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Venezuela Says Economy to Move Away From Capitalism

Aug. 27 (Bloomberg) -- Venezuelan President Hugo Chavez said the country's economy must move away from capitalism and eliminate ``large'' land holdings.

Chavez, who won a recall vote against him on Aug. 15, said the country's businessmen should help the government change the world's fifth-largest oil supplier into a ``humanist'' economy from a ``neo-liberal'' one.

``I call on private businessmen to work together with us to build the new economy, transforming the capitalist economic model into a social, humanist and equality economy,'' Chavez said during a televised speech in Caracas. ``The time has come to accelerate the transformation. The revolution has just begun.''

Chavez, 50, who counts Cuban President Fidel Castro among his friends, said in his weekly address to the nation on Aug. 8 that the referendum on whether to remove him from office was an attempt by the U.S. -- which purchases 60 percent of Venezuela's oil exports -- to replace him with a pro-American government.

The former lieutenant colonel survived a two-day coup attempt in 2002 and two-month national strike last year aimed at ousting him.

Chavez said he plans to apply more rigorously the country's Land Law, which allows the government to confiscate unused land.

``We have to eliminate large land holdings in Venezuela,'' Chavez said. ``What we've done so far has been very, very superficial.''

The government may seek to replace some central bank directors in order to have more control over the bank, which is the only major institution in the country that has remained ``somewhat independent'' of Chavez, said Miguel Octavio, executive director of Caracas brokerage BBO Financial Services.

`Tougher'

``Everybody expects Chavez to get tougher and deepen the revolution,'' Octavio said in a telephone interview. ``Chavez has to walk a fine line though, since oil people are willing to invest here as long as Chavez doesn't get too scary.''

The economy grew 23 percent in the first half as oil production recovered from the strike that cost $10 billion, according to the government. Oil sales account for about half of government income and 80 percent of exports.

Talks between the government and businessmen, such as the meeting yesterday between Finance Minister Tobias Nobrega and the Venezuelan American Chamber of Commerce, are unlikely to improve relations because of a mutual mistrust, Octavio said.

`Whatever It Wants'

``The government is going to do whatever it wants,'' Octavio said. ``The private sector just doesn't trust him.''

Carlos Fernandez, the previous president of Venezuela's largest business organization, the Federation of Chambers of Commerce and Industry, was arrested for treason last year after leading the strike that cut oil output as much as 95 percent. He fled the country when a judge freed him after a month under house arrest.

The organization's leader before Fernandez, Pedro Carmona, replaced Chavez as president for less than a day during the failed coup and afterward was granted asylum in Colombia.

``When I talk about dialogue, let no one be mistaken,'' Chavez said. ``The dialogue is to advance, to implement the constitution.''