www.taipeitimes.com By Kurt Weyland Saturday, Feb 08, 2003,Page 9

With Venezuela's leader determined to hang on to power, allowing the people to go to the polls could well be the only way out of the country's domestic turmoil

Venezuela is mired in a dangerous stalemate. Venezuelan President Hugo Chavez clings to power despite the obvious failings of his government in terms of severe economic deterioration and dangerous political polarization. The opposition, tainted by their botched coup of last April, now seeks to force Chavez from office through a costly general strike.

Both sides justify their intransigence with one-sided interpretations. His sympathizers glorify Chavez as a defender of the poor besieged by a selfish, coup-plotting elite. His fiercest opponents demonize Chavez as an autocrat pursuing a Cuban-style revolution and destroying democracy. Both interpretations are flawed. The Chavez government has not helped Venezuela's poor in any significant way. On the contrary, his belligerent rhetoric and inept governance scared off investors, inciting economic decline and boosting unemployment and poverty. Now Chavez lacks majority backing even among the poor.

The opposition comprises most of Venezuela's organized civil society, not only business, but also trade unions, professional associations, and non-governmental organizations. So Venezuela's polarization does not pit "the poor" against "the oligarchy," but a populist against civil society.

The opposition's view -- shared by rightists in the Bush administration -- is equally unconvincing. Rather than initiating a revolution, Chavez merely spouts fiery rhetoric. While his democratic credentials are dubious, he has not acted in an openly authoritarian fashion. True, he has systematically concentrated power in his own hands and has undermined governmental checks and balances. But while harassing the opposition, he has not overturned the minimal principles of democracy. Indeed, he now invokes his formal democratic legitimacy to fend off demands for his resignation.

But Chavez's insistence on the inviolability of the current constitution is hypocritical. Four years ago, Chavez deviated from the old constitution by using a plebiscite to engineer a new one, tailor-made for him. Now he invokes that charter to block calls for a plebiscite on his continuation in office.

The paradox here is that Chavez's earlier example may provide the solution to today's standoff. As Chavez used para-constitutional means to advance a desire for change in 1999, so the international community should not be confined by the present constitution in pressing to resolve a crisis that is ruining the country.

In fact, the Latin American members of the "group of friendly nations" trying to mediate this conflict can draw on interesting experiences to design such a solution. After all, confrontations like this are not unusual in Latin America's rigid presidential systems. When chief executives with fixed terms of office lose political support, they cannot be removed through a no-confidence vote, as in parliamentary systems. Presidential systems therefore risk lengthy stand-offs that threaten democracy -- as in Venezuela today.

But over the last decade, Latin American politicians have made presidential systems more flexible by finding innovative ways to remove unpopular presidents. One of Chavez's discredited predecessors was impeached on flimsy charges of malfeasance; Ecuador's Congress declared a disastrous chief executive "mentally incompetent;" in Peru, an autocratic president, after months of domestic and international pressure, was forced into exile.

While politicians interpreted the law with a good deal of creativity in these instances, they usually did so to ensure the survival of fragile democracies facing a crisis. As long as these maneuvers do not proliferate and turn into easy ammunition for the opposition of the moment, they may provide a safety valve for presidential systems.

It is to be hoped that the group of friendly nations can help design an innovative solution to Venezuela's standoff. To be acceptable to both sides, such a solution must deviate from the favorite proposals of each. The opposition prefers an "up-or-down" vote on Chavez's continuation in office, which it would most likely win -- and which Chavez will never accept.

Chavez insists on the recall referendum mechanism included in his constitution, which the opposition cannot tolerate -- removing the president in this way would require a larger absolute number of votes than Chavez garnered in the last election. But rising abstention makes this virtually impossible.

Only a democratic mechanism for conflict resolution that has an uncertain outcome has any chance of being adopted. That mechanism is an election, to be held as soon as possible. Both sides will have to work hard if they want to win. The fractious opposition will need to go beyond rejection of Chavez, elaborate a program for the country's reconstruction and unite behind an attractive candidate.

Chavez will need to clarify the content and meaning of his "Bolivarian Revolution." Since Chavez is a skilled campaigner and the opposition so far lacks unity, he will have a realistic chance of winning -- which should make a new contest acceptable to him. Pressure from the group of friendly nations may induce both sides to accept this last chance to avoid a political and economic meltdown.

Elections can be made legitimate through a constitutional amendment shortening the presidential term, as proposed by former US president Jimmy Carter in his recent mediation effort. Since this is designed to defuse an exceptional crisis, it would not become a precedent that encourages frivolous attacks on Latin America's democratically elected governments. An election now in Venezuela will save, not undermine, democracy.

