Hugo Chávez vows to keep Venezuela 'on socialist path' after re-election

President will need to deal with rising violent crime and over-dependence on oil after winning election with smaller margin

The Venezuelan president, Hugo Chávez, brandished the sword of independence hero Simón Bolívar as he celebrated his re-election with a promise to further his government's brand of socialism during a new six-year term, in which he will face several economic challenges.

"Truthfully, this has been the perfect battle, a democratic battle," Chávez told the euphoric crowd outside the Miraflores palace. "Venezuela will continue along the path of democratic and Bolivarian socialism of the 21st century."

The triumph was shared by jubilant supporters throughout Sunday night after a hard-fought but convincing victory over the opposition challenger, Henrique Capriles.

Tens of thousands of supporters descended on Caracas in cars, on motorbikes and minibuses, waving flags, honking horns and chanting: "Viva la patria!" (long live the fatherland).

In the barrios of Catia and 23 de Enero – the heartlands of Chavismo – a party mood seized the streets as red-shirted residents danced and sang while fireworks exploded overhead. Some cried mock tears as they carried the "political coffin" of challenger Capriles.

Chávez won 54.4% of the vote, 9.5 points ahead of his rival. The margin of victory gives Chávez a strong democratic mandate until 2018.

Attention now focuses on whether he can use this popular endorsement to build on the gains of the past 13 years – notably a sharp reduction in poverty, unemployment and infant mortaility – while doing more to address rising concerns about violent crime, overdependence on oil and deteriorating infrastructure.

He also faces an opposition that has united for the first time this year and gained votes despite what it said was an unfair playing field in terms of access to state resources and air time.

Thanks to the record high turnout, Chávez also won more votes this time than in 2006, though the margin of victory was tighter than in any of his previous races. Supporters said this vindicated their claims that the opposition had concocted fake polls as well as rumours about the imminent demise of Chávez to cancer.

"Spin doctors have constructed a macabre operation that violates his privacy and human decency by telling all sorts of lies. They said his death was imminent and that he would arrive at the election in a wheelchair. But look at him," said a close aide. "He's in complete condition to carry out the presidency."

But the health concerns are unlikely to disappear. "I think it's inevitable that a victory margin of less than 15% will lead to intense discussions within the Chávez camp," said Nicmer Evans, a political science professor at the Central University of Venezuela. "The subject of illness has been neutralised until now, but it'll be reopened after the vote."

Evans, who accurately predicted the outcome of the election, also expected a cabinet reshuffle. "Chávez has been failed by the people around him. He needs to change his team. We'll see that after the election," he said. Senior officials said the government would boost measures to address violent crime and economic vulnerabilities among the worst affected.

Among those who shifted allegiance from Chávez, a commonly heard cause was the growing fear of crime. In 2009, Chávez created a whole new security body – the National Bolivarian police force – but Venezuela still has one of the four highest murder rates in the world, with a murder every half an hour. The rate has almost doubled since Chávez took power to 45.1 per 100,000 of the population, in 2011.

Tough economic challenges also lie ahead. Despite its oil wealth, Venezuela has borrowed heavily in recent years and is now running a fiscal deficit. The IMF estimates the deficit at 7.4% of GDP, although private sector analysts say the figure could be close to 20%. Ahead of the election, Chávez ramped up public spending, increasing pensions, building homes and raising the minimum wage. To meet debt obligations and pay for these measures, he will come under pressure to devalue the Bolivar – which now trades on the black market at more than double the official rate against the dollar – or significantly raise oil revenues, which account for 95% of Venezuela's export earnings.

Chávez has outlined plans to more than triple production by 2020 from the heavy crude fields in the Orinoco Belt – which BP and Opec have identified as the world's biggest reserves of oil. That would push Venezuela past Iran in terms of output, but will require huge investment, technology transfer and a bigger skilled workforce. Some will come from existing partners – including China's CNPC, Chevron of the US and firms from Russia, Vietnam and India. Others, like BP and Shell, have so far been on the sidelines when it comes to developing new blocks. Managers at the state-owned PDVSA oil company said several multinationals were waiting until the outcome of the election to decide whether to participate in the expansion.

If they hoped for change, it is unlikely to come. Miguel Tinker Salas, professor of Latin American Studies at Pomona College in California, said Chávez's victory implied continuity with an existing oil policy of state-led development, bolstering sales to China and using oil to shape foreign policy.

Access to Venezuela's oil – as well as ideology and personality – help to explain how Chávez is seen overseas. In response to the election result, the US, which has seen its share of Venezuelan oil drop in the past decade, omitted direct recognition of the president's success. "We congratulate the Venezuelan people for the high turnout and generally peaceful manner in which this election was carried out," said state department spokesman William Ostick. But President Raúl Castro of Cuba, which receives subsidised oil from its Caribbean neighbour, was among the many Latin American leaders who sent warm congratulations to Chávez on his victory. "Chávez wins, the people win", said the headline on the Diario Granma website of the Communist party of Cuba.

But it would be wrong to characterise the politics of Venezuela as a simple re-run of the cold war. Chávez has a popular mandate and a very different set of challenges. Whether he will respond to his smaller margin of victory by moving closer to the centre or to more radical policies remains to be seen.

• This article was amended on 17 December 2012 to clarify that although some private sector analysts put Venezuela's fiscal deficit at close to 20% of GDP, the IMF estimate is 7.4%.


Jonathan Watts in Caracas

The GuardianTramp

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