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Chávez Sets Plans for Nationalization
Venezuelan reporter Miguel Ángel Rodríguez talks with staff members at RCTV, whose license was not renewed.
(By Fernando Llano -- Associated Press)
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The government has already increased taxes and royalties, but the companies continue to mine and refine. Chávez provided little detail about his plans in his speech, but he railed against the privatizations that preceded his administration -- including those in the country's huge oil sector, which exports most of its crude to the United States.
If Chávez moves forward with nationalization -- which could mean anything from outright expropriation to higher taxes or more state intervention -- it would likely affect CANTV, the dominant provider of fixed-line telephone service in Venezuela and the country's largest publicly traded company, as well as the utility Electricidad de Caracas.
Arlington, Va.-based AES Corp. has an 86 percent equity in Electricidad de Caracas, the largest private utility in Venezuela. The Venezuela operation -- five power plants serving more than 1 million customers -- is a major investment for AES. In 2005, the firm had revenue of $613 million from its Venezuela business. In filings with the Securities and Exchange Commission, it listed the value of its plants and equipment in Venezuela at $1.85 billion.
Chávez also said Monday that the government would soon exert more control over the Central Bank, one of the few Venezuelan institutions that has shown itself to be independent of the Chávez administration. Two of the seven directors of the bank's board, including Domingo Maza Zavala, who often criticized government economic policy, are on their way out.
"The Central Bank must not be autonomous," Chávez said. "That is a neoliberal idea."
Last week, the government replaced one of Chávez's most loyal aides, José Vicente Rangel, the vice president. In an ambitious cabinet shake-up, Chávez also replaced the heads of such key ministries as interior, justice, finance and education. He appointed his brother, Adan, to run education.
"He's gotten rid of a couple of people who have their own separate identity, particularly Rangel, who has contacts in Venezuelan society and internationally," said Mark L. Schneider, a senior vice president of the International Crisis Group in Washington, a policy group that regularly compiles reports on Venezuela's political situation. "Rangel is not a yes man, I suspect, and my guess is that he may not be in tune with the way Chávez likes to run things."
Staff writer Steven Mufson in Washington contributed to this report.
