Today the Vice-President Ramon Carrizales said exactly the
opposite he stated yesterday and the Government announced that steel company
Sidor would be “renationalized” and taken over by the Venezuelan Government
from Argentina’s Ternium. Ternium is composed of a Mexican, Argentinean and
Venezuelan steel producers, which found the synergies or joining forces and
important factor in their success. Sidor was privatized in 1998 after decades
of losses and an investment of more than 15 billions dollars.
Chavez had so far resisted nationalizing Ternium so as not
to offend his Argentinean friends the Kirchners. Last year Nestor Kirchner sent
a high level and personal emissary to negotiate prices for Sidor’ steel prices
in Venezuela when Chavez first threatened to nationalize the company who
apparently thwarted the effort.
But last night Huguito seemed to have a temper tantrum
when Sidor’s board refused to accept the demands of the steel union, SUTISS,
which has been creating trouble for the Government for the last two weeks.
What are another two and half to three billion for a rich
autocrat like Chavez? Thus, Chavez added to what is now a remarkable US$ 21
billion in payments which the country will have to make in the next couple of
years when you combine the heavy crude projects, cement companies and now
Sidor. Given that Government assets including Fonden, Bandes and international
reserves are estimated at US$ 57 billion, the numbers are no longer as comfortable
as they used to look which may explain the fact that Venezuela has the highest
risk of any emerging market at this time.
Of course, since they can no longer argue that Sidor is
charging prices that are too high, this time around the arguments are that
Sidor was “exploiting” its workers, submitting them to a form of “semi-slavery”
and while the company has not violated the law, its behavior is “anti-ethical”
This “inhuman” behavior included accepting the unions
demand that all of the workers belonging to contracting companies be hired as
regular workers, which increased the payroll by 600 people, a salary increase
of 130% which has to be added to those announced by the Government every year
in May and is thus much, much larger than anything the “human” Government of
Hugo Chavez has ever granted any workers.
A Sidor worker would make after this increase, more than a
Full Professor from a Venezuelan University or ten times the minimum
salary. But you know, most of
those intellectuals are oligarchs anyway, while a majority of Sidor’s workers Chavez
believes are in his favor. They will, only if they need him.
We have yet to hear from Chavez Kirchner’s friends, who
much like the French before the Lafarge nationalization, believed that they
were immune to Chavez’ tantrums and antics. Chavez will have to give something
up in return to Kirchner’s friends to be forgiven. But politicians in Argentina
are not likely to be convinced and this may turn out to be the end of Venezuela’s
And then there is the complete freeze out by Venezuela’s
corporate sector, which now will absolutely refuse to make any investments. Why
bother if you don’t know who will be next?
And that as the talk of the town today as people wondered
whether it would be Polar, Sivensa and all or someone in the banking sector.
The amazing thing was that the
opposition’s ignorance on economic matters made them stay on the sidelines as
none of the “leading” opposition politicians seemed to be comfortable enough to
even dare criticize the Government for its recent takeover announcements.
But to me the math is very
simple: Every dollar spent in taking over perfectly functioning companies is a
dollar away from helping hospitals in a country with a decaying heath
infrastructure, or from helping someone avoid malnutrition, or from creating a
job in a country with 50% informal sector employment or buying equipment to
fight crime in a country with 100,000 homicides since Chavez became President.
It should not be that hard to
figure which all in all represents a tribute to the mediocrity of our
politicians both Government and opposition.