www.newsday.com By GEORGE GEDDA Associated Press Writer January 21, 2003, 4:59 PM EST

WASHINGTON -- 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.

newsobserver.com Tuesday, January 21, 2003 6:48PM EST By JOSEPH B. FRAZIER, ASSOCIATED PRESS WRITER

CARACAS, Venezuela (AP) - Fearing dangers to their employees from Venezuela's political violence, many multinational companies are sending workers home or suspending operations, or both.

Microsoft Corp. on Monday closed two Venezuela offices, saying it could not guarantee employees' safety. The company has about 85 employees in Caracas and six in the western city of Maracaibo. Since Venezuela's opposition called a strike Dec. 2 aimed at ousting President Hugo Chavez, oil companies such as ConocoPhillips and France's TotalFinaElf have withdrawn nonessential expatriate staff. Some fast food franchises such as McDonald's, Burger King, Wendy's and Subway have closed.

The total number of companies and workers isn't known, but departures accelerated after the U.S. Embassy and other missions issued strong safety warnings in December.

The U.S. Embassy sent off its own nonessential staff and closed its commercial attache's office.

Dozens of Venezuelans have been killed in political violence since an April coup briefly toppled Chavez. Six have been killed since the strike began.

None of the companies has announced it is withdrawing for good. Venezuela is the world's fifth-largest exporter of crude, and it has accumulated $20 billion in investment in its natural gas, oil and oil-related services sector alone in the past 10 years.

"I think (oil companies) are assessing the situation and trying to stay as invisible as possible," said Larry Goldstein, president of the New York-based Petroleum Research Foundation. "Politically they don't want to be seen as choosing sides right now. Some have substantial investments they have to protect."

Many local workers are striking and others can't get to work because of gasoline shortages. Political protests occur daily and often end in violence. Financial transactions can be hard to complete since Venezuelan banks are operating only three hours a day.

Ricardo Tinoco, a spokesman for Ford Motor Co. in Venezuela, said operations have been suspended since early December.

He said all employees were told to come back next week. "But in light of the current situation, the lack of fuel and the fact that many of our suppliers are on strike, we don't see how we'll be able to start operations next week as planned," he said.

Ford has a large assembly plant in Valencia, 70 miles west of Caracas.

Venezuela's military raided a Coca-Cola affiliate bottler and another bottler belonging to Venezuela's largest food and drinks producer, Empresas Polar, on Friday. Both companies denied hoarding goods.

The Venezuelan American Chamber of Commerce condemned the raids as "a grave rupture of the state of law." It warned more than 1,000 affiliates that the army could commit more abuses and urged them to report alleged violations.

www.iht.com The Associated Press The Associated Press Wednesday, January 22, 2003 Aim is to end strike and call early election   CARACAS Former President Jimmy Carter said Tuesday he drafted two proposals to lead Venezuela toward elections and end a 51-day 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, labor 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.

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, 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 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, 32 kilometers (20 miles) 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 nations will meet at OAS headquarters in Washington on Friday.

www.billingsgazette.com Associated Press

CARACAS, Venezuela (AP) - Petroleum prices rose Tuesday as a strike that has disabled the world's fifth-largest oil exporter entered its 51st day and international mediators struggled to resolve the stoppage aimed at forcing President Hugo Chavez from office.

European Brent crude soared to new two-year highs at more than $31 a barrel because of the Venezuelan crisis, possible war in Iraq and cold weather in the United States.

The Organization of Petroleum Exporting Countries, meanwhile, 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.

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

Former President Jimmy Carter was in Caracas trying to help resolve the situation. He was meeting with Chavez at the presidential palace early Tuesday.

Carter, who won the Nobel Peace Prize in October, attended negotiations between the government and opposition Monday and met separately with the president, strike leaders and Organization of American States secretary general Cesar Gaviria.

Carter's Atlanta-based Carter Center, the OAS and the United Nations are sponsoring the talks.

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

Chavez threatened Sunday to walk out of talks, accusing the opposition of trying to topple him even as they negotiated. Strike leader Carlos Ortega said Chavez would never accept a vote on his rule.

