www.ohio.com Posted on Sat, Jan. 25, 2003
BY PATRICK MARKEY Reuters

CARACAS, Venezuela - Hundreds of thousands of opponents of Venezuelan President Hugo Chavez jammed a major Caracas highway on Saturday to demand the leftist leader call elections in the world's No. 5 oil exporter.

A festive sea of demonstrators packed stretches of the Francisco Fajardo highway for a rally that mixed politics with partying in support of a 55-day-old opposition strike aimed at forcing Chavez from power.

Blaring music mingled with political chants as some camped out in tents for the day-long protest against a Supreme Court decision to suspend a Feb. 2 referendum -- a setback for their campaign to oust Chavez.

Opposition leaders said they would instead use the referendum date for a campaign to collect petitions for a constitutional amendment that could cut short the populist president's rule.

"He has to go. After more than 50 days we can wait a few more until he is out," said Flores Diaz, 26, a lawyer cloaked in a red, yellow and blue Venezuelan flag.

The opposition strike, led by managers at state oil firm PDVSA, has slashed Venezuela's vital petroleum output, driving up world crude prices and drawing the international community into the nation's tense political deadlock.

Daily protests, severe domestic fuel shortages and fiery political rhetoric from both sides have stoked tensions. At least seven people have been killed and dozens wounded in clashes and shootings since the shutdown began on Dec. 2.

Two days before Saturday's huge rally, hundreds of thousands of Chavez supporters packed central Caracas in a show of strength for the former paratrooper, whose promises to ease poverty handed him a landslide election victory in 1998.

The pugnacious Venezuelan leader refuses to yield to foes he brands as rich elites trying to topple him by destroying the oil sector. His critics counter that Chavez has ruled like a corrupt, inept dictator and say their strike will go on until he quits or agrees to a vote.

"The fight continues and strike continues," anti-Chavez business leader Carlos Fernandez told reporters at the rally.

GLOBAL HELP AMID ECONOMIC CRUNCH

Nearly eight weeks into the grueling shutdown, Chavez and his foes appear set on standing their ground even as the strike drives Venezuela's fragile economy deeper into recession. Oil exports account for half the government's revenues.

The Finance Ministry and the Central Bank on Wednesday shut down foreign currency exchange markets to stave off capital flight and halt the deep slide in the local bolivar currency as investors seek the safety of the U.S. dollar.

Fighting back against the strikers, Chavez has ordered troops and replacement workers to take over oil installations. Crude production and exports have crept back up, but the industry is still operating far below its usual output of about 3.1 million barrels per day.

Commercial centers, some schools and many large firms remain closed. Banks are open for limited hours and huge lines form outside gas stations for scarce supplies. But support for the strike is fraying and businesses are reopening as the shutdown takes a heavy toll on the private sector.

The international community on Friday stepped up efforts to break the stalemate. After meeting in Washington, six regional governments led by the U.S. and Brazil said they would send a team to Caracas next week to back negotiations brokered by the Organization of American States.

The peace talks, which started more than two months ago, are stalled as government and opposition negotiators haggle over the timing of possible elections.

Former U.S. president and Nobel Peace Prize winner Jimmy Carter has proposed two solutions: the constitutional amendment that will shorten the president's term in office or a binding referendum on his rule on Aug. 19. Both sides say they are analyzing the options. Changing the constitution requires a popular referendum, which can be called with signatures from 15 percent of the electorate.

Chavez's term ends in early 2007 and presidential elections could be called at the end of 2006.

The president's popularity has fallen sharply. But he still retains strong support among poor voters who believe his reforms will give them access to the nation's huge oil wealth.

"We thought Chavez was a good alternative offering peace, but he has divided the country," said factory manager Luis Colina taking part in Saturday's rally. "People want to take away Chavez's mandate, but he's scared of a vote."

newsobserver.com By STEPHEN IXER, ASSOCIATED PRESS

CARACAS, Venezuela (AP) - At least a hundred thousand Venezuelans - many equipped with tents, inflatable mattresses and foldout chairs - parked themselves on a Caracas highway Saturday in what they said would be their longest protest yet against President Hugo Chavez. Shouting "until he goes!", the protesters blanketed a stretch of nearly three miles, prepared to spend the night. On the advice of organizers, many also brought water, sun hats, portable TVs and radios to help while away the hours. Police at the scene estimated the crowd at between 200,000 and 300,000 people. At least a hundred thousand were present, Caracas fire chief Rodolfo Briceno said.

"Prepare yourself for the longest protest in history!" screamed TV commercials and newspaper ads in the opposition-run media.

The opposition is trying to recover from a Supreme Court ruling on Wednesday that postponed indefinitely a Feb. 2 referendum that would have asked citizens whether Chavez should resign. Although the referendum wouldn't have been binding, opponents had hoped a negative outcome would persuade Chavez to quit.

"Although they stole the referendum from us, spirits are higher than ever," said Alexandra Suarez, a 19-year-old student carrying a sleeping bag on her shoulder.

Opponents had gathered 2 million signatures to petition for the vote. They backed up their demand by launching a devastating national strike Dec. 2 and staging daily street protests. Six people have been killed during protests since the strike began.

