www.rapidcityjournal.com By ALEXANDRA OLSON

Soldiers in riot gear blocked the entrance to a park outside a military base Sunday as opponents of President Hugo Chavez prepared to march on the site, where rioting left two dead and dozens injured two weeks ago.

The march is aimed at persuading the military to support a 42-day-old strike that has paralyzed the world's fifth-largest oil exporter but hasn't rattled Chavez's resolve to stay in power.

The military _ purged of dissidents after a brief April coup _ has supported Chavez, with troops seizing oil tankers, commandeering gasoline trucks and locking striking workers out of oil installations. Top commanders have professed their loyalty to the government. Dozens of soldiers used barbed wire and armored personnel carriers to block the entrance to Los Proceres park, outside the Fort Tiuna military base. The park is one of eight security zones in Caracas as decreed by Chavez. Protests are banned in those areas unless authorized by the defense ministry.

A few residents protested the show of force, chanting, "The government will fall!"

"This is totally out of proportion. It's no way to control a march," said Carlos Melo, of the opposition Democratic Coordinator movement. "If the government thinks these trucks and weapons are going to stop us, it won't."

Venezuela's largest labor confederation, business chamber and opposition parties called for the strike on Dec. 2 to demand that Chavez resign and call early elections if he loses a nonbinding referendum on his rule.

The National Elections Council scheduled the referendum for Feb. 2 after accepting an opposition petition signed by 2 million people. Chavez says the vote would be unconstitutional, and his supporters have challenged it in the Supreme Court. He was elected in 1998 and re-elected in 2000, and his term ends in 2007. Opponents accuse the president of running roughshod over democratic institutions and wrecking the economy with leftist policies. The opposition has staged dozens of street marches, called for a tax boycott and held a two-day bank strike last week.

Chavez has threatened to order troops to seize food production plants that are participating in the strike and to fire or jail striking teachers and have soldiers take over their duties.

He already has fired 1,000 oil workers after some 30,000 of 40,000 workers joined the strike, which has caused fuel shortages and slowed oil exports to a trickle.

The strike is costing the country an estimated $70 million a day.

On Jan. 3, Chavez supporters and opponents clashed while police fired tear gas to keep the sides apart during an opposition march on Los Proceres. Two Chavez supporters died after being shot and at least 78 were injured, five with gunshot wounds. It was unclear who fired on marchers.

Police also intervened Saturday when Chavez supporters blocked the route of a planned opposition march through the streets of Maracay, the military's nerve center, and on Margarita island off Venezuela's coast.

The country's crude output is estimated at about 400,000 barrels a day, compared with the pre-strike level of 3 million barrels. Exports are a fifth of the 2.5 million barrels a day the country usually produces.

The country's $100 billion economy shrank an estimated 8 percent in 2002, largely due to constant political instability. Inflation has surpassed 30 percent while unemployment reaches 17 percent. Negotiations sponsored by the Organization of American States have produced few results.

sg.biz.yahoo.com Monday January 13, 6:00 AM By Grainne McCarthy Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Having fallen swiftly on the back of some surprisingly weak U.S. employment data, the dollar is set to remain under pressure this week, increasingly vulnerable to the drumbeat of war surrounding Iraq and nuclear saber-rattling in North Korea.

"People are positioned for Armageddon on the dollar, in that scenario you can get whacky moves," says Paul Podolsky, chief strategist at Fleet Global Markets in Boston.

Investors unsure of the dollar's vulnerability to U.S. economic data got a resounding wake-up call Friday, with the currency tumbling swiftly after the government reported a dismal December payrolls report that fueled concerns about the lingering soft spot dogging the world's largest economy. The dollar hit a fresh three-year trough against the euro, while sliding to its weakest point against the Swiss franc in four years.

Late Friday in New York, the euro was at $1.0574, up steeply from $1.0488 late Thursday. Against the Swiss franc, the dollar was at CHF1.3802, sharply down from CHF1.3909 late, while sterling was at $1.6082, modestly up from $1.6061 late Thursday. The dollar was at Y119.20, modestly lower than Y119.26 late Thursday in New York.

Even as Canada reported another remarkably strong month of employment growth, job losses in the U.S. soared to 101,000, disarmingly far from consensus forecasts for a modest increase of 20,000.

There were clearly some seasonal explanations for the massive leap but the report still further underscored a view that the sluggish U.S. economic recovery isn't creating jobs, potentially boding ill for the dollar at a time when it's already being undermined by war concerns.

"Until Iraq goes away and the outlook for consumer confidence and business spending improves, the dollar is going to remain under pressure," said Jay Bryson, global economist at Wachovia Securities in Charlotte, N.C.

