PETROLEUMWORLD Caracas, Jan 4

Caracas, Venezuela, January 2, 2003

Mr. Yves Engler Vice President Communications for the Concordia Student Union

Dear Mr. Engler,

We have read your December 15th article on Venezuela, published by Petroleumworld.com. We believe it does not adequately reflect the critical political and economic situation we are facing in Venezuela. Actually, we feel you are misinterpreting what is happening here.

What you call "a general strike" is really "civil disobedience". It is allowed by the Venezuelan Constitution under Article 350. Chavez practically wrote that article into the Constitution in 1999.

Popular discontent in Venezuela is rooted in the tradition of Thoreau, Ghandi, and Martin Luther King. Perhaps, we could even go back to Antigone, in ancient Greece. What really matters is that "the strike" is sending a clear message : the Venezuelan people simply got tired of empty promises, bullish language, and bad government by the person who, as you point out in your article, was elected by a vast majority in 1998. Let us not forget that Chavez came into power after unsuccessfully trying to overthrow the government, twice, in 1992. That government had also been elected by a majority of the people but Chavez claimed it had lost legitimacy. This is exactly what is happening to him, now. He has squandered the largest political capital ever awarded to a Venezuelan. His campaign promises to fight corruption, reduce poverty, and rekindle economic growth became hollow words. He was only interested in political control. He rewrote the constitution and proceeded to gain absolute control of the Congress, the Supreme Court, the office of the Attorney General, and other authorities which, under the constitution, should be independent. The fact is, he has done away with all "checks and balances", which is not exactly democratic. Is it so difficult to understand why opposition against him has grown from a trickle in 1999 into a tidal wave of popular protests that have led to the kind of "civil disobedience" never before seen in our country?

We do not want to tire you with details. However, please look at the facts. A partial list would include the following :

(a) in the four years since Chavez came to power, the economy has been wrecked, capital flight has increased, private investment has significantly diminished, and unemployment has grown. You can get the figures from the Central Bank of Venezuela. A key indicator to watch is per capita GDP. True, it had been coming down in previous years but under Chavez, it has taken a nosedive. As a result, poverty has dramatically increased (do read the Study on Poverty by the Universidad Católica Andrés Bello in Caracas). Central Bank figures show that for the first nine months of 2002, total real GDP came down by 6.2%. Estimates for the year as a whole range from - 8% to - 9%;

(b) despite record-high petroleum prices, the government has posted a fiscal deficit every year since 1999. Fiscal mismanagement has increased to a level never seen before. As a result, domestic national debt has ballooned (it tripled since 1999);

(c) the unemployment rate has increased to 16% but, in addition, 52% of the labor force belongs to what is euphemistically called "the informal economy", meaning, no insurance, no labor law benefits, no training, no medical assistance. Picture what this means for international competitiveness in an age of globalization;

(d) it is not true that one million students have enrolled in primary school under Chavez and, yes, minimum wages have been increased but then every previous government in Venezuela had done the same. This has become common political practice in our country.

(e) inflation did subside for a while but only because the currency was artificially "anchored" (pegged) to a foreign-exchange "band". When that system collapsed in February of last year, the currency was allowed to float. It experienced an 84% depreciation, in just ten months. Inflation jumped to 31% for the year. The market has lost faith in fiscal and monetary policies; thus, devaluation will continue if Chavez stays.

(f) land distribution under Chavez is a myth but private farmers are being scared away by land-confiscation threats. As a result, agricultural production is down.

Need we continue? You should get the facts and figures that will allow you to make a more comprehensive appraisal of economic and social reality in Venezuela.

Finally, the oil industry.

The Venezuelan oil industry is paralyzed. On December 15 you wrote : "though the strike seems to be withering, in the key oil industry disruption continues." On December 30, 2002, total crude production was down to 150,000 barrels (compared to 3.1 million barrels per day in late November). Exports are down to a trickle and what little is being shipped is coming out of storage. Yet government sources claim that "oil operations are practically back to normal". Gasoline is being imported from Brazil at extremely high prices. Such imports are basically intended to get media attention abroad. The few service stations which are still open are getting gasoline of very poor quality, usually mixed with water. Hundreds of vehicles are already stranded as a result. But, do come to Venezuela, drive around, stand in line at a service station, talk to the people. Most Venezuelans in line will tell you that "this is the price we have to pay" to recover our national dignity.

