U.S., Brazil Seek to Pressure Venezuela to Hold Vote (Update1)

Caracas, May 8 (<a href=quote.bloomberg.com>Bloomberg) -- The U.S., Brazil and Spain are among the countries seeking to pressure Venezuela's government and opposition to reach agreement on a referendum on President Hugo Chavez's rule and end a yearlong impasse.

Representatives of the Group of Friends, as the negotiators from six countries that also include Portugal, Mexico and Chile are known, declined comment after meeting with members of the opposition this morning. They were slated to meet with government negotiators later this afternoon and may meet with Chavez. They have tentatively scheduled a press conference for tomorrow.

There's definitely going to be an attempt to pressure the government,'' said Vitali Meschoulam, an analyst with political risk research company Eurasia Group in New York. But I doubt it will go beyond rhetoric.''

The Group of Friends is counting on a referendum to end more than a year of political strife in Venezuela, South America's largest oil producer. Chavez, who was deposed in April 2002 for two days in a coup, has faced repeated demands that he step down or submit to a referendum.

The two sides reached a tentative agreement brokered by the Organization of American States to hold a referendum. The accord was subsequently found lacking by Chavez's political party.

It's clear that Chavez is trying to delay the holding of a vote,'' Meschoulam said. There's no doubt about that.''

Polls show that Chavez would lose by a large majority if a referendum were held. Under Venezuela's constitution, a referendum can be held any time after Aug. 19, when Chavez passes the mid-point of his six-year term in office.

Venezuela's dollar bond due 2027 jumped for a third day, rising 0.25 cents on the dollar to 66.25, pushing the yield down to 14.22 percent, according to J.P. Morgan Chase & Co. at the 4 p.m. market close in New York.

The Caracas Stock Exchange's general index rose for the first day in three, jumping 2.7 percent to 8783.69. Last Updated: May 8, 2003 16:13 EDT