The Associated Press Published Friday, January 3rd, 2003

RIO DE JANEIRO, Brazil (AP) - A senator with a degree in geology on Friday will take the helm of Brazil's state-controlled oil giant, Petrobras.

The appointment of Workers Party Sen. Eduardo Dutra as Petrobras' new president was announced Thursday night by Andre Singer, spokesman for new President Luiz Inacio Lula da Silva.

Market analysts have said that the 45-year-old Dutra, who will replace Francisco Gros, lacks the business experience needed to head one of Brazil's most profitable and heavily traded companies. They said investors would view Dutra as a political appointee, which could undermine credibility in the company.

Analysts have also said that Dutra's appointment could mean greater government intervention on Petrobras' fuel pricing policy.

But Wagner Victer, energy secretary for the state of Rio de Janeiro, said Dutra was "a suitable choice. He has the requisites needed to be a good president."

Brazil's new mines and energy minister, Dilma Roussef, told a news conference before Dutra was sworn in that the government was trying to find mechanisms to limit the volatility of gasoline prices.

Future price controls would not mean subsidizing gasoline prices, though, Roussef said.

Before a liberalization of the petroleum sector in January 2002, the government fixed gasoline prices every couple of months through a complicated pricing system that ran large deficits. The government used the controls to put off necessary fuel price increases and curb inflation.

03 Jan 2003 21:16

WASHINGTON, Jan 3 (Reuters) - The United States said on Friday it saw no need for a new mediator in the conflict between Venezuelan President Hugo Chavez and his opponents.

The Organization of American States (OAS) has been trying to settle the political dispute and end a 33-day opposition-led strike that has crippled Venezuela's oil industry and devastated the economy.

Chavez said in Brazil on Thursday that he favored the creation of a "Friends of Venezuela" group to help end the crisis. Venezuelan officials said the group could include Brazil, France, Russia and some members of the Organization of Petroleum Exporting Countries.

But State Department spokesman Richard Boucher said Washington preferred to rely on the OAS mission led by Secretary-General Cesar Gaviria, who arranged another session of talks in Caracas on Thursday.

"We don't think that there needs to be some separate Group of Friends formed," Boucher told a briefing.

"We urge both sides to demonstrate maximum flexibility in working with the Organization of American States to achieve peaceful, democratic, constitutional and electoral solutions to the crisis," the spokesman added.

At least one person was shot and wounded on Friday as both sides took to the streets, with Venezuelan troops firing tear gas and shotgun pellets to keep apart Chavez supporters and opposition marchers. In addition, the government slashed growth prospects for the recession-hit Venezuelan economy.

The United States has kept its distance from the conflict in Venezuela but it has criticized Chavez in the past and was slow to condemn a short-lived coup against him in April last year.

Its main concern now is supplies of oil from Venezuela, which normally provides 13 percent of U.S. oil imports. World oil prices have jumped as supplies from Venezuela dry up.

Boucher declined detailed comment on meetings in Brazil on Thursday among Latin American leftist leaders, in which newly-elected Brazilian President Luiz Inacio Lula da Silva held separate talks with Chavez and Fidel Castro of Cuba.

"We have an excellent relationship with Brazil and ... we look forward to building on that relationship and working on the common values and common goals that we have with our neighbors in this hemisphere," he said.

(BRASILIA, Brazil) Venezuelan President Hugo Chavez on Thursday announced a plan to involve European and Latin American countries in solving the economic and political turmoil that has paralysed his country and roiled international oil markets.

Mr Chavez, who faces a month-long strike that has hobbled his country's oil industry, said the 'Group of Nation Friends' would also involve the Organisation of Oil Exporting Countries and would help mediate talks between his government and the opposition groups that seek his ouster.

'This has to be the way out (of the crisis),' Mr Chavez said. 'There is no other way.'

He said the plan was the result of talks he held in Caracas with foreign diplomats a few days ago. 'I thought it was a good idea and began immediately making phone calls,' he said, but did not specify which countries he had contacted.

Mr Chavez spoke at a two-hour news conference in Brasilia after an overnight meeting with Cuban leader Fidel Castro. Both were in Brazil to attend the inauguration of the country's new president, former union leader Luiz Inacio Lula da Silva.

Mr Chavez also called for the creation of a pan-Latin American oil company, to be called Petro-America, in an attempt to increase cooperation among state-owned oil industries. 'It would become a sort of Latin American Opec,' he said, adding that the company could include Venezuela's PDVSA, Brazil's Petrobras, Colombia's Ecopetrol, Ecuador's PetroEcuador, and Trinidad and Tobago's PetroTrinidad.

Also on Thursday, Mr Chavez asked the Brazilian president to consider sending technical experts from Petrobras to replace some of the 30,000 Venezuelan state oil company workers who have walked off their jobs.

In Caracas, opposition legislator Alejandro Armas said the opposition had already proposed an international effort to mediate the dispute.

The idea drew support from opposition labour leader Manuel Cova, secretary general of the one million-member Venezuelan Workers Confederation. 'Whatever international initiative leading to an electoral solution is welcome,' he said.

In London, crude oil rose as traders doubted whether Venezuela would soon recover from the month-long strike, even though Mr Chavez said the country would have oil production back to three million barrels a day in 45 days. Output is now 172,000 barrels a day, strikers said.

