<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, June 05, 2003 By: Oscar Heck

VHeadline.com commentarist Oscar Heck writes: The Venezuelan Confederation of Trade Unions (CTV), the Venezuelan Federation of Chambers of Commerce & Industry (Fedecamaras), the privately-owned Venezuelan TV (RCTV, Venevision, TeleVen, Globovision) and print media (El Nacional, El Universal, Tal Cual, etc.),  white collar PDVSA unions Gente del Petroleo and the Venezuelan Council of Bishops (who often side and support the elite) all ... fully or partially ... backed the 2-month "El Paro" stoppage which began the first week of December, 2002 and dragged on to about mid-February 2003.

El Paro actions included the sabotage of PDVSA equipment, PDVSA employees not showing up to work, employee lockouts by business leaders, partial bank stoppages, attempted school shut-downs, extensive marches and demonstrations (some violent), blockage of major highways and thoroughfares, hoarding and speculation, and a massive anti-Chavez media campaign.

Their hope was that the El Paro would bring Venezuela to a complete standstill ... forcing either the ousting of Chavez or his resignation.  The El Paro failed dramatically, leaving Chavez with stronger support and leaving the Venezuelan economy in shambles.

(Note: The El Paro was mostly supported by the middle-to-upper classes which account for about 20% of the Venezuelan population).

In a general sense, the supporters of the El Paro, were/are unhappy with the democratically-elected government’s attempt to approve and implement much needed reform laws in the agricultural, banking, health, education, commerce and other sectors … e.g., passing and application of anti-hoarding/speculation, anti-monopoly laws and land reform.

Traditionally, Venezuela is “controlled” at almost every level (including the justice system) by a corrupt mafia-like elite that has also apparently backed and financed the massive ongoing anti-Chavez advertising and slander campaigns. All the “groups” mentioned above are commonly referred to as “the opposition,” although they are often not well inter-coordinated.

The El Paro culminated with the "Firmazo" in February 2003 (a massive opposition-led signature collection campaign asking for the resignation of Chavez, the dissolution of the National Assembly, the abolishing of reform laws ... and more).

The Firmazo has not been recognized as valid since it was done without going through the legal channels. About 3 million not-yet-fully-verified anti-Chavez signatures were apparently collected, representing between about 25% of the legal voting population of almost 12 million. The opposition is presently in the process of trying to organize the steps necessary to convoke a legal referendum asking for the resignation of Chavez.

Legally, this referendum can occur any time after mid-August, 2003 and appears to be a complex task. Unfortunately, the opposition as a whole (which has also been plagued by infighting) had been convinced that Chavez would have been ousted by now and had neglected to properly (and legally) organize themselves for a possible referendum … meaning that by the time they get organized, the referendum will take place later than the previously expected date of August 19, 2003.

Now, after all this mess, El Paro, El Firmazo, the sabotage of PDVSA and the ongoing anti-Chavez media campaign, what is happening?

The CTV is losing ground and attempting to halt the creation of a new “union central” ... the UTV.

The CTV appears to be going broke as well.

The CTV, according to the many people I have spoken with during my Venezuelan travels, has never done anything for the “laborer.”

The CTV, whose role should be to protect the interests, well-being and fair treatment of workers, sided with Fedecamaras wholeheartedly during El Paro in support of the employer-dictated lockouts which left thousands of workers jobless and payless.

Now, the CTV wants to retain its role as supporter of the worker?

From what I have seen, the CTV is simply another elite-operated mafia, whose president, Carlos Ortega, is a common without-conscience criminal. I believe that the CTV will (and should) dwindle away to little more than nothing in the near future. Let’s hope that the new central labor movement (UNT) will truly look out for the best interests of the Venezuelan workers who have traditionally been mistreated by the Venezuelan elite-controlled corrupt business leaders/managers and their monopoly-mafia-like practices (threats, coercion, bribery, etc.).

Note: Carlos Ortega, president of CTV, is apparently in Costa Rica and travels regularly to Miami. Carlos Fernandez, president of Fedecamaras is apparently in Miami and enjoys vacationing in Aruba. Now, in apparent desperation, the CTV is bringing up the subject of the “extravagances” traditionally (and often illegitimately) practiced by Venezuelan business leaders and managers, and that they should curb such practices!

