www.nytimes.com By TONY SMITH

PÔRTO ALEGRE, Brazil, Jan. 23 — Arriving for last year's World Social Forum here, well before he had been elected president, Luiz Inácio Lula da Silva was blunt in his criticism of the world's top policy makers then gathering for the World Economic Forum in New York.

"The sheer amount of barbed-wire fencing," he said, showed that "what those men there were thinking was no good for the majority of humankind, especially for the poor." Advertisement

This year, Mr. da Silva will stop here only briefly to address the 100,000 or so antiglobalization activists gathered for the third Social Forum before jetting off to Davos to speak to "those men," now back at their traditional venue in the Swiss Alps, but still behind barbed wire.

The fact that Mr. da Silva is willing to rub shoulders with the Che Guevara T-shirts at the Social Forum and the suits in Davos illustrates the fine line he has been walking since taking office on Jan. 1.

On the one hand, Mr. da Silva, a former metalworker, has appeared on television and on magazine covers as popular "Presidente Lula," the caring leader who takes his cabinet on trips to some of Brazil's poorest regions to show he intends to make good on election promises to redress this vast country's appalling social inequities.

Ditching for a while the suits and ties that helped him win over more reticent, conservative voters during last year's election campaign, Mr. da Silva reverted to his working-class roots, touring shantytowns, embracing an AIDS-afflicted child here, comforting a poverty-stricken widow there.

If the popular reaction is anything to go by, Mr. da Silva is managing to persuade Brazil's poorest that their economic lot can improve. Wherever he goes, Mr. da Silva draws a crowd and he plays it like a rock star.

On the other hand, Mr. da Silva has struck a serious note with the markets, nominating an economic team that is bending over backward to persuade investors that Brazil is a safe bet and that unorthodox policies are simply not on the agenda. Its first major policy decision was to raise interest rates this week to their highest level in nearly four years, assuaging fears the new government would be soft on inflation.

The government is also advancing with plans, long awaited by the markets, to reform Brazil's wasteful public sector pension system, inefficient tax laws and archaic labor legislation.

Maybe because of such ambiguity, Mr. da Silva's announcement he would fly to Davos caused furor among radicals on the left of his Workers' Party. Cândido Grzybowski, a member of the Social Forum's steering committee, called the decision "lamentable."

Mr. da Silva was scheduled to speak here Friday before leaving Saturday for Europe.

"The decision to go to Davos had to be a controversial decision because it was a political decision," said Oded Grajew, a co-founder of the Social Forum and now Mr. da Silva's personal aide for social affairs.

Mr. da Silva "wants to show the world that it is possible to combat poverty and misery with at least the same weight as is being given to the fight against terrorism," Mr. Grajew said.

If Mr. da Silva delivers any antiglobalization message, it will most likely be here rather than in Davos, where he will be trying to persuade the international financiers present to reopen credit lines to Brazilian companies. Hundreds of millions of dollars in financing were cut off before Mr. da Silva's election triumph last October, when many were predicting Brazil's economy would collapse.

Given Mr. da Silva's most recent wooing of the markets, however, even Wall Street analysts say he could get a serious hearing at Davos for Pôrto Alegre's main political idea that for world prosperity, the plight of the poor must be addressed.

"Finally there's someone between those two poles of thought who can absorb both points of view," said John Welch, chief Latin American economist at the New York branch of WestLB, a German bank. "All his political life he's been a good negotiator. Maybe he can pull this one off, too."

abcnews.go.com — By Patrick Markey

CARACAS, Venezuela (Reuters) - A six-nation group led by the United States and Brazil was ready to make a fresh bid to end Venezuela's political conflict on Friday, a day after a grenade blast in Caracas stoked fears of increasing violence in the world's No. 5 oil exporter.

Foreign ministers from the group were to hold talks in Washington with President Hugo Chavez's government and his foes, who are staging a crippling strike to force the leftist leader to resign.

Chavez, on the eve of the Washington talks, said he would not to negotiate with an opposition he dismissed as "fascist terrorists" trying to oust him by destroying the oil sector.

"We do not negotiate with terrorists. We do not negotiate with coup-mongers. We defeat them," the populist president roared at thousands of supporters rallying in central Caracas.

The group mediating in Washington also includes Spain, Portugal, Mexico and Chile. Chavez, whose anti-imperialist rhetoric often strains ties with the United States, has said he believes it should be expanded to bring in other countries, such as Russia, France and Cuba.

Negotiations brokered by the Organization of American States have so far failed to break the deadlock.

Opposition leaders, who include rebel executives at state oil firm PDVSA, have vowed to stay on strike until Chavez quits. But the combative president refuses to step down and rejects calls for early elections.

At least seven people have died in shootings and street clashes since the strike began on Dec. 2. A fragmentation grenade exploded Thursday in central Caracas, killing one man and wounding more than a dozen near the Chavez rally.

International efforts to end the crisis have intensified after the stoppage slashed Venezuela's vital oil production and exports, pushing up global oil prices as the United States prepares for a possible attack on Iraq.

