www.cnn.com Thursday, January 23, 2003 Posted: 7:09 PM EST (0009 GMT) Supporters of Venezuela's President Hugo Chavez rally Thursday in Caracas, Venezuela.

  CARACAS, Venezuela (CNN) -- Tens of thousands of people from all over Venezuela converged on the capital Thursday in a show of support for the country's embattled president and to celebrate the 45th anniversary of the end of the country's last dictatorship.

Late in the afternoon, a bomb exploded near the main square where the demonstrators had gathered several minutes before a speech by President Hugo Chavez.

Two people were killed, including a homeless man, and at least three people were wounded, police told state-run television.

At the podium, Chavez made no reference to the violence. He gazed at the crowd through binoculars and appeared elated at the turnout.

"I have seen a lot of marches," he said. "But this is not a march. No, it's a flood of the people from all parts of the country. Long live the people! Long live the popular conscience!"

In the crowd, demonstrators held signs.

"Fascists and terrorists cannot hide!" read one. "The homeland is not for sale!" read another.

Some 5 million people participated in the demonstration, said one congressman. Independent estimates of the size of the crowd were not available.

Under a blazing summer sun, the demonstrators assembled at two downtown locations -- Parque del Este and La Bandera -- for the 6-mile march to Avenida Bolivar, where Chavez addressed them late in the afternoon.

The demonstration was intended to show support for Chavez, whose leftist regime has been the target of vehement, largely middle-class opponents.

Their call for a general strike that began December 2, intended to force him to step down or call for early elections, has crippled the country's economy.

Thursday's demonstrations also marked the anniversary of the fall of Gen. Marcos Perez Jimenez, who was deposed January 23, 1958.

Though his rule was followed by democratic governments, many Chavez supporters say the twice-elected president is the only one who has fought for the rights of the country's poor.

Anti-Chavez marches to take place outside city

Before beginning their march, the demonstrators appeared festive, carrying pro-Chavez banners and milling about the streets peacefully, surrounded by police on motorcycles.

Fireworks were ignited in one area.

Opposition leaders said they were organizing anti-Chavez marches to take place in 23 locations outside Caracas, but urged their members in the capital to stay at home to minimize the chance of bloodshed.

Chavez supporters show Venezuela's constitution as they celebrate the Supreme Court decision Wednesday.

Thursday's demonstrations came a day after Venezuela's Supreme Court dealt a setback to the opposition by rejecting its motion to hold a nonbinding referendum February 2 on Chavez's presidency.

Opposition groups had put forward a petition signed by 2 million people for the referendum. Chavez's government opposed the move, sending it to the Supreme Court, which ruled that the referendum would not be legal.

The general strike has set off a flight of capital from the country and crippled the country's ability to export oil.

Before the strike, Venezuela was the world's fifth-largest exporter of oil and supplied 12 percent of U.S. oil imports. That has been reduced to a fraction -- resulting in long lines at gas stations in Venezuela and reduced foreign reserves.

In an effort to stem the outflow of money, Venezuela's central bank Wednesday closed the foreign exchange market for five trading days.

The bolivar is down 24 percent since the strike began.

Former U.S. President Jimmy Carter, who won last year's Nobel Peace Prize, is expected to speak Friday with the Group of Friends of Venezuela in Washington.

The group, which includes the United States, Spain, Portugal, Mexico, Chile and Brazil, was created last week at the suggestion of Brazil's newly elected president, Luiz Inacio Lula da Silva.

Carter has also met in Caracas this week with leaders of the Organization of American States, which has been brokering talks.

www.economist.com Jan 16th 2003 | CARACAS From The Economist print edition Getty

The opposition starts to blink, as President Chávez seeks victory at any price

ALEXANDER SOTILLO was a motorcycle messenger until he was made redundant a year ago. Now he shines shoes beside the metro station in Petare, a poor district at the eastern end of Caracas. At first glance the busy streets around him, crowded with vendors' stalls, look much as they would on a normal weekday. But this is the sixth week of the strike called by opponents of President Hugo Chávez, in a bid to force an early election. The government of Mr Chávez, a populist former army officer, claims that the strike is backed only by a privileged minority of Venezuelans, in business and the trade unions. It says that its effects are confined to the oil industry and the wealthier parts of the capital. But people in Petare dispute this. “On a normal day I can make about 60,000 bolivares [$36]. Yesterday I took 14,500,” Mr Sotillo says.

Despite the widespread hardship, there is no sign of a negotiated end to the strike. Two months of talks, chaired by César Gaviria, the secretary-general of the Organisation of American States (OAS), have proved futile. The opposition claims that Mr Chávez, who was twice elected, is ruling in an undemocratic manner, and that his “Bolivarian revolution” is taking Venezuela towards a kind of military socialism. In turn, the government sees its opponents as “terrorist” coup-plotters.

