www.voanews.com VOA News 28 Jan 2003, 16:58 UTC

The Venezuelan government has extended a freeze on foreign exchange trade for another week in an effort to protect the value of the country's currency.

Officials are expected to set a fixed exchange rate for the bolivar, which has lost at least 25 percent of its value this year.

The halt on trading began last Wednesday and is intended to prevent capital flight from Venezuela as a two-month anti-government strike continues.

The work stoppage had nearly halted the country's normal oil production of more than three million barrels per day. Striking oil executives said Tuesday the production is now more than one million barrels per day.

The government has fired an estimated 3,000 dissident state oil workers and deployed troops to oil installations to restart operations.

Some business owners have returned to work, saying the walkout has cost them thousands of dollars in lost income.

President Hugo Chavez announced Sunday he would impose price controls on medicine and food.

Mr. Chavez, a former paratrooper who survived a short-lived coup in April 2002, refuses to give in to opposition demands to step down or call early elections.

asia.reuters.com Tue January 28, 2003 12:34 PM ET By Isabel Garcia-Zarza

HAVANA (Reuters) - Latin Americans are lining up in droves these days at Spain's consular offices around the region as they seek citizenship under a new Spanish law that makes close to a million of them eligible.

Even Cuban President Fidel Castro meets the criteria for gaining Spanish citizenship. Although Latin America's most famous leftist is unlikely to apply, many of his people are hoping to use their ancestry to gain the coveted European passport.

Cuban descendants of Spanish immigrants are not the only ones dusting off the birth certificates and baptism records of their parents and grandparents to lay claim to this new right.

Thousands of people have been lining up in Argentina, Mexico, Brazil, Colombia, Chile, Venezuela and other countries, a reflection of the hard times the region is going through.

Spain's nationality law was amended effective Jan. 9 to allow people of all ages to become citizens if one of their parents was a Spaniard born in Spain, when before only those under 20 could apply.

The grandchildren of Spaniards born in Spain also will have the opportunity to become citizens, but they must first obtain visas to live in Spain for a year.

Spanish officials have estimated that close to 1 million people would be eligible to apply, although they do not expect all of them to do so.

Castro, at 76, would have no problem under the new law gaining citizenship. The Cuban leader's father left Ancara, in the Spanish province of Lugo, at the end of the 19th century to seek his fortune on the Caribbean island, a colony of Spain for hundreds of years.

ESCAPE FROM NATIONS IN TURMOIL

Like Castro's father, millions of Spaniards at the end of the 19th century and during the first half of the 20th century crossed the Atlantic in search of a better life in Spain's former American colonies.

"This new law was born out of the recognition of Spanish immigration to Latin America" a Spanish consul official said, asking his name not be used.

Some commentators have also suggested the law is intended to improve the chances that future immigrants to Spain, which has experienced an influx from north Africa, share its language and culture. It could also help address the wrongs suffered by Spaniards forced into exile by Gen. Francisco Franco.

Many Spanish immigrants went to prosperous Argentina in the first half of 20th century. Now an estimated 400,000 of their offspring and grandchildren, spurred by the crisis in that country, could cross the Atlantic in the opposite direction.

More than 50 percent of Argentina's 36 million inhabitants live in poverty and the unemployment rate is 17.8 percent.

The Spanish government estimates that in addition to the 400,000 potential candidates in Argentina, there are 100,000 in Mexico, the majority relatives of exiles from the Spanish civil war of the late 1930s. An estimated 100,000 Venezuelans are also eligible, along with 80,000 in Brazil, a similar number in Cuba, 60,000 in Chile and 50,000 in Uruguay.

The news has been received with enthusiasm in these countries, where long lines have formed outside Spain's consular offices to seek more information or apply for citizenship. Space and staff were added in some countries to handle the expected avalanche of applications.

In the Venezuelan capital of Caracas, where an opposition strike against President Hugo Chavez has dragged on for two months, hundreds, and at times thousands, have come knocking daily on Spain's doors.

"The political, economic and security situation in the country is unbearable ... If the situation was not as it is, I would not be in line. It is a reflection of the country," said Venezuelan businessman Julio Lopez, whose father came from Spain, as he waited in line documents in hand.

EUROPEAN UNION'S DOORS OPEN TOO

The doors not only of Spain, but to all of the European Union countries will be open for those eligible under the new law, once they obtain their citizenship, a process that takes several months.

A passport from any European Union country gives the holder access to the others.

