Venezuela Strike Falters as Banks Lift Protest

reuters.com Wed January 29, 2003 11:18 AM ET By Patrick Markey

CARACAS, Venezuela (Reuters) - Venezuelan private banks decided Wednesday to restore normal working hours, opening another crack in a faltering eight-week-old opposition strike against President Hugo Chavez.

But striking oil workers were maintaining their shutdown, which has rattled global energy markets by slashing oil output in the world's No. 5 petroleum exporter.

Private banks, which make up nearly 90 percent of the Venezuelan financial sector, had been operating for limited daily hours since December in support of the strike launched on Dec. 2 to pressure leftist Chavez from office.

"The National Banking Council and the Venezuelan Banking Association decided at a meeting by a two-thirds vote to restart normal operating hours from Monday," association president Ignacio Salvatierra told reporters. The two associations represent most financial institutions.

As the strike nears the two month mark, backing for the protest in non-oil sectors has begun to fray as private businesses, restaurants and stores reopen to fend off bankruptcy.

Opposition leaders, who brand former paratrooper Chavez's rule as dictatorial and corrupt, offered on Tuesday to ease their strike by exempting food production and education.

But they say the protest will continue until Chavez accepts immediate elections. Chavez is due to step down at the start of 2007.

The shutdown has stoked tensions as it forced Venezuelans to line up for cash, dwindling supplies of gasoline and some basic foodstuffs. At least seven people have been killed in rival street protests and shootings since the strike began.

Bankers cited pressure from account holders for lifting the stoppage. "This is the result of demands from the public and deposit holders ... banks don't belong to their presidents but to their deposit holders," said Nelson Mezerhane, president of the Federal banking group.

The opposition strike has driven Venezuela's fragile economy deeper into recession and forced the government to suspend foreign currency trading while it prepares a fixed exchange rate to protect its reserves.

Battered by economic uncertainty, the local bolivar currency has plummeted more than 28 percent since the strike began. Venezuela's international reserves fell 7.3 percent to 11.05 billion as the Central Bank burned through as much as $60 million a day to shore up the currency.

Economists say exchange rate controls will help the government stem capital flight in the short-term. But restrictions could later squeeze the private sector and force the government to defend its fixed rate from black market exchange rates.

Chavez, who was elected in 1998 and survived a coup last year, has also dismissed opposition calls for him to resign. Though his popularity has fallen sharply this year, he maintains a solid base of support among poorer voters who believe his left-wing reforms are the key to a better life.

The Venezuelan leader, who led a botched coup himself six years before his ballot box victory, has fought back against the strikers by deploying troops and replacement crews to oil installations. But oil production still remains only at around a third of the usual 3.1 million barrels per day.

A fiery populist, whose rhetoric is filled with class warfare slogans, Chavez has also threatened to take over banks, schools and factories that joined the strike.

The international community will intensify its efforts to break Venezuela's political deadlock this week when representatives from six nations arrive in Caracas to lend their weight to peace talks. The negotiations chaired by the Organization of American States have so far failed to break their impasse.

Representatives from the six nations, led by the United States and Brazil, are scheduled to arrive on Thursday in Caracas. They will meet for talks Friday.