www.zenit.org: 2003-01-12

CARACAS, Venezuela, JAN. 12, 2003 (Zenit.org).- Venezuela's escalating crisis is threatening the very stability of the republic, the Catholic bishops' conference warns.

The episcopal conference spelled out its fears in a document published Friday. Church leaders also expressed their concerns at a meeting with the delegates of the Table of Dialogue, a forum for representatives of the government and the opposition under the aegis of Cesar Gaviria, secretary-general of the Organization of American States.

As a weeks-long opposition strike against Venezuelan President Hugo Chávez continued, the bishops relaunched their appeal for the need to intensify negotiations.

Archbishop Baltazar Porras, chairman of the episcopal conference, underlined that the "prolonged political confrontation has reached dangerous levels of friction and verbal, physical and moral violence."

"An eventual ulterior escalation of the confrontation would not leave winners or defeated, but just one great loser: Venezuela," he said.

Tension escalated after Chávez announced that he had ordered his troops to prepare to seize control of the food supplies, according to the French press.

"I will not allow my people to die of hunger because of a strike," Chávez said.

00:05 - 13 January 2003

Fears of a hike in the price of petrol receded tonight after members of the oil producers' group OPEC agreed to raise production levels.

The decision by the cartel to lift its target by 6.5% to 24.5 million barrels a day covers a shortfall in oil exports from crisis-hit Venezuela.

The move, announced after an emergency meeting in Vienna today, is aimed at keeping crude oil in the range of 22 US dollars to 28 US dollars a barrel.

Justin Urquhart Stewart of Seven Investment Management, said the decision was good news for motorists and the UK economy, although he believed it was unlikely to result in an immediate reduction in the price of petrol.

He added: "It could have been very unpleasant if they hadn't done anything. particularly if there's going to be further shortages in the event of war in the Middle East. The fact that they are willing to do something is encouraging."

The price of crude oil in London is currently just below the 30 US dollars a barrel mark but there have been fears it could go as high as 40 US dollars as concern grows about the impact of a possible conflict with Iraq.

BP increased the price of petrol at some of its stations by 1p per litre in the New Year, taking the average across the country to about 74.8p per litre.

OPEC's decision to call today's meeting follows a month-old strike in Venezuela, where opponents are seeking to oust President Hugo Chavez. It has cut the country's exports by about two million barrels a day.

Venezuela is normally OPEC's third largest producer and a major oil supplier to the United States.

OPEC president Abdullah bin Hamad Al Attiyah said after today's meeting: "OPEC is trying to send a very strong message that it will do its utmost to stabilise demand and supply."

abcnews.go.com — By Pascal Fletcher

CARACAS, Venezuela (Reuters) - Venezuelan troops fired tear gas on Sunday to drive back tens of thousands of anti-government protesters as President Hugo Chavez ordered a crackdown against a six-week-old opposition strike that is bleeding the economy.

As the demonstrators in Caracas fled the clouds of gas, the leftist leader sternly warned opponents he would not let them disrupt schools, banks or food supplies in a strike which has already crippled shipments by the world's No. 5 oil exporter.

"They want to break us economically. They are not going to do it. I swear it by God and my mother," Chavez said during his weekly "Hello President" television and radio show.

Waving national flags, the opposition protesters marched toward Fuerte Tiuna military headquarters in Caracas as part of their determined campaign to try to force the populist president to resign and call early elections.

They found their path blocked by barbed wire barricades, armored vehicles and several hundred National Guard troops and military police, who fired a volley of tear gas canisters.

Several people were carried away, apparently overcome by the choking gas.

During his broadcast, Chavez signed a decree creating a special government commission to combat a tax rebellion announced by opposition leaders. By urging Venezuelans not to pay taxes of any kind, the strikers hope to cut government revenues already drained by the crippling oil strike.

The president, elected in 1998, said the strike was costing the country tens of millions of dollars a day. "We should prepare for difficult times," he said, adding that another government commission was drawing up budget cuts.

