In Chávez's revolutionary heartland the passion burns, but fear of defeat grows

With just one week to go before elections, Jonathan Watts and Virginia Lopez find the radical leader's backers anxious that support for his dynamic young opponent is growing

The Guardian, The Observer, Jonathan Watts and Virginia Lopez in Caracas, Saturday 29 September 2012

Supporters of Chávez cheer during a campaign rally in Monagas, north-east
Venezuela, on 28 September. Photograph: Juan Barreto/AFP/Getty Images

Venezuela is gearing up for its closest presidential poll in more than a decade. The revolutionary incumbent, Hugo Chávez, is battling cancer and fighting for his political life. A telegenic young challenger from the right, Henrique Capriles, is gaining ground. With one week left, one voter – the hatmaker of Caracas – weighs up the options.

For half a century Juan Torres has provided hats for Venezuela's heads of state. Earning little more than the minimum wage, he shaped the panama owned by the "father of democracy", Rómulo Betancourt, when he took power in 1958, the borsalino of the centrist leader Jóvito Villalba, and the stetson donned by Luis Herrera Campíns, who presided over an era of economic decline in the early 1980s.

Now he is watching with a professional eye as a nation decides whether the revolutionary red beret that has been the trademark of Chávez, 58, during his 14 years in power will be replaced by the baseball cap of Capriles.

With just a week until polling day, most forecasters predict a narrow victory of between three and five points for the incumbent. But the gap has been closing, with many voters undecided and the huge turnouts for opposition rallies providing more momentum for Capriles, who is 40, than many analysts would have believed possible.

In this politically polarised nation, there is no doubt which side of the divide Torres is from. His neighbourhood is 23 de Enero, a bastion of Chávez supporters. In next week's poll, the president will cast his vote alongside local residents here in the Manuel Pelacios Fajardo school. Electoral banners and graffiti are everywhere – all in favour of the incumbent: the words "100% Chávez" are daubed on countless car windows. "Chávez: Heart of the Fatherland" read the posters that are fixed to every lamppost.

Although this is one of the president's strongholds, there is ambivalence: a mix of appreciation, frustration and anxiety that reflects not only many of the reasons why Chávez has held on to power but also why the vote on 7 October is likely to be closer than any other since he first won in 1998.

Torres and his son, Jonás, escort us through the neighbourhood, pointing out some of the benefits they say Chávez has brought to local people during that time: a clinic staffed by Cuban doctors, a public bus service and a new school where the walls have already been painted with a slogan, "Socialist Anti-Imperialist Commune".

Local collectives have been given considerable power, including the authority to initiate projects and bid for central government funds. Memphis Paris, the representative of a group of 5,200 residents called Three Roots Collective, said his group had been given money to improve plumbing in the tower blocks and a playground with exercise machines overlooking the valley.

At first glance the improvements look modest at best, particularly given that Venezuela is one of the world's three biggest oil producers and Chávez's presidency has been marked by a surge in the price of crude from $9 (£5.50) a barrel to more than $100 today. The country's state-run oil company, Petróleos de Venezuela (PDVSA), has generated revenues of more than $980bn.

Critics say Chávez has squandered this income with programmes aimed at buying off the electorate, while supporters say the money has been used for a long-overdue redistribution of income.

The government has spent almost $300bn on social programmes that aim to improve literacy, high school education, accommodation for the homeless, and to provide subsidies for groceries or affordable home appliances. Partly as a result, poverty levels have decreased. Unemployment has fallen from 13% in 1999 to just over 8%. Infant mortality has almost halved.

Torres's shop is in a central district of Caracas that the government has made the flagship of efforts to revitalise the city. Public squares are being cleared for music concerts, dilapidated theatres and buildings are being renovated. The British architect Richard Rogers, who was introduced to Chávez officials by Ken Livingstone, has designed a new central bus terminal.

But many voters complain that many ideas are never implemented because of corruption and inefficiency. Oil production has fallen due to poor maintenance and weak investment, the road system is dire, crime is rampant and social campaigns have petered out.

Torres says the government earmarked funds to improve the facades on buildings in his neighbourhood, but the money never reached the local community. "I think Chávez has good ideas, but the people around him have failed to carry them out. I'm disappointed. They are serving their own interests, not the revolution," he says.

Venezuela's economy has grown on average by 2.8% between 1999 and 2011. It's been outperformed by neighbouring Colombia, Brazil and Chile, none of which have enjoyed the windfall from oil. Inflation for 1999-2010 grew 961%, more than 10 times the average of the other seven larger economies in Latin America.

An overdependence on oil exports and failed currency controls have created a huge black market for dollars. Torres stopped making hats himself a couple of years ago because it was cheaper to import and sell them. He earns the minimum wage, plus commission. "Business has been bad this year. I hope it settles after the election," he says. "What we need is economic change."

The lack of dynamism is evident. Most of the buildings and vehicles in his neighbourhood look dilapidated. The national murder rate has more than doubled in the last 10 years, making Venezuela one of the three most dangerous countries in the world, with almost 20,000 people killed each year. Locals in the 23 de Enero district say that, on an average weekend, there are between five and 10 homicides. The police are not in control here.

The revolution began in 23 de Enero long before the comandante came to power. In his youth, Torres was a member of the urban guerrilla movement. "Here's where we used to throw molotov cocktails," he says as we walk through his district.

Today a red-starred flag on the lamppost in the main square of his neighbourhood proclaims this as the territory of the GHPP urban guerrilla group. One wall is daubed with a mural of the Virgin Mary holding an AK-47. Another has a portrait of Che Guevara and a declaration, "We will never go back to the past. Onward with the revolution."

Torres's son, Jonás, is a passionate Chávez supporter. "Things have improved. I have read about how it was before and I have heard from my mother about the social injustice and indiscriminate violence by the police. Chávez is the best chance for change," he says.

Nevertheless, for the first time in any presidential election since Chávez came to power, the outcome is in doubt. After a year of battling cancer, Chávez has been uncharacteristically subdued for much of the campaign, while Henrique Capriles has jetted back and forth across the country, drawing vast crowds wherever he goes.

Capriles is the first opposition candidate to be selected in a primary vote and has benefited from youthful good looks and a reputation as a political winner. Although many of his supporters hail from the neoliberal right, he has successfully eaten into Chávez's traditional vote by promising to continue many of his social policies and implement them more effectively.

The narrowing gap in the polls has prompted rumours of unrest in Chávez strongholds if the outcome is disputed. The president's aides insist they are ready to accept the choice of the electorate, but this has not ended suspicion on the streets. "The armed guerrillas have always existed. If it is a tight result and they feel cheated, they'll go out and fight for the comandante," says Torres.

Torres predicts Chávez will win by a close margin, but is reluctant to say outright who he will vote for. "If the opposition get in, I don't know what will happen. But I'm not afraid of them. I'm not afraid of anyone."