www.vheadline.com Posted: Friday, February 28, 2003 By: David Coleman

Venezuela's Supreme Tribunal of Justice (TSJ) Constitutional Chamber has declared inadmissible one of three shelters introduced by Mineras Las Cristinas, C.A. (Minca) against an unavoidable execution of a November 6 (2001) administrative act which declared the rescinding of Minca's 1992 work contract at the Las Cristinas 4, 5, 6 and 7 goldmines.

TSJ file 02318 has now been irrevocably sealed by the decision of the court following a similar ruling of inadmissibility by the First Administrative Court of Appeals. A further ruling to close file 03138 referring to a constitutional shelter lodged by Minca is now deemed without merit since Minca had not lodged any appeal.

According to the files, the shelters had been aimed at trying to neutralize the administrative process by which the Venezuelan Guayana Corporation (CVG) had terminated Minca's work contract because of a string of breaches of contract.  CVG president, Major General (ret.) Francisco Rangel Gomez says that the corporation will continue to act in defense of the interests of the Republic of Venezuela inasmuch as here is valid legal reason why the contract was terminated after more than 10 years without fulfilling contracted investment and operational agreements.

www.forbes.com Reuters, 02.28.03, 12:29 PM ET

CARACAS, Venezuela, Feb 28 (Reuters) - Venezuela's four foreign-financed extra heavy oil upgrading projects from the Orinoco region are back online following the restart of the Petrozuata joint venture on Friday. The projects, which partner state oil firm Petroleos de Venezuela PDVSA with international firms such as U.S. ExxonMobil (nyse: XOM - news - people) and French TotalFinaElf <TOTF.PA>, had been pumping over 400,000 barrels of extra heavy oil before shutting down due to an oil strike started Dec. 2. The Cerro Negro and Sincor projects resumed output this week after PDVSA restarted natural gas supplies needed as feedstock for processing units that upgrade the ultra heavy oil into synthetic crude for export. Ratings agency Standard & Poor's said on Friday Petrozuata's field production "is ramping up as upgrader charge rates rise." Petrozuata officials were not immediately available to give further details. A fourth project, Hamaca, has resumed limited output of the tar-like Orinoco oil mixed with lighter crude to create an exportable blend. Hamaca's synthetic crude upgrader has not been completed. Initial output from all four projects will increase as gas supplies improve. Venezuela's government has been battling to restore the strike-hit oil sector, which provides half of state revenue. President Hugo Chavez fired over 15,000 PDVSA workers who took part in the strike, hiring replacement workers and the military to staff abandoned posts. The OPEC nation, normally the world's No. 5 crude exporter, was pumping nearly 3.1 million bpd of oil including output from the Orinoco region before the strike. On Thursday, oil minister Rafael Ramirez said total oil production had been restored to 2.08 million bpd. But PDVSA employees and rebel oil workers said that output temporarily fell by 450,000 bpd to 500,000 bpd on Friday. The rebel workers say output is now 1.13 million bpd.

reuters.com Fri February 28, 2003 12:32 PM ET By Susan Schneider

NEW YORK, Feb 28 (Reuters) - Brazilian sovereign bonds surfed nearly 1 percent higher on Friday, extending their recent rally, as a string of solid economic numbers and optimism for the newgovernment's fiscal policies eclipsed lingering jitters about a potential U.S.-led attack on Iraq.

Brazil's share of J.P. Morgan's Emerging Market Bond Index Plus notched up a return of 0.86 percent on the day, underpinned by a 0.25 point gain in the nation's benchmark C bond BRAZILC=RR to 74.5 bid. The broader EMBI-Plus gained 0.21 percent on the day.

The gains came on the back of robust January budget surplus figures and a 2002 growth rate running slightly above the previous year. The figures added to the ongoing cheer for Lula's efforts to stitch together a consensus in Congress for the overhaul of the social security and tax systems, said traders and analysts.

"Everything coming in is pretty much what the market wants to hear. We've had the primary budget surplus number and we've had the GDP number" and Lula's team is meeting its promises so far, said an emerging debt trader.

This week Brazil's government said the public sector posted a primary budget surplus of 8.46 billion reais ($2.4 billion), a sharp jump from the 5.44 billion surplus reported in the same year-earlier month. The gross domestic product, buoyed by a thriving agriculture sector, expanded 1.52 percent in 2002 compared with revised 2001 growth of 1.42 percent.

Brazil's bonds have also enjoyed a solid showing since Lula and 27 Brazilian governors pledged to work together to reform the bloated public pension and tax regimes last weekend.

"We had good news over the weekend and local investors had plenty of cash to spend. They started pushing the market up, a few guys tried to destroy it but they basically had to cover and that pushes it up higher," said another trader.

"Then guys who are underweight or at high cash levels are forced into the market because they feel they're going to miss it. It just feeds on itself," the trader said.

The strong day for Brazil came as investment bank Goldman Sachs raised its allocation of the bonds in its model portfolio to overweight. In a report, Goldman said it lifted Brazil to 1.0 percent overweight from 1.0 percent underweight thanks to the new government's push for austere fiscal policies and structural reforms.

As Brazil heads into the Carnival holiday, which starts on Saturday and runs through midday next Wednesday, traders said they were expecting volumes to be light in coming sessions.

