Chavez hints U.S. using telecom to spy on him

RIO DE JANIERO, Brazil (AP) -- Venezuelan President Hugo Chavez on Friday accused his nation's main telecommunications company of spying on him and suggested it was at the bidding of the United States.

Chavez, addressing 10 South American leaders at a summit of the Mercosur trade bloc, gave no additional details.

The accusation came less than two weeks after Chavez announced he would nationalize CA Nacional Telefonos de Venezuela, known as CANTV.

"Well, I just announced the recovery of the state property of the Venezuelan telephone company," Chavez said. "Who controls it? North American capital. And they've used the Venezuelan telephone company to record the president of the republic. Brother, it's the empire."

Though Chavez referred to "North American capital" as being responsible for using the company to spy, he did not mention the United States by name. But Chavez frequently uses the term "empire" to refer to the U.S. government.

CANTV is Venezuela's largest publicly traded company, and its largest stockholder is New York-based Verizon Communications Inc. CANTV did not immediately respond to a request for comment on the accusation.

Chavez has had tense relations with the United States since he became president eight years ago, and frequently accuses President Bush of trying to overthrow him, allegations that are fiercely denied by American officials.

Brian Penn, a spokesman for the U.S. Embassy in the Venezuelan capital of Caracas, declined to comment on the accusation about CANTV.

Copyright 2007 The Associated Press. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

Venezuela Ends Oil Negotiations

By DOW JONES/THE ASSOCIATED PRESS

CARACAS, Venezuela, Jan. 15 — Venezuela will end negotiations with foreign oil companies over how it will take a majority control of their operations along the Orinoco River, the country’s oil minister, Rafael Ramírez, said on Monday.

Mr. Ramírez said that “there’s no possible negotiation” with the foreign companies, but he said that private companies would be allowed to own minority stakes in lucrative oil projects in the Orinoco River basin.

“Every case will be different,” Mr. Ramírez said. “We will have an effective majority control.”

The government negotiated last year with the companies about its plans to take majority control of oil operations in the country, but no agreements were reached.

In a speech to Congress last week, President Hugo Chávez said the private companies — BP, Exxon Mobil, Chevron, ConocoPhillips, Total and Statoil — would be given the option to stay on as minority partners.

Mr. Chávez also announced plans to nationalize companies within Venezuela’s telecommunications, electricity and natural gas industries.

The government has already taken majority ownership of Venezuelan oil-producing operations outside the Orinoco region through joint ventures controlled by the state oil company.

Venezuela, Iran to finance opposition to U.S.

CARACAS, Venezuela (AP) -- Venezuela's Hugo Chavez and Iran's Mahmoud Ahmadinejad -- fiery anti-American leaders whose moves to extend their influence have alarmed Washington -- said Saturday they would help finance investment projects in other countries seeking to thwart U.S. domination.

The two countries had previously revealed plans for a joint $2 billion fund to finance investments in Venezuela and Iran, but the leaders said Saturday the money would also be used for projects in friendly countries throughout the developing world.

"It will permit us to underpin investments ... above all in those countries whose governments are making efforts to liberate themselves from the [U.S.] imperialist yoke," Chavez said.

"This fund, my brother," the Venezuelan president said, referring affectionately to Ahmadinejad, "will become a mechanism for liberation."

"Death to U.S. imperialism!" Chavez said.

Ahmadinejad, who is starting a tour of left-leaning countries in the region, called it a "very important" decision that would help promote "joint cooperation in third countries," especially in Latin America and Africa.

Iran and Venezuela are members of the Organization of Petroleum Exporting Countries, and Chavez said Saturday that they had agreed to back a further oil production cut in the cartel to stem a recent fall in crude prices.

"We know today there is too much crude in the market," Chavez said. "We have agreed to join our forces within OPEC ... to support a production cut and save the price of oil."

OPEC reduced output by 1.2 million barrels a day in November, then announced an additional cut of 500,000 barrels a day, due to begin on February 1. Dow Jones Newswires reported Friday that OPEC is discussing holding an emergency meeting later this month to reduce output by another 500,000 barrels a day. Venezuela and Iran have been leading price hawks within OPEC.

Ahmadinejad's visit Saturday -- his second to Venezuela in less than four months -- comes as he seeks to break international isolation over his country's nuclear program and possibly line up new allies in Latin America. He is also expected to visit Nicaragua and Ecuador, which both recently elected leftist governments.

Increasingly united

Chavez and Ahmadinejad have been increasingly united by their deep-seated antagonism toward the Bush administration. Chavez has become a leading defender of Iran's nuclear ambitions, accusing the Washington of using the issue as a pretext to attack Tehran.