Very strange.

The CTV has, for the last many months, entirely backed the Venezuelan business sector and its criminal activity (illegal lockouts, sabotage, death threats, etc.).

Why now?

Perhaps they are scared that the Venezuelan workers can finally exercise their rights to “not believe” that the CTV has a role in enhancing their lives, especially after thousands of its members lost their jobs due to the CTV-backed stoppage, El Paro.

After El Paro … what else is happening in Venezuela?

Now, the chamber of private schools is talking about a reduced number of students attending their schools and a reduced capacity to pay for tuition.

Now, they, who also supported El Paro and El Firmazo, are suddenly feeling the side-effects of their implication in the attempt to paralyze Venezuela! This is no surprise, and can only be blamed on themselves and on the opposition as a whole.

This got me to thinking about the barrio where I live in while in Caracas. The barrio is part of an anti-Chavez opposition controlled municipality. The barrio has a population of about 400,000 where there are only two elementary schools and no high-schools. Many of the people from this barrio are “forced” to pay to send their children to private schools outside the barrio … using their hard-earned-minimum-wage-salaries to try to give their children a better future. (Not to mention that the barrio children studying at private schools outside the barrio also have to pay daily bus fares!).

I asked the people in the barrio why no more schools have been built since Chavez has been in power (it was unthinkable for any more schools to be built before Chavez). Their answer was simple … the mayor of the municipality is completely anti-Chavez and wants to make sure that no new schools are built.

So, who suffers?

It appears to me that two elementary schools for a population of about 400,000 is not enough.

I also wonder at times if the owners of private schools in Caracas are also in cahoots with the local mayors and government officials. That is, keep the number of public schools to a minimum, thus supporting a flourishing private school industry with kickbacks.

Could this be possible?

Maybe the owners of some (or many) private schools were (in the past) also in cahoots with top national government officials. Note: As in most countries, public school teachers in Venezuela are underpaid … which does not help the situation overall.

After El Paro … what is happening in Venezuela?

Many people have been left jobless and payless … mostly the near-minimum-wage earners, the workers and laborers.

Who suffers now?

Mostly, these jobless Venezuelans are pro-Chavez. Mostly, these Venezuelans are those who have to work relentlessly (unlike what the upper classes believe) “just to survive”, having little or no extra time or money to pay tuition at private schools or to enjoy vacations or travel to Miami, Aruba or Costa Rica.

Luckily, the Chavez government has started several “small business loan” programs, opening the doors to workers for a possible better future, which could make them less dependent on “having to work for minimum wage” under the stranglehold of the conventional “boss.”

Oscar Heck Oscar@vheadline.com

Posted on Thu, Jun. 05, 2003 The News Sentinel-Associated Press

NEW YORK - Crude oil and petroleum products futures rallied Thursday as traders covered short positions established following bearish inventory figures released a day earlier.

Wednesday's sell-off came after government and industry data showed across-the-board builds in U.S. petroleum inventories for the week ended May 30.

Crude oil stocks rose by 2.8 million barrels to 289 million barrels, gasoline inventories grew by 2.3 million barrels to 207.3 million barrels, and distillate stocks, which include heating oil and diesel fuel, rose by a larger-than-expected 3 million barrels to 104.5 million barrels, the Energy Department reported.

But despite the builds, inventories remain below year ago levels, just as the high-demand U.S. summer driving season gets under way. Low inventories leave the market exposed to price spikes.

"When you think about it, supplies are still very tight," said Phil Flynn, a trader and analyst at Alaron Trading Corp. in Chicago.

At the New York Mercantile Exchange, nearby July crude oil futures rose 69 cents to close at $30.74 a barrel.

At London's International Petroleum Exchange, July North Sea Brent futures ended the session with a gain of 84 cents at $27.65 a barrel.

July heating oil futures jumped 2.01 cents to 77.23 cents a gallon, while July gasoline futures climbed 2.09 cents to settle at 88.52 cents a gallon.

