www.economist.com Feb 6th 2003 | CARACAS From The Economist print edition EPA

Having survived a devastating opposition strike, Hugo Chávez is preparing to take the offensive. That looks like bad news for the beleaguered private sector

NO SELF-RESPECTING revolutionary lets slip the chance to bestow an important-sounding name on a year. For President Hugo Chávez, 2002 was “the year of the consolidation of the Bolivarian revolution”. This year, he promises, is that of the “strategic offensive”. Having ridden out a two-month strike against his government, which brought the economy close to ruin, Mr Chávez sees less reason than ever to negotiate with an opposition which he dismisses as run by “coup-mongers”.

With many of its supporters facing bankruptcy, the opposition bowed to the inevitable on February 2nd, and lifted the strike in the private sector. The strike continues in the state oil company, but it is fraying. To save face, the opposition organised a ballot, in which it claims that 4m citizens voted on several different ideas for ending the political conflict that has wracked Venezuela for 14 months. Two of these were suggested by Jimmy Carter, a former American president, who has been trying to mediate in Venezuela. They are a recall referendum on Mr Chávez's rule in August, or a constitutional amendment to cut short his term.

Mr Chávez, with the army and now the oil company under his thumb, has other plans. Some of his opponents remain convinced that he is merely an incompetent autocrat whose “Bolivarian revolution” is largely in his own head. Others, pointing to his veneration for Fidel Castro, accuse him of seeking to create another Cuba. Neither view is wholly right, says Alberto Garrido, a political consultant and the author of several books on Mr Chávez. He says that the president is indeed pursuing a revolution; he has been doing so since well before 1992, when as an army officer he led an attempted coup against a democratic government. But Mr Chávez has not yet “decided to bring down the guillotine” on democracy, says Mr Garrido.

What would Venezuela look like if and when he does? Neither socialist nor communist. Unlike Mr Castro, Hugo Chávez does not propose to abolish private property. But the private sector he has in mind would consist of enclaves of foreign investment, plus small firms dependent on the state. Neither would threaten his grip on power.

Many larger Venezuelan companies, most of which back the opposition, will struggle to survive. On top of the economic effects of the strike, they now face exchange controls, announced last month as oil exports dried up. The controls will enable the government to starve businesses of imports. They will be administered by a former army captain who took part in Mr Chávez's 1992 coup against a democratic government. The bolívar has been fixed 17% higher than its last trading rate, making corruption and a black market likely.

The outlook for the economy is bleak. Oil output is unlikely to return to its previous levels quickly, if at all (see article). The government says GDP will contract by not more than 5% this year; Venezuelan analysts at LatinSource, a New York-based consultancy, put this figure at 17-20%. But Mr Chávez will attempt to shield his own supporters. He is likely to divert scarce foreign currency and cheap credits to loyal small businesses or co-operatives; he also has plans to distribute urban plots and rural smallholdings to the poor.

The “revolutionary offensive” has other targets. The government has filed complaints against the main private television stations, which could lead to their being fined or temporarily closed. It has also sent a bill to the National Assembly that would allow the infrastructure minister to revoke the channels' licences. The government is also seeking to wrest control of police forces run by opposition mayors; it has already partly disarmed the Caracas police. And there is another bill in the assembly, this one to add ten judges to the supreme court (which has recently shown some signs of independence).

Mr Chávez calls all this the “revolution of the excluded”. While communists relied on a disciplined vanguard party and organised labour, the Bolivarian “revolution” seeks to draw its support from those that Karl Marx dismissed as the “lumpen proletariat”. For Mr Chávez, the army takes on the role of the missing revolutionary party. So if his plan is to succeed, he must turn Venezuela's armed forces, by recent tradition pro-American and apolitical, into a revolutionary militia. He must also ensure that his supporters among the poor, already less numerous than in the past, do not continue to desert him as the economy slides deeper into penury.

Mr Chávez dreams of a revolution that goes far wider than Venezuela. “The happy society we want to create is in order to change...the system of production and trade and the international political system,” says Eliécer Otaiza, a former head of the secret police who still advises the president. The dream begins with that of Simón Bolívar, South America's Venezuelan-born independence hero, for a single Andean nation with, Mr Chávez adds, its own NATO-style defence organisation.