Outsiders have become increasingly concerned. Venezuela is the world's fifth-largest oil exporter; the oil price has risen by around $5 per barrel since the strike began. This week a group of “friends of Venezuela” was set up, including Brazil, Spain and the United States. Although this initiative stems from an effort by Mr Chávez to seek support from Brazil's new left-wing government and others, it has mutated into an American-backed effort to strengthen Mr Gaviria's hand.

The opposition is desperate to find a way for the private sector to return to work that does not look like capitulation, or like deserting the strikers at Petróleos de Venezuela (PDVSA), the state oil giant, who have acted as its shock troops. But it has found no way of doing this, and Mr Chávez is giving no ground. He has the support of the army and some 25% of Venezuelans. He claims to be restoring oil production with the help of strikebreakers (and foreign technicians, says the opposition). Officials claim that output has climbed to over 800,000 barrels per day. Half that, retort industry experts, who say that the PDVSA strike remains solid. Even if the strike is ended, it would take up to four months for output to return to its normal level of 3m b/d.

Mr Chávez seems to be winning his battle to abort a non-binding referendum on his rule, scheduled by the electoral authority for February 2nd after the opposition gathered the necessary signatures. The government claims, controversially, that this is unconstitutional; it says a referendum cannot be held before August. The Supreme Court (which was hand-picked by the president's allies) seems likely to agree.

What is beyond dispute is the mounting toll on daily life and Venezuela's economy. Shopkeepers in Petare say that takings are well below normal. Many workers are receiving only half-pay or less. While petrol has run out in opposition neighbourhoods, the government has managed to ensure that fuel is available in Petare, many of whose residents remain loyal to Mr Chávez. But maize flour and cylinders of cooking gas, two staples for the poor, have become scarce and expensive. Residents have started ambushing gas-delivery trucks, diverting them to Petare. “We sell them at the proper price and give the driver a little more for his trouble,” says Omar León, a community leader.

Mr Chávez has said he will send the army to seize the warehouses of food manufacturers, whom he accuses of “hoarding”. The companies, which support the strike, say their contingency plans to ensure supplies of basic goods have been disrupted by fuel shortages and government ineptitude and harassment. Both sides say they fear that looting could break out.

Even if the strike crumbles, Venezuela's economic prospects are grim. Since 1999, the economy has shrunk by almost 10%; some economists suggest that this year could see a further decline of at least as much. Facing a fiscal chasm, the government will have to slash spending, and resort to printing money. But until the oil industry returns to work, figures are just guesswork. What is not is the wave of bankruptcies that will shrink the private sector. So tens of thousands more workers will join Mr Sotillo in the informal economy, where one Venezuelan in two grinds out a precarious living. Others will swell the ranks of the 17% who are officially unemployed. Mr Chávez may win this battle. But Venezuela has already lost.

Hugo Chavez Background. Jan 16th 2003 From Economist.com

After his attempted coup in Venezuela failed in 1992, Hugo Chavez—a former army colonel and paratrooper—re-emerged as a presidential candidate six years later. He ran on a vague, populist platform and won by a landslide in December 1998 elections. He promptly put in place a new constitution, beneficial to himself. Aided once more by populism, he handily won another election in June 2000, called under the new constitution.

Despite grumbles from the opposition and army, rising poverty and a slumping economy (the bolivar was devalued in February 2002), Mr Chavez held onto power. But in December 2001, he faced a crisis as Venezuelans demonstrated angrily against a package of new decree laws, including one on land reform. A general strike in spring 2002, along with mounting military discontent, highlighted Mr Chavez's increasing isolation. After violence broke out, he was forced to resign on April 12th but was reinstated as president two days later. America was left to explain away its apparent covert support for the coup.

Tensions rose again in the winter of 2002-3, when a long-running general strike—an effort to oust Mr Chavez—shut down Venezuela's oil industry. Mr Chavez is clinging to power, but at a terrible cost to his country.

www.nola.com The Associated Press 1/23/03 9:39 AM

NEW ORLEANS (AP) -- Four people have been arrested on allegations of trying to launder money through the sale of $150 million in government notes from Venezuela.

According to a federal complaint, the four were arrested in suburban New Orleans on Jan. 15 after offering the notes to undercover Secret Service agents posing as front men for drug dealers.

The four suspects were identified as Harry H. Adair, Kenneth Vicknair, David E. Wallace and Chien C. Lam.

The charges were filed in New Orleans but is being prosecuted by the U.S. Attorney's Office in Baton Rouge. U.S. Attorney David Dugas of Baton Rouge said prosecutors in New Orleans removed themselves from the case because a family member of someone in that office worked with one of the four arrested men.

The complaint said the alleged transaction involved $150 million in promissory notes issued by the Bank of the Republic of Venezuela. An undercover agent said he wanted to buy the notes for two drug dealers, the complaint said.

www.sfgate.com CHRISTOPHER TOOTHAKER, Associated Press Writer Thursday, January 23, 2003

(01-23) 06:44 PST CARACAS, Venezuela (AP) --

Thousands of supporters of President Hugo Chavez marched Thursday to protest a 53-day-old strike intended to topple their leader and to celebrate the 45th anniversary of the fall of Venezuela's last dictator.

