sg.biz.yahoo.com Tuesday January 28, 10:06 PM

CARACAS (Dow Jones)--Venezuela's automobile industry expects vehicle sales to plunge about 61% to roughly 50,000 units in 2003, from 128,623 in 2002, Ricardo Tinoco, the spokesman for Ford Motor Co.'s (F) local unit said Tuesday.

"Sales in January are almost nonexistent. February probably won't be much better. In fact, the whole first quarter will be absolutely off," Tinoco said, referring to the effects of an ongoing 58-day-old general strike which has severely affected the economy.

"If anything starts to happen, it will be in the second or third quarter," he added.

Select from the most reliable agencies  The automobile industry blames the predicted drop in sales on Venezuela's severe economic crisis combined with anticipated foreign exchange controls.

Gross domestic product is estimated by analysts to have contracted more than 8% last year, when vehicle sales were down about 41% from 216,977 units in 2001. Auto industry officials had predicted about a 50% drop for last year.

Given the strike virtually shut Venezuela's vital oil industry for more than a month, along with many other sectors, GDP is seen shrinking as much as 40% this quarter and up to 25% for the year.

Tinoco added the bolivar's ($1=VEB1853) steep devaluation has already had an affect on sales and will likely continue because imported vehicles and some 70% of parts for those assembled here have become more expensive.

After devaluing 46% in 2002, the bolivar lost about 25% against the dollar this year before the government halted sales of foreign exchange last week. The halt is to continue until the government implements measures expected sometime next month that could include a fixed rate for the bolivar and other restrictions.

Venezuela/Auto Sales -3: Ford Ops Still Shut On Strike

Because several of its local parts manufacturers are still on strike, Ford's production is still shut down, Tinoco said.

"We don't have an exact idea of when" production will resume, he said.

Although many businesses have reopened recently, strike leaders have said they won't officially call off the action until President Hugo Chavez agrees to early elections.

Chavez has said his detractors must avail themselves of constitutionally approved measures, such as an amendment shortening his term or a possible recall referendum in August, the midpoint of his term.

Chavez's critics blame his left-leaning policies for the country's deepening economic crisis, as the economy likely contracted about 8% last year amid unemployment of 17% and inflation of 31%.

Chavez, first elected in 1998 on promises to eradicate corruption and inequality, has blamed the recession on an "economic coup" by his opponents.

In 2002, General Motors Corp. (GM) led local vehicle sales with 38,044 units, followed by Toyota Motor Corp. (TM) and Ford with 20,934 and 17,971 vehicles, respectively.

-By Jehan Senaratna, Dow Jones Newswires; 58212 564 1339; jehan.senaratna@dowjones.com

www.wpri.com By Eyewitness News Jan 28, 2003, 9:22am

PROVIDENCE, R.I. (AP) - Home-heating oil prices have risen again, causing cash-strapped residents to look to the government for help in keeping warm.

With the mercury dropping, the demand for heating oil has been great. But for some residents, the spike in the price of heating oil has made it difficult to afford heat.

Last week, the average price of home-heating oil was $1.539 a gallon, the highest in two years. On Monday, the average retail price was even higher, at $1.609 a gallon, according the Energy Office.

For these and other reasons, phones were ringing off the hook at the Energy Office, as residents called for assistance.

The office was arranging either cash grants through Rhode Island’s Low-Income Home Energy Assistance Program or for emergency fuel deliveries, The Providence Journal reported.

On Friday, President Bush ordered the release of $200 million to a federal home heating aid program to help millions of low-income people across the nation pay their heating bills.

Rhode Island received $2 million to distribute to residents who qualify.

“We’re getting calls on every line,” said Janice M.

McClanaghan, state chief of energy and community services. McClanaghan said so far this season, about 22,000 households have received grants under the program averaging about $370 per household. With the extra $2 million, the agency should be able to provide grants for about 3,000 more households, she said.

The additional federal funds mean the state will have received a total of about $13.5 million under the program for the year that ends in September.

The price of home-heating oil continues to rise, generally tracking increases in the price of crude oil, partly because of the extreme cold, McClanaghan said. But also the uncertainty about the fate of oil-rich nations such as Venezuela, and the possibility of war against Iraq, affect prices.

news.bbc.co.uk Tuesday, 28 January, 2003, 14:13 GMT

Venezuela's 58-day-old strike by right-wing business groups and unions to remove the country's democratically elected president appears to be waning.

Oil production has increased, the stock exchange reopened and the opposition infighting over how to continue their actions against President Hugo Chavez has become public.

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

Carlos Ortega Strike leader

Striking oil workers now concede that production has recovered to 966,000 barrels per day, about a third of pre-strike levels, from the lows of 150,000 in December.

The government of the world's fifth largest oil exporter says output is currently at 1.32 million barrels a day.

