March 6, 2009
Hugo Chavez is clearly feeling pretty saucy after convincing Venezuelan voters to scrap presidential term limits.
As part of his Bolivarian Revolution, Chavez has repeatedly made resource grabs ranging from oil to cement to gold, bruising up companies such as ExxonMobil (NYSE: XOM ) and CEMEX (NYSE: CX ) in the process. Now El Comandante has turned his focus to agriculture, with a call on Wednesday to "begin the expropriation process" with regard to Cargill.
Don't be fooled by the lack of a ticker symbol, Fool. Cargill is a big deal -- like biggest-private-company-in-America big. The Minnesota company, which owns a majority stake in fertilizer behemoth Mosaic (NYSE: MOS ) , is kind of like Archer Daniels Midland (NYSE: ADM ) on steroids. Operations span 67 countries, from Australia to Kenya and, of course, Venezuela.
As we've seen with BP (NYSE: BP ) in Russia and Eni in Kazakhstan, aggressive states don't need much of a pretense to muscle in on prime turf. In this case, it's something about Cargill producing a certain form of rice in order to evade price controls. Whatever.
As oil prices sag, Venezuela's ability to fund its social programs is increasingly challenged. Recent foot-dragging with payments to oil service companies like Halliburton (NYSE: HAL ) , not to mention an all-out seizure of an Ensco (NYSE: ESV ) rig, already revealed the signs of stress here. Each passing expropriation by Chavez increasingly dispels any illusion of a social reformer, and reveals a reckless and cynical path to the poorhouse.