sg.biz.yahoo.com Friday January 31, 6:21 AM

NEW YORK (Dow Jones)--The 495,000 barrels-a-day Hovensa LLC refinery in the U.S. Virgin Islands received its first shipment of Venezuelan crude oil this past weekend since its joint venture partner, state-owned Petroleos de Venezuela SA (E.PVZ), declared force majeure on Dec. 6, Amerada Hess (AHC) officials said Thursday at the company's fourth-quarter earnings teleconference.

Force majeure is a situation in which contract obligations can't be met because of an extraordinary, unforeseen event.

The refinery had been running at approximately 350,000 to 360,000 b/d, down from its normal operating rate of 450,000 b/d, since the Venezuelan supply was cut, which, officials said, wasn't an economical level at which to operate.

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AdultsHess officials said that while Hovensa isn't yet getting full shipments of crude oil from Venezuela in terms of contracted amounts, the refining margin is now in the profitable category. Now that Venezuelan shipments appear to have been restored, even at reduced levels, run rates will increase, an Amerada Hess official said during the teleconference. Hovensa LLC is a 50%-50% joint venture between Amerada Hess Corp. and Petroleos de Venezuela, SA.

-By Rose Marton, Dow Jones Newswires; 201-938-2059; rose.marton@dowjones.com

www.vheadline.com Posted: Wednesday, January 29, 2003 - 1:37:17 PM By: Oliver L Campbell

Date: Wed, 29 Jan 2003 12:35:17 -0800 From: Oliver L Campbell oliver@lbcampbell.com To: Editor@VHeadline.com Subject: Mr Willke's Letter

Dear Editor: I refer to Mr. Willke’s interesting e-mail of 28 (www.vheadline.com) January where he expounds the problems of education and inequitable income distribution in Venezuela ... I would, however, have liked him to suggest some solutions as well.

I passionately believe that a lack of sellable skills is main problem of the poor in Venezuela. In a recent article I wrote “It is essential these people (the poor) are brought into the economy by learning useful skills. This means reforming the education system so more technical institutes are created which provide practical instruction and training to those who are not cut out for an academic education. A technical qualification will be given the recognition it deserves and carry its own prestige. At the same time, a host of young people will acquire the dignity and intense satisfaction that come from being employed and doing a worth while job.”

I do not disagree with Mr. Willke that inequitable income distribution is a problem in Venezuela as, indeed, it is in many countries. The trouble is how do you reduce it?

Venezuela already has a progressive system of income tax and an inheritance tax of 40% ... we all know that value-added taxes hit the poor more than the rich. The only thing I can think of is a wealth tax of some kind, and that certainly would be difficult to introduce.

The centrally-managed economies had some success because they could dictate salaries. The result was, for instance, that a medical doctor with years of training did not earn substantially more than, say, an electrician. However, this type of economy proved to be very inefficient and most countries that had it (including Russia), have now moved to a market economy.

My point is, that in a market economy, it is very difficult to reduce inequitable income distribution. For instance, how do you lessen the large differentials in salaries where the general manager earns, say, twenty times what one of his manual workers does?

The only practical way to eliminate this is through education or ... as I prefer to put it ... through the acquisition of skills required in the market place. Those countries that have tried to introduce an incomes’ policy, like the United Kingdom, have soon abandoned it as unworkable.

You can, of course, throw money at the problem of the poor by giving them hand-outs, allowing them to use public services free of charge, and improving the infrastructure of the sectors where they live e.g. the 'ranchos' of the large cities ... this has all been done, but it is only a temporary palliative (panitos calientes), and the aim surely must be to enable them to earn a reasonable living.

The Chinese have a saying "Give a hungry man a fish and he will be hungry again ... teach him how to fish and he need never be hungry again." If money has to be thrown somewhere, it should be at the construction of technical schools all over the country. This will mean increasing taxation ... but it is the cost of rectifying the indifference of governments over the last 50 years.

