boston.com By Alexandra Olson, Associated Press, 1/29/2003 10:22

CARACAS, Venezuela (AP) President Hugo Chavez appeared to be winning the battle for control of Venezuela's oil industry, overcoming efforts by workers at the state oil company to strangle it with a 58-day-old strike.

In another sign the strike is weakening, private banks agreed Wednesday to restore normal banking hours next week, said Central Bank president Diego Luis Castellanos. Banks and many exchange houses had opened only three hours a day to support the strike.

The decision came after Chavez had threatened to fine banks, suspend their directors and withdraw military deposits from striking institutions.

Even as the government boosted oil production beyond the million-barrel benchmark, the work stoppage has had devastating effects on the country's recession-ridden economy.

Production reached 1 million barrels a day Tuesday one-third of pre-strike levels, according to striking executives at state oil monopoly Petroleos de Venezuela S.A. It had slipped as low as 200,000 barrels per day in December.

Output is rising because the government is focusing on newer oil fields, where crude is easier to extract. But the recovery should slow when the government is forced to reactivate old wells that have sat idle for nearly two months, making their crude sticky and difficult to pump.

''They are going for the lowest hanging fruit on the tree, the easiest to grab,'' said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York. ''In a few weeks, it is going to be a struggle.''

Silliere said he expects difficulties to begin when output reaches 1.2 million to 1.4 million barrels per day.

In an effort to regain control of the oil monopoly, Chavez has sacked more than 5,000 of its 40,000 workers. State oil company executives warn the firings will make it even more difficult to reach full production capacity.

''That's what happens when unprepared personnel are put to work,'' Juan Fernandez, the leading spokesmen for dissident state oil workers, told a press conference.

Opposition leaders insist the strike will continue. But a public backlash over food, gasoline and medicine shortages has prompted some workers to consider easing the stoppage in certain areas.

Concerns about a public backlash over food, gasoline and medicine shortages has prompted some strike leaders to consider easing the stoppage in certain areas.

Shopping malls, restaurants and schools may reopen next week, at least part-time, said Julio Brazon, president of the Consecomercio business chamber. Some small businesses have reopened, and others never closed.

''The lifting of the strike is not being proposed now,'' said Carlos Ortega, president of the nation's largest labor union. ''What is being proposed are some strategies that correspond to sectors involved in the strike.'' He did not elaborate.

Venezuelans must wait for hours in miles-long lines outside service stations. To ease the inconvenience, the government will impose limits on daily gas sales, said Luis Vierma, director of hydrocarbons at the Energy and Mines Ministry.

Although Chavez has had some success in reviving oil production, which provides half of Venezuela's government revenue and 70 percent of export earnings, he faces a daunting task in recuperating the country's economy.

Capital flight, stalled investment and strike damage led Santander Central Hispano investment bank to forecast a 40 percent contraction in the first quarter of 2003. Unemployment stands at 17 percent.

A freeze on foreign currency sales to protect the bolivar, which has lost 25 percent of its value this year, was extended Tuesday. The bolivar traded at 2,300 to the dollar Tuesday in secondary markets between private parties, bankers said. It was 1,853 to the dollar before the suspension started last week.

Limits on the amount of foreign currency Venezuelans can buy go into effect next week. The measure has been severely criticized by executives who say it could hurt businesses that depend on U.S. dollars to import goods.

''Chavez many have the initial advantage, but over the long term, he's going to have a much more difficult path,'' said Steve Johnson, senior policy analyst for Latin America at the Washington-based Heritage Foundation.

www.channel4000.com Posted: 11:12 p.m. EST January 28, 2003

CARACAS, Venezuela -- Venezuelan President Hugo Chavez seems to be slowly choking off the opposition's attempt to force him from office.

The nation produced more than 1 million barrels of oil Tuesday -- about a third of the normal rate -- despite a two-month-long general strike.

Chavez has fired thousands of striking workers at the state oil monopoly.

Opposition leaders are scaling back the strike, worried about a public backlash over shortages of food, gasoline and medicine.

Most small businesses are already open. Factories, shopping malls, restaurants and schools may reopen next week, at least part-time.