The Caracas stock exchange gained over 10% when it resumed operations on Monday after its last session on 29 November.

"You can't close indefinitely," said exchange president Nelson Ortiz.

"The government didn't pressure us at all into reopening," he said adding it would trade for limited hours every day.

Strikers infighting

Faced with the possibility of bankruptcy, many private businesses, restaurants and stores have already broken the strike and private banks continue to open everyday, but for limited hours.

A strike leader has condemned the return to work by business.

Shortages are causing discontent with the strikers

"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 union leader Carlos Ortega.

Several business leaders have said that schools, restaurants and shopping malls should be allowed to reopen.

"Some people plan to reopen some commerce, industry and work activity," opposition leader Julio Borges told reporters.

"We must respect that as the strike is voluntary."

Mixed messages

But strike leaders said the walkout at the state oil monopoly, Petroleos de Venezuela (PDVSA), which provides half of government revenues, would continue.

The government, however, claims most of PDVSA's 40,000 employees have returned to work after 3,000 managers were sacked.

Last week some oil tanker pilots agreed to return to work.

But the true state of affairs within the oil refineries and aboard platforms is not known.

The strike at the oil work is having the most dramatic effect on the economy.

Business strike breakers

To prop up the economy, Venezuela on Monday extended a suspension of foreign exchange trade until 5 February to offset the damage caused by the strike and maintain its foreign reserves.

Business join banks in breaking the strike

"If we hadn't suspended trading, there would have been continual withdrawals, creating a banking crisis," Finance Minister Tobias Nobrega told local television.

"We are losing international reserves dramatically ... about $60m a day," he said.

The government plans to introduce a fixed exchange rate, after the bolivar lost a quarter of its value this year, but no level has been given.

International intervention

Representatives from six nations - led by the US and Brazil - are due in Caracas on Thursday to try to broker an end to the crisis.

Former US President Jimmy Carter has tabled constitutional reforms to shorten the president's term or hold a binding referendum on Mr Chavez's rule in August.

He was elected in 1998, re-elected two years later, and his term ends in 2007.

Business leaders fear popular discontent with food and fuel shortages caused by the strike could undermine their attempt to remove Mr Chavez from office.

The strike is estimated to have cost Venezuela at least $4bn.

As a result, the economy could shrink by up to 40% in the first quarter of 2003.

www.prospect.org By Jeff Faux Issue Date: 2.1.03

Print Friendly | Email Article Two political movements representing distinct visions of the global economy will hold their annual conventions the last week of January. The World Economic Forum -- an organization of some 1,000 multinational corporations -- will meet in Davos, a picture book ski resort in the Swiss Alps. The forum was organized 30 years ago to provide a discreet hideaway where businessmen-without-borders could socialize and strategize with one another and selected heads of state. Over the years, Davos has become less an exclusive retreat to do business and more a quasi-public conference on how to make the world safe for multinational capital. This year, more than 500 government officials, media pundits, leaders of churches and nongovernmental organizations (NGOs) such as the Red Cross, and "leading thinkers" will share cocktails and ideas with the captains of global capitalism.

Meanwhile, some 7,000 miles away, a much larger group of environmental, labor and other social activists will gather in sunny Porto Alegre, a bustling commercial city in the flat, cattle-raising landscape of southeastern Brazil. The World Social Forum was first organized in 2000 as a counterpoint to the World Economic Forum. Porto Alegre was chosen because it is in the Third World and because the local government -- run by Brazil's Workers' Party, whose leader, known as Lula, has just been elected president -- offered to host it. Two years ago, 4,000 registered delegates showed up, and another 16,000 people came to listen to the discussions. Last year there were 14,000 registrants and 35,000 observers. For this year's conference, organizers had 24,000 registrants by Dec. 1.

Although the party of Porto Alegre has larger conventions, the party of Davos remains in power almost everywhere. Its neoliberal model, which makes freedom to invest the supreme political value, has been for 20 years the agenda of the International Monetary Fund, the World Bank, the World Trade Organization, the U.S. Department of the Treasury and other governing institutions of the global marketplace.

But inside the cozy chalets of Davos, the triumphalism of the past is likely to be muted this year. The world's economy is entering the third year of economic slowdown, and there's no consensus among the multinational elites on how to revive it. Japan remains in the grip of its deflationary spiral, tight-money central bankers are choking Europe's growth and much of the developing world is staggering under unpayable debts. The prospect of war in Iraq and at least a short-term unsettling of global oil prices add to the jitters. Doubts about the Bush administration's competence notwithstanding, Davos looks to the United States for salvation -- hoping that U.S. consumers will continue to defy the laws of economic gravity by spending more than they earn in order to absorb the rest of the world's excess production.

