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Posted January 08, 2007 by publisher in Cuban American Business

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By IAN JAMES | Associated Press Writer

President Hugo Chavez announced plans Monday to nationalize Venezuela’s electrical and telecommunications companies, pledging to create a socialist state in a bold move with echoes of Fidel Castro’s Cuban revolution.

“We’re moving toward a socialist republic of Venezuela, and that requires a deep reform of our national constitution,” Chavez said in a televised address after swearing in his new Cabinet. “We are in an existential moment of Venezuelan life. We’re heading toward socialism, and nothing and no one can prevent it.”

Chavez, who will be sworn in Wednesday to a third term that runs through 2013, also said he wanted a constitutional amendment to eliminate the autonomy of the Central Bank and would soon ask the National Assembly, solidly controlled by his allies, to give him greater powers to legislate by presidential decree.

The nationalization appeared likely to affect Electricidad de Caracas, owned by Arlington, Virginia-based AES Corp., and C.A. Nacional Telefonos de Venezuela, known as CANTV, the country’s largest publicly traded company.

“All of that which was privatized, let it be nationalized,” Chavez said, referring to “all of those sectors in an area so important and strategic for all of us as is electricity.”

“The nation should recover its ownership of strategic sectors,” he said.

Before Chavez was re-elected by a wide margin last month, he promised to take a more radical turn toward socialism.

Chavez said that lucrative oil projects in the Orinoco River basin involving foreign oil companies should be under national ownership. He didn’t spell out whether that meant a complete nationalization, but said any vestiges of private control over the energy sector should be undone.

“I’m referring to how international companies have control and power over all those processes of improving the heavy crudes of the Orinoco belt — no — that should become the property of the nation,” Chavez said.

In the oil sector, it didn’t appear Chavez was ruling out all private investment. Since last year, his government has sought to form state-controlled “mixed companies” with British Petroleum PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips Co., Total SA and Statoil ASA to upgrade heavy crude in the Orinoco. Such joint ventures have already been formed in other parts of the country.

Chavez threatened last August to nationalize CANTV, a Caracas-based former state firm that was privatized in 1991, unless it adjusted its pension payments to current minimum-wage levels, which have been repeatedly increased by his government.

After Chavez’s announcement on Monday, American Depositary Receipts of CANTV immediately plunged 14.2 percent on the
New York Stock Exchange to $16.84 before the exchange halted trading. An NYSE spokesman said it was unknown when trading might resume for CANTV, the only Venezuelan company listed on the Big Board.

Investors with sizable holdings in CANTV’s ADRs include some well-known names on Wall Street, including Deutsche Bank Securities Inc., UBS Securities LLC and Morgan Stanley & Co. But the biggest shareholder, according to Thomson Financial, appears to be Brandes Investment Partners LP, an investment advisory company in California. Also holding a noteworthy stake is Julius Baer Investment Management LLC, a Swiss investment manager.

Chavez’s nationalization announcement came in his first speech of the year, a fiery address in which he used a vulgar word roughly meaning “idiot” to refer to Organization of American States Secretary-General Jose Miguel Insulza.

Chavez lashed out at Insulza for questioning his government’s decision not to renew the license of an opposition-aligned TV station.

“Dr. Insulza is quite an idiot, a true idiot,” Chavez said. “The insipid Dr. Insulza should resign from the secretariat of the Organization of American States for daring to play that role.”

Cuba nationalized major industries shortly after Castro came to power in 1959, and Bolivia’s Evo Morales moved to nationalize key sectors after taking office last year. The two countries are Chavez’s closest allies in Latin America, where many leftists have come to power in recent years.

On Wednesday — hours after Chavez is sworn in for another term — former revolutionary Daniel Ortega returns to the presidency in Nicaragua.

In Managua, Venezuelan Ambassador Miguel Gomez indicated Monday that the two countries planned to work closely together, and said Nicaragua could eventually become Venezuela’s top aid recipient — getting even more help than Cuba and Bolivia, which benefit heavily from Venezuela’s petro-diplomacy.

