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CARACAS, Friday October 15, 2010 | Update
 
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Economy
Chávez's government keeps seizing private properties

Venezuela's Vice President Elías Jaua said during a visit to the premises of Agropatria (formerly known as Agroisleña) that the government will no longer depend on the private food industry. The top Venezuelan official said from Chaguaramal, in the central state of Guárico, that there will be a fight against oligopolistic and monopolistic structures, because that is "the only way for Venezuela to become an agricultural power"

The state-run network of agricultural supplies tripled the number of branches after the occupation and seizure of farming company Agroisleña (File photo: Carlos Hernández)
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  EL UNIVERSAL
Friday October 15, 2010  03:37 PM



October 11

Venezuela's government increases control over agricultural and industrial sectors

Venezuelan state policy to control the means of production was reinforced after President Hugo Chávez signed a decree expropriating Spanish farming supply firm Agroisleña, which provided supplies to 70 percent of the country's farmers before it was seized by the government.

But with the seizure of Agroisleña, which was renamed Agropatria, as reported by President Chávez in his weekly Sunday's column "Las líneas de Chávez," the Venezuelan government aims at expanding and tightening the grip over food production.

The first seizures of lands, which now total about 2.9 million hectares (7.17 million acres), were carried out at the end of 2004 with a series of expropriation decrees of farms located in the central state of Cojedes.

Since 2006, the government has seized another link in the chain of companies related to the means of production, with the nationalization of plants and industries such as meat processing plant Fribarsa; Fricapeca slaughterhouse; Lácteos Los Andes, a dairy company; Fama de América, a coffee roaster, Industrias Diana, a manufacturer of edible vegetable oil; sugar processing plants Central Venezuela and Central Cumanacoa, as wells as La Gaviota, a fish processing company.

Now, with the seizure of Agroisleña, the Venezuelan government controls the largest distribution network of agrochemicals, retail outlets and distribution centers as well as a significant portfolio of loans from private associations of agricultural producers and individual farmers.

The confrontation between a socialist collective model imposed by the government and private farmers causes serious doubts in the minds of farmers associations.

Pedro Rivas, the president of the National Confederation of Agricultural Producers (Fedeagro), said last week that "some statements suggested that agricultural inputs would only be sold to small producers, but such reports were denied." However, Rivas recalled that there is a precedent: sugar cane producers (who owned more than 100 hectares) have not received a 37 percent subsidy from the Venezuelan Ministry of Agriculture and Lands that amounted to USD 22.1 million.

Noel Álvarez, the president of Venezuela's private business chamber Fedecámaras, believes that the expropriation of Agroisleña is a new step to besiege the private productive sector. "It is a severe blow against agriculture," said the private sector leader in TV station Televen. "Production will decline and the economic cycle will decrease as it has occurred in the areas seized by the government," he said.

Meanwhile, President Chávez said in his weekly program on October 10 that the prices of fertilizers and agrochemicals distributed by Agroisleña would decrease.

Chávez renames Agroisleña; orders seizure of Venoco and Fertinitro
In his weekly radio and TV address No. 365, on October 10 President Hugo Chávez focused on political rectification of several aspects that he previously deemed a dogma of faith.

Further, Chávez decided to strengthen his expropriation policy and announced the nationalization of Venezuelan motor lubricants company Venoco, and Fertinitro, a producer of nitrogen fertilizer. He also renamed Spanish farming company Agroisleña as Agropatria and appointed of a new board of directors.

The Venezuelan head of state said that "not all private property is evil" and "socialism does not disavow private property."

The Venezuelan president announced that he will not visit China during his tour of Russia and Asia, as his Chinese counterpart Hu Jintao told him that he wanted to visit Venezuela soon. Chávez said that he would visit Syria and Ukraine instead.

Chávez criticized the opposition umbrella group Democratic Unified Panel (MUD) because the opposition parties requested China to release the winner of the Nobel Peace Prize and accused the Chinese government of being a "totalitarian" regime. He defended the importance of Venezuela's partnership with China.

