Chavez Declares ‘Economic War’ Against Bourgeoisie

By Daniel Cancel

June 2 (Bloomberg) -- Venezuelan President Hugo Chavez said he’s declaring an “economic war” against the “bourgeoisie” after business chambers criticized his handling of the economy and the performance of nationalized companies.

Chavez threatened to nationalize the country’s largest food maker, Empresas Polar SA, saying that the company isn’t “indispensable.” Chavez said Polar is manipulating workers into attacking his policies and he challenged company President Lorenzo Mendoza to see who will last longer. Mendoza, Chavez said, won’t get into heaven because he’s wealthy.

“You’ve declared an economic war against me, so I accept your challenge, stateless bourgeoisie,” Chavez said today during a visit to a state-run vegetable oil company. “I’m declaring an economic war with the help of the people and workers. War is war, my friend. Don’t complain to me later.”

Chavez has nationalized companies in the oil, food, cement and metals industries as part of his push for socialism and he blames the private sector for accelerating inflation and a recession that is forecast to continue into 2011. Chavez has threatened to nationalize Polar to boost state control over the production and distribution of food, and the government seized one of the company’s rice plants for three months last year.

The drive to construct a socialist economy has left the country facing international arbitration cases with Exxon Mobil Corp., ConocoPhillips and Mexican cement maker Cemex SAB.

Exploited Workers

Chavez said Mendoza is trying to undermine his government and that the billionaire should look at Radio Caracas Television, an opposition network removed from the airwaves, as an example of an “indispensable” Venezuelan company.

Private companies exploit their workers for economic gain and sell goods at “inflated” prices, Chavez said. The bourgeoisie should read more Karl Marx, he recommended.

Venezuela’s economy contracted 5.8 percent in the first three months of the year, the fourth consecutive quarter of declines after investment plunged and oil export revenue fell. Gross domestic product may shrink 2.5 percent in 2010, according to the median forecast of nine banks surveyed by Bloomberg.

Business chambers Fedecamaras and Consecomercio have increased their criticism of Chavez since the first-quarter GDP report released May 25, saying his nationalization drive has ruined the economy and that government-run companies have been unproductive.

Currency Devaluation

Chavez devalued the bolivar for the first time since 2005 in January and created a multi-tiered exchange system as he struggled to close a budget deficit and slow capital flight. The government shut down the unregulated currency market on May 18 and will hand control over securities trading to the central bank.

The government has taken control of 36 brokerages and jailed 10 brokerage directors as part of an investigation into the currency market. Chavez has blamed the parallel market in currency for the 5.2 percent surge in consumer prices in April.

Venezuela, which has the highest annual inflation rate of 78 economies tracked by Bloomberg, may see consumer prices rise 40 percent this year after the devaluation and dismantling of the unregulated currency market, RBS Securities Inc. says.

Chavez said his government hasn’t been able to lower inflation because private company price increases outpace his annual minimum wage adjustments.

“As long as the bourgeoisie controls 90 percent of commerce, 80 percent of the banks and multinational companies, we won’t be able to lower inflation to one digit,” he said.

Chavez, who has been in power since 1999, is trying to maintain a majority in the National Assembly after September elections before he seeks another six-year term in 2012.

Joint Ventures

Chavez said today that the government will approach manufacturing companies and offer to set up joint venture businesses as a way to guarantee low prices and give workers more control over production. Companies that refuse to cooperate may be expropriated, he said.

Venezuela is close to signing an agreement to form a joint venture with French retailer Casino Guichard Perrachon SA to operate supermarkets, Chavez said today. He expropriated Exito hypermarkets following the devaluation in January on accusations that the majority-French-owned chain illegally raised prices.

“The only way to lower prices is having the workers take control of the factory,” Chavez said. “Those companies that want to work together are welcome. Those that don’t want to cooperate, we’ll expropriate them. I repeat, war is war.”