<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, June 19, 2003 By: Jose Gabriel Angarita

VenAmCham economist Jose Gabriel Angarita writes: Nearly five months after exchange controls were imposed by Venezuelan authorities, and in the midst of speculation on what system will replace them, there is still no clear definition of the actions that could be taken once they are lifted.

Finance Minister Tobias Nobrega announced to the media that he will shortly be revealing to the Venezuelan public the changes to be made in the foreign exchange system. But the proposals, which Minister Nobrega indicated were quite far along, have not even been submitted to the Central Bank of Venezuela (BCV), according to Board member Domingo Maza Zavala: "I can tell you, as a director of the BCV, that I have no knowledge that the Board has received any proposal from the government to alter the foreign exchange scheme."

One of the most powerful bases for endowing these announcements with credibility is the reputation of the policy makers during the period of restricted foreign exchange availability; they have transmitted signals of a coming relaxation of controls but have done nothing concrete about it. The exchange control system should have been conceived as a temporary expedient, which became unnecessary and inefficient once the resumption of oil exports normalized the inflow of foreign exchange.

The longer the foreign exchange market continues to be restricted, the higher will be the cost of its eventual liberalization, though that cost will depend on the arrangement that is adopted. However, relaxation of controls will be accompanied by a major devaluation of the exchange rate, perhaps to the levels at which CANTV ADRs are now trading (an average of 2,400 bolivares per US dollar); that is the reference exchange rate for the parallel market. Liberalization will also have an impact on interest rates and inflation.

Whatever the follow-on arrangement is, there is no way to prevent a demand repressed for five months, which has put pressure on interest rates and led to a growth of deposits from the public in the financial system, from moving massively to the foreign exchange market ... unless the authorities continue certain restrictions with the aim of gradually reducing them or continuing to dole out foreign exchange in discretionary fashion. Hence, the prospects are not encouraging. The damage is already done and there is no sign of a willingness among the authorities to speed up the liberalization process, despite all the pressure being applied by the different economic sectors and even the international community.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, June 19, 2003 By: Mark Weisbrot

Center for Economic and Policy Research co-director Mark Weisbrot writes: The United States has always had a bad reputation for the way it treats its neighbors south of the border, but Washington's treatment of Venezuela has been an embarrassment even by the low standards of diplomacy that it maintains for the region.

The Bush administration endorsed a military coup against the democratically-elected government of Hugo Chavez last year. That's about as bad as you can get, although it may have been worse: There were numerous meetings between Bush administration officials and coup leaders in the months preceding the coup.

Opposition groups also received increased funding -- some of it still unaccounted for -- from the US government prior to the coup.

The major media in the US have mostly joined our government in its hostility to Venezuela. In an editorial that was as scandalous as the exploits of reporter Jayson Blair, the New York Times also endorsed the military coup. The editorial board issued a half-hearted retraction a few days later. But there were few American journalists who bothered to ask how the most influential newspaper in the world's most influential democracy could have made the mistake of endorsing a military coup against a democratically-elected government.

Chavez's major crime seems to be that he was elected mainly by Venezuela's poor, who previously had little voice in the corrupt political system that had ruled the country for four decades. It appears that our (USA) government, as well as most of our foreign policy establishment, respects democracy only when "the right people" win elections.

We have gone down this road before. Our government spent billions of dollars and financed the killing of thousands of people -- mostly innocents -- trying to overthrow the government of Nicaragua in the 1980s. That government was democratically elected in 1984, but it made no difference to Washington. The result of American efforts is a still devastated country -- 13 years after the war ended -- with most Nicaraguans actually worse off than they were 40 years ago. The impact on our own democracy was harmful as well, as it led to the Iran-Contra scandal.

Unfortunately some of the same people who were implicated in that scandal are determining US policy in Venezuela today, viewing their mission through the same distorted ideological lens. Chief among them is Otto Reich, who is currently serving as White House special envoy for Western Hemisphere Initiatives, and expresses unrelenting antagonism toward Venezuela.

• Last month Washington cut off credits from the US Export-Import Bank to Venezuela, for reasons that appear to be political rather than economic.

Venezuela is a constitutional democracy, with complete freedom of the press, speech, assembly and association. The major media are controlled by the opposition, and their TV news broadcasts are so partisan that most people here would not recognize them as journalism. The opposition also has about 48% of the seats in the national congress, and controls most of the country's wealth.

