In the corner of a toyshop in downtown Caracas lay a dusty pile of battery-operated talking Hugo Chávez dolls. El Presidente was dressed in full military regalia and, at the touch of a button, would deliver a speech on the Bolivarian revolution. "Sale: half-price," said a notice propped up on top. The sales assistant gave them a disparaging glance. "I wish I could buy them all," she said conspiratorially, "so I could burn them."

One thing you can say with certainty about Venezuela's president is that he provokes strong emotions. People in Caracas offer their political opinions almost before introducing themselves. On my first foray into the city's streets, I asked a bookseller where I could buy a map, and he gripped my arm fervently before replying: "There is only one thing you need to know about Caracas, and that is that we are revolutionaries." The whole population has been politicised; it has also been polarised into two ferociously hostile camps, Chavistas and the derogatorily named opposition of "esqualidos" ("squalid people"). The tone of debate is so angry that the situation is often described as a "cold civil war".

With a power-crazed Chávez at the helm, the fear is that it may not remain cold.

Like many cities in Latin America, Caracas is characterised by the sharp contrast between its spacious and tranquil affluent areas and the poor, gang-ridden barrios that sprawl up the surrounding hills. Since the attempted right-wing coup that briefly deposed Chávez in 2002, a dangerous face-off between the two has been evolving. Carlos Caridad Montero, a Caracas-based film-maker, took me to see one of the city's front lines: the motorway that runs between Petare, the largest barrio, and the middle-class area of Terrazas del Ávila. On one side of the road, the brick shacks of Petare are stacked on top of each other like brightly coloured Lego. On the other stands a set of grim, if slightly better-heeled, tower blocks.

"Everyone in these blocks is armed in case the gangs from Petare try to invade the area," Carlos told me. "And on the other side, you have the gangs, who are also heavily armed. In Petare, they call the people who live on this side gringos, as if they were American rather than Venezuelan."

William Ury, a conflict resolution expert at Harvard, identifies three typical symptoms of a country on the brink of civil war. The first is that the population begins to arm itself; the second is that each side begins to dehumanise and impute evil intentions to the other; and the third is the politicisation of the media. Contemporary Venezuela has each of these conditions in abundance. Ury suggests that the key to defusing the threat is to strengthen the "third side": those organisations or people who empathise with both sides of the conflict and will encourage others to resolve their differences non-violently.

The Chávez regime is making it increasingly difficult for anyone to remain on the "third side". Carlos has good left-wing credentials (he trained in Cuba). He is broadly sympathetic to Chávez, but is also concerned about the effects of political polarisation. However, working for Villa del Cine, the year-old government-backed cinema organisation, he will be expected to produce what the minister of culture has termed "cinema with an ideological tendency". Films perceived to be critical of the government or to cast Venezuela in a bad light will not be welcomed. "I co-operate because I believe there is important work to be done that does not involve criticising Chávez," he said. "The problem is that as soon as I tell people who I am working for they assume my work is 'propaganda'. You are forced on to one side or the other."

Another prominent film director, Alejandro Bellame, told me that "it is true we still have nominal freedom of speech. But now what you say has consequences. If you dare to criticise, more and more doors will be closed to you. This system rewards loyalty above talent or hard work."

Despite the divisive revolutionary rhetoric, many middle-class professionals support Chávez's determination to integrate poorer communities into Venezuelan politics. Yanay Arrocha, a publicist working for the recently closed anti-Chávez television station Radio Caracas Televisión (RCTV), told me: "The achievement of this government has been that the great majority of people now discuss politics and are interested in the nation. Poor people understand that they have rights, and rich people understand that they have a responsibility, and that there are problems to resolve." But the price has been a painful erosion of common values, she said. "The attitude that is transmitted from the top is that if you think differently from me, you are my enemy."

The social breakdown in Venezuela makes its presence felt in many ways, not least the 80 per cent increase since 2000 in the number of Venezuelans - mainly the educated professionals any developing country desperately needs - living in the United States. Street crime and delinquency have also grown alarmingly: according to the United Nations, Venezuela recently overtook Brazil in having the highest rate of gun- related violence in the world among nations not at war.

In Caracas, homicide has become the most common cause of death for men between 15 and 25. Much of the violence is contained in the poorer barrios, although "express" kidnappings and carjackings are a significant preoccupation across the city. "We have been subjected to a political rhetoric which in some way justifies the use of violence as a response to poverty," said Bellame. "What Chávez has not grasped is that you can't create solidarity by decree."

Chaos and unrest

Until lately, opposition to Chávez was characterised as "right-wing" or, in the terminology used by the president and his supporters, "imperialist". Since May, when the government shut down RCTV, the country's most popular channel, this has been changing fast. The charges against it were of anti-government bias, in particular its refusal to air news of the pro-Chávez protests that brought him back to power after the 2002 coup. However, RCTV was predominantly an entertainment channel, and showed some of the nation's favourite soap operas, or "novelas". In a young country, its 53-year broadcasting history gave it national heritage status; one acquaintance described it as "part of our collective consciousness". Polls showed that 70 per cent of Venezuelans disagreed with the decision to take it off the air.

RCTV has been replaced by TVes (pronounced té vès, or "you see yourself"), a government channel that has the apparently laudable aim of moving away from a western, consumerist agenda and reflecting the "real" Venezuela. But when I tuned in at prime time on a Saturday evening, it was broadcasting an hour-long programme about the armed forces, encouraging conscription to the reserves. An army general was explaining, over footage of Iraqi insurgents waving guns, that ordinary Venezuelans had to be trained in tactics of "asymmetrical resistance".

