Is the Chavez Magic wearing off in Venezuela?

President Hugo Chávez’s supporters suffered a stinging defeat in several state and municipal races on Sunday, with the opposition retaining power in oil-rich Zulia, the country’s most populous state, and winning crucial races here in the capital.

The losses were Mr. Chávez’s second setback at the polls in the past year, after the defeat of a proposed constitutional overhaul last December that would have enhanced his powers. The results will put opponents of Mr. Chávez in charge of areas with about a third of Venezuela’s 26 million people.

“These victories came in the economic and political centers of the country,” said Luis Vicente León, director of Datánalisis, a polling firm here. “They represent the most important symbols in terms of cities and population.”

Particularly here in Caracas, the results were rooted in festering discontent over the government’s inability to lower violent crime as homicides and kidnappings have surged over the past decade, making it one of the world’s deadliest cities. In the early hours of Monday, celebratory fireworks went off over parts of the city after the results were announced.

With food price inflation at 50% and the rest of the economy sinking, it's no wonder that many of Chavez's erstwhile supporters are turning against him. The problem is will Hugo allow the opposition any say at all in the government?

The election results will be a test for Venezuela’s beleaguered political institutions, depending how the president reacts. Despite the inroads made by the opposition, followers of Mr. Chávez still control the Supreme Court, the National Assembly, the federal bureaucracy and every state company.

Mr. Chávez recently signaled that he might move to handpick new regional authorities, effectively depleting the power of opponents elected by voters.

"Who can say there is a dictatorship in Venezuela?" Mr. Chávez asked in televised comments in which he congratulated his opponents after the result were delivered by electoral officials around midnight here.

Mr. Chávez’s conciliatory tone stood in contrast to threats he had recently leveled, including a warning that he might send tanks to occupy Carabobo, a state with a large industrial base where the political opposition has been gaining strength. He had also said he would jail a top political rival, whom he called a “swine,” in western Zulia State.

The fact is Chavez still has the guns and can still threaten the opposition and cow the people if he so chooses. But he also knows that then the mask that he has so carefully maintained over these past years would fall off and he would lose support of liberals in the west as well as the social democratic left in Latin America. Having tanks roll through the streets to beat down the political opposition would even cause many (not all) of the American left to abandon him.

As oil prices continue to fall, Chavez will be left without a way to pay off his base of support - the poorest of the poor who look to him for subsidized food and housing. If that were ever to happen, Chavez would then be truly challenged as the opposition would be able to coalesce and defeat him at the polls.