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Chavez warns banks to back projects

Venezuelan president Hugo Chavez has warned private banks that he will consider nationalising any that refuse to finance agricultural projects promoted by his government.

Banks are required by law in Venezuela to provide at least 10% of their lending to finance government development projects.

"The private banks that do not comply with the constitution and their duty, well, I do not have any problem nationalising them," Mr Chavez said during his weekly radio and television programme. "We must ensure the constitution and laws are complied with!"

Mr Chavez charged that the rules are not being followed by some of Venezuela's biggest private banks - Banesco, Banco Mercantil and Banco Provincial, which is controlled by Spain's Banco Bilbao Vizcaya Argentaria.

Mr Chavez singled out the president of Banesco, Juan Carlos Escotet, ordering him to lend more to Venezuela's cash-strapped farmers. "If you cannot do it, give me your bank," Mr Chavez said, prompting applause from a crowd of government officials and supporters.

A bill approved last year by Mr Chavez's allies in the National Assembly describes banking as a "public service" and gives the government the authority to declare banks to be of "public utility", which paves the way for state nationalisations.

The government already seized control of about a dozen banks in recent years, accusing them of causing financial problems and violating banking rules.

Mr Chavez's government controls about 28% of Venezuela's banking sector.

The president hosted the programme from the city of Barinas in the heart of Los Llanos, Venezuela's vast central plains. The sun-baked region produces most of Venezuela's meat, fruits and vegetables, but many farmers and ranchers complain of state expropriations and say government-imposed price controls on many basic foods cut into their profits.

Mr Chavez kicked off the programme chatting with workers at a state-financed cattle ranch. The self-proclaimed "revolutionary" spent much of the show discussing the need to develop "idle" lands as a means of boosting agricultural production, which has diminished in recent years. "We must advance quicker with the recuperation of land," Mr Chavez said, stressing that the government must make more land available to the poor.

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