Reuters, 05.26.03, 2:18 PM ET  

CARACAS, Venezuela, May 26 (Forbes.com-Reuters) - Close to 2,000 Venezuelan companies went out of business in the first quarter of 2003 when the economy, squeezed by a general strike and currency controls, shrank a record 29 percent, the head of the leading industrial association said Monday.

Lope Mendoza, president of the Conindustria federation that groups firms in the industrial and manufacturing sectors, described the quarterly gross domestic product (GDP) contraction announced by the Central Bank Friday as "the worst tragedy experienced by Venezuela in its contemporary history".

"With the 29 percent (GDP) fall in the first quarter, more than 1,950 companies closed down," Mendoza told reporters. He did not specify the size or type of companies hit by the contraction, the steepest ever recorded by Venezuela and probably one of the sharpest ever seen in Latin America.

Conindustria and other private sector business associations have fiercely criticized the policies of left-wing President Hugo Chavez. They accuse him of trying to stifle private business and of seeking to install Cuba-style communism.

These business groups backed a grueling opposition strike against the populist president that gripped Venezuela, the world's No. 5 oil exporter, in December and January.

The strike, which failed to force Chavez to resign, disrupted oil production and exports, slashed government revenues and triggered heavy capital flight and a slide in the bolivar currency. To halt this, the government slapped tight currency controls onto the economy which further reduced business activity.

In its report for the first quarter, the Central Bank said the manufacturing sector contracted by 35.1 percent.

Mendoza saw the decline continuing and predicted the sector, which accounted for 13 percent of GDP, would shrink over the year by 25 percent. He foresaw unemployment in the sector reaching the same percentage by the end of the year.

"We don't see the government taking measures to stimulate national production to reverse this situation," he added.

Private manufacturers, including major food producers, have complained bitterly that the stringent foreign exchange restrictions are starving them of dollars they need to import essential raw materials and spare parts.

They say that if dollar allocations are not speeded up, or unless the currency controls are relaxed, more companies are likely to go out of business.

Chavez, a former paratrooper who was elected in late 1998 and survived a coup last year, has defended the controls, saying they will not be lifted in the short-term.

Government officials say the curbs have boosted Venezuela's depleted foreign reserves and that the country's oil production has been restored to pre-strike levels of above 3 million barrels per day (bpd).

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Monday, May 26, 2003 By: Oscar Heck

VHeadline.com commentarist Oscar Heck writes: I recently watched a Canadian TV program called “Venture,” where Amy Chua was interviewed. Amy Chua has recently written a book called, “ World on Fire”, which I will soon buy.  What Amy Chua said in the interview brought back memories … memories of Venezuela and of many other countries worldwide.

She spoke of “democracy” and how “democracy” (as understood by western standards) almost automatically implies “free-market-economy”. In other words, most westerners believe that democracy and free-market-economy goes hand-in-hand, regardless of socio-economic structures.

Her basic premise appears to be that “western-style democracy” can “work” in some parts of the world but that it does not “work”, and even creates a negative effect, in many other parts of the world, especially in those parts of the world where the economy is traditionally held and controlled by an “ethnic” minority.

She gave the example of Indonesia, which became open to “democracy” in the late 1990s and how the economy essentially backfired (even though the USA praised the fact that Indonesia finally became “democratic”). She mentions that traditionally, the Indonesian market-economy (including the boom) was controlled by the 3% “Chinese ethnic minority” along with a minority of corrupt Indonesians (and others).

Amy Chua intimated that once “democracy” began to flourish, the Chinese ethnic minority (and their minority corrupt Indonesian cohorts) began to get richer and richer while the vast majority of Indonesians became poorer and poorer. As well, the traditionally restrained majority of Indonesians (the people that basically never had a voice) began to speak up against oppression and corruption to the point that the Chinese minority “left” Indonesia (with billions of dollars, of course ú est. US$40-100 billion) in order to escape further assaults upon them.