If the reader has the impression that Venezuela is not a democracy, it is mainly because our own media regularly repeat opposition charges -- that the government is "authoritarian" or "Castro-communist" -- often without rebuttal. But as any visitor to Venezuela can see, it is one of the least repressive societies in the region.

Venezuela is our third largest trading partner in Latin America, and has continued to be a reliable energy supplier -- except during the past winter when the opposition led an oil and business strike, in another attempt to topple the government.

There is no legitimate reason for Washington's unfriendliness, as both Americans and Venezuelans have much to benefit from better relations between the two countries.

Mark Weisbrot is co-director of the Center for Economic and Policy Research, 1621 Connecticut Ave NW, Suite 500, Washington, DC 20009-1052 -- telephone +1 (202) 293-5380 x228; telefax +1 (202) 588-1356 -- Email: weisbrot@cepr.net

Granma International

ASUNCION.- The 24th Southern Common Market (MERCOSUR) Summit held in the capital of Paraguay on Wednesday ended with a clear message for strengthening regional integration and particularly that of South America.

According to PL, Presidents Luis González Macchi (Paraguay), Néstor Kirchner (Argentina), Luiz Inacio Lula da Silva (Brazil) and Jorge Batlle (Uruguay) were present at the meeting, together with Gonzalo Sánchez de Lozada (Bolivia) and Ricardo Lagos (Chile) as associate members, and Hugo Chávez (Venezuela) as a special guest.

The AP news agency noted that the full members (Brazil, Argentina, Uruguay and Paraguay) signed a joint communiqué reaffirming their commitment to developing the bloc with the aim of assuring sustainable development for those countries and competitive insertion in the world economy.

The leaders also signed a second document of a general nature with Presidents Ricardo Lagos and Gonzalo Sánchez de Lozada.

Both documents ratify adherence to the United Nations and peaceful solutions to conflict, while the signatories committed themselves to combating terrorism within the framework of international law and respect for human rights, as well as to tackle the problem of drug trafficking.

At the same time ANSA reports that the bloc presidents agreed to meet again within 60 days for further discussions on issues linked to integration and to advance a medium-term program comprising an agenda known as Objective 2006, the creation of a parliament and a bloc monetary institution.

The statement indicates the need to “prioritize the bloc’s social dimension” so as to promote development and highlights the urgency of “eradicating child labor, facilitating the circulation of workers and including the theme of employment as an objective of the integration agenda. The heads of state also agreed to go more deeply into issues such as security, education, work, health and defense.

Reuters notes that it gives priority to integration and not to the Free Trade Area of the Americas (FTAA) being imposed by the United States. In that context, Kirchner informed the agency: “first of all we should consolidate MERCOSUR and then see what international prospects open up.”

Brazilian President Luiz Inacio Lula da Silva agreed with his Argentine colleague in giving top priority to the South America and announced that he is to meet with his U.S. counterpart George W. Bush in Washington this Friday with that premise in mind.

The EFE news agency reports that the bloc’s document emphasizes “the need for agricultural aspects, particularly those linked to subsidies that are distorting trade, to be included in FTAA discussions as well as within the World Trade Organization.”

The tone of the speeches made by those leaders at the session, which lasted three hours, was not uniform and varied according to speakers’ positions, but there was a general spirit to strengthen the bloc.

For Argentine Kirchner, for example, the basic issue for now is to continue defining a joint economic policy by creating a monetary institution and extending the number of bloc members.

Nicanor Duarte, the president-elect of Paraguay, who takes office on August 15, criticized the current globalization by defining it as a narcissistic neoliberal enclave scorning human values. The future Paraguayan president proposed a vindication of a culture of solidarity and called for a more political MERCOSUR rather than one that is confined to tariff activities.

Hugo Chávez, the Venezuelan president, was one of the last to speak at the meeting, where he reiterated that the key to the solution of the poverty and destitution of the Latin American and Caribbean peoples is in the endogenous model of growth and not in negotiations with the developed world.

In a speech highly critical of neoliberalism, the Venezuelan leader advised that it is not necessary to believe in the developed world and that the restrictive policies of the International Monetary Fund (IMF) had to be rejected. “We need to shake off the phantoms of neoliberalism,” he affirmed.

