VOA News 29 Dec 2002, 19:59 UTC

Hundreds of thousands of opposition supporters are demonstrating in Venezuela's capital, Caracas, on the 28th day of a crippling general strike that has caused severe fuel shortages in the oil-rich nation.

Flag-waving crowds marched through the city Sunday and converged for a massive "victory" rally.

The protests are part of an ongoing campaign aimed at ousting President Hugo Chavez. The opposition says President Chavez's leftist-leaning policies are sending the country into economic ruin.

In his weekly television program, President Chavez called his opponents traitors conspiring against patriots, who support his government. He hosted the program at a gasoline distribution center, and he led cheers every time a gasoline truck left the facility.

The strike has nearly paralyzed oil production, helping to push crude oil prices upward on world markets and causing severe shortages of fuel and other supplies in Venezuela.

President Chavez has begun importing fuel and food supplies. A Brazilian tanker arrived in eastern Venezuela Saturday to deliver a much-needed shipment of gasoline, but only enough to last for about two days.

Venezuela is the world's fifth-largest oil exporter.

Posted on Sun, Dec. 29, 2002 ALEXANDRA OLSON - Associated Press

CARACAS, Venezuela - Tens of thousands of people took to the streets demanding the resignation of President Hugo Chavez on Sunday, the 28th day of a nationwide strike that has virtually halted oil exports and evaporated domestic gasoline supplies.

The protesters poured out of nine areas of the capital to converge on an avenue chosen for its name: "La Victoria," or victory. Politicians, businessmen and labor leaders harangued the crowd with a long list of arguments why Chavez should quit.

It's a scene that has been played out many times during the strike - so far without success.

Chavez refuses to go and insists the government is regaining control of the state oil monopoly, Petroleos de Venezuela, where most managers are on strike. He says he will use the protest to downsize the mammoth corporation and has already replaced many strikers.

"It's a struggle to save the country between us patriots and the traitors," Chavez said during his weekly television show, held Sunday outside a gasoline distribution center where the government has replaced striking managers.

The president led the audience in a round of applause every time a gasoline truck left the installation in the western state of Carabobo.

At the rally in Caracas, his foes threatened more civil disobedience, including not paying taxes. Many also want to march on the presidential palace. The last time that happened, 19 people were killed in the ensuing clash between Chavez foes and followers. The April 11 violence provoked a coup that ousted Chavez for two days.

The strike has slashed oil exports, forcing the world's fifth-largest oil supplier to barter with other countries for food and fuel.

Ali Rodriguez, president of the state-owned oil monopoly, said Venezuela is currently producing between 500,000 and 600,000 barrels a day. But striking executives say the company is producing less than 200,000 barrels a day.

Production is normally more than 3 million barrels a day.

Venezuela received its first foreign shipments of gasoline Saturday with the Brazilian tanker Amazonian Explorer delivering 525,000 barrels, barely more than a normal day's demand.

Venezuela's largest labor confederation and business chamber called the strike Dec. 2 to demand Chavez accept a nonbinding referendum on his rule. Many in the opposition now demand early elections - which constitutionally can only take place if Chavez resigns.

They accuse Chavez of running roughshod over democratic institutions and wrecking the economy with leftist policies. Venezuela's economy shrank 6 percent during the first nine months of 2002. Inflation has reached 30 percent, and unemployment 17 percent.

But Chavez is still popular in the slums around Caracas where many consider him the first leader in generations to stand up for their interests.

Chavez says opponents must wait until August, when a binding referendum may be held on his rule. He was elected in 1998 and re-elected in 2000, and his term ends in 2007.

The Organization of American States is sponsoring talks to end to the crisis. Negotiations, interrupted by the holidays, resume Thursday.

Posted on Sun, Dec. 29, 2002 BY JASON WEBB - Reuters

CARACAS, Venezuela - As gasoline trucks rolled out behind him, a defiant Venezuelan President Hugo Chavez said on Sunday he was beating a month-old strike choking the oil industry but hundreds of thousands of protesters demanded he step down.

"I've got no plans to back down. My plans are for an offensive, an attack," said Chavez, applauding as strike-busting fuel trucks drove off from the Yaguas gasoline distribution center near Caracas.

But the opposition-backed general strike which has paralyzed much of the country for 28 days and has almost stopped shipments from the world's fifth-largest oil exporter showed no sign of easing as several hundred thousand flag-waving anti-Chavez protesters marched through Caracas.

"They're going to have to kill us to stop the people. Absolutely no one can stop this strike," one of the protest leaders, union boss Carlos Ortega, told the huge crowd.

The opposition strikers, organized by business and union leaders, demand Chavez call elections, accusing him of abuse of authority, corruption and economic incompetence in what they say is his quest to install a Cuban-style dictatorship.

