Chávez - Sole Trader and Landowner

NewsMax Tiana Perez Monday May 19, 2003

The government of President Chávez may lack ideology and political direction, but it certainly knows how to cater to the sector of the population that is politically most important to its survival.

A few months away from a much discussed referendum that would question the President’s tenure, Chávez is making sure that while the private enterprise gets starved, popular markets can sell at below market prices.

In 116 days of foreign exchange control, the government has issued an estimated .5% of the average demanded dollars by Venezuelan importers and manufacturers. Many companies refuse to even file their paperwork in fear of political retaliation and so prefer to go to the black market instead.

The foreign currency shortages added to the price controls imposed on February have resulted in an average decline of 25% in products on-shelf threatening normal supply of basic food products, such as eggs and chicken.

Foreseeing a further closure of private businesses, the government has assigned US$261 million to a newly created government-run enterprise called Agricultural Services Supply Corporation. The firm will buy 501,000 tons of food products within the next 180 days to deliver cheap products to the planned network of popular stores called Mercal.

Operated by the military, the stores are a relief for many families who would otherwise not survive in view of the sharp rise in unemployment. The figure now stands at around 21%, 5% higher than at the end of 2002.

The Venezuelan Agricultural Ministry is using Cuban trading companies to import the products, but reserves the right to re-sell, export, intermediate, determine prices, ship and equip tax-free through the Agricultural Services Supply Corporation.

The military has also been involved in pleasing the populace at the high cost of violating private property rights through a so-called agrarian reform that would use certificates of ownership as its main instrument.

Initially, the National Institute of Lands, presided by Adán Chávez, brother of the President, had promised to grant landownership certificates to low income families who were willing to work the empty lands. The government of Venezuela owns about 70% of the countries’ territories. Most of it will be empty.

However, the brothers chose to grant the certificates for privately owned land alleging under-utilization of the farms. Lines of people wait at the entrances of farms with the certificates in their hands, waiting for the military to pave the way for the invasion. In Barinas, home state of Chávez, the best lands have already been taken by his brother and 150,000 acres have been distributed in the form of agrarian certificates.

The country’s rule of law, civil society, Foreign Direct Investment or economy are obviously not on Chávez’ concern list. To date, the economy shrunk 15 to 25% in 2002 according to the Venezuelan Central Bank. Priorities first.