World - AP Latin America story.news.yahoo.com 1 hour, 18 minutes ago

By CHRISTOPHER TOOTHAKER, Associated Press Writer

CARACAS, Venezuela - President Hugo Chavez fired 700 workers from the state oil monopoly Friday, hoping to break a 40-day-old strike that has paralyzed the world's fifth largest oil exporter.

At least 30,000 of the 40,000 workers at Petroleos de Venezuela S.A. are participating in a nationwide strike to demand early presidential elections. Chavez sacked 300 managers of the company earlier in the strike.

"The revolutionary government is standing firm," Chavez said. "An oligarchy ... has reared like a poisonous serpent to destroy the path of justice that we are paving. The people and our morals won't let them."

The firings inflamed an already unstable situation. Chavez's opponents took to the streets Friday, and a bank strike prompted authorities to suspend dollar auctions for a second day in a row after Venezuela's currency fell.

The Bush administration was talking with other nations in the Americas on ways to end the strike, White House spokesman Ari Fleischer (news - web sites) said Friday.

"We remain deeply concerned about the deteriorating situation in Venezuela," Fleischer said. Asked about a possible U.S. role in a breakthrough, Fleischer said, "An electoral solution is the direction the United States sees."

A nonbinding referendum on Chavez's rule is scheduled for Feb. 2. Chavez insists the constitution only requires him to respect a possible recall referendum in August, the midpoint of his six-year term.

Chavez said the government would have to invest "thousands of millions of dollars" to revive the oil industry. He urged Venezuela's attorney general to imprison strikers, whom he called "criminals" and "traitors to the country."

The strike has shut thousands of businesses and brought Venezuela's oil industry to a virtual halt. Chavez has tried to jump-start oil production, and crude output is estimated at about 400,000 barrels a day, compared with the pre-strike level of 3 million barrels. Exports, normally 2.5 million barrels a day, are at 500,000 barrels a day.

Bank workers and other opposition sympathizers were rallying in Caracas and 11 other cities Friday, a day after violence broke out at similar protests.

Hundreds gathered in Caracas to march on the Melia hotel, where Organization of American States Secretary-General Cesar Gaviria, who is mediating between the two sides, is staying.

Fleischer said Gaviria has been quietly discussing options with other OAS states, including formation of a "Friends of Venezuela" group "to help the Venezuelans find a solution."

The Central Bank suspended dollar auctions for a second day Friday after the currency, the bolivar, dropped to a record low of 1,593 to the dollar Thursday — 5 percent weaker than Wednesday and down 12 percent since the start of the year.

Analysts speculated Chavez's government may have to devalue the bolivar to balance its budget. Most government income is in dollars and a weaker bolivar would increase its domestic spending power.

Meanwhile, unknown assailants tossed a grenade at the residence of Algerian Ambassador Mohamed Khelladi on Thursday night, the embassy said Friday. Nobody was injured and no arrests were made.

The motive for the attack wasn't known. Algeria has offered to send technicians to help jump-start Venezuela's oil industry.

Vice President Jose Vicente Rangel said the government reinforced security at embassies and diplomatic residences after the attack and a series of telephoned bomb threats at the Australian, Canadian, German, Libyan and Uruguayan embassies.

Chavez opponents claim the president's fiery rhetoric incites violent reactions from his most radical backers. But the president, a former paratroop commander who was elected in 1998 and re-elected two years later, accuses the opposition-backed media of whipping up emotions and campaigning for his ouster.

Bloodshed last year spurred a coup and Chavez's brief ouster. Loyalists in the military returned him to power on April 14.

Spokesmen at three of Venezuela's largest banks — Banco de Venezuela, Banco Provincial and Banesco — said 80 percent of the country's nearly 60,000 bank employees stayed home Thursday.

10 Jan 2003 19:51 www.alertnet.org

CARACAS, Venezuela, Jan 10 (Reuters) - Venezuelan President Hugo Chavez on Friday said he fired nearly 1,000 employees of state oil company Petroleos de Venezuela (PDVSA) taking part in a 40-day strike aimed at removing him from office.