The populist Chavez has been elected twice on a pledge to redistribute Venezuela's oil wealth to the poor. Critics claim he's dismantling democratic institutions and destroying the economy.

www.taipeitimes.com BLOOMBERG Wednesday, Jan 29, 2003,Page 12

Venezuelans wait to buy cooking gas in Caracas yesterday. Venezuelan opposition forces debated scaling back their strike against leftist President Hugo Chavez to ease the burden on the struggling private sector, which is now also threatened by government currency curbs and price controls.

Venezuela said it would fix the bolivar's exchange rate and extend a ban on trading to bolster foreign reserves drained by government efforts to defend the currency during a two-month-old nationwide strike.

The measures were announced by Finance Minister Tobias Nobrega on the country's Televen television network. He didn't specify at what rate the bolivar will be fixed.

Venezuela, the No. 4 exporter of oil to the US, needs to stem an exodus of foreign cash that has resulted in a 14 percent plunge in foreign reserves since the strike began. The stoppage, aimed at ousting President Hugo Chavez, is in its 57th day. Blocking access to foreign currency will make it harder to move money overseas and promote an underground economy.

"They have to do something to keep their reserves but a fixed exchange rate isn't the best solution," said Sandra Ebner, who helps manage 4 billion euros (US$4.3 billion) of emerging market debt for Deka Kapitalanlagegesellschaft in Frankfurt. "It's going to cause a run on the currency and they will have to give up the fixed rate."

The central bank spent as much as US$70 million a day earlier this month to bolster the currency, raising concern of a default on US$22.4 billion of foreign debt. The nation's international reserves declined to US$13.6 billion Friday. About US$35 billion left the country since Chavez was elected in February 1999, the president said recently.

asia.reuters.com Tue January 28, 2003 09:05 PM ET By Pascal Fletcher

CARACAS, Venezuela (Reuters) - Venezuela's opposition offered on Tuesday to ease their 8-week-old strike by exempting education and food production as the government prepared to introduce a fixed exchange rate to counter the economic impact of the shutdown.

Although oil workers were maintaining their crippling stoppage in the world's No. 5 petroleum exporter, opposition leaders were rethinking their grueling campaign to try to force President Hugo Chavez to hold early elections.

With the oil-reliant economy reeling, Chavez's government has cut budget spending and suspended currency trading to halt capital flight while it prepares to introduce foreign exchange controls next week.

Finance Minister Tobias Nobrega said late on Monday the government was considering a single fixed exchange rate.

Two days before the arrival in Caracas of a six-nation delegation which will lend its weight to peace efforts, opposition negotiators said they were prepared to halt the strike in the sensitive areas of education and food output.

"Our proposal is we should lift the strike in these two sectors as a gesture of goodwill," Timoteo Zambrano of the opposition Coordinadora Democratica group told local radio.

The government and the opposition resumed talks Tuesday on the timing of elections in negotiations chaired by Organization of American States Secretary General Cesar Gaviria. "I can't say we're close to an agreement but it's certainly been the most fruitful session we've had so far," Gaviria said.

Nobrega has extended the suspension of foreign exchange trading for another week. Government and banking sources said the currency control mechanism being discussed foresaw a single exchange rate lasting for four months, adjustable monthly, to be followed by a dual rate.

PESSIMISM OVER CONTROLS

Analysts said the currency controls might initially stem capital flight, but they would also add to the economic turmoil by pushing up prices and encouraging corruption and the creation of a black market.

This occurred in Venezuela in 1994-96. Other previous experiences in Latin America with currency controls had rarely provided lasting solutions to economic emergencies, they said.

Opposition leaders fear the government will use the measure to punish striking firms by restricting access to dollars.

In recent weeks, support for the strike has slipped and many shops, restaurants and businesses have reopened. Private banks were due to meet on Wednesday to decide on returning to normal opening hours, a government source told Reuters.

Opposition leaders are debating easing the stoppage in some non-oil areas to give hard-pressed private businessmen and consumers a breather after 58 days of a protest that has triggered an economic crisis but failed to oust Chavez.

"This strike has not failed. It will never fail," said anti-Chavez union boss Carlos Ortega. But he acknowledged that the opposition was studying "new strategies."

