CHAVEZ : his intention of nationalization TECHINT ARGENTINE companies without agreement created a big issue between both countries & Brazil alerts

By, Guido Braslavsky*
May 25, 2009. The Venezuelan government has pledged “just compensation” following the nationalization of three steel firms from the Buenos Aires-based multinational, Grupo Techint. In the face of protests from many Argentine business groups, the government of Hugo Chávez sought to calm tensions by recalling last year’s nationalization of Sidor (a Techint subsidiary) for which it paid 1.97 million dollars following negotiations with the government of Cristina Kirchner.

In statements to the Buenos Aires newspaper “Clarín”, Venezuelan government sources confirmed Venezuela’s decision, citing at the same time the official Argentine response to “respect sovereign decisions” of the country. As with the Sidor negotiations, the most recent nationalizations have initiated a long negotiation to determine the price of the firms.

The idea of “just compensation” has been a main feature of the conversations between Argentine Foreign Minister Jorge Taiana and his Venezuelan counterpart, Nicolás Maduro. The meeting of the ministers, which took place two days ago, was the first official conversation following Hugo Chávez’s announcement.


Chávez announced the nationalization of six steel firms on Friday. Techint is the owner of two of the companies, Tubos de Acero de Venezuela (Tavsa) and Materiales Siderúgicos (Matesi). Techint also has a controlling interest in a third firm, Complejo Siderúrgico de Guayana (Consigua).
Chávez’s decision to nationalize the firms came a week after his visit to Argentina where he spent a day in El Calafate as a guest of the Kirchners, though he did not mention plans, according to two cabinet ministers in an interview with “Clarín”.

When asked about Chávez’s visit, Interior Minister Florencio Randazzo stated “he did not mention anything” to President Fernández de Kirchner, adding that the political opposition “is making a big deal of this in the midst of a political campaign.”

Randazzo also stressed that Chávez’s decision was not completely unforeseen. At a press conference during his most recent visit to Argentina he was asked whether or not he planned to continue with nationalizations. Chávez responded, in English, with an enthusiastic, “Yes!”.

Randazzo also emphasized the government’s position, “We will respect the sovereign decision of the Venezuelan government and we will do all that we can to protect our national interests, as we did in the case of Sidor.”

“Clarín” also consulted with other official sources regarding the impact of the nationalizations in the context of the upcoming mid-term elections. Though the nationalization of Sidor forms part of a broader nationalization strategy of the Venezuelan government, the context of that deal was very different. There were strong indications that Néstor Kirchner negotiated directly with Chávez.

For his part, the Venezuelan leader announced the nationalization of Sidor after Cristina Fernández de Kirchner had assumed the presidency and long before the current electoral season, which diminished the impact that the announcement could have had for the Argentine government, which maintains a “privileged relationship” with Venezuela.

In response to the concerns of Argentine business groups opposed to the nationalizations, the government sought to re-position itself by stating that it would not nationalize.

However, the government clarified that the firms that have been nationalized—Argentine Airlines and Argentine Water and Sewage (AySA)—were directly related to concrete consumer service concerns.


*Edited by "Clarín", Buenos Aires, Argentina.

Nationalization of Argentine companies
Massa says government will 'back' Techint

The government suggested it would increase pressure on Venezuela, after it announced the nationalization of three Argentine companies. Cabinet Chief Sergio Massa asserted the government would "back" Techint, after the Hugo Chávez administration announced it would nationalize three companies that are owned by the Argentine consortium.

"The government must back Techint, because it is a national company," said Massa during an interview to a local radio station. "There is no place for nationalizations," he said.

Massa dismissed that the dispute over the nationalization of three companies, including giant steel-manufacturer Ternium, might strain diplomatic relations with Venezuela, ruled by the Socialist Chávez administration. "Venezuela is an important country for international trade, but it's not the only one," he added.

Yesterday, Interior Minister Florencio Randazzo said the government would press Venezuela to pay "a fair price" for the companies. The nationalization was announced on Friday, in a move create a state-run steel conglomerate.

Venezuela Expropriations: Chávez Talks Himself into Trouble with Argentina's Fernández de Kirchner
Chávez has depicted Fernández de Kirchner as an ally and soulmate in his bid to build a regional alliance to counter what he sees as the undue influence and power of the United States in Latin America. But his peremptory takeover of steelmaker Sidor and his tendency to talk off the top of his head may well have put her in between the proverbial rock and a hard place at home.