Ahmadinejad, meanwhile, has called Chavez "the champion of the struggle against imperialism."

U.S. officials have accused Chavez -- a close ally of Cuban leader Fidel Castro -- of authoritarian tendencies, and National Intelligence Director John Negroponte said recently in an annual review of global threats that Venezuela's democracy was at risk.

The U.S. also believes Iran is seeking to use its nuclear program to develop an atomic bomb. Tehran says its program is peaceful and geared toward the production of energy.

The increasingly close relationship between Chavez and Ahmadinejad has alarmed some Chavez critics, who accuse him of pursuing an alliance that does not serve Venezuela's interests and jeopardizes its ties with the United States, the country's top oil buyer. Venezuela is among the top five suppliers of crude to the U.S. market.

In a speech earlier Saturday, Chavez called for the U.S. government to accept "the new realities of Latin America," as he brushed aside restrictions that limit presidents to two consecutive terms. He vowed to stay in office beyond 2013, when his term expires, saying he would revise the constitution to get rid of presidential term limits.

But Chavez also said in his state of the nation address to government officials and legislators that he had personally expressed hope to a high-ranking U.S. official for better relations between their two countries.

Chavez said he spoke with Thomas Shannon, head of the U.S. State Department's Western Hemisphere affairs bureau, on the sidelines of Nicaraguan President Daniel Ortega's inauguration earlier this week.

"We shook hands and I told him: 'I hope that everything improves,"' Chavez said. "I'm not anyone's enemy."

Chavez prompted a crash in Venezuelan share prices this past week when he announced he would seek special powers from the legislature to push through "revolutionary" reforms, including a string of nationalizations and unspecified changes to business laws and the commerce code.

He also announced plans for the state to take control of the country's largest telecommunications company, its electricity and natural gas sectors and four heavy crude upgrading projects now controlled by some of the world's top oil companies.

He said Saturday, however, that private companies would be allowed to own minority stakes in the lucrative Orinoco River basin oil projects.

The government has already taken majority ownership of all other oil-producing operations in the country through joint ventures controlled by the state oil company. Most companies have shown a willingness to continue investing despite the tightening terms, which have also included tax and royalty increases.

Copyright 2007 The Associated Press. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

Venezuela to nationalize 'absolutely all' energy sector

Chávez tells parliament: 'We have decided to nationalize the whole Venezuelan energy and electricity sector, all of it, absolutely all.'
January 13 2007: 3:55 PM EST

CARACAS (Reuters) -- Venezuelan President Hugo Chavez said on Saturday the country's entire energy sector had to be nationalized, reinforcing his socialist revolution and possibly giving himself more targets for state take-over.

But he said he would permit foreign firms to hold minority stakes in energy deals.
Video More video
Marc Weisbrot of the Center for Economic Policy Research discusses the situation in Venezuela. (January 10)
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The anti-U.S. leader, in power since 1999, this week announced he would nationalize power utilities and the country's biggest telecommunications firm, confirming his status as the catalyst of Latin America's swing to the left.

"We have decided to nationalize the whole Venezuelan energy and electricity sector, all of it, absolutely all," Chavez said in his annual state of the nation address to parliament, potentially opening up more projects for state acquisition in the No. 4 crude exporter to the United States.
Why gas follows oil up, but not down

The president was reinaugurated this week for a term that runs through 2013.

Chavez has already pursued oil and gas projects and power utilities but on Saturday left no leeway for a private company to hold a majority in operations anywhere in the energy sphere.
What will be targeted?

It was not immediately clear whether his pronouncement on nationalizing the whole sector was a precursor to moves against specific projects or companies.

Venezuela will have to judge how closely private firms must be connected to the country's oilfields, refineries, pipelines, gasoline stations and coal mines to count as targets for nationalization.

Huge oil service companies such as Halliburton (Charts) and Schlumberger (Charts) operate in Venezuela but Chavez gave no indication whether deals involving such businesses were now in his sights.

In his address to parliament, Chavez also said Venezuela was "almost ready" to take over the foreign-run oil projects of the Orinoco Belt, which produce about 600,000 barrels per day.

Those projects, which turn tarry, heavy crude into fuel, are run by U.S. majors including Chevron (Charts), Conoco Phillips (Charts) and ExxonMobil (Charts), as well as European heavyweights such as France's Total (Charts), Norway's Statoil (Charts) and Britain's BP (Charts).

Chavez confirmed such firms could stay on as minority stakeholders after the state had acquired 51 percent.

"If someone wants to stay on as our partner, then the door is open but if he does not want to stay as our minority partner then hand me the field and goodbye," he said.

