The Monitor's View from the June 23, 2003 edition

Brazil is too crucial to the US dream of a Western Hemisphere free-trade zone for Washington to hold a grudge for long. That's why President Bush held a fruitful summit on Friday with President Inácio Lula da Silva, despite Brazil's opposition to the war in Iraq.

"Lula," as he's known, was the first such "opposition" foreign leader to visit the White House since the war. That alone highlights Brazil's central role in Mr. Bush's continuing pre-Sept. 11 vision of a new US partnership with Latin America.

The low-key summit was designed to accentuate the positive. Brazil views itself as a Latin giant standing up to the US on many issues, and Mr. da Silva's leftist, trade-unionist past has the potential to irk the conservative Bush. But both sides stand to gain much if they can strike a deal on a Free Trade Area of the Americas (FTAA). And Da Silva has embraced conservative market economics as necessary to uplifting Brazil's poor. He'll need US support as he juggles the demands of global financiers against pressure for job growth.

The two men launched a number of joint initiatives, and seemed united in how to deal with Venezuela's political crisis. Out of such bonding the US and Brazil can eventually work through their differences.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Sunday, June 22, 2003 By: David Coleman

Venezuela's Siderurgica del Orinoco (Sidor) has cut its debt to $700 million under a restructuring deal between the Chavez Frias government and international private banks, it was revealed this weekend by the Venezuelan Guayana Corporation (CVG) state-owned heavy industry holding conglomerate. SIDOR produces on average 3.5 million tonnes of liquid steel every year and manufactures finished goods from pellets to sheet and long materials.

CVG president, Major General (ret.) Francisco Rangel Gomez says the Venezuelan state has increased its share in the South American region's largest steel producer from 30% to 40.3% to capitalize more than half its debt with the government after privatization in 1997 by the Amazonia Consortium which includes Mexico's Hylsamex and Tamsa, Argentina's Siderar, Brazil's Usiminas and Venezuelan Sivensa.  Amazonia partners have reduced their participation from 70% to 59.79% in what Rangel Gomez describes as debt management that brings "guarantees for shareholders and allows for better technology and investment." he said.

The debt restructure took 11 months to complete from signing in July 2002 with the involvement of Venezuela's development bank, CVG, Citibank, Deutsche Bank and four Venezuelan commercial banks.  SIDOR president Maritza Izaguirre says the government capitalized half of the Sidor debt with the state and refinanced the other half over 15 years with a interest rate Libor plus 1.75 points. The banks had pooled Sidor debt and bought at a discount another $133.5 million in the company.  The state's participation will diminish later with the completion of the transfer of 20% of Sidor shares to employees as laid out in the privatization process.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Sunday, June 22, 2003 By: VHeadline.com Reporters

Two women were physically attacked at a weekend meeting in a Philadelphia (USA) church by a group of 20 claimed to be support the  Venezuelan opposition which failed to overthrow the democratically-elected government of President Hugo Chavez Frias.  Organizers say the anti-government rebels attempted to censor the truth in "One year after an uprising reversed the coup" statements organized by the Global Women's Strike.

"The disrupters were stationed in and outside the Tabernacle Church ... they harassed a multiracial crowd, which included several older women, a wheelchair user, youth and church members.  There were two assaults: one outside the church against a woman going into the meeting as she attempted to shield her face from a camera-wielded by a disrupter; the other inside the church against a meeting organizer who was slapped loud enough to be heard across the room."

Police officers have taken statements from several other witnesses at the Germantown (Quaker) Meeting Peace & Social Concerns Committee endorsed event: "We in the US have a hard enough time finding out what is really happening in Venezuela, since the mainstream press is biased against President Chavez Frias ... although he was elected by a landslide, the US government is hostile to his refusal to privatize oil or allow the oil revenue to be siphoned to the US, and because he encourages grassroots people to take charge of their own society -- the kind of democracy we in the US have not known for many moons," says Global Women's Strike coordinator Phoebe Jones Schellenberg.

"When people got together to hear what we saw on our April visit, the first anniversary of the popular reversal of the coup, we were physically attacked. They behaved just like their counterparts in Venezuela, to prevent US people finding out what is being accomplished there, and what we can learn from it."

"Despite Venezuela supplying 14% of US oil needs, 80% of Venezuelans live in extreme poverty. People have organized themselves into neighborhood groups, cooperatives, and unions to organize for the housing, education and food they need."

One of the Venezuelan speakers, Dozthor Zurlent says "the Venezuelan opposition is increasingly desperate and violent, having twice now failed to overthrow President Chavez Frias who has emerged from the latest failed attempt stronger than ever."

<a href=www.vheadline.com>Venezuela's Electronic news Posted: Sunday, June 22, 2003 By: David Coleman

Finance Minister Tobias NobregaFinance (Hacienda) Minister Tobias Nobrega says Venezuela's economy is expected to contract 10.7% by year's end adding to last year's negative GDP 8.9% drop.  The figures are said to be the worst in Venezuela's recent financial history and come on the heels of a punishing 2-month national labor stoppage and continuing efforts by opposition elements to sabotage the nation's economic life.

Central Bank of Venezuela (BCV) figures published this weekend have prompted the Finance Minister to tell El Nacional "the bad news is that it will be a year of recession ... but the good news is that the worst has already passed."

Venezuela's economy buckled 29% during Q1 2003 compared with the same period 2002 as the December-January stoppage failed to achieve its unilateral purpose to force President Hugo Chavez Frias to step down.  Nobrega admits that the economy has been slow to pick up since February because of high inflation ... currently at 35% ... as the government fights to control its crippled finances with strict foreign exchange controls and already seriously depleted foreign currency reserves.

Restrictions have forced Venezuelan industries to turn more to abundant domestic sources of raw material over imports which had accounted for some 60% of consumables.

Foreign currency transactions have traditionally been used as a convenient cover for money-laundering operations with a monthly demand in the neighborhood of $1.2 billion.  Nobrega says $230 million has been released by the government and, against a background of industry unwillingness to submit to certification procedures that could expose them to endemic tax fraud, he says the controls will not be abolished anytime soon, although the government is willing to evaluate modifications.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Sunday, June 22, 2003 By: David Coleman

El Nacional reports that authorizations for sales in US$ will be transferred from the Foreign Exchange Control Administration (CADIVI) which will take on a subordinate operations role within the Ministry from this week.

The move is seen as an effort on the part of President Hugo Chavez Frias' reform government to speed up transactions which have been under strict restrictions since an opposition-led 2-month labor stoppage failed to overthrow President Chavez in February.

Latest available figures show that the stoppage had cost the Venezuelan economy some $7.5 billion in lost revenues and will presumably cost more as opposition diehards continue to disrupt the nation's efforts at economic recovery after almost a half-century of unbridled political and economic mismanagement and corruption.

Venezuelan Central Bank HQ in Caracas

Central Bank of Venezuela (BCV) figures show that foreign reserves reached $16.27 billion June 18 ... up from $11 billion in January ... but Chavez Frias' most ardent critics seen in corrupt business leaders and equally corrupt trade union bosses, blame the President and the lack of hard currency after their government-wrecking maneuvers for deepening Venezuela's economic crisis where unemployment is already running at some 20%