Support for Chavez, whose term is due to run until 2007, has plunged, even among his poor powerbase which he has wooed with cheap loans and a folksy style spiced with the fiery rhetoric of class warfare.

But, while polls indicate majority support for the opposition, he is still more popular than any other single political figure in the country.

Chavez broadcast his weekly live television program -- a unique mixture of variety show and political evangelism called "Hello President" -- from Yaguas, which loyalist workers recently restarted after a strike-enforced closure.

Waving to cheering admirers, brandishing a small crucifix and at one stage breaking into a 1970s pop song, Chavez's tone hardened as he vowed to break the strike which has made lines for fuel hundreds of cars long a common sight in a country where people are used to gasoline as cheap as bottled water.

"We will move heaven and earth if necessary, but we will never leave the people in the hands of this savage and treacherous oligarchy," he bellowed, before accusing his "fascist" opponents of trying to bewitch him with voodoo.

"They're using the Devil. But the Devil isn't as strong as God, and he's on our side," he said, gripping his crucifix.

In an attempt to loosen the stoppage's grip, Venezuela has even done the unthinkable and imported some gasoline from Brazil, but fuel is still scarce in Caracas.

ECONOMY BATTERED BY STRIKE

Chavez, a former paratrooper jailed after a coup attempt in 1992 and elected in 1998, said the strike was backed by the upper classes he accuses of draining the nation's oil wealth. He also blames them for a failed coup against him in April.

Chavez has sacked dozens of striking executives from state oil giant PDVSA, sent troops aboard halted oil tankers and tried to restart complicated refineries and oil wells using lower-ranking personnel and retired managers.

The government says output and exports are restarting. But renegade PDVSA chiefs say crude production is 200,000 barrels a day, a trickle compared to the normal 3.1 million barrels.

Venezuela's economy was already badly battered by recession before the strike cut off oil sales, which usually bring in 80 percent of exports and 50 percent of government revenues.

Chavez points out that he has $15 billion in foreign reserves to help him withstand the strike while he cranks the oil industry back into operation. Ratings agencies have lowered Venezuela's already shaky credit standing as investors brace for economic mayhem in the deeply divided country.

The opposition is organizing a nonbinding referendum on Chavez's rule for early February. The president says he will pay no attention to the result, and insists that a referendum would not be constitutional until August at the earliest.

Talks between the government and the opposition have made little progress despite being brokered by the Organization of American States. The United States has also called for an electoral solution to Venezuela's stalemate.

Over 13 percent of U.S. crude oil imports usually come from Venezuela, and the conflict here is a major headache for Washington as it considers the possibility of disruptions to Middle Eastern oil supplies if it goes to war with Iraq.

In a touch of humor calculated to send shivers down millions of opposition spines, a chuckling Chavez said he had considered pretending to resign on television as a joke. But he added: "I don't think I'm going to step down ever."

— By Matthew Robinson

CARACAS, Venezuela (Reuters) - Oil shipments by the world's No. 5 crude exporter rose in the past week but were held to less than 20 percent of November levels by a four-week strike led by foes of Venezuelan President Hugo Chavez.

Government efforts to break the strike helped boost oil exports to about 520,000 barrels per day (bpd) in the week ending Dec. 29, according to data from state oil firm Petroleos de Venezuela (PDVSA) and independent shippers.

In the previous week, the government dispatched 260,000 bpd of crude, including one cargo destined for a domestic port. Venezuela exported about 2.7 million bpd of crude and products in November.

Half of the crude sold in the past seven days, about 260,000 bpd, went to the United States, which imported 1.4 million bpd from Venezuela in October.

But Venezuelan oil exports for December have averaged just 230,000 bpd, helping push U.S. oil futures to a two-year high of $32.76 a barrel in the past week.

Striking PDVSA workers have said the government's ability to maintain even limited oil sales will be severely hindered once domestic storage tanks are drained, as production has fallen to levels that will not support exports.

"Production is 200,000 bpd," opposition PDVSA executive Horacio Medina said in a television interview on Sunday. The OPEC member nation had produced 3.1 million bpd in November.

Many executives and managers from PDVSA, as well as field and refinery workers, tanker captains, pilots and dock crews have joined the stoppage aimed at removing Chavez from office.

BATTLE FOR OIL

But Chavez has refused to resign or call early elections and maintains that he is winning the battle for the oil industry, which provides about half of government revenues. Dissident PDVSA employees have said that the government will not be able to bring operations back to normal levels using replacement workers.

"In the last four days, we have moved seven and a half million barrels of oil and within one week we will be producing more than a million barrels (per day) of petroleum," Chavez said on Sunday during his weekly television and radio show, "Hello, President."

According to data supplied by PDVSA President Ali Rodriguez and confirmed by independent shipping reports, Venezuela has exported about 2 million barrels of crude in the past four days.

