www.cnn.com Chavez vows more raids on industries that support strike Sunday, January 19, 2003 Posted: 5:59 PM EST (2259 GMT)

New army chief Jorge Garcia Carneiro helps Venezuelan President Hugo Chavez prepare for his weekly TV and radio show Sunday.

CARACAS, Venezuela (CNN) -- Embattled Venezuelan President Hugo Chavez appointed two retired generals to key posts Sunday as an opposition-led oil industry strike, intended to force Chavez from office, entered its eighth week with no end in sight.

Chavez also threatened military raids on food producers who participate in the strike, which has crippled oil output and brought Venezuela's economy to a standstill. The country is facing severe shortages of gasoline, flour and bottled drinks, including milk, soft drinks and water.

"There are some businesspeople who have thought about it, who have made their products available to the consumers," Chavez said during his weekly television and radio show "Hello President." "Those who refuse, those who resist, can rest assured that today, tomorrow or beyond, we will search their warehouses, their storerooms. If they don't want to open, we will open them."

The statement comes after the national guard, on Chavez' orders, took over a Coca-Cola distribution plant Friday in the state of Carabobo. Officials said the army will turn over the products it seized to the state consumer protection agency, Indecu, which is then to distribute Coca-Cola to stores.

The move came after the country's superior court of agricultural affairs ruled that the government can take over facilities necessary to keep basic goods flowing.

Chavez said during the program Sunday that he was appointing retired Gen. Lucas Rincon as his new interior minister and Gen. Jorge Garcia Carneiro as the new chief of the army. Both men are considered loyal generals who have proven their staunch support for Chavez.

Rincon, who retired as defense minister in July, was also a former army chief of staff. Carneiro replaces Gen. Julio Garcia, who was named to the post in April after Chavez withstood a military coup attempt.

-- CNN producer Penny Mannis and correspondent Diana Muriel contributed to this report.

www.alertnet.org Jan 2003 22:10

By Tom Ashby

CARACAS, Venezuela, Jan 19 (Reuters) - Venezuelan President Hugo Chavez said on Sunday that he was winning an "oil war," restoring crude flows, restarting refineries and reopening ports crippled by a seven-week strike.

But the leftist leader said he faced resistance from "saboteurs," who cut off gasoline supplies to Caracas, hacked into computers controlling oil facilities and finances and persuaded some trading partners not to deal with the South American nation.

Crude oil output, which fell from three million barrels per day (bpd) to about half a million earlier this month, had recovered to almost 1.2 million bpd by Sunday, Chavez said.

"We could reach two million barrels per day before the end of the month," he said during his weekly television and radio show "Hello President".

Striking employees of the state-owned Petroleos de Venezuela (PDVSA), who want to force Chavez to resign by cutting off his economic lifeline, estimated output was half the volume stated by Chavez at 650,000 bpd.

Calling himself the "oil commander," the former paratrooper said he had ordered the Armed Forces to step up surveillance of the industry, which was the world's fifth largest exporter before the strike.

"If we have to use our last soldier to prevent more damage being done to the oil company, which is the economic heart of Venezuela, we will do it."

The government has sacked some 1,500 PDVSA employees, and is using retired staff, unemployed workers, the military and some foreigners to restore operations.

Strikers blame unqualified staff for a spate of accidents, including 38 oil spills totaling 4,500 barrels and seven fires in oil installations since the strike began on Dec. 2.

REFINERY RESTART

Chavez said two oil refineries paralyzed by the strike, El Palito and Amuay-Cardon, had begun to process crude oil and would together process 250,000 bpd later this week.

El Palito was already running 105,000 bpd of crude oil, and aimed to start a key gasoline producing unit, the catalytic reformer, on Wednesday.

At Amuay-Cardon, with 940,000 bpd capacity the largest oil refinery in the western hemisphere, crude processing would reach 150,000 bpd by Monday.

"That should relieve fuel supply, especially in the west," Chavez said.

