Latin America & Caribbean

Why Venezuela's government is taking over apartments

Apartment complex El Encantado
Image caption This apartment complex on the outskirts of Caracas is now in government hands

"Expropiese!" came the cry from Hugo Chavez, a command which has come to fill private investors in Venezuela with dread: "Expropriate it!"

Hilton, Banco Santander, Williams, Cargill, Owens Illinois - the list of companies whose Venezuelan subsidiaries have been on the receiving end of President Chavez's orders in recent months reads like a Who's Who of major foreign investors.

Alongside them are Latin American companies like Agroisleno, Sidetur, Exito and Cemex. Between them, they cover a wide array of economic sectors in Venezuela.

Banking, agriculture, tourism, energy, construction and steel production have all been affected by the government's decision to intervene in private ownership over the past year. Banco Santander received $1bn (£620m) compensation. Others are still waiting.

But whereas in the heady days of widespread nationalisation in Venezuela, between 2005 and 2007, Mr Chavez was focusing on what he called "strategic sectors" of the economy, such as telecommunications and oil production, now the targets are more diverse.

"I've spent years getting the money together for this place," Wally Garcia says, showing me around his half-finished apartment in a residential complex called El Encantado.

"Now, suddenly, it's in the hands of the state."

'Urban vultures'

The latest controversial government takeover involves a series of apartment blocks on the outskirts of the capital, Caracas.

Image caption Wally Garcia does not know when his flat will be finished

Like most buyers and residents, Mr Garcia found out about the move to expropriate his home when Mr Chavez announced it without warning, live on state television.

The government accuses construction firms of illegally increasing the prices of homes after their sale has been agreed, and of failing to finish buildings on time, forcing residents to continue to pay out beyond the set deadlines.

"They are urban vultures, these constructors," said Mr Chavez on his weekly television programme, Alo Presidente. "They build houses for the middle class and then squeeze them. We have decided to act."

But despite the difficulties he has had with the builders, Mr Garcia does not believe expropriation is the answer.

"We all came down here to the building site the next day, and we were asking each other 'What will this mean?' A lot of people are worried that the government will take the construction company off the job and that it will languish even further," he says.

Mr Garcia points to a government-owned housing project nearby which he says has been under construction for more than eight years.

Many residents are concerned that a half-finished building would encourage squatters or that the government might use their properties for other ends.

Mr Garcia says a hastily-conducted vote among the property-owners showed 89% were against the expropriation. However, the government is principally dealing with those residents who support the measure.

Pro-government publicity advertisements are running on state television showing some neighbours of El Encantado thanking Mr Chavez for his decisive action against what is called the construction "Mafia".

The expropriation of individual housing blocks like El Encantado is a far cry from the government's face-off in 2007 with US energy giants Exxon Mobil and ConocoPhillips over oil projects in the Orinoco river belt worth tens of billions of dollars.

"I think there is a purpose here, but not a well-executed plan," says political analyst Ibsen Martinez.

"The intention is to place as much of the economy - be it haulage companies, housing or oil contractors - under state control as possible before 2011, when the new national assembly will sit."

The government retained overall control of the assembly in recent parliamentary elections but lost its two-thirds majority which is needed to pass laws without seeking opposition support.

Mr Martinez believes that therein lies the reason for the quickening pace of expropriation.

"They're hitting private enterprise hard before January," says Mr Martinez. "They're carrying it out with great ineptitude and inefficiency but that's the route they've chosen."

Savings at risk?

But Juan Carlos Dugarte, outgoing deputy for the United Socialist Party of Venezuela (PSUV), disagrees that the recent expropriations are related to the imminent changes in the assembly.

Image caption Still a delight? Residents are divided over the impact of the takeover

"The government has guaranteed that private enterprise in this country can continue to prosper and grow," says Mr Dugarte, "but when you have construction companies charging people illegally by adding non-existent taxes and residents who are still waiting for properties they should have received in 2008, the government has a duty to step in.

"If you're working inside the law, you have nothing to fear. Otherwise, the government will intervene."

For the opposition, the prospect of Cuban-style state ownership of private property is a growing and daily reality in Venezuela.

For the president's supporters, he is breaking the monopoly of big business and correcting long-standing abuses by the private sector.

Back in El Encantado, the dust and paint fumes make Wally Garcia's apartment uninhabitable for him, his wife and their two young daughters.

Although some of his neighbours applaud the decision, and despite government assurances that the measure will protect his investment, all Mr Garcia can see is uncertainty and doubt.

For him, Mr Chavez's order to "expropiese" is an increasingly arbitrary decision, one which he fears has put his life savings at risk.

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