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Hugo Chavez demands $10 bil

By A.M. Mora y Leon | Publius Pundit

12.06.06 | In his most direct and brazen threat against the private sector yet, Hugo Chavez has warned Venezuelan businesses that unless they repatriate $10 billion in capital flight for his own disposal, he’ll take every last thing they have left in Venezuela.

It’s a profoundly menacing statement, and not only because he mentions he’ll act in just a few months, after he’s reelected in December but because he sounds so sure he’s going to win. If Venezuela were a true democracy, (and Chavez was not an election cheat) he would not be so sure of that. But more specifically, the threat signals Chavez’s intentions in the coming year, something he tends to act on swiftly:

First, see the EFE story here:

Chavez asks Venezuelan businesses to repatriate $10 bil

Caracas, Jun 10 (EFE).- Venezuelan President Hugo Chavez asked the nation’s business leaders to repatriate $10 billion of the dollars they have overseas and invest it in their own country.

“I ask you to bring back the $10 billion you took out over the last 10 years and invest it in this country. If you don’t we will have to take measures after our victory on Dec. 3,” Chavez said at a ceremony in Maracaibo, 700 kilometers (435 miles) west of Caracas.

The leftist-populist president, who refers to Venezuelan business leaders who oppose him as “oligarchs,” gave no clues as to what kind of decisions he might take if there is no return of overseas capital, which the government believes could be as much as $80 billion.

He said, nonetheless, that the measures would be defined after the presidential elections next December which, he predicted, he will win by a “knockout.” Chavez’s address took place at the ceremony of laying the foundation stone for the first Bolivarian Complete Educational City which will cover some 31,500 square meters (339,000 square feet).

EFE rr/cd

Would you, under any circumstances, return any flight capital to Venezuela under an ‘offer’ like that?

The whole thing is horrific, because those Venezuelan investors who cannot move assets out of the country, like farmers and ranchers, are the ones who stand to be destroyed. Urban Venezuelans with cash, investment portfolios and savings, rather than fixed assets like farms, are in much better shape, but they have little reason to repatriate their overseas cash, which was moved in the first place on fears it would be stolen. There is no reason to think it would not be stolen, given the current Chavez threat against farmers. So this Chavez threat could be a move to pit one sector of the private sector against another.

But more likely, it’s a sign that Hugo Chavez is running out of money. The crisis is twofold, one is that a fiscal crisis, including a big currency devaluation, is likely for Venezuela due to too much money-printing that supports too little economic activity. More hard cash might stave it off for awhile but only if Chavez stops spending like a sailor - something that is unlikely.

The other is that the cash for Chavez’s vast social programs is running out and when that happens, his political support (about 30% of the population) will probably dry up. Exhausting his carrots on that front, it means Chavez is now ready to begin taking out his sticks.

I am very fearful of this, because although Chavista social programs disgust most people by creating a permanent welfare class, Zimbabwe-style or Cuba-style expropriations are quite another thing, and there are people who might fight back, as happened in El Salvador and in Colombia, the classic death-squad-war scenario. Wars over land are always the most violent and bitter.

That’s what Hugo Chavez is proposing to bring to Venezuela now, unless, pirate-style, he gets his $10 billion ransom from the private sector.

Source Publius Pundit



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