By Andrew Cawthorne and Diego Ore
HIGUEROTE, Venezuela, Jan 21 (Reuters) - Venezuela's opposition leader has welcomed President Nicolas Maduro's dialogue with once-vilified political foes but also suspects it may be a ploy to defuse anger over his failure to control crime and end economic scarcities.
After years of polarized politics dating from predecessor Hugo Chavez's 14-year rule, Maduro's socialist government has held a string of meetings with opposition governors and mayors since December to strategize over violent crime and other national problems.
A curt handshake between opposition leader Henrique Capriles and Maduro at one meeting was the most visible sign of the rapprochement. It was their first encounter since last year's disputed presidential election and followed months of mutual insults.
"Time will tell if this was for TV, just a photo opportunity, or if there really is an intent to unite the country and win the war on violence," Capriles, the centrist 41-year-old governor of populous Miranda state, told Reuters.
"It suits them to cool the political heat ... By lowering tension and asking (us) to work with them, they buy time. But let's see in 3 months when there's no milk - what will they say then? It's unacceptable you can find whisky but not milk, diapers, flour, sometimes even soap. The world upside-down!"
The participation of Capriles, who also met for eight hours at the weekend with a minister who once helped put him behind bars, has raised hackles in the opposition's more militant wing.
'MEET THE DEVIL'
Capriles and the Democratic Unity coalition lost the presidential election last April by just 1.5 percentage points. They then saw Maduro, 51, consolidate his position in local elections in December, when his candidates won 10 percentage points more of the overall vote than rivals.
Less moderate opposition leaders believe Capriles should be taking a more aggressive stance, such as advocating street protests, and are challenging his leadership.
Capriles, speaking late on Monday at a housing project in the coastal town of Higuerote, said the majority of Venezuelans were relieved at an easing of political tension and a truce in the vitriolic rhetoric that had been flying.
"If you stop insulting me, well those on this side are going to stop hurling insults. That's a good thing," he said. "If I have to go to hell and meet the devil for the sake of our people's security, I will do it."
"This doesn't mean that we're giving up our struggle. Some people get confused, they think the one who shouts loudest is the cleverest, when it's totally the opposite."
While supporting government-opposition dialogue, Capriles has little confidence in Maduro's ability to resolve crime rates that are among the world's worst or chronic economic problems such as shortages of basic products and Latin America's highest inflation rate.
"The problem of insecurity has overwhelmed the government," he said, noting some 20 crime plans under Chavez and Maduro had failed while underlying causes such as a corrupt judiciary were still not on the national agenda.
"This Castro-communist model, of the state controlling every sector of the economy, has failed here and around the world ... They're trapped. Is the government correcting things? It seems not. What's next? More shortages, inflation won't go down."
'FIGHTING FOR MILK'
With no more elections on the horizon until a parliamentary vote in late 2015, Capriles said opposition leaders' focus should be on maintaining unity while fixing grassroots problems to demonstrate to Venezuelans that there is an alternative.
Capriles supports a Brazil-style model of free-market economics with strong social welfare policies.
He says he worries, though, that Venezuelans could simply become accustomed to queues, shortages and soaring prices - "fighting for a liter of milk" - while the rest of Latin America progresses.
"What's this government most concerned about, Venezuelans' welfare or staying in power? I have no doubt, staying in power."
Having fallen short in two presidential bids - against Chavez in 2012 and then Maduro last year - Capriles' role as opposition flag bearer is an uncertain one. For now, he has focused on his duties as governor of Miranda, a state ranging from Caracas suburbs to Caribbean fishing villages.
"I honestly feel more alive than ever!" he said in Higuerote, looking more refreshed than the haggard figure he sometimes cut during two punishing presidential campaigns.
"This is a moment for new leaders to emerge, for renovation. My role is not fixed, I don't believe in lifelong posts."
Though not drawing the same crowds or creating the same stir as during his election campaigns, Capriles was warmly greeted and embraced by excited residents in a poor area where malaria, floods and the need for building materials were among locals' concerns.
Some women jokingly begged him to marry them. (Editing by Brian Ellsworth, Kieran Murray and Andrew Hay)