The United States has rather different plans for the region: the Free-Trade Area of the Americas, rejected by Mr Chávez. But this is supported by most South American governments. And even Brazil, whose new president, Luiz Inácio Lula da Silva, has some sympathy for Mr Chávez, is wary of his pretensions to regional leadership. So far, the United States has not taken Venezuela's president very seriously, though it has given money and discreet encouragement to the opposition. But now that the opposition has twice failed to oust him, many governments in the Americas may have to think again.

www.globeandmail.com By PAUL KNOX Wednesday, February 12, 2003 – Page A19

Concern for the health of Venezuela's democracy should guide the thinking of Canadians

CARACAS -- Latin America's anguish once again demands attention, even as conflict looms on the other side of the world. Keeping the 20 republics straight can be difficult, but, fortunately, each boasts at least one distinctive characteristic with a major influence on history and current events.

Mexico has its tortured relationship with the United States. Had Cuba not been an island, its story since 1959 could not have been the same. A slave revolt gave birth to Haiti, canal-building intrigue to Panama. Indian-mestizo tension permeates life in Guatemala, high population density in El Salvador. Honduras was the original banana republic, Nicaragua had the Sandinista revolution, Costa Rica abolished its army. The Dominican Republic is a virtual factory for baseball infielders.

In South America, Colombia's rugged geography nurtures political and social strife. Ecuador is split between coastal and mountain cliques. Peru was the centre of the continent's largest pre-Columbian empire. Chile is -- visibly, at any rate -- the least corrupt of all the republics. Argentina is the most European. Brazil has immense size and a moving frontier. Bolivia is landlocked, and don't you forget it. Uruguay was the region's first welfare state. Paraguay, half Hispanic and half Guarani Indian, is the most strongly bilingual country in the Americas.

As for Venezuela, oil quickly became the defining feature after large reserves were discovered nearly a hundred years ago.

For more than 40 years, until 1970, Venezuela was the world's biggest petroleum exporter. Even after its eclipse by Middle Eastern suppliers, it was still considered a strategic source by the United States. Recently, it has accounted for about 13 per cent of U.S. imports. It is relatively close to U.S. ports and, for a long time, there was no threat of political turmoil interrupting the supply.

Since December, of course, the second statement is no longer true. A walkout by oil workers, part of a carefully planned challenge by political opponents of President Hugo Chavez, virtually halted production and cut off exports. Oil has begun to flow again, but a massive purge of senior staff and a radical change of strategy at state-owned Petroleos de Venezuela have left its future cloudy. Venezuela is an increasing source of worry to the United States.

Even before the stoppage, new attention was being paid to oil exploration and development in Latin America because of growing uncertainty about the security of the Middle East. As long as the tap was turned on, the social reforms and eccentric imagery of Mr. Chavez's "Bolivarian revolution" inspired curiosity in Washington, but not much more. Now, an overriding question hangs over U.S.-Venezuelan relations: Can Mr. Chavez guarantee stable petroleum supplies?

The answer will determine the extent to which the United States favours an early vote on whether he should continue in office. Only the Bush administration's obsession with overthrowing Saddam Hussein has stopped it from paying more attention at high levels to the Venezuelan crisis.

As far as I can make out, the effect of the turmoil here on gasoline and heating-oil prices in Canada is indirect. Three decades ago, Venezuela supplied more than half of Canada's petroleum imports. But our sources are now far more diverse, mainly because of the availability of North Sea oil. Brad Wark, an energy specialist at the Department of Natural Resources in Ottawa, tells me that Venezuelan oil is "a drop in the bucket, and it's relatively easy to replace." High prices in Canada are due to global market conditions; the contribution of Venezuela's troubles to those is smaller than that of colder weather or the outlook for the Middle East.

Venezuela's constitution includes mechanisms that could lead to some type of popular referendum on Mr. Chavez's rule before the end of this year. If his opponents have, as they claim, obtained the number of signatures needed to trigger such a vote, it should proceed without undue delay. Concern for the health of democracy in the Americas -- not fear of an oil shock -- should guide the thinking of Canadians and their government.

My mistake: In my description last week of Canada's recent official presence in South America, I mistakenly said that House of Commons Speaker Peter Milliken met several Brazilian cabinet ministers while attending inauguration ceremonies for President Luiz Inacio Lula da Silva. Mr. Milliken held a 45-minute meeting with Mr. da Silva. Foreign Affairs Minister Bill Graham visited Brazil later in the month and also met several ministers. pknox@globeandmail.ca

www.upi.com By Larry Birns and Matthew Ward A UPI Outside View commentary From the International Desk Published 2/12/2003 4:22 PM

WASHINGTON, Jan. 2 (UPI) -- As well known for its venality as its commitment to democracy, Venezuela's middle class long tolerated the corruptocracies alternately fielded by the country's two main and equally tainted political parties. This sector is now staging a crippling strike against populist President Hugo Chávez, aimed not so much at reforming his government, but at bringing it down.