She also gave another example … when she attended a conference at a university in South Africa. After the conference, the “white” professors would invite many of the conference-goers to their “place”. Their “places” were huge ranches, fully equipped, and “apt” to receive many guests. Amy Chua brought up an additional example. In the USA, if a USAP from a small “poor” hamlet in the outback of Arkansas (e.g.) watches Bill Gates on TV, that person will most probably not “curse” Bill Gates for being so rich, for two reasons: Bill Gates is also a USAP and it is “envisionable” for the “poor” USAP to dream that his/her child may one day be like Bill Gates.

• In many countries throughout the world, it does not work that way.  In the USA, Canada, and most “western” civilizations, there are reliable infrastructures and social services that are common to the majority.

In many other countries, a person only has access to reliable health-care, education, banking, etc, if one comes from the “ethnic minority” … and not from the majority. Therefore, once “democracy” enters the picture and the minority rich get richer, the poor get poorer and more and more frustrated and angry.

She contends that this syndrome started about 15 years ago and will be on the increase worldwide. As I understood her, she also believes that, although western-style-free-market-democracy has its merits, it must not be exported blindly. If entire reliable infrastructures (accessible to the majority) were to be exported simultaneously along with free-market-democracy, then that would perhaps work … however, it is not realistically doable.

She mentions that it is not realistic to expect a formerly “non-democratic” country to go from “non-democracy” to “western-style democracy” overnight (quick democracy). It took “western” countries, 40 or 60 or 100+ years of refinement and fine-tuning to arrive at a system that includes the “majority” and that is accessible to the “majority.”

Coming back to the example of Bill Gates. In Venezuela, a young person watching Ricky Martin on TV from his/her leaky-squeaky “rancho” in the barrios could never aspire to be another Ricky Martin. However, a young Venezuelan person watching the same show on TV from his/her “humble” seven-bedroom-five-bathroom summer cottage on the Caribbean can certainly aspire to be another Ricky Martin. The reliable infrastructures in Venezuela have traditionally been mostly accessible to the “minority.”

• I argue that even if the opposition and the USA and others believe that Venezuela had a “democracy” before Chavez, they are not telling the real truth.

What Venezuela had was a pseudo-democracy controlled by a small minority and not accessible to the majority. It will take years for Venezuela, under Chavez or others, to arrive at what could resemble a western-style democracy.

• I believe that Chavez is opening the doors towards this future. I also believe that it is unfair and unjust for the opposition (and the USA) to propagate the idea that Chavez is a communist or that the pre-Chavez Venezuela was a true “democracy.”

True democracy in Venezuela will be achieved when all Venezuelans will have equal (or almost equal) access to reliable infrastructures such as health-care, education, social services and equitable treatment.

If Venezuela’s opposition would concentrate on such issues rather than scream and yell about how they are losing their grip on the traditional economic control that they have inherited, then the Venezuelan opposition might have a fighting chance to attract people from the “majority” towards their side.

Chavez is attracting people to his side because he is actually trying to get things done, unlike the destructive actions that the opposition has been betting on in the last year or so.

• I believe that Amy Chua has some very interesting and valid points … and some of her points apply very well to Venezuela.

For all you “scholarly types” out there, Amy Chua is a professor at Yale Law School. She is also from the “ethnic Chinese minority” in the Philippines. She is not a communist-loving, peace-and-love, anti-USA, anti-globalization hippie terrorist activist.

Oscar Heck oscar@vheadline.com

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Monday, May 26, 2003 By: Kay Onefeather

Date: Mon, 26 May 2003 13:14:11 EDT From: Kaonefeather@aol.com To: Editor@VHeadline.com Subject: Re: In My Country

Dear Editor: In my country American indians are the ONLY race of people forced to prove they are indeed Indian! Moreover, there is a division within some indian communities, between full bloods and mixed bloods ... some full bloods accept mixed bloods ... and, some mixed bloods accept other mixed bloods. However, there are exceptions.

