For neighboring Colombia, which Chávez has long portrayed as a proxy for a meddling U.S. government, the change has been particularly pronounced. Relations with Bogotá were icy as ever when President Juan Manuel Santos took office this summer—two year earlier, Chávez had even ordered tanks to the 1,375-mile border, which was closed in 2009, and Colombia openly accused him of aiding and abetting its leftist guerillas, who take refuge on Venezuelan turf. Chávez has since worked to embrace his new counterpart, meeting personally with Santos, deporting guerillas, reopening the border and agreeing to repay Venezuela’s $800 million debt to Colombian business.

In the Chávez government’s strongest gesture to date, Venezuela late last month arrested and agreed to extradite a top guerilla commander, a move that has made some observers cautiously optimistic that Chávez’s cooperation could push Colombia’s peace process along. “This could put pressure on the guerillas to look for a negotiated solution,” says Aldo Civico, a conflict-resolution expert at Rutgers who has worked extensively on the issue.

In 2008, when Chávez called Colombia “the Israel of Latin America,” he was riding a wave of regional clout after his backing helped a string of allies into power—Bolivia’s Evo Morales, Honduras’s Manuel Zelaya, and Ecuador’s Rafael Correa. But it has been a steady stream of bad news for Chávez since. Zelaya was ousted in a 2009 coup, and last year Correa nearly suffered a similar fate. Now, Morales is facing a wave of unrest; last week protesters in La Paz even burned the Venezuelan flag. Brazil, meanwhile, has emerged as the region’s top international actor, on a platform that stresses traditional diplomacy instead of confrontation.

But it is Chávez’s headaches at home that may be his primary reasons for easing up abroad. “This is a very different Chávez than two years ago,” says Javier Corrales, a professor at Amherst who specializes in Venezuelan democracy. “His economy is a mess. He’s losing popularity. And I think he realizes that projecting antagonism abroad now hurts him more than it helps.”

Opening the Colombian border restored trade with a key economic partner, while easing tensions overall indirectly help relations with the U.S., which is the top importer of Venezuelan oil. Murder and crime rates, meanwhile, continue to spike to all-time highs—a problem many observers say is exacerbated by a growing drug trade, which Chávez would be wise to address in concert with Colombia. Crime and the economic concerns were front and center in last year’s election setback. Those issues should continue to dog Chávez in the run-up to the 2012 presidential election—and he might elect to keep his trademark aggression focused inward as he gears up for what is starting to look like a serious fight.