Thursday, January 16, 2003 By JEANNINE AVERSA Associated Press

WASHINGTON - Wholesale prices held steady in December as the sputtering economy made it difficult for some companies to charge more.

The flat reading in the Producer Price Index, which measures prices paid to factories, farmers, and other producers, came after wholesale prices fell by 0.4 percent in November, the Labor Department reported Wednesday. Excluding energy and food prices, which can swing widely, core wholesale prices dipped by 0.3 percent in December for the second straight month, suggesting some good deals are out there.

The Federal Reserve, meanwhile, painted a picture of a lackluster economy in its latest survey of business conditions. It found "subdued growth" in economic activity from mid-November through early January and little change in overall conditions.

The Fed said its regional banks used such words as "sluggish," "soft," and "subdued" to characterize growth.

The Fed said the weakest report came from Dallas, which said activity "remained anemic."

Policymakers will consider those findings when they next meet, Jan. 28-29, to decide the course of interest rates. Economists believe the Fed, which has pushed rates to a 41-year low, will leave them unchanged, preferring to see whether it has done enough to energize the economy.

On Wall Street, stocks fell on mixed earnings news from Intel Corp. The Dow Jones industrial average lost 119.44 points, closing at 8,723.18.

In the Labor Department report, wholesale costs were flat. Falling prices for computers and cars offset higher prices for gasoline and other energy products.

Those declining prices - if passed on to shoppers - benefit consumers, but squeeze some companies' profits.

Businesses whose product prices are dropping may feel more pressure on already strained profit margins. But companies buying those lower-price goods might get a break through reduced costs of doing business.

"With demand uncertain, many businesses have very weak, very uncertain pricing power," said economist Clifford Waldman, president of Waldman Associates. "Businesses, especially manufacturers, are struggling with the up-and-down recovery."

The latest snapshot of wholesale prices showed that inflation is not a danger to the economy, which is struggling to recover from the 2001 recession.

That inflation has remained under control is one of the reasons Federal Reserve Chairman Alan Greenspan and his colleagues have kept short-term interest rates at low levels in an effort to spur economic growth.

The new look on wholesale prices "is the kind of report that would make even Alan Greenspan sleep well at night," said Joel Naroff, president of Naroff Economic Advisors.

For all of 2002, wholesale prices rose a tame 1.2 percent, compared with a 1.6 percent drop in 2001.

Last year's pickup largely reflected rising energy costs. Energy prices rose 11.9 percent in 2002, a turnaround from a 17.1 percent decline in 2001.

In December, energy prices rose 0.9 percent, compared with a 1.8 percent drop in November.

Energy prices have been affected by supply disruptions due to a strike in Venezuela, a major oil exporter to the United States, and fears that a possible war with Iraq could impede the flow of oil.

Gasoline prices in December went up 1.6 percent. Home heating oil prices rose 4.7 percent. Liquefied petroleum gas, such as propane, rose 7 percent, the biggest increase since September. Residential electric power increased 0.6 percent.

Food prices went up 0.4 percent in December, following a 0.3 percent increase.

Those price increases were offset by lower prices elsewhere.

Car prices last month dropped 2 percent and truck prices fell 1.6 percent, the biggest decline since July. Computer prices fell 2 percent and telephone equipment prices went down by 1.3 percent.

Separately, the Commerce Department reported that businesses boosted stockpiles of unsold goods by 0.2 percent in November from the previous month - a possible sign that companies were betting there would be an appetite for their products.

Businesses' sales, meanwhile, rose 0.3 percent in November.

news.ft.com By Andy Webb-Vidal in Caracas Published: February 24 2003 19:57 | Last Updated: February 24 2003 19:57

A pact condemning political violence, signed last week by the government of Venezuela's President Hugo Chávez and opposition leaders, appeared to be breaking down on Monday as opponents threatened to withdraw from the accord.

Opponents of Mr Chávez, grouped in the "Democratic Co-ordinator", warned they could rescind their side of the agreement unless the international community pressed the government into upholding the accord.

The warning follows the house arrest of Carlos Fernández, head of the Fedecamaras business federation, who was captured by armed security police in a heavy-handed midnight raid last week.

Mr Fernández is facing charges of "criminal instigation" and "civil rebellion" for his role in co-leading a two-month strike in December and January aimed, unsuccessfully, at pressing for early elections and forcing Mr Chávez's resignation.

"If the international community does absolutely nothing and the government does not uphold its side of the agreement we will withdraw," said Timoteo Zambrano, an opposition negotiator in talks facilitated by the Organisation of American States (OAS). No outside sanctions were agreed as part of the accord, but opponents of Mr Chávez had hoped members of a six-nation "Group of Friends" would be able to lend diplomatic weight to reinforce the OAS-sponsored agreement.

The group - consisting of Brazil, Mexico, Chile, Portugal, Spain and the US - was formed in January to give fresh impetus to a four-month-old but virtually fruitless effort by the OAS to broker an electoral solution to the country's political deadlock, which has on several occasions spilled over into violence.

However, in a sign that Mr Chávez is willing to put already cool diplomatic relations on the line to deflect outside pressure, he has bluntly warned both the OAS and the "Group of Friends" not to interfere in domestic affairs.

Speaking on his weekly Alo, Presidente television show on Sunday, Mr Chávez accused both the US and Spain of taking sides with his opponents, who charge that the populist president and former paratrooper is governing like a dictator.

Government spokesmen from the US and Spain, and César Gaviria, secretary-general of the OAS, have expressed concern at the handling of Mr Fernández's case. However, the Fedecamaras chief has said he was treated with due respect by the authorities.