Fernández de Kirchner is said to have telephoned Chávez asking him to explain his nationalization program and how it affected other countries’ interests. Chávez has “expropriated” a 60% controlling stake held by Argentine engineering group Techint in steelmaker Sidor.

But it’s said that compensation terms have yet to be settled, and that Techint and the government are still far apart on that issue. Furthermore, Chávez is talking of taking over three subsidiary companies in which Techint has interests. The companies are Tavsa and Matesi, where Techint is the majority shareholder, and Comsigua, in which it has a minority stake.
The spark for the conversation sought by Fernández de Kirchner was a remark Chávez is reported to have made in private to Brazilian President Inacio Lula da Silva. That remark, it’s said, was to the effect that Venezuela was on course to take over foreign companies except for Brazilian ones.
In Caracas, the Foreign Ministry tried to dismiss the statement, saying Chávez had spoken in jest. If that were the case, it might have been better to have left it at that.

Instead, an official statement released by the Foreign Ministry went on to rail at considerable length against “a ferocious campaign of defamation against Venezuela” by the Argentine media, which it claimed was out to mislead the Argentine public into seeing Venezuela as a threat to their interests.

The French news agency, AFP, had already reported the humorous nature of Chávez’ remark, noting that it had prompted “jocularity” among those present at the time, the statement said.

The Argentine media had set out to misrepresent the motives which had led to a “sovereign and legally made decision” by the Venezuelan government,” the statement fumed.

The statement insisted that the takeover procedure had “guaranteed” Techint “just and prompt compensation for the shares that now return to be the property of the Venezuelan people, after having been unjustly and fraudulently privatized during the long and dark neoliberal night.” Once again, the ministry’s press officers primarily had their eyes on domestic consumption.
But a report by the Argentine state news agency Telam, which had reached the public domain several hours before the Foreign Ministry acted, put a rather different interpretation on events.

Telam’s report if anything pre-emptively undermined the ministry’s retrospective rationalization had Chávez had only been joshing with the guys. In fact, its version of events was severely at odds with what the ministry was to say later on.

Telam said that Chávez denied to Fernández de Kirchner having made any such statement to Lula. At which point, she is said to have told him to issue a public denial to that effect. Presumably, the Foreign Ministry eventually took that one on board, albeit after nary a word from the presidential palace, Miraflores.

As reported by Telam, the tone of Fernández de Kirchner’s response to Chávez’ denial, and much of what was to follow, suggested a lady who was not best pleased. It’s unlikely that, as the official news agency, Telam would have misconstrued her words – even if, as the ministry claimed, the rest of the Argentine press industry was.

Fernández de Kirchner was further said to have told Chávez that she would be keeping an eye on statements before saying anything herself from then on. Whether this was an attempt to get Chavez to rein himself in remains to be seen.

Telam quoted her as having said that any such statement as he was supposed to have made to Lula would imply “a degree of discrimination” in Chávez’s approach to nationalizations. This, she added, would impinge upon the sovereignty of individual nations.

That, she was said to have continued, would be “an unacceptable attitude” and an “absolute contradiction” of agreements signed by Argentina and Venezuela. She and Chávez have signed a string of cooperation agreements.

Ahead of the telephone conversation, Argentine Foreign Minister Jorge Taiana had announced that he was to meet next Monday with his Venezuelan counterpart, Nicolás Maduro, to discuss the plan to take over the three other companies linked with Techint.

“We are going to express the interest which the Argentine government assigns to the respect of the rights of a company, but within the framework that we have also to respect the sovereignty of other countries,” Taiana pointedly remarked.

The two ministers are due to thrash this out when they meet at the General Assembly of the Organization of American States (OAS) in San Pedro Sula in Honduras between May 31 and June 3. Noting that he and Maduro had spoken about these issues before, Taiana expressed hope that the two ministers would be able to sort things out.

In Buenos Aires, Fernández de Kirchner was under mounting pressure from the Argentine business community, where dislike of Chávez and all that he stands for would seem to be mounting by the day.

A director of Techint warned last week that he intended to raise the company’s case with Fernández de Kirchner. Since then, the pressure on her to take a stand on the takeover has steadily mounted as Argentine business leaders focus their sights on Chávez.

They have now homed in on one of Chávez’ pet aspirations – that Venezuela should join Mercosur, the economic bloc formed by Argentina, Brazil, Paraguay and Uruguay.

To date, this idea has met with an at best mixed reception from the business and political communities in those countries. Now, Argentine business leaders are said to have called on Mercosur not to admit Venezuela.