www.cbc.ca Last Updated Tue, 14 Jan 2003 17:54:13

CARACAS - Soldiers have taken some weapons from police in Caracas, where the force is loyal to a mayor opposed to embattled Venezuelan President Hugo Chavez.

The army seized submachine-guns and anti-riot rifles that can fire rubber bullets and tear gas early Tuesday, but left the officers' pistols, said Cmdr. Freddy Torres, the department's legal consultant.

Venezuelan soldier (AP Photo-File)Chavez had complained that the 9,000-member force suppressed pro-government demonstrations.

He threatened to take over the department after government officials accused the police of killing two government supporters during a demonstration. The investigation is continuing.

Critics said it was an effort to reduce the power of Mayor Alfredo Pena, who backs the groups which have disrupted Venezuela in their fight with Chavez.

Opposition parties, unions and business leaders called a general strike – now 44 days old – to force Chavez to resign or call early elections.

Chavez is resisting the pressure, and on Monday, Energy and Mines Minister Rafael Ramirez said the strikers are committing "acts of terrorism."

Many stores and schools are closed, and the state-owned oil company has been forced to slash production, costing the country tax revenue and foreign exchange.

Chavez told the army to take over police stations in Caracas in November, but the Supreme Court later overturned the order.

www.forbes.com Reuters, 01.14.03, 2:17 PM ET

CARACAS, Venezuela, Jan 14 (Reuters) - Venezuela's bolivar currency <VEB=>, battered by the nation's political and economic turmoil, fell 3.2 percent against the dollar on Tuesday as an opposition strike against President Hugo Chavez extended into its seventh week.

The bolivar, which has shed about 13 percent of its value since the start of the year, fell 51.75 bolivars on Tuesday to 1,612.50 bolivars to the U.S. dollar, according to the Central Bank reference rate.

The interbank rate <VEB=><VEB2=> dipped to 1,637.50 bolivars, down 4 percent from 1,572.25 bolivars to the dollar on Monday.

"People are paying whatever price for dollars because they see the situation in the country getting worse and that the bolivar is going to go through the floor," one trader told Reuters.

Traders said the bolivar slipped on strong demand for dollars as people looked to the U.S. greenback for safehaven as the national strike erodes confidence in Venezuela's economic future.

The strike has nearly ground Venezuela's vital oil production and exports to halt. The oil industry accounts for about half of government revenues. The opposition shutdown began Dec. 2, and strikers have vowed to stay out until Chavez resigns.

Chavez, a former paratrooper elected in 1998, faces increasing opposition to his left-wing reforms from foes who accuse him of driving the oil-rich nation toward economic and political turmoil. The strike has cost Venezuela about $4 billion so far, officials said.

reuters.com Tue January 14, 2003 01:32 PM ET By Pascal Fletcher

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez's government said on Tuesday it would survive a six-week-old opposition strike -- which it dismissed as "fiction" -- and insisted it aimed to rule until the end of its term in 2007.

Vice President Jose Vicente Rangel told reporters the government had no intention of holding early elections demanded by organizers of the strike that has crippled oil output and shipments by the world's No. 5 petroleum exporter.

The uncompromising stance dimmed hopes for a quick negotiated settlement to Venezuela's economic and political crisis, which has jolted world oil markets and stirred efforts by the international community to try to mediate a solution.

Rangel said the government's objective was to rule until the end of the left-winger Chavez's term in early 2007, although he said the constitution allowed for a binding referendum on the presidential mandate after Aug. 19.

"We have no interest in Chavez leaving office," Rangel said in a briefing to foreign correspondents.

"In conditions of violence, it is very difficult for a country to hold elections," Rangel said, urging opponents to be patient and wait for the binding referendum after August.

The opposition, which has reinforced the strike that started on Dec. 2 with almost daily street protests, is demanding Chavez resign and call immediate elections. It has vowed to continue the shutdown until he does so.

"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 between Chavez and his foes. Prior to the strike, the United States imported about 13 percent of its oil from Venezuela.

The Venezuelan leader 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.

Rangel denied that the opposition strike, which has also closed many private businesses and caused shortages of gasoline and some food items, had created chaos in South America's biggest oil producer.

"I don't share this idea of chaos. The country is working," the vice president said. He described the general strike launched by foes as "fiction," saying its organizers were "obsessed" with the idea of trying to force Chavez from power.

But he 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.

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 the United States is preparing for a possible war in Iraq.

GOVERNMENT VOWS CRACKDOWN

Chavez, a former paratrooper elected in 1998, six years after leading a coup attempt, and who survived a coup in April, 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.

Opponents, who include business and union leaders, striking oil executives and dissident military officers, say Chavez is trying to install a Cuban-style communist system.

Rangel, repeating warnings by Chavez on the weekend, said the government would not let the strikers disrupt law and order or essential services such as education, banking, food supplies and transportation. "We are going to apply the law to the letter, without (declaring) a state of emergency," he said.

Chavez, who has purged the armed forces since April and now seems to have their backing, has sent troops to help restart strike-hit oil facilities. He has threatened to do the same with schools, banks and factories that refuse to operate.

Rangel poured cold water on opposition hopes to hold a nonbinding referendum on Chavez's rule on Feb 2.

The government has appealed to the Supreme Court against the referendum, which Rangel dismissed as "unconstitutional and "politically useless." He added the government would respect whatever decision the court reached on the issue.

Chavez has said he will not resign even if he massively loses the nonbinding February referendum.

Early on Tuesday, troops in Caracas seized arms from the metropolitan police serving under anti-Chavez Mayor Alfredo Pena. Last October, the government took over the city force, but was ordered to return it to Pena by the Supreme Court.

Rangel defended the arms seizures, saying the police were responsible for shooting Chavez supporters in clashes involving pro- and anti-government demonstrators in recent months. The opposition blames armed government followers for the violence.

news.ft.com By Patrick Michael Rucker Published: January 14 2003 18:20 | Last Updated: January 14 2003 18:20

With the sugar industry in decline and tourism running flat, Cuban leaders hope that the island's oil reserves will pull it from its economic crisis while helping to thaw relations with their estranged American neighbour.

Onshore wells already cover nearly half of Cuba's domestic fuel needs. Officials predict that next year's combined oil and natural gas production will jump 17 per cent to a record fuel output equalling 34.1m barrels, equivalent to 93,400 barrels a day.

That production is due largely to foreign partnerships that help convert the heavy, sulphur-laden crude of Cuba's onshore wells into useable fuel. Cupet, Cuba's state petroleum agency, is now encouraging those same partners to search for lighter, more valuable petroleum thought to be lying offshore and in deep onshore wells.

Three years ago, Cuban officials parcelled the island's 112,000 sq km exclusive economic area in the Gulf of Mexico into 59 leaseable blocks to attract foreign investment.

Repsol-YPF, the Spanish company, optioned the first six offshore blocks between Havana and the resort city of Veradero, 100 km to the east. Last autumn, Sherritt International, the Canadian group, won rights to explore four adjacent blocks in what is becoming the centre of offshore attention. Exploratory drilling is to begin late this year.

Pebercan, a third, French-Canadian concern developing Cuba's onshore reserves, has pinned its hopes on a 4,500 metre well in central Cuba that the group thinks may hold over 600m barrels of light crude.

Geological experts agree that the hard, limestone sea terrain off Cuba's north coast could potentially hold oil. "There are promising faults and structures that could be holding oil," says Evan Richardson of Texas-based IHS Energy consulting group. "They are deep, over 1,000 metres, but the technology exists to extract oil from those depths."

However, although the geological conditions are favourable, Mr Richardson points out they also suggest light crude could be found in small, scattered pockets. "When a number of companies are bidding for drilling rights, it can build a gold rush mood," he says. "But the firms exploring offshore Cuba are small. Big companies hunt for big deposits - the last few 'elephants'. There is no evidence yet that is what exists in Cuban fields."

Cuba's foreign explorers remain quietly optimistic, but they remain tight-lipped about prospects for what is an inherently risky venture.

In the early nineties, Total, the French company, plumbed two dry offshore wells before abandoning Cuban exploration. Two years ago, Brazil's state oil company, Petrobras, sunk $16m into a highly-publicised but finally unsuccessful search for oil on Cuba's northeast coast.

Cubans would rejoice in the discovery of light crude but exploiting the product would be a much more sophisticated and expensive task that might not be profitable for many years.

"For Cuba, discovering [light] oil would be like winning the lottery," says Oscar Espinosa Chepe, an independent economist in Havana. "The news alone would improve Cuban's credit rating and bring fresh cash into the economy. If the wells are productive, Cuba could become energy independent which would certainly please the ruling regime."

Beyond the immediate windfall for the Cuban economy, some predict a Cuban oil haul would transform US-Cuban relations. Under the 43-year-old trade embargo meant to punish Cuban dictator Fidel Castro, US companies are prohibited from doing business on the island - a restriction that gives smaller oil groups crucial breathing room.

"The embargo keeps American oil firms from investing in Cuba," notes a Havana diplomat who follows the Cuban economy. "Right now, they are not making much noise but if the Cubans strike oil it will be hard for companies drilling in Florida and Texas to keep quiet."

If Cuba discovers light oil in its latest explorations, it will not be a moment too soon. Havana's transportation system is creaking for a want of fuel and rolling blackouts have swept across the city for months.

Discovering oil reserves would shield Cuba from uncertainty in the Middle East, but supplies are more closely tied to the fortunes of Hugo Chávez, the Venezuelan president.

An admirer of President Fidel Castro, Mr Chávez had been providing a third of Cuba's oil needs on generous payment terms with a daily, 53,000-barrel petroleum shipment.

Those shipments have become more erratic since Venezuela's general strike began in December. Two Venezuelan oil tankers reached Cuban ports last week but future oil supplies would certainly be in jeopardy if current unrest in Venezuela leads to the ousting of Mr Chávez.

www.sfgate.com FABIOLA SANCHEZ, Associated Press Writer Tuesday, January 14, 2003

(01-14) 20:44 PST CARACAS, Venezuela (AP) --

Soldiers loyal to President Hugo Chavez seized submachine guns and shotguns from Caracas' police department Tuesday in what the opposition mayor called a bid to undermine him.

Federal interference in the capital's police department is one reason Venezuela's opposition has staged a strike -- now in its 44th day -- demanding early elections. Tuesday's raids stoked already heated tensions in this polarized nation.

Greater Caracas Mayor Alfredo Pena said the weapons seizure stripped police of their ability to control street protests that have erupted almost daily since the strike began Dec. 2. Five people have died in strike-related demonstrations.

A smaller district police force used tear gas Tuesday to separate pro- and anti-Chavez protesters. Officials said two protesters were injured.

Strike leader Manuel Cova said opponents would "strengthen the struggle to topple" Chavez in response to the raids.

"This demonstrates the antidemocratic and authoritarian way in which this government acts," said Cova, leader of the Venezuelan Workers Confederation, the country's largest labor union.

Vice President Jose Vicente Rangel vowed there would be no early elections until a possible referendum in August, halfway into Chavez's six-year term. Opponents insist Venezuela is too unstable to wait that long.

"Chavez opponents must get it out of their heads that the way out is ... for Chavez to go," Rangel told foreign reporters. "That proposal is profoundly undemocratic."

Rangel said the weapons seizure was part of an effort to make police answer for alleged abuses against Chavez demonstrators. The government accuses police of killing two Chavez supporters during a melee two weeks ago that involved Chavez followers, opponents and security forces.

"The metropolitan police cannot be above the law, above the executive, above citizens," Rangel told foreign reporters. "We are trying to make them answer to the law. That's why we seized their equipment and weapons."

Troops searched several police stations at dawn, confiscating submachine guns and 12-gauge shotguns used to fire rubber bullets and tear gas, said Cmdr. Freddy Torres, the department's legal consultant. Officers were allowed to keep their standard-issue .38-caliber pistols. It was not clear how long the seizure would last.

Chavez ordered troops to take control of the force in November, but the Supreme Court ordered it restored to Pena last month.

Chavez is trying to break a strike that has paralyzed Venezuela's crucial oil industry and cost the government an estimated $4 billion. He has warned he might send troops to seize food production plants that are participating in the strike.

Called to press Chavez into accepting a nonbinding referendum on his rule, the strike has depleted many Caracas supermarkets of basics like milk, flour and bottled water. People spend hours in lines at service stations and at banks open only three hours a day. Many medicines are no longer are available in pharmacies.

Rangel said the strike was weak outside of Caracas -- one reason the government has been able to survive. "Is there a country on Earth that can withstand a strike for 44 days? I don't think so," the vice president said.

With hopes of helping resolve the dispute, former President Jimmy Carter plans to visit Caracas on Jan. 20 to observe the crisis, the Atlanta-based Carter Center announced.

Carter, who just won the Nobel Peace Prize, will consult with Cesar Gaviria, secretary general of the Organization of American States, who has been mediating talks between the two sides, the center said.

U.N. Secretary-General Kofi Annan said he plans to meet Chavez Thursday when he comes to the United Nations to hand over the chairmanship of the Group of 77, an organization of mainly developing nations. Annan said he will discuss with Chavez "how one can intensify the mediation efforts ... to calm the situation and return it to normalcy."

"He knows that I believe that one should use constitutional democratic means to resolve this issue and that is my message not only to him but to the opposition," the secretary-general said.

Venezuela's oil industry provides half of government revenue and 80 percent of export revenue. With the strike, about 30,000 of 40,000 workers in the state oil monopoly, Petroleos de Venezuela S.A., are off the job.

Venezuela was the world's fifth-largest oil exporter and a key supplier to the United States, and the U.S. Energy Department has said the crisis could cause American motorists to pay up to $1.54 per gallon of gasoline by spring.

Rangel said oil production will reach 1.5 million barrels a day next week -- about half pre-strike output. Currently, production is 800,000 barrels a day according the government, 400,000 according to striking executives fired by Chavez.

The president has vowed to restructure the oil monopoly and reduce bureaucracy at its Caracas headquarters, a hotbed of dissent.

Mayor Pena said Tuesday's police raids would force officers to stop patrolling many dangerous neighborhoods. Venezuela's crime rate rose 44 percent last year, the government says, partly because of a sharp rise in robberies.

"There is an escalation here leading to a dictatorship," Pena said. "The lives of the 5 million citizens who inhabit this city are in danger."

Also Tuesday, seven people died and four were burned when improperly stored gasoline exploded in western Venezuela on Tuesday. Officials said they didn't know what caused three containers of gas to explode.

Fuel shortages caused by the strike have prompted many Venezuelans to stockpile gasoline using containers unfit for such purposes. Warnings by state authorities against inappropriate storage and transportation of gasoline have been largely ignored by the population.