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Chavez to nationalise electricity, phones

Jorge Rodriguez (L) speaks with Venezuelan President Hugo Chavez after he was sworn in as new Vice President of Venezuela in Caracas 08 January 2006.

Venezuelan President Hugo Chavez said last week he would nationalize the country's electricity industry and its largest telecommunications provider,

which could have an impact on major U.S. investors in his oil-rich country.

In a televised address, Chavez, who will be sworn in Wednesday to a second six-year term, also said he would ask the legislature, controlled by his allies, to let him rewrite Venezuela's economy through presidential decree.

"All of that which was privatized, let it be nationalized," Chavez said.

"The nation should recover its ownership of strategic sectors." In the crosshairs: Electricidad de Caracas, owned by Arlington, Va.-based AES, and C.A. Nacional Telefonos de Venezuela (CANTV) the country's largest publicly traded company. AES and Verizon Communications, which owns 28.5% of CANTV, declined comment.

CANTV's American depositary receipts plunged 14.2% on the New York Stock Exchange to $16.84 before trading was halted. An NYSE spokesman said it was unknown when trading might resume for CANTV, the only Venezuelan company listed on the Big Board.

In his speech, Chavez also alluded to potential changes in the oil-producing nation's relationship with foreign oil companies, such as ExxonMobil and ChevronTexaco, which are involved in Venezuela's Orinoco River basin. "I'm referring to how international companies have control and power over all those processes of improving the heavy crudes of the Orinoco belt ? no ? that should become the property of the nation," he said.

Despite the president's often-fierce rhetoric, foreign companies have thrived amid Venezuela's oil-fueled boom. From carmaker Audi to the producer of Heinz ketchup and the major oil companies, all have enjoyed fat profits.

U.S.-based analysts cautioned that Chavez often makes sweeping public statements that are followed with more limited action. "The foreign investors that are there are doing very well. ? The country is flush with oil money," says Christopher Sabatini, senior policy director of the Council of the Americas.

Chavez critics, however, warned that he is intent on recreating Cuban-style socialism. "Chavez idolizes Fidel," says Antonio Szabo, a former Venezuelan oil official. "Before all is said and done, he is going to nationalize everything."

USA Today


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