www.sfgate.com Friday, January 10, 2003

(01-10) 12:04 PST WASHINGTON (AP) --

The Bush administration on Friday called on the international community for help resolve the five-week strike in Venezuela which is crippling oil exports, promoting violence and threatening the stability of the government of President Hugo Chavez.

"The severe damage being caused to Venezuela's economy, as well as the increasing likelihood of violence and civil conflict, requires a solution," said White House press secretary Ari Fleischer.

"U.S. policy continues to support Secretary General Gaviria's efforts in Caracas to facilitate a dialogue between both sides that leads to a peaceful, democratic, constitutional and electoral solution to Venezuela's crisis," he said.

The administration is working with the Organization of American States and member nations to explore ways to peacefully end the standoff between the Chavez government and its opponents, he said, noting that OAS Secretary General Cesar 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 Washington Post reported in Friday editions that the United States was putting aside its reluctance to get involved in Venezuela's internal affairs and readying an initiative to form a group of nations to try to end the deadlock.

The initiative may be rolled out next week, the newspaper said. It said the proposal's immediate goal would be to end the opposition-organized strike. The group would seek to develop a compromise calling for early Venezuelan elections and building on OAS mediation efforts already under way, the newspaper said.

"Secretary General Gaviria has been quietly consulting with OAS members on other possible initiatives, including the idea of Friends of Venezuela group, which might serve to strengthen his central efforts to help Venezuela to find a solution to this problem," Fleischer said.

"We have been and are working closely with Secretary General Gaviria and hemispheric partners to engage diplomatically under the OAS umbrella in support of Gaviria," he said. .

Earlier he stressed that the diplomatic effort is in "the early stages" and that "an electoral solution is the direction the United States sees."

The strike has paralyzed the Venezuelan economy and brought its vital oil industry -- a top U.S. supplier and once the world's fifth-largest exporter -- to a virtual halt.

By Associated Press, 1/10/2003 12:13

WASHINGTON (AP) The Bush administration is engaged with other nations in the hemisphere in talks to explore ways to end the five-week strike in Venezuela that has crippled oil exports, White House spokesman Ari Fleischer said Friday.

''We remain deeply concerned about the deteriorating situation in Venezuela,'' Fleisher said.

He said the administration was working with the Organization of American States and member nations to explore ways to peacefully end the standoff between the government of President Hugo Chavez and his opponents.

OAS Secretary General Cesar 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,'' Fleischer said.

The Washington Post reported in Friday editions that the United States was putting aside its reluctance to get involved in Venezuela's internal affairs and readying an initiative to form a group of nations to try to end the deadlock.

The initiative may be rolled out next week, the newspaper said. It said the proposal's immediate goal would be to end the opposition-organized strike.

The group would seek to develop a compromise calling for early Venezuelan elections and building on OAS mediation efforts already under way, the newspaper said.

''It's in the early stages,'' Fleischer said when asked about the news account and the U.S. role in seeking a breakthrough. ''An electoral solution is the direction the United States sees.''

The strike has paralyzed the Venezuelan economy and brought its vital oil industry a top U.S. supplier and once the world's fifth-largest exporter to a virtual halt.

www.alertnet.org

10 Jan 2003 16:48 By Pascal Fletcher

CARACAS, Venezuela, Jan 10 (Reuters) - A grenade exploded late on Thursday at the Venezuelan residence of the ambassador from Algeria, which has offered to assist President Hugo Chavez in his struggle to crush an opposition strike crippling vital oil exports, police said on Friday.

The blast at the Caracas residence blew shrapnel around the courtyard, damaging a car. But neither Ambassador Mohamed Khelladi nor members of his family or staff were injured, the police said.

No one immediately claimed responsibility for the blast, but the Chavez government was quick to blame the attack on hard-line political opponents supporting a 40-day-old strike that has throttled oil production and shipments by OPEC member Venezuela, the world's fifth largest petroleum exporter.

"This is part of the conspiracy against our institutions. This is the coup-mongering face of the Venezuelan opposition," Foreign Minister Roy Chaderton told Reuters as he inspected the scene of the explosion with the ambassador.

"This was to kill. ... It was clearly a terrorist attack against the people and the government of Venezuela and Algeria," Khelladi said.

The whitewashed wall of the residence courtyard showed shrapnel marks, along with bloodstains from the residence's pet dog, which was injured in the blast.

Algeria and other members of the Organization of Petroleum Exporting Countries (OPEC) have offered to help Venezuela counter the effects of the strike. Chavez said recently that Algeria would send a group of oil experts and workers to help re-start strike-bound oil tankers and refineries.

Police said the explosive device appeared to have been thrown over the wall of the residence in Caracas' exclusive Country Club district. "It seems to have been a fragmentation grenade," said Police Inspector Ali Magdaleno.

THREATS AGAINST EMBASSIES

The explosion followed bomb threats made against several foreign embassies in Caracas. The German, Canadian and Australian embassies were evacuated on Thursday after receiving calls made in the name of a previously unheard of group, the Patriotic Committee for Venezuela.

Other embassies received similar threats.

Tensions have been rising as foes of the populist Chavez press ahead with the strike, which has spawned economic and political turmoil. The strikers want Chavez, accused by his foes of autocratic rule, to resign and hold early elections.

Some foreign embassies in Venezuela, including those of the United States and Britain, have evacuated non-essential personnel during the country's political turmoil and warned their nationals not to travel to the troubled South American country unless absolutely necessary.