Spanish authorities believe that not all the country's new citizens will move to Spain or other parts of Europe.

"People are going to seek citizenship because it includes some economic aid if they stay where they are," the consul official said.

For example, Spanish citizens living in Cuba may be eligible for up to $200 per year. That is no small sum in a country where the average monthly wage is around $15, not including free health care and education and subsidized housing and food.

Long lines have formed at Spain's embassy in Havana, a busy place even before this year. To leave the Caribbean island, Cuban citizens must seek the government's permission.

The Cuban government has made no comment on the program.

"Having another nationality makes things easier here, you have more possibilities to come and go as you please," said Juana Suarez, the daughter of a Spaniard who arrived in Cuba in the 1920s.

www.forbes.com Reuters, 01.28.03, 4:32 PM ET By Patrick Markey

CARACAS, Venezuela, Jan 28 (Reuters) - Prices soared at Alberto Martin's Caracas electronics store over the last year as a sharp tumble in Venezuela's bolivar currency against the dollar pumped up the cost of his imported stereos.

Now they could go through the roof.

As the government prepares to introduce tight currency controls to offset the impact of an eight-week strike, many Venezuelans are fretting over how the changes may cut into their already depleted buying power.

"If we hardly sold anything before, now we're going to sell less. People will be earning the same, salaries won't go up. People are just going to buy the basics," Martin said.

To counter the strike against leftist President Hugo Chavez, the government last week suspended foreign exchange trading while it studied currency curbs to halt the bolivar's slide and shore up its international reserves.

Trading will be suspended until Feb. 5 while officials fine tune the controls they plan to implement. Finance Minister Tobias Nobrega said late Monday the government was considering a fixed exchange rate, but he did not specify where the rate would be set. The currency <VEBFIX=> closed a week ago at 1,853 bolivars to the dollar.

Prices in Caracas are already climbing as merchants bet that tighter controls over access to dollars will translate into higher costs for them in a nation where the bulk of consumer goods are imported.

FLIGHT TO DOLLARS Costs of electronic goods -- an imported consumer item sensitive to price changes -- at some Caracas stores have shot up as much as 40 percent recently, business owners said.

The opposition strike, started on Dec. 2 to force populist ex-paratrooper Chavez into elections, has pushed Venezuela's fragile economy deeper into recession, battering the bolivar as investors fled for the safety of the dollar.

Buffeted by economic uncertainty, the Venezuelan currency has shed more than 28 percent of its value since the strike began. It plummeted 46 percent last year as inflation topped more than 31 percent in 2002.

Economists said that a fixed exchange rate in the short term could preserve Venezuela's international reserves, which have slipped 7.3 percent to $11.05 billion this year alone as the Central Bank intervened to shore up the bolivar.

But long-term currency restrictions will complicate private sector transactions by limiting dollar access and analysts said the government may find it difficult to sustain a fixed rate.

"Some of the reasons they are doing this is to stop capital flight and save their reserves. But they could find the opposite is true if they have to shore up the fixed rate," said Fitch Ratings director of sovereign ratings Theresa Paiz.

Venezuela last introduced temporary currency controls in 1994 to 1996 during a severe banking crisis.

But that created not only a thriving black market, which ended up becoming the de facto reference rate for the bolivar, but also a parallel market with currency trading conducted through the selling of Venezuela's Brady bonds.

PARALLEL CURRENCY MARKET EMERGING Banking sources said last week that a fledgling parallel market had reappeared though trading in private accounts overseas with the Venezuelan currency valued at about 2,200 bolivars to 2,300 bolivars to the dollar. Black market rates have been pushed as high as 3,000 bolivars to the dollar.

Citing their nation's 1994-1996 curbs, Venezuelan opposition leaders quickly dismissed the government's plans to introduce new controls.

They said restricted access to the dollar would drive up prices as some imported goods became scarcer. Curbs would also drive importers to the black market for greenbacks, which would tack on costs to prices on the domestic market, they said.

"The fundamental problem is that some people are going to be able to get access to the dollars at one price and others will not," said Rafael Alfonzo, an anti-Chavez business leader. "The consumer will be the one who pays for this."

Finance Minister Nobrega said that the government's plan would provide enough dollar access to ensure that prices of essential food and medicine did not rise sharply.

But for Caracas car salesman Jose Antonio Torres the wait for a final decision on where the exchange rate would settle was just another chapter in a disastrous economic year.

