Venezuela opposition offers to ease strike

www.forbes.com Reuters, 01.28.03, 12:42 PM ET By Pascal Fletcher

CARACAS, Venezuela (Reuters) - Venezuela's opposition said Tuesday they were ready to spare education and food production from their 58-day-old anti-government strike as a goodwill gesture to help international efforts to solve the country's political crisis.

Although oil workers were maintaining their crippling stoppage in the world's No. 5 petroleum exporter, opposition leaders were rethinking their grueling campaign to try to force leftist President Hugo Chavez to hold early elections.

They are debating easing the strike in some non-oil areas to give hard-pressed private businessmen and consumers a breather after more than eight weeks of a protest that has triggered an economic crisis but failed to oust Chavez.

With the oil-reliant economy reeling from the impact of the strike, the government has chopped back budget spending and suspended currency trading to halt capital flight while it prepares to introduce foreign exchange controls next week.

Finance Minister Tobias Nobrega said late Monday the government was considering a single fixed exchange rate.

In recent weeks, support for the strike has slipped and many shops, restaurants and businesses have reopened.

Two days before the arrival in Caracas of a six-nation delegation which will lend its weight to peace efforts, opposition negotiators said they were prepared to halt the strike in the sensitive areas of education and food output.

"Our proposal is we should lift the strike in these two sectors as a gesture of goodwill," Timoteo Zambrano of the opposition Coordinadora Democratica group told local radio.

Besides slashing oil exports, the shutdown has also caused unprecedented shortages of gasoline and some food items. Despite complaints from parents, private schools and universities had also joined businesses in staying closed.

CHAVEZ TALKS TOUGH In a daily war of words with his foes, Chavez has used these disruptions to try to turn public opinion against the opposition. The outspoken former paratrooper, who survived a coup last year, has refused to negotiate with strike leaders he calls "terrorists, fascists and coup mongers".

Chavez has used troops to partially restore strike-hit oil production, which is still at around a third of normal levels.

Envoys from the United States, Brazil, Mexico, Chile, Spain and Portugal are due in Caracas Thursday to back ongoing efforts by Organization of American States (OAS) Secretary General Cesar Gaviria to broker a deal on elections.

The six-nation "group of friends" was formed to try to help break the deadlock in the Venezuelan crisis, which has pushed up oil prices at a time when the United States is considering a war on Iraq. Before the strike, the United States was receiving more than 13 percent of its oil imports from Venezuela.

Zambrano said the six-nation "friends group" had recommended lifting the strike in education and food production, arguing that disruption in these sensitive areas could inflame an already tense political and social situation.

Seven people have been killed in shootings and clashes between rival protesters since the strike began Dec. 2.

Rejecting calls for early elections, Chavez insists his foes must wait until Aug. 19, halfway through his current term. After that date, the constitution foresees a binding referendum on his rule, which is scheduled to last until early 2007.

Opposition leaders say the nation cannot wait until August. They are collecting signatures for a constitutional amendment to trigger early elections, an option proposed by former U.S. President Jimmy Carter, who is backing the peace talks.

BRACING FOR FOREX CONTROLS Following the government's announcement last week that it planned to introduce foreign exchange controls, local businessmen and consumers have been bracing for the expected impact of the measure on their costs and prices.

Finance Minister Nobrega late Monday extended the suspension of foreign exchange trading for another week. He said the government was still studying whether to introduce one exchange rate adjustable over time or a dual exchange rate.

Venezuela's bolivar has tumbled 28 percent since the strike started and it lost 46 percent of its value against the U.S. dollar during all last year. International reserves have also fallen and stood at $11.05 billion Jan. 24, not including $2.6 billion in a strategic rainy-day savings fund.

Chavez said Sunday the controls were necessary to protect the bolivar currency and international reserves against what he called an "economic coup" being attempted against him by businessmen opposed to his self-styled "revolution".

His foes accuse him of ruling like a dictator and of trying to drag the oil-rich nation toward Cuba-style communism. He portrays opponents as a rich, resentful elite defending their privileges against his efforts to implant social justice.

Private economists say foreign exchange controls, which were last introduced in Venezuela in 1994-96, may initially slow capital flight but will quickly be circumvented by a black market. They say the measures will also hike prices in a nation that imports most of its food and other consumer needs.

Opposition leaders say the planned controls will generate corruption and they fear the government will use the measure to punish striking firms by restricting their access to dollars.