Rival street protests by followers and foes of Chavez, who was elected in 1998, often end in violence. Two people were killed in clashes on Friday involving demonstrators from both sides, troops and police.

In recent months, there have been grenade attacks against the offices of anti-Chavez union and business groups and against media organizations critical of the president. The opposition has blamed these on the government.

Companies feeling the effects of work stoppage Associated Press www.hoosiertimes.com

VALENCIA, Venezuela — Graciela Martinez can't serve Coca-Cola in her small diner, located just around the corner from Venezuela's Coca-Cola bottler in the high desert city of Valencia.

Coke, like many products produced by multinationals in a vast industrial park in the city, has been virtually impossible to get since Venezuela's opposition began a strike Dec. 2 to demand that President Hugo Chavez call early elections.

Officials at Coca-Cola and other multinationals say they haven't joined the strike. They just can't operate in the volatile economic and political climate that has engulfed Venezuela.

"We are a totally apolitical company," said Jorge Jezerskas, spokesman for Panamco, the Coca-Cola bottler in Venezuela.

"But for 36 days, our suppliers haven't been able to send us raw materials. If our drivers can get enough gas to make a delivery, then they aren't sure they'll be able to get gas to come back. What can we do?"

www.manilatimes.net Saturday, January 11, 2003 By David DeRosa

New Canaan, Connecticut — Venezuela is beginning to sound like something out of Ayn Rand’s novel Atlas Shrugged — where the middle class and professionals literally walk off their jobs.                               

Banks have started to join the 40-day-old strike paralyzing the country. Yet things are still at a stalemate with President Hugo Chavez’s opposition demanding that he resign or at least hold a referendum on the continuation of his administration.                                                            

Rand’s novel has workers and management refusing to work at jobs requiring more than manual labor skills because they know any wealth they create will be looted from them by an oppressive government. As Rand once wrote: “The man who produces while others dispose of his product is a slave.”                     

Venezuela has foreign debt payments on principal and interest this month of $76 million, said Luis Oganes, a Latin American strategist with J.P. Morgan Securities Inc. in New York. That will rise to $173 million in February, $601 million in March, and $1.2 billion in the second quarter.                                 

This, in large part, is the crux of the beef against the autocratic Chavez. In fact, the opposition started to materially coalesce when he began suspending private property rights.                                                               

Since then Chavez has been alienating one group after another while supposedly retaining some support among the poorest classes. The strength of that support is questionable. El Nacional reported yesterday that a poll taken last week of 1,200 Venezuelans by Cifras Enuestadora CA found about 63 percent of Venezuelans are in favor of broadening the strike to force Chavez from office.                             

Oil practically shutdown

The fear is that Chavez may incite a civil war. Venezuela’s political problems appear intractable, and, to make matters worse, they have spilled into the economic sector.                                                                         

Some banks closed yesterday and today to express sympathy with the strikers. If the banks reopen Monday, hours of operation are likely to be shorter than normal.                       

The partial shutdown of the banking sector caused a flight to dollars. The bolivar sunk to a record low against the dollar, plunging 10 percent Wednesday but rallied by five percent yesterday.                                                             

Even more damaging to Chavez is that the strike has crippled the state-owned oil industry. Venezuela before the strike was the fifth largest oil-exporting nation with daily crude production of $3 million barrels.                                        

Current oil exports are estimated to be a mere 10 percent of the pre-strike levels. Venezuela’s oil company gets to sit back and watch as its problems, combined with a possible war in the Middle East, have sent oil prices soaring. Oil was trading on the New York Mercantile Exchange yesterday at over $32 a barrel.                                                

Debt concern

That is not the worst of it. Even if the strike were settled today, it could be up to four months before the full resumption of oil production. The killer there is that by then oil prices may have plunged if tensions in the Middle East have been resolved. The market could be awash in crude just when Venezuela is ready to sell.                                          

The loss of revenue has increased concern that Venezuela might be forced to default on its debt. The 9.25-percent bond due 2027 yesterday yielded 14.87 percent, up 187 basis points since the strike began on Dec. 2. 

Venezuela has foreign debt payments on principal and interest this month of $76 million, said Luis Oganes, a Latin American strategist with J.P. Morgan Securities Inc. in New York. That will rise to $173 million in February, $601 million in March, and $1.2 billion in the second quarter.                                                                       

“During the first two months of the year given the amounts are relatively low, they have some room to maneuver,” said Oganes. “But after February, the situation complicates itself tremendously.”                                             

‘My brother’

Meanwhile, on Monday two radio talk show hosts in Miami who like to be pranksters on the air succeeded in pulling one over on Chavez. They synthesized an amalgam of sound clips from the speeches by Cuban President Fidel Castro and used them to actually get Chavez on the phone on live radio at his private telephone line at the presidential palace.                      

Chavez, apparently thinking he was speaking directly to his idol, greeted him with “Good morning, my brother.” The “Castro voice” then began making disjointed comments and asking bizarre questions, like, “What’s the day of the week?” and “Did you get my package?”                                       

Chavez appeared to have been taken in until it became totally obvious that something strange was going on.

This must have been an absolute scream in Miami, the center of gravity for Cuban refugees who make no attempt to hide their visceral hatred of Castro.                                          

People in Caracas probably weren’t laughing so hard because for now they are saddled with Chavez and the ideology of “his brother” in Havana. --Bloomberg