Half empty.

Red-hot economic growth, record oil prices and a strong president--all that should make investors in an oil-exporting country enthusiastic about the future. Unless you're talking about Venezuela's Hugo Chavez.

The August referendum went Chavez's way, sweeping him a convincing victory on the support of millions of poor Venezuelans who believe that for the first time they will see a share of their nation's oil wealth.

The prospect of stability under a continued Chavez government did immediately calm oil markets. "Venezuela disappears as a bullish factor but does not become a bearish factor" in petroleum markets, says Roger Diwan, managing director of crude markets for PFC Energy in Washington. Observers estimate that Venezuela is pumping 2.5 million barrels of oil per day--half a million less than the government claims. Oil multinationals are investing, although big production increases are years away.

It's hard to imagine what the poor will get for their support, though, as the pie has shrunk dramatically. Venezuela's 2003 gross domestic product (GDP) was 25% below that of 1998, the year Chavez took office. This year, despite better than 10% growth, will end with per-capita GDP 20% percent below that of 1998. Unemployment and inflation are both at about 20%, and the nation's sidewalks are crowded with people hawking candy and pirated music to survive.

Venezuela's long fall predates the current government, beginning two decades ago when the country failed to diversify its economy beyond petroleum, experts say. The economic decline has hit hard retailers like Caracas department-store owner Tomas Friedlander, who said his sales have dropped 40% over the past two years. "The reason we've survived is that a lot of other stores in the area have shut down," Friedlander says.