www.duluthsuperior.com Posted on Tue, Jan. 21, 2003 BY PASCAL FLETCHER Reuters

CARACAS, Venezuela - Nobel Peace Prize winner Jimmy Carter on Tuesday presented to Venezuelan President Hugo Chavez and his foes a plan for elections to break the political deadlock gripping the world's fifth largest oil exporter.

The former U.S. president said after talks with the left-wing leader in Caracas his blueprint foresaw an end to the crippling seven-week-old opposition strike that has slashed supply from South America's biggest oil producer.

The strike, launched by opposition leaders to press Chavez to resign and hold early elections, has jolted oil markets and threatened to bankrupt Venezuela's oil-reliant economy.

The bolivar currency tumbled 5.1 percent against the U.S. dollar Tuesday. Moody's Investors Service cut Venezuela's foreign currency debt ratings, sinking the country deeper into junk bond territory because of uncertainty over the strike.

Chavez, who was elected in 1998 and survived a brief coup last year, says he is beating the strike, which is causing shortages of gasoline, cooking gas and some food items.

Carter, who has made a career of trying to solve world conflicts, traveled to Caracas to throw his weight behind international efforts to end the Venezuelan crisis.

"Both sides now want to reach an agreement to end the impasse," Carter told a news conference before flying home.

His plan comprises two independent alternatives.

One proposes an amendment to Venezuela's constitution that would allow early elections. The other is for the country to wait until Aug. 19 -- halfway through Chavez's term -- when the constitution allows for a binding referendum on the president's mandate, which is due to end in early 2007.

OPPOSITION CAUTIOUS

Chavez told reporters after meeting Carter he was willing to accept a constitutional amendment if it followed established legal procedures. An amendment, which must be proposed by 15 percent of the electorate and be approved in a national vote, could shorten his mandate to allow early elections or bring forward the August referendum on his rule.

"I don't reject any of these possibilities, but the opposition must comply with the constitution," Chavez said.

Opposition leaders reacted cautiously. "We are open to all formulas to bring forward elections," opposition negotiator Americo Martin told Reuters. But he added the nature of the constitutional amendment needed to be clearly defined.

Anti-Chavez union boss and strike leader Carlos Ortega said the opposition would carefully evaluate any proposal for the constitution to be altered.

More than two months of talks brokered by Organization of American States Secretary-General Cesar Gaviria have failed to produce a deal on elections. The negotiations Tuesday were expected to consider the Carter proposals.

Carter said both sides would have to agree on one of his proposed alternatives. "I think this is a step in a positive direction, but certainly not a definitive answer," he said.

The opposition has been demanding immediate elections, arguing the country cannot wait until the August referendum.

The president, who himself staged a botched coup bid in 1992, has accused his opponents of trying to overthrow him.

Chavez, who purged the armed forces of opponents after the April coup, has sent troops to take over strike-hit oil installations and also to raid private factories and warehouses the government alleges are hoarding food supplies.

The oil shutdown showed signs of weakening on Tuesday when oil tanker pilots in western Lake Maracaibo went back to work.

Since the strike began Dec 2, at least six people have been killed and dozens wounded in shootings and street clashes involving followers and foes of Chavez, troops and police.

www.nytimes.com By GINGER THOMPSON

CARACAS, Venezuela, Jan. 21 — Former President Jimmy Carter dived into this country's tumultuous political crisis this week and offered two proposals today for ending seven weeks of bitter stalemate between President Hugo Chavez and a broad coalition of opponents that has left the country's economy in shambles and its people poised for violence.

In one proposal, Mr. Carter urged the government and its opponents to support a constitutional amendment that would cut the president's term from six years to four. Under such an amendment, President Chavez' term would end this year and new elections could be held soon afterward.

As an alternative to that plan, Mr. Carter suggested that the conflicting parties agree to hold a recall referendum in August that would allow the people to vote on whether President Chavez should remain in office.

"Our feeling is that both sides now want to reach an agreement to end the impasse that is destroying the economy of this country and the social order," Mr. Carter said during a press conference this morning. "I don't think anyone imagined that the strike would last 50 days. And no one wants to see it last for 70 days or 100 days.

"In my opinion," he added, referring to President Chavez and government opponents, "the proposals we have put forward encompass the basic demands of both sides."

Mr. Carter's proposals were drafted after four hours of private meetings with President Chavez on Monday, and numerous hours of meetings with important business people, union officials and political parties who lead the opposition movement against the government. The proposals are aimed at ending a national strike that has shut down most major businesses and crippled the state-owned oil industry. Oil is the lifeblood of the nation's economy, and Venezuela supplies some 14 percent of the oil that the United States imports.

An umbrella opposition group, called the Democratic Coordinator, has upheld the strike for nearly two months in an effort to force President Chavez from power. However, while Venezuela loses more than $50 million a day in oil sales, a determined President Chavez has defied the political pressure against him.