Rodriguez told reporters at a late Saturday press conference that the government had managed to increase oil production to between 600,000 bpd to 700,000 bpd, adding that oil output figures he quoted to reporters on Saturday, indicating production was 1.5 million bpd, were incorrect.

The PDVSA chief said oil production would hit 2 million bpd by the end of January, and that the 130,000 bpd El Palito refinery would restart operations this week.

Rodriguez said late Saturday that production from four foreign-backed extra heavy oil projects shutdown by the strike would also be returned in the next week. The four projects, which partner oil majors such as ExxonMobil <XOM.N> and ChevronTexaco <CVX.N> with PDVSA, produced over 400,000 bpd of extra heavy oil last month.

But his statements were disputed by foreign oil officials.

"I don't think so. There are two many things that need to take place," said an official with one of the projects who asked not to be identified. "Who is going to work the plants? Who is going to bring ships in?"

Foreign oil companies have not been loading cargoes because vessels attended by uncertified crews would face insurance risks. Only ships chartered by PDVSA and U.S. refining affiliate Citgo have sailed.

Chavez said on Sunday that he had fired 90 PDVSA executives and managers taking part in the stoppage and that others were under investigation.

Copyright 2002 Reuters News Service. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Reuters, 12.29.02, 6:11 PM ET By Hugh Bronstein

NEW YORK, Dec 29 (Reuters) - Emerging market sovereign bond investors will be watching for signals this week from Brazil's incoming government about the future economic policy of Latin America's biggest country while a watchful eye is kept on Venezuela's nearly month-old national strike. "Even with Venezuela, Brazil will continue to be the central question mark. Will President Lula back his pro-market statement with concrete actions?" asked David Roberts, senior international economist at Banc of America Securities. On Friday, President-elect Luiz Inacio Lula da Silva met with his Cabinet appointees for the first time, but offered little new information for investors thirsty for policy signals from the one-time radical union leader who turned toward the political center to win October's election. Lula will take office on Wednesday. "One of the issues that the market will be looking at as Lula assumes office is the extent to which the economic team actually continues with orthodox policy, as it is signaling it will," said Mohamed El-Erian, chief emerging markets portfolio manager at Pacific Investment Management Co. (PIMCO) based in Newport Beach, Calif. The most dramatic news headlines may well come from Venezuela, where a 28-day-old strike, staged by opponents of leftist President Hugo Chavez, has almost stopped oil shipments from the world's fifth-largest exporter. But Brazil, Latin America's most important economy, is likely to command the attention of investors. Brazil's incoming finance minister, Antonio Palocci, said on Saturday that economist Joaquim Levy will head the National Treasury. Levy, who holds a doctorate in economics from the University of Chicago and has worked at the International Monetary Fund, is currently the chief economic adviser at the Planning Ministry. "It's an important appointment because it confirms orthodox shaping of the economic team," El-Erian said. Mark Dow, a portfolio manager at MFS Investment in Boston, said global economic concerns and heightened geopolitical risks focused on Iraq and North Korea will set the overall tone this week. "The market tends to interpret the news out of Brazil more charitably when the global backdrop is positive and we tend to interpret is less charitably when the global backdrop is less positive," Dow said. Market activity is expected to be thin as the New Year holiday falls in the middle of the week. SHOWDOWN IN VENEZUELA Venezuela's strikers, organized by business and union leaders, have demanded Chavez call elections or step down. But the president has only hardened his tone, vowing to break the work stoppage. "This is an impasse that cannot last long because of the costs for both sides," said Roberts. "For Chavez, the direct cost is the loss of oil revenues. The longer the ports stay closed the more his ability to govern is called into question," Roberts said. "In the meantime, the protesters can be charged with economic sabotage." Chavez was elected in 1998 after a campaign in which he vowed to wrest control from the country's corrupt elite and enact reforms to help the poor. But opposition has grown amid charges the president wants to establish a Cuban-style authoritarian state. "As we enter the fifth week of the strike in Venezuela the risk of street violence is increasing, which would further complicate the country's outlook," El-Erian said. "Both sides are very entrenched," he added. "You could see an event in Venezuela any day this week, as opposed to Brazil, where you are not likely to have an event but the market will just be trying to pick up signals about the orthodoxy of the economic team." Many investors say Chavez, notorious on Wall Street for his failed economic policies and anti-capitalist rhetoric, is probably on the way out and that Venezuelan bonds are poised to rally on that development, which helped account earlier this year for the stunning rise in Venezuelan bond prices. Venezuelan debt has rewarded holders with total returns of 18.79 percent in 2002, compared with the 14.16 percent rise in the overall market, according to the EMBI-Plus. But as the strike eats into the country's oil and Christmas season tax revenues, Venezuelan total returns have dropped 3.29 percent so far in December. Copyright 2002, Reuters News Service