NEVER TOLERATE TYRANNY!....Conservative voices from the GRASSROOTS.

CHAVEZ'S VENEZUELA, OBAMA'S AMERICA

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Chavez’s Venezuela

...OBAMA’S AMERICA

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Pro-Chavez lawmakers to tighten currency controls

CARACAS, Venezuela – Lawmakers loyal to President Hugo Chavez are proposing to tighten currency dealing rules to give the Central Bank exclusive control over trading in government bonds — a market where Venezuela’s currency has been swiftly falling against the U.S. dollar.

Congressman Ricardo Sanguino, president of the National Assembly’s Finance Committee, told state television Tuesday the proposed revisions in the currency law will exclude private brokerages from operating in the "parallel" dollar market through bond trading.

But Sanguino also said that some businesses — it was not clear which ones — would still be able to perform such currency transactions under the Central Bank’s direct supervision.

The legislature, which is dominated by pro-Chavez lawmakers, gave initial approval to the bill later Tuesday. The measure must be voted on again by legislators and signed by the president before it becomes law..

Chavez’s socialist government has currency controls that set fixed, official rates for Venezuela’s bolivar against the U.S. dollar. The currency agency provides some dollars for approved imports such as food and medicine at the official rate, but a black-market trade is also flourishing, and many businesses have turned to legal bond transactions to trade currency.

Chavez has called for the government to take action in the currency market as a way to combat worsening inflation — now running at an annual rate of just over 30 percent, the highest in Latin America.

He blames the rise of the U.S. dollar against the bolivar on speculation by wealthy businessmen, owners of brokerage firms and currency traders. The price of the dollar on the black market and the parallel bond market has increased in recent weeks to about 8.20 bolivars to the dollar.

Chavez set a two-tiered official exchange rate in January, pegging the bolivar at 2.60 to the dollar for priority goods such as food and 4.30 per dollar for imports of products the government deems nonessential.

Business groups say the government has not distributed enough dollars at the official rate to satisfy demand, forcing many businesses and importers to buy more expensive dollars on the black market or through bond trades.

About 30 percent of imports in Venezuela are purchased using dollars obtained through the unofficial market, according to the Venezuelan consulting firm Ecoanalitica.

The currency controls have failed to halt capital flight, and some Venezuelans continue to transfer funds abroad. Ecoanalitica estimates about 70 percent of the capital flowing out of the country leaves through the black market or bond trades.

The price of dollars on the black market heavily influences inflation. Last week, the Central Bank and National Statistics Institute said consumer prices jumped 5.2 percent in just April, driving the annual inflation rate to 30.4 percent.

Economist Orlando Ochoa said it is possible the new currency measures might not have a huge impact if the Central Bank merely supervises financial companies involved in currency trading. But he warned that the tighter rules could backfire if they end up turning into a crackdown that blocks movement in the market.

"If the Central Bank is going to persecute the big operators, the banks are going to decide not to participate and their nervous … clients are going to jump to the black market," Ochoa said in a telephone interview.

That could heat up inflation even more, he said.

Hugo Chavez decrees seizures of more companies

Venezuela's Chavez orders seizure of more companies, voices about corporate water use

CARACAS, Venezuela (AP) -- President Hugo Chavez announced plans Sunday to take over more private companies in Venezuela and also said his government should review the use of water by transnational companies like Coca-Cola and Pepsi.

Chavez said during his weekly TV and radio program that he has approved decrees for the "forced acquisition" of two companies: Alentuy CA, which makes aluminum cans and other products, and Envases Internacional SA, which makes containers for the food industry.

Chavez also expressed concern about "water that transnational companies have privatized," and he mentioned Coca-Cola and Pepsi.

"That must be reviewed quickly," he said. "That water in the first place belongs to the people. Water is social property."

Those remarks came in a sometimes-combative talk by Chavez as he defended his government from criticism by private business leaders who say his socialist-inspired policies are ruining the economy, which is now mired in recession.

Chavez toured the state-run dairy company Los Andes in northwestern Lara state, where he said production has skyrocketed since it was nationalized.

"This is an example of what socialism is capable of doing," Chavez said. "The bourgeoisie says that whatever Chavez touches is done for. It's just the opposite."

When the president learned from workers at the plant that milk was still being trucked by a private transport company, he immediately announced he would nationalize it. He said officials would sit down with the owners to negotiate a price.

Chavez also said the government is expropriating several small food distributors and other companies because authorities say they were violating price controls and hoarding items.

He said a major private supermarket chain, Cada, will this week begin to be absorbed into a growing network of state-run markets.

During the past few years, Chavez has nationalized a list of businesses in industries from cement to telecommunications as he moves to transform Venezuela into a socialist economy.

In a different sort of state intervention, Chavez said he has approved taking over management of more than 80 businesses that belonged to bankers accused in a scandal last year that led the government to shut down several banks.

Government authorities said widespread irregularities put the banks in financial trouble, and some bankers were arrested while others fled the country. Several businessmen with links to the government were among those implicated.

Chavez vilified his critics as "the bourgeoisie" throughout the program, which lasted more than six hours. He said they are unfairly trying to discredit the state-run food industry after authorities found rotten food in containers holding about 20,000 metric tons (22,000 tons) in a seaport under government administration.

The former president of a state food company has been arrested, and Chavez has called for justice. But Chavez also said the amount of food was minuscule compared to the amount regularly sold at a discount in subsidized government markets.

Chavez said he is also pleased that the archives of independence hero Simon Bolivar have been "rescued from the hands of the bourgeoisie" and moved to the National Archives from an institution led by historians who have often been critical of his government.

Chavez, who named his socialist-inspired movement the Bolivarian Revolution after the independence leader, said Bolivar's documents will now be put on public display.