www.chron.com Jan. 15, 2003, 7:53AM Copyright 2003 Houston Chronicle News Services

NEW YORK -- Citgo Petroleum Corp., a U.S. refiner owned by Venezuela's state oil company, had its debt rating cut below investment grade Tuesday by Moody's Investors Service because of a strike that's slashed oil shipments from its parent.

The rating on $700 million of Citgo senior unsecured debt was lowered to Ba2, two levels below investment grade, from Baa2 and may be cut further, Moody's said in a written statement. The reduction means Tulsa-based Citgo may have to rely on lines of credit to finance its operations, the statement said.

The action also reflects concern that Petroleos de Venezuela, Citgo's owner, may have to rely on the refiner to pay off $500 million of debt due in August, Moody's said. Citgo spokesman Kent Young declined to comment.

Citgo, which operates six U.S. refineries, including two asphalt plants, gets about half its crude supplies under long-term contracts with Petroleos de Venezuela. Its refineries are operating at normal levels as Citgo buys crude on the spot market at higher cost to replace the lost supply from Venezuela, Moody's said.

The price of crude rose Tuesday as the disruptions in Venezuela and threats of a U.S. attack on Iraq signaled that supplies may be low in coming months.

Crude oil for February delivery rose 12 cents, or 0.3 percent, to $32.37 a barrel on the New York Mercantile Exchange. Oil is up 71 percent from a year ago.

Heating oil surged 0.78 cent to close at 89.16 cents a gallon. Gasoline dropped 0.74 cent to 89.16 cents a gallon.

Natural gas for February delivery fell 14.4 cents to close at $5.107 per thousand cubic feet. Lower heating demand earlier this month helped ease concerns over frigid weather settling into much of the East Coast.

In London, the February Brent crude contract rose 41 cents, or 1.4 percent, to $30.61 a barrel.

www.washingtonpost.com A pedestrian passes by graffiti that reads "Chavez won't leave," referring to Venezuelan President Hugo Chavez.

By Scott Wilson Washington Post Foreign Service Wednesday, January 15, 2003; Page A10

CARACAS, Venezuela, Jan. 14 -- The opposition movement seeking to push President Hugo Chavez from office has scaled back its demands for lifting a 44-day-old general strike while quietly signaling to some hard-hit Venezuelan businessmen that they should reopen their doors.

Since the strike began Dec. 2, a diverse opposition, emboldened by large street demonstrations and key industry support, has called on Chavez to resign or hold new elections within months as conditions for lifting the protest. Both demands have been ruled out by the twice-elected president. But the opposition has held firm since the oil industry, which provides the government with almost half of its $20 billion annual budget, joined the strike in its early days and gave Chavez's opponents their strongest weapon.

In recent weeks, however, Chavez has cobbled together a temporary supply system that has kept this country of 23 million in gasoline and food, albeit at enormous inconvenience to the public and a high financial cost to the government. Now confident he has bested his opponents, Chavez has little incentive to compromise and end a standoff that has thrown the third-largest U.S. oil supplier into political unrest, according to several of the president's adversaries and allies.

The hardening government position was reflected in comments today by Vice President Jose Vicente Rangel, who ruled out compromise proposals in a meeting with foreign reporters. This has prompted many businesses sympathetic to the opposition to question whether Chavez is suffering the greater financial hardship.

In response to mounting frustration, opposition negotiators have softened their position in talks being mediated by Cesar Gaviria, secretary general of the Organization of American States, in hopes ending the strike. Opposition negotiators have dropped their demand that Chavez resign before new elections can be held; they are now focusing on whether a nonbinding referendum scheduled for Feb. 2 could be used to set an early election date.

But the government has refused to give ground, and Rangel today dismissed the opposition as being led by "fascists" and "coup mongers." He said a nonbinding referendum, which must pass high-court review, was unconstitutional and that he would urge government supporters to boycott the vote. He also suggested that it would be hard to pay the roughly $30 million cost of holding the referendum, given economic damage done by the opposition strike.

"We do not recognize it," Rangel said of the referendum. "This strike is a fiction, an obsession by people who want to remove Chavez."

Those comments came as opposition marchers demonstrated in favor of the referendum, which would be the first official public sounding on Chavez's four-year-old administration. Meanwhile, government troops seized weapons and riot gear from Caracas police stations, prompting a fresh fight between the president and the opposition mayor for control of the 8,000-member force.

The mayor, Alfredo Peña, warned in response that he would pull patrols out of the city's most dangerous neighborhoods, where Chavez supporters live. Elected in 1998 on a platform to lift Venezuela's poor majority, Chavez has antagonized the economic elite and many of his middle-class supporters with his authoritarian style and a populist program that his opponents compare to Cuban-style communism.

