Venezuela's President Hugo Chavez waves a Venezuelan flag as he greets supporters at the Miraflores presidential palace balcony in Caracas, Venezuela, Sunday, Oct. 7, 2012. Chavez won re-election and a new endorsement of his socialist project Sunday, surviving his closest race yet after a bitter campaign against opposition candidate Henrique Capriles.(AP Photo/Fernando Llano)
CARACAS, Venezuela (AP) — During his re-election campaign, Venezuela President Hugo Chavez promised to deepen the public aid programs and reforms that have formed his vaunted "21st century socialism." That message won him a surprising 11-percentage point win Sunday in what many had seen as a tight race.
Still, he's set to start a fourth presidential term under the toughest circumstances he's faced with the prospect that his government's free-spending days may be over. That will likely limit how much Chavez can expand the government programs that have helped make him so popular.
In the coming years, the country of 29 million people must defuse economic time bombs such as rapidly expanding public debt, one of Latin America's highest inflation rates and a weakening currency. Experts say Chavez will need to make hard economic choices in the coming years, including whether to devalue the currency, the bolivar, which would make the money in Venezuelans' pockets suddenly worth a lot less.
"He's going to have to deal with some very basic, mundane capitalist things, like reducing inflation," which stands at 18 percent, said Eduardo Gamarra, a Latin American studies professor at Florida International University in Miami.
"Investment in social issues is great, but he needs to do other things as well that are going to make that economy more productive."
Making Chavez's task harder is an opposition that, for the first time in his nearly 14 years in power, includes nearly half of all voters, who cast ballots Sunday for challenger Henrique Capriles.
Although Chavez won by 11 percentage points, it was his smallest margin of victory ever and less than half of his lead in the last election in 2006. Meanwhile, with about 97 percent of ballots counted the opposition had gained about 2.2 million more votes than it did in 2006, compared to about 735,000 more votes that Chavez won.
"It's not a formidable defeat for the opposition, nor is it a big triumph for Chavismo," said Mariana Bacalao, a political science professor at Central University of Venezuela. "Never has the opposition been so strong."
Even as he celebrated victory before tens of thousands of jubilant supporters early Monday, Chavez appeared to acknowledge he has let down some Venezuelans. Polls say many people are worried about everyday ills such as soaring homicide rates, power blackouts and crumbling infrastructure.
"I pledge to you, I repeat, to every day be a better president than I've been," he said, while also promising greater effectiveness and efficiency from a government whose payroll has bloated to at least 2.4 million people.
Meanwhile, the 58-year-old leader has said tests show he is cancer-free, but his illness has undoubtedly forced him to slow his pace and cut back on his frenetic days of late-night speeches and Cabinet meetings. He's endured two rounds of surgery since June 2011 to remove tumors from his pelvic region as well as chemotherapy and radiation treatment. He had announced last year that he was cured only to reveal months later that the cancer had returned.
Venezuela would have to hold a new election if Chavez were forced to step down during the first four years of his term.
More health problems would make it even more difficult for Chavez to push ahead with his promised drive to expand the state's role in the economy and provide even more entitlements to Venezuelans.
"As long as Chavez remains as the key driver here, there might be far more inertia than change," said Javier Corrales, a U.S. political science professor at Amherst College. "He has a long list of unattended issues, and if he tries to do them all at once he's going to feel overwhelmed."
At the heart of the president's problems has been declining productivity in the oil industry, which accounts for 95 percent of exports and funds Chavez's social programs. Governing the country with the world's largest proven oil reserves has so far insulated Chavez from the fallout of his confrontational polices, including a drop in foreign investment.
Ahead of the vote, Chavez spent billions of petrodollars on building tens of thousands of homes as well as on aid such as cash handouts for single mothers.
Venezuelans will choose state governors in December, and Chavez is likely to save any devaluation until after that election. Such moves are always hugely unpopular because they erode the value of salaries, which have already been hit hard by inflation in Venezuela.
Associated Press writers Jorge Rueda and Vivian Sequera contributed to this report.
Ian James on Twitter: http://twitter.com/ianjamesap