It will take weeks to repair the damage already done to the efficiency and morale of the oil industry. But, it may get worse. Look at what is happening : (a) PDVSA?s President Alí Rodríguez (a former guerrilla fighter in the 1960?s) has fired the top 90 managers of the Corporation but workers have not flocked back to work; (b) already, 23 oil-industry accidents have been reported in the past 29 days because the people being used by the government to man operations simply are not qualified; (c) army personnel with limited experience are being appointed to top administrative positions in the industry; (d) the large refineries are down to the minimum level necessary to avoid collapse; (e) force-majeure has been invoked by PDVSA on oil export contracts.

As a result of "civil disobedience" in the oil industry, fiscal income from oil will be sharply reduced. Thus, the fiscal deficit in 2003 will be larger and extremely difficult to manage. Since 2001, Venezuela has lost access to international capital markets and the Government can no longer tap domestic debt markets. The foreign-exchange implications are no less ominous. Notwithstanding the fact that exchange markets virtually shut down in December, total foreign exchange reserves dropped US$ 1.2 billion during the past 30 days. The government last week forced PDVSA to draw down (again) on the savings which the oil industry had accumulated at the special Investment Fund (FIEM). This is intended to finance the payment of PDVSA dividends to the Government, in violation of Fund rules and its spirit. PDVSA managers and workers are protesting against political interference, loss of corporate autonomy, and violation of trust. Remember that all PDVSA appointments made by the Chavez Administration have been based not on merit or experience but on political affiliation "to the revolution". Come to Caracas and check it out.

Will "civil disobedience" lead Venezuela to early elections? In your article you wrote : "according to the constitution, to remove Chavez, the opposition needs only to wait until August, half way through his term when a binding referendum can be held." True. But, at what cost? And, whatever happened to "listening to the voice of the people"? This used to be one of Chavez? favorite expressions, back in 1999. The "problem" is that, now, about 75% of the people want him out. So, instead of lending an ear, he takes refuge in the Constitution.

Have you sat through one of Chavez? four-to-five-hour weekly speeches? His rhetoric is impressive but defiant and conflict-prone. To Chavez, anyone who disagrees is a "traitor"; anyone daring to dissent simply "wants to overthrow the government"; anyone who is not for him is clearly a member of the "corrupt oligarchy". Yes, he was democratically elected in 1998. However, his government has lost legitimacy. It is time to go back to the people.

We wish you a happy new year. We hope we too can have a good year in Venezuela. Meaning, without Chavez. Without him, we can and will rebuild this country.

Sincerely,

Mauricio García Araujo Irene García de García

cc. The Editor, Petroleumworld.com

E-mail addresses : Mauricio García Araujo : mga23@telcel.net.ve Irene García de García : meganet@iamnet.com

Venezuelan Strikers Disagree as President Seeks Brazil's Help By Harold Olmos Associated Press Friday, January 3, 2003; Page A16

BRASILIA, Jan. 2 -- President Hugo Chavez of Venezuela said today that his country's oil industry, crippled by a month-long general strike, is recovering and will reach its pre-strike capacity in 45 days. Domestic opponents said the claim was false.

Chavez made the comments in Brazil, where he was attending the presidential inauguration, despite the turmoil of a strike led by opponents who seek to remove him from power.

Chavez met with Luiz Inacio Lula da Silva, who was sworn in as Brazil's president Wednesday, and asked him to send experts from Brazil's state-owned oil company to replace some of the 40,000 Venezuelan state oil company workers who have walked off the job.

After a breakfast with Silva, Chavez said the Brazilian president said he would consider the request and discuss it with the new head of Brazil's oil company, Petrobras.

Chavez has fired dozens of striking managers from the state oil monopoly, Petroleos de Venezuela SA, and sent troops to guard installations across the country. He insisted that replacement workers were slowly bringing refineries and oil wells back online.

Chavez said Venezuela is now producing 800,000 barrels a day, up from the 200,000 barrels at the country's lowest level of production.

In Venezuela, opposition leaders disputed Chavez's claim and said most of the industry's workers remain off the job. Strike leaders insist the government will not be able to restart operations without them.

Also, opposition estimates of current oil output were at odds with government assertions. There was no way to independently reconcile the figures.

