www.voanews.com David Gollust State Department 25 Jan 2003, 00:58 UTC

Colin PowellSecretary of State Colin Powell joined Friday foreign ministers or senior envoys from Brazil, Chile, Mexico, Portugal and Spain in a Washington meeting aimed at supporting efforts by the Organization of American States (OAS), to mediate an end to the political crisis in Venezuela.

The informal "Friends of Venezuela" group met behind closed doors at OAS headquarters in Washington. But in a text of his remarks released here, Mr. Powell said the situation in the oil-rich South American country is "grave" and growing worse by the day.

Venezuelan Foreign Minister Roy Chaderton, left, and Venezuelan OAS Representative Jorge Valero talk during the meeting of the newly formed "Friends of Venezuela" group

He again underscored U.S. support for the mediation efforts of OAS Secretary-General Cesar Gaviria who has been working on the issue non-stop for more than two months, and was to return to Venezuela after the meeting.

Mr. Powell said the two proposals tabled in recent days by former U.S. President Jimmy Carter for an electoral solution to the crisis represent "the best path available" to Venezuelans, and urged embattled President Hugo Chavez and his opponents to agree to one of them.

He said the "Friends" should send high-level representatives to Caracas as soon as possible to work with Mr. Gaviria, and said once the sides have agreed on a political process the six-nation group should set up a mechanism to monitor and ensure full implementation of the agreement.

www.voanews.com VOA News 25 Jan 2003, 01:20 UTC

U.S. Secretary of State Colin Powell is urging Venezuela's government and opposition to accept settlement proposals offered by former President Jimmy Carter to end a long-running general strike.

Secretary Powell made the remark Friday in Washington as he and officials from five other nations met to seek solutions to Venezuela's political crisis.

Mr. Powell said Venezuela's political crisis is "grave" and growing worse each day. He also said the Carter proposals represent the best available option to the Venezuelan people.

President Chavez has said he is open to the proposals put forth by Mr. Carter earlier this week in Caracas to end the opposition general strike that began December second.

One proposal calls for President Hugo Chavez's government and opposition to agree to a constitutionally acceptable recall referendum in August. The alternative proposal calls for a constitutional amendment to shorten the presidential term, allowing early elections this year.

In a related development, a high-level team from the "Friends of Venezuela" group is expected in Caracas next week to help find ways to break the political impasse.

The general strike has damaged Venezuela's oil-reliant economy and put upward pressure on global oil prices.

abcnews.go.com — By Arshad Mohammed and Pascal Fletcher

WASHINGTON/CARACAS, Venezuela (Reuters) - The newly formed six-nation "Group of Friends" agreed on Friday to send a high-level team to Caracas next week to try to find a solution to the political crisis that has crippled Venezuela's economy.

Brazilian Foreign Minister Celso Amorim, speaking for the group that includes the United States, Brazil, Mexico, Chile, Spain and Portugal, urged Venezuela's opposition and government to curb violence in the world's fifth-largest oil exporter.

Opponents of Venezuelan President Hugo Chavez have staged a 54-day strike, slashing Venezuela's oil exports, in an effort to pressure the populist president to resign and hold early elections. Chavez has refused to step down.

"The mission is going to discuss concrete measures like, for example, how to diminish the risk of violence ... and the process of moderating the rhetoric," Amorim told reporters after the group's first meeting, held at the Organization of American States headquarters in Washington.

He said the team, likely to arrive on Thursday, will also explore options proposed by former U.S. President Jimmy Carter: one for an amendment to Venezuela's constitution to trigger early elections and the other for an Aug. 19 referendum.

The "Group of Friends" was formed last week to support OAS Secretary-General Cesar Gaviria's more than two-month effort to broker a deal between the two sides, which appear far apart.

The polarized positions and increasing outbreaks of violence have added urgency to international peace efforts.

'WORSE BY THE DAY' "Tragically ... the situation in Venezuela grows worse by the day," Secretary of State Colin Powell told the group according to a text of his prepared remarks.

Venezuelan opposition negotiators told reporters in Washington that any accord on elections must also include an agreement to restore to their jobs striking executives and employees of the state oil company PDVSA. Otherwise, they said, the grueling strike could not be lifted.

Chavez announced Thursday his government had sacked 3,000 PDVSA employees involved in the shutdown and said he was not prepared to negotiate with "terrorists."

"There can be no way out of this crisis based solely on elections. It has to include a solution to the oil issue," Timoteo Zambrano, a leader of the Coordinadora Democratica opposition coalition, told a news conference in Washington.

