The fiery populist chose the anniversary to sign a decree last week entitling the government to "rescue" lands it deems idle or whose owners can't show clear title. A newly named government commission first must determine a property's status during a 90-day period, called an "intervention."

Land reform would seem an unlikely rallying point here, where about 90% of the people live in urban areas and agriculture accounts for only about 5% of gross domestic product. But despite the country's oil riches, 60% of Venezuela's 24 million inhabitants get by on $2 or less a day, according to a recent survey by the Andres Bello Catholic University in Caracas.

Venezuelan police officers arrive at a British-owned cattle ranch this month to determine whether land will be turned over to squatters.

Most Venezuelans feel an enormous frustration that the country hasn't been able to use its oil wealth to transform itself into a developed economy. As in most of Latin America, the image of the landless peasant resonates strongly here -- although there are few rural peasants left in the country.

Elected in 1998, Mr. Chavez rode a popular wave of resentment against the ancien régime. Since then, his attacks have deepened class tensions. Venezuela's economy fell sharply during the first five years of Mr. Chavez's term, but has rebounded in 2004, fueled by high oil prices and government spending. Overall, though, real per-capita gross domestic product -- a measure of individual wealth that accounts for population growth and inflation -- has fallen 10.5% since he took power in 1999, according to Andres Bello Catholic University economics professor Orlando Ochoa.

Ranchers and bankers say uncertainty over the future of rural properties already has triggered a freeze on financing and agricultural investments, and may result in a fall in local production. "It will have an impact on every rural property in Venezuela" says Carlos Machado, an expert on agribusiness at the Caracas-based IESA business school.

For some cattlemen and farmers, Mr. Chavez's plans echo Mr. Castro's disastrous agrarian reform in the 1960s. More recently, Zimbabwe's Robert Mugabe pushed "land reform" that confiscated white-owned commercial farms and redistributed the property to loyal supporters of his party. Many of the new owners were inexperienced in running large farms and production fell precipitously. The practice has a long history of failure in Latin America, too, because the land often is divided into inefficient small plots or directed to politically connected families.

Venezuelan officials say they will learn from those mistakes. They plan to provide newly formed peasant cooperatives with financial credits and assured markets. If need be, the government will buy the food. The government also plans to boost investment in agricultural technology and to build roads to connect the new cooperatives to markets.

A squatter at a British-owned cattle ranch

Mr. Chavez's announcement was prompted by the surprise decision a week earlier by Jhonny Yanez, a presidential ally who is governor of Cojedes state in central Venezuela, to "intervene" Hato El Charcote, a 32,000-acre cattle ranch owned by the British Vestey Group Ltd., Venezuela's largest beef producer. This ranch has been almost totally occupied by about 1,000 squatters -- themselves recruited by a Yanez political rival -- who have taken over parcels of land in two waves since 2000. The government says it will determine the legality of the Vestey Group ranch's titles and whether it has idle land over the next 90 days. Since the "intervention" in El Charcote, nine others have been initiated by a commission appointed by Mr. Yanez, including one at an internationally known biological preserve. Another eight are in the works.

Cojedes is a backwater state with barely 300,000 inhabitants in the plains of central Venezuela. Many of the squatters have been recruited from Venezuela's urban slums by political operators who lure them with promises of land; some have lived for four years in mud-wattle huts, growing meager crops of rice and yucca.

Since 2000, the number of cattle being fattened at Hato El Charcote, one of 14 ranches the Vestey Group owns here, has fallen by half to about 6,000 cows, with much of that attrition due to rustlers. Meanwhile, much of the specially developed grazing grass designed to withstand the tropical sun has been destroyed by squatters who have burned pasture areas in order to plant crops.

At a meeting last week, about 300 squatters sounded off. They blasted the Vestey Group as British imperialists who export all the meat out of Venezuela -- even though the presence of hoof-and-mouth disease has made Venezuelan beef impossible to export. "We are not eating that meat, it's being eaten in the U.S.," insists peasant leader Jacobo Yepes.

Humberto Delgado, a 57-year-old peasant leader known as Yellow Hair, says the squatters hope to get land grants of up to about 100 acres apiece for the 1,000 families they say they represent.

At the same time, the redistribution plan is betraying divisions in the Chavista camp: The squatters blast Mr. Yanez, who they say is bent on eventually evicting them and replacing them with co-operatives composed of his supporters. No way will they allow that to happen, Mr. Yepes says. "It would be war," he says firmly, as dozens of squatters nod their approval.

Write to Jose de Cordoba at jose.decordoba@wsj.com¹