Chávez: the seizure spree continues

‘Worthless’ bonds will pay for firms as cash is running short


090413_chavezIn a nationalization spree that shows no sign of abating, Venezuela officially expropriated a Cargill rice processing plant last Thursday. The American-owned plant had allegedly produced a pre-cooked variety as a way to escape government-imposed price controls on ordinary rice. In the past few years, the government has seized oil fields, the largest telecommunications firm, a major power producer, cement plants, a steel mill and a eucalyptis plantation as part of President Hugo Chávez’s plan to transform his oil-rich nation into a socialist paradise. Last week, days after the military took control of Venezuela’s ports and airports, Chávez announced he was taking over Aeropostal, the private airline.

Yet there are signs that the profligate government is running out of cash. In the aftermath of the plunge in oil prices, one bank economist predicted a US$50-billion budget deficit this year, and the government is past due on bills to the tune of more than US$7 billion, causing suppliers to stop deliveries to the critically important energy sector. On top of those dismal statistics, the government’s unpaid tab for compensating firms for all those nationalizations sits at US$10 billion. So last month, Chávez raised the spectre of not paying cash for takeovers when he warned the nation’s largest food producer, Polar, that, if seized, “we’ll pay you in bonds.” Miguel Carpio, a Banco Federal CA economist, told Bloomberg that “the message is that he’s going to pay with something that isn’t worth anything.”

To buttress his nation’s faltering economy (businesses complain that strict price controls, used to control inflation now at 30 per cent, are driving them into bankruptcy), Chávez has been on a whirlwind foreign tour to drum up new investment. He’s in China and Japan this week to sign major energy deals with both countries, which are clearly willing to risk expropriation of the new ventures to get a share of Venezuela’s oil.

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Chávez: the seizure spree continues

  1. We may have found a place even worse than Ontario in which to invest! Have fun with that marketing angle, Queen’s Park friends. You can have it for free. Hey, times are tough, I’m feeling generous, what can I say.

  2. There is no place worse than Ontario to invest. The CAW is a match for any international thug or cartel and corporate taxes although just lowered, will rise once again if the Ontario economy ever recovers.

  3. Interesting how Canada has become a voice against Venezuela since Harper became PM. All the newspapers and mags now in the hands of the media cartels have nothing good to say about countries oppsosing the New World Order.

    There is always ans analyst or expert the newspapers will find to lie to the public! thanks to the internet we can still find some truth somewhere else!

    Venezuela by far is the best protected country in south america against this US-UK crisis. As for Chavez expropiating plants violating the Venezuelan laws and paying them with worthless papers as you mention, all I can say is ……..what is the US dollar and why is it bound to collapse?……it is a worthless currency who lost it’s gold backing back in the Nixxxon era and the US has been going around the globe buying everything with this worthless currency!

    Macleans you lost your ethics long time ago

    • That Canada has become a voice against Venezuela is actually a pretty good development. Since Venezuelans seem to be incapable of removing Chavez from power by themselves, international pressure against this dictator is indispensable.

      • The Venezuelan oposition are incapable indeed and are the minority, the pro chavez majority (70%++) will not allow the opposition to remove Chavez again as they did with the help of the US and Canada.

        What right does any country have to interfere in other country internal issues?….none….. that is but that hasn’t stop the US from interfering and invading and assesinating other leaders and now Canada under Harper is at the service of the fascist of the new world order.

        Leo if you think Chavez is a dictator, you are either ill informed and deceived by the international media or part of their club.

        • I am not talking about invading Venezuela or killing Chavez, since these moves would be counter-productive. I am talking about using diplomacy to delegitimise his government. It does not take a PhD in economics to realise that he is driving his country to hell, and it does not take a PhD in political science to realise that he is doing so in a very undemocratic manner. We are not talking about Venezuela’s strictly internal issues: we are talking about preventing a developing country from becoming the Zimbabwe of South America. As a Brazilian citizen, the last thing I want to see are refugee camps in my northern border. My continent has suffered enough under the kind of psychopath that Chavez so charismatically exemplifies.

  4. It will be interesting to see China’s response if Venezuela tries to seize their assets when the price of crude oil recovers.

    • China operates under Venezuelan law and has nothing to fear, as a fact all companies now operating in Venezuela operate under the new hydrocarbon law in which all joint ventures require Venezuela to be a majority partner, so far 2 companies refused to abide….exxon and conoco and they were kicked out of the country.

      I wish Canada would protect our oil the same way, instead we subsidice exxon and others billions of dollar every year to operate in Alberta and besides taking the biggest part of the pie they are destroying the environment.

      How critical is your reasoning???????????????????????????????/

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