President Hugo Chavez Venezuela speaks to after the successful Referendum to Constitutional amendment in Caracas

On February 15, the prospects for genuine democratic development and good governance in the Western Hemisphere took a serious step back as a majority of Venezuelans voted by a margin of 54% to 45% to lift terms limits for elected officials. Although worded in a way to give all potential office holders the opportunity to run repeatedly, the message of the referendum was clear: President Hugo Chávez, after 13 years in office, can run for another six years in presidential office in 2012. The vote removes the last constitutional restraint on Chavez’s bid for presidency for life and opens the door for further authoritarian and socialist consolidation in Venezuela.

To achieve a yes vote, Chavez mobilized the resources of an increasingly socialist state. Persuasion, power and populist giveaways delivered Chavez the vote he craved, and demonstrates how successful Chavez has become in intertwining his personal rule with the future development of Venezuela. Chávez has turned previously separated powers of the legislature and courts into echo chambers. In short, the blueprint for Venezuela’s political and economic future will be drawn up by what the New York Times referred to as a “standard issue autocrat.”

Latin America’s hunger for progress against poverty, for greater social equity and for leaders able to make a difference in individual lives is constant. Equally constant is the emergence of populist leaders whose constitutional reform schemes, socialist, anti-market economic policies, and distaste for genuine pluralism smother limited government, liberal democracy, and real economic development.

From now until presidential elections in 2012, Chavez must govern in a deteriorating economic environment resulting from substantially lower oil revenues. Experts predict an economic tsunami on the horizon. Domestic problems like violent crime, inflation, and government corruption will make Venezuela harder, not easier, to govern. Domestic restraints may curb Chavez’s appetite for foreign adventures.

For the Obama Administration, the challenge ahead is figuring out how to deal with a highly visible, anti-democratic leader whose inflated sense of political self and grandiose dreams of a global anti-American coalitions stand in the way of hemispheric cooperation on pressing matter from economic recovery and fighting the drug trade to preventing international terrorism.