Strike crack: Venezuela banks halt protest - 'Result of demands from the public and deposit holders'

asia.cnn.com Thursday, January 30, 2003 Posted: 2:26 AM HKT (1826 GMT)

The Venezuelan strike has caused long lines for gas stations and banks.

CARACAS, Venezuela (Reuters) -- Venezuelan private banks decided on Wednesday to restore normal working hours, opening another crack in a faltering 8-week-old opposition strike against leftist President Hugo Chavez.

But striking oil workers at the heart of the opposition campaign stayed firm in their shutdown, which has battered Venezuela's fragile economy and rattled 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 and restricting transactions since December in support of the strike 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.

Chavez, a populist former paratrooper whose fiery rhetoric is peppered with class warfare slogans, had threatened to seize striking banks, schools and factories to break the strike.

As the strike nears the two-month mark, backing for the protest in non-oil sectors has begun to fray as private businesses and stores reopen to fend off bankruptcy. Traffic in Caracas, famous for its brutal gridlock, has begun to choke the streets of the capital again.

Banks don't belong to their presidents but to their deposit holders.

Opposition leaders, who brand former paratrooper Chavez's rule as dictatorial, inept and corrupt, offered on Tuesday to ease their strike by exempting food production and education. But they have vowed to keep up the shutdown until Chavez accepts elections. The president's term ends in 2007.

The shutdown 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 the public and 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.

Looming economic woes

With the strike cutting off oil exports that account for half of the government's revenues, the government plans to slash its budget and suspended foreign currency trading while it prepares a fixed exchange rate to protect its reserves.

Graffiti covers a McDonald's in Caracas.

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 burnt 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 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.

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 for talks that start Friday.