Despite his conviction that Caracas was on the verge of taking over these projects, the country has faced a long battle in wresting control away from the foreign firms.

A senior Venezuelan oil official last month acknowledged that the Caribbean state could face hundreds of millions of dollars in fines if it takes over the projects, because of financing agreements with international banks.

Chavez Would Abolish Presidential Term Limit

'We Are Going to Deepen This Revolution,' Venezuelans Told at Swearing-In Ceremony

By Juan Forero
Washington Post Foreign Service
Thursday, January 11, 2007; A21

BOGOTA, Colombia, Jan. 10 -- Venezuelan President Hugo Chavez, sworn in to another six-year term on Wednesday, said he would seek a constitutional amendment that could extend his tenure as he hastens his country's transformation into what he calls "21st-century socialism."

In a three-hour discourse in the National Assembly that received widespread news coverage across Latin America, Chavez promised that "we are going to radicalize this process of ours, we are going to deepen this revolution."

Invoking the mantra once issued by his mentor and ally, Fidel Castro of Cuba, Chavez said the choice for Venezuela was clear: "Fatherland, socialism or death." The ceremony was full of symbolism. Chavez wore the tricolored presidential sash on his left side, switching it from his right, a nod to his leftist leanings. And he frequently alluded to Sim?n Bol?var, the 19th-century independence hero he reveres, God and Jesus Christ, whom Chavez called "the greatest socialist of the people."

"I will not rest," Chavez said, his right hand raised. "I would give my life for the construction of Venezuelan socialism, for the construction of a new political, social and economic system."

The swearing-in came during an enthralling day for leftists in Latin America, where Chavez has been among several populist leaders to win election in recent years. In Nicaragua, Daniel Ortega, the former guerrilla who formed an alliance with Cuba during the 1980s, returned to the presidency in a ceremony just hours after Chavez was sworn in.

All week in Caracas, Chavez has shaken markets and angered the Bush administration by promising to nationalize utilities, seek broader constitutional powers and increase the state's control of the economy. He has also frequently referred to the new, more radical phase in what he calls his revolution -- drawing comparisons with Castro's famous declaration on Dec. 2, 1961: "I am a Marxist-Leninist and will be one until the day I die."

If the theatrics are similar, however, the apparent goal is not. Chavez stresses that Venezuela will remain a democracy, and analysts do not believe his government will embark on a wholesale expropriation of companies, as Castro's government set out to do soon after taking power in 1959.

"There have been some echoes, and it's not surprising," said Wayne Smith, who was a diplomat in Cuba and now is a senior fellow at the Center for International Policy in Washington. "He's a declared admirer of Castro, and while times have changed and he can talk about moving in a certain direction, let's see what he actually does. I think conditions have changed. This is not 1959."

In Wednesday's speech, Chavez said the constitution should be changed to allow the government to take control of the natural gas industry from foreign companies, which now have wide rights in the sector. Earlier this week, he said he would increase state control over four key oil production projects. Those projects, in the Orinoco Belt of northeast Venezuela, are operated by U.S. firms such as Exxon Mobil and Chevron as well as foreign multinationals Total of France and BP.

Investors are still unclear about what his nationalization plan entails. But Ricardo Sanguino, head of the finance commission in the National Assembly, told reporters Wednesday that the government would negotiate settlements with companies it plans to nationalize.

"We're not going to do anything illegal," he said. "There will always be compensation."

Chavez said the plunge in the Caracas stock exchange this week was an exaggeration and instead lauded the country's booming economy, which expanded 10 percent last year. Shares of the CANTV telephone company, which is expected to be nationalized, rebounded after Sanguino's assurances to investors. Meanwhile, the oil markets and energy companies took a wait-and-see attitude, noted David Mares, a political science professor at the University of California at San Diego who has studied the Venezuelan oil industry.

"He's announcing that he's going to do what the markets already expected him to do -- take more control of the profits of the Venezuelan production," Mares said by telephone. "He has not said that nationalization in the Orinoco means 100 percent Venezuelan ownership."

Still, the tone and substance of Chavez's recent declarations have worried many Venezuelans, opposition leaders in Caracas and rights groups. The president reiterated Wednesday that he will advance a proposal to allow him to run for reelection in 2012.

"I've proposed, and we're writing the proposal for the indefinite reelection of the president of the republic," Chavez said to applause. With all 167 members of the National Assembly in his camp, thanks to an opposition boycott of congressional elections in 2005, the measure and others proposed by Chavez are expected to pass easily.

