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FACTBOX-Problems for Chavez in Venezuela election year

Jan 25 (Reuters) - A gloomy economy, electricity rationing and revelations of graft are the biggest threats to Venezuelan President Hugo Chavez’s popularity in years and may threaten his majority in the National Assembly in September elections.

Following are some of the problems he faces:

Electricity and water rationing

On several levels, rolling power cuts forced by a long drought that hit the hydroelectric plants look to be Chavez’s biggest headache this year. Venezuela is a major oil producer and its people are used to cheap and plentiful energy.

The cuts, which may get worse as the dry season drags on into April, will erode Chavez’s popularity, affect business and make it harder to emerge from a deep recession. Major oil sites have their own power plants, but will be more vulnerable.

Facing anger from his own supporters, Chavez ditched rationing in the capital Caracas, which is likely to make the problem more severe elsewhere and could mean shortages continue after the annual rains begin in May - close to the elections.

Price rises

Venezuela has the highest rate of inflation in the Americas, at 25 percent last year, and prices are expected to surge several points more this year after a sharp devaluation of the currency on January 8. Economists’ forecasts for the year stretch from around 30 to 60 percent inflation or more.

Private Media

The government on Saturday pulled the plug on cable broadcaster RCTV International. The decision follows the closure of the original RCTV in 2007, an unpopular move because of the network’s soap operas, which have huge audiences. With the cable channel off the air even paying viewers lose the shows.

Economy

Soaring prices were less of an issue during economic good times that abruptly ended when oil prices dropped from record highs. The economy shrank 2.9 percent last year and is likely to contract for several months more.

Corruption

Chavez fired one of his closest ministers in December after the man’s brother was arrested for involvement in a banking scandal. Anger at enrichment by people close to the government is high in Venezuela’s poor neighborhoods where voters support the president but often loathe his officials.

Oil

Prices are up to around $80 a barrel, which along with the devaluation gives Chavez much more money to play with ahead of the elections, where he is trying to hold onto a large majority. Analysts have mixed forecasts for oil prices this year, but any large fall would be a serious blow to his plans.

Banks

The government nationalized several small, failing banks before Christmas and jailed at least 10 bankers, many who had close links to the government. This month Chavez hinted that another, larger bank was in trouble and warned its owners he was prepared to take it over. A move against a large bank would risk causing wider problems in the financial system.

Tension with Colombia

Chavez has slashed trade with Colombia in a spat over a U.S. military presence in the neighboring country that some fear may escalate and spark flare-ups on the border. The former soldier accuses the United States and Colombia of planning to attack Venezuela and has ordered his troops to defensively prepare for war. (Reporting by Frank Jack Daniel; Editing by David Storey)

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