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Chavez hurt Venezuela, Zoellick says

Robert Zoellick, the US choice to head the World Bank, warned on Saturday that Venezuela's economic and political troubles were growing under Venezuelan President Hugo Chavez's leftist government.

"It's a country where economic problems are mounting and we are seeing [that] on the political and press side it's not moving in a healthy direction," Zoellick told a news conference in Mexico City.

He also suggested that the World Bank's influence would not suffer if Chavez goes through with his plan to pull Venezuela out of the lending institution.

"If a country feels it doesn't need or want the services of the international financial institutions then that's their choice. Venezuelans have a great amount of oil money," Zoellick said. "I've found no shortage of countries interested in trying to work with the World Bank."

Chavez has said the World Bank is a tool of the US that keeps poor nations in debt. He has set up a commission to examine leaving the institution.

Chavez, who has been blessed with high oil prices for most of his eight years in power, insists his socialist policies have improved the lives of poor Venezuelans. The country's economy grew by 10.3 percent last year, the fastest in the region, and government statistics show poverty has declined.

Critics say Chavez's policies are hindering job creation and scaring businesses with threats of expropriation. He has also come under criticism for failing to renew the broadcast license of an opposition-aligned television station, accusing the network of backing a failed 2002 coup.

At the news conference, Zoellick also vowed to fight corruption in World Bank member states and repair the institution's reputation after the turmoil surrounding its outgoing president, Paul Wolfowitz.

The bank's 24-member board is expected to elect Zoellick to succeed Wolfowitz, who steps down June 30 after a scandal over a hefty pay raise he arranged for his girlfriend, a bank employee.

Dialogue with member states and bank staff will help repair the damage, Zoellick said.

"There has undoubtedly been a period of turmoil. Some people feel frustrated, some feel wounded," he said. "There needs to be a considerable amount of time spent talking to people."

But he said there would be some continuity from Wolfowitz's tenure, including efforts to fight corruption linked to loans.

"Nobody wants corruption and bad governments," he said. "In developing countries, in Africa, and every place I went, everybody said corruption steals from the poor."

Zoellick, 53, previously served as US President George W. Bush's trade representative and was the No. 2 official at the State Department before he left to take a job on Wall Street last year.

Meanwhile, Chavez will offer assistance to manufacturing companies in a bid to lift output this year amid shortages of milk, sugar and beef.

Chavez will support the creation of 200 "socialist" companies this year through measures including government-assisted loans, the president said on Saturday in a speech broadcast by Venezolana de Television.

"This is about independence," Chavez said. "All these companies, of a strictly socialist nature, will allow us to guarantee that the people's needs will be covered."

Venezuela last month barred food producers from exporting basic foodstuffs until the government certifies they've met domestic demand. Chavez said today the government will encourage increased production of products ranging from computers to bicycles.

Venezuela will also launch the country's first satellite next year, Chavez said.

Additional reporting by Bloomberg
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