www.sunherald.com Posted on Fri, Jan. 31, 2003 JORGE RUEDA Associated Press

CARACAS, Venezuela - Government foes facing dwindling support for a two-month strike sought international backing Friday in their drive to shorten President Hugo Chavez's term.

High-level envoys, meanwhile, from the United States, Brazil, Chile, Mexico, Portugal and Spain - dubbed the "Group of Friends" - were to meet with Chavez and opposition leaders Friday. The group also planned to attend negotiations sponsored by Cesar Gaviria, secretary-general of the Organization of American States.

The envoys are urging both sides to agree on one of two proposals made by Nobel Peace laureate and former President Jimmy Carter. The first is to amend the constitution to shorten Chavez's term and clear the way for early elections. The second is for both sides to wait for a midterm referendum on Chavez's rule.

The diplomatic push for a settlement came as shopping malls, banks, franchises and schools prepared to reopen next week. Production also was creeping upward in the oil industry, where the 61-day walkout has been the most damaging.

The opposition called the strike on Dec. 2 to demand a nonbinding referendum on Chavez's rule in February. It later upped the ante to demand Chavez's ouster.

But the Supreme Court, citing a technicality, indefinitely postponed the referendum. Chavez shows no signs of leaving.

Opponents were planning an afternoon march on the Melia hotel - where the foreign diplomats are staying - to protest government investigations against three private television stations accused of supporting efforts to overthrow Chavez. The investigations could culminate in the shutdown of the stations.

The opposition has proposed a constitutional amendment that would cut Chavez's term from six years to four and clear the way for presidential and congressional elections this year. The opposition plan also calls for a new elections council and a Supreme Court ruling to determine when a referendum on Chavez's rule can be held.

Under the proposal, Chavez and pro-government lawmakers could run for re-election. He has been president since 1999 and his term ends in 2007.

The government said it was studying the opposition's proposal but won't allow it to shorten Chavez's term.

Strike leader Manuel Cova of the Venezuelan Workers Confederation said Thursday a new presidential election could be held as early as March and should be done this year.

"To do this we need the guarantees of the international community," Cova said. "If we don't do it this year, we'll be in prison, or in exile, there won't be press freedom."

Opposition groups are organizing a nationwide campaign on Feb. 2 to collect nearly 2 million signatures needed from Venezuela's 12 million voters for the amendment proposal.

Both sides recognize international mediation "is essential to open the path for negotiation," said Gaviria, who has tried to broker an end to the political tug-of-war since November.

Chavez has welcomed the "Group of Friends" initiative, but he has warned others not to meddle in Venezuela's domestic affairs. He also has vowed not to strike a deal with an opposition he refers to as a "coup-plotting oligarchy." Chavez was briefly ousted in a failed April coup.

The standoff has devastated Venezuela's oil-dependent economy, though the government has revived production to about 1 million barrels a day. Output fell to about 200,000 barrels a day in December from the norm of more than 3 million.

Analysts predict the economy will shrink 25 percent this year after an 8 percent contraction last year. Unemployment has reached 17 percent and is expected to rise.

The government has slashed its 2003 budget by 10 percent from $25 billion and announced it will cut the state-owned oil monopoly's budget from US$8 billion to $2.7 billion.

Oil accounts for half of government income and 30 percent of Venezuela's $100 billion gross domestic product.

www.cnn.com Thursday, January 30, 2003 Posted: 9:01 PM EST (0201 GMT)

CARACAS, Venezuela (AP) -- With many opponents of President Hugo Chavez preparing to return to work, Venezuelans leading a 60-day-old strike shifted tactics, diving headlong into an initiative to shorten his six-year term with international help.

After two grueling months, strike organizers have agreed to let shopping malls, banks, franchises and schools reopen next week. Meanwhile, production continues to creep upward in the vital oil industry, where the walkout has been strongest.

As diplomats from six nations arrived in Caracas Thursday to push for early elections, opposition leaders were planning a petition drive to support several measures, including a proposed constitutional amendment that would:

•  Cut presidential terms from six years to four

•  Hold new presidential and congressional elections this year

•  Create a new elections council to organize any vote

•  Get the Supreme Court to determine when, exactly, a recall vote on Chavez's presidency can be held

•  Allow Chavez and legislators to seek re-election

Similar ideas were floated by former U.S. President Jimmy Carter during a recent visit to Caracas. The government said it was studying the opposition's proposal but won't allow it to shorten Chavez's term.

Diplomats from the United States, Brazil, Chile, Mexico, Portugal and Spain -- dubbed the "Group of Friends" of Venezuela -- planned a private dinner meeting late Thursday with Cesar Gaviria, secretary general of the Organization of American States. Gaviria has mediated talks here since November.

The envoys, including Curt Struble, acting U.S. assistant secretary of state for the Western Hemisphere, planned meetings with Chavez and the opposition on Friday.