Chavez has said the exchange controls were necessary to counter he called an "economic coup" being attempted by rich opponents of his self-styled "revolution."

The government and private banks were discussing fixing an exchange rate somewhere between a minimum of 1,500 bolivars and a maximum of 1,850 bolivars to the U.S. dollar. The bolivar closed a week ago at 1,853 bolivars to the dollar.

Besides slashing oil exports, the shutdown has caused unprecedented shortages of gasoline and some food items. Despite complaints from parents, private schools and universities have also joined businesses in staying closed.

Chavez has refused to negotiate with strike leaders and has used troops to partially restore oil production.

Envoys from the United States, Brazil, Mexico, Chile, Spain and Portugal are due in Caracas on Thursday to support efforts by OAS chief Gaviria to broker a deal on elections.

Rejecting calls for early elections, Chavez insists his foes must wait until Aug. 19, halfway through his current term. After that date, the constitution foresees a binding referendum on his rule, which is scheduled to last until early 2007.

Opposition leaders say the nation cannot wait until August. They are collecting signatures for a constitutional amendment to trigger early elections, an option proposed by former U.S. President Jimmy Carter, who is backing the peace talks. (Additional reporting by Ana Isabel Martinez, Silene Ramirez)

www.newsmax.com Tiana Perez, NewsMax.com

Editor's note: Tiana Perez, NewsMax's correspondent in Venezuela, will offer occasional dispatches on the turmoil in this crucial part of the world.

Chavez Accused of Terrorism, Crimes Against Humanity

Jan. 28: Spanish lawyer Luis Garcia Perulles has confirmed that a complaint has been filed at the National Spanish Council against president of Venezuela Hugo Chavez alleging crimes against humanity, violation of human rights and terrorism.

The action has come as a result of the death of José Antonio Gamallo, a Spanish citizen who was transported to Spain after having been seriously wounded during the protests that preceded the attempted coup on April 11, 2001.

The massive protest attended by more than 1 million people in the center of Caracas left a death toll of 17, leading to a trial and hearings at the National Assembly that lasted for more than one month. Lawyers representing the dead protesters did not accomplish more than a political discussion at the National Assembly despite having presented video proofs of Chavez backers and members of the government shooting at the peaceful crowd.

The hearings, which had as their high point the disclosure of recorded phone conversations by senior military officials between the president and members of the armed forces at Miraflores, the presidential palace, show that Chavez had ordered to unleash the “Plan Avila” on the morning before senior military officials asked him to resign.

The “Plan Avila” is a contingency plan designed to suppress civilians and foresees the seizure of the street by tanks and the armed forces. Gen. Rosendo, who was put in charge of the plan and one of the disclosers of this information at the National Assembly, considered the plan an unjustifiable atrocity toward the unarmed protesters and did not proceed to carry it on.

Following the inability of the Venezuelan judicial system to resolve the case, the lawyers representing Gamallo have taken the complaint to the international arena.

"The Venezuelan State is doing everything possible to obstruct the approval of judicial decisions,”[1] said Garcia, one of the lawyers, in reference to the proceedings caused by the events on April 11th.

He assured that the filing of the complaint accusing the government of terrorist activities before the Spanish judicial authorities was based on evidence about the redirection of funds to terrorist groups’ accounts. Garcia explained that his evidence included audiovisual material that would be evaluated by the assigned judge.

When consulted about the judicial proceedings that will be launched in Spain, Venezuelan Vice President José Vicente Rangel declared "this shows gross ignorance about what a state of law is. It is important to exhaust all national judicial resources before an international action is started. Secondly, I think it reveals a complete lack of imagination and sense of responsibility.”[2]

He charged that the ones who should be put on trial were those who sabottaged the oil industry, disrupted two months ago with the beginning of the general strike against President Chavez's rule.

PDVSA, the state oil company, remains occupied by military forces and is operating with 5,000 employees less, who had resigned and left their posts as a protest against an increased politization of the company. Meanwhile, oil exports have been restored to about one-third of usual daily production of 3.1 million barrels.

[1]: www.globovision.com, Jan. 28 [2]: El Universal, Jan. 28