* Chavez defeats youthful opposition rival Capriles
* Win extends Chavez's rule to 20 years, health permitting
* Chavez's supporters celebrate in the streets
By Andrew Cawthorne and Eyanir Chinea
CARACAS, Oct 7 Venezuela's socialist President
Hugo Chavez comfortably won re-election on Sunday, quashing the
opposition's best chance at unseating him in 14 years and
cementing himself as a dominant figure in modern Latin American
A fist-pumping Chavez led throngs of supporters in
celebration from the balcony of the presidential palace - just
months after cancer treatment had taken him out of the public
eye and left him fending off rumors he was dying.
A new six-year term will extend his rule of the OPEC member
state to two decades, giving him a chance to deepen his
oil-revenue-fueled socialism while continuing to support
left-wing allies in Latin America, though a possible recurrence
of cancer still hangs over him.
"Today we've shown that Venezuela's democracy is one of the
best democracies in the world, and we will continue to show it,"
the 58-year-old Chavez shouted, dressed in a signature red shirt
and waving a replica sword of independence hero Simon Bolivar.
Crowds roared, and the smoke of fireworks clouded the air.
Chavez took 54.42 percent of the vote, with 90 percent of
the ballots counted, compared with 44.97 percent for young
opposition candidate Henrique Capriles.
Since taking power in 1999, the flamboyant former soldier
has become a global flag bearer of "anti-imperialism," gleefully
baiting the U.S. government while befriending leaders from Iran
to Belarus whom the West views with suspicion.
At home, casting himself as an heir to independence hero
Simon Bolivar, Chavez has poured billions of dollars in oil
revenues into anti-poverty programs, and skillfully used his
humble roots and folksy oratory to build a close connection with
"Chavez is my joy. He will continue protecting the poor and
defenseless," said Gladys Montijo, 54, a teacher.
Highlighting relief among Latin American allies, Argentine
President Cristina Fernandez wrote via Twitter: "Your victory is
our victory! And the victory of South America and the
Opposition leaders appeared crushed by the loss, with some
Capriles supporters bursting into tears at his campaign
headquarters as the news sank in.
The youthful state governor put on a brave face, celebrating
his "house-by-house" campaign as the start of a long road to
changing the direction of the country.
"I hope a political movement that has been in power for 14
years understands that almost half the country does not agree
with it," a subdued and tired-looking Capriles told crestfallen
Chavez's victory was considerably slimmer than his win of 25
percentage points in 2006, reflecting anger at his failure to
fix basic problems such as crime, blackouts and corruption.
Record turnout of 80 percent on Sunday will boost Chavez's
democratic credentials, though critics said his use of state
resources made a mockery of fairness during the campaign.
After heavy campaign spending, South America's biggest oil
exporter faces growing pressure to devalue its currency in 2013,
likely spurring inflation that has been a top complaint of
In the past, Chavez has taken advantage of election wins to
press forward with radical reforms. His often-capricious
nationalizations may now turn to some untouched corners of
Venezuela's banking, food and health industries.
Cancer, though, could change that.
The constitution says if an incumbent steps down in the
first four years of a six-year term, a new vote would be called.
Under such a scenario, Capriles or another opposition candidate
would have another crack at power.
During a year's treatment starting in mid-2011, Chavez
endured three operations for two cancerous tumors, and
chemotherapy that left him bald, exhausted and fearing death at
his lowest point.
He wrongly declared himself cured once, and repeated that in
July after a recurrence, prompting skepticism from doctors who
say that at least two years must pass before a cancer patient
can be given a clean bill of health.
Chavez has looked bloated and at times exhausted in recent
months, but he ran a surprisingly energetic end to his campaign,
even managing to dance, sing and strum a guitar at rallies.
Any sign of a downturn in his health in the future would
stoke a succession debate in the ruling Socialist Party.
Congress head Diosdado Cabello, Foreign Minister Nicolas
Maduro and Vice President Elias Jaua all look well-placed for a
potential push for leadership.
But none of Chavez's allies come anywhere near his
popularity, so if there were to be another election, Capriles
could be a favorite after a widely praised campaign that has
made him well-known across the nation of 29 million people.
Though the 40-year-old Capriles is the once-rudderless
opposition's best leader of the Chavez era, his position is not
guaranteed. There are other young political figures - including
Zulia state governor Pablo Perez and telegenic former Caracas
district mayor Leopoldo Lopez - waiting in the wings.
STATE ELECTIONS AHEAD
Now, Capriles and other leaders of the Democratic Unity
coalition must dust themselves off and prepare for state
governorship elections in December, when they will hope at least
to increase the opposition's influence at the local level.
Chavez's new six-year term begins on Jan. 10.
His latest election win continues a remarkable story that
began with his birth on July 28, 1954 in a mud hut belonging to
his grandmother in the rural village of Sabaneta.
He joined the army and spent years plotting before a failed
coup in 1992 against President Carlos Andres Perez.
On his way into jail, wearing a red military beret that was
to become his trademark, Chavez gave a two-minute televised
speech admitting that his revolution had failed "for now." The
speech electrified the nation and launched his political career.
Pardoned in 1994, Chavez began crisscrossing the country
sharing his vision and eventually shocking the political elite
by sweeping to victory at the ballot box in 1998.
With private media and business leaders opposed to his rule,
Chavez was briefly toppled by army dissidents and street
protests in 2002 - but returned two days later thanks to
military loyalists and popular counter-demonstrations.
He also survived an economically crippling oil strike.
Chavez's win will probably mean more foreign investment from
politically allied countries such as China, Russia, Iran and
Belarus, while Western investors are more cautious. Relations
with Washington are also likely to remain on edge, though
Venezuelan oil has continued to flow to the United States over
the years despite the diplomatic tension.
Wall Street had been hoping for a Capriles win, so prices of
Venezuelan bonds - among the most actively-traded emerging
market debt - are likely to dip on Chavez's triumph.