Venezuela Strengthens Support for Industry, Announces Possible Nationalizations

Mérida, May 4, 2007 (venezuelanalysis.com)— Venezuelan President Hugo Chávez announced the possibility of new nationalizations, including private banks and the steel industry, at an event to celebrate the industrial program Fábrica Adentro yesterday. The purpose of the event was the granting of funding to 49 different “productive companies” with the intention of reactivating and expanding national industry. The President threatened with the nationalization of private monopolies that do not cooperate with the construction of the new industry.

President Chávez arrived yesterday to Invetubos, a new pipe factory in Valencia, along with several of his ministers. There he spoke in front of employees of the factory at an event to inaugurate the plant and to finance 49 new companies. In this occasion the government granted US$ 600 million, with the purpose of restoring idle factories and expanding productive capacity.

“The Invetubos factory is an example of what Fábrica Adentro has done up to now,” said Chávez. “It was completely abandoned since 1995, until last January (2006) when it received financing of more than 21 billion bolivars [US$ 9.8 million].”

The action is part of the Fábrica Adentro (Inside the Factory) program which has so far provided financing of more than US$ 233 million to industry throughout the country, creating nearly 110,000 new jobs and preventing the loss of another 37,000. The purpose of the program is to break the foreign economic dependence of the country by building domestic industrial productive capacity. At the same time, the new factories are part of the new “socialism” being promoted by the Chávez government. The factories, called “social production enterprises”, are structured to give workers partial ownership of the company.

Chávez emphasized Fábrica Adentro’s role in the transition that Venezuela is experiencing from the capitalist economic model towards the socialist economic model. “And, besides,” he added, “it is helping break our country’s economic dependence.”

The new pipe factory in Valencia, with a capacity of 80,000 tons of pipe per year, will create an immediate 117 jobs and is expected to grow. Last year production was only 25% of its total capacity.

Possible New Nationalizations

The new industrialization plan, however, does have obstacles. Chávez announced at the event that he would study the possibility of new nationalizations in order to eliminate private monopolies that stand in the way, naming the private steel company SIDOR as an example. According to Chávez, the company is a monopoly that does not produce for the national market, but rather exports raw materials to other countries forcing Venezuela to import the same material from other countries.

“We have to bring tubes from China and we can’t permit that,” he said. “I’ve been asked to nationalize it, but I’m following the process. We don’t want to make hasty decisions, but we can’t continue to allow SIDOR to produce the necessary steel for these pipes, and then we have to import it because they have created a monopoly.”

Chávez said he did not want to have to nationalize the company since it is held by Latin American capital, to which he gives special exception, but he assured he would go through with it “if they don’t decide to change.”

“I would be obligated to nationalize it like I have done with Cantv (national phone company). I would prefer to not do it because I think that Latin American productive forces should unite, but not unite so that they exploit us,” explained Chávez.

Chávez also mentioned the possibility of nationalizing private banks that don’t cooperate with solving social problems and only worry about making profit.

“The private bank has to give low-cost financing, and if they don’t want to do that then they can leave, or we will nationalize them, and I hope they understand this message,” he warned. Chávez emphasized that he was elected by almost 64% of Venezuelans last December with a proposal to adopt socialism, and it is toward that objective that he is working.

Chávez said it would be necessary to create a new law to eliminate the monopoly on steel in Venezuela, and he announced he would also create a special law to transform capitalist enterprises into state-run socialist enterprises. Chávez has been given the power to write new legislation over the next year and a half in order to set the country on the path to socialism.

However, responding to accusations that the Venezuelan state is planning on taking over the entire economy, Chavez said, “We do not have a statist model [of socialism], that everything will be of the state. Is it possible that there are private businesses in socialism? Yes. Even, I would say that in Venezuela it is not only possible, but necessary.”