He condemned his opponents as "fascists and coup mongers" and described them as desperate. "They don't know what to do next," said Chavez, who survived a brief coup in April. He himself attempted a botched coup bid in 1992.

Chavez, who has already sacked 2,000 striking state oil employees, repeated threats to send troops to take over private factories and warehouses if they hoarded food supplies.

He also threatened to revoke the broadcasting licenses of private TV stations that criticize his rule, describing their hostile programming as "worse than an atomic bomb."

'DECLARATION OF WAR'

On Saturday, he warned the government would intervene in banks and schools shut by the strike.

"This was a declaration of war. Chavez is not interested in dialogue or reconciliation," glass artist Luz Marina Urrecheaga said on Sunday as she and other protesters harangued troops.

The strike has rocked Venezuela's oil-reliant economy and sent its bolivar currency tumbling. It has also jolted oil markets and the oil exporters' cartel OPEC agreed on Sunday to raise production by 1.5 million barrels per day to stave off a spike in prices threatened by the Venezuelan strike.

The marchers had headed toward Fuerte Tiuna in a repeat of a Jan. 3 protest that broke up in violence, leaving two Chavez supporters dead and dozens of other people injured.

The anti-Chavez demonstrators on Sunday mocked the troops, hanging women's underwear on the barbed wire to insult them. Angry Chavez supporters who turned out to confront the anti-government marchers were kept back by a cordon of troops.

As a result of the strike, Venezuelans have experienced unprecedented shortages of gasoline, cooking gas and some food items. Bank workers staged a 48-hour stoppage last week, but will reopen on Monday under restricted service hours.

Chavez, who survived a brief coup in April, says he is a champion of the poor and that wealthy and corrupt minority elites are trying to topple him. His foes accuse him of dragging Venezuela toward Cuban-style communism.

SUPPORT FROM U.S. REPRESENTATIVES

Chavez on Sunday read out a Jan 9 letter of support sent by 19 U.S. Congress members recognizing him as the legitimately elected president of Venezuela.

"If Abraham Lincoln or George Washington were alive and here today, they would be on our side," he said.

In their letter, the 19 members of the U.S. House of Representatives -- 18 Democrats and one independent -- told Chavez they strongly opposed attempts to remove him from office and condemned Bush administration officials who appeared to support the short-lived coup against him in April.

The authors of the letter included Reps. John Conyers of Michigan, Jesse Jackson Jr. of Illinois, Sheila Jackson Lee of Texas and independent Rep. Bernie Sanders of Vermont.

"Should an illegal coup take place again, we believe the world community should condemn such an action and make clear that Venezuela is served best only when governed by legally elected leaders," they said in the letter, made public Jan. 9.

Government and opposition remain deadlocked over the timing of elections and the United States, the biggest buyer of Venezuelan oil, is backing efforts to reach a negotiated deal in talks brokered by the Organization of American States.

The opposition plans to hold a nonbinding referendum on Chavez's rule on Feb 2. His current terms ends in early 2007.

He says a binding referendum on his rule cannot be legally held until August. If he loses, "I'll go," he said on Sunday.

www.forbes.com Reuters, 01.12.03, 7:23 PM ET By Hugh Bronstein

NEW YORK, Jan 12 (Reuters) - Latin American sovereign bonds were expected to trade flat this week while investors keep an eye on Venezuela, the market's wild card, where a six-week-old national strike has hobbled the world's No. 5 oil exporter.

As they have since the strike began on Dec. 2, investors are left guessing when the work stoppage will end and what fiscal wreckage will be left in its wake. The strikers are calling for fresh elections, hoping to put an end to the controversial presidency of Hugo Chavez.

Some analysts and investors on Sunday said the strike must be reaching a "breaking point," but Jim Barrineau, a vice president in emerging markets research at Alliance Capital Management, warned the market not to hold its breath.

"A negotiated agreement is probably still weeks away because I don't see where either side has room to compromise," he said.

Venezuelan total returns have already dropped 7 percent in January while the market as a whole, as judged by JP Morgan's Emerging Markets Bond Index Plus, has risen 1.7 percent.