The Bush administration, keen to find a quick solution to the conflict in one of its major oil suppliers, on Thursday endorsed a proposal by former U.S. president and Nobel Peace Prize winner Jimmy Carter on elections.

Carter presented Chavez and his opponents with two ideas at a meeting on Tuesday -- an amendment to Venezuela's constitution that would trigger early elections or a binding national referendum on Chavez's rule on Aug. 19. Both proposals called for an end to the strike.

Chavez, who survived a coup in April, has urged foes to wait until August to hold a midterm referendum on his presidency, as the constitution allows.

But his opponents demand that Chavez accept early elections, saying Chavez has governed like a dictator and dragged the nation toward Cuba-style communism.

www.nytimes.com

he best hope for a peaceful, democratic outcome to Venezuela's political crisis may now rest in the mediation efforts of Jimmy Carter. During his presidency Mr. Carter was a firm champion of democracy throughout Latin America, standing up to the military tyrannies that then predominated in the region. Now he has proposed two principled and plausible solutions to the long-running conflict over President Hugo Chávez, which has divided Venezuela's people, hobbled its economy and raised the specter of a breakdown in constitutional rule.

Mr. Carter, who met separately in recent days with Mr. Chávez and opposition leaders, offers two possible solutions, both compatible with Venezuela's laws and the right of its people to choose their own leaders freely. One provides for passage of a constitutional amendment, either by Venezuela's legislature or a popular vote, that would shorten the current six-year presidential term and provide for new elections later this year. The other would set up a binding referendum this summer on whether Mr. Chávez should resign or stay in office as scheduled until 2006. That isn't exactly what either side wants, but Mr. Chávez and at least some opposition leaders have suggested that they might be able to accept one or both of the Carter proposals.

Until this week Mr. Chávez's opponents had hoped to drive him from office long before summer. They were counting on the combined pressure of a non-binding referendum that had been scheduled for Feb. 2 and a national strike now in its eighth week that has shut down much of Venezuela's vital oil industry, depriving the government of badly needed revenues and sending world oil prices soaring.

But the strike has begun faltering, and this week Venezuela's Supreme Court suspended preparations for the February referendum, which Mr. Chávez had vowed to ignore anyway. That should strengthen elements of the opposition willing to accept a reasonable compromise along the lines Mr. Carter has suggested.

The United States and five other nations trying to resolve the standoff hold their first meeting in Washington today. Venezuelans of all persuasions should rally behind the Carter proposals.

www.washingtonpost.com Friday, January 24, 2003; Page A27 By Thomas W. Lippman

The failure of the Bush administration to articulate a compelling rationale for a potential war with Iraq is having a pernicious global side effect: It is fostering the belief that such a conflict would be a "war for oil" and therefore an exercise in imperialism, not an exercise in security.

This view is widely held in the Arab world, where commentators argue that the United States must be expecting instability in Saudi Arabia to compound the instability in Venezuela, and is therefore looking elsewhere for ensured oil supplies. It showed up in the signs and shouts of the antiwar demonstrators who came to Washington last weekend: "No blood for oil!" "We don't want your oil war."

The oil-industry connections of President Bush and Vice President Cheney reinforce the presumed oil rationale. Some proponents of the oil theory also cite the "Carter doctrine," in which President Jimmy Carter proclaimed that the United States would protect its access to Persian Gulf oil by "any means necessary, including military force." The Carter doctrine, however, was inspired by the Soviet invasion of Afghanistan and was directed against "outside" forces, namely Moscow; it was not about the governance of the Persian Gulf countries themselves.

Even a perfunctory acquaintance with the realities of the global oil market would indicate that the "oil war" theory does not stand up to analysis. As an imagined rationale it doesn't square with the facts; and in the unlikely event that it actually does factor into the administration's thinking, it is a specious argument that cannot justify sending American forces into combat.

First, if the United States felt compelled to increase its access to oil from Iraq, it could do so by getting the U.N. Security Council to lift the economic sanctions that restrict Iraqi output -- no bloodshed necessary. Iraq's oil would flow freely into the global market, contracts already signed with Russian and European companies would increase Iraqi production and, as a beneficial side effect, prices would decline as supplies increased.

Then assume the worst in Saudi Arabia: Militant anti-American extremists seize control of the government. Such rulers might refuse to sell oil directly to the American customers, but it's highly unlikely they would refuse to sell oil to anyone, because the country's other sources of income are negligible. Because the worldwide oil flow -- about 67 million barrels a day -- is fungible in a global market, the effect of such a move by Saudi Arabia against the United States would be minimal. To the extent that the Saudis shifted oil sales to customers in Europe or Asia, those customers would stop buying oil from wherever they get it now, and the United States could shift its Saudi purchases to those other suppliers.

It might be necessary to modify refinery runs to account for variations in oil quality, and shipping costs might increase with distance, but the overall impact would be tolerable.