"Chavez! Chavez!" chanted demonstrators at a bus terminal in southwestern Caracas, one of two gathering points for marches that were to converge in a central avenue. They also gathered at a park in the east side, setting off earthshaking fireworks.

The crippling strike, called Dec. 2 to demand Chavez resign or call early elections, has dramatically reduced oil production in the world's fifth largest exporter and caused the currency, the bolivar, to lose 25 percent of its value this year as Venezuelans and investors have bought dollars.

In a speech broadcast late Wednesday, Chavez announced he would impose foreign exchange controls to protect the bolivar. The policy will set limits starting next week on the amount of dollars or other foreign currencies Venezuelans can accumulate. Earlier Wednesday, the central bank suspended foreign currency trading for a week as political and economic uncertainty fed a surge in demand for dollars.

"The people went out to defend democracy 45 years ago," said lawmaker Nicolas Maduro, a leader of Chavez's Fifth Rebublic party. "Today, they are in the streets telling the world that the majority of the people support President Chavez."

Maduro was surrounded by people wearing red bandanas reading "Chavez" and waving small blue copies of Venezuela's constitution, which the president pushed through in 1999 as a cornerstone of his self-described "revolution" to help the poor.

Strike leader Carlos Ortega, president of the nation's largest labor union, accused Chavez's supporters of planning a violent rampage in the capital. He urged government adversaries "to stay at home" to avoid "a massacre."

Maduro denied violence was planned.

Six people have died during protests since the strike began, including a man killed Monday during clashes between Chavez foes and followers. About 2,000 National Guard troops and police patrolled Caracas on Thursday.

The marches marked the downfall of Gen. Marcos Perez Jimenez, who was deposed on Jan. 23, 1958, after a decade of iron-fisted rule. Four decades of democratic governments followed -- but "chavistas" believe Chavez, who was elected in 1998 and re-elected in 2000, is the first president to stand up for the interests of Venezuela's poor majority.

Opponents accuse Chavez, who led a failed coup in 1992, of running roughshod over democratic institutions and wrecking the economy with leftist policies.

Thursday's march came after a day of disappointment for the opposition.

On Wednesday, Venezuela's Supreme Court indefinitely postponed a Feb. 2 referendum that would have asked citizens whether Chavez should resign.

The decision came just 11 days before the scheduled vote and stunned the opposition, which had hoped the plebiscite would prompt the embattled leader to quit. Government opponents presented the elections council with over 2 million signatures in November to convoke the referendum.

"It's a slap in the face for millions of Venezuelans who are waiting for a solution to the crisis," said opposition leader Rafael Alfonzo.

Chavez called the ruling "fair," adding that "it eliminates the terrible uncertainty that was affecting the country."

www.news.com.au By Patrick Moser in Caracas January 24, 2003

VENEZUELA braced for more turmoil as foreign currency trading was halted, a February referendum was suspended and supporters of embattled President Hugo Chavez planned a major demonstration.

Venezuela's Supreme Court ordered the suspension yesterday of a planned February non-binding referendum on the rule of Mr Chavez, dealing a blow to opposition hopes to inflict a symbolic political defeat on the leftist leader.

Electoral authorities had set the referendum for February 2, after the opposition had collected more than two million signatures to request the poll, which would have asked voters whether or not the populist president should resign.

But Mr Chavez's government, which is battling a seven-week opposition strike, objected to the vote as unconstitutional and appealed to the Supreme Court to stop it from going ahead.

Mr Chavez, who was voted into office in 1998 and is refusing opposition calls to step down and hold early elections, had said he would ignore the result of the non-binding referendum, even if he lost by 90 per cent.

He has said the opposition should wait until August 19, half-way through his term, when the constitution allowed for a binding referendum on his current mandate, which is scheduled to last until early 2007.

The government suspended foreign currency trading for five days, but said repayment of public debt would continue.

Traders said the move was motivated by a high demand for cash amid nervousness over the crisis and fears currency controls would be imposed.

The National Electoral Commission said the court ruling merely "froze" the referendum but did not cancel it. "We are shocked and indignant. This demonstrates we are under an authoritarian government," said Antonio Ledezma, a spokesman for the opposition, made up of labour and employer federations as well as largely conservative political parties.

The announcement heightened insecurity on the eve of a major Caracas demonstration by supporters of the beleaguered President, who planned to march through east Caracas, a stronghold of the opposition.

Opposition leaders said they were determined to continue the strike, which has mainly affected the vital oil sector, slashing production and exports.

Top diplomats of the hastily formed Friends of Venezuela group – Brazil, Chile, the US, Mexico, Spain and Portugal – were to meet tomorrow in Washington to seek a peaceful end to the crisis. Secretary of State Colin Powell will represent the US.

Venezuelans were anxiously awaiting the opposition's reaction to former US president Jimmy Carter's proposals for an August 19 referendum or a constitutional amendment followed by early elections.

In exchange, the opposition would have to end its strike immediately. Agence France-Presse