The former lieutenant colonel has kept the economy crawling. In response to the strike, President Chavez has announced the firings of more than 1,000 striking oil workers and begun sporadic imports of food and gasoline to ease critical shortages. Last week, he began seizing warehouses of soft drinks and bottled water that have been closed during the strike.

Mr. Carter said he was confident that his proposals would be well received by the opposition. And he added that there was a "positive reaction," from President Chavez. But he acknowledged that President Chavez also expressed reservations about agreeing to shortening his presidency and to rehiring oil workers who had gone out on strike.

Some 30,000 oil workers reportedly have joined the strike.

Mr. Carter said he urged President Chavez not to fire oil workers who joined the strike because of their political convictions. But he said President Chavez had told him that some workers had been accused of sabotaging refineries and tankers.

"That is a criminal act," Mr. Carter said. "But the decision about the punishment of those people would be made by the court, not the executive and based on evidence."

He added, "I hope there is going to be some backing down on both sides, which is always a crucial element in every dispute in which I have ever been involved."

Mr. Carter said the strike showed that both President Chavez, elected four years ago by an unprecedented majority of voters, and the opposition, whose demonstrations against the government draw hundreds of thousands of people, had seriously underestimated one another. Mr. Carter said, viewed the opposition as "a flash in the pan." And he said the opposition misjudged President Chavez political fortitude.

"I think now they both see the strength of the other side," Mr. Carter said, "and now is the time for them to accommodate those strengths."

President Carter said he presented a written version of the proposal to President Chavez this morning. The proposals were also presented today at negotiations between the government and opposition leaders that are being overseen by OAS Secretary General Cesar Gaviria.

Mr. Carter said the proposals would also be presented Friday in Washington at a meeting of the so-called "Group of Friends." The six-nation group — composed of the United States, Mexico, Brazil, Chile, Spain, and Portugal — is scheduled to discuss strategies for pressing both President Chavez and government opponents toward a peaceful settlement.

He flatly rejected President Chavez' recent calls to add more countries to the group, including Cuba, China, and Russia.

"This group will not be changed," Mr. Cater said. He said later, "Although President Chavez has made proposal for other countries to be members, in my opinion they will no longer be considered. The group is fixed."

www.news-journal.com By GEORGE GEDDA Associated Press Writer

WASHINGTON (AP)--Leaders from the United States and five other Democratic countries will meet here Friday in hopes of finding ways to help Venezuela overcome a political impasse between the government and the opposition.

The meeting will be hosted by the Organization of American States, which until now has taken the lead in resolving the stalemate. OAS Secretary General Cesar Gaviria has spent much of the past two months in Venezuela, but he has been unable to bridge differences between the parties over the timing of a new election.

Former President Carter, in Venezuela Tuesday on his second mediation visit, proposed an election plan that both sides are studying.

U.S. officials have strongly supported Gaviria's efforts and see the Friday meeting as a supplement to his activities.

Joining the United States at the meeting will be Mexico, Brazil, Chile, Spain and Portugal--members of a newly formed ``Friends of Venezuela.''

The meeting will be at the foreign ministers level but it is not clear whether Secretary of State Colin Powell will attend. He will depart Friday afternoon for a meeting in Switzerland.

Chile's foreign minister, Soledad Alvear, will not attend for personal reasons.

The United States has been concerned about the possible effect on world oil supplies of sharp cutbacks in Venezuela's oil production, resulting from a politically motivated strike by oil workers.

Last Friday, Venezuela's embattled president, Hugo Chavez, said he welcomed the creation of the ``friends'' group but recommended that it be expanded to include Russia, France, Algeria and China.

Diplomats say the current makeup of the friends group achieves a needed balance. Brazil under new President Luiz Inacio Lula da Silva is seen as perhaps the most sympathetic to Chavez. The Bush administration, meanwhile, has never been a strong backer of Chavez, who has a warm relationship with President Fidel Castro.

Strike leaders want Chavez to agree to a plebiscite in February on his presidency. Although the vote would be nonbinding, these leaders believe Chavez would be pressured by the outcome to step down.

The opposition believes Chavez has ruined the country's economy and tried to gather too much power in his own hands.

Chavez said any plebiscite held before August would be unconstitutional. Venezuela's constitution allows for a binding recall referendum halfway through the presidential term, which would be August.

www.forbes.com Reuters, 01.21.03, 5:27 PM ET (The following statement was released by the rating agency)

NEW YORK, Jan 21 - Moody's Investors Service downgraded the bank financial strength ratings (BFSR) of Banco Mercantil S.A., BBVA Banco Provincial S.A., and Banco de Venezuela Grupo Santander S.A. to E+ from D-, and changed the outlook for foreign currency deposit ratings and BFSRs of all five banks that it rates in Venezuela to developing from stable.

