www.newsday.com February 9, 2003 A painting by Henri Matisse that graced the walls of a museum in Caracas, Venezuela, for more than 20 years was swapped out with a fake at least two years ago, say embarrassed curators. The genuine 1925 painting, "Odalisque in Red Pants," worth about $3 million, was stolen and replaced, officials at the Sofia Imber Contemporary Art Museum said Jan. 30. They're now hunting for the original and say about 15,000 visitors monthly have been admiring a forgery. Experts discovered the painting on display was a fake on Dec. 1, after a Miami collector queried the museum after hearing - falsely - that it was up for sale.

www.vheadline.com Posted: Friday, February 07, 2003 - 5:22:52 AM By: Robert Rudnicki

According to Central Bank of Venezuela (BCV) director Domingo Maza Zavala, the foreign exchange controls implemented by the government yesterday are essential for control of the economy, particularly in such troubled times.

"These exchange rate controls, in these extraordinary circumstances that Venezuela is living through are absolutely necessary, because we are in a real emergency situation."

The BCV director acknowledged the strong opposition to the controls from Venezuela's business sector, "all economic controls, whether of exchange rates, prices or commerce, always have their opposition because people are against these kinds of controls."

The controls were announced by President Hugo Chavez Frias on Wednesday night and will see the bolivar pegged to the US dollar at Bs.1,600.00 / Bs.1,596.00 for the time being, but should it be necessary these rates will then be altered.

www.vheadline.com Posted: Friday, February 07, 2003 - 7:00:41 AM By: Roy S. Carson

President Hugo Chavez Frias says he moved to stem Venezuela's foreign exchange in the nick of time and, in doing so, foiled yet another coup d'etat plan against his government by disloyal opposition rebels who failed to unseat him after a 2-month stoppage that has paralyzed Venezuela's nationalized oil industry.

The latest coup d'etat had planned to divest Venezuela of its foreign reserves through capital flight but after the Bolivar was pegged to the dollar Wednesday, its value nosedived to record lows with centrally-controlled dollar sales suspended ... a fixed exchange rate was implemented yesterday when dollar trading resumed.

Chavez Frias blames the crisis on opposition business owners who purposefully crippled the nation's economy in an attempt to scare foreign investors in a 2-month stoppage which has basically shot the perpetrators in their own foot. "They wanted to take it all abroad ... they wanted to leave us dry ... they wanted to leave us without US dollars, so we took away the key."

Opposition rebels have not warned that the President's new exchange policy will fuel corruption and inflation.  They say it will kill investment and push Venezuela's economy into collapse. They also complain that Chavez Frias will turn the control mechanism on them to target opposition leaders in the Federation of Chambers of Commerce & Industry (Fedecamaras) who led an unsuccessful coup d'etat last April which saw Chavez Frias removed from office for two days before he was reinstated by popular consent.

Venezuelan American Chamber of Commerce (VenAmCham) vice president Antonio Herrera is quoted by the Associated Press (AP) as saying that it "lends itself to any type of witch hunt."  Applications for US$ purchases could take up to 45 days to process and could force many businesses to buy black market dollars. Venezuela imports 60% of its raw materials and most of its food so market forces will necessarily now focus on domestic supply, bring a much-needed boost to Venezuela's agriculture and domestic industry.

The opposition-led lockout/stoppage, industry self-sabotage and months of political rebellion have recently prompted a run on the dollar, with the bolivar losing 25% already this year ... inflation is in excess of 30% and foreign reserves dropped $2 billion to some $11 billion.

El Nacional director Miguel Otero ... one of the opposition's leading mouthpieces ... complains that the central government could punish him by failing to authorize dollars for specially-imported newsprint, failing to recognize the fact that domestic paper-manufacturers can quickly produce sufficient supplies for all requirements.  Otero points to the fact that the opposition (when they were in government for more than 40 years) had themselves often used currency controls to restrict newspapers' ability to buy newsprint.

Meanwhile, attending a rally yesterday with a visiting delegation from the Peoples' Republic of China, Chavez Frias distributed Chinese-built farm tractors and property deeds to Venezuelan farmers ... he recalled that Chinese leader Mao Tse Dong had "planted the seed of the China which today has entered the 21st century as the vanguard of struggling nations ... a shining example to the peoples of the Third World ... to the poor people of this planet ... we in Venezuela are among them."

www.vheadline.com Posted: Friday, February 07, 2003 - 5:27:31 AM By: Gustavo Coronel

VHeadline.com commentarist Gustavo Coronel writes: The standard way of measuring the economic well being of a nation includes several indices such as income per capita, balance of payments, size of debt, international reserves and, of course, the size of the Gross Domestic Product.

