<a href=www.vheadline.com>Venezuela's Electronic News Posted: Tuesday, June 17, 2003 By: Gustavo Coronel

VHeadline.com commentarist Gustavo Coronel writes: About 15 political and social organizations have been working for months on a plan to guide Venezuela during an eventual post-Chavez transition ... the period 2004-2007 ... provided that the Referendum is held, and that the decision of the legal majority is to revoke the Presidential mandate.

The task of putting a single document together has been in the hands of a small group led by Diego Bautista Urbaneja, one of our brightest lawyers and political scientists, and the third family member of this name, after Diego Bautista Urbaneja (1782-1856), a distinguished fighter for independence and provisional President of the Republic, and after Diego Bautista Urbaneja( 1817-1892), lawyer and seven times in charge of the Presidency during the years of Guzman Blanco. This Diego is also the author of one of the most lucid phrases I have ever heard: "Education and Health are our only basic industries"...

The plan aims at putting the brakes on the economic chaos, on the lack of governance, the process of institutional destruction and the increasing social instability resulting from a breakdown of standards and values that prevails in the country.

There are some eleven major points forming the conceptual backbone of the document:

1. The starting point must be the rapid creation of a climate of national reconciliation. Dialogue will be required if we want political and social agreement to emerge. We need stronger political parties, labor unions, professional associations and other groups of civil society. Only strong organizations can come up with valid and permanent agreements. The plan calls for the creation of a widespread mood of optimism, after some years of despair and distrust.

2. Citizens need to make sure that their rights will be protected, that laws will be equally applied to all, that investigations will be duly carried out and punishment applied to the guilty. This will require the elimination of those laws or components of existing laws which provide the Executive branch with excessive discretionary power, since this leads inevitably to abuse of power.

3. The current holders of the offices of National General Comptroller, Attorney General and Ombudsman will be removed and new officers selected ... this time in accordance with the Constitution. The new officers will have both the required credentials and total autonomy from the Executive branch.

4. The plan aims at rapidly lowering the rate of criminality in the country, by decentralizing police action and the empowerment of the professional police to do their job. Prison establishments will be progressively privatized.

5. Promoting the recovery of the economy will need clear rules of the game and legal security. Private investment will be intensely promoted, protected and given the proper incentives to create new employment. Immediate attention will be given to the construction and tourism sectors. Artisans and skilled workers should be formed in preference to traditional professions.

6. Education will be integral, emphasis made on civic education and training for useful work. Universities will have to become progressively self sufficient financially, as the State can no longer afford total gratuity in a higher education system of quality.

7. Decentralization will, again, receive first priority and regions will receive the required financial help without political maneuvering.

8. The Armed Force will be institutionalized and, again, converted into a professional body, loyal to the nation and not to one man or group. The military will return to being subordinate to civilian authority.

9. Petroleum activities will be oriented towards obtaining optimum benefits for the nation. This can only be possible if PDVSA is a company professionally-managed and totally free from political contamination.

10. Diplomatic relations with our neighbors and natural allies will be reinforced, international agreements and commitments will be honored and the nation will reject associations with international terrorism, drug trafficking and illegal armed groups.

11. The government will not offend ... will not divide ... will promote national respect and solidarity.

12. The government will attack the great national problems of unemployment, extreme poverty and child neglect with total decision. No words but action. No promises but deeds.

This summary outlines some of the basic components of the plan. The group is working continuously to refine and improve the guidelines, so that no matter who comes after, will be able to have the support of a "road map."

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

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Tuesday, June 17, 2003 By: David Coleman

Regional daily newspaper El Progreso reports from Ciudad Bolivar that a 2nd Circuit Bolivar State judge has issued a protective order in favor of Canadian gold miner Crystallex against Sintracrystallex trade union, ordering its members to return to work and refrain from impeding normal operations at the Crystallex de Venezuela C.A. contract at Las Cristinas 4, 5, 6 and 7 located in Sifontes municipality.

• Negotiations towards terms in a collective wage agreement will continue as soon as picket lines are removed from the site and normal access is restored.

Sintracrystallex strikers have been blocking access to the mine for more than two weeks.  Crystallex labor negotiator Santiago Gimon Estrada says the court action was made necessary simply to remove the threat of illegal actions against Crystallex operations ... "the relationship between Crystallex and the employees is covered by the Organic Labor Law (LOT) and falls in line with all corresponding agreements."  He adds that the company has brought forward the creation of an internal Health & Safety Committee which will be capable of giving even more worker guarantees in all aspects.

Union-company discussions on the collective wage agreement have been moved to Tumeremo since union officials have expressed the inconvenience of talks being held in Puerto Ordaz. “Taking the talks to Puerto Ordaz would have been a waste of productive time both for the union representatives and for the company and the expenses involved can be put to better use in favor of the workers themselves."