Brazil's bonds rewarded investors with a 6.4 percent return for the month as of Thursday and a solid 12 percent on the year to date, according to the EMBI-Plus.

MEXICO STEADY IN WAKE OF BOND

Mexico also lent a positive tone to the market as its bonds moved a touch higher. The nation's share of the EMBI-Plus added 0.15 percent return on the day, a move that comes two days after the nation sold $1 billion in 12-year global bonds containing much-discussed clauses aimed at smoothing the road of a possible restructuring.

The bond included so-called action clauses, which allow for changes to a bond's terms with less than 100 percent approval from bondholders. In Mexico's case, the threshold for approval is 75 percent.

The provisos theoretically provide borrower nations with breathing room in the event of a restructuring by preventing a few holdout investors from tying up the process in court. But they had generated some worries on Wall Street as investors feared their bargaining position would be undercut.

The flap over the clauses appeared to have abated on Friday.

"It was pretty much well received," the first trader said of the bond. "They're pretty much done with their 2003 financing needs so they're using it to buy back Brady debt, so I think that's given a pretty good tone to the market."

Among other emerging economies, the debt of Venezuela, where the economy is reeling from the effects of a two-month opposition strike and the charged standoff between President Hugo Chavez and his foes, added 0.87 percent on the day.

($1=3.57 reais) (Reporting by Susan Schneider; editing by Phil Berlowitz; Reuters Messaging: susan.schneider.reuters.com@reuters.net, tel: +1 646 223 6319)

www.voanews.com Melanie Sully Vienna 28 Feb 2003, 16:29 UTC

OPEC headquarters, ViennaThe Organization of Petroleum Exporting Countries (OPEC) says it has spare capacity of four million barrels of oil per day that could be released to make up a shortfall, in the event of a U.S.-led attack on Iraq. The comments come as oil prices surged to nearly $40 a barrel in New York.

OPEC has up to four million barrels per day spare capacity, if there is a need for extra crude oil. An official with the cartel said in Vienna that, beyond that, there would be limitations. But a petroleum expert in Vienna familiar with OPEC's operations says the reserve capacity would not compensate for a shortfall, if Iraqi sabotage troops were to torch oil fields in Kuwait or Saudi Arabia.

In addition, any extra long-haul crude would take weeks to get to the U.S. market.

The expert also doubts that the non-OPEC oil producing countries, such as Russia, Norway and Oman would be able to increase their oil production to meet any shortfall. But a spokesman for the Oman Embassy in Vienna said his country would not have a problem increasing supplies.

OPEC Secretary-General Alvaro Silva Calderon said in Vienna on Thursday that no guarantees could be given on oil prices. He said the current increase in prices has more to do with speculation on a possible war than with the market supply.

In January, an emergency meeting of OPEC ministers agreed to boost oil production by 6.5 percent to 24.5 million barrels per day, to meet the shortfall in oil exports from Venezuela, where domestic strife has hurt production.

The OPEC ministers will meet for a regular session in Vienna on March 11, which will be attended by non-OPEC oil producing countries, such as Russia and Oman.

Mr. Silva Calderon says the cartel does not intend to raise quotas for the second quarter of 2003, if there is no war.

www.alwayson-network.com

Colin Powell and the debate about a possible war with Iraq have taken on a legalistic tone which is rather astonishing in the context of history. In the past, wars were fought to secure trading concessions, convert the heathen, punish the infidel, conquer territory, avenge perceived slights, or satisfy the whims of the sovereign. According to Theodore Roosevelt’s biographer, Germany considered going to war against the United States so that it could occupy Venezuela and ensure debt repayment. Throughout most of history, nation-states have declared war and then sent in the troops.

After World War I, most wars were started simply by sending in the troops, with the declaration of war coming after the soldiers arrived (if such a declaration was made at all). When the Germans were invading Russia during the Second World War, they actually waited for Russian trains full of coal and other products to pass before crossing the border.

Although international lawyers and countries have attempted for centuries to place legal limits on behavior in war, the attempt to extend legal restraints to the actual declaration of war is relatively recent. The declaration of war is such a fundamental element of sovereignty for nation-states that few attempts have been made to limit it (Section 51 of the United Nations Charter being one of them).

Given this historical record of freedom of action, I have found it very strange to see the Secretary of State discussing issues of "proof" and "material violations." It has an undeniably legalistic ring to it, like some bizarre trial. What is proof? How much proof is enough? More significantly, who is the judge? The Security Council? Or perhaps only its veto-bearing members? Or even a select group of allies? And, most importantly, what is the legal remedy if Colin Powell does not "win" his case?

The problem with the United Nations Charter limitations is that the Security Council has a poor record of reacting effectively to the use of force by countries. The Security Council’s ineffectiveness in resolving the Arab-Israeli conflict and the Yugoslav disputes has been very visible. The question, then, is what to do when the agency charged with solving these problems, the Security Council, has proved so ineffective: is self help appropriate (again that legal turn of phrase)? If so, what are the limits of such self help? Is "pre-emptive" war an appropriate expression of such "self help"? What are the limits of "self help"?

These questions are fundamental ones, but in the end more political than legal. While few would choose to return to the old days when nation-states had unconstrained freedom to declare war, we continue to search for the proper limits in a world where the United Nations has not proven equal to the task.