Ortega, president of the 1 million member Confederation of Venezuelan Workers, said Gaviria and Carter should "convince themselves once and for all that we are dealing with a regime that is not democratic, and that as long as Chavez stays in power there is no possibility of holding elections."

One man was killed and 27 were injured Monday when gunfire erupted as Chavez supporters confronted opposition marchers in Charallave, a town about 20 miles south of Caracas. At least six people have died in political violence since the strike began.

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 nations 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 six-year-term, or August, as allowed by the constitution.

The 48-year-old Chavez 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.

NEWSDESK   21 Jan 2003 14:56

By Peg Mackey

DUBAI, Jan 21 (Reuters) - Jittery oil dealers will breathe easier knowing that when the end is near for Saddam Hussein, he is likely to lack the firepower to destroy the oilfields of neighbouring Saudi Arabia and Kuwait, analysts say.

Crude prices have shot well beyond $30 a barrel amid fears that a U.S. assault on Iraq could trigger widespread supply disruptions in the oil-rich Gulf.

Saudi Arabia and Kuwait, which combined export over eight million barrels per day (bpd), are still haunted by the Gulf War when Iraqi troops blew up Kuwaiti oil wells and were seen as a threat to the Saudi oil sector, the world's biggest.

This time round Saddam will still put up a fight but with a substantially reduced arsenal, said Mustafa Alani, of London's Royal United Services Institute.

"Saddam has no spare capacity to destroy the oilfields of Kuwait and Saudi Arabia. A high degree of accuracy would be needed and that cannot be achieved with Scud missiles," Alani said.

"If he is backed into a corner, Saddam will concentrate his very limited military capability on his own survival by defending Baghdad."

Lashing out at his Gulf neighbours would be self-defeating for the Iraqi leader, who is trying to win popular Arab support.

"Saddam has been trying to appeal to the Arab street over the heads of their governments," said Daniel Neep, head of the Royal United Services Institute's Middle East programme.

"Much of his popular appeal would be lost if he were to torch the oilfields which are the bedrock of most Arab economies."

SCORCHED EARTH? Though a remote possibility, if he is going down, the Iraqi leader might be inclined to blow up his own oil facilities to stop Washington from taking control of the country's huge reserves, the world's second biggest after Saudi.

"When his back is against the wall, there is no telling what Saddam will do," said Neep.

"But if he calls for Iraq's oilfields to be set alight and it looks like military action will destroy his grip on power, how loyal will the Iraqi elite be?"

Not very, is the conventional wisdom.

"I find it hard to believe that the Iraqis would willingly destroy their principal natural resource, particularly one they fought so long to gain control of," said Raad Alkadiri of Washington's Petroleum Finance Corp.

And much of Iraq's oil wealth is concentrated in the two no-fly zones, which are under 24-hour supervision by U.S. and British air patrols.

"The attempt to secure the southern fields is a primary objective to prevent him inflicting permanent or temporary damage to the oilfields," said Peter Gignoux, head of the energy desk at Schroder Salomon Smith Barney.

IRAQI OUTAGE Predicting Saddam's reaction to a U.S. assault is impossible, but certain in the minds of oil traders is that war will disrupt Iraq's oil exports -- now running at some two million bpd.

"Are we going to lose Iraqi exports? Yes," said Gignoux. "But that's already priced into the oil market."

Most major oil refiners, anticipating a February or March strike on Iraq, have bought enough oil to cover themselves through the first quarter.

But supply problems could arise if a military campaign begins before an already seven-week-old strike in oil exporter Venezuela is settled or if a U.S.-led attack drags on.

"We will have a real problem on our hands if we have a combined loss of output from Iraq and Venezuela," said an oil executive.

The Organisation of the Petroleum Exporting Countries has just agreed to raise supplies by 1.5 million bpd to make up for the Venezuelan shortfall.

But, save Saudi Arabia and the United Arab Emirates, that output increase has left the cartel stretched near to capacity.

Others say if a supply crunch develops, Washington and/or the International Energy Agency would probably order a release of strategic stockpiles.