"The strike did not involve all our workers," says Crystallex representative Gimon.  :It was a minority which threatened the physical integrity of their fellow-workers.  There was no need for strike action since the legal procedure would have been to request the intervention of the Labor Ministry to resolve any dispute which reaches deadlock in negotiations with the company itself."

"A process of discussion has now been arrived at.  Reaching a collective wage agreement is always a complex business and requires the goodwill and consensus of all parties involved.  The existence of a union is fundamental to move projects ahead and to achieve peaceful working relationships at Las Cristinas where we have one of the most important gold reserves in Latin America."

rediff.com, June 17, 2003 17:35 IST

Insider trading -- a punishable offence in the United States -- which increases stock market volatility, is relatively high in India, China, Russia, Venezuela and Mexico, according to a study done for the International Monetary Fund.

The Global Competitiveness Survey prepared by Julan Du, Professor at the Chinese University of Hong Kong, and Shang-Jin Wei, an Advisor in the IMF's Research Department, looked at 50 countries.

Insider trading involves the trading of stocks by people who have access to information that is relevant to the value of the company and, hence, the price of the stock.

The United States has arguably the most stringent regulations in regard to insider trading, the study notes.

While the US has expanded its definition of 'insider', in most other countries the definition is less broad.

Du and Wei say that because insider trading tends to be illegal, it is difficult to measure directly.

"You must use perceptions to estimate the degree of insider trading; you cannot count the amount of money changing hands," says Du.

Wei said that the results of their study "clearly show a positive association between the degree of insider trading and the degree of market volatility."

"Furthermore, we find the effect to be quantitatively significant. For example, the Chinese stockmarket is much more volatile than the US market. Our study suggests that the greater prevalence of insider trading in China has a lot more to do with this higher volatility than, say, more volatile economic fundamentals or economic policies in China."

News Miner, By DOUG REYNOLDS

There is a natural gas shortage. The price of natural gas in the Lower 48 is over $6 per million BTU. That is 200 percent higher than what it was in the late 1990s and 100 percent higher than what it was a year ago. Alan Greenspan, the Federal Reserve chairman, says that this shortage will persist for the next few years.

So what does Greenspan advocate? He wants to get more Russian liquefied natural gas to market in the United States. Russian gas? Why not get Alaska gas to market? It is cost competitive compared with Russian gas and it gives the United States greater energy security.

Congress is on the verge of helping get more Alaska gas to the Lower 48 quickly by giving tax incentives and specifying an Alcan pipeline route within the currently debated energy bill. But those provisions are still in doubt, which is amazing seeing as the Lower 48 so desperately needs our gas. What is Congress waiting for?

One problem is that the Bush administration, some consumer groups, The Wall Street Journal and think tanks such as the National Center for Policy Analysis are opposing the energy bill's Alaska provisions because they are against free market incentives. But that is a mistake. This country needs Alaska gas now, and both the tax incentives and the route specification will help.

Currently, the United States relies on Canadian and domestic sources of natural gas. Domestic gas supplies, though, are in decline and will only continue to be so; Canada's supplies are limited. Therefore the United States is going to need substantial new supplies of natural gas. The less Alaska gas is available, the more the Lower 48 will import gas in the form of liquefied natural gas from such places as Algeria, Nigeria and Venezuela--all members of OPEC. These LNG exporters and Russia can create a gas cartel similar to OPEC's oil cartel.

So if the United States needs Alaska's gas, then why doesn't the private sector just go ahead and build a pipeline without incentives? The problem is forecasting. It is difficult to forecast if gas prices will suddenly fall due to demand changes. There is a lot of volatility with markets. It is a timing gamble too large for the oil companies to deal with considering the size of the investment. The United States as a whole, however, is large enough to offer incentives and reduce the gamble at a very small cost to each consumer. The payoff to the country will be more stable gas prices in the future and lower prices.

Beside the incentive issue with the gas line, there is the route issue--why not go "over the top" through the Beaufort Sea? There are several reasons against this. That route would indeed be much cheaper if both Alaska and Mackenzie Delta gas were put into the same pipeline, but that won't happen because there already is a standalone Mackenzie line planned. Plus a single pipeline for both Alaska and Mackenzie Delta gas could only get 5 billion cubic feet of gas per day. Having two pipelines--a Mackenzie standalone pipeline and an Alcan pipeline--has the potential to produce upward of 9 billion cubic feet per day.

