10 January 2007

The Nationalization of CANTV?

In his inaugural speech, Venezuelan president Hugo Chavez announced his desire to nationalize several "strategic" sectors, including telecommunications. While this had been threatened earlier, this speech seems to have caught analysts off guard. It is unclear whether he hopes to accomplish this through seizure or through purchase of the assets on the open market.

Update (2007/01/11): This article indicates that there will be compensation for owners of nationalized companies. However this comes from a member of the legislature rather than from the Chavez government. Furthermore, Mr. Sanguino did not indicate whether this compensation would be at market levels or whether some other level would be determined. Excuse my skepticism ...

Update (2007/01/15): This article is clear that the Venezuelan government plans to pay market prices in its nationalization program. I withdraw my skeptical tone. This article goes on to summarize where privatization and nationalization have and have not been successful in developing countries in general and Latin America in particular. It is well worth the read.

Update (2007/01/22): Hugo Chavez reversed the previous signals (see this article). The article says:
Speaking during a Sunday broadcast, Chavez said the price for CANTV would take into account debts to workers, pensions and other obligations, including a "technological debt" to the state.

"I'll pay when the law dictates and in the form the government decides. I'm going to tell them that CANTV was given away, and that they shouldn't come here saying it must be paid for at the international price," he said.

Are you surprised? I, for one, am not ...

What impact do you think this will have on the telecommunications infrastructures in other countries?

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