Of 20 state-owned oil tankers, 16 were now operating normally, including eight crude carriers to supply Venezuelan-owned refineries in the United States, Chavez said.

Some foreign companies, which normally buy the bulk of Venezuela's oil exports, were still reluctant to send tankers to its ports, he added.

Lines of cars and buses stretched for miles outside service stations in the capital on Sunday, after two days without any deliveries by road tankers.

"Until the refineries start working we will depend on imports of gasoline. We will be subject to shipping delays, sabotage to valves and pipelines," Chavez said.

Chavez said "saboteurs and traitors" had hacked into PDVSA's computer system, siphoning money out of company accounts illegally.

He said he would sue Intesa, a U.S. controlled information services company, for failing to keep computers running and withholding key passwords.

"What we have done is to cut off the systems and operate manually as we did 20 years ago," Chavez said.

"This is an electronic war... We are nationalizing the brains of PDVSA because they are in the hands of traitors and saboteurs," Chavez said.

Energy and Mines Minister Rafael Ramirez, who also appeared on the show, said a tanker carrying 1.5 million gallons of gasoline to Venezuela was diverted to another country after striking workers shed doubts on PDVSA's ability to pay.

Opposition elements were organizing meetings with the financial community abroad to spread disinformation about the company, he said.

sg.biz.yahoo.com Monday January 20, 4:54 AM

                     Latest     Change   %Change    %12/31

New York DJ Indus 8586.74 -111.13 -1.28 +2.94 Jan 17 Nasdaq 1376.19 -47.56 -3.34 +3.05 Jan 17 NYSE Comp 5108.51 -56.83 -1.10 +2.17 Jan 17 S&P 500 901.78 -12.82 -1.40 +2.50 Jan 17 Russell 2000 388.10 -6.78 -1.72 +1.31 Jan 17 Wilshire 5000 8530.32 -120.65 -1.39 +2.24 Jan 17 Toronto TSX 300 6755.92 -71.10 -1.04 +2.14 Jan 17 London FTSE 100 3820.60 -61.20 -1.58 -3.04 Jan 17 FTSE 250 4321.70 -27.80 -0.64 +0.06 Jan 17 Frankfurt Xetra DAX 2918.82 -135.29 -4.43 +0.91 Jan 17 Paris CAC40 3056.93 -85.66 -2.73 -0.23 Jan 17 Tokyo Nikkei 225 8690.25 +81.08 +0.94 +1.30 Jan 17 Nikkei 300 168.39 +0.57 +0.34 +1.78 Jan 17 Hong Kong Hang Seng 9614.59 -128.64 -1.32 +3.15 Jan 17

NEW YORK STOCKS:

Stung by downbeat economic reports, a poor showing by two key technology stocks and geopolitical concerns, U.S. stocks staged a retreat Friday.

The Dow Jones Industrial Average shed 111.13, or 1.28%, to close at 8586.74. The Nasdaq Composite Index dropped 47.55, or 3.34%, to end at 1376.20. And the Standard & Poor's 500-stock index fell 12.82, or 1.4%, to 901.78.

ADVERTISEMENT The decline in stock prices came on the heels of economic-data releases that showed an unexpected decline in industrial production in December and waning consumer confidence. Add to that worries over the Iraq situation and a lackluster showing by tech bellwethers and Dow components International Business Machines and Microsoft - IBM fell 5.5% and Microsoft lost 7% - and the end result wasn't pretty.

For the week, the Dow industrials lost 2.26%, while the Nasdaq index shed 4.94%. Both indexes, though, are still up for the year.

"After the first two weeks of the year, I was full of confidence. Quite frankly, this week has hurt not only my confidence, but also the confidence of many investors," said Hugh Johnson, chief investment strategist at First Albany. "The message is fairly clear: Investors are now not so sure that the economy is going to strengthen in 2003."

On the New York Stock Exchange, there were 1,103 issues advancing, 2,143 declining and 158 unchanged.

