Hugo Chávez placed Venezuela firmly on the path towards his own radical brand of socialism on Wednesday as he was sworn in to begin a third term in office amid faintly easing concerns over the heightened risks for business.
“Fatherland, socialism or death,” Mr Chávez boomed during an especially fiery speech before the National Assembly. “I swear I will devote my days, nights and entire life to the construction of socialism in Venezuela.”
Mr Chávez, whose new term runs until 2013, also said he expected Congress to grant him an enabling law to legislate practically by decree in most areas of national life, possibly including on the theme of nationalisation.
Clues emerged on Wednesday as to how the government might proceed to nationalise Compañía Anónima Nacional de Teléfonos de Venezuela, or Cantv, the privately owned telecoms company whose share price had plunged by as much as 40 per cent in the past two days.
Carlos Escarrá, a pro-Chávez deputy, said a law might be drafted that would “reserve” strategic areas of the economy to state ownership, a legal framework that would subsequently allow for “expropriation” and then “compensation of shareholdings following their valuation”.
The allusion to at least some financial compensation for shareholders of potentially nationalised companies is not as gloomy a prospect as faced investors following the surprise announcement on Monday.
Cantv’s American Depositary Receipts in New York recovered by 18 per cent by midday on Wednesday, trimming their collapse since Monday to about 27 per cent.
Nevertheless, the new Chávez government viewed the stock market’s historic crash this week with disdain, signalling that a healthy environment for business was near the bottom of its list of administrative priorities.
Jorge Rodríguez, the new vice-president, flatly denied that there had been any negative market reaction to Mr Chávez’s nationalisation proposal.
“There was no collapse of any kind,” Mr Rodríguez insisted. “The stock market is as solid as ever, the economy is as solid as ever, international reserves are stronger than ever, so nothing like that is happening.”
Some analysts shifted their concerns over the less immediate implications of the government’s plan to eliminate the independence of the central, which could spell chaos to monetary policy, especially if oil prices decline.
“The adverse reaction observed in Venezuelan markets as a result of nationalisation plans could steal some attention from the announcement regarding the central bank,” Santander Investment said in a report.