Venezuela may face long, traumatic standoff

www.alertnet.org 13 Feb 2003 22:09

(Recasts with Gaviria comments, oil figures) By Phil Stewart

CARACAS, Venezuela, Feb 13 (Reuters) - After three months of tortured talks, the chief mediator in Venezuela warned on Thursday of a long, deadly road ahead if friends and foes of President Hugo Chavez fail to strike a deal quickly.

Organization of American States chief Cesar Gaviria said he would push for a nonviolence pact aimed at defusing the explosive divide in the world's fifth largest oil exporter.

At least seven people have been killed and scores injured in street clashes since December, as negotiations drag on.

"We are working with the wording to see if we can put out a declaration against violence, and the confrontational rhetoric, the hateful (rhetoric) that has prevailed in the country," said Gaviria, at a forum on the country's deep political crisis.

"Venezuela's recovery will be very long, very traumatic and also very difficult to bring to a good ending" without a deal soon, Gaviria said, warning "many more lives" could be lost.

Opponents of Chavez, who charge that his so-called peaceful revolution is a mask for Cuba-style communism, have demanded that he step down and agree to elections.

Chavez has refused and has accused his opponents of supporting a coup that briefly ousted him last year. He has hardened his stance in talks and has slowly eroded a 10-week-old oil strike aimed at forcing him from power by bankrupting the state.

The populist president, whose term ends in 2007, has fired more than 11,000 employees of the state oil firm PDVSA.

Negotiations to end the crisis began in November and are being brokered by Gaviria and backed by the United States, Brazil and four other nations.

OIL FLOW CUT

The flow of oil from Venezuela to the United States, which had been about 13 percent of all U.S. oil imports, has slowed dramatically during the strike. The stoppage has further jolted world oil prices, already reeling from war worries in Iraq.

Chavez said this week production was at about 2 million barrels per day (bpd) compared with pre-strike levels of 3.1 million bpd. The government on Thursday pegged exports at about half normal levels, or 1.3 to 1.5 million bpd.

Rebel oil workers put the output lower, at a modest 1.4 million bpd, and say exports are at about 1 million bpd.

Still, with oil exports limping along, and more than $11 billion in foreign currency reserves, analysts say Chavez can hold on for months even if the standoff deepens.

Chavez introduced sweeping price controls on Wednesday on everything from tomatoes to funeral services to shield the poor majority from spiraling inflation.

Opposition leaders warned that the new controls would further damage shopkeepers, many of whom shuttered their businesses for nearly two months as part of a general strike abandoned earlier in February. Capping wholesale prices will also hurt industry and farmers, already mired in recession.

"Is the desire to make everyone self-destruct? What this could do is shut down the country's productive sector," said Rafael Alfonzo, an opposition negotiator and business leader.

Chavez suspended foreign exchange trading on Jan. 22 before announcing controls to shore up international reserves and the bolivar currency. Trading was still closed on Thursday, leaving businesses starved of the much-needed U.S. currency in a nation that imports more than 60 percent of its goods.