usinfo.state.gov

Q: What's the U.S. reaction to OPEC's decision to increase production, and how much the oil strike in Venezuela is impacting the U.S. economy right now?

MR. FLEISCHER: The President views OPEC's action to increase production, particularly given the protracted dispute in Venezuela, as a welcome step. It will increase global energy supplies and support global economic growth. The President views this as a welcome step.

I'm sorry, the second part of your question?

Q: How much the oil strike in Venezuela is impacting the U.S. economy right now?

MR. FLEISCHER: I think that's a question that I -- you can talk to any number of economists and get any number of different answers about it, particularly given the fact that OPEC is going to take this action that is, as I indicated, a welcome step that does address the situation in Venezuela.

Q: Ari, I have two questions. Just a follow-up on the OPEC decision. Is that enough? What they're doing is enough to fulfill the needs of the American people and U.S. market? And if the U.S. government had asked the Mexican government to sell the U.S. more oil in any event and -- well, in any event?

And my second question is in regard to a Mexican national. This is an article that was published in The New York Post, January the 4th. It's in regards to Salvador Martinez Gonzalez, who used to work at the White House as a supervisor of attendance information for social events. And he came to work to the White House with a fake U.S. passport. And I don't understand how this happened knowing how effective is the Secret Service when it comes to screening.

MR. FLEISCHER: Okay, on your first question about Venezuela, as I said, the President views this as a welcome step that OPEC has taken. It's a significant increase in production. Ultimately, the markets will be the determinant of whether or not it's sufficient or not. But obviously, the President views this as a welcome matter.

On the second issue, I have not had an opportunity yet to take a look into that. I'll try to do so and see if there's any additional information.

www.islam-online.net

Chavez has repeatedly warned the armed forces were ready to wage battle in defense of his social revolution CARACAS, January 13 (IslamOnline & News Agencies) - Venezuela's crippling strike entered its seventh week Monday, January 13, amid renewed violence and threats by President Hugo Chavez to beef up military efforts to end the protest that throttled the vital oil industry.

In what has become an almost daily routine, police and National Guard troops fired teargas and rubber bullets to disperse protesters in Caracas and the country's second largest city, Maracaibo, reported Agence France-Presse (AFP).

On Monday, it was Chavez supporters who were targeted by security forces, in Caracas after they hurled rocks at government opponents and in Maracaibo as they tried to stage a protest outside the governor's offices, according to television footage.

The pictures showed a group of people chanting pro-Chavez slogans and hurling rocks at a dozen government opponents who converged at a square in central Caracas for a brief ceremony before a statue of South American independence hero Simon Bolivar.

At least two people, including a National Guard member, were visibly injured by the rocks.

National Guard troops fired tear gas and rubber bullets to disperse the Chavez supporters.

On Sunday, January 12, military troops dispersed thousands of anti-government protesters who gathered outside a huge military complex in Caracas.

While some protesters Sunday taunted soldiers blocking access to the army installations, the opposition has been courting the armed forces and urging them to take sides, while Chavez insisted the military were firmly behind him.

Military Still Behind Chavez With both sides firmly entrenched in their positions, attention was closely focused on the military establishment, which to date has generally steered clear of political pronouncements on the volatile crisis.

Chavez has repeatedly warned the armed forces were ready to wage battle in defense of his self-styled social revolution threatened by the business, labor and political leaders heading the strike that was 43-days-old Monday.

Over the weekend, he announced elite army rangers were being deployed to patrol oil distribution centers and pipelines.

He also threatened to use troops to seize food processing plants idled by the strike and suggested sending soldiers with teachers' degrees to replace striking school staff.

On Sunday, Chavez warned that the armed forces would close any account they have with banks that side with the strike. Last week, several financial institutions closed for two days, and many banks work a half-day schedule in support of the protest.

Chavez had already used troops to seize from strikers installations of Petroleos de Venezuela (PDVSA), the giant state oil company that has been the main target of the strike launched on December 2 in a bid to force Chavez from office.

The embattled president has repeatedly rejected calls for his resignation or snap elections.

He also dismissed opposition plans for a February 2 referendum on his mandate, saying the constitution only allowed for a recall referendum in August, half-way through his six-year term.

His foes accuse the leftist-populist president of wrecking the economy and dividing the country. Chavez, in turn, accuses his opponents of sabotage, for choking the oil industry.

With shipments from the world's fifth largest oil exporter reduced to a trickle by the strike, OPEC agreed Sunday to increase oil production by 1.5 million barrels per day in a bid to curb a surge in prices.

sg.biz.yahoo.com Tuesday January 14, 3:37 AM 01-13-03 1416ET

CARACAS -(Dow Jones)- Venezuelan state oil company Petroleos de Venezuela SA (E.PVZ), or PdVSA, on Monday lost the services of oil tanker Astro Canopus because it didn't pay its bill, an executive at an international crude oil charter company said.

The Astro Canopus had been on a three-year time charter to PdVSA, the executive told Dow Jones Newswires on the condition of anonymity.

PdVSA officials didn't return calls with requests for comment.