The uneasiness among the Davos constituency reflects more than business-cycle anxiety. Despite the rapid U.S. expansion of the 1990s, the neoliberal model has failed to deliver on its promises to accelerate Third World growth, improve the distribution of income, and usher in an era of freedom and democracy. Indeed, almost half of the world's 50 poorest countries saw a drop in their per capita incomes over the decade.

Misgivings can now be found even at U.S. universities, where thousands of foreign economics and business students have been trained in neoliberal thought. As The Wall Street Journal recently observed, "After the economic and financial distress that has hit Mexico, Asia, Russia, Argentina and Brazil in the past decade, the current generation [of foreign students] is absorbing a sobering new message about globalization and the trade-offs and turmoil that can come with it."

The response at corporate Davos has been to blame the customer, not the product. The theme of this year's conference is that ordinary people are plagued by a lack of trust in the world's companies, governments and other established institutions. A press release warns that unless trust is somehow restored, the world could see "greater system instability and a growing mandate for NGOs and new political parties."

This global distrust of established institutions that brings heartburn to the party of Davos brings hope to the party of Porto Alegre. It is a sign that the world's ordinary people are waking up to the failures of global laissez-faire. Davos looks to George W. Bush; Porto Alegre looks to Lula. The victory of Lula -- an ex-labor leader jailed under the 20-year military dictatorship with which many of the Davos member companies were happy to do business -- is Porto Alegre's answer to the establishment media that dismiss their protest movement as kooky and without clout.

Lula's victory certainly helps make the case for the Porto Alegre theme, "Another World Is Possible." But the vision of that other world is still incomplete. There is no consensus among the many disparate groups that fill the hundreds of workshops and seminars of their convention. The emphasis on self-sufficiency, decentralization and autonomy for indigenous tribes does not necessarily resonate with the majority of the world's impoverished people, who see their problem as lack of access to First World goods and services.

In Latin America, for example, where the neoliberal model is widely discredited, populist leaders remain intimidated by the threat of a capital strike from the world's financial markets. After a year of financial meltdown, Argentina is still on IMF life supports. In Venezuela, populist President Hugo Chavez is being pushed to the wall by a shutdown of the oil industry. Even in Brazil, Lula has had to reassure Wall Street by appointing conservatives to run the central bank and other economic ministries.

Indeed, the shadow of a third model -- China -- falls over both Davos and Porto Alegre. For Davos, China is a multinational corporation's dream: practically infinite sources of cheap, docile labor and a government that will use force to keep it that way. Yet China's amalgam of private greed and state power threatens to create corporate competitors whose market clout even the U.S. oil and military industrial complexes might not be able to match.

The threat to the party of Porto Alegre is that the socially repressive Chinese model -- what has been called Market Leninism -- may turn out to be an attractive alternative for the desperate Third World, resulting in a future of more centralization, more environmental degradation and much less democracy. History's sun may well be setting on Davos, but it has not yet risen on Porto Alegre.

www.news24.com 28/01/2003 14:13  - (SA)  

London - Oil prices climbed on Tuesday on rising worries about the threat to Middle East supplies of a war in Iraq after Baghdad said it had not ruled out an attack against its oil-rich neighbour Kuwait.

Traders were also nervous ahead of a major speech by US President George W Bush in which he was expected to brace Americans for possible war with Iraq, despite signs of opposition from fellow members of the UN Security Council.

The price of benchmark Brent North Sea crude oil for March firmed US28c to R30.14 per barrel in early deals.

"Prices have rallied overnight following comments by Iraqi officials that they might attack Kuwait," said Lawrence Eagles, analyst at brokers GNI-Man Financial.

Iraqi Deputy Prime Minister Tareq Aziz said Kuwait "is a battlefield and American troops are in Kuwait and preparing themselves to attack Iraq".

"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," he told Canada's CBC television.

In New York, the light sweet crude March contract slumped 99c per barrel to $32.39 on Monday after a report by UN chief weapons inspector Hans Blix on Iraq fed hopes that war might be further away than had been feared.

Eagles said Blix had given a "slightly more negative-than-expected assessment of Iraq's co-operation", but added that traders were more concerned about clues on the time-scale for war.

"The key issue for the market is that the weapons inspectors will be given a few more weeks at least to carry out their tasks," he wrote in a note to clients.

Analysts say the threat of disruption to Iraqi oil comes as the market is already tight because of a strike in Venezuela that has severely disrupted the country's oil exports, though there have been recent signs of cracks in the walk-out.

If the market loses Iraq's oil output of about two million barrels per day while Venezuela's exports are crimped, analysts say the Opec oil cartel would struggle to make up the shortfall.

Members of the Organisation of Petroleum Exporting Countries agreed earlier this month to raise output by 1.5 million barrels per day from the start of February, but the move has so far failed to rein in prices significantly.

The United States has huge strategic petroleum reserves of about 600 million barrels, but has been reluctant to tap any of the crude despite calls from US oil majors for their release. - Sapa-AFP