Independent reviews since 1999.
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I'm not crazy about Japan, probably have watched one too many WWII documentaries or read one too many books, need to remind myself sometimes that its 2006, not 1941. 
As for the game, I think you're putting too much thought into things. They probably just thought South America would make for a good setting for the game.
Um, they think it will sell because many Americans don't like Chavez. Although he has some degree of a cult of personality and sometimes kind of nuts, he's still not a dictator. I think there are better countries to attack in video games.

I don't think most American's even know who Chavez is, he only gets attention with the occasional rant of his that will get a brief headline every once in a while before quickly being forgotten. I doubt there are many gamers itching to get a chance to shoot virtual South Americans to get their oil.
"I think there are better countries to attack in video games."
Like I said, you're putting too much into this. I think there are better things to be worried about.
I know that venezula had coup a few years ago. Someone took the country over for a couple of days, then something went wrong and Chavez returned to power. I guess it could make a good setting for a game considering the situation in Venezula.
And about Chavez, I don't know much about him. He doesn't seem quite that evil, as the worst thing he has done is shut down a newspaper that called for the overthrow of his government during the coup. I don't understand the hatred for chavez, he doesn't seem quite that bad. Must have something to do with oil, or is there something about him I don't know? He seems to be an ordinary ruler for his area, even though his associations with Mahmoud of Iran and Castro can't be good.
The US government doesn't like him for the simple reason he opposes the US government's interest in all matters in this hemisphere.
His policy's are one that are popular with his constituency aka fostering socialism. Some sort of military action in his country is incredibly plausible. We'll most likely support whatever coup attempt to overthrow any nation that heavily leans toward socialism. That's pretty much been state policy for well over half a century and I highly don't expect that to be changing anytime soon.
Socialist? It's been known for a while. Chavez recently declared himself a Trotskyist, for God's sake. (Strange that he's so friendly with Castro, when Castro gave citizenship to Trotsky's assassin.)
(Obligatory video game related comment so this will make it past the censors for being pertinent to this board, and so Dave doesn't shut this thread down for diverging into politics: "Contra is fun and my favorite Street Fighter character is Ryu." There.)
[QUOTE=wur]Socialist? It's been known for a while. Chavez recently declared himself a Trotskyist, for God's sake. (Strange that he's so friendly with Castro, when Castro gave citizenship to Trotsky's assassin.)[/QUOTE]
Castro will do that with anyone who seeks asylum, as long as they are willing to support him publically. He's done the same with many American and international criminals.
[QUOTE=wur]I guess Chavez is actually now a dictator. He just consolidated power and assumed broad powers via a constitutional edit today.[/QUOTE]
The most effective dictators are always the ones who follow the law. Like Hitler, for instance: after the Enabling Act was passed, he went back to get it renewed by the Reichstag every four years. It's dictators like that who put the lie to constitutional democracy.
Law is too neutral to be a defining point for dictators, even when they head so-called democracies. This is especially true if the voting public, at least at first, concedes to such dictatorship, over and over again. They convince themselves that they aren't under a dictatorship long before said dictator gladly relieves them of the requirement of conceding.