Chavez threatens to seize Venezuelan banks that don't finance agriculture

MYT 12:03:16 PM

CARACAS, Venezuela (AP): President Hugo Chavez threatened on Saturday to take control of banks that fail to meet state-imposed lending requirements designed to benefit Venezuela's farmers. 

Chavez, who says he is leading Venezuela toward "21st century socialism,'' accused many private banks of neglecting laws requiring them to set aside nearly a third of all loans for agriculture, mortgages and small businesses at favorable rates. 

"The law must be applied,'' Chavez said during a televised meeting with farmers. Any bank that doesn't comply with these lending requirements "should be seized.'' 

Spokesmen for Venezuela's major banks did not immediately return calls from The Associated Press. Offices were closed on Saturday night. 

Chavez, a close ally of Cuban leader Fidel Castro, also announced that his government had approved new legislation establishing a maximum 15 percent interest rate on agriculture-related loans and extending their payment deadlines from 3 to 20 years. 

Chavez has threatened banks before, raising the possibility of nationalizing commercial banks last year amid demands they use some of their profits to fund social programs for the poor. 

The former paratroop commander has not followed through on most of those threats, although Venezuela's central bank, which is controlled by his allies, ordered private banks to double bank deposit reserves from 15 to 30 percent in attempt to head off inflation in 2006. 

The Venezuelan leader's comments come amid food shortages and rising inflation, which reached 22.5 percent in 2007, the highest official rate in Latin America. 

Chavez's critics blame the shortages on government-imposed price controls, which were established in 2003 to fight rising consumer prices. 

Food staples covered by the controls -- sugar, cooking oil, bread, milk, black beans, eggs, beef and chicken -- are sporadically hard to find in supermarkets, and many retailers predict shortages will persist as long as controls remain in place. 

Government officials in turn blame the shortages on greed among retailers, accusing them of hoarding products for months to later sell them at inflated prices.On Saturday, Chavez said "contraband'' -- illegal exports to neighboring countries -- was also to blame for the shortages. 

Many foods fetch much higher prices in neighboring Colombia and the Caribbean, driving some businesses to sidestep customs laws and smuggle goods over the border, Chavez said. 

"This is a problem that we must remedy,'' he said. "If the National Guard isn't enough to patrol our border, I'll have to deploy the entire army along the highways and byways to stop the contraband.'' 

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