Venezuela's Leader Mr. Chavez

Venezuela's leader has never masked his desire to use vast oil and mineral resources as a tool of social change, Barrie McKenna writes

By Barrie McKenna

Washington - A large mural hanging inside the Caracas headquarters of state-owned oil company Petroleos de Venezuela SA shows Venezuelan President Hugo Chavez and a child standing proudly in front of an oil well.

Splashed in bold letters across the poster is the slogan: "Deepening the Bolivarian Revolution in 2005."

Say what you will about Mr. Chavez, the left-leaning populist leader has

never masked his desire to use Venezuela's vast oil and mineral resources as a tool of social change. Inspired by Simon Bolivar, the independence hero who drove the Spanish out of much of South America in the early 1800s, the fiery Mr. Chavez has taken on the country's business elite, foreign multinationals and the United States.

Like a modern-day Robin Hood, Mr. Chavez insists his country's oil, minerals and land belong to all Venezuelans -- not to foreigners or private interests. And he has proven that he's ready to use the might of his government to redistribute that wealth in pursuit of his self-styled "Bolivarian revolution."

The former army strongman has turned Petroleos de Venezuela, or PDVSA, into a cash machine that is funnelling billions of petrodollars into schools, hospitals and other good deeds. He's also extracting steep new taxes and royalties from foreign oil companies, while gradually squeezing their

ability to bring in skilled foreign workers.

This week, Mr. Chavez took aim at the foreign-dominated mining sector,

vowing to cancel mining concessions and suspend all new deals with

foreigners. Replicating what he's done in the oil and gas industry, Mr.

Chavez says he wants to create a powerful state-owned mining company that

would employ tens of thousands of impoverished small-time prospectors. Those

who object can "pack their bags," he threatened, sending shares of foreign

mining companies with Venezuelan interests, such as Toronto-based Crystallex

International Corp., plunging.

Crystallex officials played down Mr. Chavez's scheme, saying it would have

no effect on its contract to operate in the rich Las Cristinas gold field

there. Idaho-based Hecla Mining Co., which has operated