"We can't fix a price for cars because we don't know where the dollar is going to go," Torres said as he turned away two customers from his showroom of foreign cars. "When we buy new cars from the plant now, we know we are not going to be able to sell them at the exorbitant prices they'll cost."

www.forbes.com Reuters, 01.28.03, 12:42 PM ET By Pascal Fletcher

CARACAS, Venezuela (Reuters) - Venezuela's opposition said Tuesday they were ready to spare education and food production from their 58-day-old anti-government strike as a goodwill gesture to help international efforts to solve the country's political crisis.

Although oil workers were maintaining their crippling stoppage in the world's No. 5 petroleum exporter, opposition leaders were rethinking their grueling campaign to try to force leftist President Hugo Chavez to hold early elections.

They are debating easing the strike in some non-oil areas to give hard-pressed private businessmen and consumers a breather after more than eight weeks of a protest that has triggered an economic crisis but failed to oust Chavez.

With the oil-reliant economy reeling from the impact of the strike, the government has chopped back budget spending and suspended currency trading to halt capital flight while it prepares to introduce foreign exchange controls next week.

Finance Minister Tobias Nobrega said late Monday the government was considering a single fixed exchange rate.

In recent weeks, support for the strike has slipped and many shops, restaurants and businesses have reopened.

Two days before the arrival in Caracas of a six-nation delegation which will lend its weight to peace efforts, opposition negotiators said they were prepared to halt the strike in the sensitive areas of education and food output.

"Our proposal is we should lift the strike in these two sectors as a gesture of goodwill," Timoteo Zambrano of the opposition Coordinadora Democratica group told local radio.

Besides slashing oil exports, the shutdown has also caused unprecedented shortages of gasoline and some food items. Despite complaints from parents, private schools and universities had also joined businesses in staying closed.

CHAVEZ TALKS TOUGH In a daily war of words with his foes, Chavez has used these disruptions to try to turn public opinion against the opposition. The outspoken former paratrooper, who survived a coup last year, has refused to negotiate with strike leaders he calls "terrorists, fascists and coup mongers".

Chavez has used troops to partially restore strike-hit oil production, which is still at around a third of normal levels.

Envoys from the United States, Brazil, Mexico, Chile, Spain and Portugal are due in Caracas Thursday to back ongoing efforts by Organization of American States (OAS) Secretary General Cesar Gaviria to broker a deal on elections.

The six-nation "group of friends" was formed to try to help break the deadlock in the Venezuelan crisis, which has pushed up oil prices at a time when the United States is considering a war on Iraq. Before the strike, the United States was receiving more than 13 percent of its oil imports from Venezuela.

Zambrano said the six-nation "friends group" had recommended lifting the strike in education and food production, arguing that disruption in these sensitive areas could inflame an already tense political and social situation.

Seven people have been killed in shootings and clashes between rival protesters since the strike began Dec. 2.

Rejecting calls for early elections, Chavez insists his foes must wait until Aug. 19, halfway through his current term. After that date, the constitution foresees a binding referendum on his rule, which is scheduled to last until early 2007.

Opposition leaders say the nation cannot wait until August. They are collecting signatures for a constitutional amendment to trigger early elections, an option proposed by former U.S. President Jimmy Carter, who is backing the peace talks.

BRACING FOR FOREX CONTROLS Following the government's announcement last week that it planned to introduce foreign exchange controls, local businessmen and consumers have been bracing for the expected impact of the measure on their costs and prices.

Finance Minister Nobrega late Monday extended the suspension of foreign exchange trading for another week. He said the government was still studying whether to introduce one exchange rate adjustable over time or a dual exchange rate.

Venezuela's bolivar has tumbled 28 percent since the strike started and it lost 46 percent of its value against the U.S. dollar during all last year. International reserves have also fallen and stood at $11.05 billion Jan. 24, not including $2.6 billion in a strategic rainy-day savings fund.

Chavez said Sunday the controls were necessary to protect the bolivar currency and international reserves against what he called an "economic coup" being attempted against him by businessmen opposed to his self-styled "revolution".

His foes accuse him of ruling like a dictator and of trying to drag the oil-rich nation toward Cuba-style communism. He portrays opponents as a rich, resentful elite defending their privileges against his efforts to implant social justice.

Private economists say foreign exchange controls, which were last introduced in Venezuela in 1994-96, may initially slow capital flight but will quickly be circumvented by a black market. They say the measures will also hike prices in a nation that imports most of its food and other consumer needs.

