Venezuelan president tries to drive his opponents out of business

www.orlandosentinel.com From Wire reports Posted February 7, 2003

CARACAS, Venezuela -- President Hugo Chavez, emboldened as a prolonged general strike against him fades, has put his political opponents on notice in recent days by threatening legal and economic retaliation against those seeking to force him from power.

The most potentially far-reaching step came this week when Chavez established a new currency-control system to protect Venezuela's foreign reserves at a time of deep economic uncertainty in the oil-rich country. The government suspended trading of Venezuela's national currency, the bolivar, on Jan. 21 as it plummeted in value against the dollar in the midst of an economically devastating general strike.

Venezuela's business leaders warned Thursday that foreign-currency controls will breed corruption, fuel inflation and push the nation's fragile economy to the brink of collapse. They also suspect Chavez will use the controls to repress opponents and punish those who staged an unsuccessful two-month strike seeking to oust him.

Chavez announced the controls late Wednesday night, two weeks after suspending the sales of U.S. dollars as the bolivar sank to record lows. The fixed exchange rate took effect Thursday, and trading in dollars resumed.

The new controls fix the bolivar currency's value at 1,596 per dollar for sales and 1,600 for purchases, but the government can adjust those rates as it sees fit. The bolivar closed at 1,853 on Jan. 21, the last day of trading, but on the black market it traded at 2,500.

Chavez vowed to deny access to U.S. dollars for "coup-plotting" corporations that participated in the strike -- a major blow in a nation that imports 60 percent of its raw materials and most of its food.

Chavez has emerged over the course of this week invigorated by the failure of a general strike designed to force him from power or submit to early elections. Suffering enormous financial loss, Venezuela's private sector on Monday abandoned the strike that began Dec. 2.