news.ft.com By Andy Webb-Vidal in Caracas Published: January 19 2003 21:01 | Last Updated: January 19 2003 21:01

US corporations with interests in Venezuela are facing increasing risk of government intervention or even expropriation, as President Hugo Chávez moves to confront a general strike and consolidate his position, business leaders warned on Sunday.

The warning comes after the military raided a Coca-Cola subsidiary bottling plant on Friday and distributed the soft drink to the poor to help ease shortages of staple goods arising from a six-week-old protest stoppage by opponents of Mr Chávez.

Mr Chávez said orders had been issued to military units to carry out similar "legal" actions against companies deemed to be hoarding essential foodstuffs. "Those who attempt to deprive the people of food and then complain that Chávez is arbitrary are traitors to the nation," he said.

US companies with operations in Venezuela include food group Kraft, Procter & Gamble, and Cargill, the agribusiness. Business leaders are watching to see whether the raid was intended as a gesture aimed at persuading other companies to lift the economically crippling strike, or whether the move marks a Cuban-inspired leftward shift in Mr Chávez's policies.

Either way, the difficult relationship between the government and private businesses look set to deteriorate. "Tremendous damage is being done to Venezuela's reputation, countries in Latin America have long had to wrestle with the banana republic, tin-horn dictatorship image from the 19th century," said Antonio Herrera, vice-president of the Venezuelan-American Chamber of Commerce.

"Venezuela had to a great degree overcome this image, but through a single event on the part of a small group of people world opinion will now start thinking of Venezuela in terms of countries that aren't quite civilised," Mr Herrera said.

The move against the Coca-Cola distributor is likely to add urgency to a nascent diplomatic initiative by a six-nation group aimed at finding a negotiated resolution to the political deadlock between the government and opposition groups.

Brazil, Chile, Mexico, Portugal, Spain and the US last week agreed to form a "group of friendly nations" to bolster an existing mission by the Organisation of American States.

Colin Powell, US secretary of state, and some of the foreign ministers from the five other "friendly nations" are expected to hold talks in Washington this week. Irked over the inclusion of the US in the group, Mr Chávez said his government could walk away from the OAS talks.

Mr Chávez met Luiz Inácio Lula da Silva, Brazil's president, at the weekend to seek support to widen the group to include Russia and France. Celso Amorim, Brazil's foreign minister, said membership of the group would not be broadened for the time being.

news.ft.com By James Wilson in Bogotá Published: January 16 2003 21:23 | Last Updated: January 16 2003 21:23

With a recent spate of bomb attacks, Colombian guerrillas have continued to defy President Alvaro Uribe's security crackdown in the oil-rich Arauca province.

Arauca, which borders Venezuela, and is the location of a large oilfield operated by US oil company Occidental, has become a centrepiece of the government's counter-insurgency strategy.

In September the government imposed greater limitations on civil liberties on a special zone including three of Arauca's town. A heavier military presence was diverted to the zone, as well as plans for more investment.

US forces are set to arrive in Arauca to train Colombian troops to protect the oil pipeline used by Occidental, a frequent target of attacks.

This week's resignation of the province's governor has further highlighted the government's struggle to pacify the province, a hotbed of rebel activity and a key testing ground for Mr Uribe's hardline security policies.

The government was on Thursday expected to announce a replacement for José Emiro Palencia, a retired colonel appointed by the president as Arauca's governor only three months ago.

Mr Uribe's government says rebel activity has decreased in the security zone. But five people have been killed in car bombs this month in the province, showing the rebels have not been cowed by the extra attention being focused on Arauca and still  maintain their regional military net.

A suspected guerrilla member was also killed this month in an attempted car bomb attack in the security zone.

Colombia's army has accused the country's largest guerrilla group, the Revolutionary Armed Forces of Colombia (Farc), of using kidnapped civilians to drive two of the other vehicles that exploded in recent days, in what would be a gruesome new tactic by the rebels.

