The daily Star, Yamin Zakaria, UK, London

The recent move by the Venezuelan President Hugo Chavez to replace the dollar by the Euro has generated anger as it did with Iraq, when Saddam chose to exchange the oil for Euro in November 2002, sealing his fate. Further resentment was caused by Venezuela's decision to barter its oil with the 13 other Latin American countries, denting the on-going "dollarisation" of South America. Unlike Iraq, Venezuela could not have been invaded, as the political pretexts would require time to build up. Instead CIA has been engaged in various covert operations including the recent failed military-led coup in April 2002.

As the dollar has been already devaluating against the Euro, other significant countries like Russia, China, North Korea, Malaysia has started to hold Euro as part of their foreign exchange reserve, under such climate a move by OPEC to switch to Euro would cause a massive devaluation and consequentially initiating a domino effect. Other wealthy rich Arab businesses would follow, and push other investors to do the same, leading to the unthinkable, a run on the dollar. Further devaluation the US cannot afford due to the massive budget deficit. More significantly it would incapacitate her ability to wage further illegal wars (state terrorism) around the world.

Therefore, we can expect a prolonged US occupation of Iraq under various pretexts until Iraq's oil revenues are switched back to the dollar -- preferably take her out of the OPEC, so no surprise for the "absence" of Iraq's "interest" in the recent OPEC meeting. Iran is also contemplating switching to the Euro, and naturally she is receiving threats under other pretexts. We may witness other "liberation" wars and destabilisation, leading to the dismantling of the OPEC cartel, not in the name of democracy or freedom, but to maintain the dollar as a global transactional currency.   

Tuesday, June 17, 2003
(06-17) 16:21 PDT MEXICO CITY (<a href=www.sfgate.com>AP) --

Mexican stocks rallied again Tuesday and rose to their highest level since May 29, 2002, led by broadcaster TV Azteca on an upgrade.

The market's key IPC index closed up 1.6 percent, or 110.74 points, at 7130.23 points. Volume was a solid 135.6 million shares worth 1.64 billion pesos, compared with Monday's 101.1 million shares worth 1.2 billion Mexican pesos.

The local market continued its recent bullish trend, while U.S. stocks rose on some positive economic data, including a 0.1 percent increase in industrial output for May and flat consumer prices last month allaying fears of deflationary pressure.

Broadcaster TV Azteca CPO shares led the charge, soaring 11 percent after its wireless phone affiliate Unefon settled a legal dispute with Canada's Nortel Networks, securing continued supplies and extending debt in the process.

SAO PAULO, Brazil (AP) -- Brazilian shares closed lower Tuesday amid expectations the central bank will likely decide to cut the reference lending rate at the end of its two-day meeting Wednesday.

While a rate cut would usually lift shares, selling on the U.S. market and a drop in local banking stocks pushed the main Sao Paulo stocks index lower, closing 0.4 percent down at 13,776 points. Volume totaled a strong 644 million reals.

Economists believe the central bank will opt for a symbolic cut of 50 basis points to 25.50 percent to help provide some relief for a sagging economy at a time when consumer price inflation is slowing.

Expecting such a cut, which would be the first of its kind in about a year, investors sold banking stocks as earnings are highly sensitive to any changes in the key lending rate, said a Sao Paulo-based trader.

BUENOS AIRES, Argentina (AP) -- Argentina's large-cap Merval Index continued last week's voluminous rally Tuesday as investors deepened their positions during the week's first trading day.

At the close of Tuesday's session, the Merval had surged 23.55 points, or 3.06 percent, to 791.94 points, surpassing levels last seen in October 1997. The broader General Index gained 766.25 points, or 2.32 percent, to close at 33,762.49 points.

Analysts said the local markets - closed Monday for a national holiday - benefited from the positive sentiment sweeping through global stock exchanges. On Monday, the Dow Jones Industrial Average rose 2.21 percent, following gains in European and Asian markets.

"Trading today showed a consolidated rise in line with international markets and funded by new capital," said Hernan Fardi, the senior analyst for Maxinver.com, a local financial consultancy.

Over the past two weeks, Argentine and international investors have begun staking positions in more liquid local stocks, lured by better returns on shares than government debt instruments. Such shifts helped push the Merval 6.7 percent higher last week and have made it the best performing market in the world.

SANTIAGO, Chile (AP) -- Chilean shares on the Santiago Stock Exchange rose again Tuesday, boosted by gains in utilities-holding Enersis, retailer Falabella, and airline LanChile that were underpinned by rising U.S. share prices, traders said.

Chilean shares had lost their impetus in recent sessions after a prolonged rally.

Chile's blue-chip Ipsa index ended up 0.4 percent at 1282.64 points from 1277.94 Friday. Markets were closed Monday for a national religious holiday.

The Inter-10 index of more liquid, internationally traded Chilean shares gained 0.7 percent to 124.69 from 123.81, driven higher by rising U.S. stocks.

Volume rose slightly to 17.77 billion pesos from CLP16.44 billion.

CARACAS, Venezuela (AP) -- Venezuelan shares ended mostly unchanged Tuesday, with the IBC General Stock Index losing 0.5 percent to close at 13352 points as investors returned from a long weekend.

