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Chavez's Economic Plans Set Latin Markets Reeling
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Since first being elected in 1998, Chávez has moved quickly to overturn the old social and economic order, sidelining his opponents and spending billions of dollars in oil revenue to found state-run cooperatives and government companies. He has steadily taken a larger share of the pie from companies such as Exxon Mobil, Chevron, Total of France and BP, multinationals drawn to Venezuela in the 1990s. New state lending agencies have been created, and new regulations have been imposed on banks, which are now required to dedicate a percentage of loans to micro-businesses and other sectors identified by the government as important to the economy.
But Chávez has promised more. Emboldened by a landslide electoral win in December that gave him another six-year term, the former paratrooper has announced he will seek special constitutional "enabling" powers to pass laws affecting the economy, as he did in 2001 when the government first pushed through legislation to increase the state's hold.
Chávez also said the Central Bank, one of the few semi-independent entities in the country, would come under state control as its directors are replaced. The Central Bank controls cash flow and releases economic data, operations the administration wants to wrest away.
One of the bank's outgoing directors, Domingo Maza Zavala, decried the government's moves.
"The Central Bank must be autonomous," Maza said in an interview Tuesday on Globovision, a Caracas news station. "Otherwise, the people will lose confidence in the currency."
In Venezuela, businessmen were bracing for more details about the government's plan while hoping for the best. Many have long complained that private investment has plummeted under Chávez, hurting industry.
Flavio Fridegotto, a businessman speaking by phone from Venezuela, said the government has to understand that it needs foreign companies to operate freely in the country.
"We don't think that they're going to be that radical," he said. "He needs businessmen. They need to take care of the transnationals."
Staff writer Steven Mufson in Washington contributed to this report.
