Venezuelan socialism is based on expropriations

Workers of French-Colombian retail chain Éxito protested and supported the seizure of the company (Photo: Kisaí Mendoza)

Economy
Since 2007, the Venezuelan government is building a socialist model based on social ownership managed by communities. However, rather than creating a web of social production enterprises, progress in the system has been attained through expropriations and nationalizations.

The 2007-2013 Development Plan provides that the State shall take control of strategic activities and promote social ownership.

In a first stage, services were regarded as strategic areas. This principle served to justify government's control of telecommunications, electricity and oil. Thus, Hugo Chávez's administration nationalized the main telecommunications company (Cantv), power utilities and industries at the Orinoco Oil Belt. Afterwards, the government decided to nationalize basic industries such as construction, steel, banking and food industry.

Pursuing dominance
For the administration of President Hugo Chávez, controlling the food sector is of the essence. Even though it owns food distribution networks such as Mercal and Pdval, and the Venezuelan Agriculture Corporation has established joint ventures and social production companies, the Venezuelan government has increased its stake in the business thanks to expropriations and purchase of facilities.

The Executive branch of government has seized 559 ranches and 12 agro-businesses. Add to this, eight companies formerly property of intervened banks. In the meantime, state-run oil holding Petróleos de Venezuela (Pvdsa) was commissioned to buy industries.

Multinationals based in Venezuela have been and are most vulnerable to the State volatile interventions. This is the case for Cargill de Venezuela, which was deprived of a rice factory which produced a good exempted from regulated prices. Nowadays, it hosts the ALBA Rice Mixed Company.

Minister of Trade Eduardo Samán has stressed that the Government is experienced in production and marketing; therefore, he thinks that there may be shareholding in other areas.

Trade was not viewed as fundamental, but now it is. The senior officer disclosed the government plans to engage in marketing of school items and toys. There, the government seeks to meet 10 percent of the demand and compete with the private ones.

In order to be more competitive, the government organized the Corporation of Socialist Markets (Comerso). Not only foodstuffs from the state-run agro-businesses will be sold there, but also apparel and footwear, household goods and appliances, and even vehicles.

Nonetheless, rather than setting a frame for the corporation, the government resolved to seize retail chain Éxito and establish there the points of sale. On January 17, President Chávez said that Éxito "will now belong to the nation."

The control
By means of purchases and expropriations, the government has grasped of most of the inputs needed in the building sector.

Once, through the Venezuelan Guayana's Corporation (CVG) and other state agencies, the incorporation of factories of building materials was approached. However, the target was partially attained upon nationalization of cement makers Lafarge, Holcim and Cemex, as well as iron and steel industry Sidor. Nowadays, the supply of goods for works and a significant amount of the raw materials of the industries relies on state agencies.

The debts owed by the oil industry due to falling oil prices paved the way to nationalization of related areas, such as water, gas and steam drive, and also sea services in Lake Maracaibo.

In the financial area, Chávez has said that banks should abide by the socialist plan. Even when the State owns some banks, its biggest interest in the sector came with the nationalization of Banco de Venezuela. In addition, the seizure of some banks allowed the establishment of Banco Bicentenario, with the State holding 25 percent of deposits.

The president claimed that nationalized businesses are now social property and, in order to consolidate his model, he has anticipated further seizures. He recently ordered a reform of the Expropriations Law.

Translated by Conchita Delgado / Gerardo Cárdenas

Angie Contreras C. / Mayela Armas H.
EL UNIVERSAL