RDRutherford

January 10, 2007

Venezuela’s Chavez sworn in for radical new term

Filed under: Venezuela — rdrutherford @ 7:10 pm

UPDATE 3-Venezuela’s Chavez sworn in for radical new term
Reuters – January 10, 2007 1:35 PM ET
Related Quotes
Symbol Last Chg
VNT Trade 14.70 +2.50
Real time quote.
(Adds Chavez on natural gas sector, economy minister)
By Saul Hudson
CARACAS, Jan 10 (Reuters) – Venezuelan President Hugo Chavez was sworn in on Wednesday for a new six-year term and vowed to press a radical socialist revolution including nationalizations that have roiled financial markets.

Emboldened by his landslide re-election win, the typically combative anti-U.S. leader kept up his attack on private property, proposing a constitutional reform that would wrest control over the natural gas sector back to the state.

The move followed his decisions before the swearing-in to strip a private opposition TV channel of its license and take over major telecommunications and electricity companies, some owned by foreign investors.

“The people voted for the path of socialism, the people want and require socialism and the fatherland needs socialism,” Chavez said.

The man who calls Cuban President Fidel Castro his mentor changed tradition by draping the presidential sash from his left shoulder instead of his right in what he says is a symbol of his socialist credentials.

Investors took fright this week at the leftist drive that further consolidates power in the hands of a former coup leader who already controls Congress, the courts and says he has total support in the army and the OPEC nation’s state oil company.

As the United States criticized Chavez’s moves against private property, the stock market lost almost a fifth of its value on Tuesday, debt prices tumbled to a six-week low and the currency changed hands at nearly twice the official rate.

Chavez dismissed the stock market plunge as the result of speculators stoking alarm among investors.

He cited passages of the bible praising the redistribution of wealth, but gave no details to flesh out his nationalization plan against utilities, leaving investors to guess whether he wants the state to have a majority stake or 100 percent control.

But his new economy minister told Reuters the government ruled out using confiscation to nationalize leading telecom CANTV TDVd.CR(VNT) and was studying mechanisms to possibly compensate shareholders for the takeover.

BLANK CHECK FROM VOTERS?

Buoyed by strong oil prices and high popularity, Chavez is expected to ride out any economic and political storm — especially because crude revenues and not Venezuela’s economic policies generally lure investment into the country.

In his political career, the former army officer has survived jail, a coup and a recall referendum.

A leading anti-U.S. voice in the world and in the vanguard of a shift to the left in Latin America, Chavez now wants to scrap presidential term limits and stay in power for decades.

Chavez, who won 63 percent of the vote in December, reiterated he wants new powers to rule by decree.

The opposition has accused Chavez, in office since 1999, of seeking to transform the fourth-biggest oil exporter to the United States into a Cuban-style centralized economy.

Polls have shown Venezuelans are generally leery of expropriations of private property but in principle support nationalizations of companies if the moves are believed to be in the interest of the country

Chavez’s natural gas proposal extends his policy of gradually taking control over the energy sector.

But by opening new fronts against the media and utilities in his new term, Chavez is homing in on two sectors that could complete his state control.

“Chavez interprets the election result as giving him a blank check to develop a program that runs against the interests of Venezuela and only serves to benefit himself,” Omar Barboza, a leading opposition official, told Reuters.

(Additional reporting by Patricia Rondon, Brian Ellsworth and Ana Isabel Martinez)

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