By NIKO PRICE Associated Press Writer December 30. 2002 2:43AM

Latin Americans have spent the past few years getting rid of entrenched systems that have failed them. But some are beginning to realize their new leaders aren't making life any better than the old did.

With much of the region gripped by uncertainty over struggling economies, the social unrest that is now paralyzing Venezuela could foreshadow wider threats to newfound democracies across the region.

After President Bush promised to make this "the century of the Americas," the U.S. government's focus has shifted to the war on terrorism.

But the major concern in Latin America harks back to Bill Clinton's mantra: "It's the economy, stupid." Without a strong recovery in the United States, whose economy dominates the Americas, there is little Latin American leaders of any political stripe will be able to do.

For two decades, the region has been replacing authoritarian regimes with democratic governments in a U.S.-oriented, free-market mold. The problem has been that new policies haven't done much to improve people's lives.

So voters have begun to opt for something else - anything else. Economic woes led to the 2000 election in Mexico of Vicente Fox, a conservative businessman who toppled 70 years of single-party rule with promises of huge economic growth and first-world status for the country.

Discontent in Brazil led to the election this year of Luiz Inacio Lula da Silva, a leftist former union boss who promised to make fighting hunger his top priority. His victory was seen as a rejection of the free-market policies of the defeated government, which had curbed runaway inflation but left the economy stagnant and millions in poverty or jobless.

Ecuadorans just elected as president Lucio Gutierrez, a former army colonel who led a short-lived coup in 2000 aimed at ending endemic corruption and halting the spread of poverty. Argentina has seen a revolving door of presidents since the country defaulted last year on much of its $141 billion foreign debt. A presidential election in April will determine whether the country continues on the free-market path or moves to the left.

Venezuelans, meanwhile, are learning unconventional leaders may not fulfill hopes either.

The radical populist Hugo Chavez was elected president in 1998 and again in 2000, promising to remake society after a 40-year alternation of power between two corrupt, centrist political parties. But he has been unable to make the once envied oil-based economy grow and has seen unemployment and poverty rise.

A powerful but confused opposition movement briefly ousted Chavez last April only to see him return two days later. The country is now a month into a general strike and sometimes violent street protests aimed at ousting him.

The protesters demonstrate in the name of democracy, despite the fact that Chavez's term lasts until 2007 and the constitution doesn't allow a referendum on his reign until August.

"We all thought he'd bring prosperity, but he's making us poorer," said Eliezer Chavez, a 20-year-old computer consultant who voted for Chavez but has joined the demonstrations demanding his removal.

He said the opposition movement is "totally democratic," because democracy for him means people can oust an elected leader they feel isn't doing a good job - whether the constitution allows it or not. Part of the threat to the region's young democracies is that democracy in Latin America is largely superficial. There are elections, but leaders often do not serve all the people. The idea of a civic spirit is not deeply ingrained.

"These societies have adopted some of the more superficial aspects of democracy and market economies," said Steve Johnson, a Latin American policy analyst for the Heritage Foundation, a conservative think tank in Washington. "You have electoral democracy, but you're basically still electing an autocrat." There is no indication that the region will reverse its economic slide - or that its institutions can stand up to the challenge.

"I think things will get worse in Latin America, and the problems will deteriorate further," said Sidney Weintraub, director of the Americas program at the Center for Strategic and International Studies, another Washington think tank.

"I think you'll get breakdowns in democracy, and as the economies fail people will experiment in ways that will only hurt them more."

Leaders of Venezuela's oil strike have put the country's daily crude production at a mere 150,000 barrels.

This contradicts the government's claim of 700,000 barrels, down from about 3 million a day in November.Advertisement

A spokeswoman for the striking employees says the current output is for maintaining electricity generation, and limited supplies of domestic gas.

On Sunday, protestors took to the streets again, calling for President Hugo Chavez to step down. They snaked their way through several streets in Caracas, before gathering at a rally.

