Chavez allies insist he's still running Venezuela

CARACAS (Reuters) - Allies of Venezuela's convalescent President Hugo Chavez insisted on Friday he was still running the OPEC nation despite his prolonged stay in Cuba for the removal of a cancerous tumour.

Army chief General Henry Rangel Silva and ministers moved quickly to head off speculation about any power vacuum or political infighting after Chavez, 56, revealed late on Thursday he was still receiving treatment after the operation.

In a separate phone call to state television late on Friday, the charismatic, authoritarian Chavez gave few further details about his condition but said he was "in frank recovery."

"I'm eating well, I'm well looked after and in good spirits," he said, repeating the account he gave on Thursday of the discovery and removal of a cancerous tumour in Cuba after an initial operation to excise a pelvic abscess.

Chavez thanked his friend and mentor, former Cuban President Fidel Castro, for persuading him to undergo the checks that found the more serious tumour.

"If it hadn't been for Fidel, who knows what labyrinth I would have found myself in today," Chavez said, adding there were "no complications" from the second operation.

Clearly anxious to demonstrate he was still running Venezuela during his recovery in Cuba, Chavez reeled off energy and infrastructure projects he was monitoring and said he had summoned several ministers, including Energy Minister Rafael Ramirez, to join him for consultations in Havana on Saturday.

He did not say when he would be back from Cuba, nor specify the treatment he is receiving, which has led to rumours the malignant cells may have spread, requiring chemotherapy.

Local media has said Chavez could have prostate cancer.

One source close to the Venezuelan medical team following Chavez's recovery said the diagnosis had revealed a cancer that required aggressive treatment that could take several months.

A wing of the Caracas Military Hospital was being prepared to receive him when he returns, the source said.

No official updates on Chavez's medical condition have been released excepts his own accounts on Thursday and Friday.

"CHAVEZ IN CHARGE"

The absence of the socialist leader -- who has dominated Venezuelan politics since 1999 and projected his leftist views across Latin America and the world -- have raised doubts about his ability to campaign for a presidential election in 2012.

It was also a humbling admission of mortality from a normally supremely confident politician with a string of polls wins who has often taunted foes he will stay in power to 2021.

With doubts swirling over how long his recovery could take and opponents questioning how Venezuela should be ruled in his absence, Venezuelan Vice President Elias Jaua insisted Chavez was in "full exercise of authority" from Cuba.

"Let no one have any doubts -- it's Chavez who's in charge here," echoed Ramirez, the energy minister.

While wishing the president a fast recovery, the opposition accused the government of lying about his condition.

They also argued that under the constitution, he should delegate powers in the case of prolonged illness or absence.

"We don't know when the president is returning ... There could be a flood of demands (arguing this) in the courts," said Ramon Aveledo, leader of the Democratic Unity opposition bloc.

General Rangel Silva said the military, a pillar of support for Chavez's government, would guarantee constitutional order during his absence.

The president, he said, would be home soon. "He is getting better, he's fine," Rangel told state TV.

Chavez, one of the world's fiercest critics of Washington, confirmed postponement of a regional summit scheduled for July 5 in Venezuela on the 200th anniversary of its independence.

Markets have generally reacted positively to news of Chavez's health problems, on the presumption they improve the chances of a more business-friendly government taking over.

Venezuela's benchmark 2027 bond jumped 4.7 percent initially on Friday to bid at 78.000 before retreating to close the day at 76.250 with a yield of 12.746 percent.

"Political vacuums are rarely to be encouraged but this one could lead to a slowdown in public spending and could raise the likelihood of an opposition victory in the next elections and thus a less confrontational governing style," said Richard Segal, an emerging markets analyst at Jefferies in London.

(Additional reporting by Mario Naranjo, Pascal Fletcher, Daniel Wallis, Deisy Buitrago, Diego Ore, Eyanir Chinea and Girish Gupta in Caracas, Jeff Franks in Havana, Andrew Quinn in Washington and Carolyn Cohn in London)

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