www.hindustantimes.com January 28

People demand gold for various reasons. But in India it is the craving for gold jewellery that makes it the biggest gold consuming nation.

Gold’s fascination also lies partly in its primary role as the successful basis for monetary arrangements throughout most of world history. Britain became the champion of the gold standard. The pivotal intellectual figure behind the overthrow of the gold standard was John Maynard Keynes who termed gold a ‘barbarous relic’. He urged Britain not to return to the gold standard after World War I but pursue a managed currency, focusing on domestic price stability. The gold standard was finally abandoned in 1971 when the US suspended the convertibility of dollars into gold.

But investment in gold has continued and gold prices are determined by the demand and supply situation. When people are jittery about the value of other assets — as when war clouds loom  on the horizon — they opt for gold. After 9/11, there was a spurt in demand  and gold prices rose by 25 per cent in 2002. Since then, the US stock market has not  picked up due to many reasons among which were the collapse of Enron and the revelation of dubious book-keeping practices by other giant corporations.

People disillusioned by the world economy are thus betting on gold. The rising oil prices may further delay the stock markets from picking up. The recent strike by Venezuela’s oil workers has already had an impact on world oil prices (they shot up to $ 33 a barrel) and there is speculation about the fate of the oilfields of Iraq. A war could disrupt Iraqi production and OPEC could hike the prices. In any case, markets would remain volatile and the dollar may remain low as compared to the euro and the yen. Only when stability returns, other options may look more attractive than gold.

ogj.pennnet.com   By OGJ editors HOUSTON, Jan. 28 -- Oil futures prices fell on New York and London markets Monday after United Nations Chief Weapons Inspector Hans Blix said he could not determine yet if Iraq has weapons of mass destruction as the US claims.

Although Iraq has complied with the inspections, Blix said, Iraq "appears not to have come to a genuine acceptance, not even today," of demands that it disarm.

On Tuesday, traders awaited the State of the Union address by US President George W. Bush for any hints about the timing of a possible war with Iraq.

UN Sec. Gen. Kofi Annan told reporters Monday that weapons inspectors need time to do their job in Iraq, and he urged Baghdad to cooperate with the UN. When asked about potential unilateral action against Iraq by the US, Annan said he hoped the Security Council's existing unity could be maintained.

"In my own speech to the General Assembly on Sept. 12, I stressed the need for multilateralism¿and that position has not changed," he said, adding, "I have not given up on peace, and you shouldn't either."

Meanwhile, Iraqi Deputy Prime Minister Tareq Aziz told Canada's CBC television that Iraq could retaliate against its oil-producing neighbor if the US launched an attack from Kuwait.

"Kuwait is a battlefield, and American troops are in Kuwait¿. If there will be an attack from Kuwait, I cannot say that we will not retaliate. We will of course retaliate against the American troops wherever they start their aggression on Iraq. This is legitimate," he told the television reporter during an interview.

Meanwhile, there were some indications of a possible break in the Venezuela general strike. Some businesses have talked about reopening next week, but striking workers at Petroleos de Venezuela SA told Dow Jones that they are pessimistic about the possibility of returning to work soon.

"The changes that are underway (within PDVSA) don't leave us with many other options left than continuing the strike. We don't have a company to go back to," Carmen Elisa Fernandez, a spokeswoman for dissident PDVSA workers, told Dow Jones Monday.

Bank of America Securities analyst Tyler Dann said he sees continued confusion on both the Iraqi and the Venezuelan situations.

If there is war in Iraq, then resolution will not translate into more oil right away, he said. "Post-resolution, we believe it can reasonably be assumed that Iraqi production approaches a sustainable level of 3.1 million b/d by yearend 2003 [assuming Iraq is not successful in implementing a scorched earth policy]; however, the establishment of an investment framework to further build Iraqi capacity could take as long 18 months, in our view," Dann said.

Regarding Venezuela, the extent of permanent damage to its production remains inconclusive, he said.

"Without a comprehensive resolution of the strike [preferably with (Hugo) Chávez out of power], refinery start-ups and field rehabilitation work will likely be difficult to comprehensively execute," Dann said.

