Chavez's new attacks on private sector

Hard on the heels of winning a referendum to abolish term limits last month, Hugo Chavez, Venezuela's president, is trying to fend off economic worries by taking on the private sector, especially companies in the politically sensitive food and farming industries.

First to feel the impact were rice processors. A rice plant belonging to Cargill Inc., a Twin Cities company, was seized for allegedly violating the "food security" law. Two plants owned by Empresas Polar, Venezuela's largest private conglomerate, were taken over "temporarily" to enforce production of price-controlled rice.

Like other companies, Polar argues controls force it to sell at a loss. It has been selling flavored varieties of rice, hitherto unregulated. Chavez rejects this argument, and threatened to expropriate all of Polar's businesses (which include brewing) and to pay compensation in bonds rather than cash.

Rice is a staple for Venezuelans, but it has recently been scarce. The government claims there is no shortage. But rice producers say output has fallen because there is no incentive to invest in either factories or farms. They point out that the government itself supplies around half the market, and they complain that its imports are undermining their businesses.

The government has also taken over two other factories, one making pasta and the other a tuna-canner. Other factories producing staple foods are being inspected and ordered to concentrate on making price-controlled goods.

Owners fear that will force them into bankruptcy. Several farms have been taken over by troops and civilian supporters of the government. Elías Jaua, the agriculture minister, says the government seeks "hegemony" in food and farming.

"Against the logic of capitalism," declared Chavez, "let us construct a new logic, that of socialism."

Venezuela's finances have been weakened by the collapse in the price of oil, which last year provided more than 90 percent of the country's export earnings. It is haunted by the events of 20 years ago, after oil prices had fallen, in which food shortages and bungled austerity measures prompted riots and looting, and hundreds of people were killed by troops.

Chavez claims these events as the starting point of his "revolution."

This time will be different, he insists, with the army siding with the poor against the rich, and economic tension providing an opportunity to move forward with socialism.

But he is being as tough on trade unions as on business. Workers on the Caracas metro, protesting about the government's refusal to respect collective agreements, were threatened with a military takeover. He denounced workers at Sidor, a recently nationalized iron and steel plant, as "corrupt" and "saboteurs" for protesting over wages and working conditions.

Some of the president's own supporters disagree with these confrontational policies. José Vicente Rangel, who served for several years as Chavez's vice president and is still close to him, said on his weekly television program that none of the problems facing the country would be resolved without dialogue.

"There'll be no pact with the oligarchy," was the president's public response.