UPDATE II: On July 6, 2011 the Guardian blinked again. On its website, it quietly changed the word "denounces" in the headline to Rory Carroll's article to "criticizes". It would take a much more drastic rework than that to make the article accurate but it's nice to see that they are feeling the heat.
On July 4, 2011, the Guardian posted a transcript of Carroll's Q&A with Chomsky – as they should have in the first place.
According to Chomsky it looks accurate, and even before hearing back from Chomsky I could tell it "sounded", so to speak, way more like him than Rory Carroll's July 3 article.
There was no missing the glee with which Rory Carroll reported on July 3 in the UK Guardian that "speaking to the Observer last week, Chomsky has accused the socialist leader [Hugo Chavez] of amassing too much power and of making an 'assault' on Venezuela's democracy."
The article closed with an open letter Chomsky wrote to Chavez asking for clemency in the case of Judge María Lourdes Afiuni, who (under house arrest since January, 2011) had been in prison since 2009 facing corruption charges.
This is not the first time Rory Carroll has taken a highly selective interest in Chomsky's views on Latin America. When Chomsky signed an open letter in 2008 critical of Nicaraguan President Daniel Ortega, Rory Carroll also jumped all over it. At about the same time, Chomsky signed an open letter to Colombian President Alvaro Uribe about far more grave matters but it was ignored by the Guardian. At the time, I asked Rory Carroll and his editors why they ignored it but they never replied to me. They also ignored an open letter to Uribe signed by Amnesty International, Human Rights watch and various other groups. I asked Carroll and his editors why that open letter was ignored and – as usual – no one responded.
There is clearly good reason not to trust Rory Carroll or the Guardian in their reporting about Venezuela, so I contacted Chomsky by email and asked him the following questions. His replies are below.
Q: I've searched for a transcript of your remarks to the Observer online but not found one. Is it available to your knowledge?
CHOMSKY: The Guardian/Observer version, as I anticipated, is quite deceptive. The report in the NY Times is considerably more honest. Both omit much of relevance that I stressed throughout, including the fact that criticisms from the US government or anyone who supports its actions can hardly be taken seriously, considering Washington’s far worse record without any of the real concerns that Venezuela faces, the Manning case for one, which is much worse than Judge Afiuni’s. And much else.There’s no transcript, unfortunately. I should know by now that I should insist on a transcript with the Guardian, unless it’s a writer I know and trust.
Q: Do you think Venezuela is less democratic a society today than when Chavez was first elected in 1998? The impression given by the Carroll article is that you believe that the concentration of executive power that has taken place under Chavez has made it less democratic than 13 years ago.
CHOMSKY: I don’t think so, and never suggested it.
Q A recent study by Mark Weisbrot showed that the private media retains a 95% audience share in Venezuela.  Many have used that kind of statistic as a talking point to show that "free expression " has not been trampled under Chavez. However, in my view, it points to a major failure. Unelected media barons continue to dominate public debate – though not as much as in previous years. Would you agree with me or do you see things differently?
CHOMSKY: A lot depends on what those media are. For example, Turkey now prides itself on at last allowing a Kurdish radio station, but I believe it mostly plays music. The way to deal with private media barons is not to suppress them but to develop publicly run media that have greater appeal.
What follows is my translation of a Q&A with Chomsky that appeared in the Brazilian newspaper FOLHA. According to Chomsky it provided a much better representation of his views than both the Guardian and the New York Times. 
FOLHA – The way she was treated convinced you of [Venezuelan Judge] Afiuni's innocence?
CHOMSKY – The letter says nothing about guilt or innocence. It does not address that issue. Personally, I consider the charges rather weak, but neither I nor the Carr Center are able to evaluate the evidence. The letter is a plea for clemency on humanitarian grounds given the unfortunate events of the last three years. It implies that the judicial process was not fair. It says she has suffered enough violence and humiliation and should receive clemency.
FOLHA – Human rights groups and the OAS (Organization of American States) criticize the Venezuelan government for lack of judicial independence. What is your position?
CHOMSKY – I think criticism by Amnesty International and the OAS should be taken seriously. I should add that criticism made by the United States is absurd. At this point, for example, Bradley Manning, who has not been convicted, is imprisoned for almost a year, mostly in solitary confinement, which amounts to torture. That is not the only case like that.
FOLHA – Do you think the fact that President Chavez is sick in Havana may have some impact on his request for clemency?
CHOMSKY – I see no connection with the petition for clemency. But I know about the president's health and hope for his full and speedy recovery.
FOLHA – When you were in Venezuela in 2009, what were your impressions during talks with Chavez?
CHOMSKY -I spent a couple of hours with him. I gave lectures, interviews, went to visit one of the slums. It was very interesting and informative, especially of his personal history, his politics, and relations with the United States.
FOLHA – Given that Chávez is a vocal admirer of yours, what do you think the impact of your letter will be when it is published?
CHOMSKY – I must say that I'm involved with this type of thing all the time, in several countries. You never know how it will work, but we try.
FOLHA – Has Chávez ever formally responded to pleas for the judge's freedom?
CHOMSKY – He has made no answer, but we almost never receive replies from government executives, except meaningless ones.
FOLHA– As a defender of Chavez and other leftist governments in Latin America, do situations like this let you down?
CHOMSKY -To say that I am an defender of [the government] is somewhat misleading. I am a defender of Latin American independence so that it can address huge internal problems that have been an international scandal for a long time.
