When President Hugo Chávez announced on January 8 that his government intended to nationalise the Venezuelan CANTV phone company and the Caracas electricity system, a little hell broke loose among investors. Venezuelan stocks of all types fell rapidly on world bourses. Phone companies, oil stocks, mining and steel companies with Venezuelan exposure – it mattered not; Mr Chavez would steal from all and sundry, investors felt, and only a fool would invest there.
Visions of Cubanesque asset seizures are easy to conjure up in the minds of the average investor, and those with a penchant to flavour analysis with their political agenda were quick to attack. However, this controversial figure has been misrepresented in English-speaking media and the case for uncompensated confiscation seems flimsy under closer examination. Expropriation invites retaliation from injured parties, and Venezuela has too much international exposure to imagine itself in a socialist vacuum.
