Cementing the Revolution

Michael C. Moynihan | August 21, 2008

After a round of bad-faith negotiations with the Mexican company Cemex, the government of Venezuela has decided it's high time that foreign cement factories are expropriated to benefit the proletariat (and by "proletariat" they mean the crooked oligarchs of Caracas). President Chavez sent the National Guard to seize the company's assets after negotiations broke down when Cemex representatives pointed out that their operations were being "significantly undervalued." Two other foreign-owned cement companies—one Swiss, the other French—caved to Chavista pressure, selling majority shares of their local factories to the Bolivarian highwaymen. As one analyst told Marketwatch, Venezuela can forget about attracting foreign investors:

"There's growing concern that this [nationalization] trend will only intensify," said Paul Biszko, senior emerging markets analyst at RBC Capital Markets.

"The government's aim is to run a socialist model where companies aren't focused on making a profit, but on satisfying the needs of the people," he said. "This obviously is troubling for investors."

[...]

"Among our clients, we have no real money investors interested in holding any Venezuelan paper," Biszko said. "I'd assume that a lot of the guys that do still hold the bonds are there only on a short-term basis."

The Financial Times makes the obvious point: "Steel, oil joint ventures, telecommunications, electricity, the third biggest bank and, on Monday, cement: the growing number of industries falling into the hands of the Venezuelan government is making President Hugo Chávez's so-called 21st-century socialism look more and more like the plain old 20th-century version."