I agree with Mr. Willke that whichever government is in power, it will have to address the problem of the poor: it is not a problem that will quietly go away.

Oliver L Campbell oliver@lbcampbell.com

www.vheadline.com Posted: Thursday, January 30, 2003 - 5:01:56 PM By: Oscar Heck

VHeadline.com commentarist Oscar Heck writes: Mr. Oliver L. Campbell's recent letter to Vheadline.com (www.vheadline.com) brought up some interesting points and reminded me of a recent discussion I had with a young tourist from Zimbabwe who was on an adventure tour in Los Llanos ... the vast central plains of Venezuela.

I mentioned to this young man, the son of a British-born merchant and businessman, that I was in the process of transferring a portion of my business to Venezuela. His immediate response was "...so you can take advantage of the low wages?" My reply was "...no, because I love Venezuela and its people, and because I can now handle my business through the internet and it does not matter where I work from.  I will be paying my employees maybe 3 times the present minimum wage ... a deserved wage for the work required in comparison with the cost of living here ... and I still make a very good profit!" He was surprised, and responded with a question "but why would you do that?" My response was simple "because I believe in it!" He never spoke to me again.

Perhaps people who are listening can consider something similar in nature. That is, since many businesses can now be managed through the internet, covering an ever-increasing international market (versus a local market), it may be worthwhile for the Venezuelan government and private enterprises to promote the establishment of small "international scope" operations offices throughout rural areas of Venezuela (and pay the employees decent wages).

An example of this occurred in Canada several years ago ... the New Brunswick Provincial Government (one of the 10 Canadian Provinces - with a high level of unemployment), promoted the establishment of "call centers" in rural areas of New Brunswick: representing hundreds, if not thousands of jobs for people who were mostly on welfare, or who only had seasonal jobs.

Such a venture, for example, can be initiated from almost any place in the world that has reliable telephone/internet access. In addition, it is relatively easy to train personnel.

With respect to paying better than the minimum wage (the minimum wage in Venezuela is pittiful), I discussed this with one of the promoters of international manufacturing investments for the Zona Libre, State of Merida (in the Venezuelan Andes). His response to me was "you can pay whatever wages you want, so long as it complies with the laws ... if you decide to pay better than the norm, it's your choice ... but it will be better for everyone ... better for the employees, the people will respect you more ... and you will have honest, devout employees ... they will not steal from you, because you will be treating them well ... and you will have employees from other companies asking to work for you!"

These are perhaps thoughts worthy of consideration?

Oscar Heck oscarheck111@hotmail.com

www.forbes.com Reuters, 01.30.03, 4:21 PM ET

NEW YORK, Jan 30 (Reuters) - Investment bank Morgan Stanley said on Thursday it raised its recommendation on Brazilian sovereign bonds to outperform from market perform amid optimism for the legislative agenda of the country's new government.

Morgan Stanley said in a report it advised clients to move their positions to overweight from market weight, a move that comes on the heels of last week's nomination of ex-president Jose Sarney, an ally of new President Luiz Inacio Lula da Silva, to head the Senate.

After weeks of negotiations, the deeply divided Brazilian Democratic Party (PMDB) agreed on Sarney as its candidate, a move likely to bolster congressional support for Lula's agenda of economic reforms. Lula, who ran on the Workers Party (PT) ticket, took office earlier this month.

"The recently sealed agreement between the PMDB and the PT provides positive prospects for the new administration's congressional agenda," said Morgan Stanley.

The decision comes as investor fears about the economic fallout of a possible U.S.-led military strike on Iraq weigh on emerging markets. Despite the uncertainty over Iraq, Morgan Stanley said it still was moving to buy Brazil.

"Brazil and Latin American assets are currently participating fully in the global sell-off in risky assets. To the degree that it is Iraq-related, we expect that this sell-off will be temporary and we are buying Brazil heading into it," it said.

