Friday April 11, 2003 By JORGE RUEDA Associated Press Writer

CARACAS, Venezuela (AP) A year after soldiers temporarily ousted President Hugo Chavez, Venezuelans find themselves steeped in economic crisis, bitterly divided and with Chavez's hold on power stronger than ever.

``I know it's a contradiction, but the coup, and Chavez's return even if things are worse now renewed my faith that we can develop our democracy,'' said Jesus Mendoza, a 45-year-old businessman who says he's opposed to Chavez.

Most Latin American governments condemned the April 12-14, 2002, ouster of Chavez, a leftist former army paratrooper who led a failed 1992 coup, was jailed for two years and then was elected president in 1998 on a platform that criticized Venezuela's corrupt democratic system.

The United States initially blamed Chavez for his own downfall before joining other members of the Organization of American States in condemning the ouster of a democratically elected president.

Chavez was arrested in the early hours of April 12 military commanders announced he resigned after 19 people died during an opposition march to the presidential palace on April 11. Videotape shows gunmen firing recklessly into the crowd.

The march came after opposition labor and business leaders called a general strike to denounce what they called Chavez's Cuba-style economic policies. Both pro- and anti-Chavez supporters died that day. But under a Venezuelan justice system subject both to Chavez's influence and its own institutional corruption, no one has been convicted in the slayings.

An interim government led by Pedro Carmona, head of Venezuela's leading business chamber, dissolved Congress, the courts and the constitution angering hundreds of thousands of Venezuelans, who took to the streets to demand Chavez's return. Cuba, meanwhile, steadfastly insisted that Chavez hadn't resigned.

A loyalist army general sent his troops to a Caribbean island where Chavez was being held and brought him back in triumph to the presidential palace.

It wasn't a matter of whether you were for or against Chavez, even if I believe we're better off without him,'' said Carlos Isturiz, a 22-year-old university student. It was about defending democracy.''

Carmona's one-day presidency was marked by persecution of Chavez allies and ruling party members, recalls Desiree Santos, a pro-Chavez legislator who went into hiding during the police manhunt for so-called ``Chavistas.''

They chased us down like dogs,'' Santos said of the raids. But we were certain the president hadn't resigned.''

Once restored, a seemingly chastened Chavez called for reconciliation among Venezuelans. Soon, however, he saw conspiracies everywhere and moved to crush them. He purged the military of dissidents. He has repeatedly assailed the private sector, opposition political parties, the news media, labor unions and the Catholic Church, repeatedly calling them ``terrorists.''

In November, his government agreed to talks with the opposition, mediated by the Organization of American States. In principle, the two sides have agreed that a popular referendum on Chavez's presidency may be held halfway into his current term, which ends in 2007. But no formal pacts have been reached, and no single opposition candidate has emerged.

In December and January, Chavez weathered a devastating two-month general strike, one called by business and labor to demand that he resign. The strike failed, though it briefly crippled Venezuela's crucial oil industry and left the economy in ruins.

The economy shrank 9 percent last year and may contract by as much as 40 percent this year. The bolivar currency lost more than 30 percent of its value against the U.S. dollar before Chavez suspended dollar sales in this import-dependent nation. Annualized inflation surpassed 30 percent. Poverty is persistent, afflicting at least 70 percent of Venezuela's 24 million people.

Many analysts and citizens wearily cite Venezuela's paradox: A state of permanent conflict under Chavez that has rendered the nation virtually ungovernable and a lack of immediate alternatives to his populist, authoritarian tendencies.

``Chavez only knows how to talk about projects that never materialize while we suffer increasing poverty, unemployment and fear,'' said Amarilis Soto, a 68-year-old retired accountant.

<a href=www.worldnetdaily.com>WorldNetDaily.com Posted: April 10, 2003 8:15 p.m. Eastern

A U.S. plan for getting Iraq back on its feet may deliver a body blow to the economies of oil-producing Gulf states, according to Arab analysts, who are greeting the remarks by Vice President Dick Cheney about Iraq's future crude production with suspicion.

