Venezuela and Bolivia to nationalize foreign-owned industries

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Evo Morales and Hugo Chavez

Bolivia's president Evo Morales took first steps to nationalize Bolovia’s mining industry, while Venezuela's president Hugo Chavez clinched the nationalisation of Venezuela's largest private electric company on Thursday, signing an agreement to buy a controlling stake in Electricidad de Caracas (EDC).

Bolivia's mining industry

President Evo Morales said Thursday that he would nationalize a mineral processing plant owned by the Swiss mining company Glencore International AG, a first step in his plans to give the Bolivian state a larger share of the country's extensive mineral wealth.

Morales did not name the terms by which his government would take control of the Vinto processing plant, located on the outskirts of the mining city of Oruro, 180 kilometers (112 miles) southeast of La Paz.

But the president said plant would be nationalized by a decree to be issued Friday at noon for a lack of transparency in its financial dealings.

"Companies that respect Bolivian laws, that do not steal money from the Bolivian people, will be respected," Morales said Thursday while speaking to community leaders in Oruro. "But if the companies do not respect the laws, I have no other alternative than to recover those companies."

Hugo Chavez's government nationalizes largest private electricity company

President Hugo Chavez's government clinched the nationalization of Venezuela's largest private electric company on Thursday, signing an agreement to buy a controlling stake in Electricidad de Caracas (EDC) from its US-based owner, AES Corp., for 739 million US dollars.

The sale agreement was signed by Paul Hanrahan, president and Chief Executive Officer (CEO) of Virginia-based AES, during a ceremony at the presidential palace in Caracas, agreeing to pass the company's 82-percent stake in the utility to the Venezuelan government.

The final contract will be signed on Monday and AES' shares will be transferred to state oil company Petroleos de Venezuela SA, or PDVSA, within 30 days, Energy Minister Rafael Ramirez said.

Ramirez emphasised that the agreement had been done within the legal framework and stressed how important it is to work within that framework for "everything."

He said that minority shareholders, including employees and retirees of the company, would have the option to work within the new state company or to sell their shares.

The deal marks the first of multiple nationalization moves planned by Chavez since he was re-elected in December pledging to deepen his socialist revolution.

More plans to nationalise

The leftist president also plans to nationalize other smaller companies in the electrical sector, oil projects operated by companies like Chevron Corp. and Exxon Mobil Corp., as well as the country's largest telephone company, CA Nacional Telefonos de Venezuela, CANTV, which is 28.5 percent-owned by New York-based Verizon Communications Incorporated.

Chavez has called the nationalizations vital to Venezuela's strategic interests, but the moves have alarmed his critics who fear he's steering his country toward communism like that of his Cuban mentor Fidel Castro.

After the signing, Vice President Jorge Rodriguez appeared to hit back at comments on Wednesday by US Secretary of State Condoleezza Rice, who accused Chavez of "destroying his own country'' economically and politically.