The strike is almost a month-old, but so far, it has not brought the opposition any closer to forcing Mr Chavez to quit, or to call for early elections.

The president says the government is regaining control of the state oil monopoly, and keeping supplies coming in. He's confident the supply of gasoline will be normal within the next few days.

Venezuela is also receiving shipments from overseas. It received the first one on Saturday, when a Brazilian tanker delivered 525,000 barrels - roughly a day's supply. Another shipment of 400,000 barrels of gasoline is expected from Trinidad.

By Alejandro  Eggers Moreno Pacific News Service Article Dated 12/29/2002

Editor's Note: Those calling for early elections in Venezuela as a way to end the country's most recent crisis miss the point, writes PNS contributor Alejandro Eggers Moreno. Whether or not President Hugo Chavez would prevail in such elections, extreme tensions between rich and poor will remain, making the country a tinderbox. Moreno (alejandro@strategicassessments.com) is vice president of Strategic Assessments Institute, a political and economic consulting firm in Los Angeles that specializes in Latin American affairs.

The chorus calling for President Hugo Chavez to hold early elections in order to end his country's current crisis misses the point: Elections or not, Chavez or no Chavez, Venezuela's problems will likely remain, and could still possibly explode.

After weeks of trying to ignore Venezuela's escalating political instability and violence, demonstrated most recently in a strike by oil executives and workers, the Bush administration decided to step into the fray earlier this month by calling for early elections. Washington later admitted that any process should stay within Venezuela's constitutional limits, but still insisted that Chavez find an "electoral solution" to the current mess.

It's a position solidly in line with what much of the Chavez opposition demands -- though some have called for his immediate resignation -- and what nearly every third party to weigh in on the crisis has recommended, including Cesar Gaviria, Secretary General of the Organization of American States. The U.S. Congress has also struck the same chord. Richard Lugar, soon to be chair of the Senate Foreign Relations Committee, insisted recently that the United States take a more aggressive stance and try to force elections in Venezuela.

While this insistence on a vague electoral solution to Venezuela's woes may look good -- especially after Washington's embarrassment over its support for the April coup attempt -- it is unlikely that early elections or any other electoral scheme would successfully resolve the crisis.

First and foremost, if elections were held today, Chavez might win. He maintains a solid and united base of support -- a recent poll put it at 36 percent -- concentrated among the country's poor, and he can mobilize his supporters quickly and effectively. His opposition, on the other hand, is united only on one issue -- its hostility towards the president.

The opposition ranges from conservative business and financial organizations to socialist groups such as Bandera Roja, which is farther to the left than Chavez himself. They often have little in common, and would be extremely hard-pressed to front a candidate who would be acceptable to all. Any sort of early elections would be likely to reveal the deep ideological rifts among the opposition, and might create between the groups the kind of tension and anger now reserved solely for Chavez.

Were Chavez to win, there is no reason to think any of the anti-Chavez forces would be any less hostile or the confrontations any less frequent or damaging. Nothing would be resolved.

Should Chavez lose, the situation could become even more dangerous. Chavez's supporters are as numerous and vocal as are those seeking to remove him, but have been afforded very little publicity by the staunchly anti-Chavez Venezuelan media. Even the commander of the army, General Julio Garcia Montoya, has come out publicly against the recent strike, ending opposition hopes that the military would turn against the president.

If Chavez were voted out of office in a special election, his supporters would likely see the act as a blatant disregard of both their interests and their constitutional rights. They voted Chavez into office, and thanks to expanded social services such as free public schools and subsidized food markets, they want him to stay there. His removal would severely antagonize over 30 percent of the population, virtually all from the poorest and most desperate sectors of society.

Further alienating those who now see Chavez as their only hope is not only dangerous for Venezuela, but risky for America as well. Disaffected Venezuelans, if left with nowhere else to turn, might form alliances with FARC, the leftist guerilla organization in neighboring Colombia on the U.S. list of terrorist organizations. Or they might try to disrupt the country's flow of oil.