U.S. diplomats arrived in Ecuador today to begin working with their counterparts from Latin America and Europe to form a "friends of Venezuela" advisory group. The delegation would join Gaviria at the negotiating table, and perhaps offer its own proposal to end the political crisis that has consumed the country for the past year.

The United States has taken a leading role in lobbying for the group, concerned about its oil supply as it prepares for a possible war with Iraq that could strain Middle East oil shipments. Before the strike, Venezuela supplied the United States with 1.5 million barrels of oil a day, about 15 percent of its imports. That has since slowed to a trickle.

But U.S. credibility here is suspect after the White House recognized the interim government that replaced Chavez in a short-lived military coup in April, and more recently endorsed early presidential elections to resolve the crisis even though they are not allowed by the constitution. Washington backed away from that position a few days later, endorsing a less specific "electoral solution" instead.

Chavez has embraced the "friends of Venezuela" proposal in the belief that foreign governments will endorse his legitimacy. But the idea is drawing criticism from opposition negotiators, who have already ruled out Brazil and Colombia as members because they border Venezuela.

"We think it's a mistake," said Rafael Alfonzo, an opposition negotiator. "There is enough on the table right now for a solution if the government wants one. This group is going to comprise equal parts for him and against him. For what? It's not going to change anything."

Despite the government's confidence, the strike has been punishing for a country whose $100 billion economy shrank 7 percent last year. Rafael Ramirez, the minister of energy and mines, announced that the oil strike alone has cost the country $ 4 billion. That includes $105 million that the government has spent to import gasoline, keeping most filling stations open but with lines lasting hours.

The cost to the private sector has also been severe. Opposition leaders have begun telling some businesses privately to do what they need to in order to save themselves while maintaining the public position that the strike is still in place.

"We feel that the right decision is not one that kills the private sector," said Alfonzo, the opposition negotiator who represents Fedecamaras, the national umbrella group of business organizations. "It's pretty much at the individual level now."

More and more businesses have opened in recent weeks, including the Italian restaurant Limoncello. Jose Ornelas, the managing partner, kept the restaurant closed from Dec. 2 until the day after Christmas while continuing to pay employee salaries. He said he lost $100,000.

Ornelas is part of a restaurant federation that belongs to Fedecamaras and that initially supported the strike. After three weeks, however, the restaurant association voted to allow members to reopen on Dec. 26. Ornelas said Fedecamaras approved the move, although it has not announced it.

usinfo.state.gov Washington File 14 January 2003 State Department Briefing Transcript

................ QUESTION: Can we jump to Venezuela?

MR. BOUCHER: Sure.

QUESTION: Okay, thank you. There was a meeting yesterday and today between some opposition leaders and some members of the State Department. I just want to know, there was any agreement on the issues concerning the role of Brazil, the end of the strike, or the electoral solution? And can we expect any announcement in Ecuador concerning the club of "Friends of Gaviria" and the way out to the Venezuelan crisis?

MR. BOUCHER: Okay, that's about five questions. I'll try to remember most of them. First of all, there was a meeting. Our Deputy Assistant Secretary in Western Hemisphere Affairs Tom Shannon met with the Confederation of Venezuelan Workers' President Carlos Ortega and the opposition dialogue participant Timoteo Zambrano.

At that -- in that meeting, we reviewed the current state of the dialogue, made clear our point of view, which is to emphasize the efforts of the OAS Secretary General, made clear we were looking for his efforts to result in a peaceful, constitutional, democratic and electoral resolution of the issues and we urged them to remain engaged in the dialogue.

We're not here to substitute ourselves for anyone in the negotiation. The results that you're imagining or hoping for need to be achieved through the parties. And we've urged both parties, both in our contacts with the government, but also in our contacts with the opposition, to cooperate, to work in that process to achieve a peaceful result that benefits the people of Venezuela.

In terms of what may be discussed, may be announced in Quito, no particular prediction right now, but we are working with Brazil, we're working with other hemispheric partners to establish a "Friends of the Secretary General" group that can support the organization's mission to try to achieve resolution of the crisis. That's something we have worked on .

The Secretary has discussed that with various people in his conversations and we'll continue to work on it to try to make sure that the international community, and particularly the people in this hemisphere, are doing everything they can to support the efforts of the OAS Secretary General.

QUESTION: This is now the name of it? It's going to be called, "The Friends of the Secretary General," not "The Friends of Venezuela?" Doesn't the Secretary General have his own friends that he doesn't really need to have a new group of them?

MR. BOUCHER: Well, this is --

QUESTION: Is that -- I mean, is this --

MR. BOUCHER: No, I wouldn't settle any name in stone until it's --

QUESTION: All right. And you're saying you have no --

MR. BOUCHER: -- until it's announced.

QUESTION: And you have no position on opposition to Brazil being a member of the group? Is that what you're saying?