Exxon has already committed to building a standalone Mackenzie Delta pipeline, so the only question left is whether North Slope gas is best transported via the over-the-top route or the Alcan route. It is likely that both routes will cost the same. Greater delays in construction due to granting difficult permits or to lengthy ice coverage in the Beaufort Sea will make the over-the-top route just as expensive as the Alcan route.

In addition, having a pipeline under ice will not easily allow for future pipeline expansion or repairs. The Alcan pipeline will more easily be expandable should demand increase or new supplies be found. It is a mistake to become locked into a one-size pipeline that could not easily be expanded or repaired when needed. We need flexibility, and only the Alcan route gives this.

The energy bill pipeline tax incentives and route specification are necessary simply because they give the United States more energy security. They provide for more flexible gas supplies. And finally, without spending a nickel, it gives the national economy a large economic stimulus that can help increase our gross domestic product--something we sorely need to get just as we are having trouble getting out of the recession. It is a good investment for America.

Doug Reynolds is an associate professor of oil and energy economics at the University of Alaska Fairbanks and is the author of "Alaska and North Slope Natural Gas." He can be contacted at ffdbr@uaf.edu.

The news Enterprise Online, By FORREST BERKSHIRE

The gray peaks and valleys splashed across Elizabethtown Finance Director Steve Park's computer monitor resemble the silhouette of the Rocky Mountains.

Park glances over at the mountain range about every 15 minutes, but he's not seeing a picturesque landscape. He's watching the price of natural gas.

He points to the highest peak.

"That's the day before the Iraq war," he says, when gas prices skyrocketed.

Then he points to the virtual cliff, and his finger follows the slope down into a deep valley as he tracks the progress of the war, with it reaching the bottom at the cessation of the conflict. His finger finally starts to rise again until it gets to the end of the screen, which tells him the price of gas today.

It will be different tomorrow, and the day after that, until it hits a peak and starts dropping again. Part of Park's job is to figure the gas rates for the city, which involves looking at the history of the market, taking advice from consultants, figuring the cost of upkeep and a little bit of gambling.

On Monday, gas was selling on the market for $5.73 per 1,000 cubic feet.

"We could go out and buy it for $5.73 right now," he said.

That means he could lock in that rate for the rest of the year. If gas rates soar, he might get some credit from customers when the winter months roll around and they're paying less to heat their homes than in surrounding areas.

But if gas prices on the market drop, some of that gas might be used to burn him in effigy as customers blame him for paying too much for heat.

"Inevitably, if we lock some in, (the price of gas) is going to drop," Park said.

The city usually locks into a price for part of its supply.

"We, generally, as a rule, if prices look favorable, try to buy half of our supply," Park said.

The city has yet to see a rate it likes this year. Park said anything between $4 and $4.50 is a good buy, but he's not sure natural gas rates will get that low this year.

Locking in a rate for part of the supply at least cushions the volatility of home heating bills. But even with that cushion, home heating bills in Elizabethtown have fluctuated monthly over the past two years. Each time the rate changes, the City Council must pass an emergency ordinance amending the rates, which is time-consuming and slower than the fluctuation of the spot market prices.

That's why Monday, the city approved a new rate schedule that will allow for more flexibility in setting heating rates.

Customers will now be assessed a base rate of $1.40 per 1,000 cubic feet of natural gas usage. During a cold winter month, a well-insulated, three-bedroom house would typically use about 15,000 cubic feet to heat for a month.

That base rate includes fixed costs, like payroll, transportation costs and maintenance.

Then, a variable rate, which will likely change each month, will be added. That rate depends on a number of factors.

It will be based on the "weight average cost of gas," which depends on the rate the city locks into for part of its supply, averaged with the price the city pays on the spot market, then a 2 percent loss rate for gas that escapes the system through leakage, a 4 percent fuel surcharge and any additional transportation costs.

The city also set a minimum rate of $6 a month.

The new rate system is a radical shift from the current one, which has been in place since the city got into the gas business in 1957.

Elizabethtown Mayor David Willmoth said the steep fluctuations the gas market has seen the last few years made the change necessary.

"That's the world we live in," he said, where world events like war in the Middle East, strikes in Venezuela, unrest in Israel and a bad hurricane season all affect the price of natural gas, which affects home heating bills.

"We don't see it changing any time soon," Willmoth said of the erratic gas prices.

Willmoth encouraged homeowners to set up their payments on even-billing, where the annual cost is spread out evenly instead of paying cheap bills in the summer and high bills in the winter.

Meanwhile, Park is still checking the gas rates, watching for a rate he feels comfortable committing to. But that's not an easy call to make.

"It dropped 60 cents last Thursday," he said. He said he's not sure what tomorrow's rates might do.

Forrest Berkshire can be reached at 769-1200, Ext. 240, or e-mail him at forrest@mail.the-ne.co.