Chavez Devaluation Missile Ravages French Retail Chain

Exito, a joint French-Colombian supermarket chain, has fallen prey to this month’s Venezuelan currency devaluation policy, which warned action against any firm that involved in speculative price hikes. President Hugo Chavez on Sunday has ordered to begin the expropriation process of the retail chain, accusing it for breaching price control laws of the country.

With this action, Chavez has brought another business sector under state control, in an attempt to reduce prices of essential items, with the country peaking at the end of last year with an inflation of 25 percent, the highest among the Latin American countries. Chavez has repeatedly threatened to seize businesses that raise prices in response to the country's first currency devaluation since 2005.

On January 8 this year, Chavez devalued bolivar against dollar to perk up the economy in tatters. He declared a new two-tiered rate: 2.6 per dollar for priority goods, such as food and medicine, and 4.3 for imports of non-essential items, such as air conditioners and electronics.

In the past 11 years in office, Chavez has nationalized major businesses from the economy, including oil, banking, electricity and telecommunications; and the retail chain seizure is latest in the line. Exito, headquartered in Colombia, runs six hypermarkets and around 32 supermarkets in Venezuela.

According to the Venezuelan president, after nationalization, the stores run by Exito and several other stores including a newly built shopping mall in Caracas will be used to strengthen Comerso, a new government retail initiative which plans to sell products at highly subsidized rates. "How much longer are we going to allow transnational companies to come here to speculate with our prices?" the Venezuelan leader asked viewers of his weekly TV program, Alo Presidente.

Chavez said legal reforms were under way to take over companies accused of speculation. In this manner, more than 200 stores are likely to get nationalized or would be added to the recently announced state-run retail chain.

According to sources, businessmen fear that the hounding of businesses by the government will only dent the confidence of the economy, and also alienate foreign investments. The head of Caracas Chamber of Commerce, Industry and Services, Victor Maldonado said Chavez's efforts to boost the state's role in the economy with takeovers were going to ruin the country.

By Jose Roy