MR. BOUCHER: I think we've pointed out before that Brazil has been one of the participants in this discussion. Certainly the Secretary has discussed this idea with the Brazilian foreign minister when he talked to him a week or so ago, and this -- the earlier idea that did come out of meetings in Brazil was not one we supported because it wasn't directed at supporting the Secretary General, and this one is.

QUESTION: But you think that the inclusion of Brazil would be a good idea?

MR. BOUCHER: We would expect that anybody who would participate in a group designed to support the Secretary General would be there to support the Secretary General. So --

QUESTION: Yeah. That didn't answer the question. You, you think that Brazil should be a member of --

MR. BOUCHER: I'm not naming any particular country. I'm just saying who we're working with. I'm trying to avoid endorsing any particular country for the group.

QUESTION: And one more thing on this. These two opposition guys were also -- they either have or are about to meet with Kofi Annan at the UN. President Chavez is going to be up there this week meeting with Secretary General Annan. Are there any plans for any US officials to see President Chavez?

MR. BOUCHER: No. He's -- it's a multilateral meeting in New York to transfer the Presidency of the G77 from Venezuela to Morocco, and we have no bilateral activities scheduled.

QUESTION: Right. Okay. None at all?

MR. BOUCHER: Nor have we had any requests.

Okay.

Sir.

QUESTION: Going back to Venezuela for a second, what were the conclusions of the meeting between Mr. Shannon and representatives?

MR. BOUCHER: I don't -- as I described the meeting, I described the things that were discussed. I don't think that this kind of meeting is designed to have a particular conclusion. It's a chance for us to hear from them on the state of affairs, on their views of the situation and a chance for us to encourage them to participate fully in the discussions with the Secretary General and try to achieve a resolution.

QUESTION: And what was their main input?

MR. BOUCHER: What was their main input? They're telling us what's going on down there in their view.

QUESTION: Thank you.

MR. BOUCHER: Okay. Thank you.

(end transcript)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: usinfo.state.gov)

www.scoop.co.nz Wednesday, 15 January 2003, 1:01 pm Press Release: United Nations

New York, 14 January 2003 - Secretary-General's press conference

Good morning, Ladies and Gentlemen – and Happy New Year!

We start the year with anxiety – anxiety over the prospect of war in Iraq, over nuclear proliferation in the Korean peninsula, and over what seems like violence without end in the Middle East. Even Côte d'Ivoire, which used to be one of the most stable and prosperous countries in Africa, is now caught in the downward spiral of conflict.

The threat of global terror hangs over all of us. We don't where or when it will strike next.

And these are only the crises in the headlines!

The worldwide AIDS epidemic will claim many more lives this year than even a war in Iraq would, and will then go on claiming more and more lives in 2004 and 2005. In southern Africa and the Horn of Africa, as many as thirty million people face the threat of starvation this year. And poverty everywhere is condemning mothers and infants to premature deaths, sending them to bed hungry, denying them clean drinking water, keeping them away from school.

Meanwhile, climate change is already here. It is one of the reasons why we have so many storms, floods and droughts, causing more and more humanitarian emergencies and tragedies.

And yet, I am still an optimist.

Today's threats are not the first we have faced. What's more, I believe in the last ten years or so we have been learning how to cope with them better.

It took too long, but the war in Bosnia was brought to an end. Kosovo is now being rebuilt; East Timor is independent; the horror in Sierra Leone was stopped; Ethiopia and Eritrea stopped their war, too.

Looking ahead, we can see that we are within striking distance of reuniting Cyprus, ending the long civil war in Sudan, and pacifying the Democratic Republic of the Congo – the battleground of what some have called Africa's first world war.

Nations working together can make a difference. Nations upholding the rule of law can advance the cause of a fairer world.

So that is the basis of my hope as we move into 2003.

I remain convinced that peace is possible – in Iraq, in Korea, and even between Israel and Palestine – if states work together on all these problems, with patience and firmness.

And I am convinced that terror can be defeated, too – if the 191 Member States of the United Nations pull together to deny terrorists refuge and cut off their funding.

Before taking your questions, let me mention two other issues that are of particular concern to me at the moment.

I already referred to the threat of famine in Africa. As you know, it is particularly acute in southern Africa. At the heart of the problem is the crisis in Zimbabwe – a country which used to be the region's bread-basket, but is now wracked by hunger and HIV/AIDS. This tragic situation is caused partly by the forces of nature, and partly by mismanagement. We could debate endlessly which of them made the greater contribution. But the challenge now is for all Zimbabweans to work together and with each other, and with the international community, to find solutions before it is too late.

The second is Venezuela. For the past 20 years, Latin America has been embracing democracy and turning its back on autocratic forms of government. I hope those who seek to bring about change in Venezuela will respect this achievement, and stick to democratic, constitutional means, in keeping with the principles of human rights and justice.