Venezuela's government considers that Polar and Cargill must be state-owned
Companies such as Venezuelan food manufacturer and supplier Empresas Polar and US food giant Cargill must be owned by the state, as it occurred with the Spanish farming company Agroisleña, said Venezuelan Minister of Food Carlos Osorio.

Although the new National Assembly, which will be sworn in on January 5, 2011 shows a different composition, the revolutionary government will maintain its course.

"We have different mechanisms to deepen the revolution, but the most important of all is popular consultation. If the counterrevolution wants to change the laws, our people will take the decision," warned the Minister of Food in an interview with pro-government newspaper Correo del Orinoco.

"Oligopolies do not ensure food security in the country and the Bolivarian government has been fighting for 11 years against this issue. There are two groups at odds, namely socialism and capitalism. The attacks launched by the US through its domestic lackeys have not managed to halt the passage of revolutionary laws. The Bolivarian government has made progress in the last 11 years, despite capitalist and imperialist attacks."

"Many times, oligarchs make their workers, such as in the case of Polar or Agroisleña, declare in front of TV cameras. Later, when you talk to them they recognize the abuses committed by such companies," Osorio said.

Trade sector: Government is plunging economy into chaos
The policy of seizures and nationalizations implemented by the Venezuelan Executive Office is plunging the national economy into chaos, said Fernando Morgado, the president of the Venezuelan Council of Trade and Services (Consecomercio).

"If the government seeks to be the only sector responsible for processing and marketing of goods in Venezuela, the economy will inevitably be plunged into chaos," said the business leader during the Annual Meeting of the Venezuelan Federation of Trade and Industry Chambers (Fedecámaras), which is being held in the city of Puerto Ordaz, southern Venezuela.

Morgado added that attacks against private property have become a state policy and the consequences will be very painful for the entire population.

"Either the government changes the course or it will impoverish all Venezuelans," Morgado said.

Venezuela's business sector asks top court for ruling on private property
Venezuela's private business association Fedecámaras will request the Supreme Tribunal of Justice (TSJ) to issue a ruling on the status of private property, said Noel Álvarez, the president of the Federation of Trade and Industry Chambers (Fedecámaras).

"We are going to file an action with the TSJ for it to determine whether private property has been infringed or not," the business leader told private TV news channel Globovisión.

According to the president of the Federation of Trade and Industry Chambers (Fedecámaras), the situation facing Venezuela's private sector has deteriorated further following the recent spat of seizures conducted by the Venezuelan government. "The government seems to have adopted the strategy of besieging the productive sector," he said.

Venezuela has seized about 185 industries in 2010
Carlos Larrazábal, the president of the Venezuelan Confederation of Industries (Conindustria), said that the Venezuelan government has seized at least 185 manufacturing companies in 2010, excluding firms in the agriculture sector.

"We are concerned that the Venezuelan government continues to seize companies without complying with Article 115 of the Constitution," Larrazábal said about the recent seizure of Agroisleña, Venoco and Fertinitro.

The business leader said that both Venezuelan employers and the country need an investment-friendly climate and the generation of productive employment, rather than "an accelerated process of capital destruction."

Vice-Minister: Socialism "is in the air" in seized Venoco
Asdrúbal Chávez, the Venezuelan Petrochemical Vice-Minister, said that socialism "is in the air" in motor lubricants company Venoco. "We have come to realize that this company uses inputs produced by the state-run oil and petrochemical industry, it manufactures motor lubricants and then we lose control over prices."

The Vice Minister added that that "price differences between the products of motor lubricants company Venoco and state-run oil company Petróleos de Venezuela (Pdvsa) are above 50 percent. This is inexplicable, because Venoco and Pdvsa used the same inputs."

Chávez stressed that "this is a fight against inflation and speculation."

Spanish farmers on hunger strike for five days in Caracas
Luis and Carlos Solórzano, two Spanish citizens who owned La Vaca farm, have been on a hunger strike for five days at the gates of Spanish Consulate in Caracas, as they are waiting for the National Land Institute (INTI) to provide an answer on the compensation for their property, which was seized by the Venezuelan government.

