Chavez Challenges Caracas-based Food and Beer Magnate

Chavez Sets Up Showdown With Mendoza After Venezuelan Seizures
By Matthew Walter and Daniel Cancel
March 6, 2009

Venezuelan President Hugo Chavez set his sights this week on Lorenzo Mendoza, the Caracas-based billionaire food and beer magnate, as he pushes his socialist revolution to new a level of threats against private enterprise.

National Guard troops occupied a rice mill owned by Mendoza's company, Empresas Polar SA, last week, and Chavez directly warned Mendoza, 43, whose family has a net worth of $5 billion according to Forbes magazine, that he is now in the government's crosshairs.

"You can't work beyond the law, Mendoza," Chavez said during a televised March 4 cabinet meeting, where he alleged the company was evading rules that require it to produce food at government-set prices. "We could expropriate all of Polar's plants."
In singling out one of Venezuela's wealthiest men, Chavez is showing that his strategy for dealing with a looming economic slump will be to push for an expansion of state control, said Patrick Esteruelas, a risk analyst at Eurasia Group in New York. He may also suffer a backlash for attacking the producer of Venezuela's most popular beer.

"He's going to be careful with Polar," Esteruelas said. "It's a wholly domestically owned company, and many of its branded products are marquee goods that are very popular."

Corn Flour

Polar's plants produce foodstuffs from corn flour, used to make Venezuela's staple corn paddies called "arepas," to mayonnaise, frozen fish and ice cream.

"Chavez simply doesn't like independent businessmen," said Miguel Octavio, head of research at BBO Financial Services Inc. in Caracas. "If a businessman doesn't depend on Chavez, he doesn't like it."

This isn't the first time the president has threatened Empresas Polar. A year ago he accused food processors of hoarding goods, and singled out the Caracas-based, privately held company as a "clear example" of a business that could be taken over.

In October 2005, Polar filed suit with the country's Supreme Court seeking to overturn the seizure of a food processing plant by a state governor. The company's Barinas I plant was seized that year by then-Barinas state Governor Hugo de Los Reyes Chavez, the president's father.

End Capitalism

Mendoza, who studied at Fordham University and the Massachusetts Institute of Technology, has tried to maintain a low political profile since Chavez survived an attempted coup in 2002, said Robert Bottome, editor of the Veneconomia newsletter in Caracas, who says he knows Mendoza.

Through a spokeswoman at Empresas Polar, Mendoza declined to be interviewed. Chavez, a self-proclaimed socialist who says he aims to eradicate capitalism in the oil-exporting economy, has regularly singled out the executive.

"I know that Mendoza has turned his money here into wealth, a reserve surely kept abroad," Chavez, 54, said in a speech last June to businessmen, asking them to bring home some of the funds invested abroad to increase productivity in Venezuela.

Mendoza shifted in his front-row seat, as state television cameras focused on him at the nationally televised event.

"Chavez cannot tolerate anyone who is able to deal with him in a position of strength, and the Polar group is a strong group," Bottome said.

Since his re-election in 2006, Chavez has nationalized the biggest telecommunications and electricity companies, cement firms and a steel mill. He seized heavy crude oil joint ventures in 2007, prompting Exxon Mobil Corp. and ConocoPhillips to leave Venezuela and seek international arbitration.

Rice Mills

In his latest crackdown, the president sent troops into rice mills to verify whether they're complying with government regulations on production of price-controlled foods. The government began the process this week of seizing a rice plant owned by Cargill Inc., the biggest U.S. agricultural company.

"We can't allow monopolies like Polar," Chavez said yesterday. "That's why we've ordered the intervention and possible expropriation of the plants, just like Cargill."Polar said in a statement yesterday it has always complied with Venezuelan law, and publicly called for more dialogue with the government. The company asked the Supreme Court to rule that the occupation of its plant by troops is illegal.

