abcnews.go.com CARACAS, Venezuela Jan. 28 —

Striking Venezuelan oil executives acknowledged Tuesday that daily production surpassed 1 million barrels, signaling that President Hugo Chavez may be regaining control of the nation's key industry.

The statement by dissident executives at the state monopoly Petroleos de Venezuela S.A., or PDVSA, came as opposition leaders debated whether to ease the 57-day-old strike against Chavez. Some fear Venezuelans' discontent with strike-induced food and fuel shortages could undermine their objective of removing Chavez from office.

Negotiations, mediated by the Organization of American States, have focused on whether to hold early presidential elections.

Also Tuesday, the Finance Ministry extended a freeze on foreign currency sales until Feb. 5. The suspension is designed to give the government more time to stem the slide of Venezuela's bolivar currency, which has lost a quarter of its value this year.

Dissident PDVSA executives said Tuesday that output by the world's fifth-largest exporter was 1.05 million barrels. Chavez claimed last week that daily production topped 1 million barrels.

That remains well below pre-strike levels of 3.2 million barrels per day, but well above the 150,000 barrels per day produced during the strike's early days.

The oil industry provides half of government income and 70 percent of export revenue.

The government has fired more than 5,000 PDVSA workers, corporation president Ali Rodriguez told state news agency Venpres on Tuesday.

Rodriguez, a Chavez ally, said more dismissals are forthcoming as the government takes advantage of the strike to downsize the company and eliminate dissent. PDVSA had almost 40,000 employees and the government claims most have returned to work.

Strike leaders deny this, saying the government has increased output by focusing on new oil wells, where it is easier to extract crude oil. They insist the strike, called Dec. 2, will continue in the oil industry despite the government's progress on bring operations back online.

"The protest by oil workers will continue because this is the path we are taking to find a solution to the crisis," dissident oil executive Juan Fernandez said.

But several business leaders said schools, restaurants and malls should reopen amid concern that discontent with food and fuel shortages and financial losses caused by the strike could undermine the objective of removing Chavez.

Julio Brazon, president of the Consecomercio business chamber, which represents about 450,000 stores and retailers, said businesses need "to recover earnings and avoid labor problems." He said shopping malls and franchises may be permitted to open part-time next week.

Carlos Avila, executive president of Subway de Venezuela, said fast-food franchises were considering opening four days a week. Each of Subway's 76 branches in Venezuela have lost an average of $30,000 during the strike.

The National Association of Private Education, which represents 911 private schools, convoked assemblies this week to decide whether schools should open Feb. 3.

Strike organizers, who accuse Chavez of dragging this South American country into political and economic chaos, warned that easing the work stoppage would be counterproductive.

"If some sectors of the opposition, business sectors or political sectors, think they can save themselves from this regime by easing the strike, they are totally mistaken," said Carlos Ortega, president of the Venezuelan Workers Confederation, the country's largest labor union with 1-million members.

The government is struggling with the strike's impact on the economy. The strike has cost Venezuela at least $4 billion so far and the Santander Central Hispano investment bank has warned that the economy could shrink by as much as 40 percent in the first quarter of 2003.

The Finance Ministry's extended freeze on foreign currency sales is meant to give the government more time to implement a new policy of foreign exchange controls, which will limit the amount of dollars and other foreign currencies Venezuelan can buy.

The exchange controls would stem the slide of Venezuela's bolivar currency but hurt businesses dependent on dollars to buy imported goods.

The strike was called to pressure Chavez to accept a referendum on his rule. The opposition hoped a referendum, though nonbinding, would embarrass Chavez into leaving office.

But Venezuela's Supreme Court ruled last week balloting must be postponed indefinitely, prompting opposition parties to organize a massive signature collection campaign on Feb. 2.

Government adversaries hope to amend the constitution to allow early elections.

Chavez, a former paratrooper, was elected in 1998 and re-elected two years later. His term in office ends in 2007.

www.vheadline.com Posted: Tuesday, January 28, 2003 - 3:29:52 PM By: Patrick J. O'Donoghue

PROVEA human rights group shows signs of pessimism in its latest report on human rights in Venezuela.

Intolerance and deaths continue.

The group cites four deaths since the beginning of the year, 70 persons asphyxiated with tear gas and 30 injured in a fight between government and opposition supporters in Los Proceres and 25 injured in Valles del Tuy. The death of Wilmer Campos Perez (45) and injury of 12 persons on January 23 in a grenade explosion near a government rally has still to be clarified.

