usinfo.state.gov 15 January 2003 State Department Noon Briefing Transcript

QUESTION: President Chavez said today that he's not particularly interested in having the US be a part of the -- of any Friends of Venezuela group. So now you've got him saying that and the Venezuelan opposition saying they don't want Brazil to be in it. So what are your thoughts on this sticky wicket?

MR. BOUCHER: Well, as you know, the goal of this group is to - I am sorry?

QUESTION: Do you have any comment on the archaism --

MR. BOUCHER: I am not going to comment on the bombast -- or the sticky wicket, either. (Laughter).

The goal of putting together some kind of 'friends group' has been to support the Secretary General and his efforts to have people on the ground that can help him. The United States has been very active, both with the government and the opposition and, indeed, civil society in general in Venezuela, to try to encourage people to reach a settlement, to reach a political solution. We would expect to continue to do that and therefore do believe that we should continue to do that with any grouping that is formed. The issue of support for the Secretary General is one I think that members of the OAS and any other interested parties would consider and decide amongst themselves.

QUESTION: So it sounds to me that if you're saying that the United States would insist on being part of such a grouping?

MR. BOUCHER: I think we would expect to be part of it, and others would expect us to be part of it.

QUESTION: Right. Okay. And would you also expect Brazil to be a part of it.

MR. BOUCHER: Again, with that -- I do not want to start today what I did yesterday; not start naming specific countries to be members.

QUESTION: Except for your own?

MR. BOUCHER: I suppose everybody could -- who wants to be on it -- could say that they want to be on it if they wish, yes.

QUESTION: Yes, but you do realize you carry a great deal of weight, the United States does in these kinds of things.

MR. BOUCHER: Yes?

QUESTION: So one would think that if the United States --

MR. BOUCHER: We would expect to be there to carry our weight.

QUESTION: -- support of Brazil, that they would be in.

MR. BOUCHER: That is why I have not started naming any particular country or not naming any particular other country.

QUESTION: Okay.

MR. BOUCHER: Terri?

QUESTION: On the matter of clubs, can you tell us whether you made any progress on keeping Libya off the human rights -- from heading the Human Rights Commission? Anything new on it?

MR. BOUCHER: There is really nothing new on that today. There is a I think the matter gets voted on next week of January 20th, so we have had our embassies approach people and we have made clear our view that there needs to be a vote, that people should vote their conscience and we would say not vote for a chairmanship by country that is a human rights violator and that is under UN sanctions.

QUESTION: But you were not very optimistic that people were going to view it that way. Have you heard anything about.

MR. BOUCHER: I try not to gauge our chances. Just say it is something we are working on and we have asked our embassies to follow up. As we have said, we think it is important for each country to consider carefully how it might vote and whether it can, in good conscience, vote for a human rights violator and a country under UN sanctions to be chairman of the UN Human Rights Committee.

QUESTION: On Venezuela. Does the need for this group called the Friends of Venezuela, does that imply that the OAS has failed?

MR. BOUCHER: No. It implies that the OAS needs and deserves every possible support it can get from the countries of the hemisphere, all of whom are pledged to support democracy, all except one who are pledged to support democracy. The members of the OAS, I think, do want to do what they can. There was an OAS meeting specifically on the subject where all the nations expressed their strong support for Secretary General Gaviria's efforts and this is another way that we think we can put people on the ground and work with the Secretary General to really support him in every possible way.

QUESTION: Will you welcome European countries to be part of this group?

MR. BOUCHER: I am not naming any regions or countries at this point. We will see what emerges from the discussions that we are having with others.

MR. BOUCHER: Okay, thank you.

(The briefing was concluded at 1:45 p.m.)

(end transcript)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: usinfo.state.gov)

sg.biz.yahoo.com Thursday January 16, 5:20 AM GLOBAL STOCK INDEXES at 15:15 EST/2015 GMT

                     Latest     Change   %Change    %12/31

New York DJ Indus 8748.34 -94.28 -1.07 +4.88 Intraday Nasdaq 1444.72 -16.27 -1.11 +8.18 Intraday NYSE Comp 5185.76 -47.90 -0.92 +3.72 Intraday S&P 500 921.28 -10.38 -1.11 +4.71 Intraday Russell 2000 396.42 -2.03 -0.51 +3.48 Intraday Wilshire 5000 8706.40 -86.77 -0.99 +4.35 Intraday Toronto TSE 300 6803.44 -7.54 -0.11 +2.86 Intraday London FTSE 100 3887.80 -57.80 -1.46 -1.33 Close FTSE 250 4339.90 -36.50 -0.83 +0.48 Close Frankfurt Xetra DAX 3049.40 -49.32 -1.59 +5.42 Close Paris CAC40 3134.66 -39.37 -1.24 +2.31 Close Tokyo Nikkei 225 8611.75 +58.69 +0.69 +0.38 Close Nikkei 300 167.63 +2.12 +1.28 +1.32 Close Hong Kong Hang Seng 9873.49 +77.18 +0.79 +5.92 Close NEW YORK STOCKS:

U.S. stocks are down Wednesday after Intel sparked concern about the semiconductor industry, a favorite sector among traders, despite itself reporting promising quarterly results.

Intel said it will curtail spending on production equipment, delivering a blow to builders of chip manufacturing equipment, which now can't plan on as much business from the No. 1 semiconductor maker. Intel will spend between US$3.5 billion to US$3.9 billion on such equipment, less than the US$4.7 billion spent last year.

Intel's announcement comes as analysts have cut their forecasts for the fourth quarter, which companies are about to report. They expect fourth-quarter earnings to rise 10.9% versus the prior year, according to Thomson First Call, but their growth forecast was 12.9% just two weeks ago.

Automatic Data Processing, a payroll-processing firm, hasn't helped sentiment by cutting its earnings forecast for the fiscal year ending June 30, saying profit should grow by a low-single-digit rate, not the mid-single-digit pace previously expected. The stock is down 3.20, or 8.1%, to 36.28.

A surge in the price of oil is also hurting equities. A U.S. government report showed a surprisingly steep decline in crude oil inventories in the week ended Jan. 10, which has sent prices up 83 cents, or 2.6%, to US$33.20 a barrel Wednesday.

While Intel played down the significance of its spending plans - saying it needs to buy less equipment because the machines it has are more efficient - some on Wall Street are concerned the company is playing coy, not revealing that the cutback is due to its belief that demand will be tepid this year.

As for Intel's good news, it earned 16 cents a share during the fourth quarter, better than the 14 cents a share anticipated by analysts, and revenue of US$7.16 billion also beat expectations slightly.

Nonetheless, reflecting the general worry over the chip business - despite Intel's relative strength - the Philadelphia Stock Exchange Semiconductor Index is down 11.49, or 3.4%, to 325.24. Applied Materials, a big chip equipment maker, is down 85 cents, or 5.5%, to 14.51, while Advanced Micro Devices, another chip maker, has lost 9 cents, or 1.2%, to 7.34.

Even Linear Technologies, a chip maker that projected third-quarter earnings above the analyst estimate, is down, falling 1.39, or 4.5%, to 29.43.

Intel is down 22 cents, or 1.2%, to 17.57, which puts it in the middle of the pack on the Dow Jones Industrial Average, which is off 112.38, or 1.3%, to 8730.24.

The Nasdaq Composite Index is down 19.70, or 1.4%, to 1441.29 while the Standard & Poor's 500-stock index has lost 12.38, or 1.3%, to 919.28.

Among small-cap stocks, the Russell 2000 Index is down 2.70, or 0.7%, to 395.75 and the Standard & Poor's SmallCap 600 Index has dropped 1.30, or 0.7%, to 199.92.

Transkaryotic Therapies is sinking 2.21, or 25%, to 6.52 after it didn't convince a panel of Food and Drug Administration advisers that its experimental treatment Replagal should be approved for Fabry's disease, which affects about 5,000 people worldwide.

Footstar is surging 2.56, or 35%, to 9.95 after playing down the financial significance of bankrupt discount retailer Kmart Corp.'s planned closure of 326 stores, noting that those locations generated only about US$200 million, or 8.4%, of Footstar's total sales last year.

Scholastic is up 2.05, or 5.9%, to 36.58 after author J.K. Rowling turned in the manuscript for the delayed, fifth "Harry Potter" book, which Scholastic will publish. The delay had prompted Scholastic to cut its fiscal 2003 earnings forecast in December.

NEW YORK PRECIOUS METALS:

Comex Feb gold futures settled US$1.30 lower at US$351.10 per ounce Wednesday after a choppy session in which prices dipped to five-day lows early on fund selling before rebounding later in the session on renewed weakness in the U.S. dollar.

The barrage of early fund selling had taken many by surprise, sources said, and is thought to have been sparked by gold's lack of fresh upside impetus of late despite dollar and equity market wobbles and continued geopolitical concerns.