Mr Chávez warned Mr Gaviria, a former president of Colombia, "not to step out of line" and to "respect Venezuelan sovereignty".

The opposition warning also comes after a shoot-out in Caracas at the weekend in which one police officer was shot dead, allegedly by government supporters.

www.sun-sentinel.com By DAVID ROYSE Associated Press Posted February 24 2003, 4:22 PM EST

TALLAHASSEE -- Attorney General Charlie Crist wants to know why gas prices have spiked to an all-time high in Florida, so he will meet Tuesday with representatives of six major oil companies.

Officials from ExxonMobil, BP, ConocoPhillips, Amerada Hess, Marathon Ashland Petroleum, and Chevron Texaco Corp. are expected to meet with Crist individually to discuss the oil industry's role in prices at the pumps. Crist spokesman Bob Sparks said the companies were voluntarily sending representatives and haven't been subpoenaed.

We're at record high prices,'' Sparks said Monday. General Crist has just invited the representatives of these companies to share their perspective on why this is so.''

Crist has also asked the Federal Trade Commission to look into whether Florida gas stations are artificially increasing prices to take advantage of possible war with Iraq. Several gas retailers suggested he should look at the whole industry, not just the stations.

According to the American Automobile Association, Florida's average cost per gallon for regular gasoline on Monday was $1.69, up 19 cents from a month earlier and 56 cents higher than the same time last year. It is the highest average price for gasoline ever in the state.

None of the six companies would comment Monday on what their representatives would tell Crist, although BP spokesman Scott Dean said: ``We always cooperate with these requests for information and we're happy to do so.''

But a petroleum industry economist said basic economics are at work and that a ``perfect storm'' of international factors were driving up the price of gasoline, not any kind of gouging or conspiracy by producers.

A two-month national strike in leading oil producer Venezuela, the potential for a strike in Nigeria, a particularly cold winter, a growing economy, and the prospect of war in Iraq all combined to push crude prices up, said John Felmy, chief economist at the American Petroleum Institute.

``This is simply fundamental supply and demand,'' Felmy said. He said crude oil prices have gone up 29 cents a gallon since November and that gas prices have followed suit, going up about 29 cents a gallon since December. He pointed out that in Florida, the price has actually gone up a little less in that period, about 28 cents a gallon.

We don't set prices on world markets, the market does,'' Felmy said. The cost of producing gasoline has gone up 29 cents a gallon.''

www.alertnet.org NEWSDESK   24 Feb 2003 19:09

By David Ljunggren

OTTAWA, Feb 24 (Reuters) - Canada wants the Organization of American States to hold an extraordinary summit this year to discuss the growing chaos in South America but Brazil is effectively blocking the idea, officials said on Monday.

The 34-nation OAS is due to hold its next Summit of the Americas in Argentina in early 2005, but the officials said Canadian Prime Minister Jean Chretien felt the grouping needed to take stock of increasing disarray in some member states.

"In the last 18 months, close to two years, there have been all kinds of difficult times in the hemisphere," a senior Canadian official told reporters, saying Chretien wanted to look at "the convulsions" that have rocked the OAS recently.

"It (the proposed summit) would partly be an occasion to reassure ourselves, to examine our main objectives and to reaffirm hemispheric cooperation," he said.

The leaders of the OAS held their last summit in Quebec City in April 2001 and since then several South American nations have experienced severe problems.

Argentina suffered an economic meltdown that spilled over into Uruguay. Venezuela is in the grip of an increasingly violent standoff between friends and foes of President Hugo Chavez, 32 people died last week in riots in Bolivia, while Colombia is still in the grip of a decades-long civil war.

Mexican President Vicente Fox is volunteering to host the proposed OAS summit if all member states agree on the need to meet but Brazil has said more than once that it needs more time to study the idea, the official said.

Diplomats said Brazil -- already locked in a protracted dispute with Ottawa over subsidies to aircraft manufacturers -- was reluctant to let Canada take the lead on problems mainly affecting South America.

Canadian Foreign Minister Bill Graham raised the idea of the summit during an official visit to Brazil last month but did not get any firm commitment.

In Brasilia, no one was immediately available for comment at the foreign ministry.

The Quebec City summit focused on the need to strengthen democratic institutions in the OAS and the official said Chretien did not doubt that the organization was heading in the right direction.

"We're getting there. But at the same time there are convulsions in the hemisphere which deserve attention," he said, adding that the proposed summit would discuss "questions of governance, the big principles of democracy and where the hemisphere is going in this regard".

Another reason to hold an interim summit was the fact that since Quebec City, around a dozen OAS members had elected new leaders, he said.

www.vheadline.com Posted: Monday, February 24, 2003 By: Patrick J. O'Donoghue

Print & broadcast media have criticized children’s rights specialists meeting in Caracas to draw up a declaration outlining children’s rights situation in Latin America.  According to reporters, when delegates were asked to provide details and concrete analysis of supposed children’s rights violations in Venezuela during the national stoppage, they were only able to supply regional statistics.

The event was organized by the Education, Culture & Sports (MECD) Ministry, International Defense of Children (IDC), UNICEF, Inter American Institute of the Child (IAIC) and the Central American Parliament. IDC president Jorge Vila says 3 million children in Latin America are outside the school system.

Delegates have called on national institutions to place children first and undertake actions to protest children’s right to education, health, physical and psychological integrity.

Venezuelan children rights groups and UNICEF-Venezuela have failed to reply to reporters' jibes that alleged HR abuses against the right of education during the stoppage were bogus.