www.redandblack.com News By KATIE REETZ Published , January 29, 2003, 12:00:01 PM EDT

Students will be encouraged to jump right in to a roundtable discussion concerning the current crisis in Venezuela this afternoon.

"The whole purpose of the event is to educate the community about international events," said Paul Duncan, Program Coordinator for Latin American and Caribbean Studies (CLACS), who is sponsoring the event.

Since Dec. 2, Venezuela's economy has been crippled by a nationwide strike initiated by opponents of President Hugo Chavez.

The strike involves tens of thousands of people and has reduced the country's oil production capacities, resulting in shortages of gasoline and fuels.

Today's discussion is titled "Polarization and Deadlock: Roundtable Discussion of the Venezuela Crisis," and will be led by two University professors with experience in the area.

Carolina Acosta-Alzuru, an assistant professor of public relations, is a native of Caracas, Venezuela and previously taught at the Universidad Catolica Andres Bello there.

Acosta-Alzuru specializes in cultural studies, international communication and women's studies.

Acosta-Alzuru said her talk will focus on the media's role in the crisis. Additionally, she hopes that students will realize how lucky they are to live in a stable environment.

"I want students here to realize their privileges -- in Venezuela the universities are closed and students' lives have been disrupted," she said.

David Smilde, an assistant professor of sociology who lived in Venezuela for six years, currently is working on two research projects involving the country.

Smilde said he hopes the discussion will get at the root of the crisis and clear up any confusion surrounding the situation.

The current disruptions in Venezuela cannot be attributed to an individual but have more to do with outdated political parties and systems, Smilde said.

"I would like people to see that Chavez is neither a savior nor a devil," he said.

The event will take place at noon today at 290 S. Hull St. and is free and open to the public.

www.latintrade.com

01/29/2003 - Source: Latin American Newsletters The government may have broken the back of the oil strike, but Venezuela's crisis is starting to cause serious international concern. The United States wants to stabilise its third-largest oil supplier before unleashing war in the Middle East, while the newly-elected leftwing President Luiz Inácio Lula da Silva sees this as an opportunity to assert Brazil's rightful role as a powerbroker in South American affairs. At an impromptu summit on the sidelines of the Ecuadorean President's inauguration, these two rival impulses were meshed into a single diplomatic initiative.

A 'Group of Friends' comprising Brazil, the US, Chile, Mexico, Spain and Portugal has been established to find a negotiated end to the general strike in Venezuela, which has entered its ninth week. Colin Powell attended the first meeting of the group –an indication of how seriously the State Department is taking this. Chávez has also met the UN secretary-general Kofi Annan, and former US President Jimmy Carter has launched his own crisis-resolution bid.

All the international parties have agreed that the Organization of American States (OAS) should continue to mediate efforts, an outcome that has not pleased the Venezuelan opposition. The OAS is seeking a constitutional solution to the crisis and this rules out the opposition's demand for immediate elections. There are two proposed routes out of the crisis. The first is to allow the population to vote on a constitutional amendment that would allow for early elections and make it possible to cut short the President's statutory six-year term. The second suggestion is to wait until August –midway through Chávez's term of office– when the constitution allows for a binding referendum to be held on the President's mandate.

The Venezuelan government, in any case, has managed to get oil back on stream by sacking executives of the state owned oil company, PDVSA, moving the company headquarters out of Caracas and drafting in technicians from Algeria. Officials said output in the last week of January was 1.3m barrels a day, compared with the normal level of 3.2m bpd. The opposition claim it is lower –at 986,000 bpd– but accept that production has quadrupled since the start of the January.

The strike –or lockout as it may more accurately be described– is, however, hitting the financial sector. On 22 January, the central bank suspended currency trading for five days and said it would maintain capital controls until the end of the strike.