Gaviria said the diplomats can monitor compliance with any electoral pact and reduce tensions that have led to six deaths since the strike began December 2. "The country can't sustain more tension," he said.

Strike leader Manuel Cova of the Venezuelan Workers Confederation said Thursday a new presidential election could be held as early as March.

"To do this we need the guarantees of the international community," Cova said. "If we don't do it this year, we'll be in prison, or in exile, there won't be press freedom. ... We must do it this year."

Chavez had welcomed Carter's ideas about early elections. But he also has threatened to abandon the OAS-mediated talks, saying he won't negotiate with "terrorists."

Chavez failed to expand the "Friends" to include governments more sympathetic to his populist revolution. He has since warned the diplomats not to interfere in internal affairs.

The opposition called the strike to demand a nonbinding referendum on Chavez's rule in February, as petitioned by 2 million Venezuelan voters. It later upped the ante to demand Chavez's ouster.

But the Supreme Court, citing a technicality, indefinitely postponed the referendum. Chavez, elected in 2000 to a six-year term, shows no signs of leaving.

The deadlock has hobbled production in the world's No. 5 oil exporter. Analysts predict the economy will shrink 25 percent this year after an 8 percent contraction last year.

The government has cut its 46 trillion bolivar (US$25 billion) 2003 budget by 10 percent and announced Thursday it will cut the state-owned oil monopoly's 15 trillion bolivar ($8 billion) budget by 5 trillion bolivars ($2.7 billion) to offset oil losses.

Oil accounts for half of government income and 30 percent of Venezuela's 185 trillion bolivar ($100 billion) gross domestic product.

Chavez says oil production has reached 1.4 million barrels a day, and exports 1 million barrels a day -- a third of pre-strike export levels.

Dissident oil executives say production is about 1 million barrels and exports half that. Venezuela still must import gasoline.

PDVSA said a key oil loading terminal in Puerto La Cruz in eastern Venezuela resumed operating on an automated basis, making it likely that tanker loadings of 30,000 barrels per day will increase. The terminal loaded 800,000 barrels a day before the strike.

A refinery in the U.S. Virgin Island of St. Croix operated by PDVSA and the U.S. Hess Corp. received its first shipment of Venezuelan crude since December, Amerada Hess said Thursday.

After spending more than 130 billion bolivars ($70 million) a day to support the currency, the government suspended sales of U.S. dollars until it unveils currency controls next week.

townsvillebulletin.news.com.au From correspondents in New York 31jan03

WORLD oil prices rose today as traders sweated over the threat of war in Iraq. Prices advanced as US President George W. Bush warned that efforts to disarm Baghdad peacefully would end in "weeks, not months".

The previous day, Secretary of State Colin Powell and Defense Secretary Donald Rumsfeld gave US lawmakers a closed-door briefing on Iraq.

They apparently previewed some of the evidence that the United States has promised to furnish showing that Iraq is not cooperating with the United Nations weapons inspections.

Powell is to deliver the information in an address to the UN Security Council on February 5.

"There was a little bit of buying pressure on the back of the Colin Powell report on Iraq, which makes the conflict more likely," said Merrill Lynch analyst Michael Rothman.

New York's light sweet crude March-dated futures climbed 22 cents to $US33.85 a barrel, adding to a 96 cent surge the previous day.

In London, the price of benchmark Brent North Sea crude oil for March delivery rose 22 cents to $US31.24.

Traders were looking ahead to Powell's speech, ABN Amro broker Mark Keenan said in London.

Prices had already climbed sharply Wednesday when a keenly watched report revealed an unexpectedly sharp decline in weekly US oil inventories.

US stocks have fallen sharply in recent weeks, to around their lowest level in 27 years, after a two-month-old crisis in Venezuela crimped exports from one of the leading suppliers to the US market.

Although there had been signs in recent days that opponents of Venezuelan President Hugo Chavez were loosening their stranglehold on the country's oil sector, analysts said it would likely be some time before exports returned to normal levels.

Chavez has expressed confidence production will be back to regular levels within about a month, though experts are skeptical of the claim.

Daily oil production, which was down to a trickle a few weeks ago, is now at least one third of its pre-strike levels of more than 3 million barrels.

Chavez put daily output at 1.3 million barrels, while the opposition has conceded it passed the 1 million barrel mark.

"Many see what is happening as the beginning of the end of the dispute, which is probably correct," said GNI-Man Financial analyst Lawrence Eagles in London.

"But how long it takes to reach that end could be critical for the market – particularly with war against Iraq likely by the end of next month," he added.

reuters.com Thu January 30, 2003 07:49 PM ET By Pascal Fletcher

CARACAS, Venezuela (Reuters) - A six-nation group, including the United States and Brazil, began a mission on Thursday to secure an elections deal to end Venezuela's 60-day-old opposition strike that has forced the government to prepare tough currency controls.