Carlos Solórzano said they have not received any response from INTI about their case, as the amount of the compensation for the improvements in the ranch was agreed in 2008 and has not yet been paid.

"We hope this problem is solved soon because every day that passes we are weakened further. My brother Luis tension lowered on October 9 and he had to be taken to Chacao municipality health center, and he is monitored every morning. This is very hard," said Solórzano.

He expects the Spanish Government to take a "firm" stance regarding the expropriations that are affecting Spanish citizens in Venezuela and push and go beyond demanding respect for property.

Solórzano brothers said they will remain on hunger strike until their case is resolved.

Koch not advised of Fertinitro seizure by Venezuelan govn't
US company Koch Industries has not been notified of the seizure of its assets in Fertinitro, a move that was announced and implemented by the Venezuelan government on October 10 and October 11, a spokeswoman for the US company told Reuters.

"Koch Fertilizer has not received any official or informal notice, nor have we received any notification from Fertinitro regarding any disruption," a Koch spokeswoman told Reuters by email. "We are attempting to obtain details and information."

Fertinitro is comprised of state-owned Pequiven and US firms Koch, each with 35 percent of the shares, and Snamprogetti, an Italian company indirectly owned by Eni with 20 percent of stocks, according to Pequiven. The remaining 10 percent shareholding was not identified.

Venezuela's Oil Minister Rafael Ramírez said the nationalization of Fertinitro guaranteed the government access to all the fertilizer it needed for farmers and a nationwide seeding plan that would ensure abundant, cheap food for all.

"The Koch company grabbed all our fertilizer and was selling it abroad at speculative prices," Ramírez told workers on October 11 at the Fertinitro plant in eastern Anzoátegui state.

October 12

Expropriations dismantle Venezuela's production model

The expropriation policy the Venezuelan government kicked off a few years ago continues. It has been the tool to dismantle a production model primarily based on private capital.

The first stage of the Simón Bolívar National Project, also known as the First Socialist Plan, will end in three years. And the government has reinforced policies aimed at replacing traditional private property with social production enterprises (EPS). In the First Socialist Plan, such institutions are termed "the germ and path to the 21st century socialism."

President Hugo Chávez said on October 10 that private property is not intrinsically bad, at least small properties.

"Large properties must be state-owned; they must be social ownership. We must put an end to oligopolies, monopolies, the concentration of ownership in a few hands, that is, the bourgeois property," said the Venezuelan head of state during his weekly Aló Presidente broadcast.

Chávez added that his administration wants people to become owners. Chávez handed land titles to a group of community councils in the state of Aragua (central Venezuela). He warned the members of the councils that they could not dispose of the properties, or at least not sell them.

Abelardo Daza, an economist and professor at the Institute of Higher Education in Business Administration (IESA), believes that a vital element of Chávez's development project is the intervention of production activities. "The question is whether this is an end in itself," he says. He did not rule out the possibility that productivity of the nationalized companies will deteriorate gradually.

"There are sectors that show a serious deterioration compared to the results obtained in the previous administration. There has been some evidence. Results cannot be seen immediately," he said.

Daza stressed that the forecasts concerning the deterioration of seized companies are based on what has occurred in the past. He mentioned state-run telecommunications company Cantv. "The company was nationalized 10 years ago. Deterioration is not automatic. Besides, this (nationalization) process has been in place for three and half years."

According to estimates of Venezuelan research firm Ecoanalítica, nationalizations have cost USD 25.22 billion, but the government has only recognized so far a little more than a third of those debts. The cost of the seizures of Agroisleña, Venoco and Fertinitro is not included.

The Venezuelan state owes USD 16.55 billion, out of which USD 7.25 are owed to oil companies involved in projects in the Orinoco Oil Belt that were nationalized.

Venezuelan business sector rejects attempts to strengthen socialism
Noel Álvarez, the president of the Venezuelan Federation of Trade and Industry Chambers (Fedecámaras), rejected the government's attempts at strengthening the so-called "21st century socialism."