Impunity, PROVEA pessimistically reports, continues to hold sway and the Venezuelan human rights organization spotlights a number of cases of daily intolerance, such as the beating up of indigenous actress Elsa Morales by women at Plaza Altamira ... dubbing her a Chavist ... and attacks on Christian Socialists (COPEI) and Movimiento Al Socialismo (MAS) activists in Caracas as they placed anniversary wreaths at the foot of Simon Bolivar’s statue.

PROVEA maintains that, in particular. the Statehas the main responsibility to prevent, investigate and penalizing all such incidents of intolerance.

• As for the negotiating process, PROVEA is again pessimistic ... "new scenarios and few results in more than two months of negotiations." 

PROVEA argues that the only way to stop the violence and create a favorable environment for human rights is through negotiation which must take place on two levels: At the negotiating table discussing the themes of disarming, electoral consultation and investigation into acts of violence

Recognition of the existence, strength and legitimacy of the other side, importance of mutual respect within the constitutional framework along with the imperious need to prioritize measures to overcome Venezuela's main problem of social exclusion.

reuters.com Tue January 28, 2003 04:40 PM ET By Pascal Fletcher

CARACAS, Venezuela (Reuters) - Venezuela's opposition offered on Tuesday to ease their 8-week-old strike by exempting education and food production as the government prepared to introduce a fixed exchange rate to contain the economic impact of the shutdown.

Although oil workers were maintaining their crippling stoppage in the world's No. 5 petroleum exporter, opposition leaders were rethinking their grueling campaign to try to force leftist President Hugo Chavez to hold early elections.

With the oil-reliant economy reeling from the impact of the strike, Chavez's government has chopped back budget spending and suspended currency trading to halt capital flight while it prepares to introduce foreign exchange controls next week.

Finance Minister Tobias Nobrega said late Monday the government was considering a single fixed exchange rate.

Two days before the arrival in Caracas of a six-nation delegation which will lend its weight to peace efforts, opposition negotiators said they were prepared to halt the strike in the sensitive areas of education and food output.

"Our proposal is we should lift the strike in these two sectors as a gesture of goodwill," Timoteo Zambrano of the opposition Coordinadora Democratica group told local radio.

Nobrega late Monday extended the suspension of foreign exchange trading for another week. Government and banking sources said the foreign exchange controls mechanism being discussed foresaw a single exchange rate lasting for four months, adjustable monthly, to be followed by a dual rate.

As businessmen and consumers braced for the foreign exchange controls, analysts said that while such curbs could initially stem capital flight, they would also add to the country's economic turmoil by hiking prices and encouraging corruption and the creation of a currency black market.

This occurred in Venezuela in 1994-96. Other previous experiences in Latin America with currency controls had rarely provided lasting solutions to economic emergencies, they said.

Opposition leaders fear the government will use the measure to punish striking firms by restricting access to dollars.

STRIKE SUPPORT SLIPPING

In recent weeks, support for the strike has slipped and many shops, restaurants and businesses have reopened. Private banks were due to meet Wednesday to decide on returning to normal opening hours, a government source told Reuters.

Opposition leaders are struggling to sustain the momentum of the shutdown. They are debating easing the stoppage in some non-oil areas to give hard-pressed private businessmen and consumers a breather after 58 days of a protest that has triggered an economic crisis but failed to oust Chavez.

The president said Sunday the foreign exchange controls were necessary to protect the bolivar currency and international reserves against what he called an "economic coup" being attempted by businessmen opposed to his self-styled "revolution."

The government and private banks were discussing fixing an exchange rate somewhere between a minimum of 1,500 bolivars and a maximum of 1,850 bolivars to the U.S. dollar. The bolivar closed a week ago at 1,853 bolivars to the dollar.

Chavez's foes accuse him of ruling like a dictator and of trying to drag the oil-rich nation toward Cuba-style communism. He portrays them as a rich, resentful elite defending their privileges against his efforts to implant social justice.

Besides slashing oil exports, the shutdown has also caused unprecedented shortages of gasoline and some food items. Despite complaints from parents, private schools and universities have also joined businesses in staying closed.

ELECTIONS DEADLOCK

In a daily war of words with his foes, Chavez has used these disruptions to try to turn public opinion against the opposition. The outspoken former paratrooper, who survived a coup last year, has refused to negotiate with strike leaders he calls "terrorists, fascists and coup mongers."