Kurt Weyland is an associate professor of government at the University of Texas and author of The Politics of Market Reform in Fragile Democracies: Argentina, Brazil, Peru, and Venezuela.

www.voanews.com VOA News 08 Feb 2003, 02:58 UTC

Former U.S. President Jimmy Carter says the Venezuelan president and his opponents are making progress to end a nationwide crisis and a crippling strike.

Mr. Carter, who has been negotiating a resolution to the conflict, said Friday that the two sides are committed to a political agreement to end their differences.

He said Venezuela's constitution allows for a recall referendum or a constitutional amendment to allow for early elections.

Opponents of President Hugo Chavez have started collecting signatures for initiatives aimed at cutting short his term in office.

Mr. Carter has also been working with the head of the Organization of American States, Cesar Gaviria, in the resolution process.

Article written by Nicaraguan reporter German Novelli for Tal Cual newspaper. It speaks for itself.   This may happen (From my exile)

On January 10th. 1978 Pedro Joaquin Chamorro Cardenal, director of newspaper La Prensa and martyr of public freedom was assassinated in Nicaragua. A year later, in the Riguero neighborhood of Managua, two US reporters, from the ABC news team, were detained by National Guard troops. The cameraman managed to stay back half a block away and, hidden behind some bushes, taped one of the most negative images of the war that would completely wipe out Somoza. Reporter Bill Stewart was forced by a guardsman to lay face down on the pavement and, without any type of compassion, he was shot by two rifle bullets in the head.   The attacks by Anastasio Somoza began with sanctions against the printed media that was denouncing the abuses. Later he arrested the Editor of the newspaper la Prensa, who suffered, before being assassinated, jail, tortures and exile. Somoza had as his motto:” To my friends, the honors, to the indifferent, the stick, to my enemies, the bullets”

As to the televised media, Stewart was assassinated as revenge for showing on the screen the horrors that the regime was imposing on the people. The intimidating visits to Venezuelan TV stations, the threat that there will be no dollars for newspapers to buy newsprint, the Content Law that will be discussed by the National Assembly and the repeated announcements by Hugo Chavez to shutdown TV stations are the first steps. Afterwards, more abuses will come. It would not be strange if Gustavo Cisneros is detained for treason and Miguel Henrique Otero assassinated. Neither that the deaths of Virgilio Fernandez and Jorge Tortosa (reporters killed while covering demonstrations) will be followed by those of others.

They are notes of history. A history that is repeating in Venezuela. Chavez, just like Somoza, argues Constitutional reasons to stay in power, just like Somoza, ignoring the majority that rejects him. Hugo Chávez, just like Somoza, has turned the National Guard into his storm troopers to quiet their voices and run over defenseless women.   Chavez, just like Somoza, has proven that he is not willing to leave stone over stone in the places where the opposition lives. Then, gentlemen of the media, my fellow reporters: Known things are silenced and because they are silenced they are simply forgotten.   Germán Novelli

www.fortune.com FORTUNE Tuesday, January 21, 2003 By Jerry Useem

"Ten years from now, 20 years from now, you will see," former Venezuelan Oil Minister and OPEC co-founder Juan Pablo Perez Alfonzo predicted in the 1970s, "oil will bring us ruin." It was an oddball statement at a time when oil was bringing Venezuela unprecedented wealth--the government's 1973 revenues were larger than all previous years combined, raising hopes that black gold would catapult Venezuela straight to First World status. But Perez Alfonzo had a different name for oil: "the devil's excrement."

Today he seems a prophet. When it hit the jackpot, Venezuela had a functioning democracy and the highest per-capita income on the continent. Now it has a state of near-civil war and a per-capita income lower than its 1960 level.

Far from an anomaly, Venezuela is a classic example of what economists call the "natural resource curse." A 1995 analysis of developing countries by Jeffrey Sachs and Andrew Warner found that the more an economy relied on mineral wealth, the lower its growth rate. Venezuela isn't poor despite its oil riches--it's poor because of them.

How could that be? For the same reason so many entertainers go bankrupt. Showered with sudden windfalls, governments start spending like rock stars, creating programs that are hard to undo when oil prices fall. And because nobody wants to pay taxes to a government that's swimming in petrodollars--"In Venezuela only the stupid pay taxes," a former President once said--the state finds itself living beyond its means.

A cycle begins. The economy can't absorb the sudden influx of money, causing wages and prices to inflate and the nation's currency to appreciate (by an average of 50%, according to a World Bank economist's study). That makes it harder for local manufacturers to compete. Incentives, meanwhile, become wildly distorted. When free money is flowing out of the ground, people who might otherwise start a business or do something innovative instead busy themselves angling for a share of the spoils. Why slog it out in a low-margin industry when steering some oil business toward a contact could make you a millionaire? Thus a doubly deadly dynamic: a ballooning public sector, a withering private one.