The opposition's latest tactic concentrates on a constitutional provision that, in fact, was drafted under Chávez, allowing Venezuelans to refuse to recognize any "authority that contradicts democratic values, principles and guarantees or impairs human rights."

But under Chávez, human rights violations have been relatively limited compared to what they were in Argentina, Chile and Brazil, and few democratic values have been "impaired." Rather, it has been the opposition's end-justifies-the-means philosophy and its importuning the army to carry out its "mission" to overthrow Chávez, which threatens Venezuela's democratic fundamentals, as well as its oil industry.

Unquestionably, Chávez has been irritating, insulting, infuriating and confrontational. However, it can be argued he has adhered to democratic ground rules at least as faithfully as those opposed to his rule, and his failings are as much a matter of style as substance.

The president may now be turning the corner in his fight for survival if he can mobilize sufficient fuel and food to satisfy the nation's minimal needs. However, if he is ousted -- which is entirely possible -- a far greater blow would be landed on Venezuela's democratic capabilities than on Chávez's personal destiny. If overthrown, Chávez will be revered eternally by the poor as a leader who, though often ineffectively, fought in their name, and not for individual benefit -- another Simon Bolivar.

For the Venezuelan opposition, its anti-Chávez battering ram all too often has been propelled by mendacious arguments defending meretricious goals. It has featured specious ad hoc interpretations of the constitution and hysterical justifications for what essentially has often been its outrageous behavior.

The opposition has distorted as often as it has invented. Its current mission is to asphyxiate the economy by freezing oil output, which is Venezuela's lifeline.

This strategy includes refusing to honor the Supreme Court's decision ordering a temporary discontinuation of the nation's debilitating oil strike, in contrast to Chávez's compliance when the court ruled that control of the Caracas police be returned to the Caracas Mayor Alfredo Pena's authority, who is one of Chávez's political enemies.

The most recent standoff between Chávez and the opposition resulted from the latter's decision, when convenient, to join Chávez in frustrating negotiations sponsored by the Organization of American States, while condemning the president and being the main stumbling block.

The opposition presented no program, except hatred of Chávez; it only barely was able to contain the craven personal ambition of a number of its highest leaders, including Carlos Fernandez and Carlos Ortega, who see themselves as presidential.

With the crucial help of Venezuela's mainly yellow press, opposition figures distribute sometimes false and always inflammatory interpretations of events.

Therefore, it is not only the government that is jeopardizing the lives of Venezuelans by staging frenzied confrontations with militants on the other side; rather, it is the opposition that sedulously promotes class warfare as much as any group, with its slogans, chants and banners.

The opposition's leadership fears the implementation of legislation featuring a modest land reform program in which fallow or excessive holdings could be transferred to small farmers.

Currently, 41 percent of the country's arable land is controlled by less than 5 percent of the population and, according to the U.N. Economic Commission for Latin America, Venezuela has one of the hemisphere's highest concentrations of wealth in the fewest hands. Its demographics indicate that about 65 percent of the population lives near or below the poverty line. From this segment comes Chávez's main support base, unlettered loyalists who will not easily return to past injustices or relinquish newly obtained benefits -- for example, free meals for their school children.

The opposition accuses Chávez of consorting with terrorists, meaning that, like all of his predecessors, he has met with heads of other nations in the Organization of Petroleum Exporting Countries to discuss the oil cartel's pricing and production. Anti-Chavistas are on par with Miami's Cuban exile community in their virulent anti-Castro demonology. Some of the more compromised leaders of Venezuela's business and labor sectors are on weak moral ground when they threaten to indict Chávez for corruption even though he, unlike some of themselves, has no record of defrauding the public.

If there is to be a solution to Venezuela's present governance crisis, it must arise from the constitution, and not be imposed only from the street or a resort to arms. One of the opposition's major sources for its lapses in credibility is its calculated naiveté and its illogicality. It stages a political strike against the oil industry and then bemoans the fact that Chávez has the nerve to try to restore production by bringing in foreign or unlicensed substitute workers to produce and transport oil. It wails over the possibility of an environmental disaster or some costly accident due to relatively untrained replacement personnel, but doesn't face up to the fact that the dangers directly flow from anti-Chavista strategy.

