www.detnews.com By Alexandra Olson / Associated Press Leslie Mazoch / Associated Press

Alberto Salazar, bottom, and Jesus Indriago, behind, wait more than six hours with other motorists hoping to fill up at a service station before it runs out of gasoline in Caracas, Venezuela, Friday. CARACAS, Venezuela -- Venezuelan motorists waited for hours to fill up at gasoline stations Friday -- a sign life has been slow to return to normal after a two-month strike that failed to oust President Hugo Chavez and left the economy in shambles. Thousands of employees at the state oil monopoly, Petroleos de Venezuela S.A, are still on strike or have been fired by Chavez. The government has raised crude oil production to about a third of normal, but refineries are largely idle. Energy and Mines Minister Rafael Ramirez said Friday that gasoline production was 150,000 barrels a day, compared to 250,000 before the strike. He said Venezuela would import 12 million barrels of gasoline this month to make up for shortages. Venezuela -- the world's fifth-largest oil exporter -- has spent more than $500 million on fuel imports since the strike began Dec. 2. Because of the dependency on imports, "the situation with gasoline goes up and down," Ramirez said. Hundreds of drivers joined lines stretching for several miles at Caracas service stations, most of which were dry and waiting for deliveries. Earlier this week, it took 20 minutes at most to fill up in Caracas, though huge lines had persisted in the rest of the country. "The strike is over but we are still going through a critical moment," said Wilmer Acevedo, 30, a tow truck driver waiting at one station. "If I don't get gasoline I can't work." The strike ended earlier this week in every other industry. But some restaurants and stores were having trouble opening because of the gasoline scarcity, which in turn was causing delays in deliveries. The shortages could worsen as the government implements exchange controls to protect its foreign reserves and the bolivar currency, which lost a quarter of its value during the strike. Dollar requests could take as long as 45 days to process under the new rules, which could delay imports. Venezuela depends on imports for 60 percent of raw materials. The government fixed the bolivar at 1,598 bolivars to the dollar. Ramirez said crude oil production was 1.9 million barrels a day, while dissident oil monopoly executives put the figure at 1.3 million. It was 3 million before the strike. "It will take a couple of months to bring refining capacity back up to a normal operating rate," said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York. "Part of the problem is they have fired a lot of the key people that used to run these things. You can't replace these people that easily." Chavez has fired more than 9,000 of the state oil company's 40,000 employees, vowing to use the strike to restructure, downsize and eliminate dissent within the company. The president vowed Friday not to rescind the firings. "Not if I were crazy," he declared in a speech to diplomats. Chavez said many fired executives were the same ones who led an oil strike in April that helped prompt a brief coup. Chavez rehired them after regaining power. The fate of the fired workers is a sticking point in negotiations between the government and opposition sponsored by the Organization of American States. Opposition leaders refuse to call off the oil strike until the government rehires the fired workers and agrees to an early vote on Chavez's rule. Citing months of economic and political turmoil, Venezuela's opposition -- a combination of leftists, conservatives, labor unions and business groups -- wants to amend the constitution to end Chavez's six-year term and call general elections this year. The government insists a referendum must wait until halfway through a president's term, as provided in the constitution -- in Chavez's case, August 2003. Chavez warned a coalition of six nations, including the United States, that backs early elections to avoid "complicating the problem further" and recognize that Venezuela's government is legitimate and democratic. Nobel Peace Prize Laureate Jimmy Carter proposed both plans as a solution to Venezuela's crisis. On Friday, the former president praised both sides for using his proposals "as a basis for progress," and the opposition for scaling back the strike.

www.economist.com 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.

Venezuela's conflict Feb 6th 2003 Venezuela's oil crisis Feb 6th 2003

Venezuela Latin American economies

Venezuelan presidency (site in Spanish), Petróleos de Venezuela, LatinSource

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.

abcnews.go.com — By Patrick Markey

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez's government sparred with its foes on Friday over tough new foreign exchange and price controls as the nation's growing economic crisis complicated their political battle.

Local currency markets, closed two weeks ago to protect the nation's reserves and bolivar currency from a two-month opposition strike that failed to oust Chavez, remained suspended on Friday as the government struggled to define details of the new curbs.

Edgar Hernandez, the head of a five-member government agency created to oversee the controls, said it would soon set requirements for exporters and those who want to buy dollars for tourism or business trips overseas.