All of these indices have significantly deteriorated in Venezuela during the last two years. But there is an index which is not easy to express in numbers but which is even more important than the Gross Domestic Product. This can be called the Gross Domestic Spirit ... to express the level of spiritual well being of a nation.

Although there is no doubt that this GDS keeps a close relationship to the GDP, and would tend to be directly proportional to this index, there is much more to it than economics. It has to do with intangible social moods, values and attitudes such as optimism, trust, solidarity, compassion, tolerance, rapport with nature or environment and respect for minorities, the elder and the children.

• The GDS does not necessarily correlate with laws, police force or size of government but with predominant social attitudes like the ones mentioned above.

When De Toqueville visited the United States he wrote that the progress of the American society could not be explained by its Constitution ... since many less progressive countries had modeled their Constitutions on the American ... nor by laws or other explicit social conventions or regulations. He said the progress was due to what he called the "Habits of the Heart" ... a collective ethic, a manner of living together in significant harmony.

The American society visited by De Toqueville obviously enjoyed a high level of GDS.

Reading Tolkien's "The Return of the King," I ran across a description of a hobbit society which seemed to possess a very high GDS. I read: "1420 in the Shire was a marvelous year ... there was wonderful sunshine and delicious rain ... but something more: an air of richness and growth, and a gleam of beauty beyond that of mortal summers ... and everyone was pleased ... there was so much corn that every barn was stuffed..." Evidently quite a combination of physical plenty and spiritual well being.

2003 in Venezuela is not shaping up like a marvelous year.

We have excellent sunshine but that's about all we share with the hobbits. Our water reservoirs are at critically low levels, after 4 years of scant rainfall and a total lack of planning on the part of our Ministry of the Environment. The air is of decay and of profound poverty. In the cities, the population seems to have tripled abruptly, probably because the rural population is having it still worse and is invading  the cities, where they can at least become street vendors.

Furthermore, many of these poor are not even Venezuelan. We see in the streets many easily identifiable peoples from the Bolivian 'altiplano' or from the Ecuadorian Andes who have emigrated north from their lands to look for a better life. In the process, however, they add to the overall poverty of our society.

• As social services are insufficient and of very low quality no one is pleased. The hospitals lack the most essential equipment and materials and the poor have to show up with their own medicine and injections if they want to be treated.

A similar situation applies to the schools at all levels, where the infrastructure and supplies are  largely missing, and the teachers go unpaid for months on end. Agricultural production has been drastically reduced and no corn is stuffing our barns. Our agriculture is said to be a "Port" agriculture, meaning imports of most staples. But with reduced income, the government will not be able to import what is needed this year. There will be hunger, something we had not seen in this country for the last 150 years.

All of this is influencing the GDS, of course, in a clearly negative way. But there is something much worse. We have become a divided society, marked by hatred and intolerance like never before, at least in my lifetime.

We had a similar situation before, in the 1860s ... a civil war that took some 200,000 lives, promoted by one of the icons of the current revolution, Ezequiel Zamora ... a civil war predicated on the basis that the oligarchs had to be exterminated.

As Yogi Berra would say: "It's Deja vu all over again..."

If a nation pretends to enjoy a high level of GDS it has to be relatively united behind common goals and share some common values. Most often the catalyst in setting these common goals and promoting these common values is the political leader ... President, King or Prime Minister. But, if the political leader promotes divisiveness and the exclusion of important sectors of the society from his/her national vision, there is no hope for this society to attain a reasonable level of spiritual well-being.

I think I can see where the error has been made.

I will give the President the benefit of the doubt that many already do not. I will accept that he wanted to fight poverty as he came into power. He probably had some vague ideas of the military being the spearhead of this effort. In 1990, I wrote a book in which I dedicated one entire chapter to this possibility, so I was not adverse to the idea. The problem came up with execution.

The President provided a handful of Generals with about $2 billion in cash to go ahead and install the Program BOLIVAR 2000 to reach the poor and make their life easier. These Generals started to buy tons of chickens and potatoes and medicines and bricks and cement sacks and to distribute them among the poor. They used the army rank and file to start building modest houses for the poor, not with the poor. They spent millions without accountability, due to the fact that the President had given them orders to go ahead and do it.

• Several of them had the bright idea that, if they requested invoices from the suppliers for amounts bigger than those of real purchases they could  pocket the difference. And they did.

