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Venezuela: Regime Prepares To Seize Food Production Assets
STRATFOR ^ | Jan 10, 2003 | Staff

Posted on 01/10/2003 3:04:11 PM PST by Axion

Venezuela: Regime Prepares To Seize Food Production Assets
Jan 10, 2003


Accusing private food production companies of hoarding food, Venezuelan President Hugo Chavez has ordered that plans be drawn up for a military seizure of private company assets. However, such a move likely would do nothing to ease Venezuela's deepening crisis.


Venezuelan President Hugo Chavez on Jan. 10 ordered regional military commanders and state governors to draft plans for a military seizure of all major food production plants, warehouses and grain silos in the country, according to Globovision television network.

Acting on the apparent assumption that the private sector is hoarding food, Chavez said in a nationally televised speech that he would not allow business leaders to "strangle the people with hunger." He also threatened unspecified legal measures against the country's four privately owned television media. However, any government moves to seize privately owned property likely will plunge Venezuela deeper into political turmoil, without easing growing food shortages throughout the country.

Venezuela is a net food importer, and native food stocks have dwindled as imports have trickled nearly to the halt amid a national labor strike that has continued for 40 days. State-owned Petroleos de Venezuela (PDVSA) has been shut down for 37 consecutive days. Overall economic losses since the strike began now total more than $13 billion, more than 10 percent of the country's $124 million GDP, according to private economists in Caracas.

In conversations with Stratfor, sources within Venezuela denied that hoarding has occurred, although food distribution has been more carefully managed since the strike began. They said the National Supermarket Association (ANSA), in conjunction with the Venezuelan Chamber of Food Processing Industries (Cavidea), have implemented an emergency plan to make sure food products are as widely available as possible and to control potential panic buying at retail outlets.

As a result, there indeed could be food stocks on hand at many warehouses – a political public relations coup for the Chavez regime should camera crews be deployed to capture footage. A broadcast of that nature could be used to lambaste the political opposition and force a shift in the current face-off.

However, the implications of a military seizure of food production assets also are varied -- and potentially negative for the government.

First, remaining food stocks could be exhausted quickly and distributed unevenly among the populace. In recent weeks, since the military seized control of PDVSA's installations, local gasoline distribution has been more constant in poor areas -- where Chavez typically has more supporters -- than in opposition strongholds. The Chavez regime would have two clear motives to follow the same pattern with food distribution: first, to maintain the support of poor voters and shore up his sagging popularity ratings, and second, to starve out his foes.

The possibility that food stuffs could be stolen outright in the event of a military seizure also is difficult to discount. While charged with distributing gasoline, sources have told Stratfor that some soldiers demanded cash payments and refused to issue receipts to citizens.

Finally, many food companies in Venezuela are owned by U.S. or European multinationals. Chavez could run afoul of these countries if their governments perceive him as confiscating private property illegally. Though Washington has made little secret of its distaste for Chavez, Bush administration officials have made no apparent moves to tilt the balance in the current political standoff. However, the United States historically has taken an extremely negative view of the seizure of U.S.-owned assets, as occurred in Cuba decades ago. Should Chavez attempt to take physical control of U.S. assets in Venezuela, the Bush administration likely will take a tough stance.

Chavez already has urged Venezuelans to "prepare for a difficult period" during the first months of 2003, and cautioned that the regime's efforts to break the national strike will have a serious negative impact on the government's financial stability.

Others also are warning of a deepening financial crisis in Venezuela. Analysts in New York City have warned that if PDVSA's strike continues, the government will "have problems" servicing its $18.3 billion foreign debt on schedule, according to the Wall Street Journal. Analysts in the United States also warned that collapsing public finances and a drop in foreign exchange reserves at the Central Bank could trigger the imposition of capital and exchange controls to stem capital flight and the currency's devaluation.

An estimated $11 billion was taken out of Venezuela in 2002 by private savers, according to Ricardo Hausmann, a former Venezuelan Planning Minister who now teaches at Harvard University. Since Chavez became president in January 1999, capital flight from Venezuela has totaled more than $34 billion, he said.

For the first time since the PDVSA work stoppage began, Chavez admitted Jan. 10 that Venezuela was able to produce only 150,000 barrels a day of crude oil, on average, during December. However, the president claimed only a week ago that PDVSA was producing more than 1 million bpd.

TOPICS: Foreign Affairs; News/Current Events
KEYWORDS: latinamericalist

1 posted on 01/10/2003 3:04:11 PM PST by Axion
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To: Axion
Is he going to try to Mugabe his way into dictator-for-life? The idea of his gov't getting its hands on the country's food supply is very disturbing.
2 posted on 01/10/2003 3:05:44 PM PST by xm177e2
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To: Axion
I don't think food shortages have reached the point where it makes sense for Chavez to do this. In fact, food shortages might turn the population against the strike, so opposition groups have been careful to avoid it.