Barrineau said he expects the nation's bond prices to keep falling in the days to come. Other New York-based analysts were more optimistic.

"I think something is going to break in Venezuela over the next week or so," said Joe Portera, global fixed income director at MacKay Shields, a New York-based investment management company.

The United States on Friday said it supports forming a group of key regional nations who could nudge both sides to an electoral solution to end their bitter impasse. U.S. officials said they hoped to bolster talks brokered by the Organization of American States that have so far failed to reach an accord.

"I'm optimistic about the United States finally getting involved," Portera said. "We actually added a bit to our Venezuela bond holdings over the last week because we think things had gotten overdone in terms of selling."

As long as the situation does not worsen, Portera noted that the government appears to have enough reserves to keep paying its bond service on time.

Chavez, notorious on Wall Street for his failed economic policies and anti-capitalist rhetoric, was elected in 1998 vowing to wrest control from the country's corrupt elite and enact reforms to help the poor. But opposition has grown amid charges the president wants to establish a Cuban-style authoritarian state.

The country's constitution allows for a binding recall vote half way through a president's term, which in Chavez's case would be after August. Opposition leaders say that is too far away and they want to go ahead with a nonbinding referendum on Chavez's rule scheduled by electoral authorities for Feb 2.

But Chavez says the February poll would be unconstitutional and and that he will ignore its result, even if he loses. He says he will abide by the outcome of the later referendum.

Venezuelan troops fired tear gas on Sunday to force back tens of thousands of anti-government protesters in Caracas. Chavez threatened take over the country's banks, which last week held a 48-hour stoppage.

But the banks will reopen on Monday, continuing the restricted service hours they have adopted since the strike began on Dec 2. "The Venezuelan strike has played out in a way that has been more damaging than people expected," said David Roberts, senior international economist at Banc of America Securities.

"The pressures are so severe that the situation must be reaching a breaking point," he added.

BRAZIL SEEN STEADY TO HIGHER Investors will also keep an eye this week on Brazil, Latin America's biggest economy, where the new president, Luiz Inacio Lula da Silva, last week mapped out his strategy for reforming the country's public pension system.

"A few details are leaking out," Barrineau said. "It looks like it could be a pretty aggressive plan and that's one factor that could keep a good tone in the market."

Changes to the social security system could soothe worries about Brazil's $260 billion debt load.

Investors fled Brazilian bonds last summer when it started to appear likely that Lula, who had lost the previous three presidential elections, would win October's vote.

The former metal worker was notorious on Wall Street for suggesting years ago that the government default on its debt in order to redirect money toward the nation's poor.

But Brazilian total returns are up 6.88 percent so far this month as Lula's government has delivered market-friendly policy signals, including the pension reform effort.

Copyright 2003, Reuters News Service

www.voanews.com VOA News 12 Jan 2003, 22:23 UTC

OPEC headquarters, ViennaVenezuelan soldiers have fired tear gas at tens of thousands of opposition supporters marching on a heavily-guarded military base in Caracas.

The military show of force injured at least 19 protesters, including a newspaper photographer hit by rubber bullets.

Sunday's march was in support of a general strike aimed at forcing President Hugo Chavez to resign or order early elections. The six-week strike as crippled Venezuela's economy and choked off oil production by what was once the world's fifth-largest oil exporter.

The Organization of Petroleum Exporting Countries said Sunday it will boost oil production to make up for the drop in Venezuelan exports that has increased world oil prices to a two-year high of $33 per barrel.

The cartel says nine of its 11 member nations will raise oil production, boosting overall OPEC output from 23 million barrels a day to 24.5 million.

Meanwhile, President Chavez accused his opponents of being "fascists" in his weekly radio and television address Sunday. He also threatened to revoke the broadcast licenses of private stations that are fiercely critical of his rule. Mr. Chavez, who has refused to resign, vowed Saturday to break the general strike that began December second.

A protest at the military complex in Caracas on January third ended in clashes with Chavez supporters that left two people dead and more than a dozen wounded.