The 55-day strike has badly hurt the oil industry, which provides half of the government's income and a third of Venezuela's gross domestic product. But production in the world's fifth largest oil exporter is slowly reviving.

The government claims most of the 40,000 employees at the state oil monopoly, Petroleos de Venezuela S.A., have abandoned the strike and that output has reached 1 million barrels per day. Striking executives put the figure at 855,000 and deny most employees are back to work. Output was 3 million barrels a day before the strike. It reached a low of less than 200,000 last month.

Justices ruled that no national vote - a referendum or election - can be held until it decides whether elections council member Leonardo Pizani is eligible to serve on the panel.

Members of Chavez's ruling party filed a suit arguing that Pizani couldn't serve because he resigned from the council in 2000, only to rejoin last November. Pizani insisted he could rejoin because Congress, by law, had failed to formally accept his resignation.

Searching for a new strategy, the opposition Democratic Coordinator movement is gathering signatures to demand a constitutional amendment that would pave the way for early elections. The amendment would involve cutting Chavez's six-year term to four.

Former President Carter proposed a similar plan while attending negotiations between the government and opposition in Caracas last week. His Atlanta, Georgia-based Carter Center, the Organization of American States and the United Nations are co-sponsoring the talks.

Under Carter's plan, the opposition would call off the strike in exchange for a government pledge to quickly push through a similar amendment. Such a deal would save the opposition the effort of collecting signatures because either the president or Congress - where the government has a majority of seats - can call a referendum to approve the amendment.

Carter proposed a second plan that would have both sides prepare for a binding referendum on Chavez's rule in August, midway point in his term. The constitution allows such a vote. The Democratic Coordinator said it was also collecting signatures to petition for that vote.

Chavez has indicated he would be open to both the amendment and the August referendum, and he welcomed Carter's proposals on Saturday. "The general focus, the strategy, appears spot on," Chavez told reporters. He had argued the February referendum would have been unconstitutional.

www.voanews.com VOA News 26 Jan 2003, 01:55 UTC

At least 100-thousand opponents of Venezuelan President Hugo Chavez have jammed a major highway in Caracas to back a 55-day opposition strike that has crippled the nation's economy.

Protesters flooded the highway Saturday chanting anti-Chavez slogans and waving Venezuelan flags. Many of them brought tents and sleeping bags, vowing to spend the night to press their demand that the president step down.

The massive street demonstration follows a recent Supreme Court ruling that suspended a referendum scheduled for February second that would have been a non-binding vote on the president's rule.

Opposition leaders are now concentrating on collecting signatures for a new petition for a constitutional amendment that could cut the president's six-year term to four.

Former U.S. president Jimmy Carter proposed a similar plan while attending negotiations between the government and opposition last week. The former president's Atlanta-based Carter Center, along with the United Nations and the Organization of American States are co-sponsoring the talks.

President Chavez, in an interview published Saturday in a Canadian newspaper, La Presse of Montreal, called the Carter proposals "interesting" but not necessarily new ideas that should be discussed with the democratic opposition.

With Venezuela's petroleum output severely slashed by a general strike begun by oil industry workers, the international community has stepped up efforts to end the political deadlock.

Officials from six nations, the recently-formed "Group of Friends" of Venezuela, met in Washington on Friday. The group is expected to send a high-level team to Caracas next week to help find ways to break the political impasse. The six-nation group brings together the United States, Brazil, Chile, Mexico, Portugal and Spain. Opposition leaders blame the country's worsening economic woes on Chavez policies and remain determined to see him leave office. The strike has paralyzed Venezuela's oil production, the mainstay of its economy, and pushed up global oil prices.

Some information for this report provided by AP and Reuters.

www.morningstar.ca 25 Jan 03(8:14 PM) | E-mail Article to a Friend

By Pierre Belec

NEW YORK (Reuters) - The question du jour in the crawl toward war against Iraq: How will stocks behave after the United States leads another war on the oil-rich country?

Investors are crossing their fingers, hoping that if there is a war, it will a short one. But few people are willing to bet the ranch on how things will turn out because the economy is fragile and the stock market is not in great shape.

A long-lasting war could wreak havoc on both.

The price of energy will be the biggest factor. If oil prices spike up at this stage of the current economic down cycle, growth in the United States and the rest of the world could grind to a virtual halt.

Wartime history won't be of much help in anticipating the market's response to fighting in the Gulf.

The run-up to war has traditionally caused stocks to drop and stay weak until the United States takes military action.

That is how things played out ahead of both World War Two and the last Gulf War, 12 years ago. Back then, stocks fell to levels that were judged to be undervalued and the market had an easy time rallying.

This time around, things are different. The U.S. economy is not back on its feet after sliding into recession in 2001 and it is more vulnerable to a destabilizing shock. Just as important, the global economy is wobbly .

Stock investors are eager to put more money on the table but the experts warn that the threat of another terrorist attack on the United States will be the wild card. The horrors of Sept. 11 kicked up the risk.