Corn Milling Machines

Should the government decide to seize Polar's facilities, it will offer bonds in compensation, not cash as in past nationalizations, Chavez said March 4. That may stem from the fact that Venezuela, which depends on oil revenue to finance half the government's budget, is running out of money, said Miguel Carpio, an economist at Banco Federal CA in Caracas.

"From here on out, Chavez's strategy is going to be coercion," Carpio said in a telephone interview. "This is a time of crisis, and this is the least expensive option."Morgan Stanley says Venezuela's economy will contract 1 percent this year, even as inflation quickens. Goldman Sachs Group Inc. economist Alberto Ramos predicts Venezuela will have to devalue the currency to compensate for a drop in oil revenue.

"Inflation is at 30 percent, and food shortages are creeping back up, and those are the two things that keep Chavez awake at night," said Esteruelas. "Chavez can deal with those problems in two ways, either by extending an olive branch to the private sector, or by taking them over."

Chavez Challenges U.S.-based Cargill Inc. on Rice Prices

State Control in Food Sector
By Fabiola Sanchez
The Associated Press
March 5, 2009

President Hugo Chavez boosted state control over Venezuela's economy, ordering the expropriation of a U.S.-owned rice plant and threatening to seize food companies that don't sell enough products at official prices that are meant to stem inflation.

Chavez accused U.S.-based Cargill Inc. and other companies of flouting price caps on basic foodstuffs by producing less of those products, or even by adding seasonings to foods so they won't qualify as the basic items eligible for caps.

"I'm calling on Venezuela's private sector to understand that a socialist revolution has arrived," Chavez said a day after announcing plans to expropriate a Cargill rice processing plant and threatening to nationalize Empresas Polar, Venezuela's largest food producer.

If he were to follow through on that threat, his government would become the biggest player in Venezuela's food industry -- potentially a key step in his plan to institute socialism.

Chavez accused Cargill of failing to comply with regulations that took effect Tuesday, requiring food companies to ensure that price-controlled items comprise at least 70 percent of their output. The rules aim to slow inflation, cutting food prices and preventing companies from producing uncapped food products instead in order to avoid controls.Food prices have soared 40.1 percent in Caracas in the past year, driving 30 percent annual inflation, the highest in Latin America. Venezuela's minimum wage, now equal to $372 a month, lost 3.7 percent of its buying power between January and November, according to the Central Bank.

But business leaders and analysts warn that price controls on rice, milk, chicken and other products are already squeezing profits and could force some food producers out of business.

"They're playing with fire because any event that affects the capacity of private production is going to leave the country with shortages," said Luis Vicente Leon, a Caracas-based economist and pollster.

Chavez says he has targeted the rice industry after repeated public complaints that white rice is hard to find in stores. Officials and National Guard troops have already occupied at least two rice plants, where officials are performing 90-day inspections to make sure that the required amounts of price-controlled foods are produced.

"The government doesn't intend to take away private businesses, but if their owners don't want to comply ... we will continue with the expropriations," said Col. Carlos Osorio, an army official in charge of food distribution.

Agriculture Minister Elias Jaua meanwhile warned the government would "occupy" the property of any private company that halts food production and said it plans to expropriate Cargill's rice plant in Portuguesa state as soon as possible.

Cargill and Polar said Thursday that they've always complied with Venezuelan laws and regulations.

"Cargill is awaiting the opportunity to clear up its situation before the Venezuelan government, and is respectful of its decisions," Minneapolis-based Cargill said in a statement.

Its rice plant is one of about a dozen Cargill facilities in Venezuela, including factories that produce oil, pasta, flour, juice and animal food.

Chavez, who won a Feb. 15 referendum letting him run for re-election in 2012 and beyond, has already nationalized the country's biggest telephone, electricity and cement companies. New steps to boost state holdings would saddle his government with a heavy financial burden as oil earnings slump, and he has said some expropriations may be financed with government bonds instead of cash.