Venezuela's Democratic Coordinator -- a coalition of opposition parties, business associations and labor unions -- insisted output was only 190,000 barrels per day and that natural gas production was down by 80 percent.

The strike, which began Dec. 2, has forced motorists to line up at service stations for hours. Store shelves were increasingly bare.

The oil industry represents 30 percent of Venezuela's $100 billion gross domestic product and 70 percent of exports. Venezuela is the world's fifth-largest oil exporter and a major provider to the United States. The strike has helped push international oil prices above $30 per barrel.

Negotiations sponsored by the Organization of American States were set to resume today after a brief break for New Year's. The main topic is the opposition's demand that Chavez submit to early elections or at least a nonbinding referendum on his presidency.

Chavez has vowed not to resign. He argues that Venezuela's constitution allows a binding referendum only in August 2003, halfway into his six-year term.

© 2003 The Washington Post Company

For the Chavez Problem in Venezuela - www.larouchepub.com

U.S. Presidential pre-candidate Lyndon LaRouche has expressed his concern over the dangerous and rapidly degenerating political situation in Venezuela, and in particular over the added complications arising from the highly unstable and erratic behavior of President Hugo Chavez. Chavez's apparent personal state of clinical insanity, represents a significant security threat to the Americas. This, added to the overall explosive situation throughout the hemisphere, threatens to become the detonator which sets off the entire bomb.

LaRouche emphasized that, in his capacity as a leading candidate for the Democratic Party nomination for the 2004 Presidential elections, it would be negligent on his part not to draw attention to this urgent matter, and to emphasize the urgency of choosing the best path towards its solution. There is substantial evidence that Chavez is actually clinically insane. This evidence, which we indicate below, must be duly assessed, LaRouche urged. If Chavez is as insane as appears to be the case, then a prompt, quiet, non-bloody solution must be found and agreed upon by the relevant parties, under which Chavez would be induced to step down from office, perhaps with the assistance of suitable friendly professional advice.

LaRouche emphasized that such an approach is called for immediately, lest others might concoct very bad alternatives to the current Venezuelan chaos, such as coups, assassinations, and other approaches that will only trigger a chain reaction and spread the problem across the region. LaRouche stated emphatically "We don't want an 'Allende solution' to the Chavez problem." LaRouche also rejected the idea, currently promoted by the Inter-American Dialogue and other bankers' think-tanks, of using the Organization of American States (OAS) to orchestrate a supra-national intervention into Venezuelan affairs, in violation of that country's national sovereignty. This mechanism was employed in 2001 by Wall Street and the U.S. State Department, in order to overthrow the Fujimori government in Peru, which established a terrible precedent for the hemisphere.

LaRouche reiterated that his policy for the Americas is in the tradition of John Quincy Adams, Abraham Lincoln, and Franklin Delano Roosevelt, where a community of principle among perfectly sovereign nation-states is the framework in which mutually beneficial economic development tasks are jointly undertaken. -

The Chavez Dossier - The essential evidence of Hugo Chavez's insanity is to be found in what masquerades as his "religious" or "theological" views. Typical were his heady remarks after his forces won 120 out of 130 seats for the Constituent Assembly in July 1999 elections: "The victory of the patriots has been pulverizing!... You are either with God or the devil, and we're with God because the voice of the People is the voice of God.... Now Chavez is not Chavez; Chavez is the People, and the People cannot be stopped! We'll win with God's favor and the People."

Before Chavez ever ran for President of Venezuela, Lyndon LaRouche identified the two years from 1992 to 1994, in which Chavez was jailed under horrendous conditions, as a critical period in turning Chavez from an ordinary fool, into a mental case, producing a "miraculous metamorphosis" in his world-view. The specific form of his insanity, became the text-book Romantic fascist dictum of Vox Populi, Vox Dei: "The Voice of the People is the Voice of God." The controlling sense of personal identity of victims of this outlook—such as Napoleon Bonaparte, or Adolf Hitler—is that of ethereal unity with "the People," and thus with "God." The victim thereby feels entitled to act like a Roman Caesar, displaying impunity and disdain towards other mere mortals.

