news.bbc.co.uk, 24 January, 2003, 23:46 GMT

Chavez put up a show of force before the Washington talks

Officials from the six-nation Group of Friends are meeting for the first time in Washington to try to end Venezuela's political crisis, crippling the country's oil production.

Chavez has refused to step down

Venezuela, the world's fifth largest oil exporter, is in the eighth week of a national strike, with the opposition pressing for President Hugo Chavez to resign or call early elections.

The group - Brazil, Chile, Mexico, Portugal, Spain and the United States - will consider two compromise plans presented by former US President Jimmy Carter.

Correspondents say the meeting reflects the growing international concern to find a way out of the Venezuelan crisis, but there is little immediate sign of a solution.

The talks come after a day of violence in the Venezuelan capital, Caracas, where one person was killed and at least 12 were wounded when a suspected bomb went off at a huge pro-government rally.

At least six people have been killed in clashes between Mr Chavez's supporters and opponents since the strike began last December.

Crisis meeting

The Group of Friends was formed to boost a so far unsuccessful mediation mission by the Organisation of American States (OAS).

The strike has crippled on oil and petrol output

The group will consider the plans presented by former Mr Carter to end the strike and hold early elections.

It also wants to send a high-level team to try to negotiate the settlement.

The BBC's Adam Easton in Caracas says that as a strategic supplier of fuel to the US, Venezuela is coming under increasing international pressure to resolve the strike.

In a sign of Washington's interest in a diplomatic solution, US Secretary of State Collin Powell was due to attend the meeting.

But correspondents say there is precious little trust between the Venezuelan Government and opposition.

They say that, at the moment, neither side appears prepared to give in.

Boost for Chavez

Opposition groups accuse Mr Chavez of behaving like a dictator and mismanaging the economy and have called on him to resign.

But Mr Chavez - who opinion polls say is supported by 30% of the population - was handed a victory on Wednesday when the Supreme Court postponed a referendum scheduled for 2 February, six months before a binding popular vote is due.

In a further boost to the president, there have been signs that the government has made some headway in breaking the oil stoppage.

Shipping data showed that oil exports in the seven days to Friday increased 62% to 688,000 barrels per day.

Before the strike, Venezuela exported almost 3m barrels per day.

newsobserver.com Friday, January 24, 2003 4:28PM EST By CHRISTOPHER TOOTHAKER, ASSOCIATED PRESS

CARACAS, Venezuela (AP) - Oil production is slowly picking up in Venezuela, a sign President Hugo Chavez may be gaining in his efforts to break a nearly 2-month-old strike.

But Chavez still has a long way to go to overcome the strike's devastating effects on the economy, already in recession when the walkout began Dec. 2 with the goal of ousting his left-wing, populist regime. Dissident executives at the state oil monopoly Petroleos de Venezuela S.A. said production was 855,000 barrels of crude on Friday, up from 812,000 barrels a day earlier. State oil company President Ali Rodriguez insists crude production has surpassed 1 million barrels per day.

Venezuela, the world's fifth-largest oil exporter and a major U.S. supplier, produced 3 million barrels a day before the strike. At one point in December, production slipped to as low as 150,000 barrels per day.

It remains to be seen whether exports, averaging around 450,000 barrels a day, will follow suit. If oil isn't shipped, inventories pile up and no space remains for freshly produced oil.

Many tanker pilots returned to their jobs this week, but foreign shippers remain reluctant to use Venezuelan ports because regular docking and support personnel haven't abandoned the strike.

Ed Sillierre, vice president of risk management at Energy Merchant LLC in New York, called the decision by pilots "the first chink in the armor."

Persuading pilots to return to work was "a very smart strategic move on Chavez's part. It really drove the stake into the heart of opposition movement," Sillierre said.

"Can he ride this thing out? Now I would say yes," he added.

The state oil monopoly employs about 40,000 people. Rodriguez told the state news agency Venpres on Thursday that most oil workers and half the company's administrators have abandoned the strike. But Fedepetrol, the largest oil workers union, insisted 17,000 of its 20,000 workers haven't returned to work.

"We are winning the petroleum war," Chavez told hundreds of thousands of his supporters at a rally in Caracas on Thursday.

"It's going to be a difficult year, but who says we can't overcome the difficulties?" he said.