Natural gas for July delivery rose 14.6 cents to settle at $6.521 per 1,000 cubic feet.

A slew of news reports helped boost the rally, traders and analysts said.

As oil prices were rallying, Venezuela's state news agency reported that the oil ministers of Venezuela, Mexico and Saudi Arabia will meet Monday to discuss cooperation between OPEC and non-OPEC oil producing nations.

Venezuela's oil minister Rafael Ramirez plans to meet his Saudi counterpart Ali Naimi and Mexico's oil minister Ernesto Martens in Madrid, Spain. Ramirez will later meet with the oil minister of Norway, another key non-OPEC oil producer.

"This is a very important meeting because it allows us to study the world oil markets and the oil prices," Ramirez said.

Venezuela and Saudi Arabia belong to the Organization of Petroleum Exporting Countries; Mexico does not. The three countries often meet to coordinate policy ahead of OPEC meetings.

Ramirez also said he would meet with Norwegian officials before the OPEC conference but he did not give a date. Norway, another independent producer, also often collaborates with OPEC's policies.

The meeting of the three oil ministers comes just before the meeting in Doha, Qatar, June 11.

OPEC in April decided to hike the ceiling to 25.4 million barrels a day while at the same time, it pledged to remove 2 million barrels a day from the market.

OPEC officials haven't said whether they intend another round of production cuts, and talk in the market is mostly that the cartel won't reduce output.

Analysts say that the recent price spike has mitigated the need for another OPEC output cut.

Separately, a fire at a Northern Natural Gas Co. natural gas pipeline early Thursday morning destroyed one of two buildings housing a compressor station in an isolated part of far West Texas, officials said Thursday.

The news helped boost natural gas and heating oil futures at the Nymex, traders said.

<a href=www.nzherald.co.nz>The New Zeland Herald 06.06.2003 8.30am

NEW YORK - Oil prices rose above US$30 a barrel on Thursday (New York time) as Opec producers Saudi Arabia and Venezuela prepared to seek assurances from non-member Mexico that it would follow the cartel in any move to tighten supply.

A meeting on Friday in Madrid between Saudi Oil Minister Ali al-Naimi and his counterparts, Venezuela's Rafael Ramirez and Mexico's Ernesto Martens, comes just days before next Wednesday's Opec meeting in Qatar to decide third-quarter cartel production.

The three countries were the architects of drastic oil output curbs in 1998 and 1999 which laid the groundwork for a five-year price boom, and are regrouping to prepare the ground for the resumption of Iraq's oil exports.

US crude futures jumped 69 cents to US$30.74 a barrel, nearing Wednesday's six-week peak of US$31. In London, benchmark Brent crude was 63 cents higher at US$27.44 a barrel.

"They aren't meeting to ask the Mexicans to pump more oil. So the question will be if they get Mexico to agree to cut," said a New York trader.

Iraq earlier on Thursday announced it was tendering to sell 10 million barrels of crude stored at export terminals, its first oil sales since the US-led invasion in mid-March.

Baghdad is aiming for some 1.5 million bpd of production by the end of this month, over half of that set for export, although continued looting in the southern region is hampering efforts to restart supplies, an official there said Wednesday.

"We believe that the market will continue to be surprised at the slowness of output recovery in Iraq and by the length of time before the security situation allows for a stabilisation of Iraqi capacity," said Paul Horsnell, an analyst with J.P. Morgan.

A full recovery to its previous over two million bpd exports -- some four per cent of globally traded oil -- appears distant.

Some analysts believe Opec could opt to postpone any further cut in supplies as prices remain above its US$25 a barrel target, analysts say.

"Prices being where they are, we don't think they will do anything," said Leo Drollas at London's Centre for Global Energy Studies.

On Wednesday, Indonesian Energy Minister Purnomo Yusgiantoro said no cut was necessary as long as prices stayed within the group's US$22-US$28 price band. The Opec basket price stood at US$26.72 on Wednesday.

Oil markets have now recovered most of their losses following US government data showing an unexpected rise in crude and petrol supplies on Wednesday, somewhat easing concerns of a potential summer supply crunch.

