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I’ll take those 2 companies over there

Dan Grech Jan 9, 2007

KAI RYSSDAL: Behind closed doors the White House probably calls it names we can’t say on the radio. In Caracas, Venezuelan President Hugo Chavez is calling it 21st century socialism. Chavez announced plans yesterday to nationalize his country’s biggest telecommunications and electricity companies. It’s no accident both are controlled by U.S. firms. From the Marketplace Americas Desk at WLRN in Miami, Dan Grech reports.

DAN GRECH: The main targets for nationalization are Telecom firm CANTV, whose largest stakeholder is Verizon, and electricity firm Electricidad de Caracas, which is controlled by the Virginia-based AES Corporation.

President Chavez also wants to increase state control of the oil industry. That could affect ExxonMobil, ConocoPhillips, Chevron and other energy firms that have invested billions there. Michael Shifter is with The Inter-American Dialogue, a think tank in D.C.

MICHAEL SHIFTER: The United States is really his target. And businesses associated with the United States are the ones that he’s going to challenge.

The Bush Administration today urged Chavez to compensate U.S. companies affected by his takeover plans. The Venezuelan president, fresh off a landslide reelection last month, is consolidating power. Along with the nationalizations, he plans to strip the autonomy of the country’s central bank.

Investors are pulling money out of the country. Chavez’s plans provoked a fire sale of Venezuelan debt. And today the country’s stock market had its biggest drop on record.

William Glade is an economics professor at the University of Texas.

WILLIAM GLADE: The long term prospects of the Venezuelan economy are not as bright as they might otherwise be. Therefore, in the long run, Venezuela will not be such a good place to do business in many different fields.

Analysts worry that Chavez isn’t finished. He may use his inauguration tomorrow to make moves against other industries.

I’m Dan Grech for Marketplace.

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