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While the world has been preoccupied with the crisis in Haiti, Latin America has quietly passed through a tipping point in the ideological conflict that has polarized the region -- and paralyzed U.S. diplomacy -- for most of the past decade.

The result boils down to this: Hugo Chávez's "socialism for the 21st century" has been defeated and is on its way to collapse.

During the past two weeks, just before and after the earthquake outside Port-au-Prince, the following happened: Chávez was forced to devalue the Venezuelan currency, and impose and then revoke massive power cuts in the Venezuelan capital as the country reeled from recession, double-digit inflation and the possible collapse of the national power grid.

In Honduras, a seven-month crisis triggered by the attempt of a Chávez client to rupture the constitutional order quietly ended with a deal that will send him into exile even as a democratically elected moderate is sworn in as president.

Last but not least, a presidential election in Chile, the region's most successful economy, produced the first victory by a right-wing candidate since dictator Augusto Pinochet was forced from office two decades ago.

Sebastián Piñera, the industrialist and champion of free markets who won, has already done something that no leader from Chile or most other Latin American nations has been willing to do in recent years: stand up to Chávez.

Venezuela is "not a democracy," Piñera said during his campaign. He also said, "Two great models have been shaped in Latin America: One of them led by people like Hugo Chávez in Venezuela, Castro in Cuba and Ortega in Nicaragua. . . . I definitely think the second model is best for Chile.And that's the model we are going to follow: democracy, rule of law, freedom of expression, alternation of power without caudillismo."

Piñera was only stating the obvious -- but it was more than his Socialist predecessor, Michelle Bachelet, or Brazil's Luiz Inácio Lula da Silva has been willing to say openly.

That silence hamstrung the Bush and the Obama administrations, which felt, rightly or wrongly, that they should not be alone in pointing out Chávez's assault on democracy.

Piñera has now provided Washington an opportunity to raise its voice about Venezuelan human rights violations. He has done it at a moment when Chávez is already reeling from diplomatic blows. Honduras is one.

Though the country is tiny, the power struggle between its established political elite and Chávez acolyte Manuel Zelaya turned into a regional battle between supporters and opponents of the Chávez left -- with Brazil and other leftist democracies straddling the middle.

The outcome is a victory for the United States, which was virtually the only country that backed the democratic election that broke the impasse. Honduras is the end of Chávez's crusade to export his revolution to other countries. Bolivia and Nicaragua will remain his only sure allies.

Brazil's Lula, whose tolerance of Chávez has tarnished his bid to become a global statesman, will leave office at the end of this year; polls show his party's nominee trailing a more conservative candidate.

Haiti only deepens Chávez's hole. As the world watches, the United States is directing a massive humanitarian operation, and Haitians are literally cheering the arrival of U.S. Marines.

Chávez has no way to reconcile those images with his central propaganda message to Latin Americans, which is that the United States is an "empire" and an evil force in the region.

Then there is the meltdown Chávez faces at home. Despite the recovery in oil prices, the Venezuelan economy is deep in recession and continues to sink even as the rest of Latin America recovers.

Economists guess inflation could rise to 60 percent in the coming months. Meanwhile, due to a drought, the country is threatened with the shutdown of a hydroelectric plant that supplies 70 percent of its electricity.

And Chávez's failure to invest in new plants means there is no backup. There is also the crime epidemic -- homicides have tripled since Chávez took office, making Caracas one of the world's most dangerous cities. At a recent baseball game a sign in the crowd read: "3 Strikes-Lights-Water-Insecurity/President You Struck Out."

Chávez's thugs beat up those baseball fans. The man himself is ranting about the U.S. "occupation" of Haiti; his state television even claimed that the U.S. Navy caused the earthquake using a new secret weapon.

On Sunday his government ordered cable networks to drop an opposition-minded television channel.

But Chavez's approval ratings are still sinking: They've dropped to below 50 percent in Venezuela and to 34 percent in the rest of the region. The caudillo has survived a lot of bad news before and may well survive this. But the turning point in the battle between authoritarian populism and liberal democracy in Latin America has passed -- and Chávez has lost.

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Petroleumworld News 02/01/2010

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