From the editors of Veneconomy:

Since November 23, there is no front where Chávez has not stepped up his ire and dictatorial aspirations.

While the general public watches in amazement the barbarities committed by the President and his yes-men in order to sabotage the democratic alliance’s recently elected governors, mayors, and state legislators and the population awaits further developments following Chávez’s call for an illegal amendment to the Constitution, the President has reopened the attack on the private sector with renewed energy.

Last week, Chávez asked the new mayor of Libertador Municipality, Jorge Rodríguez, to cast an eye over urban latifundios. Chávez gave the order, “Unoccupied land, land that must be used to build housing for the people!” But he said not a word about paying the legitimate owners compensation.

Set on this same totalitarian course, he sounded the final death knell of private enterprise this Monday, during the swearing in of Rafael Isea, the new governor of Aragua.

From the Teatro de la Ópera, Hugo Chávez issued two unprecedented orders to all the governors elect who are militants of his party, the PSUV.

The first order was for them to carry out an “agricultural revolution” to “rescue the last hectare of land” in order to hand it over to “the people.” Once again, he made no mention of any payment to the owners of these “rescued” plots of land.

And the second was for them to “rescue” all companies where there are “problems” with the workers and where the rights of the working class are supposedly being violated. Here again it seems that there is no intention of making any payment.

This second order corroborates the view that the government is making use of parallel “trade unions” to paint companies into a corner. These trade unionists use any excuse to invent unfounded claims and then, given the lack of response from the courts, or even their consent, these companies are then nationalized, expropriated or taken over by the Venezuelan Government.

One of the earliest examples of this modus operandi is the former Constructora Nacional de Válvulas, today the social enterprise Inveval, a junk yard that has produced nothing for more than four years and has generated neither jobs nor revenues for the country. In recent months, this trade union vise has been closing around the automotive industry, keeping on tenterhooks General Motors, Toyota, and the auto parts companies Johnson Controls (seats), Vivex (windows), and OCI Metalmecánica (chassis).

The result of this trade union harassment, added to the controls imposed by Cadivi, the continuous threats from Indepabis, and the stranglehold of an endless list of punitive laws, has been the dismantling of the country’s industrial park, which has shrunk from 11,117 companies in 1999 to 7,208 in 2008, a reduction of 35.2%. According to Conindustria, the country would need a park of 20,000 industries to generate sufficient domestic production to meet demand.

This renewed and more vigorous attack on private property and the agribusiness and business sectors augurs ill for the country’s economy. All that will be left following this attack will be yet another cemetery in the hands of the government.

Suffice it to see how the services provided by CANTV (telephony) and the electricity sector have deteriorated since Chávez nationalized these companies, not to mention Sidor and all the basic industries in Guayana.


Veneconomy is the leading publisher of specialized economic, political and financial insight data in Venezuela.