asia.reuters.com Fri January 24, 2003 07:49 PM ET 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.

usinfo.state.gov 24 January 2003

(Recommends proposals offered by former President Carter) (1230)

The United States believes the only solution to the current crisis in Venezuela is a peaceful, constitutional, democratic and electoral process agreed to by both the government of Venezuelan President Hugo Chavez and the political opposition, says Secretary of State Colin Powell.

In January 24 remarks to a special session of the Organization of American States (OAS), Powell reiterated U.S. support for OAS Secretary General Cesar Gaviria's efforts to facilitate a dialogue to resolve the Venezuelan impasse. He encouraged the recently-formed "Group of Friends" -- consisting of the United States, Brazil, Mexico, Chile, Spain and Portugal -- to quickly reaffirm its support for Gaviria's efforts and to work for a constitutional solution to the Venezuelan crisis.

Given what he described as the "grave" and deteriorating situation in Venezuela, Powell suggested that "time is of the essence" in reaching an accord. He said that the two proposed resolutions to the crisis offered by former U.S. President Jimmy Carter "represent the best paths available to Venezuelans."

Under the terms of one proposal outlined by Carter, Venezuela's government and opposition would agree to a recall referendum -- consistent with the Venezuelan constitution -- to be held in August to determine if Chavez should leave office.

Under the alternative proposal, the two sides would agree to a constitutional amendment to permit early general elections in the summer.

Once the two sides have reached an agreement, Powell said, the Friends Group should establish a mechanism to ensure its full implementation.

"At the end of the day, it is the Venezuelans themselves who must find solutions to their problems," Powell concluded, adding: "it is my profound hope, and my confident belief, that the Secretary General's continued work, the Friends Group's sustained efforts, and President Carter's valuable contributions will help them do so."

Following is the text of Powell's remarks, as prepared for delivery:

(begin text)

U.S DEPARTMENT OF STATE Office of the Spokesman

FOR IMMEDIATE RELEASE January 24, 2003

REMARKS OF SECRETARY OF STATE COLIN L. POWELL TO THE SPECIAL SESSION OF THE ORGANIZATION OF AMERICAN STATES

Secretary General Gaviria, Assistant Secretary General Einaudi, Ministers and Permanent Representatives, distinguished guests.

I would like to thank Secretary General Gaviria for convening this meeting and, even more, for his tireless efforts to reach a peaceful and democratic way out of the current impasse in Venezuela.

Tragically, however, the situation in Venezuela grows worse by the day. Venezuelans of all stripes see their democracy and their hopes for prosperity growing ever weaker. All of us in the region and, indeed, in the international community, recognize that Venezuela's woes are our concern, too, lest they set back the march toward economic and political stability elsewhere in the hemisphere.

Colleagues, the situation is grave. We must help our Venezuelan friends find a way out of their current crisis.

We are here today to do just that.

We are here to underscore our strong support for the people of Venezuela and for the democracy they have cherished for over four decades.

Specifically, we are here to help the Venezuelan people find a democratic solution to their immediate problems.

The United States believes that the only way out of the crisis in Venezuela is through a peaceful, constitutional, democratic, and electoral process, one that the government and the opposition have both agreed to.

We also strongly believe that the dialogue led by Secretary General Gaviria remains the best opportunity for Venezuelans to achieve such a result.

We are not alone in our conviction. The entire membership of this body endorsed these principles when it passed Resolution 833, by consensus, last December.

It is by supporting these principles, and the Secretary General's determined efforts to secure an agreement based upon them, that we believe the Group of Friends can help. Indeed, I suggest we call the group the "Friends of the OAS Secretary General" to emphasize our commitment to helping the Secretary General in his mission to bring the two sides to a peaceful resolution of their differences.

I would like to thank President Lula of Brazil for his leadership in the creation of the Friends Group. We look forward to working with our colleagues in the Group from Brazil, Mexico, Chile, Spain, and Portugal.

The Friends of the OAS Secretary General initiative is firmly embedded within the OAS. The Inter-American Democratic Charter recognizes the central importance of democracy in our countries and gives the OAS a special role in its protection and promotion in our region.

Time is of the essence. To facilitate the process for reaching an accord, Secretary General Gaviria has detailed the points of agreement between the opposition and government.

Now, the Friends must act quickly to reaffirm the group's mandate to support the Secretary General and work for a "peaceful, constitutional, democratic, and electoral" solution to the current crisis in Venezuela.

We have two good proposals to work with, both tabled by former President Carter. Each offers an electoral way out of the present stalemate.

Under one proposal, the government and opposition would agree to a recall referendum, consistent with the constitutional provision for such a referendum, to be held this August.

Under the alternative proposal, the two sides would agree to a constitutional amendment to enable early general elections this summer.

