Venezuelan Strike Stretches to 40th Day

Breaking News smartmoney.com By Jehan Senaratna Of DOW JONES NEWSWIRES

CARACAS (Dow Jones)--Not conceding the slightest point, Venezuelan government and opposition groups dragged a general strike against President Hugo Chavez's leadership into its 40th day, as prospects for more deadly clashes grew.

As the government on Friday advanced efforts to revive the country's vital oil industry, most banks and supermarkets joined the strike and truckers said they would Monday. Opposition leaders also called for the nonpayment of utility bills as part of their protest.

Dismissing industry insiders' skepticism, Venezuela's perennially optimistic Planning Minister Felipe Perez outlined a schedule of oil output levels the government will achieve despite the strike, which has severely affected operations at state oil company Petroleos de Venezuela SA (E.PVZ), or PdVSA.

Perez, who once advised a press conference that "if you think positive, good things will happen," said during a televised interview that production will be at 2.4 million barrels per day in March, 2.7 million b/d in April, and "definitely," 2.9 million b/d in May.

Current output is 1.1 million b/d, he said, contradicting PdVSA president Ali Rodriguez's recent claim it was about 600,000 b/d, which in turn contradicted observers' reports it's at about 400,000 b/d. Before the strike, daily production stood at around 3 million barrels.

Meanwhile, the stock market remained shut, as did thousands of businesses, but traffic was heavy in some areas of this capital city as more Venezuelans returned to work.

But the government seems to have begun showing its frustration despite its efforts to dismiss the strike's effectiveness.

Thursday, opposition leaders canceled a planned peaceful march for fear of being attacked by Chavez supporters, who have recently initiated violent clashes at several demonstrations.

Police and National Guard troops now routinely use tear gas to disperse crowds, after two were killed last week in one such protest.

Foreigners are also affected.

A grenade was thrown at the Algerian ambassador's house Thursday, following bomb threats - which turned out to be hoaxes - at the embassies of Canada, Germany, Australia, and Uruguay.

Algeria was earlier reported to have sent technicians to help the government restart operations at PdVSA, raising the ire of opposition leaders.

As the tension in Venezuela persisted, some were comforted by reports the U.S. may be considering firmer measures to induce a solution to the crisis.

With concerns about an oil shortage mounting as a war with Iraq looms, the Bush administration is preparing a major initiative, to be launched in the next week, that would help end a deadlock in the talks between the government and the opposition and put an end to the strike, The Washington Post reported in its Friday editions, citing U.S. and foreign diplomatic sources.

U.S. government officials weren't immediately available to comment on the report.

But analysts were encouraged, and said Chavez may soon be forced into early elections, something the embattled president has rejected saying the constitution only requires him to abide by a possible recall vote in August, halfway through his term, which runs until early 2007.

"Of course, for the opposition (which is clamoring for early elections) it's very good news, and bad news for the government," said Alfredo Keller, head of a respected Caracas-based polling and economic research firm.

The U.S. effort will reportedly be channeled through the Organization of American States, which has been brokering unsuccessful negotiations between opposition and government representatives since November.

-By Jehan Senaratna, Dow Jones Newswires; 58212 564 1339; jehan.senaratna@dowjones.com