Venezuela's President Hugo Chávez (left) swears in his new ministers in Caracas, on Monday. - Reuters
As Venezuela embarked on another six years under Hugo Chávez, the president announced plans to nationalise power and telecom companies and make other bold changes that will concentrate more power in his hands.
Sworn in today
Chávez, who will be sworn in today to a third term that runs until 2013, also said he wanted a constitutional amendment to strip the Central Bank of its autonomy and would soon ask the National Assembly, solidly controlled by his allies, to give him greater powers to legislate by presidential decree.
"We're moving toward a socialist republic of Venezuela, and that requires a deep reform of our national constitution," Chávez said in a televised address on Monday after swearing in his new Cabinet. "We're heading toward socialism, and nothing and no one can prevent it."
Jamaica and oil-rich Venezuela have been trading partners for decades, with the South American country currently supplying 21,000 barrels of crude to Petrojam daily under the concessionary PetroCaribe oil facility effected June 2005.
The agreement stipulates that Jamaica consumes the oil internally, but allows a portion of the payment for supplies to be treated as a long-term loan at 1-2 per cent annual interest for up to 23-years, and for the funds to finance development projects.
The finance ministry has already allocated more than $9 billion PetroCaribe funds to public-sector programmes.
Importance for Jamaica
The oil facility has strategic importance for Jamaica, which is struggling to tame an oil import bill that climbs to new record each year - US$1.2 billion in 2005 and a projected US$1.5 billion in 2006.
The agreement with Venezuela, penned by former prime minister P.J. Patterson and Chávez in Montego Bay, is renewable annually by automatic trigger, but can be cancelled with a month's notice.
"This agreement may be modified or denounced when the interest of the Government of the Bolívarian Republic of Venezuela so requires, in that case the Government of Jamaica will be notified in writing and through diplomatic channels 30 days in advance," according to Article X.
The changes Chávez announced Monday are in keeping with pledges he made after his re-election last month to take a more radical turn toward socialism. His critics have voiced concern that he would use his sweeping victory to tighten his grip on power, following in the footsteps of Fidel Castro.
Cuba, one of Chávez's closest allies in the region, nationalised major industries shortly after Castro came to power in 1959. Bolivia's Evo Morales, another Chávez ally, moved to nationalise key sectors after taking office last year.
"The nation should recover its ownership of strategic sectors," Chávez said. "All of that which was privatised, let it be nationalised," he added, referring to "all of those sectors in an area so important and strategic for all of us as is electricity."
Chávez, first elected in 1998, has progressively moved to remake Venezuelan society - rewriting laws, setting up state-funded cooperatives and starting a land-reform programme that has turned over large swaths of ranch lands to poor farmers. Chávez calls it his Bolivarian Revolution, named after South American independence hero Simón Bolívar.
"The eight-year transition phase is ending and we're entering a new era - the Simón Bolívar national plan, Bolívarian socialism," Chávez told his audience of cheering supporters.
The nationalisation plan 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 and the only Venezuelan listing on the New York Stock Exchange (NYSE).
Verizon Communications Inc has a 28.5 per cent interest in CANTV.
National ownership
Chávez said lucrative oil projects in the Orinoco River basin involving foreign oil companies should be under national ownership. He did not spell out whether foreign investors would be compensated or simply expropriated.
Political analyst Gloria Cuenca said Monday's announcement was a glimpse of the next six years.
Deepen his revolution
"It seems he has decided to stoke the fire to deepen his revolution, which from my point of view aims to look a lot like Castro's Cuba," said Cuenca, a communication professor at Venezuela's Central University.
Chávez did not appear to rule out all private investment in the oil sector.
Since last year, his government has sought to form state-controlled 'mixed companies' with British Petroleum PLC, Exxon Mobil Corp, Chevron Corp, ConocoPhillips Company, 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.
The United States remains the top buyer of Venezuelan oil, which provides Chavez with billions of dollars for social programs aimed at helping Venezuela's poor as well as aid for countries around the region.
Chavez threatened last August to nationalise CANTV, a Caracas-based former state firm that was privatised in 1991, unless it fully complied with a court ruling and adjusted its pension payments to current minimum-wage levels, which have been repeatedly increased by his government.
CANTV is the dominant provider of fixed-line telephone service in Venezuela, and also has large shares of the mobile phone and Internet markets.
Electricidad de Caracas is the largest private electricity firm in Venezuela. US-based AES, a global power company that today has businesses in 26 countries, bought a majority stake of Electricidad de Caracas in a hostile takeover in 2000.
After Chavez's announcement, American Depositary Receipts of CANTV immediately plunged 14.2 per cent to US$16.84 before the NYSE halted trading. An NYSE spokesman said it was not known when trading might resume.
Investors with sizeable holdings in CANTV's ADRs include some well-known names on Wall Street, among them Deutsche Bank Securities Inc, UBS Securities LLC and Morgan Stanley & Company.
But the biggest shareholder, according to Thomson Financial, appears to be Brandes Investment Partners LP, an investment advisory company in California. Also holding a noteworthy stake is Julius Baer Investment Management LLC, a Swiss investment manager.
CANTV said it was aware of Chavez's remarks but added in a statement: "No government representatives have communicated with the company, and the company has no other information."
Chavez cited the communist ideals of Karl Marx and Vladimir Lenin at other points in his speech.
In the fiery address, the president also used a vulgar word to refer to Organization of American States Secretary-General Jose Miguel Insulza. He lashed out at Insulza for questioning his government's decision not to renew the licence of an opposition-aligned TV station.
Ń AP and Gleaner reports