Moreover, the record shows that even countries whose rulers are hostile to us are willing to sell us oil because they need the money. Saddam Hussein's Iraq itself sells oil to American consumers under the "oil for food" program. If the United States buys no oil from Iran or from Moammar Gaddafi's Libya, it is because we cut them off -- not because they cut us off. Libya would welcome the return of a petroleum relationship with the United States.

Finally, an American takeover of Iraq would not, in the long run, give the United States guaranteed access to Iraqi oil. A democratic Iraq might well decide that its future prosperity would be best served by a supply relationship with, say, China, now an importer of oil with rapidly growing demand. The days when industrialized countries acquired ownership of oil in producing countries are decades in the past. Conversely, a fragmented Iraq, breaking up along ethnic lines, might produce less oil than currently, rather than more.

As the U.S. military buildup around Iraq's perimeter accelerates, the Bush administration is obliged to make a persuasive case for war. It should also make clear what its motives are not.

Thomas W. Lippman, an adjunct scholar at the Middle East Institute, is writing a book on U.S.-Saudi Arabian relations.

news.ft.com CARACAS, Venezuela (Reuters) - 24 Jan 2003 05.29

A defiant President Hugo Chavez has raised the stakes in Venezuela's bitter oil industry conflict by announcing 3,000 oil company executives were sacked and saying oil output was rising faster than expected.

Chavez's left-wing government has used troops and replacement crews to break a seven-week-old strike aimed at driving him from office. But he still faces huge problems restarting refineries and persuading foreign shippers to return to what was the world's fifth-largest oil exporter.

Anti-government oil workers conceded crude output was rising despite the long stoppage, saying it reached 25 percent of capacity at 812,000 barrels per day (bpd) on Thursday.

Opposition data lag government estimates, which peg production above 1 million bpd, but both figures show a steady recovery over the past fortnight.

"The oil wells are working and today we have already exceeded one million barrels per day in oil production and the recovery has been much faster that we hoped," Chavez said.

"The perspective we have is that by the end of January, within a week, or at the latest in the first week of February, we should be at roughly two million barrels per day of oil production," he told a huge government rally.

Oil used to provide more than half of Venezuelan state revenue, and the 53-day-old strike has caused an economic crisis in the OPEC member nation. Chavez announced a massive budget cut and suspended foreign exchange trading Wednesday.

"The anti-patriotic, privatising, neoliberal, fascist, coup-plotting, depraved oligarchy thought they would kick us out of power by the end of the year through the oil strike, or rather the oil sabotage, because there is no strike here," Chavez said, adding the strike had failed.

Strikers, who want to force Chavez to resign and hold early elections, claim 90 percent support for the strike among the country's 37,000 oil workers. They poured cold water on Chavez's output objectives.

"The government might get it up to 1.3 or even 1.5 million barrels per day, but alone they will never get back to the three million we had before," an opposition spokesman said.

Chavez blamed a spate of accidents, including oil spills and refinery fires, on sabotage by the strikers. In his speech on Thursday, the president said a total of 3,000 state oil firm managers and technicians had been fired -- 1,000 more dismissals since last week.

"They sabotaged the loading terminals, the distribution ports and the pipelines, but these have all been restored by the revolutionary government, the people and the Venezuelan Armed Forces," Chavez said.

The opposition said the government was neglecting crucial safety procedures in its rush to restore output, blaming the accidents on unqualified strike-breakers.

EXPORT STILL SLOW

Despite two weeks of higher flows at the wellhead, oil exports have been stuck around 500,000 bpd, a fifth of normal levels, according to shipping agents.

About 90 percent of the country's oil refining remains closed, according to opposition estimates, and foreign ship owners say insurance risks due to uncertified port staff and poor safety practices prevent them stopping in Venezuela.

Before the strike, Venezuela pumped 3.1 million bpd of crude oil and refined a third of the oil, supplying 13 percent of U.S. import needs.

The strike has helped drive world oil prices to two-year highs, and caused severe fuel shortages on the local market.

Some blue-collar oil workers have returned to work to avoid losing their jobs. But support for the strike remains strong among skilled workers at oilfields and refineries, and managerial staff in the company head offices.

Bladimiro Blanco, an anti-Chavez member of the Fedepetrol oil union, said 85 percent of his 20,000 membership, including blue collar PDVSA employees and contractors, stayed on strike on Thursday.

PDVSA chief Ali Rodriguez said last week that 75 percent of contract workers have returned to work, while half of the management was still out.

Earlier this week, oil tanker pilots in the western Lake Maracaibo oil hub went back to work after accepting a big pay packet from the government.

The move has eased port operations in the region which pumps half the country's crude oil, but export levels have not recovered partly because foreign ship owners have stayed away.

Pilots in the east of the country have been working normally since the beginning of January, but ship agents say very few tankers are leaving from these ports.

Strike leader Juan Fernandez said oil exports from the western Lake Maracaibo were increasingly dangerous because the government had failed to maintain dredging of the long channel linking export terminals to the Caribbean Sea.