Chavez may be making headway in his push to revive oil production, but that doesn't mean domestic fuel shortages will return to normal anytime soon. Venezuela only refines a fraction of its crude oil for domestic consumption, and the few refineries used for that purpose are still far from full capacity.

"Domestic consumption will be an issue for a long time," Sillierre said. If the strike were to end immediately, "Venezuela would be importing gasoline easily through March, quite possibly into the summer," he said.

Chavez must also face the effects of damage already done to the nation's oil-dependent economy. Almost half of Venezuela's income, 80 percent of export earnings and roughly a third of the country's $100 billion gross domestic product come from oil exports.

The government has acknowledged losing over $4 billion in income so far.

Finance Minister Tobias Nobrega announced a $1.5 billion cut this week in Venezuela's $25 billion budget. Cash-strapped opposition governors and mayors claim they may not be able to pay public employees at the end of the month.

The Santander Central Hispano investment bank has 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. Unemployment is 17 percent and inflation is 30 percent.

www.forbes.com Reuters, 01.24.03, 4:16 PM ET

CARACAS, Venezuela, Jan 24 (Reuters) - Venezuela's 130,000 barrel-per-day El Palito oil refinery has been successfully restarted by workers breaking a seven-week-long strike, striking workers said on Friday.

After several failed attempts to restore it, one of El Palito's crude units is running at 100,000 bpd, but auxiliary units including key gasoline producers, are still shut.

"One of the crude units is running, but it will take them a lot longer to restore full operation, because the other units are more complex," an opposition spokesman said.

In a daily report on the oil industry, the opposition estimated that the government had restored 275,000 bpd of local oil refining capacity, versus a total 1.3 million bpd available.

Government attempts to restart El Palito hit a snag two weeks ago when a fault caused an explosion sending a plume of black smoke into the air.

The Amuay-Cardon refinery is running one 50,000 bpd crude unit, while the Puerto la Cruz refinery is running at 75,000 bpd, the opposition said.

The Venezuelan-operated refinery in Curacao said it started up last weekend at a rate of 32,000 bpd, but an attempted start of the catalytic cracker failed and will take weeks to repair.

Venezuelan gasoline production, which is key to government efforts to break the strike and ease fuel shortages, is still well below the country's 250,000 bpd demand level.

www.vheadline.com Posted: Friday, January 24, 2003 - 3:22:47 PM By: Patrick J. O'Donoghue

Chacao Mayor Leopoldo Lopez accuses the Supreme Tribunal of Justice (TSJ) of decreeing the death of justice in Venezuela on throwing out the opposition consultative referendum.

• Primero Justicia (PJ) Lopez insists on holding a “symbolic” signing campaign on February 2, the date the opposition and the National Electoral College (CNE) had set for the referendum.

“On February 2, we will collect signatures for a constitutional amendment, a constituent national assembly, recall referendums for seven pro-government Assemblymen and a letter to the Organization of American States (OAS) signed by all Venezuelans.”

Radical Socialist Causa R leader Andres Velasquez says the consultative referendum planned for February 2 will go ahead despite its suspension by the Supreme Tribunal of Justice (TSJ). “We are going to do it as a protest."

Velasquez was present at the opposition march in Bolivar State and stated that the signature protest would take place all over Venezuela in community halls and tents … “we’ll turn it into a live and direct national survey to show the whole world that Chavez Frias has no legitimacy.”

www.vheadline.com Posted: Friday, January 24, 2003 - 3:10:00 PM By: Patrick J. O'Donoghue

Confederation of Trade Unions (CTV) director, Pablo Castro says a constitutional amendment is the way forward towards securing a peaceful, democratic and electoral solution to Venezuela's political, economic and social crisis.

Analysts say they cannot be certain if Castro’s declaration marks a distance from CTV president Carlos Ortega and general secretary Manuel Cova but they say the declaration coincides with a general realization among opposition groups that President Chavez Frias will not cave in to opposition pressure to hold early elections or be forced to a consultative referendum.

Castro insists that any agreement to go for a constitutional amendment must be the result of government-opposition negotiations because he maintains that it will be binding on Chavez Frias and difficult for him to duck out of.

“It will help us avoid the kind of ambushes that Chavez Frias laid to stall the consultative referendum … It’s up to the National Assembly to speed up the passing of the amendment … the country cannot wait any longer.”

Castro points out that such an agreement is the only basis for lifting the national stoppage.