Futures prices The March contract for benchmark US light, sweet crudes dropped by 99¢ to $32.29/bbl Monday on the New York Mercantile Exchange, while the April position lost 77¢ to $31.39/bbl. Heating oil for March delivery slipped by 1.59¢ to 93.43¢/gal. Unleaded gasoline for the same month declined by 2.10¢ to 90.15¢/gal.

The March natural gas contract lost 12.8¢ to $5.40/Mcf Monday as forecasts for cold weather in early February were revised.

In London, the March contract for North Sea Brent crude also settled lower, losing 63¢ to $29.86/bbl on the International Petroleum Exchange. The natural gas contract climbed, up 13.84¢ to the equivalent of $3.218/Mcf on IPE.

The average price for OPEC's basket of seven benchmark crudes lost 40¢ Monday to $30.16/bbl.

www.vheadline.com Posted: Tuesday, January 28, 2003 - 1:05:45 PM By: Gustavo Coronel

VHeadline.com commentarist Gustavo Coronel writes: The number of Venezuelan State owned enterprises keeps changing, mostly upwards ... over 100 of them share some undesirable characteristics:

1. They all lose money,
2. They are all extremely inefficient and fat with political clients, and,
3. Most are corrupt.

From State Banks to industrial agglomerates ... from social service agencies to Universities ... from military run social programs to custom offices ... from tax collecting agencies and lotteries and race tracks, the government shows an appalling capacity to waste money.

How much is this money and where is it coming from?

The government has received about $100 billion in the last four years. About 70% of this money comes from the petroleum industry. After the costs and the required capital investments of PDVSA are deducted, the contribution from PDVSA to the government represents about 30% of  GDP and 35% of National Budget ... a budget of about $30 billion ... only second in size to the Brazilian, although we are only 23.4 million people.

• The other main sources of government income are taxes and indebtedness (our debt is of about $35 billion).

It would seem logical to assume that the main concern of the government should focus on the host of unproductive, corrupt, money losing State enterprises ... concern about the bankrupt Industrial Bank ... about the $45 billion sunk in Guayana industries without one cent of profit ... about the chaotic and corrupt military "Bolivar 2000" program ... about the tragedy of the 200,000 or more street children who wander about in our cities ... about the obscene mediocrity of State Universities (with one exception) ... about the high criminal rate that has made of Venezuela one of the five most violent countries in the world.

We would certainly share those concerns and help in the solution of these tragedies ... but the government shows little or no concern for this gallery of horrors.

On the contrary, hardly a month goes by without the addition of another monster to this gallery: the Women's Bank, the Poor Bank, a projected Military Bank, another Steel Mill, a projected "Popular" university to operate in the Presidential Palace, a Caribbean Airline to go island hopping ... a never ending succession of inept, half-baked government projects.

The main, almost sole, concern of the government is reserved for PDVSA and her "unsatisfactory" performance ... precisely the only State-owned company which makes money ... the same PDVSA which was ranked second in 1998 in a group of 50 world petroleum companies by Petroleum Intelligence Weekly ... the same PDVSA that in 1998-2000 had more productivity per employee than SHELL, EXXON or British Petroleum ... the same PDVSA that in 1998 won first place in the ranking of the best managed State petroleum companies, made by the Petroleum Economist.

In order to attack PDVSA, the government has hired a group of mercenaries which has concocted a story mixing half truths and lies. According to this story, while in 1976 PDVSA gave 80% of total income to the government it gave only 20% in 2000. The reason being, according to the story, that the PDVSA managers are stealing this money from the government.

• This story is designed to promote hatred for those managers among the poor and uninformed population.

What the story does not say is that a comparison between the 1976 PDVSA and the 2000 PDVSA can not be done without the necessary explanations. In 1976 PDVSA was a production company ... it did not invest one cent other than in production costs, since foreign companies had ceased investing due to the imminent nationalization.

