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The Progressive Economics Forum

Chavez to nationalize electricity and telecom

I recently read somewhere a commentary that Venezuela’s Hugo Chavez was not really that radical, that his populist rhetoric was largely limited to expanding social programs for the poor, and that behind the scenes he was still playing nice with US businesses. Unfortunately, I seem to have lost the link to that article. Perhaps Chavez’s latest announcement will alter that view:

Chavez: Will nationalize telecoms, power

President Hugo Chavez announced plans Monday to nationalize Venezuela’s electrical and telecommunications companies, pledging to create a socialist state in a bold move with echoes of Fidel Castro’s Cuban revolution.

… The nationalization appeared likely to affect Electricidad de Caracas, owned by Arlington, Virginia-based AES Corp., and C.A. Nacional Telefonos de Venezuela, known as CANTV, the country’s largest publicly traded company.”All of that which was privatized, let it be nationalized,” Chavez said, referring to “all of those sectors in an area so important and strategic for all of us as is electricity.”

… Chavez said that lucrative oil projects in the Orinoco River basin involving foreign oil companies should be under national ownership. He didn’t spell out whether that meant a complete nationalization, but said any vestiges of private control over the energy sector should be undone.”I’m referring to how international companies have control and power over all those processes of improving the heavy crudes of the Orinoco belt — no — that should become the property of the nation,” Chavez said.

In the oil sector, it didn’t appear Chavez was ruling out all private investment. Since last year, his government has sought to form state-controlled “mixed companies” with British Petroleum PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips Co., Total SA and Statoil ASA to upgrade heavy crude in the Orinoco. Such joint ventures have already been formed in other parts of the country.

Chavez threatened last August to nationalize CANTV, a Caracas-based former state firm that was privatized in 1991, unless it adjusted its pension payments to current minimum-wage levels, which have been repeatedly increased by his government.

Enjoy and share:


Comment from Robert McClelland
Time: January 9, 2007, 2:14 pm

…to give him greater powers to legislate by presidential decree.

I don’t know enough about Venezuela to say whether or not his ideas are needed to improve the country, but the more I read about him, the more convinced I become that Chavez is nothing more than a leftwing version of Bush.

Which makes me wonder if we’re witnessing the ushering in of a new era of dictators that hide behind the cloak of democracy.

Comment from Marc Lee
Time: January 9, 2007, 2:23 pm

Chevez’s authoritarian tendencies are definitely a major point of contention about his regime. But the Latin Americans love the “strong man” type.

Comment from Molson
Time: January 9, 2007, 5:35 pm

I was listening to the radio earlier today, and I heard a guy from the Wall street Journal talking about how he talked to a businessman in Venezuela who stated that the old telecom company before it was privatized in 1991, was just terribly run. He said you could drive across town to speak to who you wanted to before you could get a dial tone. I mean nobody does nationalizations anymore, even the far left in some countries was privatizing industry.

Comment from rabbit
Time: January 9, 2007, 6:30 pm

Oil is propping up this dictatorship. When the oil runs out, or the wells quit producing due to mismanagement, or if the price of oil plummets, this regime will look like Wiley Coyote running over a cliff, and the world will have yet another basket case of a nation.


Comment from tom s.
Time: January 9, 2007, 8:20 pm

“But the Latin Americans love the “strong man” type.”

I don’t often disagree with you, but you must be joking, right? They get the strong man type, more often than not, but that is surely a product of circumstance more than preference. Next you’ll be saying that those Arabs aren’t ready for democracy.

Oh well, I guess everyone is wrong from time to time.

Comment from Marc Lee
Time: January 10, 2007, 10:08 am

I love how Chavez gets the opinions flowing …


I have traveled extensively in Latin America, and spent a lot of time studying the region, and I stand by my opinion. I’m not, however, saying that this is a good thing. And I am not saying that they want dictators, either. But it is a common human trait that desires strong leadership — this is often juxtaposed with a democratic instinct.


You are right about oil driving Venezuela’s economy. But Chavez is channeling the benefits of oil to the poor. And I doubt the price of oil is going to plummet — if anything the long-term trend will be up up up.

What do think about Alberta? They were a “basket case” prior to oil.


Both telecom and electricity are classic natural monopoly areas where the choice is often between a private monopoly and a public monopoly. In telecom there have been some very convoluted attempts to impose competition on this structure, with mixed benefits, in my opinion.

The corruption of Venezuela’s elites in running the old monopoly telecom system does not mean that telecommunications cannot be administered properly as a public utility.

Comment from Molson
Time: January 10, 2007, 4:13 pm

I guess my opinion is if it isn’t broken, don’t fix it. If it runs fine as a private firm, then leave it that way, even if you need to place some regulation on it due to lack of competition.

Comment from tom s.
Time: January 10, 2007, 5:22 pm

I’ve not travelled at all to South America, and so I defer to your opinion. But sceptically, very sceptically…

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