Eventually you're 16th-century Spain. It, too, once struck it rich on gold (not the black kind) from the Americas. Its monarchs spent like loons, expanding the army 15-fold, creating an elaborate patronage system and sending conquistadors in search of El Dorado. (Spanish gold also financed Columbus's discovery of Venezuela.) While inflation and currency appreciation slowly killed industry and agriculture, a parasitic class of noblemen lived off gold money (think of Saudi Arabia's idle princes), waiting for the next ship to come in. By the time ships stopped coming, Spain wasn't able to feed itself, forcing it to declare bankruptcy eight times and finishing it as a world power.

But the Midas myth dies hard. "This is a country that can never, ever sustain itself on oil," Terry Lynn Karl, author of The Paradox of Plenty: Oil Booms and Petro-States, says of Venezuela. "But everyone from the President to the poor believes it can." And therein lies the trap. President Hugo Chavez rode popular rage into office by focusing on corruption. But what neither he nor anyone else will face up to is this: Oil is not an economy. Creative economic activities have spillover effects that become self-sustaining. Oil spills only into a barrel--and from there usually into the hands of a favored few. That's the real reason Venezuela's productivity growth has been roughly half the Latin American average.

Can the curse be avoided? A few smaller countries--Malaysia, Norway, Mauritius--curbed its worst effects by spending slowly and using the money to diversify their economies. In Venezuela oil still accounted for 80% of exports before a devastating strike made even that scarce. As a 16th-century Spanish economist said of his homeland, "What makes her poor is her wealth"--a suitable lament for Venezuelans who have been waiting so long for their ship to come in. From the Feb. 3, 2003 Issue

reuters.com Wed February 5, 2003 08:25 PM ET By Patrick Markey

CARACAS, Venezuela (Reuters) - Opponents of Venezuelan President Hugo Chavez said on Wednesday they feared the leftist leader would use planned foreign exchange controls as a weapon against them after they failed to oust him with a two-month strike.

Venezuela's government suspended currency trading two weeks ago while it drafted the controls to protect its reserves and the bolivar currency after the opposition strike cut off its economic lifeline by slashing vital oil production.

The new restricted foreign exchange regime was due to start on Thursday, but sources said the government was still wrangling over final details.

Chavez warned foes he would go on the offensive and ordered restricted access to U.S. dollars for the business leaders and opponents he accuses of trying to topple him.

"There can be no pardon here. There will be no negotiation with traitors or with terrorists. We don't negotiate our principles," the president told supporters late on Tuesday.

Finance Minister Tobias Nobrega said the government planned to introduce a fixed exchange rate that would be adjusted monthly. Government sources told Reuters that the new initial fixed rate had been set at 1,600 bolivars to the dollar. The bolivar last traded at 1,853 to the dollar.

Chavez is locked in a bitter struggle with opponents who are pressing for elections to oust a leader they say rules like a dictator and wants to install Cuban-style communism. He has resisted calls for an early vote.

Since Chavez's 1998 election on a populist platform, his fierce anti-capitalist rhetoric and threats against private property have riled foes who accuse him of driving the nation into economic chaos.

Anti-Chavez business leaders said they feared currency controls would be used to punish strikers by restricting access to dollars. Venezuela imports more than 60 percent of its goods and many businesses need the U.S. currency to purchase products from overseas partners.

Officials have said priority would go to fuel, medicine and food imports and are also studying price controls.

"This will be a political tool. This regime is doing everything to finish off the private sector, said Albis Munoz, vice president of the Fedecamaras business chamber.

ECONOMIC WORRIES AFTER STRIKE FALTERS

The strike, started on Dec. 2 by unions, private sector leaders and opposition parties, battered the oil-reliant economy. But the stoppage later faltered and most businesses have since reopened. Only state oil workers are staying out.

Chavez has sacked more than 5,000 state oil employees in a strike-breaking offensive to restart exports. But strikers say oil production still stands at only just over a third of the normal 3.1 million barrels per day.

Chavez, who survived a coup last year, is defiant in the face of an opposition he sees as divided and without clear leadership. He has vowed to strengthen his self-styled "revolution" aimed at easing poverty.

A six-nation group, led by the United States and Brazil, is backing efforts by the Organization of American States to broker a deal to end the political dispute over the president's rule. But talks have stalled over the timing of a vote.

Chavez rejects opposition calls for a constitutional amendment that would shorten his term and trigger elections. He says they must wait for a referendum after August.

Nervous demand for dollars sent the local bolivar currency tumbling 24 percent from the start of the year until the government suspended trading on Jan. 22.

A black market has already surfaced, with the bolivar trading at 2,200 to 3,000 bolivars to the dollar. Prices on many goods have spiked as businesses bet they will be forced to pay more for imports ranging from televisions to baby foods.