santafenewmexican.com By JORGE RUEDA | Associated Press 01/31/2003

A man passes McDonald's restaurant in Caracas, Venezuela, during the ninth week of an opposition-led work stoppage that intends to oust President Hugo Chavez. - AP | Leslie Mazoch

CARACAS, Venezuela—As backing for a 60—day—old strike dwindled, government opponents asked for international support in their drive for an amendment shortening President Hugo Chavez's term.

Shopping malls, banks, franchises and schools plan to reopen next week, and production is creeping upward in the oil industry, where the walkout has been the most damaging.

Diplomats from six nations arrived in Caracas on Thursday to push for early elections, while opposition leaders who say Chavez has ruined the country promised a petition drive to amend the constitution.

Envoys from the United States, Brazil, Chile, Mexico, Portugal and Spain - dubbed the "Group of Friends" - were to meet with Chavez and opposition leaders Friday. They also planned to attend negotiations sponsored by Cesar Gaviria, secretary-general of the Organization of American States.

Opponents were planning an afternoon march on the Melia hotel - where the diplomats are staying - to protest government investigations against two private television stations accused of supporting efforts to overthrow Chavez. The investigations could culminate in the shutdown of the stations.

Strike leader Manuel Cova of the Venezuelan Workers Confederation said Thursday a new presidential election could be held as early as March and should be done this year.

"To do this we need the guarantees of the international community," Cova said. "If we don't do it this year, we'll be in prison, or in exile, there won't be press freedom."

The opposition has proposed an amendment that would cut Chavez's term from six years to four and clear the way for presidential and congressional elections this year. The opposition plan also calls for a new elections council and a Supreme Court ruling to determine when a referendum on Chavez's rule can be held.

Under the proposal, Chavez and pro-government lawmakers could run for re-election. He has been president since 1999. Opposition groups are organizing a nationwide campaign on Feb. 2 to collect signatures for the amendment proposal. They need almost 2 million signatures from Venezuela's 12 million voters to hold a referendum on the amendment.

Government representatives at OAS-mediated negotiations haven't shown any sign they will consent to a plan cutting Chavez's term. Both sides recognize international mediation "is essential to open the path for negotiation," said Gaviria, who has tried to broker an end to the political tug-of-war since November. The strike began Dec. 2.

Chavez has welcomed the "Group of Friends" initiative, but he has warned others not to meddle in Venezuela's domestic affairs. He has also vowed not to strike a deal with an opposition he refers to as a "coup-plotting oligarchy." Chavez was briefly ousted in a failed April coup.

The standoff has devastated Venezuela's oil-dependent economy, though the government has revived production to about 1 million barrels a day. Output fell to about 200,000 barrels a day in December from the norm of 3 million.

Venezuela is the world's fifth largest oil exporter. Analysts predict the economy will shrink 25 percent this year after an 8 percent contraction last year.

Unemployment has reached 17 percent and is expected to rise. The government has slashed its 2003 budget by 10 percent from US$25 billion and announced it will cut the state-owned oil monopoly's budget from US$8 billion to US$2.7 billion.

Oil accounts for half of government income and 30 percent of Venezuela's US$100 billion gross domestic product.

www.forbes.com Reuters, 01.31.03, 12:33 PM ET  By Susan Schneider

NEW YORK, Jan 31 (Reuters) - Brazilian sovereign bonds drifted higher on Friday, nudging the broader market into positive terrain, as a solid currency and the promise of an increased primary budget surplus kept investors sanguine about the economic giant's financial prospects.

Brazil's share of J.P. Morgan's Emerging Market Bond Index Plus added 0.47 percent on the day, aided by a 0.875 point gain in the country's benchmark C bond <BRAZILC=RR> to 68.75 bid. The broader EMBI-Plus inched up 0.1 percent on the day.

Brazil's bonds posted gains on the heels of a strengthening in the currency, the real, and came as investors await the unveiling of a new primary fiscal surplus target next week.

Finance Minister Antonio Palocci is widely expected to lift the 2003 surplus target above last year's goal of 3.75 percent of gross domestic product, a move that would buoy confidence by underscoring new President Luiz Inacio Lula da Silva is serious about maintaining Brazil's financial health.

"Until the beginning of last week, I would say that most of the market expectations were in the range of 4 percent of GDP," said Ricardo Amorim, head of Latin American research at research firm IDEAGlobal. "But now it's probably around 4.25 or 4.3 percent of GDP and this has helped the market."

On Thursday, Brazil reported a record primary budget surplus of 52.4 billion reais ($14.7 billion), or 4.06 percent of gross domestic product (GDP), putting the nation well ahead of its annual International Monetary Fund target.

The gains by Brazilian bonds also follow Thursday's move by Morgan Stanley to raise its rating on the country's debt to outperform from market perform. The investment bank said it advised clients to move their positions to overweight from market weight amid optimism for Lula's legislative agenda.

