Who's at risk if Chavez starts to nationalize Veneuela operations or repudiates debts?
I read a rather remarkable note in a gold newsletter that suggested troubles brewing there, which may come to a head following the Sept 27-30 meetings of Opec Heads of State. Today, this shows up. Which OSX companies are exposed? Big Oil?
REPEAT: Venezuela Pres Fast-Track Bid Gets Mixed Reviews
By JEHAN SENARATNA Of DOW JONES NEWSWIRES
CARACAS -- While most agree it's high time Venezuela's President Hugo Chavez got on with the job of repairing this Latin American country's badly-fractured economy, many are apprehensive about how he appears to be going about it.
Chavez said Wednesday night he'll ask the National Assembly to give him fast-track powers that will enable him to bypass legislative deliberations and decree over 30 new laws.
Given that his Patriotic Pole political coalition controls at least 60% of the legislature - the margin necessary to pass the so-called "Enabling Law" - no one doubts the former coup-leader turned highly-popular elected president will get exactly what he wants.
Chavez's reasoning is sound, said Teodoro Petkoff, former planning minister and usually vocal critic of the current administration.
"He is enabled by the constitution to ask for the powers and I can understand why he wants them," said Petkoff, who now runs the daily Tal Cual newspaper that frequently pokes fun at the left-leaning Chavez.
"There is some very urgent work to be done and the assembly will be very busy drafting laws to fit the new constitution," Petkoff said.
Pedro Palma, president of the Venezuelan-American Chamber of Commerce, or VenAmCham, agreed "the rules of the game" need to be defined soon so private investors know where they stand before putting their money in Venezuela.
"We are asking for rules quickly...A smaller team will very likely pass the laws much more quickly than the assembly," Palma said.
Venezuela is emerging from a wrenching 7.2% economic contraction in 1999 and posted 1.5% growth in the first half of 2000, according to government statistics.
Local officials have forecast an economic expansion of between 2% and 3% this year spurred by government spending but observers, including current Planning Minister Jorge Giordani, have said private investment is crucial to sustainable growth.
Chavez's Need To Control Everything Seen A Problem
Although most observers concede the need for quick passage of new laws relating mainly to economic issues, they fear Chavez's apparent penchant for rejecting opposing views will raise its ugly head in this process as well.
"There is a risk that the government has its own opinions," and may exclude opposing voices in the passage of the new laws, VenAmCham's Palma said.
Roberto Bottome, editor-in-chief of the monthly Veneconomy newsletter, was less subtle in his criticism.
"Dictators do it that way," Bottome said. "If this administration is capable of drafting good laws, there is no reason to believe they couldn't be improved upon in public debate," he said.
Bottome rejected the idea that urgency is Chavez's real reason for requesting special powers.
"There is nothing on that list (of laws) that constitute such an emergency that they need to bypass congressional debate," he said.
The opposition Democratic Action and Christian Democratic parties agree, and argue that the Assembly's sovereignty is being compromised and the new constitution violated.
Some critics say Chavez's request for special powers is merely an extension of the new constitution's "Transitory Dispositions," which granted a temporary legislature packed with the President's supporters similar powers until representatives to the National Assembly were elected July 30.
"We are in a permanent state of transition," columnist Marta Columina recently charged.
Uncertainty about what the new legislation will entail is keeping local financial markets in a holding pattern. The Caracas bourse's IBC stock index fell 0.5% Thursday to 6981.52 points as investors adopt a wait-and-see attitude.
Country's Institutions Have Low Credibility
The new laws, running from consolidating what Chavez termed "anachronistic" laws guiding activities in the petroleum industry to the tax authority to small businesses and agriculture, are intended to spark the economic resurgence Venezuela sorely needs.
But if Chavez drafts the new laws without open debate, he could be perceived as further undermining the autonomy of the country's institutions, and that certainly won't engender investor confidence, analysts say.
Standard & Poor's, in its latest opinion on Venezuela, said the country's sovereign ratings are restrained by, among other things, "low central bank credibility...(and) a limited de facto independence."
Credibility in the strength of all the country's institutions is critical to investors, VenAmCham's Palma said.
"The government should keep in mind that in order to create the proper credibility, it's very important to allow the participation of different members of society, so that all views are seen to have been considered in the (legislative)
process," Palma said.
Chavez's plans for land reform, for instance, are likely to draw a heap of criticism from investors, analysts say.
"Too much land is owned by too few people," Chavez said, adding that "equilibrium" in the distribution of land is vital. The business community is now running scared, murmuring about expropriations and violation of orthodox
private property tenets.
If land expropriations are eventually carried out, critics fear the land reform law will add to the business community's fears about the viability of investing in Venezuela.
One thing is certain, observers say: private investors will continue to look elsewhere until they're satisfied Venezuela is a safe place to invest.
-By Jehan Senaratna; Dow Jones Newswires; 582 564 1339;
jehan.senaratna@dowjones.com |