Chavez has used troops to partially restore strike-hit oil production, which is still at around a third of normal levels.

Envoys from the United States, Brazil, Mexico, Chile, Spain and Portugal are due in Caracas on Thursday to back ongoing efforts by Organization of American States Secretary General Cesar Gaviria to broker a deal on elections.

The six-nation "group of friends" was formed to try to help break the deadlock in the Venezuelan crisis, which has pushed up oil prices at a time when the United States is considering a war on Iraq. Before the strike, the United States was receiving more than 13 percent of its oil imports from Venezuela.

Rejecting calls for early elections, Chavez insists his foes must wait until Aug. 19, halfway through his current term. After that date, the constitution foresees a binding referendum on his rule, which is scheduled to last until early 2007.

Opposition leaders say the nation cannot wait until August. They are collecting signatures for a constitutional amendment to trigger early elections, an option proposed by former U.S. President Jimmy Carter, who is backing the peace talks.

reuters.com Tue January 28, 2003 04:40 PM ET By Pascal Fletcher

CARACAS, Venezuela (Reuters) - Venezuela's opposition offered on Tuesday to ease their 8-week-old strike by exempting education and food production as the government prepared to introduce a fixed exchange rate to contain the economic impact of the shutdown.

Although oil workers were maintaining their crippling stoppage in the world's No. 5 petroleum exporter, opposition leaders were rethinking their grueling campaign to try to force leftist President Hugo Chavez to hold early elections.

With the oil-reliant economy reeling from the impact of the strike, Chavez's government has chopped back budget spending and suspended currency trading to halt capital flight while it prepares to introduce foreign exchange controls next week.

Finance Minister Tobias Nobrega said late Monday the government was considering a single fixed exchange rate.

Two days before the arrival in Caracas of a six-nation delegation which will lend its weight to peace efforts, opposition negotiators said they were prepared to halt the strike in the sensitive areas of education and food output.

"Our proposal is we should lift the strike in these two sectors as a gesture of goodwill," Timoteo Zambrano of the opposition Coordinadora Democratica group told local radio.

Nobrega late Monday extended the suspension of foreign exchange trading for another week. Government and banking sources said the foreign exchange controls mechanism being discussed foresaw a single exchange rate lasting for four months, adjustable monthly, to be followed by a dual rate.

As businessmen and consumers braced for the foreign exchange controls, analysts said that while such curbs could initially stem capital flight, they would also add to the country's economic turmoil by hiking prices and encouraging corruption and the creation of a currency black market.

This occurred in Venezuela in 1994-96. Other previous experiences in Latin America with currency controls had rarely provided lasting solutions to economic emergencies, they said.

Opposition leaders fear the government will use the measure to punish striking firms by restricting access to dollars.

STRIKE SUPPORT SLIPPING

In recent weeks, support for the strike has slipped and many shops, restaurants and businesses have reopened. Private banks were due to meet Wednesday to decide on returning to normal opening hours, a government source told Reuters.

Opposition leaders are struggling to sustain the momentum of the shutdown. They are debating easing the stoppage in some non-oil areas to give hard-pressed private businessmen and consumers a breather after 58 days of a protest that has triggered an economic crisis but failed to oust Chavez.

The president said Sunday the foreign exchange controls were necessary to protect the bolivar currency and international reserves against what he called an "economic coup" being attempted by businessmen opposed to his self-styled "revolution."

The government and private banks were discussing fixing an exchange rate somewhere between a minimum of 1,500 bolivars and a maximum of 1,850 bolivars to the U.S. dollar. The bolivar closed a week ago at 1,853 bolivars to the dollar.

Chavez's foes accuse him of ruling like a dictator and of trying to drag the oil-rich nation toward Cuba-style communism. He portrays them as a rich, resentful elite defending their privileges against his efforts to implant social justice.

Besides slashing oil exports, the shutdown has also caused unprecedented shortages of gasoline and some food items. Despite complaints from parents, private schools and universities have also joined businesses in staying closed.

ELECTIONS DEADLOCK

In a daily war of words with his foes, Chavez has used these disruptions to try to turn public opinion against the opposition. The outspoken former paratrooper, who survived a coup last year, has refused to negotiate with strike leaders he calls "terrorists, fascists and coup mongers."

Chavez has used troops to partially restore strike-hit oil production, which is still at around a third of normal levels.