MIXED VIEWS ON VENEZUELA Venezuelan bonds see-sawed in early trade and were hovering 0.29 percent lower by midday in the New York session as investors took a mixed view on the nation's political and economic turmoil. Foes of President Hugo Chavez have staged a general strike for the last two months in an effort to force the leader's resignation or new elections. The shutdown has choked off Venezuela's lucrative oil output, fueling worries the country may be left without enough cash to pay its debts.

With the work stoppage showing signs of easing, however, oil production has risen, allaying investor fears of a debt default. The president of state oil firm PDVSA said on Friday that output had topped 1.5 million barrels per day (bpd), a sizable jump from the paltry levels of a few weeks ago.

But at the same time, the ebbing of the strike suggests that Chavez is likely to remain firmly in power for now, said analysts. Chavez has made few friends on Wall Street, thanks to his populist rhetoric and antagonism to free market reforms,

"People are looking at where they have some upside this year in Latin America and maybe Venezuela is one of them," said an emerging debt trader. "If things start to settle down, if they start getting oil production back, (the spreads over U.S. Treasuries) should grind tighter."

Venezuela's political impasse has already drawn the attention of the international community, including the United States, which had relied on Venezuela for more than 13 percent of its oil imports. A six-nation group, including the United States and Brazil began a mission in Caracas on Thursday in an effort to secure an elections deal to end the strike.

"If anything, I think the feeling is that the U.S. will draw closer ties (with Venezuela), especially if we invade Iraq, and then we're going to need oil from somewhere. We'd need to mend that up pretty quickly," said the trader.

The prospects for a resolution to the strike prompted Morgan Stanley to raise Venezuela to market perform from underperform on Thursday. Merrill Lynch, meanwhile, said a slow recovery in oil output and the nation's efforts to preserve cash for debt payments prompted it to raise Venezuela's bonds to market weight from underweight in its model portfolio.

Peru's debt, meanwhile, was little changed on the day after Thursday's sale of $500 million in 12-year global bonds. (Reporting by Susan Schneider, editing by Andre Grenon; Reuters Messaging: susan.schneider.reuters.com@reuters.net, tel: +1 646 223 6319)

www.voanews.com Greg Flakus Caracas 31 Jan 2003, 16:19 UTC 

In Venezuela, diplomats from six nations, the so-called "friends of Venezuela," are meeting to find a solution to the country's crisis. One of the main goals is to bring Venezuelan political leaders together in dialogue. But, the rhetoric from both opponents and supporters of President Hugo Chavez remains strident.

The diplomats from the United States, Brazil, Mexico, Chile, Spain and Portugal are here in Caracas to promote a dialogue between the two sides that would ease tensions and lead to a democratic, political solution.

The secretary-general of the Organization of American States, Cesar Gaviria, who has spent months here in Caracas trying to find a way out of the crisis, says the main theme of the meetings on Friday is prevention of further violence.

He says, Venezuela must deactivate its climate of violence, and find a peaceful way out of this crisis. He says, the diplomats from the six nations are meeting with both President Chavez and his opponents, and that they may extend their meetings into next week.

Promoting a dialogue here will not be easy. The opposition has eased off on the strike that shut down most commerce, as well as oil production, for the past two months, but demonstrators continue to call for the president's resignation. For his part, Mr. Chavez continues to deride his opponents in public.

He calls them coup-plotters, and accuses them of trying to re-establish a system of government that favors the wealthy classes. He rejects what he calls the "neo-liberal" policies of past governments, and also condemns the "capitalists" and "oligarchs" who privatized some industries.

Chavez opponents say the nation's economic problems began when he took office and started implementing a leftist strategy that they say is modeled after the Cuban communist system. Mr. Chavez has openly praised Cuban President Fidel Castro and has sold oil to Cuba at preferential prices. President Chavez constantly speaks of his government as "revolutionary," though he was elected democratically.

Whatever can be said of Mr. Chavez's handling of the economy, there is no doubt that the current opposition-led strike has had a devastating effect on the country. Oil production is off by about a third, unemployment has reached 17 percent and businesses have lost millions of dollars by closing their doors. Although the strike by some 35,000 oil workers is expected to continue, most business establishments are expected to open next week. Banks will be open for regular hours starting Monday, and large shopping malls and theaters are also expected to open by the end of next week.

biz.yahoo.com Reuters Friday January 31, 12:23 pm ET

LONDON, Jan 31 (Reuters) - European petrol prices edged up this week as the wholesale gasoline market registered 20-month highs, industry experts said on Friday. London-based consultancy Oil Price Assessments Limited (OPAL) said German retailers had increased its prices by two euro cents ($0.021) over the week, while on Friday prices in Spain were raised by 1.6 euro cents and in the Netherlands by one euro cent.

ADVERTISEMENTFrance and the UK had seen tiny increases though further rises were likely, the London-based consultancy said.

