Venezuelan soldiers in a military parade, photo via wikipedia.org

Chavez declares 'economic war' against private companies

Consumer prices in Venezuela may rise 40 percent this year and President Hugo Chavez has declared "economic war" against private companies in an effort to rein in inflation, which is running at the highest rate among 78 economies tracked by Bloomberg L.P., reports Baptist Press.

In January, Chavez devalued the country's currency for the first time since 2005 and created a multi-tiered exchange system as he struggled to close a budget deficit and slow capital flight, according to the Bloomberg news service. The government shut down the unregulated currency market on May 18 and was planning to hand control over securities trading to the central bank. The government has taken control of 36 brokerages and jailed 10 brokerage directors.

Venezuela's economy contracted 5.8 percent in the first three months of the year -- the fourth consecutive quarter of declines -- and consumer prices surged 5.2 percent in April alone, according to Bloomberg.

Chavez blamed Venezuela's "bourgeoisie" for the country's economic woes after business groups criticized his handling of the economy and the performance of nationalized companies, Bloomberg reported. Chavez said the government can't lower inflation because private company price increases outstrip his adjustments in the minimum wage.

"As long as the bourgeoisie controls 90 percent of commerce, 80 percent of the banks and multinational companies, we won't be able to lower inflation to one digit," Chavez said, according to Bloomberg. "The only way to lower prices is having the workers take control of the factory. Those companies that want to work together are welcome. Those that don't want to cooperate, we'll expropriate them. ... War is war."

Chavez has nationalized oil, food, cement and metals companies in his push to build a socialist economy, Bloomberg reported. He pointed to Radio Caracas Television, an opposition network removed from the airwaves, as an example of what happens to companies that do not cooperate with his economic dictates.

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TAGS: Venezuela President Hugo Chavez economic war private companies inflation

[06/12/2010]

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