Jan. 10 abcnews.go.com — By Pascal Fletcher

CARACAS, Venezuela (Reuters) - A grenade attack and bomb threats against foreign embassies in Caracas pulled the international community deeper into Venezuela's crisis on Friday as a 40-day-old opposition strike dragged down the country's oil-reliant economy.

A grenade exploded late Thursday at the residence of the ambassador from Algeria, which has offered to assist President Hugo Chavez in his fight to beat the strike.

The shutdown, now in its sixth week, has crippled oil output and exports in the world's No 5 petroleum exporter, jolting world markets and pushing up oil prices.

Venezuelan banks and supermarkets closed their doors for the second consecutive day on Friday in support of the grueling strike, called by opposition leaders to press the leftist Chavez to resign and call early elections.

Chavez refuses and has vowed to beat the strike, which has cut off millions of dollars of oil income.

Fitch Ratings lowered Venezuela's credit standing by two notches on Friday, downgrading its sovereign debt rating deeper into "junk bond" territory, to 'CCC-plus' from 'B'.

The blast at the Algerian ambassador's residence, which caused damage but no injuries, followed bomb threats Thursday against the German, Canadian and Australian embassies in Caracas.

No one claimed responsibility for the attack. But Algeria and other members of the Organization of Petroleum Exporting Countries (OPEC) have offered to help Venezuela counter the effects of the strike.

Chavez's government blamed the blast on hard-line "terrorist" political opponents supporting the strike. "This is the coup-mongering face of the Venezuelan opposition," Foreign Minister Roy Chaderton told Reuters.

EMBASSY SECURITY TIGHTENED

Government officials said security at foreign embassies would be increased. The grenade attack and threats may galvanize international efforts to resolve the crisis, which has disrupted Venezuelan oil shipments to clients as different as the United States and communist-ruled Cuba.

The United States and other members of the Organization of American States are studying the idea of creating a "Friends of Venezuela" group of nations to support current OAS efforts to broker a negotiated, electoral solution to Venezuela's conflict. Brazil has also been working on such an initiative.

"We remain deeply concerned about the deteriorating situation in Venezuela," White House spokesman Ari Fleischer told reporters in Washington.

The United States normally receives more than 13 percent of its crude oil imports from Venezuela.

Chaderton welcomed the idea of foreign support. "All this contributes to strengthening our democracy and the recognition of Venezuela's legitimate institutions," he said.

Chavez was elected in 1998 and survived a brief coup by military officers in April. He says his opponents are trying to topple him through the strike. His foes accuse him of ruling like a dictator and trying to implant Cuban-style communism.

In recent months, there have been grenade attacks against the offices of anti-Chavez union and business groups and media organizations critical of the president, which the opposition has blamed on the government.

Two people were killed in clashes a week ago involving anti- and pro-government demonstrators and troops and police.

Some foreign embassies, including those of the United States and Britain, have evacuated nonessential personnel and warned their nationals not to travel to Venezuela unless absolutely necessary.

Rangel said oil output and refining was recovering. But oil industry sources said government efforts to raise oil production have met with little success so far. They put production this week at about 450,000 barrels per day (bpd), compared with 3.1 bpd in November before the strike.

Opponents of Venezuelan President Hugo Chavez Rally in 12 Cities; Dollar Auctions Suspended abcnews.go.com The Associated Press CARACAS, Venezuela Jan. 10 —

Opponents of President Hugo Chavez took to the streets Friday as a bank strike prompted authorities to suspend dollar auctions for a second day in a row after Venezuela's currency fell.

Bank workers and other opposition sympathizers were rallying in Caracas and 11 other cities on Friday, a day after violence broke out at similar protests amid a nationwide strike that has shut thousands of businesses and brought Venezuela's vital oil industry a top U.S. supplier and once the world's fifth-largest exporter to a virtual halt.

The Bush administration was talking with other nations in the Americas on ways to end the strike, White House spokesman Ari Fleischer said Friday.

"We remain deeply concerned about the deteriorating situation in Venezuela," Fleischer said. Asked about a possible U.S. role in a breakthrough, Fleischer said, "An electoral solution is the direction the United States sees."

Hundreds gathered in Caracas to march on the Melia hotel, where Organization of American States Secretary-General Cesar Gaviria, who is mediating between the two sides, is staying.