The loss comes as PdVSA scrambles to find tankers to move crude oil so it can uncap more wells it was forced to shut because of an ongoing 43-day-old general strike against President Hugo Chavez's leadership.

(MORE) Dow Jones Newswires

01-13-03 1419ET

Venezuela PdVSA Loses Chartered Tanker For Nonpayment -3

International shipping agencies will boycott Venezuelan ports because their insurance carriers have refused to guarantee coverage as long as the strike continues, said the executive, whose agency loaded "one or two ships a week" in Venezuela.

"We've been told there are no qualified pilots, and we're not sure if there are people to moor the ships. The insurance companies have said they're not sure the ports are safe," he said.

The government has tried to replace harbor pilots and tug boat captains but industry insiders have said they don't have the licenses required to operate at the country's terminals.

"Currently, we could get to Venezuela and be told (by insurance companies) we can't load because it's too risky...so we won't be going there until the strike's over and everything settles down," he said.

Without chartered tankers, PdVSA is restricted mostly to using its own eight tankers, which limits exports to about 9 million barrels per month versus almost 10 times that in November before the strike began, according to Ciro Izarra, who was the international crude trading manager at PDVSA before the strike began.

And that's seen continuing to limit PdVSA's ability to uncap wells because there's simply nowhere for the oil to go once it comes out of the ground.

Observers have said the company is currently pumping about 400,000 barrels per day, which is close to what Izarra estimated PdVSA can ship with its own fleet.

Opposition leaders are demanding President Hugo Chavez agree to call elections in 30 days if he loses a Feb. 2 nonbinding vote on whether he should remain president.

Chavez has thus far maintained the constitution only requires him to accept the results of a possible recall referendum next August, the midpoint of his term.

Chavez's critics blame his left-leaning policies for the country's deepening economic crisis, as the economy likely contracted about 8% last year amid unemployment of 17% and inflation of 31% sparked by the bolivar's ($1=VEB1513.25) 46% devaluation.

Chavez has said the country's problems are due to an "economic coup" led by his opponents.

PdVSA Web site: www.pdv.com

-By Jehan Senaratna;Dow Jones Newswires; 58212 564 1339; jehan.senaratna@dowjones.com

www.newsday.com By ALEXANDRA OLSON Associated Press Writer

January 13, 2003, 5:40 PM EST

CARACAS, Venezuela -- Venezuelan opposition leaders said Monday they were considering asking doctors, teachers and small business owners to return to work, saying aspects of the 43-day-old walkout could become "counterproductive."

But the strike will continue where it matters most, in the key oil industry, said Enrique Naime, a leader of the opposition political movement Democratic Coordinator. The industry provides half of government revenue and 80 percent of export earnings.

"The oil people are insisting they aren't going to cede," Naime said. "The strike will continue but it's important to continue without kicking goals into our own net."

The opposition is worried that suffering caused by the strike could lead to a popular backlash, even though it says it has taken measures to ensure there are no acute shortages of essential goods.

Most private schools and some public schools have been closed since the strike began Dec. 2. Hospital workers supporting the strike are only attending emergencies. Many small businesses complain they can't sustain losses much longer. Gasoline and bank lines are long; gas shortages have disrupted commerce. Many Caracas supermarkets have run out of fresh milk and are running low on basics such as flour and drinking water. Many medicines no longer are available at pharmacies.

"At this moment, the doctors' strike could be counterproductive, just like the educational strike could be counterproductive," Naime said.

He said strike leaders were considering asking medical workers, teachers and small business owners to resume work.

William Davila, another Democratic Coordinator leader, said the food industry also should be given the freedom to ensure supply. But Davila said any easing of the strike should depend on a pending decision by the Supreme Court on the legality of a nonbinding referendum of Chavez's rule. The National Elections Council has set the referendum for Feb. 2.

The strikers are trying to force Chavez to accept a nonbinding referendum on his rule. Chavez's presidency runs until January 2007, and Venezuela's constitution says a binding referendum may be held halfway into his six-year term, or August.

Chavez's opponents cite a clause in the constitution that allows citizens to petition for referendums on "matters of national importance" at any time. They delivered 2 million signatures asking for the vote.

The strike is strongest in the state oil monopoly, Petroleos de Venezuela S.A., where 30,000 of 40,000 workers are striking. The government fired at least 1,000 managers. Energy and Mines Minister Rafael Ramirez said the government will bring oil production back to 2.5 million barrels a day by mid-February.

Once the world's fifth largest oil exporter and No. 4 supplier to the United States, Venezuela now exports less than 300,000 barrels a day, according to striking executives. The government says exports are 800,000 a day.

According to the Lundberg Survey of 8,000 U.S. service stations, Venezuela's strike has helped raise U.S. gasoline prices by 5 cents per gallon in the past three weeks to an average $1.50 a gallon.

Citing scarce gasoline imports from Venezuela, the U.S. Energy Department said American motorists could pay up to $1.54 per gallon of gasoline this spring even if war is averted in Iraq.

