Hugo Chavez’s government has once again demonstrated its willingness to halt the march of untrammelled capitalist growth in Venezuela. On November 30, his government shut down four medium-sized banks facing financial insolvency; three more followed suit by the end of the week. In an industry-wide crackdown aimed at protecting ordinary deposit-holders, 27 arrest warrants were issued including several for financiers behind the failed banks. These individuals belong to a group of politically connected big businessmen known as “Boligarchs,” after their close ties to President Chavez’s Bolivarian revolution. The arrest that made headlines was that of Arné Chacón, president of the failed Banco Real and brother of Jesse Chacón, Venezuela’s Science and Technology Minister. Minister Chacón soon handed in his resignation, which Mr. Chavez accepted last week, saying: “We are demonstrating that there are no untouchables here.” The arrest of Boligarch Ricardo Fernandez Barrueco further signalled the President’s intention to purge the economy of those who prospered at the expense of the masses. Mr. Barrueco became a billionaire supplying corn and transport services to government-subsidised supermarkets.

The crackdown flies in the face of allegations by the United States and its allies that the Chavez regime is corrupt, populist, and dangerous to mainstream market institutions. In part, western insecurity has been fuelled by Venezuela’s bold approach towards the global oil economy. For example, in 2008, it took on Exxon Mobil — the world’s largest private company — and won against it in British courts in a dispute over oilfields in the Orinoco basin. The U.S. is also hostile to Mr. Chavez’s pursuit of an alternative paradigm in global politics, one in which resource-rich countries like Venezuela, Iran, China, and Russia forge close links based on trade in oil, weapons technology, and agricultural products. Yet the western bloc must concede that the toppling of the Boligarchs is testimony to the Venezuelan leader’s willingness to tackle corruption in high office. While Washington’s hostility towards the Chavez administration peaked during the Bush years, President Obama has an opportunity to repair and normalise the relationship. This would be politically expedient, especially since the people of Venezuela voted overwhelmingly, in a referendum in February, in favour of allowing Mr. Chavez to run for office again in 2012. Mending fences with this charismatic leader from Latin America would have positive effects and implications going beyond the region.

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