"We have fired now nearly 1,000 of them (striking employees). We are cleaning up PDVSA," Chavez said in a speech to supporters broadcast live on television.

Thousands of PDVSA managers and executives, oil field and refinery workers, ship captains and dock crews have joined the strike, which started on Dec. 2 and has crippled the OPEC nation's oil sales.

The strike has severely disrupted Venezuela's economy, which relies on oil exports for half of government revenues.

Crude and product exports have fallen to less than a fifth of the 2.7 million bpd sold before the shutdown. Oil production has dropped to 450,000 barrels per day (bpd) from 3.1 million bpd in November, a PDVSA executive said this week.

The government this week announced a plan to create two PDVSA affiliates in the main eastern and western production centers, shifting power away from the current Caracas headquarters, where levels of absenteeism have been high during the stoppage.

In addition, PDVSA is seeking workers to replace some of the striking employees, according to a message posted by Planning Minister Felipe Perez on an Internet forum.

Rebel PDVSA employees have said they will not return to their jobs until Chavez resigns or agrees to early elections, and that government efforts to restart the industry using replacement staff will fail. Venezuela's oil sector normally employs about 40,000 workers. (Additional reporting by Ana Isabel Martinez)

10 Jan 2003 18:40 www.alertnet.org

By Arshad Mohammed

WASHINGTON, Jan 10 (Reuters) - The United States supports forming a "group of friends" of Venezuela of key nations in the region to try to break an impasse between Venezuelan President Hugo Chavez and opposition groups who have crippled Venezuelan oil exports with a strike, a U.S. official said on Friday.

Washington hoped the idea could support Organization of American States Secretary-General Cesar Gaviria's efforts to end the crisis, which pits the leftist president against opposition groups who wish to oust him, the official said.

The United States backed the idea in part because Gaviria's efforts so far to end the 40-day-old strike that has throttled oil exports by the world's fifth-largest petroleum exporter have not succeeded and it hoped that a gesture by other nations in the region might nudge both sides to compromise.

The strikers want Chavez, accused by his foes of autocratic rule, to resign and hold early elections, something he has so far refused to do.

"Are we trying to find a way to break the impasse -- absolutely. We want to try to find a way to end the political crisis," said the U.S. official, who asked not to be named, stressing the U.S. view that there needs to be an "electoral solution" allowing Venezuelans to express their views.

"The notion of a group of friends is one among a number of ideas to inject new energy and new thinking into the process, but most importantly if both Chavez and the opposition are exposed to a unified international view that they both need to compromise, there's increased pressure," he added.

"In other words, (so) that Chavez doesn't think he's got support from friendly governments to hold the line and (so) that the opposition doesn't think it has support from groups in the hemisphere that it can continue the strike indefinitely," the official said.

However, the U.S. official stressed that the United States wanted the "group of friends" idea to support Gaviria's efforts, not to act in competition with them.

"Gaviria ... is the key player there. All we want to do is to support his efforts," the official said, saying Washington had held off from endorsing the idea until it became clear to U.S. officials that Gaviria supported it.

The U.S. official said the loss of Venezuela oil exports as a result of the strike was one factor, but not the dominant factor, in the United States decision to back the idea of a group of friends. Prior to the strike, the United States imported about 13 percent of its oil from Venezuela.

"I wouldn't say that it (oil) weighed disproportionately," the official said.

The Washington Post, which first reported that the United States favored the "group of friends" idea, said an initiative was expected to be rolled out within the next week.

A U.S. official said that any initiative would complement Gaviria's efforts.

"We remain supportive of Gaviria and the OAS effort and if something's appropriately structured that would help that, we would support it," he said. "I wouldn't call it a major new initiative but it is an effort to break the impasse. We want to get regional leaders focused on helping to do that."