Morgan Stanley said it also raised Venezuela to market perform from underperform, thanks to the prospects for a solution to a two-month-old general strike, the government's efforts to maintain reserves through capital controls and increased oil output.

Foes of Venezuelan President Hugo Chavez are staging the work stoppage in a bid to force the leader's resignation or spawn new elections. The strike has strangled oil production, the government's chief source of revenues, and raised concerns the nation may be left without enough cash to pay its debts.

Morgan Stanley said that as the strike loses steam, it expects the opposition to reach an agreement with Chavez for an August referendum on his rule, a move that Chavez may concede to because of international pressure.

This, along with the government's plans for a single fixed exchange rate and a recovery in oil output sufficient to keep the government and state oil giant PDVSA from defaulting on its debt, support the move to market weight, the bank said. (Reporting by Susan Schneider; Editing by Stuart Doughty; Reuters Messaging: susan.schneider.reuters.com@reuters.net, tel: +1 646 223 6319)

www.voanews.com Greg Flakus Caracas 30 Jan 2003, 17:47 UTC

After nearly two-months, the opposition strike in Venezuela is showing signs of weakening, but the divide between those who oppose and those who support President Hugo Chavez remains wide.

The large shopping malls remain closed, but many smaller shops are open. Supermarkets still have shortages, but quite a few restaurants and bars are open at night.

Most gasoline stations are closed, and people wait in long lines at the ones that are open, yet, vehicles still circulate on Caracas streets, using fuel brought in by boat from other countries.

The general strike that shut down almost all commerce in Venezuela since December 2 is starting to come undone. Little by little, merchants are opening their doors, or expanding hours of operation, if they were already open. Owners of shopping centers, theaters and other popular destinations say they expect to open next week.

The Venezuelan Banking Council has decided to reopen banks to the public on Monday. President Chavez had brought pressure on the bankers by threatening to withdraw armed forces funds from the banks.

But Banking Council Vice President Nelson Mezerhane says that pressure had nothing to do with the decision to reopen.

He says the pressure felt by the banking sector came from the clients whose deposits the banks hold. For the past two-months, the banks have been open only a few hours a day, leading to long lines and severe restrictions on financial transactions.

The strike has cost Venezuela more than $4 billion, and the economy is expected to show a 25 percent contraction this year as a result. The nation's currency, the Bolivar, has lost nearly 30 percent of its value.

Oil production in this, the world's fifth largest producer, fell as low as 200,000 barrels-a-day last month. Last week, the government managed to move production back up to about one-million-barrels-a-day, but that is still only about a third of what used to be produced.

Opposition rally in Caracas (VOA photo - G. Flakus)The weakening of the strike in the banking and commercial sector is seen by Chavez supporters as a victory for their side, but opposition leaders say their struggle is not over. The strike in the oil industry continues, with 35,000 of the nation's 40,000 oil workers remaining at home.

Hundreds of anti-Chavez protesters gather every evening at a plaza in the fashionable Altamira section of Caracas to listen to anti-Chavez speeches and songs. The divergent elements of the opposition remain united on their principal goal, that of removing Mr. Chavez from power.

In a smaller plaza, in a working-class neighborhood a few kilometers away, Chavez supporters hold nightly meetings that draw smaller crowds. Public opinion polls indicate that around 30 percent of Venezuelans back President Chavez. His mostly poor supporters deride the opposition leaders as "oligarchs" and say that only Mr. Chavez cares about the poor.

International diplomatic efforts to end the political conflict in Venezuela are showing signs of progress. Representatives of the six nations referred to as "friends of Venezuela" have begun arriving in Caracas for meetings Friday with government and opposition leaders.

The diplomats from the United States, Brazil, Chile, Mexico, Spain, and Portugal are pressing for a solution, based on proposals set forth by former U.S. President Jimmy Carter on January 21. Under the Carter plan, there would either be a recall referendum in August, or a change to the constitution that would allow for early elections.