"In the UK, (retailer) margins are getting very tight, at under four pence (six cents) a litre," said Peter Regnier of OPAL.

Gasoline on the benchmark Rotterdam barge market traded at $327 a tonne for 10 parts per million (ppm) refinery material on Thursday and Friday, the highest levels since May 2001, according to Reuters calculations.

Germany, Europe's largest consumer of motor fuels, switched to the cleaner 10ppm petrol on January 1. The rest of northwest Europe still uses 50ppm petrol, which last traded at a very high $319 a tonne.

Wholesale buying from major BP (London:BP.L - News) prompted by a 10-day partial shutdown of its Nerefco refinery in Rotterdam helped drive the already tightly supplied market to the high.

Wholesale prices have also been boosted by underlying fears of a war in Iraq and strong demand from the U.S. to make up for lost supplies from oil producer Venezuela, where a general strike has dragged on for more than eight weeks.

www.vheadline.com Posted: Friday, January 31, 2003 - 12:06:34 PM By: Gustavo Coronel

VHeadline.com commentarist Gustavo Coronel writes: The first thing that made me feel proud about PDVSA was the manner in which it became a First World corporation surrounded, on all sides, by Third World government agencies.

What could be called an island of excellence.

It was living proof that Venezuelans could be as organized, as disciplined, as efficient as the Norwegians or the British or the Americans. It was living proof of the proposition that education, training and proper work ethics are not the monopoly of northern, protestant cultures and that progress and success are not only found in developed societies.

During the 1980s, PDVSA rapidly became one of the three or four most important energy corporations in the world ... and its management was 100% Venezuelan ... men and women of all colors, mostly 'mestizos' like the majority of our population. Some were pretty dark, like the marketing expert and board member Mario Rodriguez. Some started as minimum wage laborers ... like Alberto Quiros ... who became the first Venezuelan president of Shell, and still is our foremost petroleum expert.

Many were immigrants or sons of immigrants. But the whole management team was tightly united around four basic principles:

PDVSA was to be managed professionally, as a commercial enterprise.

PDVSA was to be apolitical.

PDVSA should finance itself, and

PDVSA should always plan well and execute well.

...and this is the way it was until 2000.

PDVSA grew from having 18 billion barrels of reserves to having 340 billion barrels of reserves (including the Orinoco heavy oil belt) in 1999. It went from a production capacity of 2.7 million barrels a day to 3.8 million barrels a day ... from one million barrels a day of refining capacity to over three million barrels per day with refineries in Venezuela, the Caribbean, North America and Europe.

In 1976 gross income was $9 billion and in 2000 $54 billion. Net earnings increased from $7 billion to $20 billion while the government share per barrel increased from $8 to $12 per barrel. Of these net earnings of $20 billion the government take is, I am told by the petroleum finance managers, $15 billion, this is, 79%. A major portion of the costs of PDVSA, some $19 billion, have to do with the buying in the open market of the oil they could be producing internally, if it was not for the OPEC quota limitation.

But the objective of the Chavez government was not to make the rest of the bureaucracy as disciplined and efficient as PDVSA's, but to make PDVSA as inefficient and as chaotic as the rest of the government sector. This was necessary, in order to have a society in which we would all be at the same level, not by upgrading the poor and the ignorant, but by downgrading the prosperous and the educated.

One of Chavez' claims was that petroleum managers earned too high a salary ... I have already documented the fact that PDVSA productivity per employee was the highest in the group of its large international competitors. No society can ever prosper by penalizing productivity.

• Of course, the 1.3 million government employees ... including Chavez ... earn mediocre salaries, and the net result is a very high degree of corruption, low productivity and an indifferent bureaucracy.

Today PDVSA is being destroyed systematically ... over 5,000 managers and technicians have been fired ... men and women who are impossible to replace except by foreign-hired guns. Operations are disastrous and oil spills are 10 times the normal incidence. There is no management in place.

To go by the PDVSA Caracas HQ is an insult to the eye and to our sense of smell. The walls of the building are covered with grafitti, painted by the two most violent 'Chavista' groups -- the Tupamaros and the Paracaimas -- both armed and harboring an intense social hatred for the middle class.

• In this environment, I am afraid there is very little hope for a civilized way out for Venezuela.

As the 'Powers' other than the Executive remain co-opted by Chavez, all doors to a peaceful solution are being closed. This is leading to increasing frustration among large sectors of the population that up to now have remained within legal bounds.

As this frustration mounts, it will get to the point where words are no longer the manner of exchange.

For someone who has a "revolutionary" dream, violence is the preferred path because it seems easier to destroy completely and to build anew, than to reform a house while inhabited by dissenting tenants.

This is our tragedy and it is unfolding right now, before the eyes of the international community.

Santayana said that those who forget history are obliged to relive it.

I have not forgotten what I experienced under Perez Jimenez, what I lived under Sukarno and what I saw happening in Cuba ... I do not intend to relive those years of horror.

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