Let me conclude by saying that we should not see this as an age of threats, but as one of many new opportunities. Ours is the first generation that can defeat poverty – if we put our minds to it, and if we hold our leaders to the pledges they made here at the Millennium Summit.

Yes, the world is a messy place. But the instruments are there to deal with these problems, and foremost amongst them is the United Nations itself.

Thank you very much. I will now take your questions.

Q: On behalf of the United Nations Correspondents Association, let me wish you and your wife, Nane, a happy and peaceful 2003. Thank you for coming to visit us so early this year. I hope that is in fulfilment of some New Year's resolution that you have made to spend more time with us, your in-house press corps. What can we do to ensure that you stick to this new habit?

Wearing my Expresso hat, I would like to ask you if you think that the Security Council has got its priorities out of order. As you noted yourself – well, perhaps you did not note it, but this house is at this moment obsessed with the issue of Iraq, which at present seems in no position to threaten anyone with weapons of mass destruction. Nevertheless, the drive to war continues. As you yourself mentioned, there are dangerous new developments in the Korean Peninsula. In the Middle East, the bloodbath of the Israeli occupation and Palestinian suicide bombers continues. And yet, we see that we are focusing on Iraq the whole time. Has the Security Council got its priorities wrong?

SG: Let me say that, from my own remarks, it is obvious that the world is facing many challenges. The Security Council, by the nature of its remit, is focused on peace and security issues. But the other parts of the United Nations and the international community should be focusing on some of the other issues that I raised. This is an issue not for the United Nations alone, but for the entire international community. I think the Council is seized with Iraq because it has been on its agenda for quite a while. Now, of course, the inspectors are back in and have resumed their work. Mr. Blix will give an update on 27 January.

But I am not sure that it is only the Council that is responsible for this emphasis and focus on the Iraq issue. I am afraid that you ladies and gentlemen also have something to do with it, because I have given you a whole list of issues that are – or should be – very high on the international agenda. Why is it that we focus on only one?

Q: Let me ask you about a topic that you do not really hear about often with regard to Iraq. In the past, you have said that Iraq must face its responsibilities. You have also said you have been opposed to the war and any type of military offensive. Right now, with regard to the state of play, what is your opinion? Should there be a military attack on Iraq – if a country such as the United States goes ahead – especially if no weapons of mass destruction are found?

SG: I do not think, from where I stand, that we are at that stage yet. The inspectors have a responsibility in Iraq. The Council has asked them to pursue the disarmament programme and report back, and then the Council will make a determination – if Iraq has performed or not. If there is a breach, the Council will then have to take the decision. I think the inspectors are just getting up to full speed. They are now quite operational and able to fly around and get their work done. I think we should wait for the update that they will give to the Council on the twenty-seventh, and hear what further instructions the Council gives them. But the inspectors are carrying on with their work, and I think the resolution is very clear that it is when the inspectors report back, either at the critical stages in their work or if there are unforeseen developments that they bring back to the Council that makes the Council determine that there has been a breach, and therefore there should be serious consequences. I do not think we are there yet. So I really do not want to talk about war. Nor is the Council talking about war.

Q: Although you say that you would prefer that there not be a war, in the event that there is a war, what sort of humanitarian consequences do you see the Iraqi people facing, and is the United Nations prepared to respond?

SG: We have been doing some contingency planning on that and we are extremely worried about the humanitarian fallout and consequences of any such military action. Obviously we do not want to be caught unprepared. So we have gone ahead and made contingency plans, and we are in touch with Governments that can provide some financial assistance for us to move our preparedness to the next level. But we are worried. The consequences for the population and the refugees who may have to leave can be quite substantial and negative.

Q: There has been some debate about what cooperation actually entails in terms of the Iraqi Government's relationship with the United Nations weapons inspectors. Are you of the mind that the Iraqis are fully cooperating, as set out in resolution 1441 (2002)? Or is there a need for what is now being termed “proactive” cooperation?

SG: I think the inspectors who are working with the Iraqis have been very clear, and in their own analysis of the Iraqi declaration they have determined that there are major gaps which need to be filled. They have indicated that they would prefer - and they would expect - Iraq to be proactive in its cooperation. And I suspect that that would be one of the main topics of discussion when Mr. ElBaradei and Mr. Blix go to Iraq next week. They will press for the gaps to be filled in; they will press for Iraq to be more proactive in its cooperation; and they will do whatever needs to be done for them to fulfil their mandate. So it is not perfect. It is better than it used to be, but I think the inspectors are pressing for the gaps to be filled in.

Q: Mr. Hans Blix gave an interview yesterday to the BBC in which he said that he did not know how long the American Government was willing to wait for them to complete their searches. He also said that it could be that one day it will say, “Move aside, boys; we're coming in”. Can you explain to us what the procedure is for pulling the inspectors out? Can he take instructions from a Member State, or does he have to have clear instructions from the Security Council to pull inspectors out of Iraq? There was a controversial decision made by Mr. Butler in the past. Will there be a repeat of that in the future?

My second question is about the Palestinian-Israeli conflict. The bloodshed is continuous; is it not time for the United Nations to take the bull by horns - a personal initiative, a one-on-one meeting, you going to the area? It seems that the conference in London is going to go nowhere. Is it not time, maybe, that you should take the lead, Sir, in stopping this bloodshed?

SG: Let me start with your first question. I think that Security Council resolution 1441 (2002) is quite clear that the Council will have to meet based on reports from the inspectors to determine what action the Councilshould take. I would expect that if the inspectors find anything, they will report to the Council and the Council will take a decision. And depending on that decision we will all see where we go from there.

On your second question, I think it is a tragedy that the bloodshed is continuing. That is why the Quartet has been very active in trying to work out a road map – a road map that will operationalize the objective of two States, Israel and Palestine, living side by side, that everybody has embraced. But you can get there only if you take concrete steps and define what is demanded of each of the parties. That road map is ready, and I hope we will be able to put it on the table and to the parties, formally, as soon as possible – perhaps in the next month or so – and press ahead with the peace effort.

Q: I wonder if you regard North Korea's withdrawal from the Treaty on the Non-Proliferation of Nuclear Weapons as a grave threat to international peace and security and whether or not you favour bringing that issue to the Security Council.

SG: It is grave, and I have issued a statement. North Korea is the first country ever to withdraw from the Treaty, and I hope that it will come back into compliance. The International Atomic Energy Agency Board has met to discuss it, and they have given it a bit more time to come into compliance before they decide what the next step should be, including bringing it to the Council. But they are not going to bring it to the Council immediately. They have given it time to come into compliance. As most of you know, I myself have sent an envoy to discuss the humanitarian situation in North Korea, given the new situation and the possible negative impact on the population, because we are going to find it difficult to raise the money that we need and the supplies that we need to continue our humanitarian programmes in North Korea. Mr. Maurice Strong is in North Korea today; he will be there for a few days having discussions with the leaders. He will focus mainly on the humanitarian issues, but of course he is also available and prepared to listen to any other issues they may want to discuss with him.

Q: Do you not think that the crises in Iraq and North Korea have undermined any peace initiative regarding Palestine?

SG: I would not say that it has undermined any peace initiative in Palestine or with regard to the Israeli-Palestinian crisis. If anything, I would say that it underscores the urgency of doing something about the Israeli-Palestinian issue. I think it is even more important today than ever that the international community energetically tackle the issue of the Israeli-Palestinian conflict. And that is what I hope the Quartet will do in the coming months.

Q: Mr. Secretary-General, you raised two new issues at the end of your opening remarks - one involving Zimbabwe, and one involving Venezuela. There has been some talk of an initiative that would lead to the retirement of President Mugabe. I was wondering whether you or the United Nations was involved at all with either side in trying to promote some kind of a new initiative in Zimbabwe.

Secondly, Mr. Chavez is going to be here at the United Nations tomorrow. I was wondering what your message to him is going to be.

SG: On the first question, I have also read the reports in the press. I and the United Nations have not been directly involved in the Zimbabwean issue, and I do not know whether the report is correct or not. But we have not been involved.

On Venezuela: yes, I will be seeing President Hugo Chavez here on Thursday, when he comes for the handover of the G-77 chairmanship. I would hope to be able to discuss with him the developments in Venezuela and how one can intensify the mediation efforts to calm the situation and return it to normalcy. I have had the chance of speaking to him several times on the phone, and he knows that I believe one should use constitutional and democratic means to resolve this issue. That is my message - not only to him, but also to the opposition.

Q: You mentioned that the issue of Iraq is not an issue that relates only to the Security Council, but the whole world is interested in it. Are you planning, or have you thought about, using your moral authority in a last salvation initiative to help the region - at least concerning this issue - and to send some kind of political adviser to underline the urgency of the situation to the Iraqis?

SG: I have been in touch with quite a lot of the leaders in the region about the region. The leaders in the region remain engaged in the process of convincing President Saddam Hussein and the Iraqi leadership to disarm and to cooperate fully with the inspectors. If they do disarm and comply with the demands of the Security Council, the region may not haveto go through another military confrontation. This is a message that I have sent to them, and I keep repeating it. I hope the [Iraqi] leadership is listening. All the leaders of the countries in the region, including Turkey, are sending the same message to Iraq. I hope they will heed the request.

Q (interpretation from French): Mr. Secretary-General, if you do not mind, I would like to speak French. What is your opinion on the debate as to whether or not the United States should be requesting a second resolution in the Security Council before declaring war against Iraq, if that comes to pass? Do you think that a second resolution should be requested?

SG (interpretation from French): I think that it has been envisaged in Security Council resolution 1441 (2002) that the Council will take the matter up a second time to discuss the question of Iraq if the inspectors inform the Council either that Iraq is not cooperating or that they have found weapons. If that is the case, I think the Council is obliged to debate the matter and take the necessary decision.

Q (interpretation from French): In your view, do you believe there is going to be a second Security Council meeting? That is, is there going to be a second resolution?

SG (interpretation from French): I think normally there can be a second resolution when the Council discusses these things, especially on such an urgent matter. They are supposed to take a decision.

Q: Mr. Secretary-General, your name has become attached to the idea of humanitarian intervention - that the world cannot stand by and watch a genocide occur within borders. Some have argued that the new United States concept of pre-emptive action is simply an expansion of the "Kofi doctrine" of humanitarian intervention. Do you believe there is a case for pre-emptive military action, especially in the case of incipient terrorism?

SG: That is an interesting question. But I would want to distinguish the two. I think the basis on which I argued for intervention, which eventually also led to the establishment of a commission by the Canadian Government, which issued a wonderful report that I would recommend to all of you: “The Responsibility to Protect”. It argues that sovereignty is not just privilege; it also carries responsibilities. Governments do have responsibilities to protect their citizens. If they fail to do so, in a situation where their human rights are systematically and grossly being violated, the international community may have to step in, because a Government has failed to protect the people. We should not allow them to use their sovereignty as a shield behind which to commit these gross violations.

If I understand the Washington doctrine properly, that is focused on terrorists or groups or countries that may be planning attacks against them. Therefore the pre?emptive action is, if you wish, an extended doctrine of self?defence. But it is a difficult issue to deal with, because one can talk of war of prevention, where you see a force arrayed against you, with a visible threat, ready to attack, and you make a pre-emptive strike to stop that attack. There are instances of this in history. Beyond that, where the threat is not imminent and the evidence is not obvious, it becomes a very murky area to deal with. So one will have to be very careful when moving into these areas of pre-emptive strike. Of course, the evidence is usually only with the one who is making the strike. Often, others may claim that it is not verifiable or that the evidence is not convincing.

So, except for those situations where the evidence is clear, where there is imminent threat, where it is obvious and so forth, it can lead to lots of confusion and set precedents that others can use.

Q: Have you received any information about China's intention to join the Quartet? What do you expect from China so it can play a better role in the United Nations? I understand you just met with China's Ambassador to the United Nations yesterday.

My second question is, do you worry about whether it will be possible to implement the Quartet's road map in reality, since we still have lots of violence in the Middle East?

SG: China has become quite active in the search for a settlement in the Middle East, and I believe they have appointed, or intend to appoint, an envoy to oversee developments in that situation. I am not aware that they have made a formal request to join the Quartet, but I am sure they will work very closely with the Quartet. I do not think that should be a problem.

Q: One more try on Iraq: You are in touch with Secretary of State Powell; you are in touch with Iraqi officials. Is there any message on the looming crisis that you are giving them that you can share with us?

SG: Now, I think we are all aware in the work going on in the Council. We are all aware – particularly those of you in this room – of Council resolution 1441 (2002) and the legislative climate surrounding the passage of that resolution. We will have to assume, and I will have to assume, that the members of the Council acted in good faith; that the issue is disarmament and that they will do whatever it takes to disarm; and that if the disarmament were to succeed and we were to agree that Iraq has been stripped of its weapons of mass destruction, then that should be the end of the story. If, on the other hand, it were to come out that Iraq continues to defy, and that disarmament has not happened, as I have said, the Council will have to face up to its responsibilities and take the necessary action. But, of course, this is the understanding and the spirit of the resolution, which I hope we will all respect.

Q: If I could ask about North Korea for a second, I wonder, given the latest meetings over the weekend and other information, what you are hearing relative to this peninsula crisis. Is it getting better? Is it getting worse? Beyond that, could you give your own diplomatic prescription for the crisis in the Korean peninsula?

SG: I think there are very intensive efforts in capitals and between capitals to try and resolve this issue peacefully and diplomatically, and I think that is the right way to go. These activities include Washington, Moscow, Beijing, Seoul and Tokyo, and I think they are also cooperating amongst themselves. I will not be surprised if we are able to find a way out. I think the signals coming from both the United States and Korea give me hope and encouragement that it will be possible, with determined effort, to find a diplomatic solution.

Q: Why do you say that?

SG: I think, first of all, the United States has indicated that they are prepared to talk. The North Koreans seem to be indicating that they are pulling back on their claim that they do have weapons of mass destruction. I think what we are also hoping to do with the efforts of the atomic Agency (IAEA) is that we will be able to get the inspectors back in, and I am also hoping that eventually they will rescind their decision to pull out of the NPT.

