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Adios amigos: With oil revenues dwindling, Chávez may find it harder to keep Venezuela's allies happy.

Also on ForeignPolicy.com: Two of Chávez's top allies in Venezuela's government defend the president in a special interview.

With the impending Feb. 15 referendum to abolish term limits for all Venezuelan elected officials, including President Hugo Chávez himself, the last thing he needed was for the price of Venezuelan oil to fall by more than half. His government had already postponed oil refinery projects to confront a budget deficit, and it is struggling to stave off currency devaluation ahead of Sunday's vote.

Venezuelan government resources are overwhelmingly channeled to the referendum campaign, which in mid-January was technically tied, with 51.5 percent in support of abolishing term limits, and 48.1 percent against. According to Margarita López Maya, a Venezuelan social scientist and fellow at the Washington-based Woodrow Wilson International Center, Chávez "can win with a minimal margin and maintain his project" of self-styled socialism at home. But even if Chávez does eke out a referendum victory, low oil prices may have taken the wind out of his policy of petrodollar diplomacy.

If Venezuelan crude commands $37 per barrel on average this year (well below the $60 figure in the approved 2009 federal budget), total oil exports would amount to $36 billion -- half of what is paid to service public and private foreign debts and for imports and other ordinary expenses, writes Domingo Maza Zavala, a former Central Bank director. An early casualty could be the regional alliances promoted by Chávez to challenge what he considers U.S. hegemony in Latin America.

Even before trouble hit the oil market, Chávez was having problems turning his dream of a unified Latin America into reality. His main regional initiative, the Bolivarian Alternative for the Americas (ALBA), was intended to obstruct the U.S.-promoted Free Trade Area of the Americas. To put teeth into ALBA, Chávez launched the Banco del Sur, a regional bank signed into existence in December 2007 by founding members Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay, and Venezuela. Banco del Sur hoped to raise between $7 billion and $10 billion that would be used to capitalize loans for social programs and for an interlocking grid of highways, bridges, waterways, ports, and power lines.

But Banco del Sur still does not have any paid-in capital, nor has it named officers or staff. And it is not yet engaged in development funding. Early on, Brazilian officials obstructed Chávez's hopes for tapping neighboring countries' international reserves to capitalize the bank by saying their reserves were off-limits. Venezuela has signaled it would put up 70 percent to 80 percent of the bank's capital, but hasn't yet delivered.

Venezuela's failure to come up with the cash could have long-term diplomatic consequences. Venezuela's good relations with other Latin American countries are largely based on Chávez's largesse -- generous donations of oil and aid, and indirect assistance in aircraft, vehicles, and personnel. No one knows how much has been spent on oil diplomacy. The biggest ticket item -- donations of crude oil and derivatives to Cuba topping 94,000 barrels a day -- was valued at $3 billion in 2008, according to some estimates. In Bolivia, where U.S. aid now totals $125 million annually, Venezuela is expected to exceed U.S. assistance levels. But Chávez's lavish promises to create or upgrade refining capacity in five countries (Brazil, Cuba, Jamaica, Nicaragua, and Vietnam) have only been fulfilled so far in one country -- Cuba.

Venezuelan government finances are notoriously opaque, because aid funds can be drawn from several different government development funds and stabilization funds. Ambassadors are known to disburse aid from their checkbooks during official trips in friendly countries, making accounting impossible. Yet it is still clear that Chávez's ability to pursue oil diplomacy slips with each drop in the price of petroleum.

Chávez is by no means broke. Foreign exchange reserves held by the Central Bank now total at least $28.6 billion, but this amount is significantly less than what was held prior to the Jan. 21 transfer of $12.5 billion to Venezuela's National Development Fund. "He still has some money, and everybody is being as nice as they can to get money out of him," says Robert Bottome, editor of VenEconomía economic research publications, who has reported on the country's economy for 50 years. But, he adds, the government will have to borrow for the 2009 budget. Low oil prices are shrinking the economy, which is estimated to have grown less than 5.5 percent in 2008 -- a 3 percentage point drop from the previous year. In 2009, Venezuela could experience either imperceptible growth or even a recession if oil prices fail to recover. Like most countries, Venezuela might find that foreign aid is one of the easiest budget items to cut.

Chávez's axis of alliances is further challenged by shifts in geopolitics that will likely reduce the appeal of Bolivarianism in favor of pragmatism and new channels of cooperation. U.S. President Barack Obama's popularity in the region could enable him to engineer a reengagement with Latin America, including opening a dialogue with Cuban leader Raúl Castro, which could potentially affect Venezuela's relationship with Havana. Brazil's newfound economic power and influence might also bolster its willingness to assume its natural place as a regional leader. For the United States, Cuba, and Brazil, the promise of transforming hemispheric relationships might transcend commitments to Venezuela.

All of this suggests that Venezuela's most ambitious regional initiatives may already be thwarted. On Feb. 16, Chávez might awake to find that he has been given a new lease on political life, only to lead a revolution that cannot expand beyond the home front.