MercoPress. South Atlantic News Agency

President Chavez threatens banks with nationalization

Venezuelan President Hugo Chavez threatened on Thursday to nationalize the country's banks and largest steel producer, if they don't join the country's economic expansion plans.

"Private banking must give priority to financing the industrial sectors of Venezuela at low cost" Chavez said. "If banks don't agree with this, it's better that they go, that they turn over the banks to me, that we nationalize them and get all the banks to work for the development of the country and not to speculate and produce huge profits." It was not clear if Chavez was only referring to Venezuelan banks like Mercantil Servicios Financieros CA and Banco Provincial SA, or if he was also aiming the threat at major international banks with subsidiaries in the country, such as Citigroup Inc. and Spanish banks Banco Bilbao Vizcaya Argentaria SA and Banco Santander Central Hispano SA. Chavez also warned the government could take over steel producer Sidor, which is majority controlled by Luxembourg-based Ternium SA. Sidor "has created a monopoly" and sold the bulk of its production overseas, forcing local producers to import tubes and other products from China and elsewhere, Chavez said. "If the company Sidor ... does not immediately agree to change this process, they will obligate me to nationalize it," Chavez said. "I prefer not to," Chavez added, as he ordered Mining Minister Jose Khan to depart immediately for the company's headquarters and come back with a recommendation with 24 hours. Chavez initiated a nationalization drive in January that is bringing the country's largest telephone company CANTV and the electricity sector under state control. The state oil company PDVSA also took over the last privately run oil operations in the country from major international oil companies on Tuesday. Chavez says the nationalization of "strategic" companies are part of Venezuela's transition to a socialist system. "I'm not deceiving anyone," Chavez said. "I'm only governing the country, and the country has elected me various times ... All of those who voted for me backed socialism, and that is where we are heading". In related news United States Deputy Secretary of State John Negroponte said the populist economic policies of Venezuelan President Hugo Chavez are not sustainable and eventually will fail. Negroponte begins a four-nation Latin American trip next week and is scheduled to visit Colombia, Ecuador, Peru and Panama. "The government and people of Venezuela are going to find that the policies that Mr. Chavez is expending his monies on are simply not going to be sustainable," he said. "I don't see how you can go on promising literally billions of dollars of aid to other countries while you have blatant poverty in your own country, while at the same time you're running down if you will, degrading, the wealth-producing portions of your economy which I believe he's doing. So sooner or later, these policies will fail." For United States foreign policy 2007 is a "year of engagement" with the hemisphere that began with the trip by President Bush to Brazil, Uruguay, Colombia, Guatemala and Mexico in March. Secretary of State Condoleezza Rice is expected to make her own trip to the area in the coming weeks, and in June she will host a conference of Caribbean leaders.