Local markets were closed Monday to mark a religious holiday.

The exchange's biggest stock, CA Nacional Telefonos de Venezuela, which accounts for 40 percent of the IBC, ended 85 bolivars higher at 4,600 bolivars.

Trades in CANTV, as the company is known, were equivalent to about US$1.58 million out of the exchange's total volume of US$1.71 million.

CANTV has found buyers after a decision by the company's transfer agent to resume converting local shares to American Depositary Receipts.

Reuters, 06.17.03, 6:24 PM ET  CARACAS, Venezuela, June 17 (Reuters) - Venezuelan steelmaker Sidor, the largest steel producer in the Andean region, has received more than $60 million from the state currency control board CADIVI to start a program of scheduled debt payments to its creditors, CADIVI said Tuesday. The hard currency allocation to the troubled steelmaker, which last year reduced its $1.4 billion debt by nearly half in a major debt restructuring, consisted of $58.5 million $2.6 million, the currency board said in a statement. "This restructuring permitted a reduction of the amount owed from approximately $1.4 billion to $800 million. A schedule of payments was established which has now begun with this first handover," CADIVI said. The Amazonia consortium that controls Sidor (Siderurgica del Orinoco) consists of Mexico's Hylsamex <HYLSAMXB.MX> and Tamsa <TAMSA.MX>, Argentina's Siderar <SID.BA>, Usiminas <USIM3.SA> of Brazil and Venezuela's Sivensa <SVSa.CR>. CADIVI's allocation to the steelmaker indicated that the much-criticized Venezuelan currency board was moving to free up hard currency for companies squeezed by debt payments or requiring dollars to import essential goods. Since currency controls were introduced by President Hugo Chavez's government more than four months ago, business leaders have complained bitterly that the slow allocation of funds by CADIVI is strangling economic activity in the world's No. 5 oil exporter. Venezuela is experiencing its worst recession in recent history following an opposition strike against Chavez in December and January which disrupted oil exports and slashed government revenues. The oil-reliant economy contracted nearly 30 percent in the first quarter. Sidor's debt problems were brought on by a sharp fall in international steel demand and prices and a shrinking domestic economy.

June 17 (<a href=quote.bloomberg.com>Bloomberg) -- Ford Motor Co., the world's second- largest carmaker, may pull out of Venezuela because restrictions on buying U.S. dollars prevent the company from importing parts.

``We are concerned about our ability to produce cars in Venezuela.'' said Richard Canny, Ford's president of South American operations, in an interview in Sao Paulo.

Ford has suspended operations twice in six months at its plant in Valencia, Venezuela, which employs about 1,300 workers and makes about 1,000 cars a month. ``We will probably have to shut down the factory again in the coming weeks,'' Canny said.

Restrictions on dollar sales have cut off Ford's access to currency to buy parts to assemble cars, and threaten to stifle investment in the country, analysts said. The government limited dollar sales in January to brake a fall in international reserves when investors lost confidence in the bolivar after a two-month national strike aimed at ousting President Hugo Chavez.

``Chavez doesn't care about or understand the needs of investors, which makes it inevitable that he'll adopt policies that are detrimental to them,'' said Francisco Toro, an analyst at research company Veneconomy in Caracas.

Ford shut operations at the factory during the strike and again for several weeks in February and March because of a lack of imported parts.

The strike in December and January lowered oil production by as much as 95 percent, contributing to a 29 percent contraction in the economy in the first quarter.

Ford's rivals, including General Motors Corp., have also shuttered operations because of parts shortages.

Fiat SpA closed its Venezuelan manufacturing operations in September 1999, when a recession slashed sales by half.

The Venezuelan car market will probably contract as much as 70 percent this year to about 40,000 vehicles, General Motors Corp.'s Venezuelan unit said in April.

Venezuelan vehicle sales fell 41 percent last year to 128,623, down from 216,977 in 2001.

Car sales through May fell 69 percent to 22,061. Ford has about 15 percent of the market, according to figures from the Venezuelan automobile chamber of commerce.

Reuters

Oil prices held firm on Tuesday as traders expected government data due on Wednesday to show another drop in tight US crude inventories.

US light crude futures were down 11 cents at $US31.07 a barrel, within $US1.50 of last week's three-month highs. International benchmark Brent gained 2 cents at $US26.67 a barrel.

Oil prices are up 20% from the same time last year, pushed higher by tight UScrude inventories, which are 12% below 2002 levels.

Department of Energy data due on Wednesday is expected to show that crude stocks fell another 1 million barrels last week, a Reuters poll of energy analysts found.

Analysts also expected a fall in gasoline stocks as summer vacation driving demand gets into gear. Fires at Exxon Mobil and Murphy Oil refineries in Louisiana have also cut gasoline supplies.

Murphy Oil said on Tuesday it expects its 110,000-barrel-per-day refinery in Meraux, Louisiana, will be shut through the third quarter to repair damage caused by the June 10 fire.

Delays in the resumption of Iraq's post-war oil exports have prevented US crude inventories from rebuilding after disruptions in Venezuela and Nigeria ran down supplies earlier this year.

Source: Reuters