However, bargain hunting and good levels of bank buying remained evident as soon as Feb slipped below the US$350 level, particularly once the U.S. dollar swooned against the euro between 0930 (1430 GMT) and 1000 ET (1500 GMT).

Thereafter, the early fund selling pressure waned and the dealer buying managed to lever prices back above the US$350.50 level to a US$350-$351.50 range that prevailed through the later stages of the session.

Dealers agreed that the fund community had become a little overloaded with gold in recent weeks and that the market was in store for a slight pullback before renewed upside progress could be attempted.

They also said that the continued presence of bank buying on any weakness has reaffirmed many market observers' longer-term bullish expectations of the market.

"The fact that the funds sold off was not surprising given the levels of open interest we've got, but the fact that the banks still have a hearty appetite on any dips bodes well over the long term," said one dealer, referring to the 214,684 contracts or 2.14 million ounces of open interest in gold futures reported on Comex Wednesday.

"We could do with that open interest coming lower a little before we turn higher again," he added.

"But, as the dollar is not going to miraculously strengthen any time soon, or the situations with Iraq or North Korea suddenly get worked out without any shots fired, the reasons behind the funds buying gold in the first place have not gone away - so they'll not be doing a complete reversal on their holdings and start only selling gold," he said.

"They'll just probably let (gold) cool off for a while before buying any more," he added.

John Tyree, analyst at Rosenthal Collins Group, said that key support was flagged at US$348 initially and then around US$345, US$343 and US$340.

Resistance was seen at US$357.50 and US$360, he added.

Spot gold followed the same path as Comex futures, swinging lower early to around US$348.50 before leveling off around the US$350-$351 area as the session wore on.

With the potential for fund long liquidation also overhanging the spot market, support is touted at around US$348 initially and then at US$345, US$343 and $340.

Mar silver settled 1.5 cents higher at US$4.78 after having endured a similarly choppy session as seen in gold.

Dealers said silver will continue to look to gold to provide general direction, although good support is seen at US$4.72 and then at US$4.70. Resistance around US$4.95-$5.00 is deemed impenetrable over the short term - which may serve to limit overall movement.

Nymex Apr platinum settled US$2.60 lower at US$609.60 after light speculative selling amid the prevailing very thin conditions.

Apr is seen remained holed up in a US$600-$620 range over the short term. A relatively sound demand outlook is expected to steer prices higher over the longer run.

Mar palladium was bereft of much interest whatsoever and languished in a US$245-$248 range throughout.

A less bright demand forecast compared with platinum is seen pulling palladium back toward the US$225-$230 region over the coming weeks.

Settlements: London PM Gold Fix: US$351.00, Vs US$353.10 Tuesday PM Fix U.S. spot gold 1340 ET: US$350.85, down US$2.05; Range US$348.45-353.65 Feb gold (RGCG03) US$351.10, down US$1.30; Range: US$348.70-352.20 Mar silver (RSIH03) US$4.780, up US$0.015; Range: US$4.720-4.805 Apr platinum (RPLJ03) US$609.60, down US$2.60; Range: US$607.20-613.00 Mar palladium (RPAH03) US$245.40, down US$4.60; Range US$245.00-248.00

NYMEX:

Crude oil futures rose sharply Wednesday after data showed a larger-than-expected weekly decline in U.S. inventories.

Data released by the Department of Energy's Energy Information Administration earlier Wednesday showed that U.S. crude oil stocks fell by 6.4 million barrels to 272.3 million barrels as refiners unexpectedly stepped up production by 1.1% to 92.3% of operating capacity.

The decline came despite a slight increase in imports. The data showed that imports rose by 200,000 barrels a day to 8.489 million barrels a day. Despite last week's increase, however, imports are about 1 million barrels a day lower than a month ago, an analyst at the EIA said.

Separately, the American Petroleum Institute reported that crude oil stocks fell by 3.264 million barrels to 272.236 million barrels last week, as imports tumbled by 676,000 barrels a day to 8.27 million barrels a day.

Analysts surveyed by Dow Jones Newswires had projected a decline of 2 million barrels in crude oil stocks.

Despite the disparity in import figures, traders seized on the data as evidence that the seven-week strike in Venezuela continues to cut into U.S. oil inventories.

It was "the kind of report we thought it would take to keep prices on their upward path," IFR Pegasus energy analyst Tim Evans said of the EIA report.

On the New York Mercantile Exchange, nearby February crude surged 84 cents to close at US$33.21 a barrel, just shy of a two-year high of US$33.65 a barrel hit last month.