There will certainly be plenty of economic data this week for dollar investors to sink their teeth into, with the focus most likely on somewhat stronger economic activity and benign inflation. Headline retail sales for December - to be reported Tuesday - are expected to come in very firm, mostly thanks to the 18% jump in auto sales already reported. But excluding autos, economists anticipate just a 0.3% increase.

The U.S. will also see December's producer price and consumer price indexes on Wednesday and Thursday respectively, while the focus for Friday will be squarely on the initial University of Michigan consumer sentiment report for January, which should provide a glimpse of how confidence is holding up amid growing war jitters.

But aside from the clear significance of much of this data, many analysts expect the dollar to look more to the Pentagon, State Department and ultimately the White House for signposts for near-term direction.

As the central emblem in financial markets of the world's only superpower, the dollar is beset by multiple threats to global stability that are simultaneously breaking out on several fronts. As well as the situations in North Korea and Iraq, the ongoing battle against terrorist network al-Qaida is high on the list of nightmarish issues facing the Bush administration. The U.S. - given its position of global hegemon - has almost by default become the first line of defense in tackling these challenges.

"Connect the dots and what emerges is hardly encouraging for the dollar in particular and the financial markets in general," said Joseph Quinlan, global economist at Johns Hopkins University in Washington.

He argues that investors in U.S. assets, while certainly cognizant of war risk, may have priced in an overly rosy scenario under which the war on terrorism has already been won, the war against Iraq has already been priced in and a war on the Korean peninsula is too remote a possibility to take seriously.

An upset to this more optimistic picture could weigh much more heavily on global capital flows, ultimately depressing the dollar given the U.S. status as a creditor nation dependent on capital inflows to finance the current account.

Indeed, some analysts believe the dollar's swift reaction to the jobs data raises the question of whether the currency might be headed for a more precipitous slide, which has the potential to ripple more heavily over into other U.S. asset markets, while also raising alarm among policy makers.

"We've had a pretty quick move here and a lot of people are scratching their heads and asking if the speed of adjustments might be more than they've already anticipated," said Marcel Kasumovich, head of G-10 currency strategy at Merrill Lynch in New York. "Especially if you start to see a feedback to interest rates or equity markets, that sends a warning signal to central banks that maybe there's a confidence issue."

For now, that's not happening, but the tenacity of the euro's gains could have clear consequences for U.S. fixed income markets. A stronger euro only enhances the appeal of European sovereign debt, which many global fund managers have been advocating for months as much more appealing than Treasurys, particularly with expectations that the European Central Bank still has some room to lower interest rates.

Already currency analysts are talking about the euro reaching as high as $1.10 this month, a dramatic contrast from just a couple of weeks ago when a survey of major currency dealing banks predicted the euro only scaling those heights at the end of this year.

Elsewhere, the focus this week will once again be on Venezuela, after the bolivar tumbled last week amid some panic buying ahead of a 48-hour bank strike. The currency did rebound on Friday, but remains vulnerable to further instability, with the general strike, which began Dec. 2, lingering.

-By Grainne McCarthy; Dow Jones Newswires; 201 938 2381; grainne.mccarthy@dowjones.com

asia.reuters.com Sun January 12, 2003 05:41 PM ET By Tom Ashby

VIENNA (Reuters) - Embattled Venezuelan officials on Sunday accused striking oil workers of sabotaging the country's energy industry, while assuring fellow OPEC states the government would restore output swiftly.

State oil company chief Ali Rodriguez said he would start criminal prosecutions against workers he said had sabotaged oilfields, refineries and computer systems during the six-week-old strike that has brought the industry to its knees.

"There are criminal and civil cases to answer in this and of course we will apply the law in Venezuela," Rodriguez told a press conference after an OPEC meeting in the Austrian capital.

Striking executives of Petroleos de Venezuela, many of whom have now been sacked by Rodriguez, say incompetence by replacement workers is to blame for a recent spate of accidents, including oil spills in the western Lake Maracaibo.

The Organization of the Petroleum Exporting Countries met on Sunday in emergency session to deal with the Venezuelan stoppage, lifting quotas by 1.5 million barrels a day, seven percent.

In response to Venezuelan assurances that output would resume swiftly, OPEC included the South American country in the production hike despite its current inability to fill its quota.

OPEC President Abdullah al-Attiyah said OPEC was hopeful that Venezuela would return to full production soon and said the other cartel members would reverse the hike when that happened.

OUTPUT SLUMP

Opposition oil executives said output fell below half a million barrels per day last week, from more than three million in November. Government officials peg it closer to a million.