Cheney predicted Iraq may be able to pump as much as 3 million barrels of oil a day by the end of this year, which would generate annual sales of $20 billion to help it rebuild.

The total cost of reconstruction in Iraq is estimated to reach $100 billion.

Iraq averaged production of 2.48 million barrels a day in February, according to Bloomberg News estimates and currently produces 1.7 million barrels a day, according to Arab News.

Arab analysts allege the U.S., the world's largest oil consumer, will seek to pump up Iraq's production quotas as a way to drive down the price.

Adnan Jaber, economic editor of Al-Watan, told Arab News the drop in oil prices could have a domino effect on other sectors of the economy in Saudi Arabia and across the region, exacerbating an existing unemployment problem.

"It is worth noting that while the U.S. forces allowed the Iraqis to loot and plunder various ministries, the only one they protected against public intrusion and theft was the Ministry of Petroleum," Adnan said.

Oil prices slid nearly 5 percent yesterday as Kurdish fighters took control in the oil-rich city of Kirkuk in northern Iraq, easing fears of damage to Iraqi oil fields, which in turn contributed to fears a glut may be on the horizon.

The International Energy Agency reported global oil production last month rose to a record 80.3 million barrels a day.

"OPEC is worried, and with good reason,'' Jim Steel, director of commodity research at Refco Inc. in New York, told Bloomberg News. "Production is up, and it will be difficult to get the different nations to reduce output by enough to support prices.''

Top exporters Saudi Arabia and Russia increased output last month after Iraqi production was disrupted by the war. The reported daily production surplus is now 2 million barrels.

"There is an awful lot of oil out there," Kyle Cooper, a Citigroup Inc. analyst in Houston, told Bloomberg. "Even if the Saudis cut production by 1 million barrels, supplies will grow. Nigerian production is increasing and there could still be further increases from Venezuela. OPEC members hate cutting output because it means a decline in income.''

OPEC will consider whether to cut production quotas at a proposed emergency meeting planned for later this month or early May.

Adnan suspects the U.S. would pull Iraq out of OPEC to undercut the oil-quota system.

"After all, the U.S. bypassed the U.N. Security Council in going to war against Iraq. It could just as well bypass OPEC in its quest for cheap Iraqi oil, since Iraq has 300 billion barrels of underground oil reserves," he asserted.

The suspicions in the Arab world may explain why Bush administration officials plan to revive strained relations with the United Nations Security Council. As WorldNetDaily reported, Secretary of State Colin Powell said the U.S. will seek new resolutions regarding management details in post-war Iraq.

"We need an endorsement of the authority, an endorsement of what we're doing in order to begin selling oil in due course, and in order to make sure that the humanitarian supplies continue to flow in the oil-for-food program," Powell said in an interview with the Los Angeles Times.

By Alex Lawler - Bloomberg News

PARIS -- OPEC officials expressed concern the war in Iraq may cause the departure of a founding member of the group, leading to additional oil supplies and the threat of lower world prices.

"Will Iraq walk out of OPEC? My answer is I don't know," said OPEC President Abdullah bin Hamad al-Attiyah, who is also the oil minister for Qatar. "We have to wait and not jump to give any judgment. The coming months will give a clearer picture, even for OPEC."

He said he "hoped" Iraq would stay.

In day 22 of the war, U.S.-led forces are in Baghdad and tightening control of Iraq, bringing closer a return of the nation's oil sales. Coalition forces control Basra, the second-largest city. Kirkuk, in the northern oil region, fell Thursday, the British Broadcasting Corp. said. Iraq is traditionally OPEC's fourth-largest oil producer.

Oil sales from Iraq, whose reserves are second only to those of Saudi Arabia, halted when the war began, leading other members of the Organization of Petroleum Exporting Countries to pump more to prevent shortages. Oil prices have fallen by about a fourth since early March as the threat of a longer disruption in Iraqi oil exports eased.