Heating oil and gasoline futures rallied in tandem with crude despite bearish petroleum-product stock data.

February heating oil rose 1.70 cents to close at 90.86 cents a gallon, while February gasoline futures advanced 1.27 cents to close at 90.43 cents a gallon.

On London's International Petroleum Exchange, February Brent futures rose 61 cents to close at US$31.22 a barrel. February IPE gasoil futures inched up US$1.25 to close at US$261.75 a metric ton.

The rally in heating oil and gasoline futures was surprsing given that the data indicated that refiners continued to build up petroleum-product stocks.

The DOE report showed that gasoline stocks rose by 5.8 million barrels to 215.6 million barrels, while distillate stocks, which include heating oil and diesel fuel, grew by 2.6 million barrels to 132.3 million barrels.

The API report painted a somewhat mixed picture. It showed that while gasoline stocks swelled by 4.399 million barrels to 215.043 million barrels last week, distillate stocks posted a decline of 104,000 barrels to 134,277 million barrels.

Most analysts surveyed had forecast a moderate decline in both gasoline and distillate stocks.

"Even with the build of nearly six million barrels in gasoline, traders were a lot more interested in what was going on in the crude oil," said Peter Beutel, an analyst at Cameron Hanover in Connecticut. "The bottom line is that the major fundamental factors are still in effect, those being the strike in Venezuela and fear of a war with Iraq."

Beutel said that "the locals are going to smell heavy buy stops over US$33.65 a barrel. If they can somehow get some kind of fundamental justification, they'll work this market higher."

There was little indication Wednesday that either Iraq or Venezuela is going to go away as a bullish factor in the market.

The U.S. made a formal request Wednesday for limited help from the North Atlantic Treaty Organization in the event of a war with Iraq.

Prices for crude oil are in dollars a barrel and the change is in cents; prices for Nymex products are in cents per gallon and the changes are in points; prices for IPE gasoil are in dollars a ton and the change is in cents.

Nymex Prices:

Contract Settle Change Vs Low High Tuesday

Feb crude oil 33.21 +84 32.45 33.30 Mar crude oil 32.45 +67 31.85 32.50 Feb heating oil 90.86 +170 89.00 91.60 Mar heating oil 88.61 +145 87.00 89.00 Feb gasoline 90.43 +127 88.10 90.60 Mar gasoline 90.80 +141 88.60 90.90 NEW YORK LATE FOREIGN EXCHANGE INDICATIONS: Wednesday Tuesday Australia 0.5843-0.5848 0.5829-0.5834 Britain 1.6034-1.6040 1.6058-1.6064 Euro 1.0542-1.0547 1.0564-1.0569 Hong Kong 7.7990-7.7992 7.7988-7.7993 Japan 118.10-118.15 117.97-118.02 New Zealand 0.5384-0.5388 0.5385-0.5390 Singapore 1.7330-1.7340 1.7306-1.7316 LONDON METAL EXCHANGE: Copper at the London Metal Exchange

soared to a one-month high at US$1,690 a metric ton Wednesday on a heavy bout of fund and speculator buying prompted by Tuesday's strong close.

After easing lower during Asian hours, buying interest picked up pace during morning floor trade, with sentiment buoyed by the break of resistance at US$1,665/ton.

The second ring of morning trade saw the three-month contract charge up to the day's high before profit taking and light long liquidation emerged to dampen the upside momentum.

Weakness on the equity markets added to the metal's woes in the afternoon session, as did the fact technical indicators were beginning to look overbought, and the gains were pared back toward US$1,670/ton for the close.

The Dow Jones Industrial Average was around 120 points lower by the LME close while the FTSE 100 ended nearly 60 points weaker.

Although the market has made impressive gains over the last few weeks, dealers were reticent to back the metal for further upside short term. They noted that a deeper retracement would be needed before the US$1,690/ton resistance level is broken.

This sentiment was strengthened by the failure to break resistance and the pullback in the afternoon session, but much will depend on the tone of key economic releases later in the week.

The U.S. industrial production figure for December will be released on Friday and players, especially funds, will be using this number to give direction to their trading strategy.

Although copper's fundamentals are becoming increasingly positive, a poor performance for the industrial sector could dampen the mood in the market and lead to a reversal of the recent gains.

Aluminum was also a star performer Wednesday, building on Tuesday's strong performance with funds again said to behind the move.

The rally has caught a lot of players off guard given that the metal's fundamental outlook remains gloomy but further gains have not been ruled out.