Since assuming the Presidency in February 1999, at any point at which he has been challenged, Chavez has asserted that dictum, with increasing fervor, as justification for his decisions. When the courts overruled him, he asserted that he is bound by no law or institution, because he represents the People, and thus, by derivation, his is the Voice of God. As the crisis has grown, Chavez's assertion of "Vox Populi" has taken on increasingly "religious" tones, as the Venezuelan population, too, has become increasingly overtaken by charismatic religious movements of various denominations. Each of these reports hearing divine "voices" telling them what they must do—and each of which coheres, to an uncanny degree, with the role which the international oligarchical elites would have them play within their overall game-plan for Venezuela.

In April-May 2000, Chavez attempted to force the Catholic Church hierarchy to bow before him, arguing that "Christ was resurrected from the dead, to become the People," and since Chavez represents the People, he threatened to unleash "legitimate violence" against those in the Church who opposed him. In so doing, he presented himself as a died-in-the-wool Catholic. Then in January 2002, Chavez announced he had become a born-again (Protestant) Evangelical Christian, only to retract the statement four days later. Meanwhile, Chavez's disaffected wife, Marisabel Rodriguez, has shown up at born-again (Protestant) Christian rallies, to urge Chavez to mend his ways.

Chavez's most recent public display of clinical dissociation came in a rambling, five-hour presentation on his national TV/radio show "Hello, President," on Dec. 15, 2002. There Chavez ordered Army troops to ignore any rulings by the courts which were unfavorable to him, and to follow no one's orders but his own. As for those calling for his resignation, he retorted: "Chavez will leave only when God commands, because I am in the hands of Christ.... He is the commander, and when He speaks I obey, understood? And secondly, [I obey] the People. And I assume the voice of the People is the voice of God. I will not leave because of pressures from a group of businessmen, a group of coup-makers, a group of fascists."

From this substratum, numerous secondary expressions of Chavez's insanity are nourished, some of which have been noted in the public media. For example, The New Yorker magazine published a profile of Chavez in its Sept. 10, 2001 issue, written by Jon Lee Anderson, which contained a report on the author's interview with Chavez's psychiatrist, Dr. Edmundo Chirinos. Dr. Chirinos, who considers himself a supporter of the Venezuelan President, explained that Chavez "prefers to embrace dreams that seem impossible to achieve, rather than confronting the harsh realities of life." Anderson summarized Dr. Chirinos's description of Chavez, as "a hyperkinetic and imprudent man, unpunctual, someone who overreacts to criticism, harbors grudges, is politically astute and manipulative, and possesses tremendous physical stamina, never sleeping more than two or three hours a night."

Anderson also interviewed officials at the prison where Chavez was incarcerated in the early 1990s, including the secretary of the prison psychologist from that period. "Every morning, he [Chavez] sat in a chair in the open-air caged yard that had been built specially for him outside his cell," they reported. "There was a plaster bust of Simon Bolivar there, and he would speak to it." He would turn the head around to face him for the conversations, they reported. Anderson also noted that Chavez's aides today report that he is a "caffeine addict," who used to drink 26 cups of espresso a day, until his staff managed to wean him down to "only" 16.

`La gran batalla? dejó 2 muertos LUIS MARTINEZ EL UNIVERSAL

Miles de manifestantes se dirigieron desde varios puntos de la ciudad hacia Los Próceres para seguir protestando contra el Gobierno. Pero el enfrentamiento de chavistas y la oposición en el distribuidor La Bandera, junto con la acción de la Policía Militar y la Guardia Nacional dejó como resultado previsible más de 70 personas asfixiadas, por lo menos 30 heridos por pedradas y otros por armas de fuego Una anciana se enfrentó a los policías militares que impidieron el paso de la multitud hacia Fuerte Tiuna

Primera marcha del año, primer parte de guerra. No muy distinto parece haber comenzado el 2003 con respecto a su predecesor. La manifestación, llamada `La Gran Batalla? hizo honor a su nombre cuando afectos al Gobierno se apostaron en el distribuidor La Bandera y miembros de la oposición se enfrentaron primero a insultos, luego a pedradas (del oficialismo lanzaron la primera piedra) y luego, para tratar de restablecer el orden, intervino la Policía Militar y la Guardia Nacional con su tradicional ración de bombas lacrimógenas y perdigones para ambos lados de los manifestantes.

