Chavez's defeat a warning to his Andean allies

By Alonso Soto

QUITO (Reuters) - Venezuelan President Hugo Chavez's stunning defeat in a vote on expanding his powers through constitutional changes may serve as a warning to his Andean allies as they try the same tactic to make leftist reforms.

Chavez suffered his first defeat at the ballot box in Sunday's referendum vote, a clear boost for opponents of the anti-U.S. bloc he leads in the Andean region.

Bolivian President Evo Morales faces opposition groups fiercely resisting his reform plans, and Ecuador's President Rafael Correa is drawing up his own package of proposals.

Although Chavez's proposals were the most far-reaching, all three men want to use constitutional rewrites to gain wider powers and push through changes aimed at giving more state resources and power to the poor.

Chavez has led the charge but many Venezuelans feared he would use the powers to impose a dictatorship. Even his moderate supporters were concerned, and he fell short.

"It shows the other guys that you have to be very careful when pushing controversial, radical reforms because it could backfire," said Alberto Ramos, a senior analyst at Goldman Sachs. "They might assess the situation better, and not rush for radical changes that the population is not ready for."

The Venezuelan reform package included scrapping term limits on Chavez's rule, allowing him control of the central bank's foreign currency reserves and giving him more powers to nationalize large areas of the OPEC economy.

While Chavez remains popular, his proposals united the usually fractured opposition, and a nascent student movement took to the streets in often violent protests.