"It has mostly been a sympathy move with the rest of the complex but with the funds in charge there is no telling where we will go from here," said one dealer. "We could be looking at US$1,400/ton before the end of the week but longer term I think the funds will bail and well be back to US$1,340/ton.

The buoyant mood triggered renewed buying in the tin market which helped the three-month contract break resistance at US$4,500/ton to hit a six-month high at US$4,535/ton.

Lead also broke out of its lethargic mood and charged to a one-month high at US$451/ton while zinc briefly broke resistance at US$800/ton.

Nickel continued to consolidate either side of US$8,000/ton and could challenge resistance at US$8,200/ton if Friday's data shows a strong performance by the industrial sector, dealers said.

(Prices in dollars a metric ton)

                 Wednesday PM Kerb                  Change from
                 Bid       Ask                      Tuesday PM kerb bid
Copper           1,678.00-1,678.50                  up 11.00
Lead               449.00-450.00                    up 5.50
Aluminum         1,378.50-1,379.00                  up 9.50
Zinc               799.50-800.00                    up 13.50
Nickel           8,015.00-8,020.00                  up 95.00
Tin              4,505.00-4,510.00                  up 45.00
Al alloy         1,360.00-1,365.00                  up 30.00
Al alloy         1,420.00-1,422.00                  up 15.00
(NASAAC)

EUROPEAN STOCKS:

European stocks were lower Wednesday as gloomy retail sector updates continued to fuel worries over consumer spending and Intel's fourth-quarter trading update provided little cheer for technology stocks.

At the close, London's FTSE-100 Share Index was down 1.5% at 3887.8, while Paris's CAC-40 Index fell 1.2% to 3134.66. Frankfurt's Xetra Dax Index closed down 1.6% at 3049.40.

Technology bellwether Intel easily beat analysts' earnings expectations when it presented its fourth-quarter trading update overnight in the U.S. However, the world's biggest chip maker indicated it would spend US$400 million to US$600 million less on capital expenditures this year than it did in 2002, throwing some cold water on hopes for a tech recovery to come sooner rather than later.

Among tech-sector decliners, Dutch semiconductor-equipment maker ASML fell 5.1% in Amsterdam to EUR8.4, and German chip maker Infineon skidded 2.6% to EUR8.3 in Frankfurt. STMicroelectronics Europe's biggest chipmaker fell 1.6% to EUR20.5.

U.K. high street stalwart Marks & Spencer also did little to whet investor's appetite's with its latest trading update. Shares fell 5.8% to 304 pence despite posting strong sales for its latest quarter. The company said clothing sales fell short of internal targets, and that it has had to reduce the price of more stock than expected in order to sell it, which will lead to higher-than-expected costs.

Analysts at CSFB advised investors to steer clear of some of the consumer related plays that once appeared to be a shelter in the storm. "While the case is still tentative it could be that 2003 will be the year when they too are finally sucked into the downturn," they said.

Investors remain confused as to whether the global economy is on the mend. In economic news, U.S. producer prices were unchanged in December, and core prices, excluding food and energy, declined 0.3% for a second consecutive month.

Economists surveyed by Dow Jones Newswires had forecast an increase of 0.2% overall and of 0.1% in the core figure. The figures show that the country's slowing economic growth is making inflation an increasingly remote threat.

Economists at Dresdner Kleinwort Wasserstein forecast continued sub-trend growth for the global economy during 2003 and remain skeptical that the U.S. can easily break out of its current economic soft spot. "In the Eurozone the speed at which growth picks this year will depend crucially on future policy settings in the interest rate, fiscal and exchange rate spheres," they said in a note published Wednesday.

Media stocks were also putting pressure on indexes across the region after Goldman Sachs downgraded the European media sector to cautious from neutral. The broker cited the weakening dollar, muted advertising prospects, geopolitical fears and high valuations as reasons for its bearish stance.

Continued uncertainty over the evolving situation in Iraq is also weighing on investor sentiment said traders.

Overnight Market Commentary -3-

Earnings are likely to continue dominating market direction as Apple Computer and Yahoo line up to post earnings after U.S. markets close Wednesday.

At 1646 GMT, the Dow Jones Stoxx Index of shares in European companies was trading down 1.4% at 196.98, while the Dow Jones Euro Stoxx Index, which tracks companies in countries that joined the single currency, fell 1.1% at 192.97.