Posted on Thu, Jun. 19, 2003 RANDOLPH E. SCHMID Associated Press

WASHINGTON - Scientists have discovered a previously unknown population of red siskins, a bird feared to be nearing extinction in the wild.

"It was totally a surprise to us, a great shock," said Michael J. Braun, a research scientist at the Smithsonian's National Museum of Natural History.

Once widespread in the coastal mountains of Venezuela and Colombia, the bird was nearly wiped out by trapping after it became popular both in that region and in Europe in the 1800s.

The bird was particularly valued for its bright red feathers and in Latin America it is known as el cardinalito, or little cardinal.

Breeders discovered that the red siskin could mate with the canary, Braun said Thursday, providing a bright color to the formerly drab songbird. Any canary today that has some red feathers has some siskin genes, Braun said.

Braun said the research team was conducting a survey of birds in little-studied Guyana - which neighbors Venezuela - when they came across a population of several thousand red siskins.

That, he said, is several times the known population of the birds elsewhere in the wild.

The discovery was made in April of 2000, he said, but was kept under wraps until a conservation plan could be developed providing legal protection for the birds in Guyana.

It was just a matter of time before they were discovered, he said, because the region where they were found is increasingly being developed.

Red siskins been protected in Venezuela since the 1940s.

The goal is not to prevent people from raising the birds in cages, he said, but to avoid damage to the wild population.

The American Federation of Aviculture is engaged in a red siskin recovery project, attempting to breed a large enough captive population of the birds for the commercial market.

The discovery by Braun and Mark Robbins of the University of Kansas is being published in the June issue of The Auk, the journal of the American Ornithologists Union. The research is a collaboration between the Smithsonian, the University of Kansas and the University of Guyana.

ON THE NET National Museum of Natural History: www.nmnh.si.edu American Ornithologists Union: www.aou.org

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Thursday, June 19, 2003 By: Gustavo Coronel

"From Paraguay, President Chavez claimed that the State should be strengthened in order to be able to fight corruption in the hemisphere. The judicial power, he said ... was infiltrated by corruption in Venezuela..." Union Radio, June 18, 2003.

VHeadline.com commentarist Gustavo Coronel writes: Visiting a country perceived as the most corrupt country in Latin America (Paraguay), the President of the country perceived as the second most corrupt in Latin America (Venezuela) ... according to Transparency International and to the work just published by University of Santiago de Chile's Raimundo Soto ... saw fitting to speak about how to fight CORRUPTION.

On this occasion the Venezuelan President offered his recipe: To strengthen the power of the State.

How is this accomplished? The State becomes strong when its institutions are strong and, in turn, they are strong, when they are staffed by the best candidates, according to the proper rules of selection and when they are truly autonomous and independent. Only efficient and independent institutions can be strong.

In the Venezuelan case this is not what has happened ... the Executive power has had excessive discretionary power and has "captured" all other institutions ... there are no independent government institutions: the members of the Supreme Tribunal of Justice (TSJ) were named at will by Chavez and Luis Miquilena.

Later on ... when Chavez and Miquilena split ... the Supreme Tribunal of Justice became a battleground between these two persons' followers. Today, the government is attempting to pass a new Law on the composition of the Tribunal, which would increase the number of its members to 30 ... so that these new members are Chavez followers and can guarantee that all decisions satisfy the desires of the President?

This is what the President seems to understand by "strenghtening" the judicial system ... but, of course, the results of this maneuver will not help the fight against corruption, but will, in fact, reinforce it.

Similarly, the National Assembly is still in the hands of the President, although his originally ample majority has dwindled to one or two votes. Since the government block does not practice votes of conscience and always votes according to the desires of the President, there is no democratic discussion on any topic.

Whatever is needed by the President is offered to him at the earliest possible moment by the Assembly.

This state of subservience can not but result in higher corruption levels, as there are no checks and balances on Executive power.  We have recently seen how internal debt has been increased to $11 billion by the Minister of Finance, with the bulldozing approval of the Assembly ... a move which puts the country closer to financial bankruptcy.

