Venezuela braces for new violence

www.theage.com.au Thursday 23 January 2003, 16:05PM

Crippled by 52 days of strike, Venezuela braced for more turmoil as foreign currency trading was halted, a February referendum was suspended and supporters of embattled President Hugo Chavez planned a major demonstration.

The government suspended foreign currency trading for five days, but said repayment of public debt would continue. Once full operations resume, exchange rules will be set by the Central Bank and the Finance Ministry.

Traders said the move was motivated by a high demand for cash amid nervousness over the crisis and fears currency controls would be imposed.

The announcement coincided with a preliminary Supreme Court decision to call off a referendum the opposition planned to hold February 2 in a bid to force Chavez from office.

The leftist-populist president already had said he would ignore the outcome of such a poll, but has said he was open to proposals put forward by former US president Jimmy Carter that would pave the way for a recall referendum in August, or a constitutional amendment to shorten his term of office - which ends in 2006.

The National Electoral Commission said the court ruling merely "froze" the February 2 referendum but did not cancel it.

"We are shocked and indignant ... This demonstrates we are under an authoritarian government." said Antonio Ledezma, a spokesman for the opposition, made up of labour and employer's federations as well as largely conservative political parties.

The announcement heightened insecurity on the eve of a major Caracas demonstration by supporters of the beleaguered president, who planned to march through east Caracas, a stronghold of the opposition leading the strike aimed at forcing Chavez from office.

The city was rife with rumours of impending violence, and tension was particularly high at the Plaza Altamira, which has become emblematic of the opposition since insurgent officers set up camp there late last year.

Three people were gunned down at the eastern Caracas square during a December 6 opposition rally. Three more people have since died and dozens more were wounded, many by gunfire, in clashes between Chavez supporters and opposition protesters.

Opposition leaders chose not to stage any protests in Caracas, saying they wanted to avoid further bloodshed, but demonstrations were planned elsewhere in Venezuela.

They also showed determination to continue the strike, which has mainly affected the vital oil sector, slashing production and exports, and forcing motorists to wait in line for hours in the hope of getting a tankful of fuel.

Chavez accused the opposition of engaging "in an irrational effort to cause national chaos."

Meanwhile, top diplomats of the hastily formed "Friends of Venezuela" group - Brazil, Chile, the United States, Mexico, Spain and Portugal - were to meet behind closed doors Friday in Washington to seek a peaceful end to the crisis.

The State Department said Secretary of State Colin Powell would represent the United States at the meeting in the Organisation of American States headquarters.