The Dow Jones Euro Stoxx 50 Index was down 1.2% at 2479.9 and the Dow Jones Stoxx 50 Index was down 1.5% at 2454.5.

asia.reuters.com Wed January 15, 2003 05:04 PM ET By Phil Stewart and Patrick Markey

QUITO/CARACAS (Reuters) - Venezuelan President Hugo Chavez sought backing from fellow Latin American leaders on Wednesday to resolve a six-week-old opposition strike that has crippled his country's vital oil exports.

Arriving in Ecuador's capital for the inauguration of President Lucio Gutierrez, the populist Venezuelan leader branded his opponents "fascists" and "terrorists" and said he was fighting the same campaign that Jesus Christ had.

"The whole world is divided," the embattled leader told a reporter in Quito. "Why do you think that Christ came to the world 2,000 years ago to fight for the poor against the powerful? We are waging this battle."

Former paratrooper Chavez said he would discuss Venezuela's conflict with the region's presidents later Wednesday.

Venezuela's opposition strike, which began Dec. 2, has threatened to engulf the world's No. 5 petroleum exporter in economic turmoil and pushed up global oil prices to two-year highs. Strikers, including rebel state oil firm managers, have vowed to keep up the stoppage until Chavez quits.

U.S. oil futures on Wednesday settled up 84 cents at $33.21 as energy markets were rattled by Venezuela's strike and fears over a United States attack on Iraq. Venezuela usually supplies about one sixth of U.S. oil imports.

Venezuela's bolivar currency, battered by political and economic uncertainty, fell 6.1 percent on Wednesday against the dollar amid heavy demand for the U.S. greenback.

EYES ON LATIN AMERICAN LEFT

Latin American leaders including the presidents of Brazil, Peru and Chile planned a battery of sideline meetings on Venezuela after Gutierrez was sworn in.

They were expected to discuss an initiative to set up a so-called "friends of Venezuela" group of regional nations to help broker an end to the standoff.

The diplomatic effort aims to complement so-far fruitless talks in Venezuela by the head of the Organization of American States, former Colombian President Cesar Gaviria, who is also in Quito and will be attending some of the meetings.

"The goal of the countries grouped as 'friends of Venezuela,' is to find a calm, peaceful solution which would above all satisfy the people of Venezuela," said Brazil's President Luiz Inacio Lula da Silva.

Chavez can expect ideological sympathy from several of the presidents, including Lula -- a former metalworker who is Brazil's first democratically elected leftist leader.

Left-leaning Gutierrez, the son of an Amazon river-boat salesman, has assured investors that he is far more financially and politically orthodox than Chavez, whose foes accuse him of ruling like a dictator and of driving Venezuela into chaos.

The Venezuelan opposition has cautiously accepted the "friendly nations" initiative as long as it supports the OAS negotiations. But it remains unclear which nations would be acceptable to both the government and the opposition.

Nobel Peace Prize winner and former U.S. president Jimmy Carter arrived Wednesday in Venezuela, where he plans to hold talks with both sides next week.

Venezuela's opposition leaders, anticipating the Supreme Court will block their proposed nonbinding Feb. 2 referendum on whether Chavez should quit, on Wednesday started to examine alternatives in their campaign for elections.

Venezuela's Supreme Court is still studying the legality of the referendum on whether Chavez should step down. The government has dismissed the poll plan as unconstitutional.

Chavez, who was elected in 1998 and survived a coup in April, has said he will ignore the referendum if it goes ahead. It was unclear when the court would hand down a ruling.

While a consultative referendum could not force Chavez from power, the opposition hopes that a decisive rejection of his government would strengthen their legitimacy.

Chavez, whose reforms aim to ease poverty, accuses his opponents of trying to illegal topple him by destroying the oil sector.

seattlepi.nwsource.com Wednesday, January 15, 2003 · Last updated 2:03 p.m. PT By MASOOD FARIVAR DOW JONES NEWSWIRES     Iraqi President Saddam Hussein, right, receives unidentified Jordanian tribal leaders in Baghdad, Wednesday, Jan. 15, 2003. (AP Photo/INA)

NEW YORK -- Under sanctions and an erratic leader, Iraq has hardly been a reliable global oil supplier.

But in an odd twist, the United States has grown increasingly reliant on Iraqi oil exports to replace supplies cut off by a seven-week-old strike in Venezuela - even as the Bush Administration steps up preparations for a possible invasion - raising further concerns about the impact a U.S. attack would have on the oil market.

"The United States gets several hundred thousand barrels a day of crude oil from Iraq," said John Lichtblau, chairman of PIRA Energy in New York. "That's not insignificant."