Brent crude oil for February delivery was 40 US cents, or 1.4 per cent, higher at US$29.83 a barrel at 10.59am London time. - AP, Reuters

3 Jan 03(3:07 PM) |  E-mail Article to a Friend By Doug Palmer

WASHINGTON (Reuters) - U.S. trade negotiators must clear a number of difficult hurdles this year to achieve their goal of concluding two major new trade agreements by the end of President George W. Bush's first term, analysts say.

Although trade talks have a history of slipping past their deadlines, U.S. trade officials hope to make the most of the next 24 months to finish talks on a new World Trade Organization agreement to lower trade barriers in agriculture, services and manufactured goods.

The United States also hopes to complete negotiations on a proposed Western Hemisphere free trade zone in the same time frame, dispute ongoing turmoil in South America.

The WTO talks suffered a serious setback in late December, when negotiators failed to agree on provisions to guarantee poor countries that lack a pharmaceutical industry would have access to cheap life-saving drugs.

"This has put the U.S. in a pretty awkward political position on a highly emotional issue," said Ed Gresser, a trade policy analyst at the Progressive Policy Institute. "Until it's fixed, it's going to make it a lot harder for the U.S. to get support" on its priority issues in the WTO talks.

Other countries have accused the United States of blocking the deal at behest of its big drug manufacturers, which want to make sure patent waivers for generic manufacturers to supply the drugs are limited to HIV/AIDS, malaria and tuberculosis.

Developing countries are pushing for a broader list.

WTO members will try again in February to reach an agreement. If they are not successful, the issue could block progress on other issues and dim prospects for the WTO's next ministerial meeting in September in Cancun, Mexico.

In March, WTO members are supposed to decide on the basic framework for advancing agricultural trade talks.

Countries are still far apart, with Japan and the European Union resisting pressure from the United States and the developing world for significant agricultural reform.

HARD CHOICES

Failure to meet the March deadline could add one more item to the Cancun meeting, where members are already facing difficult decisions on whether to expand the scope of the WTO talks into areas such as investment and competition policy.

It would also bode badly for the proposed Free Trade Area of the Americas. The United States has balked at regional demands that it trim the $19 billion it spends annually on domestic farm subsidies unless Japan and the EU also agree to curb their farm spending as part of a new WTO pact.

Continued economic difficulties in Argentina and political turmoil in Venezuela have cast a pall over the Western Hemisphere talks. However, that could prompt Brazil to play more of a leadership role, even though new President Luiz Inacio Lula da Silva expressed skepticism about the proposed trade pact during last year's election campaign.

Sherman Katz, a trade scholar at the Center for Strategic and International Studies, said Lula already was showing signs of a more accommodating approach to the trade talks.

"We've already begun to see Lula come back to the center some. Politics is politics anywhere and statements made in an election to get votes are often not statements that lead to dramatic policy changes," Katz said.

At the same time, Bush's decision to send chief U.S. trade negotiator Robert Zoellick to Lula's inauguration on Monday was a sign of strong U.S. interest in working with the new leftist president to forge the trade pact, he said.

Jan 4 Michael Smith in Rio de Janeiro, Bloomberg

Jose Eduardo Dutra, a Workers' Party senator and former union leader, has been picked to head Petroleo Brasileiro SA, in a signal that Brazil's state oil company may focus more on the government's economic goals than on profit.

Andre Singer, spokesman for President Luiz Inacio Lula da Silva, confirmed the appointment, which Mr da Silva's aides said earlier in the week was imminent.

Mr Dutra, 43, will likely carry out Mr da Silva's promises to have Petrobras build oil platforms in Brazil and use the country's biggest company to create jobs. Mr da Silva's energy minister this week said the government might restore price controls and fuel subsidies to stem inflation.

More government intervention may hurt profits, and would mark a retreat from President Fernando Henrique Cardoso's effort to make Latin America's largest publicly traded company more accountable to investors, analysts said. President Cardoso sold $US5billion ($9billion) of Petrobras' shares since 2000, in part by pledging to let executives base decisions on profitability, not politics.

"The hope that this will be a new company, which sold investors into several share sales, has evaporated," said Bill Rudman, who helps manage about $US600million in bonds and stocks, including Petrobras, at Westdeutsche Landesbank asset management.

A geologist, Mr Dutra worked seven years at Petrobras in a mining unit that was transferred to then state-controlled iron-ore miner Cia Vale do Rio Doce. He was a union leader, and soon became a leader of Mr da Silva's Workers' party. In 1994, he was elected senator in Brazil's state of Sergipe and last year made an unsuccessful bid for state governor.

Mr da Silva likely chose Mr Dutra to have a strong advocate for greater government involvement, especially in trying to head off inflation by holding down fuel price increases, said Christopher Garman, a political analyst at Sao Paulo-based consultancy Tendencia Consultoria.

"He may be more swayed to lower gasoline prices than someone who has more experience in the sector and would be more interested in increasing profits for Petrobras," said Mr Garman.

Mr Dutra fought against President Cardoso's efforts to sell state-run industry, sponsoring a bill to block the sale of Rio Doce. After he failed, Mr Dutra tried unsuccessfully to have the Rio Doce sale investigated. Inflation is rising at the fastest annual pace since 1996, partly because of higher oil prices.