The United States remains the top buyer of Veneuzelan oil, which provides Chavez billions of dollars for social programs aimed at helping the poor in countries around the region.

Gomez said Chavez and Ortega planned to sign an agreement on Thursday providing Nicaragua with resources — he described them as loans — for infrastructure, health, education, agricultural development and the construction of 200,000 houses, as well as energy and debt forgiveness.

  1. Follow up post #1 added on January 08, 2007 by publisher with 3905 total posts

    We don’t usually post non-Cuba news but this news story could be dated from 1960 and change Hugo Chavez to Fidel Castro. Fidel apparently taught Chavez well. First he said you need an enemy so Chavez goes to the UN and says bad things about Bush. Now he is nationalizing private companies and turning off opposition television stations.

    What’s next, the Venezuelan missile crisis?

    Say goodbye to US Venezuela relations. Watch for Embargo 2.

    One more thing, is this the latest Castro ploy to throw cold water on any warming of US Cuba relations thus keeping the US Embargo in place for Castro’s benefit?

    No way the US is going to extend an olive branch to Cuba now.

    Cuba consulting services

  2. Follow up post #2 added on January 09, 2007 by Varsi Padayachee

    Publisher, Given the disaster in the middle east which could cut oil supplies to the US, it would be wise for us not to go about speculating as to who is the winner or loser. Chavez, is certainly not your protypical leader. However, he certainly has worked hard to restore the balance of power in Venezuela. Is that so bad, or is it bad because it denies Corporate Anerica the opportunity of raping Venezuela. Addedly, why does this become a fidel issue? Does Pres. Chavez not have the independence to make his own decisions? Perhaps you have forgotten the US’s involvement in the failed attempt to depose him, and it was the people who rose, not Fidel.
    With all due rspect, why do we conveniently forget that US officials referred to Prez. Chavez as Hitler or one who promotes terrorism or perhaps the most destabalizing force in Latin America. How short are our memories. It was the US promoted policies of neo-liberalism that brough most LATAM countries to their knees. The people of LATAM are becoming increasing vocal in their condemnation of US lapdogs running their countries. A Us ally, Toledo of Peru is under indictment in his country. Why is the former President of Bolivia being offered refuge in the US? or perhaps explain why the former Prers. of Panama, after she granted clemency to Posada Carriles, fled to the US.
    Or perhaps we should talk about the economic terrorism imposed upon LATAM by US proxies the World Bank and IMF. Even newly installed Pres. Correra of Ecuador has signalled that he will renegotiate his country’s debt because he deems it unfair.
    Perhaps, we in the US should get off our Parsimonious horse, stop strutting across the stage as sanctimonious peacocks and humble ourselves to the fact that it is we who need friends of the REAL type.  The situation in Iraq is a classic example. Even the Brits are deserting the ship.

  3. Follow up post #3 added on January 09, 2007 by Varsi Padayachee

    Just came in.
    This survey of the LATAM elite tells the story.

  4. Follow up post #4 added on January 09, 2007 by captain c

    MR.  Varsi Padayachee,  Well said,  AMEN.

  5. Follow up post #5 added on January 09, 2007 by publisher with 3905 total posts

    Your points about US involvement in Venezuela are well taken but Chavez nationalizing private companies should not be seen as an anti-US move. It is a pro-communism move.

    Chavez learned well from Castro. Castro told Chavez that he needs an enemy but that only justifies actions for his own people.

    Chavez is already gearing up for his successful 2012 Presidential run. He will not allow a viable opponent. Perhaps he won’t even allow dissent by that time.

    Go ahead and be anti-Bush but let’s not start being pro-Chavez.

    Cuba consulting services

  6. Follow up post #6 added on January 09, 2007 by Danny

    Well Venezuela was a beautiful country, unfortunately that will change now.  Here comes Castro #2.  Venezuelans can kiss there rights good bye.