Washington lost credibility in Venezuela when it appeared to welcome a coup last year that briefly ousted Chavez.

But it hopes the plan will head off an initiative by left-leaning Brazil to form its own "group of friendly nations" to resolve the crisis that the United States believes would be counterproductive, the Washington Post reported.

A U.S. official said Washington did not see the group of friends idea as a way of injecting itself into the Venezuelan situation, acknowledging Latin American sensitivities about the history of U.S. influence in the region.

But he said the United States was likely to get blamed if things went badly, so it had might as well do what it could.

"If things go badly, the United States (will) be blamed, so we might as well be engaged in trying to make sure that things go well," the official said.

www.voanews.com VOA News 10 Jan 2003, 19:02 UTC

The United States says it is concerned about the political crisis in Venezuela and supports international efforts to resolve the situation.

White House spokesman Ari Fleischer told reporters Friday Washington remains "deeply concerned" about what he calls the "deteriorating situation" between the Venezuelan government and the opposition.

Mr. Fleischer says the head of the Organization of American States, Cesar Gaviria, has been "quietly" discussing possible resolutions with OAS members. The spokesman says the United States supports the OAS efforts, which include forming a so-called "Friends of Venezuela" group.

The Washington Post reports Friday the grouping would bring together representatives from Brazil, the United States, Mexico, Chile, possibly Spain, and the United Nations.

The newspaper says the representatives would guarantee a compromise proposal for early elections. It says the initiative is expected to be presented within the next week.

Meanwhile, opponents of President Hugo Chavez rallied in the streets Friday for anti-government protests. Bank workers stayed off the job for a second day to support a crippling, five-week general strike aimed at forcing Mr. Chavez to resign or call early elections.

Venezuelan officials say the opposition is to blame for a grenade explosion late Thursday at the Algerian ambassador's residence in Caracas. No one was injured. Algeria has offered to assist Mr. Chavez in efforts to end the strike.

The work stoppage has halted shipments of 1.5 million barrels of oil a day to the United States and has contributed to an increase in world oil prices.

10 Jan 2003 18:51 www.alertnet.org

NEW YORK, Jan 10 (Reuters) - Oil production in Venezuela would need four months to recover to near normal levels if the the 40-day-old strike were to end today, dissident state oil company executives said on Friday.

"In a couple of months maybe we can restore production by 50 percent, mainly of the light crude oil production, and in a period of four months, we might be in the level of 90 percent," Marco Rossi, a striking executive with Petroleos de Venezuela (PDVSA), Venezuela's state oil company told a teleconference call on Friday.

Venezuela was producing about 3.1 million barrels of crude per day before the strike.

The rebel PDVSA officials were making their case for the strike to the U.S. energy industry for the first time.

Venezuelan crude oil installations, including PDVSA's 940,000 bpd Amuay-Cardon plant, the western hemisphere's largest refinery complex, have been virtually stopped by the strike.

The strikers said that, because they did not have access to operations, it was difficult to confirm claims of ecological damage caused by the replacement of regular oil workers with people appointed by the government.

Opposition officials have said oil has been spilled during tanker loading operations in the western Lake Maracaibo production center and that such incidents have increased by "1,000 percent" since the beginning of the strike.

The labor turmoil has cut production by the world's No. 5 oil exporter, a leading supplier to the United States, and caused shortages of gasoline domestically.

The Chavez government says the strike has cut oil production to 600,000 bpd, while the opposition said on Friday production had fallen to 340,000 bpd.

The strikers said Venezuela has had to turn to alternative sources of petroleum products, including buying gasoline from Brazil and diesel from Malaysia.

PDVSA was seeking gasoline from the U.S. Gulf for late January, U.S. traders said on Thursday.

Strikers have vowed to continue the strike until leftist President Hugo Chavez leaves office.

Striking PDVSA workers have said government efforts to restart operations using replacement workers would fail, and that adequate production could only be resumed when striking employees returned.