In Porto Alegre, Chavez proclaims price, currency controls

Fred Feldman ffeldman at
Mon Jan 27 23:20:22 MST 2003

Subject: [Venezuela_Today] Venezuela braces for price, currency controls
Hard hit by a ruinous strike that entered its ninth week, the Venezuelan
government was set to implement price and currency controls.

The measures were announced as the strike aimed at forcing leftist- populist
president Hugo Chavez from office showed signs of weakening but still kept
exports at a fraction of their regular levels.

The embattled government has announced it would implement this week currency
control measures to combat capital flight, which media estimated at 1.8
dollars since the strike started on December 2.

Speaking at the World Social Forum in Porto Alegre, Brazil on Sunday, Chavez
announced his government would introduce price controls so the currency
measures do not affect the poor, who make up 80 percent of the population of

His trade and production minister, Ramon Rosales, said the measure would
to food staples, medicine and other essential items, according to the El
Nacional daily.

He also said companies dealing in those items would get priority in the
allocation of foreign currency.

The government was yet to announce details of the currency controls that
go into effect Wednesday, when currency trading resumes after a five-day
suspension ordered by the government.

Exporters feared the currency controls would severely affect trade,
particularly if authorities adopt a proposed measure under which all dollars
earned from exports must be deposited with the central bank.

"This situation will reduce the competitiveness of Venezuelan exports and
cause loss of markets," said Francisco Mendoza, president of the Venezuelan
Exporters Association.

He told El Nacional that measures allowing the government to determine who
how much foreign currency would lead to chaos and corruption.

Rosales insisted the controls would not be used as a political weapon, while
the same time saying the employers' group that leads the strike "will have
assume the consequences."

"They are calling for an insurrection, therefore it is a contradiction that
they should participate in a coup and come and ask for foreign currency," he

The strike is headed by the Fedecamaras employers' federation, the CTV trade
union group and a coalition of political parties.

On Monday, the Caracas stock exchange opened for the first time since the
strike was launched, and rose 10.42 percent from its last session on

Protest organizers have indicated the strike could be eased further, with
schools, businesses and shopping malls reopening in coming days.

El Nacional, an opposition daily, said a formal announcement to that effect
could be made to coincide with the arrival in Caracas later this week of
representatives of the Group of Friends of Venezuela, which is made up of
Brazil, Chile, Mexico, the United States, Spain and Portugal.

The group, which already held talks in Washington Friday, was expected to
continue discussions on proposals aimed at resolving Venezuela's crisis, put
forward by former US president and Nobel peace laureate Jimmy Carter.

The Carter proposals would lead either to an August 19 referendum or early
elections through a constitutional amendment to shorten the president's term

They would also entail ending the strike, which has caused daily crude
to drop from three million barrels of oil to just under a million barrels
according to the opposition and about 1.3 million barrels according to

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