Envoys from the United States, Brazil, Mexico, Chile, Spain and Portugal are due in Caracas on Thursday to back ongoing efforts by Organization of American States Secretary General Cesar Gaviria to broker a deal on elections.

The six-nation "group of friends" was formed to try to help break the deadlock in the Venezuelan crisis, which has pushed up oil prices at a time when the United States is considering a war on Iraq. Before the strike, the United States was receiving more than 13 percent of its oil imports from Venezuela.

Rejecting calls for early elections, Chavez insists his foes must wait until Aug. 19, halfway through his current term. After that date, the constitution foresees a binding referendum on his rule, which is scheduled to last until early 2007.

Opposition leaders say the nation cannot wait until August. They are collecting signatures for a constitutional amendment to trigger early elections, an option proposed by former U.S. President Jimmy Carter, who is backing the peace talks.

www.guardian.co.uk Tuesday January 28, 2003 9:10 PM

CARACAS, Venezuela (AP) - President Hugo Chavez's government scored a victory in Venezuela's political crisis by producing more than 1 million barrels of oil Tuesday, frustrating a 2-month-old opposition drive to strangle the world's No. 5 oil exporter.

By raising production to a third of its normal rate, Chavez seized another advantage over his opponents - jump-starting Venezuela's oil industry while defeating calls for a February referendum on his rule.

But the 58-day-old strike has put Venezuela on the verge of economic collapse, caused long-term damage to oil infrastructure and forced Chavez to extend his ban Tuesday on U.S. dollar purchases to preserve foreign reserves.

Chavez surpassed the 1 million-barrel benchmark by focusing on newer oil fields where crude is easier to extract. But production may not reach 2 million barrels a day if the government doesn't revive older wells, said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York.

They are going for the lowest hanging fruit on the tree, the easiest to grab,'' Silliere said. In a few weeks, it is going to be a struggle.''

Energy analysts warn that Venezuela has lost production capacity during the strike and that it could take months to restore it. Refining is curtailed, and Venezuela is purchasing its gasoline abroad.

Dissident executives at the state oil monopoly, Petroleos de Venezuela S.A., confirmed production surpassed 1 million barrels, compared to a low of 200,000 during the strike.

Oil provides half of Venezuela's government revenue and 70 percent of export earnings.

Chavez has fired more than 5,000 striking workers at the state oil monopoly, which employed 40,000, eliminating dissent and trying to increase government control over the semiautonomous corporation.

State oil company executives warn the firings will make it even more difficult to reach full production.

Opposition leaders insist the oil strike will continue. But they are scaling back in other areas, worried about a public backlash over food, gasoline and medicine shortages.

Most small businesses are open - either because they never joined the strike or because they couldn't sustain losses.

Factories, shopping malls, restaurants and schools may reopen next week, at least on a part-time basis, said Julio Brazon, president of the Consecomercio business chamber and a strike leader.

Citing political and economic turmoil, Venezuela's opposition called the strike Dec. 2 to force Chavez to call a nonbinding referendum on his rule in February. They delivered 2 million signatures demanding the vote.

Last week, Venezuela's Supreme Court postponed the referendum indefinitely, citing a technicality.

Chavez's foes are now gathering voter signatures to demand an amendment to reduce the president's six-year term to four years - allowing an early binding referendum on his rule.

A similar idea was floated last week by former President Jimmy Carter, whose Carter Center has joined the Organization of American States and United Nations in trying to broker an electoral solution.

Carter also proposed an alternative: Dropping the strike, and holding a binding referendum halfway into Chavez's term, or next August.

Venezuela's opposition - a coalition of labor, business, leftist and conservative political parties - has won international backing for early elections.

Over Chavez's objections, Spain, Portugal, the United States, Brazil, Mexico and Chile have formed a ``Friends of Venezuela'' initiative and are urging both sides to work quickly on the Carter proposals.

Recession, capital flight, stalled investment and strike damage led Santander Central Hispano investment bank to forecast a 40 percent collapse in economic activity the first quarter of 2003.

The finance ministry on Tuesday extended for another week a freeze on foreign currency sales to protect the bolivar, which has lost 25 percent of its value this year. The government, meanwhile, plans exchange controls that could hurt businesses that depend on dollars to import goods.

``Chavez many have the initial advantage, but over the long term, he's going to have a much more difficult path,'' said Steve Johnson, senior policy analyst for Latin America at the Washington-based Heritage Foundation.