International News

By Diego Ore

CARACAS (Reuters) - Socialist leader Nicolas Maduro and the billionaire boss of Venezuela's biggest private company have buried the hatchet after a war of words over food shortages and other economic problems in the South American nation.

Perpetuating the hard-line rhetoric of his predecessor Hugo Chavez, newly-elected Maduro turned on Empresas Polar president Lorenzo Mendoza in recent days, accusing him of hoarding products as part of an "economic war" on the state by private business.

Mendoza, whose company is Venezuela's biggest beer- and flour-maker, denied that and pointedly challenged the government to sell production plants nationalized under Chavez back to the private sector to boost efficiency.

On Tuesday night, the pair met to discuss their differences in a spat seen by Venezuelans as a bellwether for state-business relations going forward under Maduro's government.

Both sides came out of the meeting sounding reconciliatory and pledging to work together to overcome food shortages that have increased tensions in Venezuela after Maduro's disputed election win last month.

"It was very cordial, direct, sincere meeting ... We clarified we are producing at full capacity," Mendoza said.

"The president was very kind in listening to us and communicating the need to keep investing, producing and supplying markets. That is our lifelong commitment, passion and vocation ... Part of this issue (shortages) has to do with the high politicization (in Venezuela)."

Vice President Jorge Arreaza gave a similar account of the meeting. "The problem's been overcome," he told state TV.

TOUGH ECONOMIC PANORAMA

Supplies of food and other basic products have been patchy in recent months, with long queues forming at supermarkets and rushes occurring when there is news of a new stock arrival.

The situation has spawned jokes among Venezuelans, particularly over the lack of toilet paper. The government announced this week it was importing 50 million rolls to compensate for "over-demand due to nervous buying."

Authorities have also allowed increases in some price controls on products - including basics like chicken, beef and milk - to the consternation of consumers but relief of private businesses that complain of sometimes having to sell at a loss.

Mendoza's Polar is a central player in the Venezuelan economy, employing more than 31,000 people and accounting for 3 percent of non-oil GDP, according to its own figures.

As well as dominating Venezuela's beer market, the company controls 48 percent of the flour sector, 35 percent of pasta, 20 percent of rice, and 11 percent of cooking oil.

According to Forbes, the U.S-educated Mendoza, 47, is Venezuela's second richest man with $4 billion net worth.

Chavez frequently threatened to nationalize Polar, but in the end went no further than a few minor takeovers of warehouses and land, perhaps in recognition of the status the company has, with its products in almost every Venezuelan household.

Opposition leader Henrique Capriles, who disputes Maduro's narrow win by 1.5 percent of votes in last month's presidential election, says the food shortages and rhetoric against Polar have simply illustrated the government's economic incompetence.

Others have been struck by Mendoza's unusually public defense against Maduro's comments, something the businessman seldom did during Chavez's 14-year rule.

"In the end, the meta-story here is the change in attitudes. It strains the mind to think that Mendoza would have been this feisty in defending his company if he were dealing with Hugo Chavez at the peak of his popularity," wrote pro-opposition blogger Juan Cristobal Nagel.

"The fact that he is willing to go to bat for his company - and his ideas - so vehemently is further proof that Maduro is a weak president, that he is no Ch vez."

Maduro supporters, however, say the former bus driver and union leader's willingness to sit down with Mendoza demonstrated his qualities as a negotiator.

The late Chavez turned the state into a major player in the food industry through a wave of nationalizations, but many of those operations have struggled to maintain production after their takeover due to factors including labor disputes.

With inflation at a worrying 12.5 percent in the first four months of the year alone, and growth expected by most economists to slow after the end of last year's election-year, Maduro faces a tough economic as well as political environment.

Aware of the long-held enmity by Venezuela's business elite towards his mentor Chavez, Maduro has since his first day in power been railing against "bourgeois" saboteurs and "speculators" whom he blames for economic problems.

(Additional reporting by Enrique Andres; Writing by Andrew Cawthorne; Editing by Vicki Allen)