Opposition leaders, an alliance of political parties and private-sector representatives, warned the curbs would weaken Venezuela's battered economy. Accusing Chavez of ruling like a dictator, they predict he will use currency curbs to conduct a witch hunt of opposition businesses.

"We are worried about the time they are taking to establish the new controls. Up until now they have only put out the regulations for the public sector, but not for tourists or for the private sector," said Rafael Alfonzo, an anti-Chavez business leader and opposition negotiator.

Chavez, a populist first elected in 1998, introduced the controls after economic uncertainty sent the bolivar tumbling by nearly 30 percent during the opposition strike aimed at forcing him from office.

The former paratrooper, who survived a brief coup last year, threatened to use the new controls to limit his foes' access to U.S. currency. He has refused to step down.

Most private-sector businesses have returned to work after the opposition strike that began on Dec. 2. Strikers at state oil firm PDVSA are maintaining their shutdown of the oil exports that account for half the government's revenues.

Chavez says the government brought oil production back to nearly 2 million barrels a day using troops and replacement crews. Strikers say output is still about a third of the usual 3.1 million barrels per day in the world's fifth-biggest oil exporter.

POLITICAL FIGHT DEADLOCKED

Under the new foreign exchange system, the bolivar was set at a fixed rate of 1,600 bolivars to the dollar -- a 16 percent revaluation from the 1,853 bolivars rate at which it last traded. The controls also tightened access to U.S. currency and imposed price ceilings on basic food goods and services.

Economists have warned the curbs will create a black market as Venezuela's private firms -- heavily reliant on dollars for the imports that make up 60 percent of the nation's consumer goods -- skirt the restrictions. Imported goods will become scarcer and prices will climb, analysts said.

The fiscal crisis and the currency controls have become the focus of the political battle between Chavez and the opposition. Talks between the feuding parties have stalled over the timing of possible elections.

Jimmy Carter, the former U.S. president and Nobel Peace Prize winner, who is backing negotiations led by the Organization of American States, urged both sides on Friday to work to end their dispute through the ballot box.

Carter has proposed two electoral options: a constitutional amendment to shorten the president's term and trigger elections, or a referendum on Aug. 19. The government has dismissed the amendment option and responded evasively about the August referendum.

newsobserver.com

By ALEXANDRA OLSON, ASSOCIATED PRESS

CARACAS, Venezuela (AP) - Venezuelan motorists waited for hours to fill up at gasoline stations Friday - a sign life has been slow to return to normal after a two-month strike that failed to oust President Hugo Chavez and left the economy in shambles.

Thousands of employees at the state oil monopoly, Petroleos de Venezuela S.A, are still on strike or have been fired by Chavez. The government has raised crude oil production to about a third of normal, but refineries are largely idle. Energy and Mines Minister Rafael Ramirez said Friday that gasoline production was 150,000 barrels a day, compared to 250,000 before the strike. He said Venezuela would import 12 million barrels of gasoline this month to make up for shortages.

Venezuela - the world's fifth-largest oil exporter - has spent more than $500 million a day on fuel imports since the strike began Dec. 2. Because of the dependency on imports, "the situation with gasoline goes up and down," Ramirez said.

Hundreds of drivers joined lines stretching for several miles at Caracas service stations, most of which were dry and waiting for deliveries. Earlier this week, it took 20 minutes at most to fill up in Caracas, though huge lines had persisted in the rest of the country.

"The strike is over but we are still going through a critical moment," said Wilmer Acevedo, 30, a tow truck driver waiting at one station. "If I don't get gasoline I can't work."

The strike ended earlier this week in every other industry. But some restaurants and stores were having trouble opening because of the gasoline scarcity, which in turn was causing delays in deliveries.

The shortages could worsen as the government implements exchange controls to protect its foreign reserves and the bolivar currency, which lost a quarter of its value during the strike. Dollar requests could take as long as 45 days to process under the new rules, which could delay imports. Venezuela depends on imports for 60 percent of raw materials.

The government fixed the bolivar at 1,598 bolivars to the dollar.

Ramirez said crude oil production was 1.9 million barrels a day, while dissident oil monopoly executives put the figure at 1.3 million. It was 3 million before the strike.

