A vote against him would feel treacherous. “I’ll abstain,” she said. “I wouldn’t say I’ve lost faith in him. I’m just annoyed.”

—Dawn/Guardian News Service