abcnews.go.com Ecuador's New President Lucio Gutierrez Pledges War on Corruption As He Takes Office QUITO, Ecuador Jan. 15 —

Lucio Gutierrez, a cashiered army colonel who led a coup three years ago against an unpopular president, took office Wednesday as Ecuador's new president and immediately issued a warning to the country's "corrupt oligarchy."

His followers in the Congress chanted "Lucio, Presidente" as he strapped on the red, yellow and blue presidential sash and took the oath of office.

"Lucio Gutierrez will not govern for the left nor for the right. He will govern for Ecuadoreans unhindered by the ideologies of the past," he said to loud applause.

But he issued a warning that he will take strong steps against "the corrupt oligarchy that has robbed our money, our dreams and the right of Ecuadoreans to have dignified lives."

Gutierrez, 45, has pledged a war against corruption that most likely will bring him into a confrontation with Ecuador's entrenched political elite.

He has labeled Ecuador's traditional parties and their leaders as corrupt and said all of the country's former presidents should be in prison for their responsibility in "the national disaster" although he later apologized for his remarks.

In a newspaper interview published Wednesday he reiterated his warning that he will call massive street protests if the political establishment tries to block his reforms.

In a fiery address Tuesday night before the Supreme Electoral Tribunal, Gutierrez said he would found a new Ecuador based on "ethical values, moral values ... with social justice" for the poor, including Ecuador's large Indian population.

Seven Latin American presidents were among the guests at the inauguration ceremony, including Cuba's Fidel Castro, Brazil's Luiz Inacio Lula da Silva and Venezuela's Hugo Chavez.

It was the first time that Castro, da Silva and Chavez all of them leftists and Gutierrez, who describes himself as center-left but enjoyed the support of leftist groups during his campaign, had gathered in the same place.

On his arrival in Ecuador, Chavez referred to Gutierrez as "my comrade and brother in arms." Gutierrez has frequently expressed his admiration for Chavez, raising fears among some Ecuadoreans that he may seek to emulate Chavez, a former paratrooper and coup leader like Gutierrez whose leftist rhetoric has divided Venezuela along class lines and produced growing political instability.

"I think they are different personalities but their political plans are not so different," said Benjamin Ortiz, head of a Quito think tank. "His goal is to accumulate political power and if he achieves it, it will be a beginning similar to that of Chavez, who began with popular referendums."

Gutierrez, frequently referred to in the streets simply as "the Colonel," thrust himself into the national spotlight three years ago when he led a group of disgruntled junior army officers and 5,000 Indian protesters in an uprising that drove the highly unpopular Jamil Mahuad from power in the midst of the country's worst economic crisis in decades.

He won an election runoff in November, on a campaign pledge to put an end to deeply rooted corruption.

One international study ranks Ecuador as the second-most corrupt country in Latin America and the eighth most corrupt in the world.

In his campaign Gutierrez pledged to reduce the number of lawmakers, eliminate the influence of political parties over the court system and extradite corrupt bankers who made off with people's money when the banking system collapsed in 1999. He plans to call popular referendums to achieve his reforms.

"At some moment the country must change or if it doesn't I will convoke marches," he said in an interview published Sunday in the daily HOY. "We will not permit the mafia to destroy what we want to build."

Gutierrez got a taste of what he faces in his efforts to rein in Ecuador's traditional power brokers when he failed in a bid to negotiate an agreement with opposition parties that would have given him control of the 100-member Congress. Gutierrez's political coalition has only 17 seats.

www.forbes.com Reuters, 01.15.03, 1:22 PM ET A corrected repetition follows. By Silene Ramirez

CARACAS, Venezuela, Jan 15 (Reuters) - Venezuela's bolivar fell 7 percent in interbank trading on Wednesday, closing down 3.4 percent against the U.S. dollar after Central Bank intervention to prop up the currency, which hit new lows on the 45th day of a general strike.

The bolivar slid early Wednesday to 1,770, triggering intervention by the Central Bank, which sold an estimated $30 million in addition to the $30 million it had already offered during the day's dollar auction sessions, traders said.

"The foreign exchange market is crazy. People aren't looking at the price. What they want is to have dollars in their hands," one trader said.

"When the demand was unstoppable, and it looked as though the price had no limit, the Central Bank came in hard selling dollars to push it below 1,770 bolivars," another trader said.

The Venezuelan currency has fallen sharply in recent days as the national strike grinds on with no end in sight.

The strike by opponents of President Hugo Chavez, who want him to resign and hold early elections, has severely disrupted oil production and shipments by the world's No. 5 petroleum exporter.