Should you venture into some private "internet indian territories," be prepared to prove any claim of indian blood, with tribal affiliation and family connections, including blood Quantum. Otherwise, you face the probability of being "labeled." Wannabe is the favorite label, followed by troublemaker, and even spy. And, more often than not, it's mixed bloods who are most adamant about proof to indian claim. (Another division)

Caution within American indian communities is understandable. No other race has been victimized and exploited, as much, or as long. Sad to say, this continues even today, effecting all aspects of their lives ... land, home, family and spirituality. (More division)

Blood Quantum is, no doubt, yet another ploy of "divide and conquer" ... a way to end indians. With each generation, the percentage of indian blood is thinned, and the number of mixed bloods increase. Today, countless numbers of mixed bloods are unable to prove affiliation. Because of separation from one cause or another, or because connection to family has been lost or buried, many mixed bloods are left in "limbo." (Another form of division)

Furthermore, offspring fathered by "roaming" Red men in this country (USA) ... leaving little or no trace to family ties ... is yet another problem facing mixed bloods. (If nothing else is proven, the prolificacy of American indian men is beyond question!)

Why am I writing this to Venezuela?

Venezuela is rich in native indian history ... history, that traces where you've been and where you're going ... history, that belongs to ALL peoples, full bloods, mixed bloods, and just 'bloods.'

History, to learn from, in order to assure a better future for all.

My sincere hope is that Blood Quantum ... or any other form of division ... will never be used in Venezuela, to separate and segregate a major portion of its humanity.

Division of any kind, weakens ALL peoples, and the whole of humankind suffers.

Kay Onefeather kaonefeather@aol.com

<a href=www.outlookindia.com>outlookindia.com TARIQ ALI

If it is futile to look to the UN or Euroland, let alone Russia or China, for any serious obstacle to American designs in the Middle East, where should resistance start? ... The day the Mubarak, Hashemite, Saudi and other dynasties are swept away by popular wrath, American - and Israeli - arrogance in the region will be over.

Unsurprisingly, the UN security council has capitulated completely, recognised the occupation of Iraq and approved its re-colonisation by the US and its bloodshot British adjutant. The timing of the mea culpa by the "international community" was perfect. On Friday, senior executives from more than 1,000 companies gathered in London to bask in the sunshine of the re-established consensus under the giant umbrella of Bechtel, the American empire's most favoured construction company. A tiny proportion of the loot will be shared.

So what happened to the overheated rhetoric of Europe v America? Berlusconi in Italy and Aznar in Spain - the two most rightwing governments in Europe - were fitting partners for Blair while the eastern European states, giving a new meaning to the term "satellite" which they had previously so long enjoyed, fell as one into line behind Bush.

France and Germany, on the other hand, protested for months that they were utterly opposed to a US attack on Iraq. Schröder had owed his narrow re-election to a pledge not to support a war on Baghdad, even were it authorised by the UN. Chirac, armed with a veto in the security council, was even more voluble with declarations that any unauthorised assault on Iraq would never be accepted by France.

Together, Paris and Berlin coaxed Moscow too into expressing its disagreement with American plans. Even Beijing emitted a few cautious sounds of demurral. The Franco-German initiatives aroused tremendous excitement and consternation among diplomatic commentators. Here, surely, was an unprecedented rift in the Atlantic alliance. What was to become of European unity, of Nato, of the "international community" itself if such a disastrous split persisted? Could the very concept of the west survive?

Such apprehensions were quickly allayed. No sooner were Tomahawk missiles lighting up the nocturnal skyline in Baghdad, and the first Iraqi civilians cut down by the marines, than Chirac rushed to explain that France would assure smooth passage of US bombers across its airspace (as it had not done, under his own premiership, when Reagan attacked Libya), and wished "swift success" to American arms in Iraq. Germany's cadaver-green foreign minister Joschka Fischer announced that his government, too, sincerely hoped for the "rapid collapse" of resistance to the Anglo-American attack. Putin, not to be outdone, explained to his compatriots that "for economic and political reasons", Russia could only desire a decisive victory of the US in Iraq.

