Hugo Chavez Conducts 'Military Communism Reforms' To Kill Venezuela’s Economy

Venezuelan President Hugo Chavez has apparently decided to reorganize the economy of his nation from head to toe. On January 18, Chavez passed the law stipulating the expropriation of the stores that raise prices on their goods. Chavez announced the expropriation of six Hipermercado Exito stores after the French-Colombian retailer broke the law by raising prices.

The news about the nationalization of three private banks came the day before. There was a different reason for that: supervising agencies of the country found violations of law in their activities. As a result, three large (for Venezuela) banks - InverUnion Banco Comercial, Banco Del Sol и Mi Casa – were expropriated. The three banks make up less than one percent of the capital of the nation’s entire bank system. Nevertheless, the recent event is another fact to prove the nationalization of the bank system of the country in general.

The story in Venezuela’s financial system began in 2008. The state has expropriated many private credit organizations since then and has thus nationalized more than a third of the bank sector.

The nationalization of Banco de Venezuela, the nation’s third largest financial organization, was especially conspicuous at this point.

The Venezuelan government was not taking any hasty decisions about expropriation before. This time, however, the reorganization of the bank system has taken a national scale in the country. In addition to the above-mentioned three banks, six others – including large banks Banco Canarias и BanPro - suffered the same fate.

The nationalization process began in 2007, after Chavez established state property over a number of leading enterprises of the nation. Those were presumably oil, steel and cement making enterprises.

Nowadays, the government of Venezuela eyes even supermarkets. It does not go about one chain of them only. Businessmen raise prices on their goods because it is impossible to preserve previous prices against the background of the recent devaluation of the national currency, which Chavez conducted in the beginning of January. They say that the current inflation rate in Venezuela – 25 percent a year – is one of the highest in Latin America.

Hugo Chavez simply believes that the people of Venezuela will not suffer from the devaluation because the authorities would punish entrepreneurs for price speculation.

A store like that would be closed for 24 hours. If the owners do not obey the law, the store would be expropriated.

Chavez paid special attention to the above-mentioned Exito network because it is a transnational company operating on the market of Venezuela.

The new regulations complicated Venezuela’s relations with other countries even more. Experts say that such measures are taken against unfriendly countries, whereas the friendly ones, including Russia, do not have to worry about their business in Venezuela.

Ivan Rodionov, a Russian economist, said in an interview with Pravda.Ru that Chavez’s initiatives could be described as “military communism” reforms.

“Everyone knows what they lead to. They lead to the complete destruction of economy and massive protests. Chavez wants to build socialism. What happens in the “socialist countries” of South America? Their leftist leaders said that they were building socialist regimes. As a matter of fact, there is nothing socialist about their societies at all. It’s all about pseudo-socialism, or state capitalism with elements of socialism. This is the so-called populist socialism.

“On the one hand, those revolutionaries play the game of socialism, but on the other hand, they are large capitalists, they own key enterprises or even industrial branches of their countries.

“Such a system could exist in the USSR, when prices on raw materials were high. The Soviet economy collapsed soon after the prices began to slide. The same events can be seen happening in Venezuela.

“As for the stores, Chavez intends to nationalize them because their owners raised prices on goods after the devaluation of the national currency. They had to do it to minimize risks for business against the background of unstable economy in the country. However, the measures, which Chavez takes now, will inevitably lead to even more lamentable consequences in Venezuela,” the expert said.

Sergey Balmasov

Read the original in Russian

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Author`s name Dmitry Sudakov