The interbank rate <VEB=><VEB2=> closed at an average of 1,695.25 bolivars to the dollar, down 57.75 bolivars from Tuesday's interbank close of 1,637.50 bolivars. This followed declines of 4 percent on Tuesday and 5 percent on Monday.

HARDENING POSITIONS The Venezuelan Central Bank's bolivar reference rate , the overall official average calculated at the end of the trading session, was down 3.2 percent against the dollar on Tuesday at 1,612.50 bolivars.

Measured by this rate, the bolivar has lost 13 percent of its value against the dollar since the start of the year, and 18 percent since the strike started Dec 2.

Signaling a hardening of the government's position against the strikers, Chavez blasted them as "terrorists" on Tuesday and said he would not negotiate with them.

By throttling the country's oil income, the strike is pushing the already weakened economy further into recession.

Vice President Jose Vicente Rangel said on Tuesday the government had no intention of holding early elections and was aiming to try to rule to the end of its term in 2007.

In a bid to break the deadlock, the United States and other countries are moving to set up a "friendly nations" group to back efforts by the Organization of American States to broker an agreement on elections. Mexico and Argentina said on Tuesday they were willing to be part of such a group.

Chavez and other regional leaders were due to meet in Quito on Wednesday to attend the swearing-in of Ecuador's new president, Lucio Gutierrez. They were expected to discuss the "group of friends" initiative.

The oil industry strikers have said they would continue the shutdown until Chavez quits or agrees to hold early elections.

Chavez, the outspoken former paratrooper who was elected in 1998 and survived a coup last April, has vowed to beat the strike.

www.forbes.com Reuters, 01.15.03, 1:05 PM ET By Patrick Markey

CARACAS, Venezuela (Reuters) - Venezuela's opposition leaders, anticipating the Supreme Court will block a Feb. 2 referendum on whether President Hugo Chavez should quit, Wednesday started to examine alternatives in their campaign to force the leftist leader to resign.

Venezuela's Supreme Court is still studying the legality of the referendum called by the opposition on whether Chavez should step down. But opposition leaders have said they expect the nation's top court would reject the proposed poll.

Andres Velasquez, a member of the opposition alliance Coordinadora Democratica, said it was an "open secret" that the court would suspend the referendum. He said they were eyeing other options, such as constitutional reform and a constituent assembly to trigger early elections.

"It would be a pity for the country if the Supreme Court yields to pressure from the government to halt this referendum. They would be robbing the nation of its constitutional rights," Velasquez told Reuters.

It was unclear when the court will rule on the referendum. Foes of Chavez, who are staging a six-week-old strike that has slashed the nation's vital oil production, hope the nonbinding referendum would bolster their fight against a president they charge has caused political and economic chaos with his left-wing reforms and dictatorial rule.

The shutdown, which began on Dec. 2, has threatened to engulf the world's No. 5 petroleum exporter in economic turmoil and helped push up global oil prices to two-year highs. The opposition, including rebel state oil firm managers, has vowed to keep up the strike until Chavez quits and calls elections.

U.S. oil futures Wednesday were up 65 cents at $33.02 in an energy market rattled by Venezuela's strike and fears that a U.S. war with Iraq would disrupt crude supplies. Venezuela usually supplies about a sixth of U.S. oil imports.

Venezuela's bolivar, battered by political and economic uncertainty, fell Wednesday for the third consecutive day as jitters over the strike sent the currency down as much as 7 percent against the U.S. dollar. It closed down 3.4 percent.

PUSH FOR ELECTIONS, INTERNATIONAL APPEALS Chavez, a populist elected in 1998 who survived a coup in April, has rejected calls for early elections and vowed to defeat the strike. He says the constitution only allows a binding referendum on his rule after August -- halfway through his current term.

The bitter deadlock over his rule intensified after the opposition stepped up its daily campaign of street protests and rallies. At least 5 people have been killed and dozens injured in street clashes since the strike began.

While a consultative referendum would not legally force Chavez from power, the opposition hopes that a decisive rejection of his government in such a poll will strengthen the legitimacy of their call for elections.

Opposition representatives are also studying a constitutional amendment that would shorten the president's term in office. That measure would require a referendum and a majority vote in the National Assembly. The opposition may also try to call a constituent assembly, which could alter the constitution to allow early elections.

International pressure is increasing for the two sides to break the stalemate as talks brokered by the Organization of American States (OAS) have so far failed to reach an accord.

Opposition representatives held meetings in the United States Wednesday to shore up support for their campaign. They are also promoting the possible creation of the "group of friends" of regional nations to back peace negotiations.