Crude oil stocks jumped 2.8 million barrels in the week to May 30 while petrol supplies rose 2.3 million barrels, the Department of Energy's statistical arm said.

Crude supplies are still down 11 per cent against last year's levels, while petrol is down five per cent.

Reuters, 06.05.03, 3:38 PM ET NEW YORK, June 5 (Reuters) - NYMEX crude futures ended higher on Thursday, pushing upward in late trading on news that oil ministers from OPEC heavyweights Saudi Arabia and Venezuela will meet their counterpart from nonaligned Mexico on Friday in Madrid, traders said. "It was the story on the oil ministers meeting in Madrid," said a New York trader. "They aren't meeting to ask the Mexicans to pump more oil, so the question will be if they get Mexico to agree to cut." NYMEX July crude settled 69 cents higher at $30.74 a barrel, trading from $29.65 to $30.80. The contract was briefly at $31.00 on Wednesday, leaving the April 21 $31.25 high trade as the next level to approach. In London, IPE benchmark Brent July crude settled 63 cents higher at $27.44 a barrel, just below the $29.47 session high. The meeting in Madrid between Saudi Oil Minister Ali al-Naimi and counterparts, Venezuela's Rafael Ramirez and Mexico's Ernesto Martens, will come just days before next week's OPEC meeting in Qatar to decide third-quarter cartel production and market share policy [nL05274438]. Crude bounced early in the session when technical support levels held in the face of early follow-through selling from Wednesday's price dip, traders said. "We saw some funds buying helping push back up," said a New York broker. In addition to seeking cooperation from Mexico, as well as rival producers Norway and Russia, OPEC must also discuss how to accommodate returning Iraqi production. Iraq on Thursday tendered to sell its first crude since the war and said it aimed to enter term supply deals this month [nL05200743]. But oil traders are still skeptical as to how fast the Iraqi oil industry can rebound and what state its oil infrastructure was in after the anarchic looting in the chaos that followed the war. Analysts have said that while recent high prices may cause OPEC to stall any further production cuts, the cartel will only be postponing future cuts [nL04178763]. The price of OPEC's basket of seven crudes fell to $26.72 Wednesday, still at the upper end of its $22-$28 target range. U.S. gasoline supplies are five percent below 2002 levels as the peak demand driving season begins, but Wednesday's data from the U.S. Energy Information Administration (EIA) showed a rise in supplies as refiners upped crude runs. EIA said gasoline stocks jumped 2.3 million barrels while crude stocks rose 2.8 million barrels [EIA/S]. Amerada Hess (nyse: AHC - news - people) denied talk of refinery problems at its huge refinery on St. Croix in the U.S. Virgin Islands. NYMEX July gasoline settled 2.09 cents higher at 88.52 cents a gallon, off a high at 88.80 cents. NYMEX July heating oil settled 2.01 cents higher at 77.23 cents a gallon, bouncing off a session low of 75.00 cents.

June 5 (<a href=quote.bloomberg.com>Bloomberg) -- Brazil's real rose from yesterday's three-week high after the central bank's sale of contracts used to protect investors from a decline in the currency, reducing the demand for dollars.

The real rose 1.3 percent to 2.8785 per dollar in Sao Paulo at 2:35 p.m. New York time. The real extended gains after Banco Safra SA said it plans to sell two-year bonds and a congressional committee paved the way for pension system changes to reduce government debt. The real has gained 23 percent in 2003, the best performance of the 16 most traded currencies. Mexico's peso rose.

Investors, primarily bank Treasury desks, have more bets the real will fall than it will rise, said Helio Ozaki, a trader with Finambras Corretora de Cambio e Titulos Ltda., a Sao Paulo brokerage that handles more than a quarter of all Brazilian spot- market currency trades. The central bank's sale yesterday of the currency protection made it less likely demand for dollars will rise allowing their bets to pay off.

The central bank slapped a lot of people yesterday,'' Ozaki said. There are about 30,000 more dollar futures contracts out there betting the dollar will strengthen than weaken -- yesterday's sale has pulled the rug out from them and made anyone else ready to bet against the real think twice.''

