CARACAS, Venezuela -- Investors spooked by President Hugo Chavez's nationalization plans rushed to sell off Venezuelan stocks Tuesday, while U.S. officials and financial analysts warned that increasing government control in the power, telecom and oil sectors is a mistake.\nChavez, who begins another six-year term Wednesday after a sweeping election victory, announced plans Monday to nationalize Venezuela's largest telecommunications company, electrical companies and four lucrative oil projects now run by foreign companies in the Orinoco River basin. He also called for a constitutional amendment to strip the autonomy of the Central Bank.\n"Chavez has singled out 'strategic sectors' for now, but what could come next?" asked Pedro Palma, an economist at Venezuela's IESA business school. He said Chavez has created "a climate of great uncertainty."\nChavez's plans to impose state control over oil upgrading projects in the Orinoco, now controlled by companies like Exxon Mobil Corp., Chevron Corp. and ConocoPhillips Co. also prompted worries in the U.S., Venezuela's largest oil customer.\n"I think the goal here is to enforce the sanctity of contracts," U.S. Energy Secretary Samuel Bodman said Tuesday, expressing concerns that Chavez could "violate that principle."\nWhite House press secretary Tony Snow also weighed in, saying: "Nationalization has a long and inglorious history of failure around the world. We support the Venezuelan people and think this is an unhappy day for them."\nInvestors dumped shares in C.A. Nacional Telefonos de Venezuela, or CANTV, whose American Depository Receipts lost nearly 42 percent of their value since Chavez's announcement. On Tuesday alone, CANTV lost $285.7 million in market capitalization.\nShares in Electricidad de Caracas, owned by Arlington, Virginia-based AES Corp., fell by 20 percent Tuesday morning before the Caracas stock exchange suspended trading. And the U.S. dollar hit a new high of 4,000 Venezuelan bolivars on the black market Tuesday, making a joke of the official exchange rate of 2,150 bolivars.\nGovernment seizures of companies don't appear to be likely: With Venezuelan oil selling above $50 a barrel, Chavez's government has plenty of cash to buy out private-sector stakes in key companies.\nChavez also said he would ask Congress -- now completely controlled by his supporters -- to grant him special powers to enact "revolutionary laws" to carry out the nationalizations and other changes.\nOil companies are accustomed to operating in politically unstable regions and have so far taken a long-term perspective on abrupt changes by Chavez's government. He's already raised taxes and royalties and brought most oil operations under state-controlled joint ventures.
Investors wary of Venezeula's oil plans
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