Bucking the global trend to privatize and globalize businesses and state-owned enterprises, Venezuelan President Hugo Chavez announced plans to nationalize his country’s electrical and telecommunication companies. Sworn in for the third term, Chavez says he wants to create a “socialist” state along the lines of Cuba and initiate “a deep reform” of the nation’s constitution amendment to eliminate autonomy of the Central Bank. He declared that his nation was “heading toward socialism” and “nothing and no one can prevent it.”
A string of socialist regimes in the region are increasingly gravitating towards socialism as the rest of world seems to move away from it. Last year, Bolivian President Evo Morales moved to nationalize key public sector ventures. The thinking as Chavez puts it is to “recover ownership of strategic sectors” and an “area so important and strategic” for Venezuela “is electricity.” He also hinted at revoking private investments in lucrative oil projects in the Orinoco River basin but refused to divulge more details on whether it is only this project or all oil projects as a whole.
At stake are relationships with several international who’s who in the oil world such as British Petroleum, Exxon Mobil, Chevron, Conoco Philips, Total, Statoil, etc. Ironically, the country that epitomizes capitalism and an anti-thesis of Chavez, the United States, continues to be the largest consumer of Venezuelan oil providing billions of dollars for social programs for the poor in the Latin American nation as well as for aid to allies who oppose US President George Bush.
Immediately following his announcement, the shares of CANTV, the largest fixed line telephone provider in Venezuela and the only stock from that country to be traded in the New York Stock Exchange plummeted causing officials to suspend trading. Several international investment banks, including Deutch Bank, UBS Securities, and Morgan Staley had invested vast amounts of money in that company.