  7. Follow up post #7 added on January 10, 2007 by Varsi Padayachee

    Mr. Publisher, no where in my contribution do I illustrate my pro-Chavez bias. Quite the contrary, my thoughts are provoking honesty, rather than pro or anti anyone. When Chavez ran this last time, all of those who opposed him, said that the elections would be rigged. Even before the results were in the opposition and its US allies were getting ready to cry foul. Yet International observers stated, unequivocally that the elections were transparent, honest and except for a few glitches, free and open. In conclusion the International observer team noted that the electoral process was even fairer and mre modern that that tmployed in the US.
    For the last 8 years Citgo has been the only oil company to subsidize our poor. When the Bush admin. cut the oil assistance program, NOT ONE US oil company stepped up to the plate, despite taking in obsene profits.
    One does not have to like or be a fan of Pres. Chavez. However, it is incumbent upon one to weigh each facet, and make judgements based on that thesis.
    Sadly, when it comes to Bush, the English language has reached a poit of bankruptcy when describing him.
    In response to Danny’s comment, please take a look at the Detention Laws used by the Apartheid Govt. of the old South Africa, and compare it to our Patriot Act. The similarities are startling.

  8. Follow up post #8 added on January 14, 2007 by Curt

    Publisher, I had the opportunity to visit Venezuela a few months ago. I saw elderly people learning how to read & write for the first time. I saw new schools and hospitals in areas where there were formerly none. Despite CATV being shut down, the opposition still controls much of the press. There is no repression & in many ways, Venezuela has more of a democracy than we have here in the U.S. Chavez may shoot his mouth off but he ranks much higher on the decency scale than Bush.

  9. Follow up post #9 added on January 14, 2007 by publisher with 3905 total posts


    I don’t doubt what you saw but do you really think Chavez is better for his people than Bush?

    Stealing from the rich to give to the poor is not my idea of a great man.

    Cuba consulting services

  10. Follow up post #10 added on January 14, 2007 by Curt

    Publisher, Chavez only came up with the crazy idea that everyone should benefit from the countries oil profits, not just the oil tycoons. As far as nationalizin U.S. companies in Venezuela, that is the risk they take when they invest overseas and outsource U.S. jobs so they can pay cheaper wages. Yes, i really do think Chavez is better for his people than Bush.

  11. Follow up post #11 added on January 15, 2007 by Varsi Padayachee

    Mr. Publisher, Your response to Curt is certainly strange, though entertaining. Perhaps you can tell those of us who are ignorant to Bush’s greaness, what has he doe to make the lives of the underprivieged, better?
    I know it’s not the “No Child left Behind”, debacle, or
    Could it be his brilliant Middle East Mess, and
    Not to Forget WMD, or
    Perhaps cutting off the heating oil subsidy to the poor, or
    perhaps, his tax breaks to the rich, and
    the BIg oil companies….
    And he has fould Osama Bin Laden..
    So how does Bush, who steals from the poor, to give to the Rich stack up against our modern day Robin Hood, President Chavez.
    I suspect we are all taught to set different priorities!

  12. Follow up post #12 added on January 15, 2007 by Curt

    Chavez’s approval rating in Venezuela is almost 3x the approval rating of Bush’s in the US.

  13. Follow up post #13 added on January 16, 2007 by Varsi Padayachee

    And has anyone noticed the obsecene profits the oil companies are raking in at the expense of the average joe. In Venezuela they pay about 15cents a gallon. So Chavez is really a bad guy!

  14. Follow up post #14 added on January 19, 2011 by emilia

    To Varsi Padayachee.

    I don’t know how much you know about Cuba’s politics, but in reference to actual Chavez’s movements, I can tell you that Mr.Chavez is a “copy cat” from Fidel Castro theories, actually he was doing trips for 10 years to Cuba in order to get information on how to govern, (I would say how to destroy a place).
    It’s proven that all done in Cuba by the Castro brothers have a result of (0) convenience to the country and the citizens.
    Cuba was splendorous before 1959, today it’s a disaster everywear you visit, although they insist in “everything is fine”.
    With my respects I advise you to find information about Cuba from both sides of opinion,add how the country was before 1959, then you may confirm that Chavez is a copy of Castro and that Venezuela is going down the sink, as well as Cuba did.

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