This began to happen in the last decade. For the first time in 500 years there have been movements in Latin America towards regional integration, something that has been stifled for a long time. Significant efforts have been made to address serious problems of inequality, poverty, and high income concentration. I think that's very good, and I certainly defend that. I think the developments in South America in the last decade are probably the most exciting in the world. At this time the so-called Arab Spring may be the start of something similar in the Middle East.
But there are problems everywhere, including Brazil, and including the U.S. that seriously worry me.
FOLHA – Problems related to the functioning of democracy?
CHOMSKY -Take the judiciary, since we are talking about it. When you have military trials, and prolonged pre-trial detention in conditions that amount to torture in the U.S., those are serious problems.
FOLHA– In Venezuela, your expectations have been disappointed?
CHOMSKY – I have no particular expectations. I follow with interest what happens. I think there are problems and also progress. I hope they show mercy in the case of the judge, that shortcomings with the judicial system are resolved, and that programs to reduce poverty, expand access to health care, remain successful and vibrant.
FOLHA– Many analysts in the U.S. make a distinction between Chavez and former President Lula, as leaders of opposing models. Do you see this distinction?
CHOMSKY -You know better than I that Lula has supported Chavez. There are differences, of course. But the U.S. effort to make a sharp distinction is part of the propaganda campaign against Venezuela, which is intense.
Lula's case is very interesting. The Lula government and its policies are not so different from those of Joao Goulart in early 1960s. At that time the government of John F. Kennedy organized a military coup, which occurred shortly after his assassination, and the installation of a national security state that blocked the modest steps toward democracy and social reform.
In recent years, things have changed. The fact that U.S. propaganda is obliged to portray Lula positively, rather than criticize him for not being sufficiently subservient, for example in the case of Iran, is an indication of changes in Latin America during the past ten years. In Venezuela, as you know, there was an attempt by the U.S. to carry out a military coup [against Chávez in 2002].
FOLHA – Lula is highly praised for not having tried to stay in power after the two constitutional terms, as opposed to Chávez.
CHOMSKY – That is also an interesting critique. Was the U.S. was a fascist dictatorship under Franklin Delano Roosevelt? He served four terms. Term limits can be debated to be good or bad, but there are no strong arguments. In the parliamentary system, the prime minister may be reelected indefinitely.
FOLHA – Has Obama changed the USA's Latin America policy?
CHOMSKY -Not significantly. The era of US backed military coups has declined, but not ended. In the last decade there have been three. The first in Venezuela, which failed; the second in Haiti when the U.S. and France, both traditional torturers of Haiti, kidnapped the president [Jean-Bertrand Aristide] and sent him to Africa; and the third in Honduras, under Obama.
In the case of Honduras, a rift developed between the U.S. and Brazil, in fact, between the U.S. and most of the world. The U.S. was almost the only country to recognize the coup in practice and turned a blind eye to the atrocities. That was under Obama.
FOLHA– In your view, is greater independence from the US something that is in South America's own hands, or does much depend on the rise of China, which needs exports from the regions?
CHOMSKY – Looking at it from the outside, improvement should have come a lot easier for Latin America than it did for East Asia. It has many resources, no external enemies, many advantages. However, it didn't. The reasons are obvious if we compare the socio-economic models. In East Asia, there were capital controls. In South Korea, during the period of rapid development, you could be sentenced to death for capital flight. Foreign investment was accepted, but was controlled and required the transfer of technology; imports were mainly restricted to capital goods.
In Latin America it was totally different. Imported goods were luxuries. No controls were placed on capital flight. Until recently there was little concern for the welfare of the population. And when governments tried to go in another direction, they were overthrown by military coups backed by the United States.
There was a big change in the last ten years. Programs to combat poverty in Brazil were, I think, quite successful. In Venezuela there was a big reduction of poverty. Bolivia has seen remarkable democratic progress. The indigenous population in Bolivia, which is the most repressed in the hemisphere, was able to enter the political arena to press their demands and elect someone from their ranks. Bolivia has a history of reform and activism which had always been crushed in the past. All these are important steps.
In terms of growth, the most spectacular example was Argentina, which completely rejected the demands of the IMF, U.S. Treasury and foreign investors, restructured its debt, and against the predictions of most economists, has grown considerably since then.
FOLHA- What are the prospects for the U.S. economy, the persistence of high unemployment?
CHOMSKY -The situation in the U.S – it's bad enough. Since 1980, incomes stagnated or declined, there was a huge concentration of wealth that is beginning to seem worse than in Latin America. A fraction of 1% of the population, ie, hedge fund managers, corporate executives, gets the bulk of the income. There has been a financialization the economy which has led to repeated crises.
There were no crises in the 50s and 60s, the regulations were in force since the New Deal. Since then there has been a vicious process of Latin Americanization: high concentration of income, impoverishment of the population, unemployment. And it's getting worse. The infrastructure is collapsing. There is a great deal of hysteria about the national debt, which is a minor problem compared to unemployment. It is a dangerous situation.
FOLHA – How do you think NATO's intervention in Libya will it end?
CHOMSKY -First, it is important to note that there are only three powers that are seriously involved, the three traditional imperial powers, Britain, France and the USA. The others have only a marginal role or were out of it completely, like Brazil.
At the last BRICS summit, in China, a resolution called for a political settlement in Libya, and this is what almost everyone in the world calls for. Turkey is not supporting NATO. The Arab countries are not doing anything. Qatar sent some planes. Germany is not supporting NATO. It reluctantly joined NATO. It's hard to know what will happen, but there may be a partition of the country.
 Those two emails are archived here
For many more unanswered emails to Rory Carroll and his editors see
 The Weisbrot (CEPR) survey is about television media