ANALYSIS-Chavez steel takeover shows socialist ideology king

CARACAS (Reuters) - For socialist Venezuelan President Hugo Chavez, ideology is king.

His decision Wednesday to nationalize the OPEC nation's largest steelmaker shows even friends are not exempt from his crusade to control the economy because it targets a top company from Argentina despite the leftist ally's pleas.

The self-styled socialist revolutionary's swoop for Argentine-controlled Ternium Sidor was also the second against a Latin American company in a week after a raft of takeovers last year focused on U.S. and European assets.

The move, which Venezuelan steelworkers cheered, will also worry companies in sectors such as banking and food, which Chavez has repeatedly threatened to nationalize.

"We expect the government to maximize these (political) gains and use it to energize other takeovers of strategic industries," said Gianfranco Bertozzi of Lehman Brothers.

Chavez, who calls former Cuban leader Fidel Castro his mentor, had put his radical policies against the private sector on hold following a stinging referendum defeat in December on expanding his powers and enshrining socialism as a constitutional goal.

But his shock resumption of nationalizations in the last few days highlights how Chavez will not veer from his strategy of building a socialist state.

He calls capitalism an evil and has taken foreign companies under state control to ensure they act in what he calls the strategic national interest.

Despite Chavez's strong denials, some opponents believe he wants to turn Venezuela into another communist Cuba.

"I think the government's philosophy is to eliminate private property and the private sector of the economy," said Oscar Garcia Mendoza, president of a mid-sized bank, Banco Venezolano de Credito, and a critic of the anti-U.S. leader.

MORE TO COME?

Chavez wants banks to lower their fees and food companies, particularly the country's largest private sector employer, Polar, to provide amply supply of basic groceries as he battles shortages that have weighed on his popularity.

"Is the president going to nationalize something else? ... There are sectors defined as priorities. If any is not in step with what he wants, who knows?" said an ex-minister, who asked not to be named because he no longer speaks for the government.

Still, in a country increasingly difficult for foreign investors, even bowing to Chavez's demands and winning support from home governments might not be enough to stave off takeover.

Chavez threatened to seize Ternium Sidor last year but the company met his demands to sell more to the Venezuelan market and Argentina's leftist government, one of his top South American allies, intervened to dissuade him.

Still, this week, he sided with workers in a labor dispute with the company, which was privatized in 1997, .

His vice president said Chavez ordered the nationalization after a meeting where the "arrogant" and "inhumane" company showed more concern for its plant machinery than its workers.

Similarly, Mexico's Cemex, , the biggest cement operator in Venezuela, slashed its exports last year in response to Chavez's demands and takeover threats.

But Chavez, who typically pays fair compensation, last week ordered the nationalization of its Venezuela business over Mexico's objections.

TANKS AND TAKEOVERS

In 1992, Chavez launched a failed coup with a socialist-style manifesto to nationalize companies that had been privatized. Since winning power at the ballot box in 1998, he has carried out much of his pre-coup program.

His aggressive nationalizing matches the style of a man whose military training was in a tank division. It has become a default tactic he turns to resolve problems head-on.

In diplomatic spats with Spain and Colombia in recent months, he threatened to take over companies from those countries.

Chavez is under opposition pressure for failing to meet goals for building cheap homes, and he accuses Ternium and the cement industry of neglecting local construction companies.

"Collectively, the takeovers of both the cement and steel industries will be used to breathe new life into construction ... especially in the form of lower tier housing which would target Chavez's eroded support base," Bertozzi said. (Writing by Saul Hudson; Editing by Frank Jack Daniel and Kieran Murray)