In 1976, reservoirs were young and productive ... in 1976 there was no exploration and reserves were only of 18 billion barrels, good for only 20 more years ... in 1976 refineries were obsolete and produced mostly fuel oils.  There was no marketing done directly ... there was no tanker fleet ... there was no research being conducted.

The mercenaries fail to mention that the government's fiscal take was based on a mechanism called the Fiscal Reference Price, which obliged the industry to pay taxes at a government imposed price per barrel, which had nothing to do with the real price.

Example: If the FRP was $10, the company paid taxes like if it had sold the barrel at that price when, in reality, the sale price had been, say, $6 per barrel. Obviously this artificially inflated the government take. This mechanism disappeared soon after nationalization as its existence was senseless under new ownership.

After 1976, moreover, the government had to do something that was previously done by the foreign companies, i.e. INVEST ... in exploration, production secondary recovery, modern refineries, a new tanker fleet. As a result of this huge effort, Venezuela today has reserves for more than 100 years. The refineries produce mostly gasolines and other light products ... what a difference from the PDVSA of 1976!

• But the mercenaries openly lie when they say that PDVSA's contribution to the government (actually, to the nation) is only 20%.

The direct contribution, made up of income tax, royalties and dividends is higher than 40%. There are other substantial indirect contributions, including some $200 million per year for the communities where PDVSA operates and some $300 million per year in gasoline subsidies, since the government forces PDVSA to sell gasoline in the domestic market below production costs and, even worse, below international prices.

A gallon of gasoline sells in Venezuela for $0.20 while in Colombia it is several times higher ... this promotes huge smuggling operations to Colombia and Brazil, which further erodes PDVSA's financial results.

There is still another artificial restriction on PDVSA's financial performance.

Since OPEC has imposed a quota on Venezuela, and PDVSA has won markets which are vastly greater, it has to buy in the open market the oil it could produce internally at some $7 per barrel for around $20 ... this is what could be called punishment for being efficient. When these considerations are properly added to the story it is clear that PDVSA's performance has been exceptional.

What is the reason for Chavez' merciless attack on the only productive State-owned company? Very simple: CONTROL.

PDVSA had become a pebble in Chavez' left shoe. It was in the hands of managers, not politicians ... in the hands of "counter revolutionary" technocrats ... they had to be swept out.

What the Chavez government is doing to PDVSA is a crime which will not go unpunished.

PDVSA, as we knew it, is rapidly ceasing to exist, being replaced by a mediocre, third world outfit complacent to the ideological salad put together by the President, now self-named as "Oil Commander-in-Chief."

• With the collapse of PDVSA we are witnessing the collapse of the country ... when the time comes, if I am still around, I hope to be a witness for the prosecution.

Why? Because when I was building pipelines for a better PDVSA, Ali Rodriguez, the current President of the "revolutionary" PDVSA, was blowing them up, as the main dynamite expert of the Cuban-supported guerrilla which failed in Venezuela during the 1960s.

Gustavo Coronel is the founder and president of Agrupacion Pro Calidad de Vida (The Pro-Quality of Life Alliance), a Caracas-based organization devoted to fighting corruption and the promotion of civic education in Latin America, primarily Venezuela. A member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), following nationalization of Venezuela's oil industry, Coronel has worked in the oil industry for 28 years in the United States, Holland, Indonesia, Algiers and in Venezuela. He is a Distinguished alumnus of the University of Tulsa (USA) where he was a Trustee from 1987 to 1999. Coronel led the Hydrocarbons Division of the Inter-American Development Bank (IADB) in Washington DC for 5 years. The author of three books and many articles on Venezuela ("Curbing Corruption in Venezuela." Journal of Democracy, Vol. 7, No. 3, July, 1996, pp. 157-163), he is a fellow of Harvard University and a member of the Harvard faculty from 1981 to 1983.  In 1998, he was presidential election campaign manager for Henrique Salas Romer and now lives in retirement on the Caribbean island of Margarita where he runs a leading Hotel-Resort.  You may contact Gustavo Coronel at email ppcvicep@telcel.net.ve

www.cnn.com Tuesday, January 28, 2003 Posted: 12:45 PM EST (1745 GMT)

CARACAS, Venezuela (AP) -- Striking Venezuelan oil executives acknowledged Tuesday that daily production surpassed 1 million barrels, signaling that President Hugo Chavez may be regaining control of the nation's key industry.