"Internal market distribution is being normalized, we have managed to free up port operations and we have drawn down stocks whose build-up had blocked production," Rodriguez said.

"This has helped a sustained rise in output, so this month we should achieve our objectives."

Oil Minister Rafael Ramirez said oil output should rise to two million barrels per day by the end of January and 2.5 million by mid-February.

Asked if Venezuela would pump its full 2.8 million bpd quota by the end of February, Rodriguez replied: "Not totally because damage has been very great and we don't know if there has been sabotage in some wells, so we have to be very careful."

The government has repeatedly failed to meet previous deadlines for restarting the industry, and still faces a major obstacle from a crashed central computer system. Striking workers say Venezuela will take months to get back to quota. "There has been electronic sabotage and sabotage on valves because the campaign is aimed at causing accidents, and we have to take anti-sabotage measures to start up safely," said Rodriguez, a former OPEC secretary-general.

The United States welcomed OPEC's big output hike, having lost some 13 percent of its imports from Venezuela.

The country's main oil refineries have ground to a virtual halt, export terminals have drastically reduced loadings and long lines have formed at gasoline stations, while Venezuela resorts to importing fuel.

Rodriguez said the small El Palito refinery was now being started again after a seal blew in last week's attempt to restore the flow of refined products to the domestic market. Rodriguez said the country's largest refinery complex at Amuay-Cardon had been shut down incorrectly by striking workers, leaving deposits of asphalt and sulphur in some units.

Nevertheless, he said operations there would resume in two or three weeks.

"Our objective is to re-establish basic production this month and restart the refineries to satisfy the internal market because we are importing gasoline at prices far above what we sell it at, which is creating losses for the company," Rodriguez said.

www.nytimes.com By ERIC PFANNER, International Herald Tribune

VIENNA, Jan. 12 — The Organization of Petroleum Exporting Countries agreed today to increase its official production quota in an effort to ease concern over tight global supplies and keep a lid on rising prices.

In an emergency meeting here, called to address the effects of anti-government strikes in Venezuela that have cut off most of that country's oil production, members of the cartel agreed to raise their total output quota to 24.5 million barrels a day as of Feb. 1.

"OPEC is trying to send a very strong message that it is doing the utmost to ensure adequate supplies," said Abdullah bin Hamad al-Attiyah, the OPEC president and Qatari oil minister.

Though the new quota represents an increase of 6.5 percent from the 23 million level set only a month ago, industry analysts said the actual amount of new oil that enters the market may be smaller, meaning any downward effect on prices could be muted. That is because the sensitive politics of the cartel required that every member will get a proportionately higher share, even though Venezuela's production will remain only a fraction of its official quota until strike-damaged facilities are repaired.

The only way that OPEC, which pumps about one-third of the world's oil, will be able to make up for Venezuela's lost share in the short term is if other members produce above their set limits, analysts said. In December, total OPEC production fell short of the 23 million limit by several hundred thousand barrels.

OPEC had sought to stamp out quota cheating at its December meeting, when it raised the official quota from 21.7 million barrels per day. But since then, the strikes in Venezuela against the government of President Hugo Chávez, along with concerns about a possible war in Iraq, have pushed prices sharply higher on world markets, throwing a monkey-wrench into those plans. On Friday, Brent crude oil for February delivery traded at $29.68 a barrel.

"It's hard to put Humpty Dumpty back together again," Gary N. Ross, chief executive of the PIRA Energy Group, an international energy consultancy in New York, said in reference to the effort to clamp down on quota cheating.

Analysts said the increase in the overall quota suggests that OPEC members that can pump more oil — only Saudi Arabia and the United Arab Emirates have significant spare capacity — will do so to some extent, even if their individual quotas are rising only marginally. Saudi Arabia's official level, for instance, rises to 7.96 million barrels a day from 7.48 million, but analysts say it could produce as much as 10 million barrels.

"There is no shortage," said Ali al-Naimi, the Saudi oil minister. "We never allowed the shortage to take place. There is a significant shortage from Venezuela, but there is no shortage in the international market."

If the official outcome of the meeting was less important than the reality of what happens in the market, then why would OPEC ministers gather in frigid Vienna — blanketed in nearly a foot of snow — only one month after their last regular meeting?

Appearances matter a great deal, too. Industry analysts said Saudi Arabia, in particular, was eager to be seen as cooperative at a time when many American conservatives are raising questions about the Saudi commitment to fighting terrorism.

Unusually high oil prices are not in Saudi Arabia's interest, if they contribute to a slowdown in the global economy and lower demand for the country's oil reserves, the largest in the world.

