Chavez threatens economic crackdown

www.nzherald.co.nz 17.02.2003 5.05 pm

CARACAS, Venezuela - Venezuela's embattled President Hugo Chavez is looking to further secure his grip on the private sector, threatening a military takeover of factories and new controls on the hobbled banking sector.

Tens of thousands of opposition Catholics marched in Caracas against the populist president, praying for peace and an end to his rule as firemen soaked them.

Chavez branded his foes fascists waging "economic and financial sabotage," and pledged to defend newly imposed currency and price controls which industry leaders say will drive them out of business.

"The revolutionary government (is) on the offensive," Chavez said.

"If anybody even thinks about closing their (food processing) factories ... we'll take them over. Nobody can threaten the people's food supplies," he said during the state-sponsored Sunday television program "Alo Presidente."

Chavez spooked Wall Street last month when he ordered troops to briefly take over a Coca-Cola affiliate's bottling plant, after accusing its owners of hoarding. His opponents seized on the episode as proof that Chavez's "peaceful revolution" was a mask for Cuban-style communism.

The former paratrooper, who narrowly survived a coup last year, is desperately trying to stem fallout from an oil strike meant to force him from power. The world's No. 5 oil exporter is gripped by its worst recession in at least two decades and the economy contracted nearly nine percent last year.

The economic turmoil and rising unemployment is underscored by violent street clashes between Chavez allies and enemies that have left seven dead and scores injured since December. After three months of fruitless negotiations, Chavez has refused to bend to opposition demands for early elections.

First elected in 1998, Chavez still has three more years left in his term, and jokes he'll stay in power until 2021.

Opposition marchers, many clad in their Sunday best, packed an enormous Caracas highway to pray before Venezuela's patron saint -- the virgin of Coromoto. A priest called for peace before a sea of Venezuelan flags, as a firetruck shot thousands of liters of water into the swelling crowd.

Chavez has already shuttered foreign exchange markets and forced retailers to sell everything from tomatoes to funeral services at government-set prices to shield his mostly poor supporters from spiralling inflation.

The currency controls have hurt the private sector, starving businesses of the much-needed U.S. greenback in a nation that imports more than 60 percent of its goods. The black market has bloomed, offering dollars at 25 percent below the government's official exchange rate.

As marchers gathered in Caracas, Chavez headed east to an oil field where he announced a proposal to introduce controls on commercial bank lending rates for the first time in seven years. He complained Venezuela's poor were not offered affordable credit.

"I want rates to be fixed. I want interest rates to be cut and I want the BCV (Venezuelan Central Bank) to fix interest rates," Chavez declared.

Commercial banks angered the president in December by slashing operating hours to support a damaging, but short-lived, general strike.

To revive the crippled petroleum sector, Chavez has fired more than 12,000 employees of the state oil firm PDVSA.

Still, the flow of oil from Venezuela to the United States, which had been about 13 percent of all U.S. oil imports, has slowed dramatically. The 11-week stoppage has further jolted world oil prices, already reeling from war worries in Iraq.