SANTIAGO - The result of Sunday's referendum in Venezuela, in which the "No" option prevailed against the country's President, is a major turning point for Latin America. In the past nine years, Hugo Chavez has won 11 elections in a row and become a major reference point in the region. For much of the outside world, the complex currents of change buffeting Latin America have been reduced to what is happening in Venezuela, severely distorting our understanding of them.

The victory of the Venezuelan opposition, however slim (51 per cent to 49 per cent), represents a significant shift from the established trend over the past decade in the country of Simon Bolivar, whose name Mr. Chavez has appropriated, in his efforts to bring about the "Bolivarian revolution" - not just in Venezuela but also in the rest of Latin America, where he has actively promoted his "21st century" socialism.

The overlapping of his presidency with the rise of the left in Latin America (eight of 10 countries in South America are now ruled by left-wing or left-leaning parties or coalitions) has led to a widespread (if misleading) tendency to conflate his attempts at revolution with broader regional trends, giving him a worldwide platform quite unrelated to developments on the ground.

Mr. Chavez, a former paratrooper and leader of a failed coup against then-president Carlos Andres Perez in 1992, finally came to power in the 1998 election. He made the most of the bankruptcy of Venezuela's two-party system. The electorate got tired of a four-decade-long situation in which Christian Democrats and Social Democrats alternated in power, in an arrangement that was very comfortable for the political and economic elites but did little to improve the standard of living of the popular sectors. Endowed with the richest oil reserves in the Western Hemisphere, Venezuela still managed to keep between 40 per cent and 50 per cent of the population under the poverty line.

Enter Hugo Chavez, whose dark skin and quick wit quickly endeared him to the Venezuelan masses, who saw him as one of their own, and who was of a very different ilk from the Europeanized elites who had ruled the country for so long, pocketing much of the country's oil income in so doing. With a deft touch and an uncanny sense of timing, Mr. Chavez quickly moved to consolidate his power, putting in place in 1999 a new constitution that considerably increased his powers, extending the presidential term from five years to six, and allowing for a one-time re-election. He also put in place a variety of social programs that have reached out to the low-income sectors, thus consolidating his basis of support.

Sunday's referendum put to a test his effort to extend much further his already considerable control over the state apparatus: The 69 proposed constitutional changes (to his 33 originally suggested reforms, the legislative assembly, controlled by him, added another 36), which implied altering about a third of the constitution's articles, included extending the presidential term from six to seven years, allowing for the indefinite re-election of the head of state, putting an end to the central bank's autonomy, and reorganizing the country's regional and administrative divisions. People realized these were not just cosmetic reforms, but proposals that allowed Mr. Chavez to get something very close to total power within the ostensible framework of a democratic dispensation.

Even for some of his supporters, such as General Raul Baduel, one of Mr. Chavez's earliest and most loyal backers and someone who was instrumental in turning around the 2002 coup against him, this was simply too much of a naked power grab, and they turned against him, as did many university students, who took to the streets to campaign for the "No" option. This explains why, only 12 months after being re-elected with 63 per cent of the vote in December of 2006, Mr. Chavez endured such a humiliating defeat Sunday.

The message of the Venezuelan referendum is a clear one. Latin America, a region whose economies have picked up quite strongly over the past five years and is otherwise enjoying, as is Canada, the benefits of the worldwide commodity boom, is still grappling with a 40-per-cent poverty rate and the highest inequality anywhere. Sick and tired of the "Washington consensus" policies that were rammed down the throats of almost all countries in the region during the 1990s, the electorates have been searching for different solutions, many of which (such as those of Chilean President Michelle Bachelet and Brazilian President Luiz Inacio Lula da Silva) have come from the left.

But this does not mean citizens are ready to throw out the baby with the bathwater - that is, to get rid of the democratic institutions that have become entrenched south of the Rio Bravo since 1990.

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.