(For a TAKE A LOOK on Honduras, click on [ID:nN28343997])
* Chavez, leftist allies ramp up anti-U.S. rhetoric
* Obama largely praised in Latin America over Honduras
* Obama, Chavez at risk if crisis turns violent
By Patricia Zengerle
CARACAS, July 17 (Reuters) - Leftist Venezuelan President Hugo Chavez has ratcheted up his anti-U.S. rhetoric three weeks into the Honduran crisis, dampening hopes for rapprochement between oil trading partners who have been bitter diplomatic rivals.
Chavez initially blamed Washington for the June 28 ouster of his leftist ally, Honduran President Manuel Zelaya, but then toned down his noisy campaign to demonize the United States in Latin America, as U.S. President Barack Obama was praised for his quick actions to condemn the military coup.
The rhetorical ceasefire between the rival capitals ended this week as the crisis dragged on without Zelaya's return. Frustrated, Chavez and his allies blasted the United States.
"The Honduran army wouldn't have gone forward without the approval of the State Department. I don't think they told Obama, but there's an empire behind Obama," Chavez thundered on Thursday at a summit in Bolivia where he, Bolivian President Evo Morales and other leftist leaders met with Zelaya's foreign minister to show support.
Morales blamed Washington for the coup, and Cuban leader Fidel Castro published a column on Thursday saying: "The idea that the U.S. ambassador in Tegucigalpa, Hugo Llorens, did not know about the coup is absolutely false."
"Honduras is very important to Chavez," said Daniel Hellinger of Webster University in Missouri. "If Zelaya is kept out, then he does get to blame Washington."
"If Zelaya returns, I suppose that it is a win for Chavez, but the U.S. will also claim that it has acted in support of democracy," Hellinger said.
The Obama administration quickly called the ouster of Zelaya illegal, demanded his reinstatement, cut off military aid and left negotiations to a respected Latin American leader, Costa Rican President Oscar Arias.
That stance, in line with international calls for Zelaya's return to office, was viewed as a welcome departure in a region that Washington has long sought to dominate, notably by backing repeated right-wing military coups.
"The position that the administration has taken so far ... has diffused a lot of disposition toward suspicion toward the United States," said John Carey, a Latin American expert at Dartmouth College in New Hampshire.
Although the United States is one of OPEC nation Venezuela's biggest oil clients, Chavez has demonized Washington while waging his self-declared socialist revolution, and U.S. officials in turn have used Chavez's vehement anti-Americanism to demonize efforts toward social change in Latin America.
Relations reached a low ebb during the administration of Obama's predecessor, George W. Bush, which endorsed a 2002 coup in Venezuela that ousted Chavez for two days.
WILL THERE BE BLOOD?
Despite the newly heated rhetoric, most observers still expect some kind of negotiated solution in Honduras, such as an early election in which neither Zelaya nor interim President Roberto Micheletti could run, and say chances of a violent outcome remain slim.
But a lack of progress from negotiations to date and protests blocking highways in coffee and textile exporter Honduras ahead of Arias' weekend mediation talks have raised the specter of violence, and a possible end to good feelings about the new administration in Washington.
"If things don't change quickly ... you could have another attempt for President Zelaya to re-enter the country, you could have groups from the de facto government and the Zelaya supporters clashing ... that's the most unpredictable scenario," said Eric Farnsworth, vice president and head of the Washington office of the Council of the Americas.
"It would be a scenario that would be fraught with complications for the (Obama) administration," he said, stressing he sees a negotiated settlement as much more likely.
Such an outcome could also turn sour for Chavez, or any outsider seen as promoting chaos in Honduras.
Brazil, Peru, Costa Rica, Mexico and other nations do not want Central America to plunge into an era of instability and civil war like what it suffered in the 1980s, especially at a time of global economic crisis.
But if things go badly in Tegucigalpa, and Chavez and his allies are held responsible, he could lose important friends.
"I think the United States has much less of a risk than Chavez, if Chavez were to try to change his rhetoric into action," said Robert Pastor, a Latin American expert at American University in Washington who was U.S. President Jimmy Carter's national security adviser on Latin America.
"I would have hoped that the United States privately and quietly told Chavez, 'we're working together on this, you can say what you need to say publicly but we're not talking about any military action' ... If it doesn't remain the case, I think it would be Venezuela that remains at risk." (Additional reporting by Terry Wade in La Paz; editing by Frank Jack Daniel and Eric Beech)