Venezuelan President Hugo Chavez. AFP PHOTO

Chavez on Monday announced takeovers of the telecommunications and power sectors. Investors, concerned the leftist ex-soldier was creating a centralized Cuba-style economy, rushed to sell Venezuelan holdings.

While he threatened an even more sweeping offensive against private property, the details of the plan that emerged during the week revealed the plan was typical of his bold brinkmanship and more limited in scope than initially feared.

After losing a fifth of its value the day after the announcement, the Caracas stock exchange quickly recovered some ground. The local currency saw a similar swing and debt bonds traded as if the risk of investing in Venezuela increased only slightly.

It became increasingly clear Chavez's new push for what he calls "21st century socialism" will retain the OPEC member's links to multinational capitalism, rather than burning bridges like Latin America's leftists of the past.

"While there is a certain degree of improvisation to the latest wave of actions, it's in keeping with many of the steps they have taken up until now," said Patrick Esteruelas, an analyst with Eurasia Group in New York.

Chavez's plan does not include nationalisation of the property of huge oil companies like Chevron Corp. and ConocoPhillips, an implicit recognition these companies provide key revenues for his free spending on the poor that secured his re-election last month.

Government officials have also said investors in companies facing nationalisation will be compensated for assets, meaning the government is not expropriating property as in Cuba's 1959 revolution led by Chavez's mentor, Fidel Castro.

Chavez's initial announcement described a broad takeover of the entire telecommunications sector, but the government later clarified that the move was limited to just the top company in the industry, CANTV.

The government has also said it does not have plans to take over mining companies, which were feared targets.

Chavez has spent nearly eight years carefully balancing his promises for leftist revolution with an oil-driven market economy that has given him the resources to finance a massive social development campaign for Venezuela's poor majority.

POWER GRAB

After his landslide re-election, Chavez went almost two weeks without making a public appearance - unusual for the notoriously talkative president - as he apparently considered a radical strategy for his new term.

Along with the nationalisation push, Chavez is working to centralise power, seeking to legislate by decree, end the central bank's autonomy and refuse a renewed concession to an opposition-linked television station.

He has said these new decisions are to meet the demands of an electorate that wants socialism - and wants him in office for decades.

"Country, socialism or death," he cried on taking the oath of office on Wednesday.

Walter Molano, head of research at BCP Securities, a Latin American broker-dealer based in Greenwich, Connecticut, said Chavez was less concerned with the ideology of socialism than with hard-nosed tactics to stay in power long-term.

"He understood very well that the consolidation of economic control under his mandate would provide him with the political longevity that he desperately desires," Molano wrote in a research note.