Friday, April 4, 2008

Chavez strikes back

U.S. analysts say Venezuela's decision Thursday to nationalize the country's cement industry shows that President Hugo Chavez still is determined to create a socialist state despite a defeat at the polls last December. The move by the anti-U.S. Chavez, whose support had been eroding before a diplomatic dispute with neighboring Ecuador was resolved amicably and Venezuela prevailed last month in a compensation dispute with Exxon Mobil, could help restore his government's popularity. Chavez has been very popular with Venezuela's poor because of lavish social spending funded by the booming oil market. But his proposal to accelerate the nationalization program was defeated by Venezuela voters last year and Chavez promised to focus on reducing crime and food shortages. Venezuela's government has been under fire for failing to build enough houses and analysts said the takeover of the cement industry could be a way to solve that problem quickly, according to the Reuters international news service.
Chavez had accused the industry, which was privatized in the 1990s, of exacerbating the housing situation by exporting cement instead of selling it to domestic builders. Reuters said a poll showed public support for the government slipped to 34 percent in February, its lowest point since 2003. "The measure in some ways is an attempt to move more rapidly in one of the problem areas," said Daniel Hellinger a political science professor at Webster University in St Louis, according to Reuters. The nationalization move affects facilities owned by Mexico's Cemex, France's Lafarge and Switzerland's Holcim. "This is another iteration of the gradual move to a command economy as the government is steadily encroaching on private sector activity," said Albert Ramos, a senior economist at Goldman Sachs, according to Reuters. Venezuela usually pays compensation for such takeovers.

No comments: