www.gulf-daily-news.com LONDON:

World oil prices set new two-year highs yesterday for fear of war in Iraq and then eased as cracks started to appear in a Venezuelan strike that has cut deep into exports to the US.

US light crude at 1745 GMT was down 21 cents at $34.61 a barrel after setting a fresh high of $35.20 in early electronic trade. London Brent blend eased 39 cents to $30.73 a barrel. President George W Bush said it was now clear to him that Iraqi leader Saddam Hussein was failing to comply with UN disarmament demands.

Oil dealers said the remarks appeared to leave little doubt that Washington was now close to authorising the use of military force against Baghdad.

But early price rises were contained by news from Venezuela that tanker pilots in Lake Maracaibo, a strategic export route, had ended their part in the seven-week-old nationwide strike.

"This is something that helps Chavez. A prerequisite to restart production is to get exports going, so this is a step in the right direction," said George Beranek of Washington's Petroleum Finance Company.

World oil markets have yet to respond to an Opec decision to boost output and the organisation could therefore agree to a further production hike when it convenes March 11, Opec President Abdullah bin Hamad Al Attiyah said yesterday.

www.newsday.com

By ALEXANDRA OLSON Associated Press Writer

January 22, 2003, 2:25 AM EST CARACAS, Venezuela -- Rivals in Venezuela's bitter political standoff studied proposals made by former President Jimmy Carter to end the dispute that has dramatically cut oil production in the world' s No. 5 exporting country.

The Nobel Peace Prize laureate proposed two plans Tuesday. The first entails elections and the end to a 51-day-old national strike. The second proposal calls for both sides to prepare for a binding referendum on President Hugo Chavez's presidency in August, the midpoint of his six-year term.

Both supporters and foes of Chavez expressed doubt their opponents would respect a democratic solution to the bitter stalemate.

"As democrats we move along an electoral and peaceful path. They aren't democrats and they don't believe in this possibility," said strike leader Carlos Ortega, president of country's largest labor union.

Juan Barreto, a ruling party member, expressed doubt opposition leaders have "the capacity and patience to move forth" with the proposals.

The first plan would amend Venezuela's constitution to shorten presidential and legislative terms of office and stage early elections.

It calls for the opposition to end the strike and for the government, which has a congressional majority, to move quickly on changing the constitution. Amending the constitution requires the approval of congress and a popular referendum.

Carter said that if both sides agreed on the amendment proposal, there "would be no delays" in implementing it because international mediators would "guarantee the integrity of the agreement."

A so-called "Group of Friends of Venezuela," a forum of six countries including the United States, Mexico, Brazil, Chile, Spain and Portugal, has been formed to help end the standoff. Diplomats involved in the initiative will hold their first meeting at the Organization of American States in Washington on Friday.

The proposals, added Carter, have taken into account the basic demands of both sides but "difficult details" will have to be worked out in negotiations.

Before leaving Venezuela Tuesday, Carter was optimistic opponents would make concessions in order to end the political impasse and ongoing work stoppage.

"Nobody imagined the strike would last for 50 days and no one wants it to last for 70 or 100 days," he said.

The government has acknowledged the strike has reduced oil production and cost $4 billion so far.

Oil provides 70 percent of export earnings and a third of Venezuela's $100 billion gross domestic product. Output stands at about 660,000 barrels a day, compared to 3 million before the strike, according to strike leaders. The government claims production is at least 800,000 barrels a day.

A key point is the fate of workers at Venezuela's state owned oil monopoly. Some 30,000 of 40,000 workers are striking. Chavez has fired more than 1,000.

Carter said his proposal would have strikers return to work but allow the government to prosecute anyone accused of sabotaging the industry. Chavez accuses "fascist, coup-plotting" oil executives of using sabotage to prevent the government from jump-starting the oil industry.

Arguing that Venezuelans cannot wait until August to cast ballots given the deepening crisis and political upheaval, opposition leaders called the strike on Dec. 2 to force Chavez from power.

Chavez was elected in 1998 and re-elected in 2000 on promises to help the country's poor majority, but he has failed to remedy the nation's economic ills.

Political unrest has contributed to 17 percent unemployment, 30 percent inflation and a weakening currency, which reached a record low of 1,853 to the dollar Tuesday.

asia.reuters.com Tue January 21, 2003 09:11 PM ET By Pascal Fletcher

CARACAS, Venezuela (Reuters) - Nobel Peace Prize winner Jimmy Carter on Tuesday presented to Venezuelan President Hugo Chavez and his foes a plan for elections that seeks to end a crippling opposition strike in the world's fifth largest oil exporter.

The blueprint unveiled by the former U.S. president offered two options: one for an amendment to Venezuela's constitution that would trigger early elections and the other for a national referendum on Chavez's rule on Aug 19.

Both options, which were received by government and opposition negotiators Tuesday, foresee the lifting of the seven-week-old strike launched by opposition leaders to press the left-wing leader to resign and hold early elections,

The grueling shutdown has slashed output and exports by South America's biggest oil producer, pushing up world oil prices to two-year highs of more than $34 a barrel.

The 51-day-old oil industry strike showed signs of falling apart Tuesday when some oil tanker pilots in western Lake Maracaibo went back to work. Nevertheless, strike leaders said they were continuing the shutdown.

Chavez, a populist who led an unsuccessful coup attempt in 1992, was first elected to the presidency in 1998 and survived a brief coup last year, has refused to resign and says he will try to break the strike.

Opposition leaders said they hoped Carter's proposal, backed by international pressure, would give fresh impetus to faltering negotiations on ways to end the crisis, which is threatening to bankrupt Venezuela's oil-reliant economy.

"President Carter's weight and authority, combined with the international situation, could force the government to sit down and talk," opposition negotiator Alejandro Armas told Reuters.

More than two months of peace negotiations brokered by Organization of American States Secretary-General Cesar Gaviria have so far failed to produce a deal on elections, increasing uncertainty about Venezuela's economic and political future.

The bolivar currency tumbled 5.1 percent against the U.S. dollar on 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.

Raising fears of social unrest, the strike has led to shortages of gasoline, cooking gas and some food items.

ELECTORAL OPTIONS

Carter, who has made a career of trying to resolve 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.

One of the two options he presented proposes an amendment to the constitution that would allow the holding of early elections. Such an amendment must be proposed by 15 percent of the electorate and be approved in a national referendum.

The other option 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.

Chavez told reporters after meeting Carter he was willing to accept a constitutional amendment. "I don't reject any of these possibilities, but the opposition must comply with the constitution," he said.

"We are open to all formulas to bring forward elections," opposition representative Americo Martin told Reuters.

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.

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.

Carter said he would also present his electoral proposals in Washington on Friday to the first meeting of foreign ministers from six nations forming a "group of friends" whose task is to help seek a solution to the Venezuela crisis.

The six-nation group, comprised of the United States, Brazil, Mexico, Chile, Spain and Portugal, was created last week to back the OAS-brokered peace talks.

(Additional reporting by Patrick Markey)

www.cbc.ca

www.cbc.ca Last Updated Tue, 21 Jan 2003 21:09:48

CARACAS - Oil tanker pilots in western Venezuela have ended a seven-week-old strike. The move appears to be the first crack in a protest that has crippled the world's sixth-largest oil exporter.

The end of the strike should make it easier to export crude from the western Lake Maracaibo region, which pumps half the country's oil.

The strike was part of an oil industry action intended to force President Hugo Chavez from power.

Thousands of other oil workers remain on strike.

The labour action has slashed Venezuelan oil exports to one-fifth of normal levels and helped push oil prices to two-year highs.