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Chávez slips into demagogy again

Editorial | The Financial Times

Published: January 13 2005 02:00 | Last updated: January 13 2005 02:00 | After routing the opposition at the polls last year, Venezuela's President Hugo Chávez has signalled an escalation of his offensive against the country's elites with a "war" on latifundio, big rural estates that he blames for rural poverty. This is a mistake. Land reform is likely to weaken the farm sector. It has regularly failed Latin America in the past and is especially pointless in Venezuela, where nine out of 10 people live in urban areas.

Land reform that gives the government the ability to expropriate land that is idle or unproductive or where owners are unable to prove legal title has been on the statute books for more than three years. But it is only now, after consolidating his power at a recall referendum in August and in subsequent local elections, that Mr Chávez is implementing it. Saturday's theatrical occupation by the national guard of a 13,000 hectare estate owned by Britain's Vestey Group was the first step in a much broader programme.

The government argues that taking over idle and unproductive land is socially just and economically sensible, that giving land to the poverty-stricken rural poor will help ease tensions, and that, under the terms of Venezuela's constitution, landowners are entitled to compensation at market rates.

The argument, however, is flawed in many respects. First, the government itself is the biggest landowner in Venezuela and has huge amounts of empty land that could be settled by the landless. Though records are unreliable, partly because the government has neglected to build an accurate registry, as much as nine-tenths of state lands may be unproductive.

Second, the policy threatens to undermine property rights. Following changes last year that strengthened Mr Chávez's influence over the courts, landowners may struggle to prove the legal titles they need to win compensation. The expropriation of Vestey's Agroflora subsidiary is an inauspicious precedent since the government has so far failed to show that the estate was unproductive. Vestey has been in Venezuela for over a century, and has supplied the country with beef.

The measures, accompanied by the usual rhetorical attacks on "oligarchies", will inevitably damage business confidence. For the moment Mr Chávez may not be too concerned since his government has handsome surpluses from high oil prices. But if the latter fell, shortfalls in investment would undermine economic performance.

Finally, land reform offers no guarantee of increased agricultural productivity. Past experience, including that of Venezuela in the 1960s, shows the opposite. The priority for Venezuela should be to create a prosperous agricultural sector providing cheap food for its predominantly urban population and diversifying exports away from dependence on hydrocarbons. Ensuring these businesses pay decent wages and guarantee good working conditions for its workers would be the best way to address rural poverty.

Editor's commentary: at last a reputable news source stresses upon a transcendental fact, i.e. that the single biggest landholder of Venezuela is indeed the State. However State's land is not up for redistribution, is not included in the 'land reform' and Chavez is not willing to give it away; only private and productive farms, such as Vestey's group El Charcote ranch, seem to be in the crosshairs of the 'Bolivarian Agrarian Revolution'. A. Boyd.

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