Chavez threatens to nationalize banks
CARACAS, Venezuela
Venezuelan President Hugo Chavez on Thursday warned he would nationalize the country's banks and largest steel producer if they persist with what he described as unscrupulous practices.
Chavez's threat did not seem to signal an imminent takeover but rather appeared aimed at strong-arming the businesses to contribute more to local industry as he made a wide-ranging speech promising that Venezuela was headed for a classless society. Coming alongside recent moves to nationalize telecommunications, electricity companies and the oil sector, the warning was yet another sign that Chavez is serious about deepening his socialist revolution.
"Private banks have to give priority to financing the industrial sectors of Venezuela at low cost," Chavez said. "If banks don't agree with this, it's better that they go, that they turn over the banks to me, that we nationalize them and get all the banks to work for the development of the country and not to speculate and produce huge profits."
It was unclear if Chavez was referring only to Venezuelan banks including Mercantil Servicios Financieros CA and Banco Provincial SA, or also major international banks with subsidiaries in the country, such as New York-based Citigroup Inc. and Spain's Banco Bilbao Vizcaya Argentaria SA and Banco Santander Central Hispano SA.
Chavez also warned the government could take over steel producer Sidor, which is majority controlled by Luxembourg-based Ternium SA. Ternium's U.S.-traded shares closed down nearly 3.9 percent at $26.15 (19.21 euros) Thursday on the
New York Stock Exchange.
Sidor "has created a monopoly" and sold the bulk of its production overseas, forcing local producers to import pipes from elsewhere, Chavez said.
"If the company Sidor ... does not immediately agree to change this process, they will force me to nationalize it," Chavez said, arguing the company should be giving priority to supplying national industries.
"I prefer not to," Chavez added, as he ordered Mining Minister Jose Khan to immediately head over to Sidor's headquarters and come back with a recommendation in 24 hours.
Sidor and banks did not respond to requests for comment.
"I don't think it'll happen immediately, they're just threats. I don't think it's possible to carry them out for now," said Franklin Rojas, director of Caracas-based economic institute CIECA.
Rojas noted that Chavez would likely run up against his close ally, Argentine President Nestor Kirchner, if he tried to nationalize Sidor. Sidor's parent company, Ternium, is controlled by a major Argentine conglomerate, Techint Group.
Chavez made the announcements in a televised speech, urging Venezuelans to cast aside materialism and recalling independence hero Simon Bolivar as he said the country must close the gap between rich and poor
"Bolivar said that one day in Venezuela there will be one single class," Chavez said. "That's where we're headed... equality, justice."
Chavez initiated a nationalization drive in January to impose state control over "strategic" companies. His government took over multibillion-dollar oil operations from major foreign oil companies this week and announced earlier Thursday that it would not be paying cash compensation to them.
"We do not expect to pay out money in order to arrive at some arrangement with the companies," said Oil Minister Rafael Ramirez, according to a transcript of an interview with state TV.
Ramirez did not elaborate on how else the government might compensate BP PLC, ConocoPhillips, Exxon Mobil Corp., Chevron Corp., France's Total SA and Norway's Statoil ASA, which have invested more than $17 billion in the projects.
Ramirez also said one of the companies, Houston-based ConocoPhillips, would be expelled from the country and barred from staying on as a minority partner in a state-run joint venture if it continues to resist the state takeover. The company is the only one that has not signed an agreement in principle recognizing state control.
"I'm not deceiving anyone," Chavez said. "I'm only governing the country, and the country has elected me various times. ... All of those who voted for me backed socialism, and that is where we are heading."
Venezuelan President Hugo Chavez on Thursday warned he would nationalize the country's banks and largest steel producer if they persist with what he described as unscrupulous practices.
Chavez's threat did not seem to signal an imminent takeover but rather appeared aimed at strong-arming the businesses to contribute more to local industry as he made a wide-ranging speech promising that Venezuela was headed for a classless society. Coming alongside recent moves to nationalize telecommunications, electricity companies and the oil sector, the warning was yet another sign that Chavez is serious about deepening his socialist revolution.
"Private banks have to give priority to financing the industrial sectors of Venezuela at low cost," Chavez said. "If banks don't agree with this, it's better that they go, that they turn over the banks to me, that we nationalize them and get all the banks to work for the development of the country and not to speculate and produce huge profits."
It was unclear if Chavez was referring only to Venezuelan banks including Mercantil Servicios Financieros CA and Banco Provincial SA, or also major international banks with subsidiaries in the country, such as New York-based Citigroup Inc. and Spain's Banco Bilbao Vizcaya Argentaria SA and Banco Santander Central Hispano SA.
Chavez also warned the government could take over steel producer Sidor, which is majority controlled by Luxembourg-based Ternium SA. Ternium's U.S.-traded shares closed down nearly 3.9 percent at $26.15 (19.21 euros) Thursday on the
New York Stock Exchange.
Sidor "has created a monopoly" and sold the bulk of its production overseas, forcing local producers to import pipes from elsewhere, Chavez said.
"If the company Sidor ... does not immediately agree to change this process, they will force me to nationalize it," Chavez said, arguing the company should be giving priority to supplying national industries.
"I prefer not to," Chavez added, as he ordered Mining Minister Jose Khan to immediately head over to Sidor's headquarters and come back with a recommendation in 24 hours.
Sidor and banks did not respond to requests for comment.
"I don't think it'll happen immediately, they're just threats. I don't think it's possible to carry them out for now," said Franklin Rojas, director of Caracas-based economic institute CIECA.
Rojas noted that Chavez would likely run up against his close ally, Argentine President Nestor Kirchner, if he tried to nationalize Sidor. Sidor's parent company, Ternium, is controlled by a major Argentine conglomerate, Techint Group.
Chavez made the announcements in a televised speech, urging Venezuelans to cast aside materialism and recalling independence hero Simon Bolivar as he said the country must close the gap between rich and poor
"Bolivar said that one day in Venezuela there will be one single class," Chavez said. "That's where we're headed... equality, justice."
Chavez initiated a nationalization drive in January to impose state control over "strategic" companies. His government took over multibillion-dollar oil operations from major foreign oil companies this week and announced earlier Thursday that it would not be paying cash compensation to them.
"We do not expect to pay out money in order to arrive at some arrangement with the companies," said Oil Minister Rafael Ramirez, according to a transcript of an interview with state TV.
Ramirez did not elaborate on how else the government might compensate BP PLC, ConocoPhillips, Exxon Mobil Corp., Chevron Corp., France's Total SA and Norway's Statoil ASA, which have invested more than $17 billion in the projects.
Ramirez also said one of the companies, Houston-based ConocoPhillips, would be expelled from the country and barred from staying on as a minority partner in a state-run joint venture if it continues to resist the state takeover. The company is the only one that has not signed an agreement in principle recognizing state control.
"I'm not deceiving anyone," Chavez said. "I'm only governing the country, and the country has elected me various times. ... All of those who voted for me backed socialism, and that is where we are heading."
posted by Alice at
Friday, May 04, 2007
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