Venezuela: Chavez Takes Big Socialist Step

Hugo Chavez made clear today that he intends to make quick use of the considerable "political capital" he gained in last month's landslide election victory. On the day a huge cooperation and aid agreements was signed with Nicaraguan President Ortega, Chavez let it rip that he intends to re-nationalize the country's vital telecom and electricity industries.

This is huge, if unexpected, news and the hypervenalation by the markets and pundits reflects that. (Re) Nationalization of critical industries is an essential step for a country in gaining it's sovereignty and ability to plan and control its destiny.

But naturally, the power elite (and even some liberals) are going crazy. They thought Chavez had a big mouth and a pesky thing for the poor, but they did not think all his talk about socialism would actually produce the type of concrete, systemic changes needed to take a piece of the country back form those who care nothing about it (Verizon or Mexico's billionaire Carlos Slim).

But let's point out to non-Venezuelans that CANTV (not the cool one) ran a virtual monopoly in most every telcom sector but cel phones - competition never worked out like it was supposed to. Venezuelans also know that under privitization, basic phone costs shot up and service targets went unmet. There are actually fewer telephones per home than there was in 1997. Money is in cel phones, so rural and hillside areas have languised without service. (If you go to the CANTV website you will find "tesimonials" but not statistics).

The plans are still without important details. The US has demanded that US companies get compensated, which they will. If I were to guess I would say we're talking about a majority state ownership deal, not a 100% takeover. But I will bet anyone one thing - that the telephone and internet per household rate will vastly improve in coming years.