Stuart Munckton
While the land reform process and expropriation of idle factories led by the government of socialist President Hugo Chavez has captured the most media attention, a series of other measures are being put in place that give the government greater control over Venezuela's economy in order to develop it in the interests of the poor majority.
BBC News reported on September 2 that the government's proposed reform of the banking system would force all private banks operating in Venezuela to have two state representatives on their boards. This move would open up the functioning of private banks to the elected government and allow the government to ensure banks' operations are not detrimental to the interests of the Venezuelan people.
BBC News reported: "Analysts say that the government's chosen bank appointees would be there to ensure loans and other money flows are more determined by left-leaning political considerations rather than pure financial gain factors." In other words, the government is attempting to ensure that, unlike in most countries where private banks operate according to the sole criteria of what will increase their profit margins, the Venezuelan government is attempting to make the banks assist in implementing the left-wing program the government was elected to carry out.
BBC News quoted Venezuelan banking expert Fransisco Faraco as saying, "The government has a revolutionary project and by necessity that has to go through controlling the flow of credit".
The moves to assert more control over private banks follow legislation passed earlier this year that increases the control of the government over Venezuela's Central Bank, which is state-owned but has been run largely autonomously. Venezuelanalysis.com reported on July 22 that the legislation allows the government to spend US$6 billion of the $30 billion in the country's foreign currency reserves, with the money to be deposited in the National Development Fund. Last year, Chavez asked the Central Bank to hand over $1 billion from those reserves to help fund his government's program to develop the agricultural sector. When the board of the Central Bank refused to comply, Chavez referred the matter to the National Assembly.
According to Venezuelanalysis.com, on September 25 Chavez announced that the government would use $1 billion of the foreign currency to create a new state-run steel and iron processing company, aiming to create employment and manage the nation's resources. The previously state-owned steel plant was privatised before Chavez came to power in 1997, at the cost of thousands of jobs. Chavez explained that the formation of the new state-run plant was part of a series of polices aiming to create "a new model of social and economic development".
On September 20, Chavez announced that his government would refuse to grant any more concessions to any private foreign or national mining company. Venezuela plans to create a national state-owned mining company that would take charge of all mining activities in the country. Venezuelanalysis.com reported on September 22 that Chavez, insisting that "we need a big turnaround", stated that foreign companies must respect Venezuela's constitution and pay their taxes or "they should leave".
From Green Left Weekly, October 12, 2005.
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