www.vheadline.com Posted: Thursday, March 20, 2003 By: Robert Rudnicki

Venezuelan Foreign (MRE) Minister Roy Chaderton Matos has cautioned that he is unsure how long it will take for Confederation of Trade Unions (CTV) president Carlos Ortega's application for safe conduct to Costa Rica to be processed as "these things take time."

Ortega is currently confined to the Costa Rican embassy in Caracas after having his application for political asylum granted by the Costa Rican government.

The Minister estimated that the application could take between one and seven days to process, but insisted that it would be completed as soon as possible and that no conditions would be placed on the Costa Ricans as a result.

Ortega applied for asylum after an arrest warrant was issued for his involvement in the two month long national work stoppage which began on December 2. Fellow strike leader Carlos Fernandez was arrested and after being placed under house arrest he has been rushed to a private clinic as his health continues to deteriorate.

sg.biz.yahoo.com Thursday March 20, 6:25 AM By Dan Molinski Of DOW JONES NEWSWIRES

BOGOTA (Dow Jones)--As dollar restrictions in Venezuela continue and Colombian exporters wait to be paid $300 million for products already delivered to their neighbor, a trade group in Bogota is calling for a system of barter trade between the two countries.

"This is not some crazy idea," Maria Luisa Chiappe, president of the Colombian-Venezuelan Chamber of Trade and Integration, told Dow Jones Newswires Wednesday. "We're proposing a barter system through which Colombia will buy Venezuelan products and trade them for Colombian products, without cash changing hands."

The Venezuela government, led by President Hugo Chavez, halted foreign currency sales in January to stem a hemorrhage in international reserves and has since enacted tight restrictions on foreign currency sales.

The Venezuelan government has allowed importers of food, medical supplies and other necessities to buy dollars to pay for their goods. But importers of nonessential products such as clothing apparel and leather shoes have not been given access to greenbacks, so far.

Chiappe said she would present this proposal to the two countries' governments this week or next.

She added that the chamber will meet with textile and leather exporters Thursday to discuss the idea. In this meeting, they plan to discuss how products would be priced under a barter system. It's likely all product prices would be converted into dollars, Chiappe said.

Officials at Colombia's Trade Ministry were not available for comment.

Colombia exports more of its products to Venezuela than to any other country except the United States. Textile and apparel makers in Colombia send 20% of their products to Venezuela.

Colombia exported $1.1 billion worth of goods to Venezuela last year and imported $788 million worth.

Chiappe suggested the barter could involve Venezuela trading its iron and steel for Colombian textiles and apparel.

Barter Trade Unnecessary If Central Banks' System Works

Last week, the central banks of Colombia and Venezuela revived a long-standing agreement to act as a clearing house for exporters and importers to guarantee payments on shipments.

Chiappe said this plan, arranged by the Aladi Latin American Trade Grouping, may be all that's needed.

"The Aladi system is good, but the problem is we still don't know whether (Venezuela importers) who can't buy foreign currency, such as importers of clothing apparel, will be allowed to take part in this system, given Chavez' restrictions," Chiappe said.

If the Venezuelan government decides to authorize all its importers to take part in the Aladi clearing system, then the need for the barter system won't exist, Chiappe said.

"The Aladi system, indeed, would be better than the barter system, as it contains many guarantees and has the backing of the central bank of each country," she said.

Javier Diaz, president of Colombia's main exporters association, Analdex, said he also supports a bartering system if the Aladi system with the central banks doesn't work out.

"The bartering system would be more complicated than using the central bank as a clearing house," Diaz said. "Because as a Colombian exporter, I would have to look for an importer who needs goods from Venezuela."

He added: "But if bartering is the only way to keep our trade lanes open, then I'm all for it."

The last time Colombia utilized the bartering system was during an economic crisis more than 30 years ago, Diaz said. At that time, Colombia bartered its world-renowned coffee to the then-Soviet bloc nations of Russia, Czechoslovakia and Yugoslavia, and received automobiles in exchange.

In Argentina last year, barter clubs gained a following within the country as its currency lost value amid an economic meltdown.