Opposition leaders say the planned controls will generate corruption and they fear the government will use the measure to punish striking firms by restricting their access to dollars.

www.forbes.com Reuters, 01.28.03, 12:42 PM ET By Pascal Fletcher

CARACAS, Venezuela (Reuters) - Venezuela's opposition said Tuesday they were ready to spare education and food production from their 58-day-old anti-government strike as a goodwill gesture to help international efforts to solve the country's political crisis.

Although oil workers were maintaining their crippling stoppage in the world's No. 5 petroleum exporter, opposition leaders were rethinking their grueling campaign to try to force leftist President Hugo Chavez to hold early elections.

They are debating easing the strike in some non-oil areas to give hard-pressed private businessmen and consumers a breather after more than eight weeks of a protest that has triggered an economic crisis but failed to oust Chavez.

With the oil-reliant economy reeling from the impact of the strike, the government has chopped back budget spending and suspended currency trading to halt capital flight while it prepares to introduce foreign exchange controls next week.

Finance Minister Tobias Nobrega said late Monday the government was considering a single fixed exchange rate.

In recent weeks, support for the strike has slipped and many shops, restaurants and businesses have reopened.

Two days before the arrival in Caracas of a six-nation delegation which will lend its weight to peace efforts, opposition negotiators said they were prepared to halt the strike in the sensitive areas of education and food output.

"Our proposal is we should lift the strike in these two sectors as a gesture of goodwill," Timoteo Zambrano of the opposition Coordinadora Democratica group told local radio.

Besides slashing oil exports, the shutdown has also caused unprecedented shortages of gasoline and some food items. Despite complaints from parents, private schools and universities had also joined businesses in staying closed.

CHAVEZ TALKS TOUGH In a daily war of words with his foes, Chavez has used these disruptions to try to turn public opinion against the opposition. The outspoken former paratrooper, who survived a coup last year, has refused to negotiate with strike leaders he calls "terrorists, fascists and coup mongers".

Chavez has used troops to partially restore strike-hit oil production, which is still at around a third of normal levels.

Envoys from the United States, Brazil, Mexico, Chile, Spain and Portugal are due in Caracas Thursday to back ongoing efforts by Organization of American States (OAS) Secretary General Cesar Gaviria to broker a deal on elections.

The six-nation "group of friends" was formed to try to help break the deadlock in the Venezuelan crisis, which has pushed up oil prices at a time when the United States is considering a war on Iraq. Before the strike, the United States was receiving more than 13 percent of its oil imports from Venezuela.

Zambrano said the six-nation "friends group" had recommended lifting the strike in education and food production, arguing that disruption in these sensitive areas could inflame an already tense political and social situation.

Seven people have been killed in shootings and clashes between rival protesters since the strike began Dec. 2.

Rejecting calls for early elections, Chavez insists his foes must wait until Aug. 19, halfway through his current term. After that date, the constitution foresees a binding referendum on his rule, which is scheduled to last until early 2007.

Opposition leaders say the nation cannot wait until August. They are collecting signatures for a constitutional amendment to trigger early elections, an option proposed by former U.S. President Jimmy Carter, who is backing the peace talks.

BRACING FOR FOREX CONTROLS Following the government's announcement last week that it planned to introduce foreign exchange controls, local businessmen and consumers have been bracing for the expected impact of the measure on their costs and prices.

Finance Minister Nobrega late Monday extended the suspension of foreign exchange trading for another week. He said the government was still studying whether to introduce one exchange rate adjustable over time or a dual exchange rate.

Venezuela's bolivar has tumbled 28 percent since the strike started and it lost 46 percent of its value against the U.S. dollar during all last year. International reserves have also fallen and stood at $11.05 billion Jan. 24, not including $2.6 billion in a strategic rainy-day savings fund.

Chavez said Sunday the controls were necessary to protect the bolivar currency and international reserves against what he called an "economic coup" being attempted against him by businessmen opposed to his self-styled "revolution".

His foes accuse him of ruling like a dictator and of trying to drag the oil-rich nation toward Cuba-style communism. He portrays opponents as a rich, resentful elite defending their privileges against his efforts to implant social justice.

Private economists say foreign exchange controls, which were last introduced in Venezuela in 1994-96, may initially slow capital flight but will quickly be circumvented by a black market. They say the measures will also hike prices in a nation that imports most of its food and other consumer needs.

Opposition leaders say the planned controls will generate corruption and they fear the government will use the measure to punish striking firms by restricting their access to dollars.