Washington is still not satisfied. It wants to punish France further. Why not a ritual public flogging broadcast live by Murdoch TV? A humbled petty chieftain (Chirac) bending over while an imperial princess (Condoleezza Rice) administers the whip. Then the leaders of a re-united north could relax and get on with the business they know best: plundering the south. The expedition to Baghdad was planned as the first flexing of a new imperial stance. What better demonstration of the shift to a more offensive strategy than to make an example of Iraq. If no single reason explains the targeting of Iraq, there is little mystery about the range of calculations that lay behind it. Economically, Iraq possesses the second largest reserves of cheap oil in the world; Baghdad's decision in 2000 to invoice its exports in euros rather than dollars risked imitation by Hugo Chavez in Venezuela and the Iranian mullahs. Privatisation of the Iraqi wells under US control would help to weaken Opec.

Strategically, the existence of an independent Arab regime in Baghdad had always been an irritation to the Israeli military. With the installation of Republican zealots close to Likud in key positions in Washington, the elimination of a traditional adversary became an attractive immediate goal for Jerusalem. Lastly, just as the use of nuclear weapons in Hiroshima and Nagasaki had once been a pointed demonstration of American might to the Soviet Union, so today a blitzkrieg rolling swiftly across Iraq would serve to show the world at large that if the chips are down, the US has, in the last resort, the means to enforce its will.

The UN has now provided retrospective sanction to a pre-emptive strike. Its ill-fated predecessor, the League of Nations, at least had the decency to collapse after its charter was serially raped. Analogies with Hitler's blitzkrieg of 1940 are drawn without compunction by cheerleaders for the war. Thus Max Boot in the Financial Times writes: "The French fought hard in 1940 - at first. But eventually the speed and ferocity of the German advance led to a total collapse. The same thing will happen in Iraq." What took place in France after 1940 might give pause to these enthusiasts.

The lack of any spontaneous welcome from Shias and the fierce early resistance of armed irregulars prompted the theory that the Iraqis are a "sick people" who will need protracted treatment before they can be entrusted with their own fate (if ever). Such was the line taken by David Aaronovitch in the Observer. Likewise, George Mellon in the Wall Street Journal warns: "Iraq won't easily recover from Saddam's terror" - "after three decades of rule of the Arab equivalent of Murder Inc, Iraq is a very sick society". To develop an "orderly society" and re-energise (privatise) the economy will take time, he insists. On the front page of the Sunday Times, reporter Mark Franchetti quoted an American NCO: "'The Iraqis are a sick people and we are the chemotherapy,' said Corporal Ryan Dupre. 'I am starting to hate this country. Wait till I get hold of a friggin' Iraqi. No, I won't get hold of one. I'll just kill him.' " No doubt the "sick society" theory will acquire greater sophistication, but it is clear the pretexts are to hand for a mixture of Guantanamo and Gaza in these newly occupied territories.

If it is futile to look to the UN or Euroland, let alone Russia or China, for any serious obstacle to American designs in the Middle East, where should resistance start? First of all, naturally, in the region itself. There, it is to be hoped that the invaders of Iraq will eventually be harried out of the country by a growing national reaction to the occupation regime they install, and that their collaborators may meet the fate of former Iraqi prime minister Nuri Said before them. Sooner or later, the ring of corrupt and brutal tyrannies around Iraq will be broken. If there is one area where the cliché that classical revolutions are a thing of the past is likely to be proved wrong, it is in the Arab world. The day the Mubarak, Hashemite, Saudi and other dynasties are swept away by popular wrath, American - and Israeli - arrogance in the region will be over.

Tariq Ali's new book, Bush in Babylon: Re-colonising Iraq, will be published by Verso in the autumn. This was originally published in The Guardian