A Chequer-Board of Nights and Days

It has been a long time--far too long, one might add--since we have had the opportunity to note the latest misadventures of Hugo Chavez. Let's catch up, shall we?

First, let's note this article, which points out that hubris continues to be a problem for the Chavez regime:

The notion that Venezuela's President Hugo Chávez would ease his radical policies after last December's humbling defeat in a national referendum on constitutional reform has been quickly disabused. His administration has launched new attacks on the private sector--taking over two food companies and in recent days announcing plans to nationalise the cement industry. The three foreign cement-makers that dominate the industry have been targeted, but few companies anywhere in private sector will feel safe after the recent government moves.

The Chávez administration has argued for some time that the state should have greater control over what it deems to be strategic industries. In 2007 he took over the largest telecommunications and electricity companies, and also imposed new contracts on foreign oil companies that gave the state a majority stake in existing heavy-oil joint-ventures.

Yet Mr Chávez seemed to tone down his radical rhetoric a bit after losing the referendum, which sought, among other constitutional changes, to eliminate presidential term limits. This apparent shift proved to be short-lived.

The article goes on to discuss the various and sundry acts of nationalization the Chavez regime has engaged in--acts that critics quite correctly point out are designed to distract attention from the government's own failures in terms of designing and implementing economic policy. And while the following should be obvious, it is nevertheless worth noting--perhaps this wisdom will somehow catch the eye of a policymaker in Venezuela who can talk sense to President Chavez (hey, hope springs eternal):

. . . even if adequate compensation is offered and accepted, these latest heavy-handed actions by the government will make all businesses nervous, and will further sour foreign investors on making long-term commitments to Venezuela.

Indeed, besides the other difficulties in the business climate--among them exchange and price controls and other interventionist policies--the threat to private property (including land) has been growing. Whereas the initial nationalisations involved public utilities, which in some quarters are thought to be fair game for public-sector control, extending the nationalisation agenda to other sectors is far more controversial. Companies in many industries now will feel at risk; the government in the recent past threatened landowners, other food businesses, and firms in the steel and banking sectors.

Further, there is no certainty that greater state control will improve the operation of the takeover targets or better meet the government's socialist policy goals. Production by state oil company PDVSA has been declining in recent years, for example, owing to what many see as ineffective government management. Cement output might not increase, or building of low-cost homes accelerate, simply because the state has majority ownership.

This report reinforces fears concerning Chavez's nationalization spree:

"It is very hard to imagine that any of the companies will be willing to continue operating in Venezuela without any kind of control over their business. It's either all or nothing," said an inside source, who questioned whether the government would be capable of managing the business as efficiently as the private companies.

Read on to find out just how badly and how haphazardly the regime's nationalization policies are. Key passage:

"The problem with this government is that it doesn't have an efficient decision-making process. Economic policymaking has become completely distorted and disorganised," said Guillermo Ortega, who led the research team in the finance ministry until early this year.

"There are people who understand the problems, but they have no influence over the actual decisions that are made."

And finally, just to show that this post isn't all about dollars, cents and the free market--or lack thereof in Venezuela--consider this story, which should remind all and sundry just how dangerous and troublesome the Chavez regime aspires to be:

Senior officials in Bogotá believe Hugo Chávez, Venezuela's president, has offered covert financing to the Revolutionary Armed Forces of Colombia (Farc) guerrilla group through his country's oil industry.

The claim was based on information allegedly recovered from the laptops of Raúl Reyes, a slain Farc commander.

"There is a letter written by a Farc secretariat member that says [the group] had received an offer from Chávez to set up oil businesses so that they could have a constant influx of money," a Colombian government source told the Financial Times. He did not know whether Farc had taken up the alleged offer.

If true, this allegation should come as no surprise whatsoever. Recall that for all of his fulminations against imperialism, Chavez is, in fact, an imperialist nonpareil.