PEP TALK

The nation's brokerage houses are doing a lot of hand holding. They're laying out possible outcomes. Most are putting a positive spin on the war story, trying to soothe investors' worries.

Stock salesman are reminding their clients that the market didn't crash after the Gulf War began on Jan. 17, 1991.

One brokerage house offers "Ammunition when clients say they are afraid to buy anything because we may be going to war soon" in a pep talk to its sales force.

"For those who were in the business back during the Gulf War, I'm sure you remember the market was dismal between the time Iraq invaded Kuwait and when we started shooting," the internal memo says, adding that stocks performed superbly during Desert Storm.

Indeed, the market was fired up. The Dow Jones industrial average initially surged 115 points or 4.6 percent. Three months later, the Dow was up some 500 points or 19.7 percent. One year later, the blue-chip index had climbed an impressive 756 points, or 30.1 percent.

Crude oil soared in the months leading up to the Gulf War. In today's prices, adjusted for inflation, oil climbed from $23 a barrel to $47 by October of 1990. Days after the first bomb was dropped on Baghdad, oil slid to $25.

Fast forward to 2003. Oil hovers at a 26-month high around $32 a barrel, up from $20 in 2002, fueled in part by unrest in Venezuela, a big supplier to the United States. Whether oil prices will continue to increase in the event of a war is the big unknown for the world economy and for stocks.

After a strong start in the first week of 2003, the stock market is now dead in the water, with the Dow having lost all of the year's gains, and then some.

The Dow Jones industrial average fell 238.46 points on Friday, or 2.85 percent, to 8,131.01. The Standard & Poor's 500 index slumped 25.94 points, or 2.92 percent, to 861.40. Both indexes hit their lowest since Oct. 17. The Nasdaq Composite Index dropped 46.14 points, or 3.32 percent, to 1,342.13.

For the week, the Dow tumbled 5.3 percent, the S&P 500 4.5 percent and the Nasdaq 2.5 percent. The Dow and S&P 500 are in negative ground for the year despite an early January rally.

SMARTING INVESTORS

Clearly investors are scared stiff. Few are making bets that the next military strike against Iraq will be a cakewalk or that oil prices will collapse. Only the brave are getting flashbacks to the glory days of the Gulf War.

Average investors have gotten smart after $8 trillion in market wealth went up in smoke over the past three years. They've learned that Wall Street is a risky place.

The smart money says: Wait until the geopolitical script plays itself out and then make decisions with all the facts in hand.

"Any kind of surprise terrorist event or war, could send the market into a free-fall crash," writes James Dines, editor of the Dines Letter. "What I find especially disturbing is the very urgency of President Bush's demand that Iraq be attacked immediately before Saddam Hussein 'develops weapons of mass destruction.' Why the hurry?. I can only wonder whether Bush knows something that he has not chosen to disclose."

Bush again this week beat the war drums, saying that Hussein is not disarming but is "delaying and deceiving." But opposition to the U.S. stand has mounted, with China and Russia joining France, Germany and Canada on Thursday in urging that U.N. weapons inspectors be given more time in Iraq.

Iraq said it would expand its cooperation with United Nations weapons inspectors but said it was convinced the United States will attack despite efforts aimed at resolution. A Russian military source said this week the Washington and its allies planned an attack in the second half of February.

Yet some people reckon history is on the side of investors.

"The market loves action," says Kent Engelke, capital markets strategist for Anderson & Strudwick Inc., "I arrogantly and naively believe the market will follow a similar course as in 1991 once we start bombing Iraq. It will again be a no-contest."

Dines says the market is too risky and only the most aggressive traders should venture into stocks at this time. The average investor should sit on the sidelines.

"Nobody knows for sure where the markets are going next in these dangerous times," Dines says.

www.vcrisis.com  

Author: Emilio Figueredo Emilio is Editor of Analitica.com Article: Notes to the international press interested in Venezuelan events

Author: Moises Naim Moises is Editor of Foreign Policy Magazine and was Venezuela's Minister of Trade and Industry from 1989 to 1990. Article: The Venezuelan Story: Revisiting the Conventional Wisdom Article: Democracy Dictates Latin America's Future

Author: Antonio Guzman-Blanco Former Manager at a major international bank doing business in Venezuela Article: President Hugo Chavez' ties to terrorism

Author: Francisco Castillo Francisco is attorney at Hoet Pelaez Castillo & Duque, one of Venezuela's most prestigious law firms. Article: Chavez and Terrorism

Author: Antonio A. Herrera-Vaillant Antonio is Editor in Chief, "Business Venezuela" Vice president / General Manager VENAMCHAM Article: I got my job through the New York Times

Author: Priscilla West Priscilla is a former PDVSA employee Article: Venezuelan Crisis - It's Not An "Oil Workers Strike!"

Author: J.M. Barrionuevo Director of EM Strategy at Barclays Capital Article: The Crisis Article: Venezuela’s Unfolding Scenario Article: The President’s Freefall Begins Article: Venezuela’s Gathering Tempest

Author: Martin Arostegui Martin is a free-lance writer for Insight magazine Article: Chavez Plans for Terrorist Regime