The opposition negotiators had earlier met with foreign ministers of the "friends" group.

The opposition shutdown has throttled oil output by South America's largest oil producer, pushing up world prices. It has also triggered a fiscal crisis for the Venezuelan government, forcing it to suspend foreign exchange trading and cut back budget spending by 10 percent.

But, in a sign that Chavez is making some headway in his efforts to break the strike, oil production and exports have been rising again.

Still, oil exports, the country's economic lifeblood, were only a quarter of normal levels and striking state oil executives voted Friday to maintain the stoppage.

Venezuelan oil supplies to the United States, normally more than 13 percent of total U.S. oil imports, have been disrupted by the strike, just when the United States is preparing for a possible war on Iraq.

Opposition negotiators said they hoped the "Group of Friends" could pressure Chavez to accept a negotiated electoral solution to end the crisis, which has raised fears of a violent, uncontrollable internal conflict in Venezuela.

Chavez, a former paratrooper who survived a brief coup last year, is resisting calls for early elections and has vowed to beat the strike. He accuses his opponents of trying to topple him from power by wrecking the economy.

His opponents say the president, who Thursday threatened to close hostile private television channels and take over banks which joined the strike, is ruling like a dictator. They accuse him of trying to install Cuba-style communism in Venezuela.

Chavez has already said he is willing to abide by the result of a binding referendum on his rule which the constitution foresees after Aug. 19, half way through his current term due to end in early 2007.

www.newsday.com

By CHRISTOPHER TOOTHAKER Associated Press Writer January 25, 2003, 11:41 AM EST

CARACAS, Venezuela -- Opponents of President Hugo Chavez launched a 24-hour street demonstration Saturday to protest a court ruling that postponed a referendum on Chavez's rule.

A 2 1/2-mile stretch of central Caracas highway was set aside for the event, which organizers warned may last longer than one day.

"Prepare yourself for the longest protest in history!" screamed TV commercials and newspaper ads in the opposition-run media. They advised protesters to bring drinking water, sun hats, folding chairs and portable TVs to while away the hours under the tropical sun.

The demonstration followed a Supreme Court decision Wednesday to indefinitely postpone a nonbinding plebiscite, dashing opposition's hopes for a means of removing Chavez from office. Opposition leaders were convinced Chavez would be so embarrassed by the outcome, he would quit.

Negotiations mediated by Cesar Gaviria, secretary general of the Organization of American States, continued, aimed at ending the 55-day-old strike and bitter political stalemate.

But the opposition says it isn't going to wait for talks to produce results.

"We can't wait for the rainstorm to hit without having an umbrella," said Haydee Deutsch, of the Democratic Coordinator opposition movement.

Opponents are now considering a proposal by former President Carter, which would amend Venezuela's constitution to shorten presidential and legislative terms and mandate early elections.

"It's an option we think is viable," said labor leader Alfredo Ramos. The proposal calls for the opposition to end the strike and for the government, which has a congressional majority, to move quickly on changing the constitution. Amending the constitution requires congressional approval and a popular referendum.

A second proposal by Carter, who won the Nobel Peace Prize last year, calls for Venezuelans to prepare for a binding recall referendum on the president's rule in August.

The so-called "Group of Friends of Venezuela," six countries that have pledged to help Gaviria broker an end to the crisis, met for the first time in Washington on Friday.

Secretary of State Colin Powell, who attended the meeting, urged Venezuelans to adopt Carter's ideas.

"The Carter proposals represent the best path available to the Venezuelans. They provide the badly needed basis on which both sides can bridge their differences on the immediate issues," Powell said, in a text released by the State Department.

While the "Friends" initiative began to take shape, oil production in Venezuela, the world's fifth largest exporter, was creeping up. Increased output could be a sign Chavez is defeating the work stoppage intended to force his ouster. But the former paratroop commander still struggles with the strike's effect on a recession-hit economy.

Oil production stood at about 3.2 million barrels per day before the strike was called Dec. 2. -- and slipped as low as 150,000 barrels per day later that month.

On Friday, dissident executives at state-run monopoly Petroleos de Venezuela S.A., or PDVSA, said output had crept to 855,000 barrels per day, up from 812,000 barrels on Thursday.

But production gains could be capped if exports, averaging around 450,000 barrels a day, don't pick up quickly. If oil isn't shipped, inventories pile up and no space remains for fresh production. Many tanker pilots returned to their jobs this week, but foreign shippers remained reluctant to use Venezuelan ports because regular docking and support personnel have not abandoned the strike.