These outlook changes are a direct result of the change in outlook of Venezuela's ceiling for foreign currency bank deposits to developing from stable. In addition, Moody's also downgraded Venezuela's country ceiling for foreign currency bonds and notes to Caa1 from B3 due to the continuing suspension of the country's oil operations and the uncertainty about when production will resume.

This downgrade did not affect the rated banks, which do not have rated foreign currency bonds or notes. Moody's downgrade of the bank financial strength ratings of Banco Mercantil, BBVA Banco Provincial, and Banco de Venezuela Grupo Santander, the three strongest banks in the Venezuelan system, to E+ from D-, reflects the continued erosion of the operating environment.

Moody's also expects that corporate defaults will likely increase as a result of the ongoing economic disruption, negatively affecting the banks' asset quality. The other two rated banks, Banco del Caribe and Banco Banesco, are already rated E+. On February 27, 2002, the ratings agency had put the system's BFSRs on negative outlook, stating that "the Venezuelan banking system should be viewed with a certain amount of caution in light of the deteriorating political and economic environment in which it operates." This outlook culminated in a downgrade of the system on September 26, 2002, when Moody's reiterated that the banks were becoming increasingly vulnerable to political risk.

The following ratings were affected:

Banco Mercantil S.A: bank financial strength rating to E+ from D- BBVA Banco Provincial S.A: bank financial strength rating to E+ from D- Banco de Venezuela Grupo Santander S.A: bank financial strength rating to E+ from D-

www.ctv.ca Associated Press

CARACAS — Former U.S. president Jimmy Carter said Tuesday he drafted two proposals for leading Venezuela toward elections and ending a deadly 51-day-old strike intended to force President Hugo Chavez from office.

Carter made his proposals after attending negotiations between the government and opposition and meeting separately with Chavez and strike leaders. His Atlanta-based Carter Center, the Organization of American States and the United Nations are sponsoring the talks.

One proposal would amend Venezuela's constitution to allow for early general elections and to cut terms in office, Carter said. The amendment would have to be approved by Congress and voters.

Venezuela's opposition would call off the strike and, in return, the government - which has a majority in Congress - would agree to move quickly to adopt the amendment and organize early elections, Carter said.

Carter's second proposal calls for both sides to wait for a recall referendum on Chavez's rule, which the constitution says can happen halfway into the president's six-year term. In Chavez's case, that is August.

Carter, a Nobel Peace Prize winner, said before leaving Venezuela that the government and opposition would receive his proposals later Tuesday.

"We've been pleased with the reception we've had from both the government and the opposition," Carter said. "My opinion is that both sides want to end an impasse that is destroying the economy."

Business leaders, labour unions and opposition parties launched the strike Dec. 2 to demand that Chavez resign or call early elections.

Chavez said Tuesday he told Carter he would abide by any constitutional changes.

"If the people were to decide it should be four years ... I have no problem with that," Chavez said.

Strike leader Carlos Ortega, president of the one million-member Confederation of Venezuelan Workers, said earlier that Chavez never would accept a vote on his rule.

The strike has crippled Venezuela's oil industry, which was the world's fifth-largest exporter and a major supplier to the United States.

The strike has slashed production by more than two-thirds and caused domestic shortages of gasoline, food and drinking water. It has cost Venezuela $4 billion US, according to the government, and contributed to the plummeting of the bolivar currency.

The Organization of Petroleum Exporting Countries said it will be difficult to make up for shortages of Venezuelan oil in the United States because many U.S. refineries are geared to process heavier Venezuelan crude.

After an early surge Tuesday, European Brent crude fell to $30 US a barrel after Venezuelan tanker pilots announced they would resume work, which could convince foreign tanker companies to dock at Venezuelan ports. Foreign companies refused to do so during the strike for security and insurance reasons.

At least six people have died in political violence since the strike began, including a man killed Monday in clashes between Chavez supporters and opposition marchers. The violence in Charallave, about 30 kilometres south of Caracas, also injured dozens.

Six countries - Brazil, Chile, Mexico, Portugal, Spain and the United States - have begun an initiative called "Friends of Venezuela" to help end the crisis. Diplomats from the six countries will meet at OAS headquarters in Washington on Friday.

The National Elections Council, accepting an opposition petition, agreed to organize a Feb. 2 nonbinding referendum asking citizens whether Chavez should step down.

Chavez says the vote would be unconstitutional and his supporters have challenged it in the Supreme Court. But the president has welcomed a possible binding referendum halfway through his term.

Chavez, 48, was elected in 1998 and re-elected in 2000 on promises to redistribute the country's vast oil wealth among the poor majority.

His opponents accusing him of steering the economy into recession with leftist policies and running roughshod over democratic institutions.