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Venezuela: Chávez tightens financial controls

Venezuela's president has begun to put his anti-capitalist rhetoric into effect

Venezuelan president Hugo Chávez has a fanatical following at home as a fiery, anti-US leader, but his outbursts have always been taken with a pinch of salt abroad. After all, the US is the main buyer of Venezuela's oil, its chief export. But Chávez's new posturing as a virulent anti-capitalist has more than a few investors concerned.

A series of financial controls on bank interest rates, currency trading and oil investments, and a contentious land reform programme that is jeopardizing property rights are now backing up what for much of Chávez's six-year rule has been just rhetoric. "Capitalism is worse than Count Dracula, Frankenstein, the Boston Strangler and Jack the Ripper combined," Chávez proclaimed recently, promoting a socialist "revolution" he says is designed to help the country's poor. Bondholders and bankers fear Chávez, who praised Argentina's 2001 debt default, and aims to move Venezuela towards a centrally planned economy inspired by his Cuban ally Fidel Castro that could ultimately implode and throw the country into a deep recession.

On the surface, Venezuela's economy seems to be doing better than ever. Economic growth was Latin America's highest last year at 17% and the government says it will be 10% this year.

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