El `enfrentamiento? dejó como saldo dos muertos por arma de fuego: Jairo Gregorio Morán, (23), con herida en la región lumbar izquierda y Oscar Aponte Gómez, (24), con herida en la parte izquierda del cuello. También fue baleado Sergio Carreño, de 33 años, con herida en el muslo izquierdo. En total fueron ocho los heridos por armas de fuego y hubo más de 70 asfixiados por las lacrimógenas, y alrededor de 30 con contusiones por piedras o botellazos.

Douglas Arocha, de 23 años, personal de Protección Civil de la Alcaldía Mayor, recibió un balazo en el abdomen; Pedro Córdova, de 33 años, del personal de Salud de la Alcaldía de Chacao, recibió un impacto en la pierna derecha; José Guillermo Prieto, de 26 años, fue atendido en el hospital Vargas por una herida de bala en el codo derecho. El cuarto herido por arma de fuego responde al nombre de David Grozzi.

Pero los civiles no fueron los únicos heridos. Cuatro policías metropolitanos y una funcionaria de Policaracas también deben agregarse a esta lista, uno de ellos por herida de bala: el cabo Molina Filadelfia, los demás recibieron diversas contusiones, como el distinguido Luis Hurtado, quien resultó herido por una piedra en el maxilar derecho, el policía Douglas Capote fue atendido por una pedrada en la cabeza y el distinguido Cedeño sufrió una contusión en la cabeza. La funcionaria de Policaracas no fue identificada, pero resultó con una herida en la cara al ser golpeada por un fal de un guardia nacional.

Ellos sí, nosotros no

Ante estas agresiones, el gobernador del Estado Miranda, Enrique Mendoza, condenó los hechos y señaló de manera irónica que `cuando montaron la fritanga, el gaitazo ese, con aguardiente y todo, sí había el permiso correspondiente?.

La marcha opositora tuvo que parar la caminata a la altura del edificio de la Procuraduría General de la República por un cordón de guardias y policías militares que impidieron la llegada de los manifestantes a los monolitos de Los Próceres. El coronel José Rodrigo Pantoja, comandante de la Policía Militar, justificó el hecho alegando que la manifestación no fue autorizada hasta la zona militar. Explicó que una cosa muy distinta es que la gente vaya a Los Próceres a hacer ejercicio y pasear y otra una movilización que ha sido anunciada como la gran batalla?. Señaló finalmente que ellos como militares respetan el derecho constitucional de manifestar libremente siempre y cuando se esté apegado a la ley?, por eso acordonaron el sitio hasta la Procuraduría y cuando algunos manifestantes trataron de violentar la alcabala de militares, se produjo la acción disuasiva.

WHAT a mess in Venezuela. 2003-01-04 www.newsok.com

A national strike that began Dec. 2 is entering its second month, its organizers -- an unusual alliance of business and union leaders -- calling for an immediate referendum on President Hugo Chavez's continued rule.

The stoppage has put hundreds of thousands of Venezuelans in the streets in a stormy atmosphere the Los Angeles Times likened to a chair- throwing episode of "Jerry Springer."

Some are protesting Chavez's dabbling in Cuban-style socialism and an economy in recession. Others are marching in support of the president, who claims he is trying to distribute the country's oil wealth to the poor, which make up about 60 percent of the population.

Venezuela's oil industry, the world's fifth-largest, has been crippled. Long gas lines are common in Caracas. Recently the unthinkable occurred: importation of gasoline from neighboring Brazil. The U.S., which gets about 15 percent of its oil from Venezuela, is watching carefully.

The Bush administration has been criticized for meeting with members of Chavez's opposition. It was no more than a pro forma meeting, standard practice for U.S. governments, but still it drew a letter of protest from a handful of Democrats.

"While the Venezuelan president is trying to confiscate property, militarize the civilian government, take over the labor unions and squash a free press, congressional Democrats believe the biggest threat to life and liberty in Venezuela is America," the Wall Street Journal editorialized.

Others are criticizing the administration for not doing enough.

President Bush is taking the proper course for now: maintain contact but at a safe distance.

Venezuela's stalemate is largely Chavez's own doing. According to the country's El Nacional newspaper, 67 percent of those who supported Chavez now think there should be a new election.

America should let the Venezuelan drama run its course and stand ready to assist responsible leaders when the dust settles.