The Carter proposals represent the best path available to Venezuelans. They provide the badly needed basis on which both sides can bridge their differences on the immediate issues. They offer a way out of the current impasse, and it is our job, as the Friends of the Secretary General Group, to urge both sides to agree to one of them.

Once the two sides have agreed to a political process, the Friends should establish a mechanism to monitor and ensure full implementation of the agreement.

The situation in Venezuela requires urgent action, and the Friends should send high-level representatives to Caracas as soon as possible, even as early as next week. This Friends delegation should act, under the guidance of Secretary General Gaviria, to press both sides to accept one of the proposals currently on the table.

Finally, we believe the Friends' OAS missions here in Washington and embassies in Venezuela should form working groups to enhance the Group's coordination and communication as our efforts move forward.

My friends, the Venezuelan people need to direct their political aspirations into constructive and democratic channels. President Chavez and the leaders of the opposition must understand that the current situation is untenable. An electoral process will allow the Venezuelan people to resolve their problems in an orderly, fair, and transparent manner. Without an electoral process, nobody wins; everyone loses.

It is important to end the current stalemate, but that step alone will not solve Venezuela's problems. Today's impasse arose from, and reflects, the deep divisions that remain in Venezuela. Even after the electoral process is underway, Venezuela's deeper problems will remain. Until those problems are addressed, Venezuelans will not be able to move confidently into a brighter future.

At the end of the day, it is the Venezuelans themselves who must find the solutions to their problems. It is my profound hope, and my confident belief, that the Secretary General's continued work, the Friends Group's sustained efforts, and President Carter's valuable contributions will help them do so.

(end text)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: usinfo.state.gov)

www.forbes.com Reuters, 01.24.03, 6:09 PM ET

CARACAS, Venezuela, Jan 24 (Reuters) - Venezuela's government on Friday swapped 191 billion bolivars or about $103 million in domestic public debt to extend their maturities and alleviate a fiscal crisis during an opposition strike, the Central Bank said.

Venezuelan Central Bank said the government exchanged National Public Debt notes maturing on Saturday in a voluntary operation for issue coming due between three and a half months and one year later.

About one trillion bolivars or $540 million in National Public Debt notes had been offered in the exchange.

Finance Minister Tobias Nobrega earlier this week announced the government would carry out domestic debt exchanges as part of a plan to counter the impact of the opposition strike against President Hugo Chavez.

Venezuela on Wednesday suspended currency exchange trading as it struggled to stem capital flight and the sharp slide in its bolivar currency amid economic and political uncertainty. The local currency closed Tuesday trading at 1,853 bolivars to the U.S. dollar.

www.iht.com NYT Saturday, January 25, 2003   The best hope for a peaceful, democratic outcome to Venezuela's political crisis may now rest in the mediation efforts of Jimmy Carter. During his presidency, Carter was a firm champion of democracy in Latin America, standing up to the military tyrannies that then predominated in the region. Now he has proposed two principled and plausible exits to the long-running conflict over President Hugo Chavez, which has divided Venezuela's people, hobbled its economy and raised the specter of a breakdown in constitutional rule.

Carter, who met separately with Chavez and opposition leaders, offers two possible solutions, both compatible with the country's laws and the right of Venezuelans to choose their own leaders freely. One provides for passage of a constitutional amendment, either by Venezuela's legislature or a popular vote, that would shorten the current six-year presidential term and provide for new elections this year. The other would set up a binding referendum this summer on whether Chavez should resign or stay in office as scheduled until 2006. That isn't exactly what either side wants, but Chavez and at least some opposition leaders have suggested that they might be able to accept one or both of the Carter proposals.

Until this week, Chavez opponents had hoped to drive him from office long before summer. They were counting on the combined pressure of a nonbinding referendum that had been scheduled for Feb. 2 and a national strike, now in its eighth week, that has shut down much of Venezuela's oil industry, depriving the government of badly needed revenues and sending world oil prices soaring.

But the strike has begun to falter, and this week Venezuela's Supreme Court suspended preparations for the February referendum, which Chavez had vowed to ignore anyway. That should strengthen the elements in the opposition willing to accept a reasonable compromise along the lines Carter has suggested.

Over the years, Venezuela has been one of Latin America's most consistent constitutional democracies. Changes in political direction and leadership, including Chavez's own two elections, have been carried out lawfully and through the ballot box. That tradition is too valuable to overturn in the heat of the current crisis. Carter points the way toward an honorably democratic solution.

www.weeklystandard.com by Thor L. Halvorssen 01/23/2003 12:00:00 AM

VENEZUELA IS NOW an abyss where there is no rule of law. A rogue government tortures innocent civilians with impunity while paying lip service to democracy and buying time at the "negotiation" table set up by the Organization of American States. Venezuela's foreign minister, Roy Chaderton, has funded an effective multi-million dollar public relations campaign to smear the opposition as coup-plotters and fascists intent on bringing about violence.