The statement by dissident executives at the state monopoly Petroleos de Venezuela S.A., or PDVSA, came as opposition leaders debated whether to ease the 57-day-old strike against Chavez. Some fear Venezuelans' discontent with strike-induced food and fuel shortages could undermine their objective of removing Chavez from office.

Negotiations, mediated by the Organization of American States, have focused on whether to hold early presidential elections.

Also Tuesday, the Finance Ministry extended a freeze on foreign currency sales until February 5. The suspension is designed to give the government more time to stem the slide of Venezuela's bolivar currency, which has lost a quarter of its value this year.

Dissident PDVSA executives said Tuesday that output by the world's fifth-largest exporter was 1.05 million barrels. Chavez claimed last week that daily production topped 1 million barrels.

That remains well below pre-strike levels of 3.2 million barrels per day, but well above the 150,000 barrels per day produced during the strike's early days.

The oil industry provides half of government income and 70 percent of export revenue.

The government has fired more than 5,000 PDVSA workers, corporation president Ali Rodriguez told state news agency Venpres on Tuesday.

Rodriguez, a Chavez ally, said more dismissals are forthcoming as the government takes advantage of the strike to downsize the company and eliminate dissent. PDVSA had almost 40,000 employees and the government claims most have returned to work.

Strike leaders deny this, saying the government has increased output by focusing on new oil wells, where it is easier to extract crude oil. They insist the strike, called December 2, will continue in the oil industry despite the government's progress on bring operations back online.

"The protest by oil workers will continue because this is the path we are taking to find a solution to the crisis," dissident oil executive Juan Fernandez said.

But several business leaders said schools, restaurants and malls should reopen amid concern that discontent with food and fuel shortages and financial losses caused by the strike could undermine the objective of removing Chavez.

Julio Brazon, president of the Consecomercio business chamber, which represents about 450,000 stores and retailers, said businesses need "to recover earnings and avoid labor problems."

He said shopping malls and franchises may be permitted to open part-time next week.

Carlos Avila, executive president of Subway de Venezuela, said fast-food franchises were considering opening four days a week. Each of Subway's 76 branches in Venezuela have lost an average of $30,000 during the strike.

The National Association of Private Education, which represents 911 private schools, convoked assemblies this week to decide whether schools should open February 3.

Strike organizers, who accuse Chavez of dragging this South American country into political and economic chaos, warned that easing the work stoppage would be counterproductive.

"If some sectors of the opposition, business sectors or political sectors, think they can save themselves from this regime by easing the strike, they are totally mistaken," said Carlos Ortega, president of the Venezuelan Workers Confederation, the country's largest labor union with 1-million members.

The government is struggling with the strike's impact on the economy. The strike has cost Venezuela at least $4 billion so far and the Santander Central Hispano investment bank has warned that the economy could shrink by as much as 40 percent in the first quarter of 2003.

The Finance Ministry's extended freeze on foreign currency sales is meant to give the government more time to implement a new policy of foreign exchange controls, which will limit the amount of dollars and other foreign currencies Venezuelan can buy.

The exchange controls would stem the slide of Venezuela's bolivar currency but hurt businesses dependent on dollars to buy imported goods.

The strike was called to pressure Chavez to accept a referendum on his rule. The opposition hoped a referendum, though nonbinding, would embarrass Chavez into leaving office.

But Venezuela's Supreme Court ruled last week balloting must be postponed indefinitely, prompting opposition parties to organize a massive signature collection campaign on February 2.

Government adversaries hope to amend the constitution to allow early elections.

Chavez, a former paratrooper, was elected in 1998 and re-elected two years later. His term in office ends in 2007.

www.upi.com By Gregory Tejeda United Press International From the National Desk Published 1/28/2003 1:07 PM

When I saw the headline, "Hispanics outnumber blacks for first time," about the Census Bureau report showing people who identify in some way with the Spanish heritage, my initial reaction was, "Yeah, so?"