"They are trying to paint OPEC in a good light," said Leonidas P. Drollas, chief economist with the Center for Global Energy Studies in London. "The Saudis are trying to ingratiate themselves a bit with the United States."

But OPEC also emphasized that the increase in quotas may be temporary. If Venezuelan production returns to pre-strike levels and a war with Iraq is averted, for instance, the cartel might otherwise be faced with a price-depressing oil glut just as seasonal demand wanes in spring.

"We will look very closely at the market and we will continue our consultation," Mr. Attiyah said.

The OPEC president said he had faced no pressure from the United States, the world's largest oil consumer, to do something about rising prices. But he hinted that the possibility of a war in Iraq had figured in OPEC's discussions.

"We take all the factors into consideration in determining whether there is a shortage in the market," he said.

Iraq, which is nominally an OPEC member but outside the group's quotas because its production is monitored by the United Nations, stepped in to fill some of the gaps left by the loss of Venezuelan output. Over the last few weeks it has been producing about two million barrels a day, Mr. Drollas said.

The increased output from Iraq and quota cheating by other OPEC members probably accounts for United States petroleum stockpiles being above predicted levels in the week ending Jan. 3, actually rising by one estimate and falling less than expected by another. Though total OPEC production fell slightly short of the 23 million quota, the relative adequacy of supply helped push down futures prices slightly last week.

Though OPEC insists that it has enough spare capacity to make up for all of the lost production from Venezuela, a war in Iraq could upset the fragile supply-demand balance.

In the event of a war, analysts say the International Energy Agency would probably release some oil from its strategic reserves, held by 26 member nations. And the United States could tap its own Strategic Petroleum Reserve, as President Bill Clinton did in 2000 when prices spiraled.

www.csmonitor.com By Lawrence E. Harrison

MEDFORD, MASS – Brazil's President Luiz Inácio da Silva - "Lula," as he is widely known - has made Brazil's gaping gulf between its few rich and many poor a focus of his new administration.

The United States should do the same. While not as vast as Brazil's, the gap between the rich and the poor in the US is too wide - the widest among all the rich democracies.

According to World Bank data, the poorest 10 percent of Brazil's population receives just 1 percent of the country's total income, while the richest 10 percent receives almost half. In the US, the poorest 10 percent receives 1.8 percent of total income, while the richest 10 percent gets almost a third.

In no other rich democracy does the poorest 10 percent receive less than 2 percent of the total. (The average for rich countries is 2.9 percent.)

Don't leap to the conclusion that this extreme inequity in US income distribution reflects the policies of the Bush administration. The data are for a Clinton boom year - 1997.

In fact, Census Bureau data show a steady erosion of income inequity since the 1970s.

The Census Bureau estimates that in 2001, about 33 million Americans - 11.7 percent of the population and disproportionately African-American and Hispanic - lived below the poverty line. For a family of four, that meant an income of less than $18,000 per year, or $4,500 per capita.

At this level of affluence, the persistence of poverty for tens of millions of Americans is a national disgrace.

A national consensus is needed aimed at ending poverty, consistent with the vision of the late Harvard political philosopher John Rawls. For Rawls, the good society was the society in which a principal goal was the well-being of those worst off.

Progress toward the goal of eliminating poverty can be achieved through, for example, steady increases in the minimum wage (Lula has proposed increases that would double the Brazilian minimum wage in four years), progressive tax reform, and more extensive and effective unionism for low-wage workers.

Some will argue that a high minimum wage, a true living wage, would reduce the competitiveness of American products.

The Harvard Business School's Michael Porter has the right answer in his book "The Competitive Advantage of Nations": "The primary economic goal of a nation is to produce a high and rising standard of living for its citizens ... cheap labor [is not a] meaningful definition of competitiveness ... the ability to compete despite paying higher wages would ... represent a far more desirable national target."

The US also needs an immigration policy that reduces the flow - legal and illegal - of the more than 1 million people who come to the US annually, as the Commission on Immigration Reform urged in 1995. That report has since been ignored by both Democratic and Republican administrations.

The stream of mostly uneducated and unskilled immigrants increasingly feeds the reservoir of the poor, drives down wages and benefits at the low end, and competes for public services with poor citizens, adding severe pressure on beleaguered state and local budgets.

The Democrats are looking for a message, a vision. The goal of ending poverty and the measures necessary to achieve it fit well with Democratic Party ideology. At the same time, the Republicans are committed to a compassionate conservatism that should also embrace the goal.

Here's an opportunity for a national consensus to end a national disgrace.

• Lawrence Harrison teaches at the Fletcher School of Law and Diplomacy at Tufts University. He is coeditor with Samuel Huntington of 'Culture Matters.'