"What the country needs now is union, complete union between the population and the armed forces," he said. The journalist conducting the interview smiled and nodded.

"Chávez is, above all, a military man," explained Ivo Her nández, a professor of political science, when I went to see him at the Simón Bolívar public university on the outskirts of Caracas. "Politics for him is a battle: there are no greys - just black and white. The idea of doing things consensually doesn't enter his head. In no sense does this situation benefit Venezuelans from any social group. He has caused too much chaos and unrest for the country to develop." The university itself is buzzing with dissent, with "freedom of speech" graffiti daubed on walls and cars throughout the leafy complex. Students in yellow T-shirts run around putting up posters advertising rallies and protest marches.

The RCTV shutdown has been the catalyst for an important new wave of opposition, spearheaded by a national student movement. Almost daily, students have been marching through the streets of the capital, protesting against curbs on freedom of speech and, crucially, on the independence of universities (Chávez has announced plans to replace independent student unions with government-friendly "Popular Student Power" councils). The protesters - who are from public and private universities alike, and therefore from diverse social backgrounds - do not use the emotive anti-Chávez rhetoric employed by the right-wing opposition. Instead, they promote the idea of "national reconciliation", which they symbolise by painting their hands white.

I attended a student rally at a baseball stadium in central Caracas. Thousands of young people from around the country were packed in, waving Venezuelan flags and chanting, "We are students, not coup-plotters." Sindy ópez, a fresh-faced 19-year-old from Simón Bolívar University, was there with her friend Maria González.

"When they closed RCTV, we really got desperate, and furious about the lack of freedom of expression and diversity of thought," she said. "We realised we could not let it carry on. It is not like the president says - I'm not from the elite; my family doesn't even own a house. I just can't see this happen to my country."

Chávez has responded to the protests by claiming that those involved are "representatives of the international bourgeoisie" who are being manipulated by the right. He called on those living in the barrios to "defend our revolution from this fascist aggression" - a comment that was interpreted by many RCTV supporters as an incitement to attack.

"We have been trying to make our voices heard non- violently," said one protester. "The problem is that the president wants violence." So far, the marches have been peaceful.

The students have been dubbed the "2007 generation" by the Venezuelan media, and have become a focus for protest from other pockets of opposition, including journalists. Their agenda centres on inclusive politics; having grown up under Chávez, they are well aware that they will not succeed without the support of poor communities. They are attempting to create a dialogue, with students who live in the barrios being encouraged to set up discussions and consultations that feed back into the movement.

"Every one of us needs to bring the debate to their work, their family, their barrio," said one of the student leaders, Stalin González. "We don't want to impose any idea or ideology on anyone. All we want is for every Venezuelan to have a say in how we construct this country."

Chávez will have to listen to their message - and soon.

Hugo's friends and foes

WARM

Ken Livingstone Chávez's visit to London in 2006 to see the mayor concluded with a deal like no other. In return for $32m worth of diesel oil, to be used to subsidise London bus travel, the Greater London Authority would provide expertise and advice to the Venezuelan government on projects from transport and cleaning up rivers to tourism. Livingstone himself is head of the Venezuela Information Centre.

Alexander Lukashenko When Chávez visited Belarus in June, the Belarusian president (known as Europe's last dictator) praised him as "a man of extensive knowledge". Lukashenko pledged co-operation; Chávez stated his desire to "form a team". There is speculation that his recent visits to both Belarus and Russia have been to arrange major weapons purchases. Vladimir Putin has sold Venezuela $3.5bn of weapons in the past several years.

Fidel Castro Chávez regards Castro as a father figure and Cuba as a model for his Bolivarian dream, and Castro has committed himself to helping him achieve it. Chávez has provided Cuba with oil and poured capital into its economy in return for educators and medical professionals. Castro has complimented him for being "a champion of the cause"; Chávez has stated Venezuela should head "toward the same sea as the Cuban people . . . a sea of happiness, true social justice and peace".

Evo Morales In April 2006, the Bolivian leader signed up to Chávez's "Bolivarian Alternative for the Americas", a managed trade agreement and anti-American alliance that also involves Cuba. Venezuelan aid has poured in. Deals were concluded in May 2006 including partnerships between the state-owned oil companies and joint mining and fertiliser ventures. In March, Venezuela paid the legal bills for Bolivia's controversial gas nationalisation. Morales's opponents fear that he is leading Bolivia down the path to a presidential monopoly of power.

Mahmoud Ahmadinejad The Iranian president had good reason to welcome Chávez to Tehran again this month, as his government faces another round of sanctions by the UN Security Council. Chávez is defending Iran's nuclear programme and promising to unite the Persian Gulf and the Caribbean. "I thank God that Iran and Venezuela are standing together for ever," he said.

COOLING

Luiz Inácio Lula da Silva The ethanol deal that Brazil signed with the US in March blunted Chávez's dream of an anti-US alliance in the south. In May, he described Brazil's national congress as a "parrot" of the US. Lula coldly replied: "Chávez has to look after Venezuela, I have to look after Brazil."

ICY

George W Bush In September, Chávez called Bush the "devil" at the UN General Assembly. Last month, a US military psychological profile described Chávez as insecure, malignantly narcissistic and driven by a need for adulation. The Bush administration tacitly backed a coup that briefly ousted Chávez in 2002, and has made no secret of its distaste for a leader who has thrown an economic lifeline to Castro's Cuba.

Research by Marika Mathieu and Zain Sardar

Related article: Chávez: the defence