"The market underestimated the tenacity of the Venezuelan strikers," said Phil Flynn, head of the energy trading desk at Alaron Trading Corp. on the Chicago Mercantile Exchange. "People are finally starting to wake up not just to the strike but also to Venezuela's importance as a U.S. supplier."

In Maracaibo, 340 miles west of Caracas, police used tear gas to keep pro- and anti-Chavez rallies apart. National Guard troops used tear gas to stop a small clash in Caracas.

Chavez -- who purged the military of dissidents after a brief April coup -- has sent troops to seize striking oil tankers, commandeer gasoline trucks and lock strikers out of oil installations. Last week, he threatened to send soldiers to seize food production plants participating in the strike and fire or jail striking teachers.

"We are spending millions of dollars to import food," Chavez said Friday. "I can't allow the people to be strangled by hunger. I can't allow children to die because there are no medicines, or no milk."

www.upi.com By Owain Johnson UPI Business Correspondent From the Business & Economics Desk Published 1/13/2003 1:12 PM

CARACAS, Venezuela, Jan. 13 (UPI) -- Venezuelan President Hugo Chavez has threatened to take drastic action against the private banking sector, unless the banks agree to stop observing the national general strike, which entered its 43rd day Monday.

Most banks have been opening for no more than three hours a day to show their support for the general strike, which is seeking to force the leftist president to submit to a referendum or to call new elections.

Several of the oil-rich country's largest banking groups closed entirely Thursday and Friday, although almost all returned to their limited working day Monday.

Speaking during his weekly address to the nation Sunday, Chavez warned that the banks were on a collision course with his “social revolutionary” government.

He said banks refusing to work as normal would face hefty fines and could even be taken over by the government.

"We will fine those banks that are not complying with the law and if they still refuse to comply with it, we will have to remove their directors or intervene in them," Chavez warned.

The president also announced he would be ordering Venezuela's influential armed forces to withdraw any funds they hold in Banesco, one of the banks participating in the strike.

"I can't leave soldiers' salaries, the accounts for tank maintenance, the accounts for frigate maintenance, for the navy, the accounts which pay for tires for military vehicles or for the troops' food in a bank that has assumed a stance linked to the conspiracy," Chavez said.

The loss of the military accounts will hit Banesco, Venezuela's fourth largest bank, extremely hard. Banesco President Juan Escotet confirmed in a televised interview Monday that military deposits account for around 10 percent of the bank's total deposits.

Venezuela's Banking Regulatory Authority, Sudeban, had ordered all private-sector banks to work normally -- from 8:30 a.m. until 3:30 p.m. -- but the vast majority of branches are only opening in the mornings.

The limited opening times have led to giant queues outside banks and a general shortage of cash in ATMs. The banks' support for the strike has also made business extremely difficult for those mainly small and medium-sized companies that are still trading despite the ongoing strike.

The head of Sudeban, Irving Ochoa, said he would be meeting with senior bank directors later Monday to try to reach a new agreement on quality of service, security and operations during the general strike.

Ochoa said he was hopeful the government and the banks will strike a deal acceptable to both sides later this week, despite the tough line taken by Chavez.

The financial services sector is likely to take the president's warnings seriously. The Chavez government has already showed by its treatment of state-owned energy giant PDVSA that it is not afraid to take tough measures in order to break the general strike.

The government has dismissed striking oil workers' spokespeople and has threatened to dismiss all those PDVSA employees that do not return to work. The government has begun to restart a small proportion of the company's operations using contract workers, loyal employees and technicians brought in from abroad.

PDVSA is, however, a state-owned company under government control, and it is unlikely that Chavez would actually risk intervening in the private banking system, which is largely owned by foreign companies.

Venezuela's two largest banks are both owned by Spanish groups. The Santander Group and the Banco Bilbao Vizcaya Argentaria own the Banco de Venezuela and Banco Provincial respectively. U.S. banking giant Citibank is also a major player in Venezuela.

At a time when his beleaguered government is extremely reliant on foreign support, it would be very damaging diplomatically for Chavez to intervene in banks owned by powerful foreign groups.

A more likely scenario is that the president's threats were intended to dissuade the banks from any further full-day shutdowns. It seems likely Sudeban will broker a deal between the sector and the government that will commit the banks to continue opening at least partially every day in exchange for an end to government legal proceedings against them.

It is also in the banks' interests to remain open partially, as the financial services sector has been one of the sectors worst affected by Venezuela's economic slowdown and cannot afford to lose any more business than is inevitable given the effects of the general strike.

Throughout 2002 banks suffered the lethal combination of a dramatic decrease in borrowing, a wildly fluctuating exchange rate and a lack of investor confidence in the government's ability to manage the economy.

Large numbers of investors pulled their money out of Venezuela in response to the worsening political and economic situation, which led to an estimated fall in gross domestic product of around 8 percent in 2002.

Defaults on loans have also risen sharply as the economic contraction forces many smaller companies into bankruptcy, while the prospects for 2003 remain dismal as the effects of the ongoing general strike, and in particular, the dramatic decrease in oil revenue make themselves felt.

"We should prepare for a difficult year. The enemies of the fatherland are going to continue to try to destabilize the country," Chavez warned Sunday.