NYSE volume totaled 1,346,306,020 shares, compared with 1,476,120,850 Thursday.

The NYSE Composite Index was 5108.51, down 56.83. The average price per share fell 26 cents.

NEW YORK PRECIOUS METALS:

Comex gold futures eased slightly Friday on light long liquidation and week-end profit taking - but nevertheless ended the session with the highest end-of-week close in the contract's history and near six-year highs on the spot market.

The most-active Feb contract settled at US$356.80 per ounce, down US$1.30 on the day.

Extended U.S. dollar weakness relative to other currencies, equity market wobbles and taut geopolitical tensions contributed to gold's recent sturdiness and the scaling of the six-year highs of US$359 scored Thursday.

Also helping prices has been a recent reluctance of dealers to establish short positions in the metal amid the current uncertain times and particularly ahead of the approaching U.S. long weekend.

However, some profit taking by speculators and banks was noted Friday to trim Feb gold's recent gains - although prices remained above the US$355 level throughout.

Spot gold followed a similar path, ending the week around US$356.50 which is the highest end-of-week close since February 1997.

Dealers said gold prices are set to remain prone to spurts higher on any further geopolitical shocks as long as the dollar remains on its southerly path and uncertainty shrouds the global economic outlook.

However, according to the latest Commitments of Traders Report, the speculative community is currently hosting historically high net-long exposure to the market (of over 63,500 contracts), so some players are concerned that the funds' appetite for further buying may be waning.

"There's always alarm bells ringing when (fund) net length gets to historic levels and that usually precedes a reversal in price movement," said a floor dealer with a precious metals refiner.

"The only problem now is that is makes good sense to be long and would be dangerous to go short, so most people don't really know what to do except to keep going with the flow - and the flow is higher," he added.

Beyond the US$360 level the next key areas of resistance are deemed to be at US$363, US$365 and US$370.

Mar silver was 2.5 cents lower at US$4.81 in accord with gold's tone, after having tread water in a US$4.785-4.840 range through the day.

Resistance for Mar is seen at the 10-day moving average around the top end of the intraday range at US$4.835 initially and then at the US$4.85 level. Support is expected around US$4.77, US$4.75 and the 30-day moving average around US$4.745.

Nymex Apr platinum was US$4.70 higher at US$619 after light fund buying amid thin conditions pushed prices to fresh contract highs and register the highest week-end close on the spot market since April 2001.

Dealers said a promising demand and uncertain supply outlook will continue to steer prices higher over the coming weeks, although some light long liquidation is expected to appear into the strength.

Mar palladium crept higher in platinum's slipstream and settled at four- day highs of US$258, but is not expected to extend those gains over the coming days given palladium's less stellar demand forecasts.

Settlements: London PM Gold Fix: US$357.00, Vs US$352.30 Thursday PM Fix U.S. spot gold 1345 ET: US$356.47, down US$0.78; Range US$355.20-358.60 Feb gold (RGCG03) US$356.80, down US$1.30; Range: US$355.30-358.70 Mar silver (RSIH03) US$4.810, down US$0.025; Range: US$4.785-4.840 Apr platinum (RPLJ03) US$619.00, up US$4.70; Range: US$617.00-621.00 Mar palladium (RPAH03) US$258.00, up US$7.50; Range US$255.00-260.00

NYMEX:

Worries about a possible war with Iraq lifted U.S. crude oil futures to US$34 Friday for the first time since November 2000.

Profit taking pushed prices down through most of the session. But with growing talk of a U.S. attack on Iraq, traders concluded it was too risky to short crude futures ahead of the long weekend, analysts said.

"In general, we know that things are moving forward on the war front," said Tom Bentz, an analyst at brokerage house BNP Paribas Futures in New York, alluding to a massive U.S. troop buildup in the Persian Gulf. "That will continue to lend support" to the market.