Unpublished, preliminary government data indicate exports of Iraqi oil to the United States have been rising in recent weeks. Since the Dec. 2 start of the labor strike in Venezuela, Iraq's crude oil exports to the United States have averaged more than 500,000 barrels a day, nearly double the volume reported during the September-November period, the data show.

Last week, Iraqi oil exports to the United States jumped to 830,000 barrels a day, their highest level since early last year and nearly 10 percent of total U.S. imports that week, according to an Energy Department analyst.

While Iraq's exports remain below levels seen in 2001 and early 2002, the recent surge, including the shipments to the United States, is making a difference, analysts said.

The surge in Iraqi shipments helped boost total crude oil imports into the United States by 200,000 barrels a day last week to 8.5 million barrels a day.

"That's probably in reaction to the loss of Venezuelan exports," said Aaron Brady, an analyst at Energy Security Analysis Inc., a consulting firm in Wakefield, Mass. "You need to make it up somehow. Iraqi oil is doing its share filing in that gap."

Iraqi oil exports have been erratic since the start of the United Nations oil-for-food program six years ago. The program allows Iraq to sell as much oil as it likes provided revenue go into a U.N. account and are used mostly for humanitarian purposes.

After topping 1 million barrels a day in January and February of last year, Iraqi oil exports to the United States nose-dived. The decline came in response to the onerous conditions of a new U.N. pricing policy imposed to frustrate Baghdad's efforts to collect an illegal surcharge from traders.

Iraq compounded the problem by cutting off its exports in April in an ill-fated effort to spark a broad oil embargo in support of the Palestinians.

For much of last year, Iraqi exports averaged less than 1 million barrels a day, with less than half coming to the United States.

Faced with a sharp loss of revenue and U.S. threats of military action, Iraq quietly dropped the surcharge demand in September. Some analysts saw the move as an attempt to build commercial ties as a bulwark against a U.S. attack.

Whatever the motive, the change prompted major international oil companies to return to the Iraqi market for the first time in nearly two years, according to industry analysts and U.N. diplomats.

The result has been a clear rise in Iraq's oil exports, according to U.N. figures. Since the start of September, Iraqi exports have averaged about 1.5 million barrels a day, the figures show.

Iraq typically ships between 40 percent and 50 percent of its oil exports to the U.S. market. But even if more oil goes to Europe, in a global market it makes little difference, Brady said.

"It frees up other oil to be sent to the United States," Brady said. "It's helping right now."

With Iraqi oil exports rising and Venezuelan oil largely off the market, analysts are increasingly concerned about the prospect of losing both producers at the same time.

Those concerns have driven oil prices up over $33 a barrel to two-year highs in New York. Prices are now 75 percent higher than they were a year ago.

To help offset the loss of Venezuelan oil, the Organization of Petroleum Exporting Countries agreed Sunday to hike production by 1.5 million barrels a day beginning Feb. 1.

Iraq, an OPEC member, wasn't part of the agreement, because its exports are controlled by the U.N.

OPEC officials said they will hike production again if Iraqi oil supplies are disrupted by a war.

The Bush administration has so far resisted pressure to release oil from the nation's Strategic Petroleum Reserve to counter the Venezuelan supply shortfall. Observers believe the administration wants to have the option of tapping the reserve if there is a war with Iraq.

www.jta.org By Julie Drucker Jewish Journal of Greater Los Angeles

LOS ANGELES, Jan. 13 — These are sad days for the Jewish community in Venezuela as many begin to question whether this country, once so hospitable to Jewish life, can still be called home.

As the country faces nearly its sixth week of a devastating strike calling for early elections or the resignation of President Hugo Chávez, Venzuela’s economy, already set to shrink by 6 percent this year, has been hurled into utter chaos. Poverty levels are estimated at 80 percent— a tragedy for one of the wealthiest and most stable countries in Latin America.

The economic deterioration that began with the Latin America debt crisis of 1983 and has continued unabated is now coming to a head under the rule of Chávez. A former army officer and ex-coup leader, Chávez has initiated a self-styled “revolution” marked by fiery, anti-wealth rhetoric and little action. His close ties to Cuban dictator Fidel Castro and leftist policies have deeply polarized the country, with twoentrenched camps on both sides of the strike — neither of which is showing any signs of backing down. After a month of paralysis, more people are armed, food and supplies are growing scarce, and oil production has ground to almost a halt. The nation is on the brink of chaos, and anything could happen.

