MICHAEL PENFOLD is Associate Professor at the Institute for Higher Administrative Studies in Caracas and co-author of Dragon in the Tropics: Hugo Chávez and the Political Economy of Revolution in Venezuela, which Foreign Affairs named one of the best books of 2011 on the Western Hemisphere.

Leopoldo Lopez, left, with presidential candidate Henrique Capriles Radonski. (Jorge Silva / Courtesy Reuters)

In October, Venezuelans will head to the polls for the fourth presidential vote since Hugo Chávez took power in 1999. With the announcement earlier this week by Leopoldo Lopez that he is ending his candidacy and throwing his support to Henrique Capriles Radonski, the young and charismatic governor whom many expect to be Chávez's main contender, the opposition is gradually consolidating its power. It is slowly becoming a more serious challenge to the regime in Caracas, which remains electorally competitive itself.

The stakes are higher than at any point in the last decade, for both the government and the opposition. A Chávez defeat would signal the end of a leftist revolution that has radically transformed Venezuela and, some argue, Latin America in the twenty-first century. A Chávez victory, however, would inflict a fatal blow to a renewed opposition that has struggled, and now seems to be succeeding, to gain some traction in a socially polarized country.

To be sure, Chávez will not give up easily. He has framed the election as a confrontation that leaves no room for political negotiation. Although the president enjoys robust popular support, he faces three obstacles besides Capriles Radonski: dysfunction in the economy, a weak administration that is unable to cope with high crime rates, and his alleged battle with cancer.

For now, high oil prices serve as an ongoing life raft for Chávez, and a massive expansion of public expenditures has spurred growth in domestic consumption. Meanwhile, Caracas has doubled down on its control of the economy, tightening regulations, exacting price controls, and expropriating businesses. Previously, Chávez used such controls as finely tuned instruments for preempting the politically charged private sector. But now he has taken direct control of major national and foreign businesses to advance his agenda.

In the past few years, Chávez targeted Sidor, the giant steelworks company owned by Techint, a huge