On the New York Mercantile Exchange, nearby February crude climbed to a high of US$34.00 a barrel, the highest for a front-month contract since November 2000, before settling at US$33.91, up 25 cents. The contract had fallen as low as US$32.90 earlier in the session.

Heating oil and gasoline futures also recovered from earlier losses. February heating oil closed up 19 points at 89.86 cents a gallon after falling as low as 87.40 cents. February gasoline futures edged up 35 points to close at 91.11 cents a gallon, well off its intraday low of 88.00 cents a gallon.

On London's International Petroleum Exchange, Brent and gasoil futures ended in negative territory.

March North Sea Brent futures slipped 4 cents to close at US$30.54 a barrel. February gasoil futures dropped US$5 to settle at US$256.75 a metric ton.

Comments by U.S. Secretary of State Colin Powell heightened worries that the U.S. is edging close to an invasion of Iraq, Bentz said.

Powell was quoted by Germany's Sueddeutsche Zeitung newspaper as saying that "we believe a persuasive case will be there at the end of the month that Iraq is not cooperating" with U.N. weapons inspectors.

U.N. weapons inspectors are scheduled to report to the Security Council on Jan. 27 on Iraq's weapons of mass destruction program and Iraq's cooperation with the inspection.

Chief weapons inspector Hans Blix said Thursday that Iraq must cooperate more fully with inspectors to avoid war. The comment helped lift crude oil prices.

Iraq has declared itself free of weapons of mass destruction.

But U.N. officials say the declaration contains many gaps, while U.S. officials contend it is false.

U.N. inspectors reported finding 12 empty chemical warheads outside Baghdad on Thursday, a discovery some analysts say could provide the U.S. with a justification to launch an attack against Iraq.

The recent developments make war with Iraq increasingly inevitable, said analyst Peter Beutel of Cameron Hanover in Connecticut.

"Yesterday's discovery of empty missile shells is being discussed as the possible 'smoking gun' that will lead to war," Beutel said. "If it is not, something else almost certainly will."

Concerns about a possible war with Iraq come at a time when Venezuelan oil output remains crippled by a prolonged strike in the Latin American country.

Despite attempts by the embattled government of President Hugo Chavez to restore oil operations and optimistic predictions by other government officials, analysts believe it would take months for Venezuelan production and exports to return to normal.

"Even if there is a quick compromise or resolution of the crisis, a lot of the fields are fairly mature and it's going to be difficult to restart those wells," said Antoine Halff, an analyst at the Paris-based International Energy Agency. "How is Venezuela going to afford it? That problem isn't going to go away, it's going to get worse probably."

Fear that both Venezuelan and Iraqi oil supplies could remain curtailed at a time when U.S. crude oil inventories are at historically low levels is likely to keep prices high in the near term, Bentz of BNP Paribas said.

www.forbes.com Reuters, 01.19.03, 4:22 PM ET  By Hugh Bronstein

NEW YORK, Jan 19 (Reuters) - Ecuador sovereign bonds, bolstered by a new government austerity plan, are set to rise this week, while Venezuelan debt is sapped by the country's seven-week-old national strike, Wall Street analysts said.

Ecuador bonds are trading at spreads wider than those of Venezuela, reflecting the perception of greater risk. But if Ecuador takes concrete steps toward solvency while Venezuela's economy falls victim to political conflict, analysts said Ecuador could trade inside Venezuela before the end of the month.

Ecuador's new president, Lucio Gutierrez, will freeze wages and raise fuel prices under an austerity decree aimed at closing a financing gap inherited when he took office, the government said on Sunday.

The decree raises the price of the most commonly used gasoline from $1.12 to $1.48 a gallon for consumers, a hike that Gutierrez's leftist and Indian supporters have threatened to protest.

"There are two bets," said Jose Cerritelli, a Bear Stearns debt strategist.

"Either Gutierrez succeeds and he gets an International Monetary Fund agreement within a month, which would prompt an Ecuadorean bond rally, or you think his ex-supporters will go to the streets and force him to backtrack," Cerritelli said. "This would probably be the first step toward default."