-By Dan Molinski, Dow Jones Newswires; 571-600-1980; colombia@dowjones.com

www.belleville.com Posted on Wed, Mar. 19, 2003
CHRISTOPHER TOOTHAKER Associated Press

CARACAS, Venezuela - President Hugo Chavez is using currency controls to limit press freedom by denying Venezuelan newspapers the dollars needed to import newsprint, a newspaper director said Wednesday.

Nationwide newsprint stocks are down to one month's supply, said Miguel Otero, director of Caracas' El Nacional.

"Nobody knows how the newspapers are going to operate after April," Otero said. "The government wants to silence us."

Chavez accuses Venezuela's news media of conspiring to overthrow his leftist government. Many newspapers endorsed a recent, failed two-month general strike to demand early presidential elections. Chavez's term ends in 2007.

Chavez suspended dollar sales to businesses and citizens Jan. 22 to stem a rapid devaluation of the bolivar currency and capital flight.

The government published a list this week of 6,000 imported items, such as medicine and food, that will be eligible for private dollar purchases at a date to be announced. Newsprint is not on the list, although the government says it may be in the future.

"This is undoubtedly an attempt against freedom of expression. It's becoming a government policy," Otero said.

The bolivar lost a quarter of its value against the dollar this year before currency sales were halted.

ON THE NET Venezuelan Currency Administration Committee: www.cadivi.gov.ve

www.miami.com Posted on Wed, Mar. 19, 2003
By MARIKA LYNCH mlynch@herald.com

CARACAS - Jose Luis Rosal fell off the back of a pick-up truck, scraped his cheek, and needed 15 stitches in the crown of his head. Three days later, though, the 20-year-old waited seven hours outside a Caracas hospital for an X-ray to see if he had a skull fracture.

The hospital in his hometown, located an hour outside the capital, turned him away because they didn't have the materials to make an X-ray, his sister said.

Venezuela's chronically strapped hospitals have been further pinched since the government stopped selling U.S. dollars needed to import supplies, medicine and other goods.

The government imposed the currency controls two months ago, after a national strike that failed to oust President Hugo Chávez and all but shut down the oil industry -- the country's primary source of foreign exchange. With the national currency, the bolivar, dropping in value and fearing capital flight, the government imposed the controls to keep dollars in the country.

But since Venezuela relies on imports for most goods, imports bought with U.S. currency, the lack of dollars is being felt throughout the country.

Pharmacists say they have a stock for three more weeks, and then ''the Venezuelan health system could collapse,'' Edgar Salas Jimenez, president of the Venezuelan Pharmaceutical Association, said.

Manufacturers and distributors are running through inventory, but goods from toilet paper to electronics could become scarce, they warn. Meanwhile, farmers say their crops will be thinner this year, without the proper imported fertilizers. Then they'll have to scrounge for packaging material to wrap what is produced.

Big business, shopkeepers, and street sellers like Fortunata Humani, who sells bikinis and lace panties from a sidewalk stall, expect to be affected. Wholesalers already warned Humani their imported inventory is sparse. Humani, 46, says she may have to start sewing her own clothes from home, if she can find the material.

The Venezuelan economy, private analysts say, could shrink up to 30 percent this year, and the currency controls will be a factor.

''They are destroying the entrepreneurial fever of the Venezuelan people,'' economist Orlando Ochoa said of the controls. ``What little there is left.''

The effects also could reach Florida. Close to $3 billion in Venezuela-bound exports -- from machinery to medicines and clothing -- passed through Miami-Dade and Tampa's ports in 2001, according to business development group Enterprise Florida. Also, under the measure, Venezuelans aren't allowed to use credit cards abroad, which curtail shopping in South Florida malls. Business travelers will be allowed to get dollars, but only $1,000 a trip, allowed three times a year.

This week, the government said it will start selling $645 million a month, to go toward a list of priority goods, mostly foods and medicine. The government is also artificially setting their prices, to keep them down.

But a newly created government agency will decide who gets the greenbacks, and only a fraction will actually be given to private importers, said Jose Piñeda, head economist for the Venezuelan American Chamber of Commerce and Industry. The government will use some, he said, to import food and distribute it to the poor at markets, he said.

Venezuela has imposed currency controls twice in the past two decades, and both periods ended with high inflation, Piñeda said. This time, though, the economy has already been weakened by the two-month strike, and the effects could be worse.