"With the indefinite reelection and the new model he's talking about, what has been announced today is part of an era that is much harder," Ernesto Alvarenga, a founder of Chavez's movement and now an opponent, said by phone from Caracas. "I think we're definitively in a phase of Chavista hegemony," he said, using the name given to the president's followers.

After winning office in December 1998, in an election that obliterated Venezuela's two long-ruling parties, Chavez set about purging elites from office and holding referendums that led to a redrafting of the constitution and a shift in control in the National Assembly. The new constitution lengthened presidential terms and permitted reelection, and in 2000 Chavez won his first six-year term.

He has installed military officers in all levels of government and packed the Supreme Court, and now says he will end the autonomy of the Central Bank.

Chavez has also become wildly popular among the poor, who have benefited from billions of dollars in oil revenue that Chavez has spent on education, nutrition and medical programs. But critics say he plays on the most base instincts of his countrymen, benefiting from conflicts with business sectors, opposition groups and the news media. On Wednesday, he reiterated his criticism of the Roman Catholic Church, which has questioned his plan not to renew a television station license.

Chavez said that one archbishop, Roberto Luckert, is "going to hell," and he told Cardinal Jorge Urosa that the church had gone too far by meddling in state affairs. "Mr. Cardinal," Chavez said, "the state respects the church. The church should respect the state."

Chavez's Economic Plans Set Latin Markets Reeling

White House Warns Venezuela Over U.S. Companies

By Juan Forero
Washington Post Foreign Service
Wednesday, January 10, 2007; A07

BOGOTA, Colombia, Jan. 9 -- Financial markets from Buenos Aires to Caracas reeled on Tuesday following Venezuelan President Hugo Chávez's announcement that he plans to nationalize some private companies, and the White House warned that it expects U.S.-based corporations to be compensated for any losses.

The U.S. Energy Department also expressed concern after Chávez, who has pledged to accelerate his socialist "revolution," said Monday that he would nationalize telephone and electric utility companies and increase state control over four major oil projects in which American and other foreign companies have invested $17 billion.

At the White House, Gordon Johndroe, a spokesman for the National Security Council, said that "if any U.S. companies are affected, we would expect them to be promptly and fairly compensated." He also said that a nationalization plan, if it proved far-reaching, could be harmful to Venezuela.

Meanwhile, White House press secretary Tony Snow lambasted Chávez's plan, saying: "Nationalization has a long and inglorious history of failure around the world. We support the Venezuelan people and think this is an unhappy day for them."

The Venezuelan leader did not say whether his nationalization plan would mean outright expropriation, higher taxes or majority state control. And as is often the case after Chávez's announcements, Venezuelans scrambled Tuesday to play down the news, with energy officials saying the president was only reiterating existing policy.

But the announcement, made in a bombastic speech in which Chávez also attacked the Catholic Church and insulted the secretary general of the Organization of American States, sent stocks into a tailspin in Venezuela and generated market jitters across Latin America.

In Venezuela, the stock market suffered its biggest loss on record, plunging 19 percent, according to the Bloomberg news agency. The currency was also hit hard. The bolivar, which is officially pegged at 2,150 to the dollar, dropped to more than 4,000 to the dollar on the black market.

Trading on shares of CANTV, Venezuela's largest telephone company, was suspended for 48 hours after shares fell 30 percent. And trading on shares for the electric utility, Electricidad de Caracas, was halted after a drop of more than 20 percent. On the New York Stock Exchange, shares of AES Corp., the Arlington-based company that owns 86 percent of Electricidad de Caracas, fell 86 cents, or 4 percent, on news of the Chávez speech.

In Mexico, the stock prices of Telefonos de Mexico and America Movil SA also dropped. The two companies, both owned by the richest man in Latin America, Carlos Slim, had launched a joint effort to take control of CANTV, whose largest shareholder is now Verizon Communications Inc. Stocks in Argentina and Colombia, the latter a close trading partner of Venezuela's, dipped, as well.

"Obviously, the markets responded," said Maya Hernandez, an analyst with HSBC in New York. She said that although Chávez had said he would move to consolidate his socialist agenda, "what surprised us was the urgency with which he moved, not the direction."

Still, she said, the government has generated numerous questions that officials in Venezuela say should be answered Wednesday, when Chávez is to be sworn in to a third term.

"It's very unclear how he will go about this, especially the nationalization," Hernandez said. "What will he do? Is he going to compensate the companies? Is he going to expropriate the companies?"

