Venezuela Suspends Nationwide Referendum - In Blow to Opposition, Venezuelan Court Suspends Referendum on Chavez's Rule

abcnews.go.com The Associated Press CARACAS, Venezuela Jan. 23 —

President Hugo Chavez applauded a Supreme Court decision to postpone a Feb. 2 referendum on his rule and announced he would impose foreign exchange controls to protect Venezuela's sagging currency.

In a speech broadcast late Wednesday, Chavez said he would set limits starting next week on the amount of dollars or other foreign currencies Venezuelans can accumulate. Earlier in the day, the central bank suspended foreign currency trading as political and economic uncertainty fed a surge in demand for dollars.

Also Wednesday, Venezuela's high court indefinitely suspended the opposition-backed nonbinding referendum on Chavez's rule. The decision came just 11 days before the scheduled vote and stunned the opposition, which hoped the plebiscite would prompt the embattled leader to quit.

Chavez called the ruling "fair," adding that "it eliminates the terrible uncertainty that was affecting the country."

Government opponents presented the elections council with over 2 million signatures in November to convoke the referendum. They called a general strike, which has lasted 52 days, to demand Chavez accept the outcome of the vote.

The strike has dramatically reduced oil production in the world's fifth largest exporter and caused the bolivar to lose 25 percent of its value this year as Venezuelans and investors sell the currency to buy dollars amid the uncertainty.

The court ruling prompted angry reactions from the opposition.

"It's a slap in the face for millions of Venezuelans who are waiting for a solution to the crisis," said opposition leader Rafael Alfonzo.

Justices ruled that no national vote a referendum or election can be held until it decides whether elections council member Leonardo Pizani, who helped organize the referendum, is eligible to serve on the panel.

Pizani had resigned from the council in 2000, only to rejoin last November. He insisted he could rejoin because Congress, by law, had failed to formally accept his resignation.

Members of Chavez's ruling party filed suit arguing that Pizani's absence from the council made his resignation legally binding.

While government adversaries criticized the ruling, residents of Caracas braced for a pro-government march on Thursday to celebrate the downfall of Marcos Perez Jimenez, Venezuela's last dictator, in 1958. Government allies urged Chavez supporters from across the country to turn out for the march.

Strike leader Carlos Ortega, president of the nation's largest labor union, accused Chavez's supporters of planning a violent rampage in the capital. He urged government adversaries, who have staged near daily street marches since the strike began on Dec. 2, "to stay at home" to avoid "a massacre."

Interior Minister Lucas Rincon guaranteed security forces would maintain public order.

Chavez, a self-proclaimed "revolutionary" whose leftist rhetoric has scared off foreign investment, said he was against imposing the new currency controls but had to do it out of necessity.

Meanwhile, the "Group of Friends of Venezuela," a forum of six nations supporting OAS-mediated negotiations to end Venezuela's crisis, prepare for a first meeting.

Diplomats from Brazil, Chile, Mexico, Portugal, Spain and the United States are to meet at the Organization of American States in Washington on Friday. Cesar Gaviria, secretary general of the Organization of American States, began mediating the talks over two months ago.

Chavez has welcomed the "Friends" initiative, but he warned Wednesday that Venezuela would not accept foreign interference in domestic affairs.

"Sovereignty isn't debated, much less negotiated," he said.