Chavez Emboldens Venezuelan Workers with Takeover Precedent

CARACAS, April 11 (Reuters) – President Hugo Chavez has set
a precedent that emboldens workers and worries businesses by
nationalizing Venezuela's largest steel maker in the middle of
a sometimes violent labor dispute.

Left-wing Chavez ordered the takeover this week of the
sprawling Ternium Sidor steel plant — his latest move to put
what he calls strategic industries in the South American oil
nation under state control.

For months, workers had demanded the government step in to
end a dispute over pay and pensions that had led to strikes and
clashes with police in which a union leader was shot in the
leg.

Chavez's decision now opens the door to increased pressure
to resolve labor disputes and could create headaches for the
private sector and the government, which is a major employer.

His vice president, Ramon Carrizalez, said "the worker
comes first" in Chavez's Venezuela.

Jubilant workers at the Argentine-run Ternium Sidor (TX.N: Quote, Profile, Research)
complex on the banks of the Orinoco river celebrated, cheering
and chanting in front of state television cameras as they
expected the government to quickly meet their pay demands.

"What is going to happen with the rest of the unions in
Guayana?" asked a former minister in Chavez's economic cabinet,
speaking on condition of anonymity. "Others could be inspired
to ask for the same."

The area around Ciudad Guayana in the east of the country
is at the heart of Venezuela's industrial belt, which is almost
entirely in government hands.

Workers at another union in the region took less than 24
hours to appear on television after the announcement and urge
Chavez to take over a smaller company that was privatized along
with Sidor in the 1990s.

Ever since he first tried to take power through a failed
coup in 1992, Chavez has promised to return privatized
industries to the state.

Since he won office at the ballot box in 1998, the former
tank division soldier has taken over large private farms and
foreign-run utility companies and oil assets, paying billions
of dollars in compensation.

Last week, he also ordered the takeover of companies owned
by the three largest cement producers.

Ismael Perez of business group Conindustria said the impact
of the nationalizations policy was being felt at labor
negotiating tables across the private sector.

"This is something in mind of many unions, when there are
contract arguments, they immediately say they will ask the
government to expropriate or nationalize if there is no
agreement," he said.

INHERITING PROBLEMS

Much of the country's mineral and metalworking industry was
never privatized, including bauxite, iron ore and coal. The
government controls most of the sector and already has labor
contract disputes with some unions in the region.

In the short term, the nationalization of Ternium Sidor
should bring political benefits for Chavez as the self-styled
socialist revolutionary showed he can side with workers.

But he will soon have to deal with complex labor relations
with Sidor's almost 10,000 workers and management.

Sidor was founded four decades ago and grew rapidly in the
1970s oil boom to become one of Latin America's largest steel
operations.

The union is one of the strongest in the country and is
divided between pro-Chavez and opposition tendencies.

The union has asked the government to resolve the contract
dispute and blocked steel exports from Sidor since the
nationalization order.

This is nominally to prevent Ternium from making bad faith
sales, but it may also be to apply pressure on the government.

"He is going to inherit all the antagonisms that there are
between management of a steel company and the work force," said
Daniel Hellinger, a Venezuela expert at Webster University in
St. Louis.

(Editing by Saul Hudson and Sandra Maler)