If anything, a highly publicized, man-to-man face-off between Chavez and an opposition candidate would provide the ideal forum for the current simmering hostility to break out into open and armed conflict.

To truly increase stability and end political tensions, getting rid of Chavez is not enough. Instead, Venezuela -- and the United States and any other party that has an interest in the country's political health -- must address the conditions that allowed Chavez to rise to power in the first place. Previous Venezuelan administrations, riddled with corruption and content to adapt market policies that sacrificed the living standards of the bulk of the population in order to enrich a small business and financial elite, generated such anger that Chavez was able to take the presidency with the largest percentage of a democratic vote in Venezuelan history.

Any election that threatened to return the country to those conditions would simply fuel further hostility and intensify the current conflict.

The deep social rift that divides Venezuela must be addressed head on. No amount of voting, no change of leadership will alter the fact that two large segments of Venezuelan society hold diametrically opposed views with equal conviction.

(c) Copyright PNS For more discussion on this article and to see what others have to say click on the link below to go to discussion forums.

HR Daily News December 30, 2002

Despite continuing economic uncertainty, employees in most countries can expect their pay to increase next year by 1 to 3.5 percent above inflation, according to the a report by Mercer Human Resource Consulting.

U.S. employers predict pay increases of 3.9 percent next year, compared with Canadian employers who expect a 3.3 percent increase. Inflation in these countries is anticipated to be 2.3 percent and 2.5 percent, respectively.

The report reveals distinct differences in pay and inflation trends in over 60 countries across various regions of the world. In the majority of countries, including Australia, U.K., and U.S., pay increases are predicted to hover above the annual inflation rate.

However, a handful of countries can be found at the extremes. For example, in Venezuela pay increases are expected to be around 7 percentage points lower than inflation, while in Bulgaria pay is predicted to rise almost 11 percentage points above inflation.

"Despite some optimism about economic recovery, companies remain cautious in setting their salary budgets and are reluctant to commit to high increases in the current uncertain times," says Gareth Williams, an international consultant in Mercer's Chicago office.

Mercer's Global Compensation Planning Survey Report examines economic, employment, and pay trends in more than 60 countries worldwide. Data on projected pay come from surveys of large employers, while inflation data is mostly collected from the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD).

"Demand for talented staff will be a major factor influencing the extent of any salary and wage rises in 2003. Businesses more likely to feel the effects of an increase will be those in high growth industries with limited skilled resources,” says Mercer Principal Bruno Cecchini. "Companies can no longer afford to match market movements purely when putting together remuneration budgets; they must have a firm understanding of what they can actually afford. It is critical for companies to implement a clear performance-oriented reward structure for employees," he says.

The Bush adminstration's unexpected call for early elections to end Venezuela's political crisis suggested Washington still has much to learn about nurturing democracy in Latin America.   

CARACAS, Venezuela -- President Hugo Chavez said yesterday that he was defeating a month-old strike choking the oil industry even as hundreds of thousands of protesters took to the streets to demand his resignation.

"I've got no plans to back down. My plans are for an offensive, an attack," said Chavez, applauding as strike-busting fuel trucks drove off from the Yaguas gasoline distribution center near Caracas.

But the opposition-backed general strike, which has paralyzed much of the country and has almost stopped shipments from the world's fifth-largest oil exporter, showed no sign of easing as several hundred thousand anti-Chavez protesters marched through Caracas.

The opposition strikers, organized by business and union leaders, asked Chavez to call elections, accusing him of abuse of authority, corruption and economic incompetence in what they say is his quest to install a Cuban-style dictatorship.

Support for Chavez, whose term is due to run until 2007, has plunged, even in his power base among the poor, whom he has wooed with cheap loans and a folksy style spiced with the fiery rhetoric of class warfare.

In an attempt to loosen the stoppage's grip, Venezuela has even done the unthinkable and imported some gasoline from Brazil, but fuel is still scarce in Caracas.