Fleischer said Gaviria has been quietly discussing options with other OAS states, including formation of a "Friends of Venezuela" group "to help the Venezuelans find a solution."

The Central Bank suspended dollar auctions for a second day Friday after the currency, the bolivar, dropped to a record low of 1,593 to the dollar Thursday 5 percent weaker than Wednesday and down 12 percent since the start of the year.

Analysts speculated Chavez's government may have to devalue the bolivar to balance its budget. Most government income is in dollars and a weaker bolivar would increase its domestic spending power.

Meanwhile, unknown assailants tossed a grenade at the residence of Algerian Ambassador Mohamed Khelladi on Thursday night, the embassy said Friday. Nobody was injured and no arrests were made.

Vice President Jose Vicente Rangel denounced the attack in an appearance on state television and called it an act of terrorism.

The motive for the attack wasn't known. Algeria has offered to send technicians to help jump-start Venezuela's oil industry.

Rangel said the government reinforced security at embassies and diplomatic residences after the attack and a series of telephoned bomb threats at the Australian, Canadian, German, Libyan and Uruguayan embassies.

On Thursday, government supporters attacked anti-Chavez marches in Caracas and outside oil facilities around the country as political violence increased in this crisis-stricken South American country of 24 million.

"Chavistas," as the president's backers are called, attacked a rally outside a refinery in Cardon, 270 miles east of Caracas, wounding a 40-year-old worker and a 28-year-old demonstrator, said Luis Arends, a civil defense worker.

In Caracas, gunfire erupted at an opposition rally. No one was hurt, and the rally resumed. Nobody was arrested.

Chavez supporters armed with machetes and sticks also prevented a demonstration at an oil facility in central Carabobo state, Globovision television reported. A minor clash occurred at a plant in Barinas state.

Chavez opponents claim the president's fiery rhetoric incites violent reactions from his most radical backers.

Chavez, a leftist former paratroop commander who was elected in 1998 and re-elected two years later, blames the opposition-aligned news media, which he accuses of campaigning for his overthrow.

Bloodshed last year spurred a coup and Chavez's brief ouster. Loyalists in the military returned him to power on April 14.

Spokesmen at three of Venezuela's largest banks Banco de Venezuela, Banco Provincial and Banesco said 80 percent of the country's nearly 60,000 bank employees stayed home Thursday.

The bank strike forced many supermarkets to close because shoppers were unable to pay with credit cards or debit cards, said Nelson Da Gama, president of the National Association of Supermarkets.

A nonbinding referendum on Chavez's rule is scheduled for Feb. 2. Chavez insists the constitution only requires him to respect a possible recall referendum in August, the midpoint of his six-year term.

www.sfgate.com Friday, January 10, 2003

(01-10) 12:04 PST WASHINGTON (AP) --

The Bush administration on Friday called on the international community for help resolve the five-week strike in Venezuela which is crippling oil exports, promoting violence and threatening the stability of the government of President Hugo Chavez.

"The severe damage being caused to Venezuela's economy, as well as the increasing likelihood of violence and civil conflict, requires a solution," said White House press secretary Ari Fleischer.

"U.S. policy continues to support Secretary General Gaviria's efforts in Caracas to facilitate a dialogue between both sides that leads to a peaceful, democratic, constitutional and electoral solution to Venezuela's crisis," he said.

The administration is working with the Organization of American States and member nations to explore ways to peacefully end the standoff between the Chavez government and its opponents, he said, noting that OAS Secretary General Cesar Gaviria has been quietly discussing options with other OAS states, including formation of a "Friends of Venezuela" group "to help the Venezuelans find a solution."

The Washington Post reported in Friday editions that the United States was putting aside its reluctance to get involved in Venezuela's internal affairs and readying an initiative to form a group of nations to try to end the deadlock.

The initiative may be rolled out next week, the newspaper said. It said the proposal's immediate goal would be to end the opposition-organized strike. The group would seek to develop a compromise calling for early Venezuelan elections and building on OAS mediation efforts already under way, the newspaper said.

"Secretary General Gaviria has been quietly consulting with OAS members on other possible initiatives, including the idea of Friends of Venezuela group, which might serve to strengthen his central efforts to help Venezuela to find a solution to this problem," Fleischer said.

"We have been and are working closely with Secretary General Gaviria and hemispheric partners to engage diplomatically under the OAS umbrella in support of Gaviria," he said. .