Investors will watch this week for protests in Ecuador as well as any signals that might come from the IMF.

"My bet is that the protests will not be serious, the new economic program will survive and that Gutierrez will get a new IMF deal within a month," Cerritelli said. "Therefore the country that will probably rally the most this week and this month will be Ecuador." Daniel Tillotson, an emerging markets analyst at Prudential Securities, was more moderate in his optimism.

"It sounds like (Gutierrez) is delivering some seriousness that will impress the IMF," Tillotson said. "But will the IMF demand legislative endorsement of the decrees, and will the opposition-dominated legislature deliver that endorsement if required? There's still some uncertainty."

Ecuador spreads ended last week at 1541 basis points. Venezuela spreads ended at 1371. Narrower spreads reflect the perception of decreased risk as measured against safe-haven U.S. Treasury bonds.

CHAVEZ, MORE DEFIANT THAN EVER Venezuelan President Hugo Chavez, meanwhile, named a new interior minister and head of the army, placing loyal generals in key posts as he fought to beat a 49-day-old opposition strike that has strangled vital oil exports.

"The damage to the government's finances is continuing," Tillotson said. "Until that turns around, Venezuela bond spreads will have to widen to reflect the increasing risks."

Chavez said on Sunday his government would use "everything we've got" to defeat the strike launched by opposition leaders, who are pressing him to resign and hold early elections.

Chavez was elected in 1998 after 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 only reason Venezuelan bonds might stop their decline would be if investors start to believe that the opposition will force Chavez from office.

"But I think it's too early for that and the people who might be planning to remove him are not going to broadcast their plans ahead of time," Cerritelli said. "So there's really no reason for investors not to reduce their exposure to Venezuela this week."

Venezuela total returns have fallen 8.36 percent so far this month while Ecuador's are 14.19 percent higher, according to JP Morgan's Emerging Markets Bond Index Plus. The index itself stands 1.5 percent higher so far in January.

BRAZILIAN INTEREST RATES Economists largely expect Brazil's Central Bank to hold its benchmark interest rate steady at 25 percent on Wednesday, according to a Reuters poll.

Nineteen of 22 economists surveyed this week bet the bank would leave the Selic rate unchanged when the Monetary Policy Committee (Copom) finishes its monthly meeting on Wednesday, its first under Brazil's new left-leaning president, Luiz Inacio Lula da Silva, and Central Bank President Henrique Meirelles.

"It might be good for the new central banker to establish credibility by raising rates," said Mark Dow, a portfolio manager at MFS Investment in Boston.

"That might drive a stake through the heart of fear that Lula will follow an inflationist policy," Dow said. "But I'm not sure which way the central bank is going to go."

www.planetark.org

BRAZIL: January 20, 2003

SAO PAULO, Brazil - Brazil's Agriculture Ministry said last week a shipment of U.S. corn found to contain traces of banned genetically modified organisms will have to be burned, re-exported or used for paper production.

Odilson Ribeiro, Director at the ministry's plant safety department, said the shipment of 7,400 tonnes of U.S. corn at the port of Itajai in Santa Catarina state tested positive for trace amounts of genetically modified material, which would preclude its use in animal or human foods or for planting.

Tests run by the ministry turned up 0.25 percent GM material in the shipment.

The importer, National Starch Chemical Industrial, which produces corn starch for industrial foods and for paper production, is contesting the finding, telling the financial daily Valor that the U.S. corn is certified as GM-Free.

A company representative was not available for comment and the paper did not say for what purpose the corn was intended.

Jose Valerio, president of the firm, also told the paper that the level of transgenic material in the corn was at most 0.1 percent, putting it well within the legal 4 percent limit permitted by Brazil before the product can be considered genetically altered.

Brazil bans any commercial or experimental use of genetically modified food crops. The country's growing livestock industry has also been struggling with a 1 million