Jesus Soriano has never met Roy Chaderton or Hugo Chavez. Soriano supported President Hugo Chavez's meteoric rise, volunteered during the election campaign, and is now a second-year law student in Caracas. His law-school peers describe the 24-year-old as a cheerful and happy young man.

Soriano, a member of the Chavez party, is part of a national student group called "Ousia," a group that brings together moderates who support the government and opposition members seeking a peaceful resolution to the current crisis.

On December 6, Soriano witnessed the massacre that occurred during a peaceful protest in Altamira, a neighborhood in Caracas where the opposition has a strong presence. The killer was Joao De Gouveia, an outspoken supporter of Chavez who has an unusually close relationship with mayor Freddy Bernal, a Chavez crony. Gouveia randomly began shooting at the crowd. He killed three--including a teenage girl he shot in the head--and injured 28 people. As Gouveia kept shooting, several men raced toward him to stop the killing. Soriano was one of the men who wrestled Gouveia to the ground and prevented further killing. Soriano also protected Gouveia from a potential lynch mob that swarmed around the killer.

Soriano's heroic accomplishments did not cease that day. He became a national figure in Venezuela when he brought a small soccer ball (known in Venezuela as a "futbolito") to a sizable protest march organized against the rule of Lt. Col. Chavez. Soriano and other pro-Chavez partisans made their way towards the march intending to engage the opposition members in dialogue.

That hot afternoon, Soriano kicked the futbolito across the divide at the members of the opposition. They kicked it back. The magical realism of the event is evident in the extraordinary television footage of what occurred next. By the end of the match the anti-Chavez protestors and pro-Chavez partisans were hugging and chanting "Peace! Unity! We are Venezuela! Politicians go away! We are the real Venezuela!" In one particularly moving part of the footage, Soriano and a member of the opposing team trade a baseball hat for a Chavez-party red beret.

In one hour this sharply divided group of strangers accomplished more than the high-level negotiation team that seeks to defuse a potential civil war. Chavez was reportedly furious with the televised soccer match and even angrier that the reconciliation was a product of the efforts of one of his supporters. Soriano was declared an enemy of the revolution.

Last week Soriano organized another soccer match. On Wednesday he visited the Universidad Central de Venezuela, the main university in the capital, to attend a meeting of the student government. Violent clashes erupted as members of the Circulos Bolivarianos, an armed militia sworn to protect the revolution, began throwing rocks and tear gas grenades at the students. The militia identified Soriano and captured him. They then tied his hands and feet, lifted him up, and paraded him through the street like a sacrificial lamb chanting "Judas! Judas!" The entire spectacle was recorded by a cameraman who works for the official government television entity. Soriano was beaten so severely that he was left at the hospital emergency room. At the hospital he was detained by the DISIP, Chavez's secret police, and taken to their headquarters for questioning.

During his interrogation, fingernails in his left hand were torn out. After being further tortured and injected with drugs, the secret police took him into the bowels of the building and placed him in a cell. His cellmate: Joao de Gouveia.

Gouveia has the keys to the cell and comes in and out of the secret police headquarters at will. His only restriction is that he must sleep in the precinct, lest Chavez's police are revealed as allowing a confessed killer to roam free. Soriano's mother (who is also a Chavez supporter) tearfully claimed that Gouveia sodomized Soriano and beat him with such force that Soriano cannot open his eyes.

Soriano was released last Friday afternoon after Roy Chaderton advised Chavez that the case could filter out of Venezuela and could become a "human-interest story" with the potential to derail their PR campaign.

The government denied that Soriano had been mistreated. A thorough medical examination by a civil surgeon reveals that, beyond lacerations, severe bruising, and cracked ribs, Soriano had been repeatedly raped while in custody. His right arm shows that he has been injected. Nails are missing from his left hand. Soriano's internal organs have been crushed to the point that he urinates blood, and he cannot walk without assistance.

Once the medical report was made public, the secret police immediately began saying that Soriano was a member of a "right-wing paramilitary organization." This tactic, engineered by Chaderton, is used frequently to disqualify and discount opponents of the regime. All enemies of the "revolution" are coup plotters and fascists. The government now circulates a photo of Soriano in military fatigues. Carlos Roa, Soriano's attorney, showed me that the picture is a yearbook photo from when he was a schoolboy in military academy.

Although it was obvious that Soriano had been tortured, Iris Varela, a Chavez congressional representative, offered no apologies: "I am glad they did this to him. He deserved it." That such savage treatment is what greets government supporters who seek a peaceful resolution to the current crisis speaks volumes about Chavez's ultimate intentions. Soriano, now recuperating at home, must wonder why he ever supported the Chavez regime.

Thor L. Halvorssen is a human rights and civil liberties activist who grew up in Venezuela. He now lives in Philadelphia.