Many treasury desks were forced to stop adding to their positions yesterday, said Flavio Farah, head of the Treasury desk at the Sao Paulo unit of Dusseldorf, Germany-based Westdeutsche Landesbank Girozentrale.

Betting against the real right now makes no sense,'' Farah said. It's going to be a while before we figure out just what to do for the medium term.''

Inflows, Debt

The currency extended early gains after Banco Safra announced its plans and on the lower house pension ruling.

Sao Paulo-based Banco Safra plans to sell bonds maturing in July 2005 to yield 5.5 percent to 5.75 percent. Morgan Stanley has been hired to manage the sale.

In Brazil's capital, Brasilia, a committee of Brazil's lower house of Congress said a bill to limit pension expenses is constitutional, moving forward plans designed to help the government eventually reduce its $400 billion debt.

In the meantime, capital flows to the country continue, boosting demand for the real and helping it rise. More than $8 billion of bonds and loans have been contracted abroad this year, according to the O Globo daily newspaper, helping the real outperform all the world's major currencies.

Yesterday, Banco Votorantim SA, the financial services arm of the Sao Paulo-based Votorantim cement, mining, banking and industrial group sold $180 million of two-year bonds to yield 6.25 percent.

Telesp Celular Participacoes SA, based in Sao Paulo and Brazil's biggest cellular telephone service provider, said it plans to sell $150 million of 18-month bonds. Telesp Celular Par is controlled by Vivo, a joint-venture between Madrid-based Telefonica SA and Lisbon-based Portugal Telecom SGPS SA.

Development, Rate Outlook

Also boosting investor sentiment, Alain Belda, the chief executive of Pittsburgh-based Alcoa Inc., the world's biggest aluminum maker, said his company plans a new power plant in Brazil and will invest $2.7 billion in Brazil by 2011.

Capital flows remain strong and the swap sale makes it easier for the flows to cause the real to rise,'' Ozaki said. There are few forces now preventing the dollar from weakening'' against the real.

The real's rise may also have been helped by comments today from central bank President Henrique Meirelles.

The inflation rate for the previous 12 months will fall to 10.8 percent, within the range the government has set as a target for this year, by the end of 2003, he said during a visit to investors in Berlin, according to newswire Agencia Estado.

A stronger real will help reduce inflation by reducing the costs of imports and commodities, which are priced in dollars.

Rate Backdrop

In coming days expectation the U.S. will cut interest rates may lift the real further. Much of the rally in Brazilian bond prices in recent months has been fueled by U.S. and European investors seeking higher returns than they can receive at home.

Brazilian banks have taken advantage of low U.S. rates -- yields on two-year U.S. Treasury bonds fell to a 53-year low of 1.198 percent this week -- to invest at Brazilian rates. Brazil's benchmark 26.5 percent rate is at a four-year high.

Lower U.S. rates could maintain the difference between U.S. and Brazilian rates that has sparked the bank bond sales even if Brazilian rates were to fall.

Investors are focusing on the possibility of another U.S. interest rate cut by the Federal Reserve as soon as its June 25 meeting, said Daniel Katzive, a currency strategist at UBS Warburg, the biggest trader in the $1.2 trillion-a-day foreign exchange market, in Stamford, Connecticut. ``The currencies that have done best are the ones with the highest yield.''

Brazil's benchmark 8 percent bond maturing in 2014 gained 0.94 cent to 91.25 cents on the dollar, causing the yield to fall to 10.14 percent, according to J.P. Morgan Chase & Co. The bond rose to a record high of 91.75 on May 13.

Mexico, Regional Currencies

The peso rebounded from its biggest plunge since Brazil devalued its currency in January 1999 by gaining for the first day in three.

The peso strengthened 0.3 percent to 10.5375 per dollar from yesterday's 10.5725 per dollar close, when it fell 2.8 percent, the currency's largest one-day decline since Jan. 13, 1999.

Colombia's peso rose from a three-week high, gaining 0.3 percent to 2,833.10 per dollar. The Argentinean and Chilean currencies were unchanged. Peru's new sol weakened 0.1 percent to 3.4837 per dollar. Venezuela fixed it bolivar at 1,598 this year.