Venezuelan court suspends referendum on Chavez's rule

CARACAS, Venezuela -- In a setback for opposition efforts to oust Hugo Chavez, the Supreme Court on Wednesday indefinitely postponed a nationwide referendum that would have asked Venezuelans whether the president should quit.

Hours later, President Hugo Chavez moved to bolster Venezuela's strike-damaged economy, saying he would impose foreign exchange controls to prevent Venezuela's currency from further plummeting. The Central Bank had suspended foreign currency trading earlier in the day.

The high court decision came just 11 days before the scheduled vote, the decision stunned the opposition that delivered 2 million signatures in November to demand the referendum and backed it up with a strike that has lasted 52 days. It was also to pay for the vote because Chavez's government refused to do so.

Opposition leaders reacted angrily to the court's decision, contending that Chavez's government was acting through the court to cling to power despite international pressure to find an electoral solution to end Venezuela's political crisis.

Government leaders rejected the claim, noting that the opposition has embraced past court decisions against Chavez -- including a ruling clearing four high-ranking officers of rebellion charges in a brief April coup.

Justices ruled that no national vote -- a referendum or election -- can be held until it decides whether elections council member Leonardo Pizani, who helped organize the referendum, is eligible to serve on the panel.

Pizani had resigned from the council in 2000, only to rejoin last November. He insisted he could rejoin because Congress, by law, had failed to formally accept his resignation.

Pro-Chavez lawmakers filed suit arguing that Pizani's two-year absence from the council made his resignation legally binding.

"This goes beyond my appointment, this is about politics," Pizani said after the ruling.

Chavez opponents vowed to step up street protests -- a stark contrast to hopes raised Tuesday by Nobel Peace Prize laureate Jimmy Carter, who presented both sides with electoral proposals to end the crisis.

"Today there is a dictatorship in Venezuela," said lawmaker Julio Borges, whose First Justice party led the petition drive in November calling for the referendum.

"The government doesn't care about the people's will," Borges said. "It only cares about staying in power."

Vice President Jose Vicente Rangel described the court decision as crucial. "I hope all sectors of the country will respect and adhere to it," he said.

The referendum wouldn't be binding, but opponents hoped that a poor showing would increase political pressure on Chavez to quit.

Chavez argued that Venezuela's constitution allows a binding referendum midway through his six-year term, or August. Opponents cited a constitutional clause that allows citizens to petition for referendums on "matters of national importance" at any time.

The strike has slashed oil production in the world's fifth-largest petroleum exporter by more than two-thirds -- crippling an industry that provides half of government revenue and 70 percent of export revenue.

Chavez, speaking during a military ceremony, said he would impose the new currency controls by early next week. The move will limit the amount of U.S. dollars or other currencies Venezuelans can accumulate. The move is aimed at protecting the bolivar currency, which has lost 25 percent of its value this year. Chavez did not provide further details on the new policy.

Though the move could strengthen the local currency, it could also increase costs for businesses that depend on dollars to pay for imported goods. Venezuela's economy is highly dependent on imports -- about 50 percent of food is imported.

Meanwhile, Carter proposed two plans in Caracas on Tuesday.

The first calls for an end to the strike in exchange for a government pledge to amend Venezuela's constitution to shorten presidential and legislative terms of office and allow early elections.

The second plan calls for both sides to prepare for a binding referendum on Chavez's rule in August.

Diplomats from Brazil, Chile, Mexico, Portugal, Spain and the United States were to meet at the Organization of American States in Washington on Friday to discuss Carter's proposals. The six countries, called the "Friends of Venezuela," are trying to strengthen mediation efforts by OAS Secretary General Cesar Gaviria.

Chavez was elected in 1998 and re-elected in 2000 on promises to help the country's poor majority, but he has failed to remedy the nation's economic ills.

Opponents blame Chavez's leftist policies for an estimated 8 percent economic contraction in 2002. Chavez blames it on opposition attempts to destabilize the country.