Relations with U.S. further deteriorated after President Chávez 11 Sept expelled U.S. ambassador “in solidarity with President Morales” (see Bolivia), threatened to cut off oil exports. Chávez strengthened military, economic ties to Russia: 2 Russian nuclear bombers in Venezuela for military exercise mid-month; leaders announced joint Russia- Venezuela Caribbean naval manoeuvres for Nov; Russia 26 Sept granted $1bn loan for arms purchases. Govt 19 Sept expelled 2 HRW activists after report criticising Chávez’s civil liberties record.

President Chávez 31 July issued 26 decree-laws– made public 4 Aug – that further strengthen govt’s economic, political and social power; opposition criticised as attempt to enact constitutional reforms rejected in Dec referendum. Chávez 18 Aug ordered takeover of Mexican cement firm Cemex’s Venezuelan assets. Supreme Court 6 Aug upheld comptroller general’s anti-corruption ban on 258 mostly opposition candidates for Nov state, municipal elections.

Diplomatic relations with Colombia reestablished (see Colombia). Comptroller general’s anti-corruption ban for Nov state and municipal elections reduced from 371 to 258 candidates; still includes most prominent opposition candidates. Supreme court yet to rule on challenges to constitutionality; public discontent over court’s silence increased.

President Chávez 8 June urged FARC to end armed struggle (see Colombia). Chávez 10 June revoked intelligence decree-law criticised for violating civil liberties. Govt announced new stimulus package 11 June: set up $1b fund for key sectors, scrapped financial transactions tax. Comptroller general confirmed anti-corruption ban on 400 mostly opposition candidates in Nov state, municipal elections; national electoral council said would abide by list, urged supreme court rule quickly on appeals.

Relations with Colombia remained tense after evidence of Caracas’ supposed ties to FARC disclosed (see Colombia). President Chavez denied authenticity of documents, questioned partiality of Interpol. Govt accused Bogotá of illegal incursion after 60 troops entered just inside Venezuelan territory 17 May. Chavez said would not tolerate secession of Bolivia’s Santa Cruz (see Bolivia); warned “contagion” might spread to Venezuela’s Zulia state. Govt revoked plan to revise school curricula after widespread protests from parents, teachers organisations.

President Chávez continued pushing radical reforms rejected in Dec referendum: private enterprises in steel, cement sectors early month – including Argentine, Mexican concerns – nationalised; law taxes on foreign oil companies raised, laws on police, military reserve and education reform decreed. Police operations against radical pro-Chávez groups in Caracas slums 3 Apr met with blockade of armed individuals, demonstrations. Protesters threatened “military response” if operations continued. 17 Apr pro-Chávez United Socialist Party of Venezuela registered before National Electoral Court ahead of Nov regional elections.

President Chávez criticised domestically for “unnecessary” troop mobilisation to Colombian border (see Colombia); U.S. considering placing Venezuela on terrorism sponsors list for FARC links. UK court 18 March suspended order freezing $12bn assets of state oil company PdVSA in ExxonMobil dispute. Comptroller-general disqualified 400 opposition candidates from contesting Nov 2008 elections; appeal pending. PSUV party formally established 9 March after Chávez elected its president 2 March. Suspected Guajira cartel head Hermágoras Gonzalez arrested 9 March.

Several small bomb blasts mid-Feb in Caracas, 1 killed; previously unknown Grupo Venceremos de la Izquierda Central Unida claimed responsibility, motives unclear. Chávez threatened to cut U.S. oil supplies 10 Feb after U.S., European courts froze $12b assets of state oil company PdVSA to guarantee repayment should ExxonMobil win compensation for Venezuelan assets’ expropriation. Caracas asked ExxonMobil to resume participation in World Bank-sponsored talks, paid $1.8b compensation to European oil firms U.S. annual narcotics report condemned Venezuela’s “demonstrable failure” to fight drug trafficking 29 Feb. Food shortage protests continued; Chávez warned may nationalise food producers.

President Chávez stepped up harsh rhetoric against Colombia in aftermath of hostage liberation (see Colombia) accusing  Colombian  and  U.S.  governments of preparing military intervention. In mid-month visit to Colombia, U.S. officials had criticised Chávez for failing to stem cocaine trafficking and cautioned against Venezuela’s arms purchases. 1,200 troops sent to Colombian border to prevent food smuggling from country 22 Jan.

Voters rejected proposed constitutional changes in 2 December referendum, 51% to 49%. President Hugo Chavez accepted result, said would leave office at 2013 end of term, but vowed to continue reforms. Diplomatic spat with Bogotá continued as Chavez threatened to reduce trade and FARC hostage swap failed (see Colombia).