Since first being elected in 1998, Chávez has moved quickly to overturn the old social and economic order, sidelining his opponents and spending billions of dollars in oil revenue to found state-run cooperatives and government companies. He has steadily taken a larger share of the pie from companies such as Exxon Mobil, Chevron, Total of France and BP, multinationals drawn to Venezuela in the 1990s. New state lending agencies have been created, and new regulations have been imposed on banks, which are now required to dedicate a percentage of loans to micro-businesses and other sectors identified by the government as important to the economy.

But Chávez has promised more. Emboldened by a landslide electoral win in December that gave him another six-year term, the former paratrooper has announced he will seek special constitutional "enabling" powers to pass laws affecting the economy, as he did in 2001 when the government first pushed through legislation to increase the state's hold.

Chávez also said the Central Bank, one of the few semi-independent entities in the country, would come under state control as its directors are replaced. The Central Bank controls cash flow and releases economic data, operations the administration wants to wrest away.

One of the bank's outgoing directors, Domingo Maza Zavala, decried the government's moves.

"The Central Bank must be autonomous," Maza said in an interview Tuesday on Globovision, a Caracas news station. "Otherwise, the people will lose confidence in the currency."

In Venezuela, businessmen were bracing for more details about the government's plan while hoping for the best. Many have long complained that private investment has plummeted under Chávez, hurting industry.

Flavio Fridegotto, a businessman speaking by phone from Venezuela, said the government has to understand that it needs foreign companies to operate freely in the country.

"We don't think that they're going to be that radical," he said. "He needs businessmen. They need to take care of the transnationals."

Staff writer Steven Mufson in Washington contributed to this report.

Venezuela’s Hugo Chávez lurches leftwards, again

The second coming

Jan 10th 2007 | CARACAS
From Economist.com

THE story of Hugo Chávez’s eight-year presidency in Venezuela is one of reinvention. This week, as he embarked on another six-year term, the left-leaning former army officer appeared to cast aside what remained of his “democratic socialist” clothing, to reveal a radical political, economic and social programme which is now avowedly communist in inspiration.

Mr Chávez seems determined, through his rhetoric and policies, to provoke angry reactions from opponents at home and abroad. Ahead of his reinauguration on Wednesday January 10th, he announced that elements of the economy deemed strategic—telecommunications, electricity, and the heavy-oil upgrading facilities which process production from the vast Orinoco belt—are to be nationalised or renationalised. Shares in several affected companies plunged on January 9th. The central bank will also lose its constitutional autonomy—something of a fiction in any case—letting the government print money at will to finance social programmes.

More rhetoric and revelations are likely in his inaugural speech, but some aspects of what Mr Chávez calls a “new era” are already clear enough. The constitution is to be reformed to allow socialist measures to be implemented. A fresh enabling law will let the executive issue decrees billed as even more explosive than a similar package in 2001 which sparked a three-year-long political crisis.

This week he scornfully advised church leaders who are confused about his plans to see Christ as an “authentic communist, anti-imperialist and enemy of the oligarchy”. He no longer talks of working to “improve capitalism”, but of the true path of “21st-century socialism”. Behind him as he spoke was a ten-metre-high close-up of his own face and hands, reminiscent of a bishop blessing his flock. The image reflected another salient feature of the Venezuelan regime: a growing cult of personality surrounding a leader who talks of resurrection and socialism in the same breath.

Private enterprise, already hedged in with price and exchange controls and subject to unfair competition from a state that is encroaching on everything from agriculture to banking, will be further restricted. The process of political decentralisation begun in the late 1980s will be reversed, and the restriction on consecutive presidential re-election will be removed, allowing Mr Chávez to remain in power indefinitely.

Channels for dissent look set to dwindle. A law now being considered in parliament will severely limit the flow of foreign money to non-governmental organisations. An independent television channel, RCTV, one of two which openly oppose the government, is to be shut down by the simple expedient of not renewing its licence, up for review in May. “There will be no new concession for that coup-mongering channel called Radio Caracas Television,” the president told the armed forces in late December, after winning the presidential election by a large margin. RCTV's boss Marcel Granier is an outspoken critic and was once seen as a possible opposition candidate.

Mr Chávez has also drawn international criticism. The secretary-general of the Organisation of American States, José Miguel Insulza, said the move to close the television station appeared to be a form of censorship and “a warning to others”. Mr Chávez, evidently relishing the scrap, responded with insults and by calling on Mr Insulza to resign, accusing him of acting like a “viceroy of the empire” (meaning the United States). As he has done consistently in relation to America in recent years, the Venezuelan president now appears to be consciously provoking a reaction from the rest of the continent. Despite significant differences in political and economic conditions, at home and abroad, the eerie echoes of Fidel Castro’s Cuba in the early 1960s are hard to ignore.