"We firmly reject any attempt to continue moving through the path of an arbitrary socialism that excludes people and whose economic, social and political results are apparent," said the business leader at the closing session of the 66th Annual Meeting of Fedecámaras, held in Puerto Ordaz, a major city of southern Bolívar state.

Álvarez stressed that Venezuelan government's policy of expropriations, seizures, and nationalizations is not aimed at development, but at "hijacking society" and establishing a political and economic model "contrary" to the history of Venezuelan society.

October 13

Venezuelan business sector rejects state-centered policies

"Economic despotism" implemented by Hugo Chávez's government has put Venezuela country in a "state of shock" and will only lead to the "destruction of the country," said Noel Álvarez, the president of the Venezuelan Federation of Trade and Industry Chambers (Fedecámaras), to sum up the perception of local entrepreneurs vis-à-vis the decisions made by the Executive Office.

"The only results of a foolish and unfeasible economic project are economic downturn and (a litany of) excuses. (This model), which aims at establishing only one employer who, through the tyranny of monopoly, wants to make decisions in each sector of our public and private lives," said the business leader in the closing session of the 66th annual meeting of Venezuela's private business chamber, held in Puerto Ordaz, a major city of southern Bolívar state.

Venezuelan business leaders said that economic challenges will not be overcome under the so-called "21st century socialism," but through a change involving a greater role of the private sector, an investment-friendly climate, and "productive entrepreneurship."

October 15

Rural employment down amidst land seizures by government

Less and less people are working in the agricultural sector. Official data show that from the moment the government began to seize lands, under the agrarian reform, the percentage of rural workers dropped from 9.6 percent in the first half of 2006 to 8 percent of the employed population at the end of the first half of 2010.

This means that over the past four years, the percentage of people who work in agricultural, livestock and hunting activities has declined by 1.6 percentage points, according to data issued by the National Statistics Institute (INE), as published by Venezuela's Integrated System of Social Indicators (Sisov).

The information provided by the agency attached to the Ministry of Planning and Finance did not specify the total number of farmers and ranchers. However, according to INE data released in previous semesters the number of farmers is about one million people.

The transfer of land ownership implemented by the government began in the second half of 2006. After this period, the fall in the percentage of rural workers has deepened sharply.

The number of workers in the manufacturing sector, which has also been affected by the policy of transfer of land ownership promoted by the government and by nationalizations, has dropped since then, yet with less intensity than in the rural sector.

Official data show that in the first half of 2006, the percentage of population employed in the industrial sector was 12 percent. By the end of the same period in 2010, the percentage of employed population in the sector declined to 11.3 percent.

Workers have moved to the oil sector (which is almost totally state-owned), which increased from 0.7 percent in 2006 to 1 percent of employed population, according to official figures.

Workers have particularly moved to the construction sector. This activity employed 8.3 percent of the employed population at the end of the first half of 2006, while in the same period of 2010 it reached 9.9 percent of employed population in Venezuela.

The data released by Sisov shows that the transport sector currently employs more people than four years ago. In the first half of 2006, 8 percent of the employed population worked in the transport sector, whereas in the first half of 2010, the percentage increased to 9 percent.

The rest of the economic sectors (electricity, trade, banking and community services) has remained unchanged or has shown a slight change in their importance as employers.

Acting President: Venezuela no longer depends on private industry
Venezuela's Vice President Elías Jaua said during a visit to the premises of Agropatria (formerly known as Agroisleña) that the government will no longer depend on the private food industry.

The top Venezuelan official said from Chaguaramal, in the central state of Guárico, that there will be a fight against oligopolistic and monopolistic structures, because that is "the only way for Venezuela to become an agricultural power."

Jaua added that the seizure of Spanish farming supply firm Agroisleña was one of the steps the Venezuelan government examined most carefully. Therefore, "it is a fact, an irreversible decision."

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The end of a cycle

Hundreds of thousands of demonstrators took to the streets of Brazil on March 13 to demand the ouster of embattled President Dilma Rousseff, carrying banners expressing anger at bribery scandals and economic woes. A banner read "We don't want a new Venezuela in Brazil."

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