Envoys from the group, which includes Mexico, Chile, Spain and Portugal, gathered in Caracas to bolster talks between President Hugo Chavez and his opponents, who are feuding over his leftist leadership of the world's No. 5 oil exporter.

Despite growing hopes for an accord, Chavez, a firebrand ex-paratrooper who survived a coup last year, has given no indication he will accept opposition calls for an early poll.

In a speech on Thursday, the populist president blasted his striking foes as "traitors" trying to wreck the country. "No one is going to sink Venezuela," he said, as his supporters chanted "Hey, hey, Chavez is here to stay!"

Deputy foreign ministers from the six-nation "group of friends," formed this month to help tackle the Venezuelan crisis, were due to hold talks during dinner late on Thursday with Organization of American States Secretary-General Cesar Gaviria.

The strike has slashed vital oil exports to overseas clients, including the United States, which normally obtains more than 13 percent of its imports from Venezuela.

Gaviria is brokering peace talks between the government and the opposition which have so far failed to agree on elections to halt the strike that is threatening Venezuela with economic ruin and has raised world oil prices.

He said the foreign envoys would meet on Friday with Chavez and negotiators from the government and the opposition.

Although support for the opposition strike has clearly weakened, state oil employees have vowed to stay out until Chavez accepts an early vote. The eight-week stoppage is still draining oil revenues despite government moves to restore output, which it says reached 1.4 million barrels per day (bpd) on Wednesday. Strike leaders put output at around 1 million bpd.

Finance Minister Tobias Nobrega said the strike, which he called a "kamikaze attack" on the strategic oil sector, had cut economic growth and would increase inflation and unemployment.

BELT-TIGHTENING MEASURES

He said the government would introduce a fixed currency exchange rate as part of controls to stop capital flight which has bled the nation's reserves during the strike.

"Don't let the savage capitalists think for a moment that we are going to leave any gaps for them to take out dollars," Chavez said. The foreign exchange controls will be introduced next Thursday but the government has said it will continue foreign debt payments.

Nobrega also announced the government would slash the budget of state oil company Petroleos de Venezuela (PDVSA) by $2.7 billion -- a cut of almost one-third -- as it absorbs a slump in vital oil export revenues.

The belt-tightening measures found favor on Wall Street. Citing the slow recovery of oil output and the government's efforts to preserve cash for debt payments, investment banks Merrill Lynch and Morgan Stanley both raised their recommendations on Venezuelan sovereign bonds.

Fears of a worsening economic crisis and violent social upheaval have added urgency to the mission of the "group of friends." "This nation needs solutions. ... The crisis is too deep," opposition negotiator Rafael Alfonzo told Reuters.

Chavez, whose opponents accuse him of dragging the South American nation toward Cuba-style communism, refuses to resign. The opposition has proposed a constitutional amendment to cut his term to four years from six and trigger early elections.

Dampening hopes for an accord, Chavez, elected in 1998, told strikers on Wednesday to forget about him leaving office.

He has vowed to beat the strike, which he portrays as an attempt to topple him by wealthy, hostile elites opposed to his self-styled "revolution" in favor of the nation's poor.

Foreign Minister Roy Chaderton, a government negotiator, underscored Chavez's determination, saying: "The government is not interested in getting rid of itself. It is not seeking either a shortened term or early elections or any change of government even within the framework of the constitution."

Observers of the talks said the six nations wanted to build a climate of confidence, focus attention on the key electoral issue and act as guarantors of any agreement.

But they added that a settlement did not appear close. "I haven't heard anyone who is in the middle of the (negotiating) table saying that ... This process is still ongoing," said Matthew Hodes of the Atlanta-based Carter Center, which is headed by former U.S. President Jimmy Carter. (Additional reporting by Silene Ramirez, Ana Isabel Martinez)

www.voanews.com VOA News 30 Jan 2003, 22:58 UTC

Diplomats from six nations are set to meet with Venezuelan government and opposition leaders in Caracas Friday in the latest push to end the nation's political crisis.

The officials belong to the "Friends of Venezuela" group, which comprises Brazil, Chile, Mexico, Portugal, Spain and the United States.

The delegates are hoping to work out an electoral accord to end a long-running general strike that the opposition called last month to force President Hugo Chavez out of office.

They are expected to discuss proposals set forth by former U.S. President Jimmy Carter that call for either a recall referendum in August or a constitutional amendment to allow for early elections.

The Friends of Venezuela group was formed to lend diplomatic support to the Organization of American States, which has been mediating talks between the Chavez government and his opponents.

The meeting comes as the general strike, which began December second, shows signs of weakening. Venezuelan banking officials say banks will resume normal business hours next Monday, after operating on a limited schedule to support the walkout.

Striking oil executives also have acknowledged that output, which was virtually paralyzed several weeks ago, has now surpassed one million barrels per day.

Oil provides half of government income and 70 percent of export revenue. Before the strike began, Venezuela was the world's fifth-largest oil exporter.