The people's en-suite

Observations on Venezuela

I arrived in Caracas to find my hotel being nationalised. The Hilton occupies a vast complex in the centre of town, now a somewhat unsavoury area. The government, which owns the lease, has told the company to leave by May.

It felt comically apt. The fate of the Hilton encapsulates perfectly what is going on in Venezuela: Hugo Chávez's revolution has moved up a gear. All around Caracas, giant red posters remind people of the "five motors" of the revolution. Images of Chávez are everywhere, from the ubiquitous graffiti to the "21st-century socialism" wristwatches on sale in the street markets.

For much of his eight years in power, the bombastic comandante has battled for survival. His opponents tried to unseat him militarily (in 2002), economically (via an oil-sector strike and lock-out in 2002-2003) and politically (with a recall referendum in 2004).

The state and Chávez have morphed into one. Congress, entirely made up of representatives of pro-government parties, has effectively neutered itself by giving the president the right to rule by decree. By May, by extending government control over facilities in the Orinoco basin, Chávez will have complete power over the oil sector. The telecoms and electricity sectors are the next targets for nationalisation. He has removed his vice-president and finance minister from office, both seen as independent-minded, and is turning his attention to the legislature.

With Congress reduced to rubber-stamping, the country's most important policy platform has become Aló Presidente, Chávez's radio and television broadcasts, nightly on radio and weekly on television. Even this overexposure seems not to damage him, and watching has become the only way to track the twists and turns in presidential thinking.

Chávez's championing of the poor and underprivileged, and his verbal attacks on the wealthy "who are more committed to Miami than Venezuela", has heightened tension in a city that already had a serious crime problem. Yet, ironically, there is a boom in conspicuous consumption among the rich, fuelled by entrepreneurs who have moved into selling construction services and security and military equipment to the government. In restaurants in upmarket districts, customers spend money like water and property prices are soaring.

In Caracas, people either love Chávez or hate him. But outside the city, there is less ideological fervour. On the Caribbean coast, in the small town of La Vela del Coro, I met Wilfredo Medina, an industrious mayor who has pioneered what is now one of Chávez's favourite themes: the "explosion of popular power". I watched local representatives discussing problems of health, education and security. One activist, a dedicated young Chávista, told me that his loyalty was to the community first and only then to el comandante.

"But when you criticise Chávez, even a little, you're accused of being unpatriotic and disloyal to the cause," he also confided.