"It will take a couple of months to bring refining capacity back up to a normal operating rate," said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York. "Part of the problem is they have fired a lot of the key people that used to run these things. You can't replace these people that easily."

Chavez has fired more than 9,000 of the state oil company's 40,000 employees, vowing to use the strike to restructure, downsize and eliminate dissent within the company. The president vowed Friday not to rescind the firings. "Not if I were crazy," he declared in a speech to diplomats.

Chavez said many fired executives were the same ones who led an oil strike in April that helped prompt a brief coup. Chavez rehired them after regaining power.

The fate of the fired workers is a sticking point in negotiations between the government and opposition sponsored by the Organization of American States.

Opposition leaders refuse to call off the oil strike until the government rehires the fired workers and agrees to an early vote on Chavez's rule.

Citing months of economic and political turmoil, Venezuela's opposition - a combination of leftists, conservatives, labor unions and business groups - wants to amend the constitution to end Chavez's six-year term and call general elections this year.

The government insists a referendum must wait until halfway through a president's term, as provided in the constitution - in Chavez's case, August 2003.

Nobel Peace Prize Laureate Jimmy Carter proposed both plans as a solution to Venezuela's crisis. On Friday, the former president praised both sides for using his proposals "as a basis for progress," and the opposition for scaling back the strike.

www.forbes.com Reuters, 02.07.03, 3:26 PM ET By Matthew Robinson

CARACAS, Venezuela, Feb 7 (Reuters) - One of Venezuela's extra heavy Orinoco oil projects restarted with reduced production this week after being down for about two months because of a strike in protest of President Hugo Chavez, while three larger foreign-run projects remained shut, project officials said on Friday. The Orinoco projects, which partner state oil firm Petroleos de Venezuela (PDVSA) with international oil majors such as U.S. ExxonMobil (nyse: XOM - news - people), ConocoPhillips (nyse: XOM - news - people), French TotalFinalElf <TOT.PA> and Norway's Statoil <STL.OL>, have been shut since early in the strike that began Dec. 2 in the world's No. 5 crude exporting country. The three projects that remain halted -- Petrozuata, Cerro Negro, and Sincor -- had been at or near full capacity before the stoppage. They use massive processing units to upgrade about 400,000 barrels of extra heavy crude from the Orinoco tar belt into "refinable" synthetic crude and were shut because of a lack of natural gas feedstock from PDVSA. Staff at the foreign-financed projects did not take part in the strike, which has wide support among PDVSA managers and executives, but nationwide logistical problems kept the projects from running normally. A fourth project, Hamaca, returned with limited production of 15,000 bpd this week. Hamaca had been producing 35,000 bpd to 40,000 bpd of blended extra-heavy and light oil for export in November as its upgrading unit has not yet been completed. "We are warming up some of our units, but the crude is going into storage," one source, who asked not to be named, told Reuters. It was not yet clear if pipeline problems and safety issues at shipping terminals could be cleared up that would allow the oil being pumped to be exported, the source said. Another Hamaca source said output could be fully restored by the end of the month if the problems were resolved soon. Chavez, struggling to break the strike and return the country's most important industry, had said on Sunday that the Orinoco projects would be back on line this week. SYNCRUDE STILL HALTED Cerro Negro, Sincor, and Petrozuata remain shut as PDVSA has not been able to guarantee a steady supply of natural gas needed to run upgraders. "We still don't have gas, that's the big limitation," a source with one project said. In addition, officials said they were not likely to begin exporting synthetic crude from storage until port conditions were declared safe. The government has enlisted replacement workers at terminals to load vessels, but shippers and foreign firm have hesitated to lift cargoes from uncertified staff that could create an insurance risk. "The mother companies (operating the projects) need the cash, and PDVSA would like them to start, but there are potential safety concerns. No firm can risk a major oil spill," an official with one project said on condition of anonymity. Negotiations with PDVSA to secure gas supplies and ports were ongoing, sources said. Efforts by replacement workers to restart oil exports, which normally supply half of state revenues, have increased shipments to 700,000 bpd, oil minister Rafael Ramirez said on Friday. Venezuela had been exporting nearly 2.7 million bpd before the strike began. Striking oil workers have said the government has only managed to restart about 1.3 million bpd of production, compared with total Venezuelan output of 3.1 million bpd before the strike.