SG: On your first question, I really cannot speak for how Prime Minister Blair feels, but, talking for myself - I sometimes get these kinds of questions - my answer has always been that it is always better to make an attempt to do the right thing, to try to correct a situation and fail, than to do nothing. So the question of a “slap in the face” when people do not listen or do not do what is right does not bother me at all – and I do not consider it as a slap in the face. I will continue pressing for what I think isright.

On the question of President Saddam Hussein, I have not been involved in any discussions or talks about him leaving Iraq and going into exile. As far as planning by the United Nations is concerned, we are very active on the humanitarian front. Obviously, we live in the real world, and we have had lots of experience handling post-conflict situations, or what some call nation-building: from Kosovo to Afghanistan to Bosnia. We have had quite a lot of experience, and have some ideas about putting together post-conflict structures. So, obviously we are doing some thinking, without assuming anything. But it will be prudent for us to look ahead.

Q: Are you talking about something like Mr. Brahimi in Afghanistan?

SG: Not at all; I have not got that far at all. That would be premature.

Q: Do you believe it would be a mistake for the United States to take the holes and gaps in the 7 December declaration by Iraq and add to that this idea of a lack of proactive cooperation – in other words, if the inspectors do not find anything, that is a sign that Iraq does not cooperate – and put those two things together and use that as an excuse for going to war without the authorization of the Security Council?

SG: I really cannot speak for Washington, and I do not know how these decisions would be made. But I think, if I can judge from the Council discussion last week, that the Council members are not looking to go in that direction at this stage.

Q: If there is an upcoming discussion in the Security Council about a material breach, should it involve a second resolution – although my country probably will not be happy to vote at all. And a little personal question: recalling your own descriptions of feelings of the Secretary-General, you once said, “I am not necessarily an optimist, but I am always hopeful”. So, what is your mood regarding Iraq? Is it just hopefulness or is it optimism?

SG: I think I answered the first question when our colleague posed his question in French, that obviously the resolution requires that the issue go back to the Council for the Council to debate. This is a crucial and important issue, and I would expect that when the Council tackles this issue, which is at the centre of the world's and the public's attention, that they would want to take a decision on it and decide what the serious consequences should be. They themselves have indicated that if there is a material breach there will be serious consequences. I hope they would be able to follow through.

On your other question, let me say that I am both optimistic and hopeful that if we handle the situation right, and the pressure on the Iraqi leadership is maintained and the inspectors continue to work as aggressively as they are doing, we may be able to disarm Iraq peacefully, without need to resort to war.

Q: I was interested in your answer about a clear case for when pre-emption might be necessary - forces arraigned against you, a visible threat ready to attack. Given the build-up of US forces in the Gulf, I was wondering if that is actually helpful towards reaching a diplomatic, peaceful solution in Iraq.

If I could just follow up a bit on the possible role for the United Nations - assuming, of course, that all peaceful means will be pursued, what sorts of scenarios are you looking at in terms of a UN role in a post-conflict Iraq?

SG: On your first question – whether the presence of US troops is helpful for the solution – I think I would want to make a distinction between pressure and the threat of use of force and the actual use of force; when do you cross that threshold. I think there is no doubt in anyone's mind that the pressure has been effective, that it has worked. Without that pressure I don't think the inspectors would be back in Iraq today. It took us four years to try to get them in there. Four days after President Bush spoke at the UN and challenged the world and Iraq, Iraq accepted to get them in. So there is not doubt that the pressure has had an effect.

On your other question, regarding what scenarios the UN is looking at when we look at post-conflict Iraq, at this stage we focus mainly on the humanitarian aspects. We are doing some preliminary thinking on the political and administrative areas. We have no definite thoughts, and I would prefer not to be drawn into speculation at this stage.

Q: On Korea – Mr. Maurice Strong is in Korea. You mentioned that he would be willing to listen to other issues. Has he been sent with any instruction or encouragement to raise other issues? Will you see yourself becoming, through him, more of a liaison on the wider issues of monitoring? Especially given that North Korea has disparaged the IAEA as a sort of tool of the US.

SG: I think we are still at an early stage of this crisis. There have been a lot of messages and jockeying for positions, and statements are being made about the Atomic Agency or the others. But I think – Maurice is a very experienced man; he has carried lots of responsibilities, from the private sector to running major environmental conferences, running major energy companies, and all that. So he is someone who has a broad experience. He is also quite well known in the region, and they may want to discuss other things with him. I did not discourage him from discussing other things if they come up. Of course, I have my own good offices, which is always available. So we will see what Mr. Strong brings back. But is free to discuss any other issue.

Q: I wanted to get your reaction to an announcement today by British Foreign Secretary Straw that he reserves the right to initiate an attack on Iraq without there being another UN resolution authorizing it. Also, last week the European Union President announced that they wanted to dispatch a peace team to the Arab States to also tackle the problem of Iraq. Your reaction to those things?

