Chavez's Venezuela a tinder box

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Hugo Chavez

Everyone knows about Hugo Chavez's embrace of Iran and Cuba.

And everyone knows about his hatred of the U.S.

But few outside the country understand the dire straits Venezuela finds itself in under the leadership of Hollywood's new favorite tyrant.

Despite being blessed with the largest oil reserves outside the Middle East, oil prices inside the country are at record highs.

Violent crime is soaring to the point that foreigners will not venture into certain neighborhoods, even in the capital of Caracas, without bodyguards.

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Food shortages – especially staples like bread, milk and meat – are acute. And Chavez tries to use rationing to further his own political power – by holding rallies in mega-mercados where his supporters give away scarce goods or sell them at reduced prices.

Venezuela now has the highest inflation rate in Latin America.

But, despite all those problems, Chavez has no shortage of money to spend on his military. In the past two years, Venezuela has spent more than $4 billion on arms – more than any other country in Latin America and even more than notoriously militarized Asian countries like Iran and Pakistan.

Venezuela bought dozens of fighter jets, attack helicopters and 100,000 Kalashnikov assault rifles. These weapons are needed, Chavez says, to fend off an imminent invasion by the U.S.

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