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10/02/2005:
"Chavez' Oil-Fuled Revolution"
It seems there's no stopping Venezuelan President Hugo Chávez. He's already curbing the power of the big oil companies operating in Venezuela. Now he's stepping up a program of expropriation that could bedevil a number of businesses, both locally owned and foreign. The moves come just as Chávez seems prepared to further consolidate his power at legislative elections in December. The pro-Chávez coalition hopes to increase its majority in the 167-member National Assembly by more than 20 seats, to around 110. "It's going to be a battle for us," concedes Gerardo Blyde, a legislator from the opposition First Justice Party.The opposition has pledged to join forces for the elections, but remains discredited after last year's defeat in a referendum that attempted to oust Chávez from office. If voters reward Chávez with a big win, as expected, the way will be clear for sweeping new moves in his Bolivarian revolution -- his populist effort to tap Venezuela's oil wealth to impose socialism in the country. "Chávez is dead set on his revolution; there's no turning back," says Aníbal Romero, a political scientist at Simón Bolívar University in Caracas. "The question is how fast and how far."
Food fight
Chávez is moving quickly. He has been boosting spending on health and education since coming to power in 1999, but he is now increasing government control of the economy, to investors' dismay. Oil companies with operating contracts in Venezuela, such as Chevron (CVX ) and BP PLC. (BP ), have been ordered to set up joint ventures controlled by state oil company Petróleos de Venezuela (PDVSA), and royalties have been hiked from 16.7% to 30%. Chávez now has targeted more than 700 plants, particularly in the food industry, that are idle or not operating at capacity for possible expropriation. On Sept. 26 the state seized control of a plant operated by Alimentos Polar, the country's No. 1 private food manufacturer. "This is an unfair and arbitrary expropriation," Polar President Lorenzo Mendoza told reporters, adding that the facility was operational. The move followed the seizure of a shuttered H.J. Heinz Co. (HNZ ) tomato processing facility. The company is negotiating to sell the plant to the state. Chavez defends the moves. "We will only expropriate what is necessary," he said in a recent speech.
The President is also going after rich landowners. Authorities recently began taking control of 21 large ranches spread over hundreds of thousands of acres. Chávez has threatened to hand part of the land to poor Venezuelans unless owners legally document their ownership and show that their spreads are being productively used. In another shock to investors, Chávez disclosed plans to review -- and possibly revoke -- mining concessions and create a national mining company. The news caused shares in Canada's Crystallex International Corp., (KRY ) which has operations in Venezuela, to plunge 52% from Sept. 19 to Sept. 28. "What happens here in Venezuela will undoubtedly have some impact on the commercial decisions of companies, not just from the U.S. but from all over the world," U.S. Ambassador to Venezuela William Brownfield told reporters in Caracas. "Nationalization is a step backward," adds a State Dept. official in Washington.
businessweek.com
Well then, he must be stopped. The ironic problem facing Bush's corporate oil buddies is that unless oil goes down $20 a barrel, Chavez will have plenty of money to transform his country. Chavez points the way for every country with resources the Yankees want.