Earlier he stressed that the diplomatic effort is in "the early stages" and that "an electoral solution is the direction the United States sees."

The strike has paralyzed the Venezuelan economy and brought its vital oil industry -- a top U.S. supplier and once the world's fifth-largest exporter -- to a virtual halt.

By Associated Press, 1/10/2003 12:13

WASHINGTON (AP) The Bush administration is engaged with other nations in the hemisphere in talks to explore ways to end the five-week strike in Venezuela that has crippled oil exports, White House spokesman Ari Fleischer said Friday.

''We remain deeply concerned about the deteriorating situation in Venezuela,'' Fleisher said.

He said the administration was working with the Organization of American States and member nations to explore ways to peacefully end the standoff between the government of President Hugo Chavez and his opponents.

OAS Secretary General Cesar Gaviria has been quietly discussing options with other OAS states, including formation of a ''Friends of Venezuela'' group ''to help the Venezuelans find a solution,'' Fleischer said.

The Washington Post reported in Friday editions that the United States was putting aside its reluctance to get involved in Venezuela's internal affairs and readying an initiative to form a group of nations to try to end the deadlock.

The initiative may be rolled out next week, the newspaper said. It said the proposal's immediate goal would be to end the opposition-organized strike.

The group would seek to develop a compromise calling for early Venezuelan elections and building on OAS mediation efforts already under way, the newspaper said.

''It's in the early stages,'' Fleischer said when asked about the news account and the U.S. role in seeking a breakthrough. ''An electoral solution is the direction the United States sees.''

The strike has paralyzed the Venezuelan economy and brought its vital oil industry a top U.S. supplier and once the world's fifth-largest exporter to a virtual halt.

www.alertnet.org

10 Jan 2003 16:48 By Pascal Fletcher

CARACAS, Venezuela, Jan 10 (Reuters) - A grenade exploded late on Thursday at the Venezuelan residence of the ambassador from Algeria, which has offered to assist President Hugo Chavez in his struggle to crush an opposition strike crippling vital oil exports, police said on Friday.

The blast at the Caracas residence blew shrapnel around the courtyard, damaging a car. But neither Ambassador Mohamed Khelladi nor members of his family or staff were injured, the police said.

No one immediately claimed responsibility for the blast, but the Chavez government was quick to blame the attack on hard-line political opponents supporting a 40-day-old strike that has throttled oil production and shipments by OPEC member Venezuela, the world's fifth largest petroleum exporter.

"This is part of the conspiracy against our institutions. This is the coup-mongering face of the Venezuelan opposition," Foreign Minister Roy Chaderton told Reuters as he inspected the scene of the explosion with the ambassador.

"This was to kill. ... It was clearly a terrorist attack against the people and the government of Venezuela and Algeria," Khelladi said.

The whitewashed wall of the residence courtyard showed shrapnel marks, along with bloodstains from the residence's pet dog, which was injured in the blast.

Algeria and other members of the Organization of Petroleum Exporting Countries (OPEC) have offered to help Venezuela counter the effects of the strike. Chavez said recently that Algeria would send a group of oil experts and workers to help re-start strike-bound oil tankers and refineries.

Police said the explosive device appeared to have been thrown over the wall of the residence in Caracas' exclusive Country Club district. "It seems to have been a fragmentation grenade," said Police Inspector Ali Magdaleno.

THREATS AGAINST EMBASSIES

The explosion followed bomb threats made against several foreign embassies in Caracas. The German, Canadian and Australian embassies were evacuated on Thursday after receiving calls made in the name of a previously unheard of group, the Patriotic Committee for Venezuela.

Other embassies received similar threats.

Tensions have been rising as foes of the populist Chavez press ahead with the strike, which has spawned economic and political turmoil. The strikers want Chavez, accused by his foes of autocratic rule, to resign and hold early elections.

Some foreign embassies in Venezuela, including those of the United States and Britain, have evacuated non-essential personnel during the country's political turmoil and warned their nationals not to travel to the troubled South American country unless absolutely necessary.

Rival street protests by followers and foes of Chavez, who was elected in 1998, often end in violence. Two people were killed in clashes on Friday involving demonstrators from both sides, troops and police.

In recent months, there have been grenade attacks against the offices of anti-Chavez union and business groups and against media organizations critical of the president. The opposition has blamed these on the government.