Business leaders want a parallel dollars market, where they can buy currency at a higher rate than the established 1,600 bolivars to the dollar. So far the government has avoided the idea. Some businesses are already turning to the black market, where one dollar is sold for 2,800 bolivars.

Business leaders, most of whom are opposed to President Chávez, also fear the government currency agency will use its power to punish people who supported the country's strike. The worry isn't without warrant. Chávez has said that ''Not one dollar'' will go to the ''coup-plotters,'' his name for those who tried to force him out through the strike.

First elected in 1998, Chávez was briefly ousted by a coup last April. A coalition of union, oil and business leaders failed to push him out, or call new elections, through a strike that ended in February.

Venezuela's newspaper owners fear that newsprint will not get on the import list, for political reasons. Their newspapers have been highly critical of Chávez. Newsprint first appeared on the list for a day, then was quickly removed. But officials have since said it will be restored.

On average, local newspapers have enough in stock to keep printing through April and into May.

But if that doesn't come through, ''we're going to be the first country in the world without a newspaper,'' said Miguel Henrique Otero, publisher of the daily El Nacional.

www.belleville.com Posted on Wed, Mar. 19, 2003 CHRISTOPHER TOOTHAKER Associated Press

CARACAS, Venezuela - Jewelry, crystals and gold-encrusted statues normally fill Luis Pereida's gift shop in downtown Caracas. But his suppliers haven't brought him a shipment in three months, and the store's stock is dwindling.

The problem is a package of currency controls that President Hugo Chavez imposed on Jan. 21 to try to stop the free fall of Venezuela's bolivar. The rules restrict buying of dollars - and without dollars, the distributors who supply Pereida can't buy goods from abroad.

The shortage of greenbacks is beginning to hit business owners hard, and Pereida, for one, is worried.

"If this situation continues, I'll have to close my store," he said.

To try to cushion the blow for importers, the government exchange controls committee, or Cadivi, has declared some 6,000 goods essential - including some food products, medicines, personal hygiene items and industrial raw materials.

Importers of those goods, under the new regulations, will eventually be granted dollars. But as a result of delays in implementing the new system, not one dollar has been granted during the last 57 days.

The delay, coupled with restrictions on imported "luxury" goods like electronic entertainment equipment and jewelry, have many shop owners anxious and confused.

Some are buying dollars on the black market. The bolivar is set at a fixed rate of 1,598 to one dollar but it trades as high as 2,800 to the dollar on the black market.

Eduardo Gines, who owns an electronics store, said his suppliers are either selling inventories or buying black market dollars "because there is no other alternative."

The president of the currency committee, Edgar Hernandez, said Monday the government would begin granting dollars this week.

"We are doing the job as fast as possible," he said.

The currency control committee is supposed to sell $650 million this month, but economic analysts say only a fraction of it will go to the private sector for imports.

"This isn't enough," said Jose Pineda, chief economist at the Venezuelan American Chamber of Commerce and Industry, or VenAmCham. Importers need at least $800 million month, he said.

Pineda said the only the government is currently importing goods. In order to combat food shortages caused by the lack of available dollars, Chavez's government is importing food and using the military to distribute and sell it at markets for the poor.

Pineda estimates the government could use $400 million of the $650 million Cadavi is slated to grant in March, leaving the rest for importers, students studying abroad and people on business trips.

Imports averaged a bit more than $1 billion a month last year and are expected to fall by roughly half that amount because of the new rules.

Opposition leaders are demanding Chavez agree to early elections, blaming his left-leaning policies for the country's deepening economic crisis.

Chavez blames the economic downturn on his adversaries, who staged a two-month general strike this winter aimed at ousting him. The strike crippled markets, and the bolivar lost a quarter of its value before currency sales were halted.

The former paratrooper, who was elected in 1998 and re-elected in 2000, accuses opponents of leading "an economic coup" to remove him from office. He was briefly overthrown in April, but returned to power two days later.

Amid the turmoil, Fedecamaras, the nation's leading business chamber, said Monday that at least 30,000 businesses could go bankrupt this year.

Venezuela's economy contracted almost 9 percent in 2002, and Fedecamaras predicted that it will shrink another 17 to 36 percent in 2003.

On the Web Venezuelan Currency Administration Committee: www.cadivi.gov.ve