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Under the iron hand of its polarizing left-wing prexy Hugo Chavez, Venezuela has been doing its darndest to boost its local film industry — and make Hollywood pay dearly to do business there.

So far the results are backfiring. U.S. distributors are managing, albeit begrudgingly, to work within the strictures while government-backed pics are so far faltering at the wickets.

The number of local releases has admittedly skyrocketed, from an abysmal two to three pics annually to a dozen this year with 18 pics in the queue for 2007.

But “El Caracazo,” one of the pics which hews to the the government line, lured only 70,000 moviegoers, although it was released with a healthy 100 prints.

So far this year, only Jose Novoa’s mafia drama “El Don” has done well, with 400,000 admissions.

Meanwhile, the three film industry guilds, repping actors, producers and crew members, have been appealing to the government to keep the 40-year-old film subsidizer CNAC as the leading indie film body. They feel this body is reliably democratic in bestowing its funds.

Ironically, CNAC’s authority is being undermined by the state, which is pumping $10 million into production at La Villa del Cine, a spanking new complex, where Chavez himself cut the inaugural ribbon in June.

This studio complex includes film and TV sound stages, post facilities and Dolby sound labs.

When Chavez, 52, took the presidency in 1999, he wasted no time in declaring his own cultural revolution.

Last summer, Venezuela passed a comprehensive amendment to its 1993 Film Law which included what the MPA considers “a number of provisions of serious concern to the U.S. audiovisual industry operating in Venezuela.” The regs include a distribution quota requiring 20% of film releases to be local as well as new taxes for exhibs, distribs, broadcasters, pay-TV operators and retailers based on their gross receipts. These are funneled to film fund Fonprocine.

“This law may serve as a negative precedent for other countries in the region,” warns MPA senior VP Steve Solot.

(Mexico and Brazil’s regs are not particularly onerous, and in any case, are not rigorously adhered to; Argentina on the other hand is introducing a modest screen quota.)

The MPA lobbied to get a 5% tax levied on distribs to be sourced from yearly net receipts, rather than from grosses, but Chavez’ government nixed that request.

As for a reg requiring the Yanks to use the country’s two local labs for striking 20% of their prints, authorities said they would reduce that quota if the labs did not meet quality and delivery standards.

Sony Pictures, which is releasing Adam Sandler vehicle “Click” on 30 prints on Sept. 1 in Venezuela, has complied with the local print requirement.

For Fox Latin America, the screen quota will work in its favor when it releases Venezuelan thriller, Eduardo Arias’ “Elipsis” on Sept. 29. Distrib, which picked up all Latin American rights, will release it on 30 prints, high for a local film.

On average, Hollywood releases 110 pics a year in Venezuela (population 27 million) which generate some $60 million in grosses, 86% of the country’s total box office.

It’s not just Hollywood that’s irked by Chavez’s heavyhandedness. So too are local talents.

“Chavez is out to make propaganda films in the style of the old Soviet regime,” says helmer/ scribe Jonathan Jakubowicz, whose gritty kidnapping drama, “Secuestro express” became the biggest all-time local hit in Venezuela last year and was the first Venezuelan pic ever to get U.S. distribution.

Pic’s portrayal of Venezuela as lawless and corrupt did not sit well with the government, which denounced it as counter-revolutionary.

One government official’s family is suing the helmer for using his image in the film while a lawyer who claims he is doing it on behalf of the Venezuelan people, is calling for Jakubowicz’ incarceration. Jakubowicz now resides in Los Angeles and has no intention of returning.

Another Venezuelan helmer, Alejandro Saderman, moved to Argentina three years ago where he has found easier backing for his films, his latest being tango drama “El ultimo bandoneon.”

In an unusual twist, the country’s well-entrenched pirates refused to hawk Jakubowicz’ pic because they supported his message and wanted people to go and pay for it on the big screen.

This obliged their regular clients in the slums to go to the cinemas, some for the first time in their lives. Pic was number one for seven weeks and racked up a record 1.2 million admissions.

“Secuestro express,” which didn’t receive any official coin and was shot on digital, has spawned an underground digital film movement among kids in the slums. They then get the pirates to disseminate their homemade DVD copies.

In Venezuela, “film has become a way for those without a voice to speak up,” says Jakubowicz.

Juan Carlos Lossada, the prexy of the region’s only state-run distributor, denies that the government ever tried to interfere with “Secuestro express.” 

“It screened for a record period of time and even if our officials criticized it, it kept on playing,” he asserts. “In fact, the controversy probably helped stoke admissions,” he adds wryly.

He points out that Amazonia’s release slate includes pics that are openly critical of Chavez, such as Franco de Pena’s “Amor en concreto.”