On an intellectual level, I appreciate the meaning of growing numbers.

At 37 million people -- one of every eight people in the United States -- Hispanics are becoming a presence that business must cater to and politicians ignore at their own peril.

But while my brother, Chris, jokes about pulling out a giant foam finger and running around the streets shouting, "We're numero uno," the notion Hispanics have overtaken blacks in numbers sounds like a phony accomplishment -- like we've suddenly won the Grand Prize Game!

Is the growth of Hispanics intended to mean that somehow, our situation is now more significant than that of African-Americans?

Some people might claim the problems of black America now belong on the social backburner or might use the population shift to try to stir up dissension.

But a slight shift -- especially one that has been foreseen for years -- does not suddenly alleviate the discrimination faced by U.S. blacks.

Besides, what exactly is a Hispanic?

The once-great Spanish Empire set up its colonies throughout the Americas, including in what is now New Mexico, California and Florida. Spaniards imposed their language, customs and Catholicism on all the indigenous peoples they encountered and also brought African slaves to do the actual heavy work of building new colonies.

Hispanic applies to the descendants of all these people, though those who use the term Latino are trying to emphasize the efforts and cultures of native peoples.

Because of the variety of people covered, not all Hispanics are alike. They include people from countries whose history and issues of concern are varied -- similar to the differences among those from France, Italy and Germany, all Europeans who might be surprised at being lumped together.

I am of Mexican descent. I'm aware some Mexican citizens perceive me as just another Yankee brat whose grandparents "sold out." I don't always feel a social or political kinship with people whose ethnic backgrounds trace back to Puerto Rico or Cuba.

Even though some of our customs -- but not our Spanish accents -- are similar, people who trace their roots to Argentina, Venezuela or the "motherland" of Spain might as well be from another world. So it's hard to take seriously an increase in an ethnic definition that, by its very nature, is artificial.

The issue is more complex for extremely dark-skinned people of Hispanic background. Due to the vagaries of the Census Bureau classifications for race, such people can be counted as Hispanic, African-American or both, depending on their preference.

In fact, it's only when you subtract Hispanics of African background from the African-American category and then add them to the number of Hispanics do Hispanics outnumber blacks. However, Hispanic population growth is expected to continue at high enough rates in the future to remove the discrepancy.

Federal officials said last week 196.2 million people in the United States are white. But the 2000 Census previously showed 48 percent of Hispanics identified themselves racially as white -- compared to 8 percent American Indian, 2 percent African-American and 42 percent, myself included, who picked "other" because they thought the racial categories were flawed.

It's not wrong for some Hispanic people to think of themselves as white. The genetics of European Spaniards run strong in many Hispanic families. They're not Anglo-Saxon white, but then again, neither are people of Polish, Italian or Russian descent.

But people of those ethnic descents get lumped into the vast "white" barrel by the Census Bureau, while Hispanic whites get counted separately.

That makes the population shift "documented" by the study even more meaningless.

With my light complexion, I have often been mistaken for Italian, Greek or even Polish. On explaining my ethnic history, I have been told by some it counts as being "white."

So am I just another white boy? I hope not.

Am I a "vato loco" who, had my father not busted his butt to provide a few advantages with regard to education, could just as easily be dreaming about the day I could work on a garbage truck? (I'm not exaggerating. One of my cousins who didn't get any breaks would love that job.) "Vato loco," not to be confused with "gato loco" or crazy cat, is commonly used to refer to wild, street kids, in some cases gangs.

Or am I just me, a slightly sarcastic writer from Chicago who thinks statistics about "the largest minority" are too easily used negatively to emphasize differences by those who want to keep Hispanics from ever fully assimilating into the United States?

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(Hispanidad is a weekly column about the culture of Hispanics and Latinos in the United States, written by Greg Tejeda, a third-generation Mexican-American. Suggestions for topics can be made to gtejeda@upi.com)