The Ombudsman, the Comptroller General and the Attorney General are only sad figureheads doing the President's bidding. To me, this is the reason great amounts of national financial resources can be utilized by the Executive power in anti-constitutional and illegal ways without any objection from those officers. It's obvious that, under this state of affairs, corruption will flourish rather than decrease, since the Executive power has no restraint.

The Armed Force is currently under a military high command that is not loyal to the nation and to the Constitution but to one man, the President. An independent high command would not accept the use of military force to support vandalism, as recently took place in the Petare area of Caracas. Similarly, an institutionally-oriented high command would have to remind the President that he can not rule until 2021 ... as he keeps boasting he will do ... unless he violates the laws of the country. In order to keep the members of this high command loyal to him, the President could be forced to give the group privileges which are not permissible under the law. This abnormal bond promotes corruption since the armed forces should exclusively be loyal to the Constitution and the Law.

The President's words during his visit to Paraguay have been most unfortunate ... they describe a theoretical model to fight corruption which he is not in practice following.  As his words fly all over the world from Paraguay, corruption inexorably creeps up and takes firm roots among members of his government. Scandals take place almost around the clock.

This was to be expected, as corruption flourishes in those governments in which words do no fit deeds ... when there is a gap between what its is said and done, the politician or the bureaucrat loses credibility. Today, very few still believe the words of the President because they have seen that what is taking place is very different.

Citizens' tolerance of the issue of corruption is very low because this has been a problem for many years now ... and they had hoped that this President would have had the will to eradicate it.  But this will does not exist. If it did, Venezuela would not still possess one of the most corrupt states of the western hemisphere.

Two cases of high level ... presumably corrupt ... practices have been denounced in the last weeks. One is the situation in the State of Barinas, where the Governor, President Chavez' father, has been the object of a highly-incriminating report by the State Comptroller describing how more than 50% of the total State budget has been wasted or pilfered.

As a result the State Legislative Chamber has rejected the Governor's Annual Report and elevated their charges to the attention of the Comptroller General who, it is expected, will promptly ... do nothing.

• The document is so explicit in its allegations that members of the government party in the State Legislature did not vote in favor of Governor Chavez.

The other case involves the Minister of Finance, Tobias Nobrega, denounced by Francisco Rodriguez (the main financial advisor to the National Assembly) for managing the sale of millions of dollars of Venezuelan debt bonds without Assembly approval and in a manner described as "uncompetitive bidding" which totally lacks transparency. By means of this mechanism the debt paper is sold to private investors for a pre-established top price which is lower than face value, only to be re-bought later at face value by the government.

Rodriguez' accusations, seconded by economist Gustavo Garcia and politician Carmelo Lauria suggest that these operations are conducted to satisfy the personal interests of government officers, including the Minister.

I do not know, of course, if such charges are true, since no proper investigation has been made. But what is beyond doubt is that excessive discretionary power among government bureaucrats and their lack of accountability inevitably leads to high levels of corruption.

Corruption can not be fought with empty and hypocritical words but with decisive action, even if (or, specially if) relatives or close friends are involved.

Our national poet Andres Eloy Blanco wrote a poem about the chief of police of a small town being forced to put his lifelong friend in prison for breaking the law but, then, going everyday to cultivate his friend's patch of land while he was in jail.

If the President wanted to be true to his creed, he would take action against the questionable activities of  his circle of friends and relatives even while he keeps loyal to them.

Because, Loyalty is one thing and Complicity is quite another...

Gustavo Coronel is the founder and president of Agrupacion Pro Calidad de Vida (The Pro-Quality of Life Alliance), a Caracas-based organization devoted to fighting corruption and the promotion of civic education in Latin America, primarily Venezuela. A member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), following nationalization of Venezuela's oil industry, Coronel has worked in the oil industry for 28 years in the United States, Holland, Indonesia, Algiers and in Venezuela. He is a Distinguished alumnus of the University of Tulsa (USA) where he was a Trustee from 1987 to 1999. Coronel led the Hydrocarbons Division of the Inter-American Development Bank (IADB) in Washington DC for 5 years. The author of three books and many articles on Venezuela ("Curbing Corruption in Venezuela." Journal of Democracy, Vol. 7, No. 3, July, 1996, pp. 157-163), he is a fellow of Harvard University and a member of the Harvard faculty from 1981 to 1983.   You may contact Gustavo Coronel at email gustavo@vheadline.com