Civil Society, Economy & Trade, Headlines, Latin America & the Caribbean

POLITICS-VENEZUELA: Re-Nationalising Its Way to Socialism

Humberto Márquez

CARACAS, Jan 10 2007 (IPS) - Venezuelan President Hugo Chávez began a new six-year term Wednesday, after announcing that the re-nationalisation of public enterprises would be the first “line of attack” to promote socialism in this country.

Chávez is planning to carry out rapid social and economic reforms, and will ask Congress for special powers for one year for this purpose. All 167 members of the legislature belong to government coalition parties, as the opposition boycotted the 2005 parliamentary elections.

The first companies that will return to state hands are the electric utilities and telecommunications firms, and some oil partnerships, according to Chávez, although he did not give details, which has caused jitters among investors.

The Caracas stock market plummeted on Tuesday, falling 18.66 percent on the Caracas share price index which dropped from 62.012 to 50.438 points. At that stage trading in National Telephone Company (CANTV) and Caracas Electricity (EDC) shares was stopped.

“If these shares had continued trading, the stock market would have fallen further,” an agent for stockbrokers Merinvest told IPS. “The announcement of the plan and the uncertainty as to how it will be implemented both influenced investors,” he added.

CANTV, mainly owned by U.S. company Verizon, with Spain’s Telefónica as a minority shareholder, lost 35 percent of its value in American Depository Receipts (ADR) which are quoted on the New York Stock Exchange where, as a preventive measure, trading in this company’s and EDC’s ADR was also suspended.

“Everything that was privatised will be nationalised,” said Chávez in a fiery speech after swearing in the new Vice President Jorge Rodríguez and 27 ministers on Monday. There are about 10 new faces in the cabinet, which is characterised as “hardline” and committed to state-directed reforms.

According to Chávez, this is about “regaining control of strategic sectors, such as communications, water and electricity.” He said that when CANTV was privatised in 1991, the officers who later joined him in his aborted 1992 military coup already took a poor view of the measure.

He also said that he would regain state control of deals with U.S. oil companies Exxon-Mobil, Chevron-Texaco and Conoco-Phillips, French oil firm Total, British Petroleum and the Norwegian Statoil to produce light and medium synthetic crudes from extra-heavy crude oil from the Orinoco Belt, in the southeast of the country.

He announced that the Central Bank’s autonomy would be revoked, and on the political front said he wanted to reform the constitution “to make faster progress” towards socialism, increase the powers of local councils and review laws to seek more balanced development for different regions of the country.

There will be legal reforms in education, Chávez said, “to demolish the old values of egotism, individualism and capitalism.”

As well as announcing these measures, the president took issue with the secretary general of the Organisation of American States, José Miguel Insulza, after he criticised the Venezuelan government’s decision not to renew the broadcasting license held since 1953 by the private channel Radio Caracas Televisión, which takes a staunchly opposition line.

Insulza “is a ‘pendejo’ (idiot), from the P to the O, to behave as though he were a viceroy for the empire. He should be ashamed of himself and resign,” Chávez declared.

Chávez also took up cudgels with the Catholic hierarchy. His answer to Catholic bishops demanding explanations about the government’s proposals for “21st century socialism” was: “Do you want me to explain it to you? Go and study for yourselves, monsignors, look it up in the books of (Karl) Marx and (Vladimir Illych) Lenin; read the Bible.”

“The contentious tone of the president’s speeches shows that he can’t bear any dissident views, and that those of us who maintain that he’s going down the road to neo-authoritarianism are not imagining things: this is a real, tangible goal,” sociologist Tulio Hernández told IPS.

Opposition leader Teodoro Petkof used the term “totalitarianism-lite” for the direction in which Venezuela is heading.

The companies affected by the nationalisation announcements, and their owners, like Verizon in the case of CANTV and the U.S. AES Corporation in that of EDC, kept a prudent silence while awaiting more details after Chávez’s speech.

In Washington, Secretary of Energy Samuel Bodman expressed “deep concern” about the nationalisations announced by Chávez.

U.S. Energy Secretary Sam Bodman also called for contracts to be respected. “We can express concern because it is real and I think the goal here is to enforce the sanctity of contracts,” he told reporters at a news conference.

Political scientist Alberto Garrido told IPS that Chávez’s speech “was honest about what he is building, socialism as a way of life, and Venezuela is now the laboratory for this new concept. Given the importance of geopolitics in the president’s eyes, it won’t only be national but international, too.”

For 30 years, the state has owned the biggest company in the country, Venezuela’s oil firm (PDVSA), one of the main corporations in the developing South.