Venezuela’s present predicament is particularly disappointing. Once viewed as a beacon of democracy in a region dominated by military dictatorships, Venezuela had enjoyed nearly a half-century of stability and economic growth — thanks largely to its great reserves of oil. The resulting opportunities drew substantial numbers of Jews to Venezuela. Although Jews began immigrating to Venezuela at the beginning of the 19th century, it was not until after World War II that most Jews arrived and formed a strong and vibrant community. The Jewish population received yet another boost after the Six-Day War in 1967, when a large influx of Sephardi Jews from Morocco arrived and settled mostly in the capital of Caracas.

At the peak of the boom years, the ’60s and ’70s, it was estimated that affiliated Jews numbered approximately 30,000, split evenly between Sephardim and Ashkenazim. Middle-to-upper-class professionals and business owners established associations, schools, synagogues and community centers. They developed deep ties to the country and a strong sense of patriotism. They acculturated and settled into a comfortable “live-and-let-live” rapport with the government — the government welcomed the community and the Jewish community kept a low profile.

A snapshot of the Jewish community at present shows a different picture. On the economic front, many Jews, just as the population at large, are slowly being squeezed out of the middle class. Once lucrative professions now barely pay enough to make ends meet. An experienced university professor, for example, now makes approximately $200-$300 a month. This forces professionals to become small entrepreneurs, or leave.

Dr. Marcko Glijenschi, founding member of the Confederation of Israeli-Venezuelan Associations, an umbrella organization that organizes the Ashkenazi and Sephardi communities in Venezuela, reports a notable increase in assistance recipients. An average caseload prior to Chávez was around 100 cases; it now is approximately 400. In addition, the requests are changing from items such as matzah and candles to staples, such as soap or toothpaste.

Another telling event is the recent closure of one of the campuses of the well-established day school in the old Jewish neighborhood of San Bernardino in Caracas. The 450-student school was under financial strain. Its capacity to provide aid to an increasing number of families requesting scholarships, or enrolling their children and not keeping up with payments, became impaired by the simultaneous reduction in donations.

All this may seem reminiscent of Argentina. But according to Venezuelan community leaders, the Jewish community’s present predicament is not the same. Argentina’s social structure was different, with a large Jewish

proletariat class. By contrast, Venezuela’s Jews are mostly middle to upper class. Argentina has seen a full quarter of its Jewish population slip into poverty, while in Venezuela, the Jewish community’s economic problems are, so far, small enough to be handled locally, within the community. Resources are strained, however, and time is running out. The red flags have been raised, prompting a visit from the American Jewish Joint Distribution Committee to instruct community leaders as to what to do if the situation deteriorates.

Although these events are alarming, the greatest current threat to the community is widespread emigration. Since the 1980s, Jews have been gradually emigrating due to worsening economic conditions. Under Chávez, the trend has become dramatic. Glijenschi comments that prior to Chávez’s election in 1998, the population of affiliated Jews numbered 20,000; now, it has shrunk to 14,000.

The custom of sending college-age children abroad — often to the United States — to get a university education and then return to settle in Caracas, is now turning into a slow emigration pattern. Children are no longer encouraged to return. In addition, many Venezuelans are physically leaving the country, but still keeping business ties.

Finally, young professionals facing an unpromising future are being forced to leave. Just recently, for example, 250 professional Jewish Venezuelans met in Miami to discuss prospects for immigration to the United States and a new life. Understandably, the mood has become bleak and pessimism prevails. Will the community survive?

Rabbi Pynchas Brener, head rabbi of La Unión Israelita, a large modern Orthodox temple that also runs a day school and community center for approximately 1,500 families, sees three potential scenarios, all linked to the outcome of the present conflict: If Chávez stays in office, and continues present policies, Jews will continue to emigrate at the rate of 2 percent to 3 percent a year, slowly but systematically shrinking the community; if Chávez succeeds in his Castro-style “Bolivarian Revolution” and implements extreme leftist policies, 50 percent of the community would leave rapidly; and, if Chávez loses the present conflict and resigns, the community would be invigorated by the return of 30 percent to 50 percent of the recent emigrants.

Ena Rotkopf, director of the Venezuelan Federation of Jewish Women,agreed: “If the situation changes, I have no doubt that those who emigrated will return because our community is very united, the country is beautiful, and the Jews who left have very deep ties. Our present leaders are all graduates of our day schools, they love their community, they love their country.”

Julie Drucker, a language and marketing consultant for the Latin market, grew up in Venezuela and lives in Los Angeles. She can be reached at JulieDrucker@yahoo.com.