"Iraq must reflect before it increases production," said Chakib Khelil, the oil minister for OPEC country Algeria, at an oil conference in Paris. "At the present moment, there is a legal problem about who represents Iraq. Is there a government? Who is going to decide whether to produce or not to produce oil? I don't believe a decision has been made."

OPEC was formed in September 1960 in Baghdad, with Iraq, Iran, Kuwait, Saudi Arabia and Venezuela as members. Since then, the United Arab Emirates, Nigeria, Libya, Indonesia, Algeria and Qatar have joined.

Unlike other members, Iraq has no quota because of United Nations sanctions in place since the Gulf War.

OPEC agrees to limit oil sales to bolster prices.

Iraq could raise oil production to pre-Gulf War levels of 3.5 million barrels a day within three years, if $5 billion is invested, according to the Centre for Global Energy Studies, a London-based consulting company founded by former Saudi oil minister Sheikh Zaki Yamani.

Iraq was pumping about 2.5 million barrels before the current war began.

Its output capacity could reach 8 million barrels a day after nine years and $30 billion, the consultants have said.

By Globe Wire Services, 4/11/2003

NEW YORK -- US oil prices dropped nearly 5 percent yesterday as Kurdish fighters took control of the oil city of Kirkuk in northern Iraq a day after the fall of Baghdad, easing fears of damage to Iraqi oil fields.

Dealers said that expectations of a flood of oil from OPEC members in the coming weeks, combined with rising production from Nigeria following disruptions caused by ethnic violence, were also weighing on the market.

''Short-term the market is already bearish because OPEC supplies will build stocks. The news from Kirkuk adds to that sentiment,'' said Geoff Pyne, consultant to Sempra Energy.

US light crude oil on the New York Mercantile Exchange fell $1.39, or 4.8 percent, to $27.46 a barrel. London Brent blend crude oil eased 75 cents to $24.50 a barrel.

Kurdish guerrillas captured Kirkuk, the hub for Iraq's northern oilfields that pump 40 percent of the nation's crude, after government troops gave it up virtually without a fight.

The United States said it plans shortly to take control of the city from the Kurdish fighters, Washington's allies in northern Iraq. In Iraq's southern oilfields the US military said it aimed to restart production in less than an initial estimate of three months.

''We are hoping to pump about 200,000 bpd to 800,000 bpd. Our initial assessment was that it would take 12-15 weeks before we could expect to see any oil flowing,'' said Colonel Michael Morrow.

''We'll probably take less time than that,'' he said, adding that the US Army Corps of Engineers would attempt to speed up the process with the help of Iraqi oil workers.

A decision on the timing of a resumption in exports will not be taken until interim authorities are installed.

Also weighing on prices was a report yesterday from the International Energy Agency that said OPEC should think twice about cutting production to boost sagging oil prices because supplies remain short and the immediate outlook remains cloudy. The Paris-based IEA, which represents the world's wealthiest countries, said stocks were low in member nations, and there were doubts about the export situations in Iraq, Nigeria, and Venezuela.

''Significant production curbs . . . may impact upon the industry's ability to rebuild stocks,'' the report said.

But OPEC's president, Abdullah Hamad bin al-Attiyah of Qatar, said yesterday in Paris that the world's oil markets are glutted, and the resumption of Iraqi oil production could make that worse.

Al-Attiyah said the current crude oil excess totals more than 2 million barrels a day.

OPEC officials said Monday that oil ministers planned to meet April 24 in Vienna whether or not the war in Iraq has ended.

twincities.com

OPEC should think twice about cutting production to boost sagging oil prices because supplies remain short and the immediate outlook remains cloudy, the International Energy Agency said Thursday. Most OPEC members have been producing at maximum capacity to keep supplies plentiful during the war. However, oil ministers fear OPEC might be oversupplying the market just as demand starts falling to its seasonal low. The Paris-based IEA, which represents the world's wealthiest countries, said stocks were low in member nations, and there were doubts about the export situations in Iraq, Nigeria and Venezuela.