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Venezuela’s government seized the assets of the country’s largest paper product plant Venepal yesterday, after bankruptcy was finally declared last December. The troubled company stopped production in September, 2004 threatening to sell off the plant’s machinery to pay off creditors. Workers at the plant who had not been paid for three months, organized a national campaign to encourage the expropriation of the factory, which culminated in yesterday’s official announcement.

The nationalization of Venepal was accompanied by a US$6.7 million credit, necessary to restart production. Venezuelan President Hugo Chávez signed the declaration to expropriate the factory after the National Assembly -with the support from opposition parties- declared Venepal to be of “public benefit and social interest last Thursday - which is a legal prerequisite for expropriation.

The Secretary-General of Venepal’s union, Edgar Peña, expects production to begin in two weeks, when the factory will begin producing ‘Bolívarian notebooks’ for the Ministry of Culture to be used in the government’s social programs and publications.

According to Peña, Venepal workers prepared a detailed report on the viability of worker’s control at Venepal for the National Assembly. Peña identified the report as instrumental in precipitating the National Assembly’s decision.

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Venepal had been in dire financial and organizational straits since 1997, but in 2002-03 the company closed the plant in support of a general strike against President Chávez. Though workers at the plant opposed the lock-out, the factory remained closed and lost so much money that it was unable to reopen. In response, Venepal workers occupied the factory, restarting production under a highly successful, though shortlived, regime of worker management.

An agreement reached with the company fell through shortly thereafter resulting in the most recent closing of the factory in September, 2004.

The Venepal complex covers approximately 3,680 contiguous hectares overlapping three states, with an added 2,000 hectares in nearby states used primarily for agricultural production. Of the 900 workers at who were laid off at various points in 2004, only 350 remain.

Speaking to reporters, ministers, and all 350 Venepal workers in the Presidential palace, Chávez argued, “these emerging companies cannot be viewed through the lens of state capitalism, this is not the way, we must advance towards co-management. We should not fear the workers, since they are the soul of these companies.”

Yet according to Chávez, Venepal will be run by the state during the first stage, to be converted to a co-management structure between workers and the state later on. Labor Minister María Cristina Igelsias will preside over a commission to develop the new organization that will run Venepal.

“We are not going to privatize anything else... What we have to do is to recover them,” declared Chávez. The expropriation of Venepal appears to be merely the beginning of a bold plan in keeping with the Bolívarian government’s strategy of ‘endogenous development.’

According to a report in the Venezuelan online newspaper Aporrea.org., Chávez also announced plans to recover a corn processing plant, the creation of several food-processing plants in an attempt at breaking the monopoly of the private sector, and all of the basic industries in private hands in the industrial region of Guyana.

This last category could potentially include Sidor, one of Latin America’s largest steel manufacturing industries, and the site of repeated conflicts between the company and the steel union.

Such a policy in Guyana would not only arouse the concerted animosity of the private sector, but could also bring to the fore conflicts between workers and management in companies already run by the state. The CVG, the corporation responsible for all state-run enterprises in the industrial region of Guyana, has been strongly criticized by workers at Sidor (where the CVG owns a 20.5% share) and Alcasa, an aluminum processing plant wholly owned by the state.

“The expropriation of Venepal is an exception, not a political measure, nor a government one. We won’t take land, if it’s yours it’s yours. But the company that is closed and abandoned, we’ll go for them. For all of them,” said Chávez.