Dec. 7 (Bloomberg) -- President Hugo Chavez's first defeat in a national election isn't likely to stop his drive to socialize Venezuela's economy.

Chavez may push to nationalize industries, seize property and weaken central bank independence using his control of all 167 seats in congress and the 32-member Supreme Court, analysts say. He also wields executive powers to rule by decree until July 2008, which they say he may use to accomplish at least some of the agenda voters rejected Dec. 2.

``He will be nothing less than a steamroller,'' said Pedro Benitez, a political science professor at the Central University of Venezuela. ``Chavez the magician is running out of tricks and that means he will resort to radical solutions to get what he wants.''

Chavez, who spoke on Dec. 5 surrounded by his top military officers, declared a ``new offensive'' to accomplish his economic goals before his term ends in 2013. He offered no details.

While the 1999 constitution bars the president from seeking the same amendments a second time, his allies could call for a constitutional assembly, said Francisco Rodriguez, a professor at Wesleyan University in Middletown, Connecticut, and former head of the Venezuelan congress's economic advisory office.

Socialist Revolution

During the campaign, Chavez, 53, said he needed the 69 proposed changes to the constitution to further his socialist revolution, transfer some national and state powers to citizens and redistribute more oil wealth through a planned nationalization of the natural-gas industry. He also sought to abolish presidential term limits.

While victory in the referendum would have given Chavez power to carry out his plans in one swoop, his supporters, led by the president of the national assembly, Cilia Flores, are urging him to move ahead in steps, using his executive authority.

Labor Minister Jose Ramon Rivero asked Chavez to create a pension fund for workers who lack social security coverage, El Universal newspaper reported Dec. 4. Pro-Chavez industry group Empresarios por Venezuela urged a reduction in working hours, president Alejandro Uzcategui said Dec. 4. The referendum called for a cut to six hours from eight.

`Any Tool'

``If history is a guide, Chavez will use any tool at hand to speed up his revolution,'' Benitez said.

The national assembly gave Chavez decree powers once before, in 2001, when he used the authority to impose 49 laws, including a land-reform measure that allowed the government to seize farms and residences a government panel deemed underutilized.

Opposition to the moves ended in a failed coup the next year and a nationwide strike in 2003 that plunged the economy into its worst-ever recession. Chavez went on to beat back a recall referendum and easily win re-election in 2006.

Majority opinion showed the first signs of a shift in June, when he shut down the most-watched television station, RCTV. Polls indicated about 70 percent of the public opposed the decision.

By proceeding with his plans now, Chavez will exacerbate imbalances in the economy.

Venezuelan oil prices have surged sevenfold since he was first elected in 1998. After the recession ended in 2004, the country began posting quarterly growth rates averaging 12 percent, supporting a fourfold increase in government spending and soaring consumer demand.

Socialist Policies

At the same time, eight years of socialist policies, including price controls and government takeovers of companies, have left Venezuela with shortages of milk and meat, an inflation rate of 21 percent -- the highest in the region --and plummeting foreign investment.

The expansion risks leaving Venezuela more dependent on oil as price and exchange controls discourage manufacturing and erode productivity, Rodriguez said. About six in every 10 items Venezuelans consume are imported, and private consumption now accounts for 71 percent of gross domestic product, compared with 52 percent eight years ago, he said.

``The key issue for Venezuela is oil revenue,'' said Michael Atkin, head of sovereign research at Boston-based Putnam Investments, whose fund holds Venezuelan debt. ``If oil revenue drops for whatever reason and Chavez can't hand out goods, things will look nasty.''

Shortages

A ban on foreign-exchange trading that Chavez imposed in 2003 means businesses and individuals now pay almost three times the official rate of 2,150 bolivars in the black market, or about 6,100 bolivars per U.S. dollar. The ban sparked a surge in the cost of imports and worsened shortages, forcing the government to limit sales of rice, oil and sugar.

``This really is ridiculous,'' said Valeria Rojas, 42, a Chavez supporter, as she waited in line with 170 people for more than an hour to buy meat at a Central Madeirense CA supermarket in Caracas. ``This is something no one can get used to.''

Economic policies that spur the shortages aren't about to change, Alonso Cervera, head of non-Brazil Latin America economic research at Credit Suisse Group, wrote in a Dec. 3 report -- a point Chavez hammered home in his Dec. 5 news conference at the presidential palace.

``For those who are boasting that our revolution stumbled across, let me tell them that today, the revolution is stronger than ever,'' Chavez said. ``The revolution is here to stay and we will continue to fight.''

To contact the reporter on this story: Guillermo Parra-Bernal in Caracas at gparra@bloomberg.net; Helen Murphy in Caracas at hmurphy1@bloomberg.net

Last Updated: December 6, 2007 23:04 EST