Oil exports account for roughly half of government income. Chavez's government has acknowledged losing over $4 billion since the strike started.

Chavez could be "winning the petroleum war," as he claimed on Thursday, but the economic outlook for 2003 is dismal.

The Santander Central Hispano investment bank warned that Venezuela's economy could contract as much as 40 percent in the first quarter of 2003 if the crisis isn't resolved soon. The economy shrank by an estimated 8 percent in 2002.

Financial Times Venezuela gets a hand from nimble Castro The US is being outsmarted by Cuba's leader in its own back yard, writes Moisés Naím, former minister of trade and industry in Venezuela and editor of Foreign Policy magazine. By Moisés Naím

Originally published in the Financial Times January 20, 2003

Oil and beauty queens: for decades, those were the only stories from Venezuela to catch the attention of the international media. Now, with its oil industry paralysed, the economy in free fall and President Hugo Chávez stepping up his Bolivarian revolution, Venezuela's disintegration is a story the world can no longer ignore.

The greatest surprise of the crisis is how little Washington has mattered. Fidel Castro's Cuba - small, poor and isolated - has been far more influential in Caracas than George W. Bush's mighty US. Indeed, few episodes better illustrate the limits of US power than the outmanoeuvring of Uncle Sam by Fidel in a country that is one of the largest suppliers of oil to the US.

While the US government was once closely involved in any Latin American political intrigue, it now seems strangely slow to appreciate what is happening in its back yard. In only a few years President Chávez has transformed one of most reliable partners of the US in South America into one of its most adversarial neighbours. Last year, and despite common perceptions to the contrary, the US was taken by surprise when a cabal of military officers and business leaders hijacked a massive civil protest in Caracas and ousted Mr Chávez - albeit briefly.

The clumsy, anti-democratic behaviour of the plotters and the swift, effective reaction of Mr Chavez's supporters returned the president to power, leaving White House spokesmen spluttering awkwardly about their hesitation to condemn the coup unequivocally. More recently, Washington was caught unawares by the strike that is blocking exports of Venezuelan oil, just as the US prepares for war in Iraq.

Following the terrorist attacks of September 11 2001, Latin America all but disappeared from the map of top US policymakers. Without Islamic terrorists and nuclear capabilities, the region could not compete for attention. Moreover, as long as Mr Chávez, a thuggish but democratically elected president, did nothing to trigger an international reaction or threaten US interests, the options for intervention available to even a superpower were very limited. Washington's authority was further curtailed by its hesitant and ambiguous reaction to the attempted coup, a reaction denounced by Democrats in the US Congress.

In contrast, Cuba's attention to Venezuela has been sustained and effective. There is no foreign policy goal more fundamental to Cuba's economic well-being than ensuring that Mr Chávez stays in power. Venezuela's oil, sold at highly advantageous terms to Cuba, is an important reason but not the only one. An alliance with Venezuela has helped Cuba to ease the political and economic stranglehold the US has maintained since the collapse of the Soviet Union. Indeed, Venezuelan air force pilots report that the equivalent of an airlift between Caracas and Havana has been established.

The Cuban regime is extending its influence by sending thousands of government employees - among the health workers and sports trainers are intelligence officers - to Venezuela for extended periods. Meanwhile, large numbers of Mr Chávez's supporters are being sent to the island for training. Commenting on the abortedcoup, one European ambassador in Caracas said: "I don't know which was a bigger factor in returning Chávez to power - the ineptitude of his enemies or the effectiveness of the Cubans - but I do know that both played a role."

Havana has the motives and means to prop up the Venezuelan leader. Its intelligence is highly active and effective. The US authorities believe the Cuban secret service has infiltrated some of the most sensitive intelligence facilities in the US. Historically, Cuban agents either were directly involved or had front-row seats in almost all the revolutions, coups and guerrilla movements in the developing world.

Cuban diplomacy supported by Venezuelan oil money has also made significant inroads in the island nations of the Caribbean, which control an influential voting bloc in the Organisation of American States. Such ties may well complicate the organisation's role as mediator in the talks between Mr Chávez and the opposition.

The Venezuelan crisis can be solved only by Venezuelans. But, as the crisis deepens, the role of other countries will be crucial. The world's last remaining superpower will have to avoid being outsmarted again by the western hemisphere's sole cold war dictator.

The writer is a former minister of trade and industry in Venezuela and is editor of Foreign Policy magazine