Marta Lucía Ramírez, the defence minister, has warned not to expect results too quickly as a result of the government's increased military build-up. But many political observers believe Mr Uribe's current high popularity ratings will only be maintained if he manages to show dramatic results against the rebels in coming months.

Some extra powers that the government had wanted to use in Arauca and in another security zone in northern Colombia were also overturned by a constitutional court ruling. The government is expected in March to introduce plans to change laws so the army can be given a freer hand to detain suspects.

www.forbes.com Reuters, 01.19.03, 2:37 PM ET

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez, battling a 7-week-old opposition strike, said Sunday that oil output had recovered to almost 1.2 million barrels per day, versus a top capacity of 3.2 million.

He said flows were rising fast in the east of the country, where current flows of 500,000 bpd would reach 1.3 million bpd by the first half of February.

In the west, he pegged output at 600,000 bpd, with 80,000 barrels per day from the southern fields.

Striking employees of the state-run Petroleos de Venezuela, who aim to force Chavez to resign by cutting off his economic lifeline, estimated output at 649,000 bpd on Sunday.

www.forbes.com Reuters, 01.19.03, 2:28 PM ET

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez, fighting a 7-week-old opposition strike, said the OPEC member country could restore oil output to 2 million barrels per day by the end of January.

The government estimates current output near 1 million bpd, while striking workers peg it at 650,000 bpd.

"We could reach 2 million barrels per day before the end of the month," Chavez said in his weekly television program.

abcnews.go.com — By Pascal Fletcher

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez on Sunday named a new interior minister and head of the army, placing loyal generals in key posts as he fought to beat a 49-day-old opposition strike that has strangled vital oil exports.

Chavez, who has purged the armed forces of opponents since surviving a short-lived coup in April, said his government would use "everything we've got" to try to defeat the strike launched by opposition leaders, who are pressing him to resign and hold early elections.

"Those who are trying to get rid of me by force, through a military coup or an economic coup, or by creating chaos, are not going to succeed," Chavez declared during his weekly "Hello President" television and radio show.

He vowed that his government would use military raids against striking private businesses if necessary.

The strike, which enters its eighth week Monday, has crippled oil production and shipments in the world's No. 5 petroleum exporter. It has also caused serious shortages of gasoline, cooking gas and some food items, sparking looting in some provincial towns and villages.

Chavez named Gen. Lucas Rincon, a former defense minister and ex-armed forces chief, as interior minister and Gen. Jorge Garcia Carneiro, as the new chief of the army -- the most powerful branch of the armed forces -- replacing Gen. Julio Garcia, who had held the post since the April coup.

Both generals are close allies of Chavez, himself a former army officer, who has increasingly used the armed forces to counter the strike.

OUTRAGE AT RAIDS

In a move that drew howls of outrage from Chavez's foes, National Guard troops on Friday broke into two private drinks manufacturing facilities. One was a local bottling affiliate of Coca-Cola Co. and the other a storage plant belonging to Venezuela's biggest private firm, Empresas Polar.

The soldiers seized truckloads of soft drinks, water and beer and took them away for distribution to the population.

Chavez said some private manufacturers were breaking the law by hoarding products to support the strike and vowed he would not hesitate to act against them.

Opposition leaders said the military raids were an unlawful attack against private property and only confirmed accusations that Chavez was trying to introduce Cuba-style communism.

The president blasted his opponents as "oligarchic elites" opposed to his rule, which he says is aimed at helping Venezuela's poor majority and promoting social equality.

Chavez has also sent troops to take over and restart strike-hit state oil fields, refineries and export ports.

But Venezuela's oil production, refining and exports are still well below normal levels. The strike has jolted world oil markets and cut off exports to the United States, which normally imports over 13 percent of its oil from Venezuela.

Condemning opposition strike leaders as "terrorists and coup mongers," Chavez has refused to negotiate with them. He said on Saturday his government was considering withdrawing from ongoing talks with the opposition brokered by Organization of American States Secretary General Cesar Gaviria.

Chevez's threats have raised doubts about the future of the peace negotiations, which have been going on for two months without any sign of agreement on the key issue of elections.