Venezuela 'risks becoming ungovernable'

news.ft.com By Richard Lapper and Andy Webb-Vidal in Caracas Published: January 29 2003 22:19 | Last Updated: January 29 2003 22:19

Venezuela could become ungovernable if government and opposition fail to make progress in talks that will become the focus of fresh international attention later this week, the head of the Organisation of American States warned on Wednesday.

César Gaviria, the OAS secretary-general, said a fast deteriorating economic crisis threatened to tear apart already precarious social stability and lead to new and potentially more violent political tensions.

"If we don't move ahead, new problems will emerge and the situation could get out of control," Mr Gaviria told the Financial Times.

Venezuela's political and economic crisis is accelerating. A general strike - now in its eighth week - has crippled the strategically important oil export industry, formerly the world's fifth largest, contributing to the recent rises in crude oil prices to a two-year high. The strike is expected to lead to an economic contraction of 10-20 per cent this year. Faced with a sharp fall in international reserves and a steep drop in the value of the bolívar - the Venezuelan currency - President Hugo Chávez this week introduced exchange controls, which are expected to stoke a sharp increase in retail prices.

Opposition leaders are pressing Mr Chávez to resign. But they have been unable to agree on strategy. If leaders press for a constitutional amendment to shorten Mr Chávez's six-year term, the president - who still commands popularity ratings of between 30 and 35 per cent - would be able to contest new elections. His term is scheduled to end in 2007.

Efforts to end the political impasse will be given greater urgency and weight tomorrow when representatives of the six-nation Group of Friends (Brazil, the US, Chile, Mexico, Spain and Portugal) are expected to meet Mr Gaviria, government and opposition leaders.

The OAS-sponsored talks between the government and a loose opposition alliance - supported by business and trade union groups, and Venezuela's middle class - have been under way since November but have failed to make much progress.

Mr Gaviria said the two sides had agreed to look at ways to reduce growing violence and this week for the first time explicitly discussed an electoral solution to the crisis. "They are focusing on the same things. The time when they were just underestimating each other has gone," he said.

Even so, several obstacles stand in the way of further progress. Roy Chaderton Matos, Venezuela's foreign minister, told the Financial Times on Tuesday that both government and opposition leaders must "tone down" their language and rhetoric if negotiations between the two sides are to have any chance of success.

Mr Chaderton Matos said "hate and irrationality" were making it more difficult to reach a peaceful resolution of the deadlock. "We have to take the poison out of the atmosphere," he said.