This is how fortunes are made in a country without social order. Of course, thousands of very poor Venezuelans were delighted to buy food at subsidized prices and to have a home delivered to them, even if this home sort of collapsed after the first heavy rains. But this strategy was flawed in its essence because, the more it gave, the more expectations it created.

As the millions of poor came rushing to demand their chickens and their bricks, and as the government became incapable of satisfying them all, the strategy backfired. For every satisfied poor there were 10 frustrated poor. The government used its resources in a lottery-like fashion. Each week there were some winners and many losers.

In a perverse way, the government reinforced among the poor the notion that luck and timing could determine their future. Not hard work, not education, not perseverance but luck ... connections perhaps, and being at the right place at the right time.

As thousands push and shove to get physically closer to the President, to deliver a wrinkled piece of paper with his/her aspirations and name, hoping that s/he will be heard, they do not realize that they have become beggars. The strategy has backfired. It produces millionaires among the Generals and  bureaucrats, and beggars among the poor. Whatever the original plan was, it did not work ... unless this was the original plan.

Our Gross Domestic Spirit is therefore very low.

We are now living in a sad, miserable country, socially divided and inhabited by hate and foul-smelling ... where the amount of beggars is the greatest I have ever seen ... where private property is being invaded every day by the very poor who feel they have the blessings of the government.

Who knows, maybe this is the way it should be.

Maybe we Venezuelans were not meant to get an education and to work hard and to save and to generate wealth.

Maybe the whole idea was for all of us to be ignorant and over-dependent on the Welfare State.

If that was the real plan, somebody failed to tell me.

And now, after so many years of living the wrong way, as I thought everybody should live ...  it is too late for me to go back on my tracks.

I'd rather take to the hills...

Gustavo Coronel is the founder and president of Agrupacion Pro Calidad de Vida (The Pro-Quality of Life Alliance), a Caracas-based organization devoted to fighting corruption and the promotion of civic education in Latin America, primarily Venezuela. A member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), following nationalization of Venezuela's oil industry, Coronel has worked in the oil industry for 28 years in the United States, Holland, Indonesia, Algiers and in Venezuela. He is a Distinguished alumnus of the University of Tulsa (USA) where he was a Trustee from 1987 to 1999. Coronel led the Hydrocarbons Division of the Inter-American Development Bank (IADB) in Washington DC for 5 years. The author of three books and many articles on Venezuela ("Curbing Corruption in Venezuela." Journal of Democracy, Vol. 7, No. 3, July, 1996, pp. 157-163), he is a fellow of Harvard University and a member of the Harvard faculty from 1981 to 1983.  In 1998, he was presidential election campaign manager for Henrique Salas Romer and now lives in retirement on the Caribbean island of Margarita where he runs a leading Hotel-Resort.  You may contact Gustavo Coronel at email ppcvicep@telcel.net.ve

www.orlandosentinel.com From Wire reports Posted February 7, 2003

CARACAS, Venezuela -- President Hugo Chavez, emboldened as a prolonged general strike against him fades, has put his political opponents on notice in recent days by threatening legal and economic retaliation against those seeking to force him from power.

The most potentially far-reaching step came this week when Chavez established a new currency-control system to protect Venezuela's foreign reserves at a time of deep economic uncertainty in the oil-rich country. The government suspended trading of Venezuela's national currency, the bolivar, on Jan. 21 as it plummeted in value against the dollar in the midst of an economically devastating general strike.

Venezuela's business leaders warned Thursday that foreign-currency controls will breed corruption, fuel inflation and push the nation's fragile economy to the brink of collapse. They also suspect Chavez will use the controls to repress opponents and punish those who staged an unsuccessful two-month strike seeking to oust him.

Chavez announced the controls late Wednesday night, two weeks after suspending the sales of U.S. dollars as the bolivar sank to record lows. The fixed exchange rate took effect Thursday, and trading in dollars resumed.

The new controls fix the bolivar currency's value at 1,596 per dollar for sales and 1,600 for purchases, but the government can adjust those rates as it sees fit. The bolivar closed at 1,853 on Jan. 21, the last day of trading, but on the black market it traded at 2,500.

Chavez vowed to deny access to U.S. dollars for "coup-plotting" corporations that participated in the strike -- a major blow in a nation that imports 60 percent of its raw materials and most of its food.

Chavez has emerged over the course of this week invigorated by the failure of a general strike designed to force him from power or submit to early elections. Suffering enormous financial loss, Venezuela's private sector on Monday abandoned the strike that began Dec. 2.