SG: I think there are lots of efforts around the world, as I said, by Arab leaders themselves and some European leaders, trying to get the message to the Iraqi authorities to honour the obligations to the Council as a way of avoiding war. I hope they will listen to them, as I said earlier.

On the statement by the British Foreign Secretary, obviously it may be his Government's policy that he is stating. But I think the Council discussions and the Council resolutions, which guide me, make it quite clear that they will have to go to the Council for further discussions, and for the Council –which has threatened serious consequences – I hope, to also determine what those consequences would be. That would be my reading of the resolution.

Thank you very much, ladies and gentlemen.

asia.reuters.com Tue January 14, 2003 06:48 PM ET By Pascal Fletcher

CARACAS, Venezuela (Reuters) - One person was shot and injured in clashes between rival Venezuelan protesters and police on Tuesday as President Hugo Chavez's government denied a six-week-old opposition strike was causing chaos.

In scattered skirmishes in west Caracas, police fired tear gas and shotgun pellets to drive back groups of pro-Chavez militants hurling rocks and bottles who moved to attack a march by opponents of the left-wing president.

The Chavez supporters, some of them masked, stoned reporters, smashed the facade of a closed McDonald's restaurant, and threw a Molotov cocktail at a van belonging to a local TV channel, witnesses said.

It was the third consecutive day of street clashes in Venezuela, the world's No. 5 oil exporter, where the grueling opposition strike has slashed petroleum output and shipments and pushed the oil-reliant economy further into recession.

Rejecting opposition calls for early elections, Vice President Jose Vicente Rangel said the government would beat the strike and aimed to rule until its term ended in 2007. "We have no interest in Chavez leaving office," Rangel said.

"It's a 'fiction' strike, carried out by people who are obsessed with the idea that by staging a strike, they can get rid of Chavez."

Rangel denied that the strike, which has also closed many private businesses and caused shortages of gasoline and some food items, had created chaos. "The country is working," the vice president said.

His comments to foreign correspondents confirmed there was currently no end in sight to Venezuela's economic and political crisis, which has rocked world oil markets and stirred efforts by the international community to try to mediate a solution.

In Tuesday's confused, running battles, one man was injured in the leg by a bullet, but it was not clear who had opened fire, Caracas fire chief Rodolfo Briceno told Reuters.

Fighting to keep the two feuding sides apart, police also used tear gas against some of the opposition protesters.

The country's bolivar currency fell 3.2 percent against the U.S. dollar on Tuesday to 1,612.50 bolivars. It has lost about 13 percent of its value this year.

Rangel condemned the oil industry disruption, which has cost the country $4 billion in lost revenue, as "sabotage" and "terrorism." The government has fired 2,000 striking state oil employees and is struggling to restore the industry to normal.

Rangel said the government objected to opposition plans to hold a nonbinding referendum on Chavez's rule on Feb. 2. Dismissing the proposed February poll as "unconstitutional and politically useless," he said the constitution only allowed for a binding referendum on the president's mandate after Aug. 19.

DEADLOCK OVER ELECTIONS

"In conditions of violence, it is very difficult for a country to hold elections," Rangel said. At least five people have been killed in street clashes since the strike began.

The government has appealed to the Supreme Court against the planned Feb. 2 referendum, but Rangel said it would respect whatever decision the court took. Chavez has said he will not resign even if he massively loses the February poll.

Chavez's foes say he is trying to install a Cuban-style communist system. The opposition includes business and union leaders, striking oil executives and rebel military officers.

"We are maintaining the civic strike," anti-Chavez union leader Manuel Cova told reporters.

In a bid to break the deadlock, the United States and other countries are moving to set up a "friendly nations" group to back efforts by the Organization of American States to broker an agreement on elections. Mexico and Argentina said on Tuesday they were willing to form part of such a group.

Chavez was due to discuss his country's crisis in New York on Thursday with U.N. Secretary-General Kofi Annan after attending the inauguration in Quito on Wednesday of Ecuador's new president, Lucio Gutierrez.

"I will be seeing President Hugo Chavez here on Thursday ... and I hope to be able to discuss with him the developments in Venezuela, and how one can intensify the mediation efforts, to calm the situation and return it to normalcy," Annan told a news conference in New York on Tuesday.

The Venezuela crisis has helped push oil prices to two-year highs of over $30 a barrel as the market frets over supplies at a time when Washington is preparing a possible war in Iraq.

Before the strike, the United States had been receiving more than 13 percent of its oil imports from Venezuela.

Chavez, a former paratrooper elected in 1998, six years after leading a coup attempt, himself survived a coup in April. He accuses his foes of trying to destroy his self-styled "revolution" aimed at helping the poor. Most Venezuelans live in poverty despite the nation's oil wealth.

(Additional reporting by Patrick Markey)