Nobel Peace Prize winner and former U.S. president Jimmy Carter also arrived in Venezuela, where he plans to hold talks with both sides later this month.

Chavez visited Quito Wednesday for the inauguration of Ecuador's new President Lucio Gutierrez during which regional presidents were also to discuss the fledging "group of friends" initiative. Chavez will meet with U.N. head Kofi Annan Thursday to discuss the Venezuelan crisis. I

www.forbes.com Reuters, 01.15.03, 12:38 PM ET By Susan Schneider

NEW YORK, Jan 15 (Reuters) - Brazil's sovereign bonds tripped nearly 1.5 percent lower on Wednesday, weighing on the broader market, as investors worried the courts may be dilute new President Luiz Inacio Lula da Silva's plans to overhaul the costly pension system.

Brazil's share of the J.P. Morgan Emerging Market Bond Index Plus lost 1.4 percent, dragged by a 1.5 point drop in the benchmark C bond <BRAZILC=RR> to 69.75 bid. The broader EMBI-Plus slid 0.42 percent.

The Brazilian losses came after Marco Aurelio Mello, the president of Brazil's supreme court, told a local newspaper that Lula's pension form proposal "is unlikely to prosper in a democratic state under the rule of law."

The comments, which also sank the nation's currency, the real, and Brazilian stocks, raised doubts about how much leverage Lula's two-week-old presidency may have to push through structural reforms investors view as paramount to improve the nation's finances, said analysts.

"They are talking about giving some concessions to the military and other special cases amongst the civil servants, so I guess there is some disappointment about how aggressive that reform bill is going to be," said Siobhan Manning, Latin American debt strategist at Italian investment bank Caboto.

Venezuela's debt also moved into negative territory as foes of President Hugo Chavez maintained a six-week-old strike that has choked oil production -- the source of one-half the government's revenues -- to a trickle. The nation's share of the EMBI-Plus lost 0.87 percent.

While investors are holding onto some Venezuelan debt in hopes Chavez will step down, opening the door to a more market-friendly leader, the reigning fear is that the two sides will remain at an impasse and further damage an economy already in recession. Venezuela's debt has lost nearly 9 percent so far this month on the economic worries.

"The bolivar (currency) is down about 6 percent, the strike continues and there were a bunch of downgrades in the past few days," which are combining to weigh on the bonds, said an emerging debt trader.

Moody's Investors Service cut the ratings on four Venezuelan oil projects on Tuesday and Fitch Ratings lowered the ratings of Venezuela and state oil company PDVSA, among others, last week.

Members of Venezuela's opposition were in New York on Wednesday to call for greater international support in the conflict, which they said must be resolved by democratic and electoral means.

Chavez, meanwhile, branded the strikers "terrorists" on Tuesday and said he would not negotiate with them.

Ecuador's debt also took a dive, weighed down by market heavyweight Brazil, in the hours before retired Col. Lucio Gutierrez took office as the Andean nation's president. The nation's share of the EMBI-Plus slid 2.13 percent on the day.

Gutierrez, who helped lead a coup three years ago that toppled the president, won over voters with vows to rein in corruption and poverty. He has also wooed investors with pledges to pay the debt and seek an International Monetary Fund deal, although investors say the IMF accord must come quickly if the country is to avert a cash crunch.

(Reporting by Susan Schneider, Reuters Messaging: susan.schneider.reuters.com@reuters.net, tel: +1 646 223 6319.)

www.latintrade.com 01/15/2003 - Source: BNamericas

Venezuela's state oil company PDVSA has delayed plans for a nitrogen injection project in the east of the country and a combined nitrogen injection and power generation project in the west "indefinitely," a mines and energy ministry source told BNamericas. According to previous reports, combined investment in the two projects would be some US$2.7bn. PDVSA's new management has formed a technical committee, which is re-evaluating the feasibility of the two nitrogen injection projects, the source said, without saying when the committee might make a decision. Bids for the eastern and western projects were due this month.

The projects would have produced nitrogen for reinjection to increase hydrocarbons production, and the western project, at Ciudad Ojeda in Zulia state, would have included a 1,000MW power plant. PDVSA had sold about 40 sets of bidding rules for the projects before Venezuela's general strike started, which has brought the world's fifth largest oil producer to the verge of collapse with thousands of oil-workers calling for President Hugo Chavez to quit. In retaliation for PDVSA's part in the strike Chavez has fired managers and plans to split the state-owned company into two separate entities in the east and west of the country.