www.forbes.com Reuters, 01.29.03, 12:53 PM ET By Susan Schneider

NEW YORK, Jan 29 (Reuters) - Venezuela, in preparing to fix its exchange rate, is boldly going where most of its Latin American neighbors have gone before. But the path is strewn with pitfalls. As a two-month-old general strike gouges oil revenues and ravages markets with uncertainty, the government of Venezuelan President Hugo Chavez has grappled with a plunging currency, an exodus of capital and dwindling international reserves. The shutdown, waged by Chavez's foes to provoke his resignation or new elections, has already forced the embattled leader to import food and gasoline and shutter the currency market. Now, his government is studying the drastic step of fixing the bolivar currency under broader capital controls. "The first impact of this is that it deters foreign investment," said Fernando Losada, senior Latin American economist at ABN-Amro. For local companies "there are going to be controls, there is going to be paperwork, there is going to be bureaucracy. Everything will be much more difficult." Finance Minister Tobias Nobrega said Monday the government was considering a single fixed rate. Government and banking sources said discussions are focused on a single rate lasting four months, adjustable monthly, followed by a dual rate. The move will let Venezuela achieve key short-term goals, said analysts. A mix of capital controls and the fixed currency would help the cash-strapped nation guard its reserves of $11 billion and prevent more cash from bleeding across the borders, until oil output can be converted from a trickle to a torrent. Such steps are probably necessary in the short-term to help keep the government solvent, said analysts. But whatever the final recipe it is likely to take Venezuela on a chaotic and damaging ride, one already blazed and abandoned by much of the region, they added. "The imposition of capital controls for even a day undermines confidence and credibility significantly because it reminds you that at any time, if you've invested in Venezuela, there may be a day when you can't get the investment out if you need to," said Christian Stracke, head of emerging markets strategy at research firm CreditSights. Beyond the battering of confidence, a fixed rate will almost certainly give rise to a black market, opening the door to corruption and inefficiency, analysts said. "Most every country in the region has experimented with these controls and I can hardly think of a case in which it was very successful, ABN-Amro's Losada said. PLUNGING BOLIVAR Venezuela's bolivar, which closed at 1,853 to the dollar before the market was shuttered last week, has slid 28 percent since the strike started. The government and private banks are discussing a fixed rate of between 1,500 and 1,850 bolivars. Although the fixed rate prescription would help halt this slide, the non-oil side of the economy may endure heavy side effects. Oil holds immense sway in Venezuela, providing a weighty one-half of government income before the strike, but other industries count for a key chunk of taxes . Under a fixed rate, exporters would probably underinvoice shipments in order to take advantage of the better black market rate, while importers would likely overinvoice their products to take advantage of a lesser, official rate, analysts said. "It creates a lot of distortions, corruption and confusion, especially at the customs level," said Siobhan Manning, Latin American debt strategist at Italian investment bank Caboto. The system would also hit consumers, said analysts. The government would likely use the dollars it has to import essential goods like food or medicine while prices of non-essential imports would likely soar. "The non-oil sector has already suffered through high political risk, which has curbed investment and created so much uncertainty that consumers aren't spending," Caboto's Manning added. "Then you add in add the market controls and distortions -- it's going to wreak havoc on an already distressed non-oil economy." Economists say Venezuela's gross domestic product, which contracted in 2002 even before the strike took root in December, may post a fierce double-digit contraction in 2003. GOOD FOR BONDHOLDERS, SHORT-TERM Ironically, controls are welcome to Venezuelan bondholders. Capital controls and a fixed rate stand guard over currency reserves, meaning cash to pay foreign debts will not run dry. But the long-term price tag is high, as Venezuela has learned with similar moves in 1994-96 and before. "Venezuelans were already aware that capital controls were a risk and now those fears have been reinforced," Stracke said. "The next time the capital controls are lifted they'll go back to doing what they've always been doing -- whenever possible move money offshore and avoid investing in Venezuela."