If things progress to that point, all bets are off.

3 posted on 01/10/2003 3:21:36 PM PST by Dog Gone
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4 posted on 01/10/2003 3:22:42 PM PST by Anti-Bubba182
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To: Dog Gone
If he seizes US property...we seize CITGO (and sell it to the lowest bidder!)
5 posted on 01/10/2003 3:28:53 PM PST by kaktuskid
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To: *Latin_America_List; Cincinatus' Wife
6 posted on 01/10/2003 3:38:11 PM PST by Libertarianize the GOP
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To: kaktuskid
The bids wouldn't be too high anyway, since they have no oil to sell!
7 posted on 01/10/2003 3:39:03 PM PST by Dog Gone
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To: Axion
Now that Chris Dodd is about out of the picture, the US will be free to do what it needs to.

Time to topple over another communist dictator. Soon coming to a theater near you.
8 posted on 01/10/2003 3:42:19 PM PST by MonroeDNA (Horn broke. Watch for finger!)
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To: xm177e2
PS, any single Venuzuelan women, contact me....

9 posted on 01/10/2003 3:44:46 PM PST by MonroeDNA (Horn broke. Watch for finger!)
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To: xm177e2
Is he going to try to Mugabe his way into dictator-for-life?

My thought, too. It's almost eerie that Mugabe claimed that warehouses and markets were hoarding food when it was the famine and lack of production cutting supplies, and now Chavez follows suit.

Of course, it works with many. Grey Davis claimed the same thing about electricity and how many times do we hear Americans who are certain that the oil companies are holding oil off the market?

10 posted on 01/10/2003 3:57:20 PM PST by BfloGuy
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To: kaktuskid
"we seize CITGO"

We should do that anyway since he intends to starve the masses into compliance.
I hope the cia has something along the lines of a fully loaded predator drone waiting in the wings for this socialist nutcase. It is no coincidence that this is heating up simultaneous to North Korea's nuclear development and the pending Iraq action.
11 posted on 01/10/2003 4:44:15 PM PST by Domestic Church
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To: Domestic Church
It is no coincidence that this is heating up simultaneous to North Korea's nuclear development and the pending Iraq action.

It surprises me that labor unions are opposing a Communist. Do you think perhaps they are in cahoots for the purpose you suggest?

12 posted on 01/10/2003 7:29:43 PM PST by Mind-numbed Robot
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To: Libertarianize the GOP; Axion
Hugo Chavez - Venezuela

Hundreds of Venezuelans stand in line to apply for a Spanish passport in Caracas January 10, 2003. A strike launched December 2, 2002 by opposition members of Venezuelan President Hugo Chavez has battered Venezuela's oil-reliant economy, rattled global energy markets and fired up the political conflict between opponents and supporters of the leftist leader to resign and call elections. REUTERS/Kimberly White REUTERS

13 posted on 01/11/2003 1:51:04 AM PST by Cincinatus' Wife
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To: Mind-numbed Robot
The average Venezuelan citizen, including the rank and file of the Labor unions)who voted for Chavez didn't understand he planned on changing the form of government entirely and with brute force. They voted assuming the staus quo would remain. The fact that the labor unions are outraged( they are in a democratic mindset) shows how drastic the changes being implemented really are...this isn't a case of the frog in the pot slowly heating to a boil. There will be blood in the streets from this new dictator's use of an iron fist as he tries to silence his opposition a la Machiavelli and Castro. This regime is betting that we are too busy elsewhere to put this fire out but we have technology on our side and probably could use it to keep this situation destabilized until we have the time to clean this up.
14 posted on 01/11/2003 6:37:47 AM PST by Domestic Church
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To: Domestic Church
The top Venezuela military that have voluntarily abondoned the Chavez regime over the last few months have banded together to publicly denounce his Cubanization of their beloved country. They have been exposing the dirty secrets of his regime (at great risk personally) and have been the sparkplug that brought together all these different opposition groups under one unified tent. See their expose's here...

BTW, we could hope here in the USA for no better allies than the Venezuelan people. According to the just published 2002 Global Attitudes Survey by the Pew Research Center in Washington; 82% have a favorable opinion of the USA, and that is amongst the highest ratings of all the 44 countries surveyed. And, in regard to supporting the US led war on terrorism, 79% favor it while only 20% oppose it! (What's the current %'s for that question here in the USA today?!?)


15 posted on 01/11/2003 8:16:51 AM PST by shanec
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