The opposition also chronically lashes out at such basic institutions as the "Chávez-controlled" Supreme Court, and then, in passing, cites the court's numerous anti-Chávez rulings that have damaged the president's standing. The same love/hate relationship exists with the constitution. The opposition sees no problem with its contrasting selective indignation or muscular praise -- all very well, but this is not the typology of democratic practice.

All told, the opposition's current scenario poses a serious threat to Venezuela's organic institutions. Any non-constitutional solution will fatefully undermine the country's prospects for domestic peace and its precious tradition of political civility, while opening itself up to bitter infighting among the now united, but predictably soon to be divided victors, even if Chávez decides to step down. Of course, don't forget the constitutional role of Jose Vicente Rangel, the nation's vice president, who would automatically replace the president if called upon to do so.

There may be a way out for patriotic Venezuelans. The opposition could wait until next August, when the very constitution it selectively touts provides for a binding referendum midway through a presidential term on the incumbency's continued tenure. But what happens if Chávez wins such a ballot? This will almost guarantee that the middle class, as it did in Colombia, will turn to vigilantism against the perceived leftist devils, and the epoch of death squads will be inaugurated. Or, the legislature could call for presidential elections earlier than 2006, even prior to next August. But, if the opposition is to triumph, it must do so lawfully and through the amendment process, and not through political chicanery or economic extortion.

As for Chávez, his friends must make him realize that he is partially to blame for failing his nation and his revolution. His excesses, indiscretions and immaturity have helped to make enemies out of former friends, and have jeopardized the enactment of the positive vision he had for a better, more democratic Venezuela.

It may not be too late, but from this moment onward, Chavez must temper his conduct with a wisdom and perspective he has thus far failed to exhibit. To begin with, he must come to believe that thousands of the people who have taken to the streets to demonstrate against his rule are worthy Venezuelans, capable of being assets rather than merely fulminating foes.

Give these people a chance. Settling matters by scorching Venezuela's basic institutions recalls the disastrous consequences for President Salvador Allende's Chile in 1973. There, imprudent Christian Democrats solicited the military to rid the country of its constitutional president in order to bring on their own anticipated rule, but instead they got 17 years of brutal repression. There is always a danger of history repeating itself.

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(Larry Birns is the director of the Washington-based Council on Hemispheric Affairs. Matthew Ward is a Research Fellow at COHA. Outside View commentaries are written for UPI by outside writers on subjects of public interest.)

www.forbes.com Reuters, 02.12.03, 12:57 PM ET

JOSE, Venezuela, Feb 12 (Reuters) - U.S. oil major ExxonMobil Corp (nyse: XOM - news - people) will load a cargo of synthetic crude between Feb. 19-21 from its strike-hit Cerro Negro syncrude project in Venezuela, an official from the country's state oil company PDVSA said on Wednesday. The lifting of the 520,000 barrel cargo apparently marks the first loading of crude from a Venezuelan port by a major international oil firm since early in a two-month strike by foes of President Hugo Chavez. Foreign companies had held off in loading at Venezuelan ports due to potential insurance risks that could be incurred by uncertified staff hired by the government to break the strike. Jose Port loading manager Rubin Rodriguez said that the vessel, Therassia, would load, but that Exxon Mobil would conduct a final audit of the port on Feb. 16. Chavez has used troops and replacement crews to try and restart the oil sector of the world's No. 5 petroleum exporter. But he and the striking workers give conflicting accounts of his success. He says crude production is nearing 2 million barrels per day, but strike leaders said on Wednesday output was at 1.398 million barrels per day. Opposition leaders started the strike on Dec. 2 to press Chavez to accept elections, but lifted the shutdown after two months as many businesses reopened. Chavez has fired more than 11,000 oil workers in a crackdown. But they are maintaining their protest.

icthewharf.icnetwork.co.uk Feb 13 2003

A VENEZUELAN man who tried to smuggle £50,000 worth of cocaine in his shoes into London City Airport, was jailed for six years this week.

Francisco Antonio Zambrano Moreno (26) was stopped at the entrance to the Customs Channels at the Docklands airport, after flying in from Caracas, Venezuela, on November 20 last year.

After carrying out a search, customs officers found brown and black tape wrapped packages, under the insoles of his shoes. The shoes were found to contain 694 grams cocaine with an estimated street value of approximately £50,000.

On Monday (February 10) Moreno was sentenced to six years in prison at Middlesex Guild hall Crown Court. Judge Matheson said "It is usual that the couriers are the ones caught smuggling and that real criminals behind the drugs trade are not caught. "

Customs spokesperson, Shona Lowe, said "This sentence should send a very strong message."