Hot spots: Venezuela.(international)

President Hugo Chavez faces regional elections in November in which 24 governoships across the nation will be at stake. He was taken by surprise last December when the voters rejected his proposed constitutional reform, which would have allowed him to run indefinitely for re-election. And he has not been able so far, by all appearances, to regain the popular support that this outcome indicated he had lost. If anything, his backing among the people has been further undermined by increasingly troublesome economic problems including rampant inflation and growing shortages of many daily essentials.

Chavez' response, true to form, has been to step up expropriations of companies he has been blaming for these problems. At the time of last December's setback, he had already taken control of private oil, telephone and electricity operations. After his plan to alter the constitution had gone awry, he appeared to slow the pace of nationalization, but has now begun to push it again. He has made it clear that the government will take majority stakes in the local units of cement producers Cemex SAB, Lafarge SA and Holcim, Ltd. Cemex is home-based in Mexico, Lafarge in France and Holcim in Switzerland.

Behind the takeover is the regime's failure to meet the demands of its mainly poor supporters for the construction of cheap housing. It is more than doubtful, though, given the declines in efficiency that past expropriations have caused, that forcing state control on the cement producers will help remedy this. The companies are already spending millions to fund social-welfare projects and all the nationalization will do is make the foreign investors even more hesitant to come up with needed capital outlays.

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Similarly, Mr. Chavez last month ordered the expropriation of the country's largest steelmaker, Sidertirgica del Orinoco or Sidor for short. This company, which was privatized as recently as 1997, is currently controlled by an Italian-Argentine consortium called Techint in Luxembourg. The latter's main shareholders, the Roccas, are close friends of Argentina's President Cristina Fernandez de Kirchner and her husband, ex-President Nestor Kirchner. Sidor has been in a dispute with its unionized labor force for more than a year. In 2007, then-Pres. Kirchner pleaded with Chavez not to renationalize the company.

But now it apparently no longer matters that Argentina under the Kirchners has been a close ally of Chavez' regime. The unions want the enterprise nationalized, although its management recently offered to raise salaries by 130%, making Sidor workers some of the best paid in the country. According to Venezuela's Vice President Ramon Carrizales, Sidor managers have been keeping workers in "semi-slavery." The fact is that the company could be made profitable only with a reduction of its workforce to about 4,000 from originally 13,000. If the state now starts padding the payroll again, as is likely, the enterprise will quickly revert to being a drain on public coffers.

Further increasing the regime's attack on the oil profits of companies from PDVSA to Total, Statoil, BP and Chevron, the National Assembly last month passed a new oil windfall tax that kicks in at 50% of the difference when the price of Brent benchmark crude surpasses $70 per barrel and at 60% when it exceeds $100 per barrel on the average. The impost is expected to net the government $760 million a month or more than $9 billion a year. Yet, the regime is still actively selling bonds to raise even more money for social programs and--it says--to better regulate the foreign exchange markets. ...