President Hugo Chávez started his new term of presidency in early 2007 and proclaimed that he would implement his ideas of the 21st century socialism in the next six years by pushing forward social reforms. His failure at the referendum in early December，however，indicated that his camp is not as strong as imagined.Venezuela’s economy is in a cycle of strong growth，the highest in Latin America. Nevertheless，high inflation rate has become a challenge for President Chavez’ ability to govern the nation. By taking advantage of its huge oil revenues，Venezuela is playing an active role in regional affairs. In addition to engaging in cooperation with other Latin American countries，Venezuela has also been making efforts to develop relations with Russia，Belarus and Iran. Social situation in 2007 is relatively stable，with unemployment rate declining and wages rising. The government continues to carry out its social welfare programs. However，there are still several unfavorable factors that tend to hinder government’s ability to maintain social stability.