April 31, 2010

April 30: Chávez seizes land from Empresas Polar, orders takeover of three sugar mills. During a late-night Cabinet meeting broadcast in live TV, the Venezuelan president signed a decree ordering the expropriation of five plots of land owned by Empresas Polar, Venezuela’s leading beer and food company, as well as the take over of three sugar mills.

April 29: Chávez orders crackdown on dozens of butchers in Caracas. Venezuela’s Attorney General launched an investigation of 38 Caracas butchers for allegedly violating government-imposed price controls on foods. The butchers under investigation have been prohibited from traveling while they await trial; some of them have been illegally detained by soldiers.

April 26: “No private property is sacred” according to Chávez’s government. During a press conference, Diosdado Cabello, a senior member of Chávez’s United Socialist Party of Venezuela, declared that Venezuela’s government is indeed “anti-capitalist” and that “no private property is sacred because the Constitution doesn’t say so.”

April 25: Chávez’s War on Private Property Destroys Venezuelan Mining Sector. Chávez threatened to nationalize gold mining concessions in Venezuela, calling the mining companies leadership “crazy people” driven by capitalist greed. Chávez’s statements came on the heels of a survey by Canada’s Fraser Institute, which measured how the public policies of 72 governments affect their respective mining industries. Venezuela ranked dead last.

April 21: Venezuela’s Economy to Decline While Most Others Grow in South America. Economic forecast reports by both the World Bank and the International Monetary Fund conclude that while almost every country in the Western Hemisphere will see modest to substantial economic growth in 2010, Venezuela’s economy will continue to deteriorate.

April 19: Chávez Shuts Down McDonald’s and Wendy’s. Chávez ordered to close down the Caracas McDonald’s and Wendy’s restaurants because “it is an ideological inconsistency to have two businesses identified with the U.S. empire in Bicentennial Boulevard…it is not xenophobia,” explained Gerson Pérez, leader of Chávez’s ruling party.

April 13: Chávez Rallies Government-Organized Militias, Advocates Violence. Chávez hosted a military-style parade, where he armed 35,000 young militias to defend his socialist revolution and mark the anniversary of the 2002 failed coup against him.

April 12: Chávez Intensifies Threats to Polar. Chávez hints that Empresas Polar Owner Lorenzo Mendoza is on the fast track to hell as a result of all his hard-earned success. In remarks directed at Mendoza, Chávez asked, “If you want to go to heaven, do you know what Jesus said? Sell everything you have and distribute it to the poor.”

April 8: Polar Fights back. Empresas Polar filed a motion with the Supreme Court to nullify the government’s expropriation of two company warehouses in Barquisimeto.

April 7: Venezuela’s Strongman Splurges on Russian Weapons. Prime Minister Vladimir Putin boasted he had sold Chávez another $5 billion in weapons – a huge sum for a Latin American country that is deep in recession and busy rationing its water, electricity and hard currency.

April 29, 2010

A few weeks ago, Venezuela’s largest food producer and employer, Empresas Polar, took what in most democracies would not raise any eyebrows, but in today’s Venezuela was a dramatic step. The company went to court to seek the equivalent of an injunction to stop the expropriation of one of its warehouses in the city of Barquisimeto.

Polar took the action after Chávez called for the expropriation of Polar’s property with the justification that he wanted to build homes. The all-knowing leader of Venezuela apparently ignored the fact the Polar property was in an industrial area, that the company offered other land it owned for the construction of homes in Barquisimeto, and that there were hundreds of homes projected to be built in other areas whose construction was paralyzed for various reasons.

Polar’s legal maneuvers were met with scorn by Chávez.  Continuing what has become a weekly tradition, Chávez taunted and threatened Polar President Lorenzo Mendoza. “Don’t provoke me. Tell your lawyers to keep calm,” he said, hinting that a Polar protest could lead to even more expropriation. Chávez warned Polar that their legal actions would not matter because he could take the property if he wanted.

On Tuesday, Chávez followed through on his threats by issuing an official decree to forcibly expropriate the land.  With this order, all procedural hurdles to seize the private property have been removed. Chávez’s declaration made no mention of compensation or assistance for the 3,200 Venezuelans who work full-time at these Polar warehouses.

What lesson should be learned from the expropriation of these seemingly unimportant warehouses? For one, it shows that the Venezuelan legal system operates at the whim of Mr. Chávez. Polar exercised its legal right to challenge in court the government taking of its property. Chávez responded by issuing a decree that makes the legal recourse taken by Polar null and void.  So much for due process! It also shows that what Chávez wants, Chávez gets at any costs. No longer is the government concerned with maintaining even the facade of independence of its institutions.

April 26, 2010

A new survey from the Fraser Institute, a Canadian think tank, gives the Venezuelan government an abysmal rating regarding its handling of the mining industry and appeal to foreign investors.

The annual Survey of Mining Companies takes the opinions of mining and exploration companies and translates them into hard data to assess how governments’ public policies affect their respective mining industries.

The survey ranks Venezuela dead last of the 72 countries measured, outpacing developing states such as the Democratic Republic of Congo and Honduras. Venezuela’s public policy potential measured 6.9 out of 100. Ecuador was second worse, clocking in at 10.5.

President Hugo Chávez’s fervently anti-private property policies appear to have heavily influenced Venezuela’s standing within the international mining community. One respondent of the survey noted that, “in Venezuela, if you actually succeed in making progress with a project, Hugo Chávez will simply nationalize it.”

The statistics reflect that there simply is little incentive for mining businesses to invest in Venezuela. The South American country led by Chávez finished dead last or second-to-last among 72 countries in the following individual categories:

• Uncertainty concerning the administration, interpretation, and enforcement of existing regulations
• Regulatory duplication and inconsistencies
• Taxation regime
• Political stability
• Labor regulations
• Security (due to threat of attack by terrorists, guerilla groups, etc.)

A copy of the survey can be found here.