Disturbing Precedent in Canada-Venezuela Relations

Canada Puts a Muzzle on Academic Freedom
Dear Friends,

This message was sent to each of the following in response to the Canadian government's refusal to issue visas to academics from Venezuela to a student sponsored conference at Glendon Campus, York University, Toronto.

To Jason Kenney, Minister of Citizenship, Immigration, and Multiculturalism
To Lawrence Cannon, Minister of Foreign Trade,
To Paul Dewer, NDP foreign affairs critic,
To Bob Rae, Liberal foreign affairs critic,

Dear Sir:
On February 28, an academic symposium on Venezuela at York University in Toronto was disrupted by the refusal of the Canadian government to issue visas to two invited speakers from Venezuela.

Our organization, the Venezuela We Are With You Coalition, has worked for four years to organize educational activity about developments in Venezuela. We are not aware of any other case where the federal government has barred Venezuelans making brief visits to this country for educational speaking engagements. We are informed that Layo Gascuez and Eduardo Rothe, both prominent figures in Venezuelan public life, made appropriate application to the Canadian embassy in Caracas for visas in order to speak at Venezuela: From Boli­var to Chavez, an academic symposium held at Glendon College of York University. Further information on the symposium is available at

According to Ekaterina Malyuzhinets, one of the event's organizers, the speakers were denied visas for inexcusable reasons. The embassy demanded non-required paperwork and asked inappropriate questions,she said.

A diplomatic representative at the Embassy of the Bolivarian Republic of Venezuela in Canada told me that Gasquez and Rothe presented a document from the Venezuelan ministry asking that a visa be issued, but this was disregarded.I was told that the objections to issuing the visa were raised by Canadian immigration authorities. Canada's Department of Foreign Affairs and International Trade was apparently asked to assist in resolving the problems, but declined to do so.

This is an alarming precedent. It casts a shadow over our ability to invite speakers from Venezuela in the future. We ask that you review this case and assure us that there will be no repetition of such exclusion.

John Riddell
for the Venezuela We Are With You Coalition

Rally Round Isaeli Apartheid Week!

Rally Round Israeli Apartheid Week!
Two days into Israeli Apartheid Week in Toronto, the event is proceeding well, with a total audience of more than 600 at the first two downtown events.

Organizers and participants show no signs of intimidation by the concerted efforts of Stephen Harper's government to discredit the event and its supporters.

An organized Zionist disruption at this evening's event was easily parried, but it serves to remind us of the high stakes involved this year's event.

This is the first time in memory that the Canadian government has openly attacked a solidarity movement's right to exist. Harper has mobilized university administrations and rightist, Zionist organizations in a concerted bid to deny freedom of speech to Palestinian rights advocates.To add insult to injury, Canada's embassy in Venezuela has just assumed the task of diplomatic representation of Israel, whose ambassador and staff were expelled from the country during the murderous assault on Gaza.

Beating back the attack on Israel Apartheid Week is now the overriding task for progressive activists in Toronto. We need to build and participate in the Israeli Apartheid Week events planned for Wednesday through Saturday. Events in the Toronto area are listed below.

We hope to see you there!

WEDNESDAY March 4, 7 p.m.: Gaza: Breaking the Siege. University of Toronto, Walberg Building #116, 200 College St. at St. George.

THURSDAY, March 5, 7 p.m.: Globalization, Labour, and Poverty. University of Toronto, Kofler Institute Rm 108, 569 Spadina Road.

FRIDAY, March 6, 7 p.m.: From South Africa to Palestine, the Struggle Continues. Ryerson University, Ted Rogers School of Management, Room 1067, 55 Dundas St. W.

SATURDAY, March 7, 12:45 p.m. Join the Israeli Apartheid Week contingent in International Women's Day March, Bloor St. and Bedford Road.

Events are also taking place at York University, Wednesday and Thursday, at 12:30 p.m. For details, see

For information on events in 40 other cities around the world, see