A NEWSDAY SPECIAL REPORT

BY BART JONES AND LETTA TAYLER | STAFF WRITERS

May 1, 2005

Despite the fresh bloodstains, the streets of Caracas were eerily quiet the night after Venezuela's leftist President Hugo Chavez was briefly toppled in a military-backed coup in April 2002.

But the gleaming presidential palace was abuzz with activity as nearly 400 prominent citizens signed a decree that would fleetingly transform the fragile democracy into a dictatorship.

Signers of the document - which Chavez voided after his supporters dramatically swept him back to power hours later - included Maria Corina Machado, an activist from one of Venezuela's leading families.

The Carmona Decree, named after coup leader and president-for-a-day Pedro Carmona, dismantled all three branches of Venezuela's government. In the aftermath, Machado's civic group was awarded tens of thousands of American tax dollars from two major U.S. agencies - The National Endowment for Democracy and the U.S. Agency for International Development. The funds were used partly to encourage voter participation in a subsequent effort to oust Chavez, this time through a recall referendum.

A Newsday examination reveals that the U.S. support of Venezuelans opposed to Chavez has deepened the rift between the two nations, raised doubts about two respected U.S. agencies and led to a result that is questionable at best. This is a tale of the United States pouring millions of dollars into an apparent attempt to oust a popularly elected Latin American leader - an effort so poorly implemented that experts say the net result has been to solidify Chavez's hold on power and has led U.S. senators to worry that administration policy could provoke Chavez into suspending oil shipments, which currently account for 15 percent of U.S. imports.

Officials at the U.S. State Department, USAID and NED vigorously deny they are trying to unseat Chavez. But during her tour of Latin America this past week, U.S. Secretary of State Condoleezza Rice accused Chavez of having a "destabilizing" influence in the region and called for a "free and completely democratic Venezuela."

While the State Department asserts that U.S.-funded projects are aimed at bolstering a multi-party system and promoting dialogue in a nation wracked by political violence, recently declassified documents suggest a bias toward the opposition.

"They're giving aid to groups that are trying to topple Venezuela's democracy," said Eva Golinger, a Long Island attorney and Chavez sympathizer who, along with investigative journalist Jeremy Bigwood, obtained the documents through Freedom of Information Act requests. "They're funding one side and that one side's goal is to get rid of Chavez. ... It's definitely about regime change."

Meetings between U.S. officials and Venezuelan opposition leaders, combined with Washington's initial praise of Chavez's undemocratic ouster, have led many critics to charge that the White House either winked at or aided his brief overthrow on April 11, 2002.

U.S.-Venezuelan relations are in such a tailspin that five ranking members of the Foreign Relations Committee took Rice to task during her January confirmation hearings. U.S. hostility toward Venezuela is "hypocritical," given Chavez's numerous electoral victories and the White House's close friendships with far more authoritarian-style leaders, criticized Sen. Lincoln Chafee (R-R.I.).

An unrelenting Rice countered that Chavez is "a negative force in the region" who must be isolated - a message that she repeated like a mantra during her tour of Latin America.

Rice's crusade has met a lukewarm reception in Latin America, a region growing increasingly wary of U.S. intervention. And Chavez, a flamboyant former paratrooper whose mentors include Cuba's Fidel Castro, has delighted in turning U.S. criticism to his political advantage. Rice is an "imperial lady moving across Latin America," said Chavez.

Chavez, 50, contends Washington is plotting his demise so it can steal Venezuela's oil reserves, the largest outside the Middle East.

"Don't make the mistake, Mr. Bush, of ordering my assassination, because you will regret it," he boasted in one of his numerous diatribes earlier this year against President George W. Bush "... If these perverse plans succeed, Mr. Bush can forget about Venezuelan oil."

White House alarmed

When Chairman Richard Lugar (R-Ind.) asked Rice during her confirmation hearings what Washington would do if Venezuela cut off its oil sales to the United States, she replied that it could fall back on emergency reserves and develop more domestic energy sources.

Though many political observers dismiss Chavez's rhetoric as hot air - he also refers to Bush as "Satan" - the Venezuelan leader also has made several concrete moves that alarm a White House accustomed to acquiescent Latin American leaders.

This past week, he has signed an array of trade and other agreements with Castro, and canceled an annual U.S.-Venezuelan military exercise dating back to 1970, saying the U.S. training officers were spreading a negative image of his government. Chavez also has dramatically built up Venezuela's weapons arsenal and is creating a militia he hopes will number 2 million. He also is forging ties with Iran, China and Russia, while railing against the U.S. on the Iraq war and a proposed hemispheric free trade agreement.

But U.S. policy to counter Chavez has failed and his popularity, particularly among Venezuela's impoverished majority, continues to grow. The best evidence is that Chavez defeated the recall referendum spearheaded by Súmate last August, with 58 percent of balloters voting to keep him in office until his third term ends in January 2007. It was the eighth time he or his allies have won at the polls since 1998, and Chavez has made it clear he intends to remain in office for years.

"The NED and USAID are doing what they do all over the world. They're promoting U.S. interests," said William I. Robinson, author of "A Faustian Bargain," a book about alleged intervention by the two funding agencies in the 1990 election in Nicaragua. But Venezuela, Robinson continued, "is the one case in the world where it completely backfired."