www.forbes.com Reuters, 01.29.03, 12:33 PM ET

NEW YORK, Jan 29 (Reuters) - Venezuelan sovereign bonds climbed more than 1 percent on Wednesday as cracks in a two-month-old general strike gave investors hope that stalled economic activity, particularly oil output, is on the path to recovery. The broader emerging debt market drifted, however, as persistent worries about a possible U.S.-led attack on Iraq weighed on U.S. markets, keeping investor sentiment toward riskier assets cool. Venezuela's share of J.P. Morgan's Emerging Market Bond Index Plus jumped 1.62 percent in terms of daily returns as spreads over comparable U.S. Treasuries -- the premium investors demand to compensate for risk -- narrowed 0.44 percentage points to 12.67. Venezuela's private banks decided on Wednesday to restore normal working hours after operating for a limited schedule in support of the shutdown staged by foes of President Hugo Chavez. The banks join the private businesses, restaurants and stores that have reopened to avert bankruptcy. "The market has been starting to price that very slowly the strike has begun to show cracks," said an emerging markets analyst who did not want to be identified. "The strike is definitely losing support and people are definitely going back to work, but to what degree it's difficult to say." Rising oil production has also helped ease the gloom weighing on Venezuelan bonds, which have slumped nearly 6 percent so far this year on fears that the economic shutdown will leave the nation without the cash needed to pay its foreign debts. With the government using troops and replacement workers to try to break the strike, Venezuela's oil output reached above the one million barrel per day (bpd) mark this week for the first time since the strike began, according to striking oil workers. Chavez has said crude output is 1.32 million bpd. The trouble, said analysts, is that Venezuela is still a long ways from the 3.1 million bpd it pumped before the strike. "The problem is that you get it up to one million and you still have two million to go," said Daniel Tillotson, an emerging markets analyst at Prudential Securities. "As some people have been saying, that first one million is the easiest to get back on line and then it gets harder." Prior to the strike, Venezuela's government relied on oil for about half its revenues. The broader EMBI-Plus added a scant 0.20 percent on the day as market heavyweight Brazil inched 0.59 percent higher. Brazil's benchmark C bond <BRAZILC=RR> rose 0.375 points to 67.5 bid. Traders and analysts said the neutral day reflected a lack of news in Brazil, which accounts for about a fifth of the EMBI-Plus, and a rocky day in U.S. equity markets. When U.S. markets slide,investors often become more skittish about taking major bets in riskier markets, like emerging debt. "It's unexciting as far as Brazil goes today," said an emerging debt trader. The U.S. Dow Jones Industrial Average <.DJI> trekked 0.95 percent lower and the Nasdaq Composite Index <.IXIC> shed 0.86 percent after U.S. President George W. Bush fueled fears of a U.S. attack on Iraq in a State of the Union speech on Tuesday night. Bush vowed to provide new intelligence on Iraq's alleged arms programs and to use full military force to disarm Iraq, if necessary. Investors are worried that a conflict could do further damage to an already sluggish U.S. economy. Emerging market investors were also on the lookout for a planned Peruvian bond sale of up to $1 billion, a deal that could be placed before the end of the week, traders said.

reuters.com Wed January 29, 2003 12:26 PM ET

WASHINGTON (Reuters) - Argentina and the United States will work together to craft a new Washington Consensus, the ideological framework that marked relations between the White House and Latin America in the 1990s, a senior Argentine official said on Wednesday.

Born in the late 1980s, the Washington Consensus consisted of a cocktail of policy recommendations that went from privatizations to the elimination of trade barriers.

Many governments embraced the recommendations enthusiastically, but the Consensus failed to better the lot of most Latin Americans, which recently have shown their displeasure at the polls by electing left-leaning governments in Venezuela, Ecuador and Brazil.

Worse, the economy of Argentina, the poster-child of economic reforms in the 1990s, crashed early in 2002, plunging that country into its deepest recession ever.

Martin Redrado, the vice minister of foreign affairs, talked about the consensus during a two-hour meeting with Richard Haass, the State Department's policy director.

"We agreed that there must be a new Washington Consensus," he told Reuters in a telephone interview. "Clearly, the consensus has been insufficient to bring about a better standard of living for our people."

Redrado, who is meeting with other top administration officials during a two-day visit to Washington, said the United States "understands that the Consensus lacked a political side."

"We see that it lacked a social side."

The Consensus recommendations were also embraced by multilateral organizations like the International Monetary Fund and the World Bank. The World Bank now makes social programs a hallmark of its lending strategy.

The creator of the original Washington Consensus term, John Williamsohn, an economist with the Institute of International Economics, is working a new set of guidelines, which will be presented in March at the annual meeting of the Inter-American Development Bank, to be held in Milan.

Williamsohn said the paper, co-authored with other top Latin American economists, will carry a new name tag.

Argentina, the United States and other Latin American nations will work together to generate a "new consensus that underscores the main guidelines for development in this decade," he said.

Redrado also heads a Buenos Aires economic think tank, the Capital Foundation.