Venezuelan President Hugo Chavez is thriving in his opposition to President Bush. The administration has struggled to respond.

BY PABLO BACHELET

WASHINGTON - Several months ago, the Bush administration decided to
implement a two-pronged policy to contain Venezuelan President Hugo Chavez:
expose him before his regional peers as a dangerous meddler and support
Venezuelan institutions such as labor unions and political parties as a way
to offset his growing power.

But the policy has gotten off to a rocky start, interviews with former and
current administration officials and analysts show.

Chavez, who openly touts his friendship with Cuban leader Fidel Castro, has
proved adept at countering every challenge thrown his way by Washington,
observers say. Latin American nations have been reluctant to turn against a
neighbor flush with oil money, and administration officials say they're
unwilling to reveal the most damning evidence against Chavez for fear of
compromising intelligence sources.

On the public-relations front, the administration has struggled to produce
an alternative to Chavez's populist appeal.

"The alternative should not be how you stop Chavez but how you have an
alternative message for the region that is more compelling," said Bernard
Aronson, who was assistant secretary of state for Latin America in the early
1990s.

LOST LEVERAGE

The Bush administration lost much of its leverage on Venezuela after it
appeared to condone a failed coup against Chavez in April of 2002,
undermining Washington's reputation as a defender of democracy. Afterward,
Washington supported an "electoral" and "constitutional" solution to
Venezuela's political crisis. With mediation by the Organization of American
States and the Carter Center, Venezuela held a recall referendum on Chavez
in August 2004 that he easily won.

After the referendum, the administration went back to the drawing board to
come up with a new policy. Officials say some in the government advocated a
get-tough approach by, for instance, turning a spotlight on allegations that
Chavez did not play fair in the referendum or turning up negative evidence
about Chavez's record on human rights and corruption . There was at least
one proposal that would have affected Venezuela's oil industry.

"Scrimmages within the administration on Venezuela were often very, very
rough," said Miguel Diaz, a former CIA analyst on Latin America who tracked
the internal debate on Venezuela last year for the Center for Strategic and
International Studies.

In January, the State Department decided to form its own task force to
better monitor events in Venezuela.

The policy review was completed in the spring. The idea was to help the
Venezuelan opposition and other "civil society" groups with money and other
resources supplied by the National Endowment for Democracy -- a private
institution that obtains most of its money from the U.S. Congress -- and the
U.S. Agency for International Development.

Chavez has accused the National Endowment for Democracy of supporting groups
that have tried to overthrow him.

The administration also wants Latin Americans and Europeans to do the same,
creating what the official described as "connections between their NGOs
[non-governmental organizations] and Venezuela."

In early June, Bush met at the White House with Mara Corina Machado, a
spokeswoman for Smate, a grass-roots citizen participation movement. Machado
is facing treason charges for accepting U.S. funds to promote the recall
referendum.

At the same time, officials have tried to put the spotlight on Chavez's
purported meddling in places such as Bolivia and Ecuador.

ROLES IN BOLIVIA

Roger Pardo-Maurer, Defense Secretary Donald Rumsfeld's top advisor on Latin
America, in July told the Heritage Institute, a conservative think tank,
that Cuba and Venezuela had a deliberate plan to make Bolivia a "Marxist,
radical, anti-U.S., pro-Cuba, drug-production state."

Rumsfeld said last month that Cuba and Venezuela have been involved in
Bolivia "in unhelpful ways."

Bush administration officials have said Venezuela provided cash and other
assistance to radical groups. But the administration has declined to go into
details, citing concerns that doing so would reveal intelligence-gathering
sources.

The result is that U.S. statements have sounded mostly empty, analysts said.

Chavez has dismissed most U.S. allegations against his government as lies or
intrusions into the sovereign affairs of a state. He has also gone on the
offensive.

He dismisses Bush's push for free trade in the hemisphere as a self-serving
"neo-liberal" ploy to further impoverish Latin Americans. He has increased
his influence in the region by spending hundreds of millions of dollars on
bonds from Ecuador and Argentina, and has offered cheap oil to Caribbean
nations.

ROBERTSON AFFAIR

The administration was embarrassed when the Rev. Pat Robertson, a religious
broadcaster and former Republican presidential candidate, suggested last
month that Chavez be assassinated.

Robertson eventually apologized, but to many Latin Americans the affair
appeared to give credibility to Chavez's assertions that Bush was plotting
to kill him.

When the United States tried to get the Organization of American States to
make sure countries are governing more democratically, Venezuela
successfully spearheaded a campaign to water down the initiative.

"Every time there is a public-relations crisis [the Bush administration]
seems to be on the losing end," says Diaz.