By CLIFFORD KRAUSS

          CARACAS, Venezuela -- Promising a peaceful revolution to remove the "cancer" of
          corruption, Hugo Chavez Frias was inaugurated as president on Tuesday, almost seven years
          to the day after he started a failed coup.

          Trembling as he took his oath, Chavez declared, "I swear over this moribund constitution that I will
          press necessary democratic transformations."

          Speaking before Congress and 14 world leaders, Chavez gave an emotional two-hour address
          describing a Venezuela that is rotting to the core, how its 23 million people fell far short of their
          potential and how a "social time bomb" of hunger, disease and malnutrition was going "ticktock,
          ticktock."

          Interspersing poetic allusions from Walt Whitman and Pablo Neruda with more muscular anecdotes
          from the life of Simon Bolivar, Chavez pleaded with Venezuelans to work to escape "this terrible
          labyrinth we find ourselves in."

          But he gave few details on how he planned to remove Venezuelans from their maze of high
          unemployment, high inflation and decrepit services from a government dependent on shrinking oil
          revenues.

          "We are looking for a middle position," he said, "the invisible hand of the market and the visible hand
          of the state."

          After campaigning as a populist friendly to Cuban President Fidel Castro, Chavez sought to reassure
          business leaders and foreign investors by promising to attack the government's widening budget
          deficit. He pledged his support for a regional currency in the next decade, called for closer relations
          between the Andean and Mercosur trade zones, and said he would use the military for antipoverty
          efforts like road-building.

          As is customary on inauguration days, there were cannon salutes, the laying of a wreath of flowers in
          honor of Bolivar and folk music accented by sweet flutes played in the streets. But what made the
          day particularly memorable, and frightening to many among the traditional political elite, was the
          emergence of this unlikely, enigmatic man as leader of Latin America's pre-eminent oil exporter and
          leader in diplomatic affairs.

          The son of schoolteachers, Chavez grew up in the prairies, selling sweets to other children to buy
          food and books. As a teen-ager, he entered the military academy, where he studied strategy and
          honed his skills as a baseball pitcher with a strong curveball.

          The turning point of his life occurred in 1989, when food riots here led him and other young officers
          to start the coup three years later against President Carlos Andres Perez.

          The coup failed, and Chavez spent two years in jail. But his attacks against corruption made him a
          folk hero. In his speech Tuesday, Chavez unabashedly paid tribute to his comrades from the coup
          attempt who listened on a Senate balcony. Television cameras broadcast a close-up of Andres
          Perez, now a senator, wincing and crossing his arms as others joined in mild applause.

          Chavez promised again to seek a referendum that would lead to an assembly to rewrite the
          constitution. Chavez's aides said he wanted the new constitution to remove the judiciary from
          politics, add checks and balances between branches of government and remove the one-term limit
          for presidents, breaking the advantages that the two main opposition parties enjoy.

          A new constitution, Chavez said, is necessary to help remake a country that he described as being in
          the deepest of crises.

          "So much riches, the largest petroleum reserves in the world, the fifth largest reserves of gas, gold,
          the immensely rich Caribbean Sea," Chavez said. "All this, and 80 percent of our people live in
          poverty. What scientist can explain this?"

          For several years after the coup attempt, the United States refused to extend an entry visa to
          Chavez. Last week, however, he visited Washington and met President Clinton. Tuesday, Energy
          Secretary Bill Richardson, who led the U.S. delegation here, cautiously praised the inaugural speech.

          "He set a good tone for a very ambitious agenda," Richardson said. "It's a good start in the
          American-Venezuelan relationship."

          Castro took copious notes throughout Chavez's speech. Afterward, the Cuban leader embraced
          Chavez in a bearhug at a street ceremony and directed a smart salute to the Venezuelan military high
          command, some of whom fought guerrillas financed and trained by Cuba 35 years ago.

          Tens of thousands of Venezuelans, many wearing the trademark red beret worn by Chavez's
          paratroopers from the 1992 coup attempt, cheered the along a parade route.

          "Our previous governments only knew how to steal," said Ofelia Banza Carillo, 48, a homemaker
          who waved a Venezuelan flag. "Everything, everything, everything will change now. It has to."