Venezuelans await currency controls

CARACAS, Venezuela -- Venezuelans awaited details of new currency controls, while protesters continued to press for the ouster of President Hugo Chavez in a nearly two-month-long strike that has severely hampered the economy, although oil production was slowly increasing.

Chavez last week suspended foreign currency dealings through Tuesday and said he would announce new currency controls to halt the rush of nervous Venezuelans trading in their currency, the bolivar, for dollars.

Details about the new controls and even when they will be announced have not been revealed, but there are fears that the government will largely limit the availability of dollars to Chavez supporters while cutting off those taking part in the strike, which began Dec. 2.

Production and Commerce Minister Ramon Rosales was quoted as saying by the El Nacional newspaper that importers and exporters who do not back the strike will get priority for access to dollars.

That would drive many businessmen to a new but flourishing black market for the American currency, sending already-rising prices even higher.

Rosales also said dollars will be guaranteed for food and raw materials for agriculture, health and education.

Chavez has given no hints about the controls, although he said Sunday he will soon propose a tax on all financial transactions in Venezuela. He did not give more details but said Venezuela's dollar-based reserves dropped $3 billion in December and January.

Meanwhile, a demonstration on a central Caracas highway continued Sunday morning after thousands spent the night on the asphalt to protest a Supreme Court decision indefinitely suspending a Feb. 2 referendum to ask Venezuelans whether Chavez should resign.

Tens of thousands protesters danced to salsa music blaring from massive loudspeakers as countless red, blue and yellow national flags fluttered in the wind.

The loosely grouped opposition is trying to recover from the blow of the Supreme Court ruling. The president's opponents had gathered 2 million signatures to petition for the vote and launched the strike and daily street protests. Six people have been killed in protests since the strike began.

Although the referendum wouldn't have been binding, opponents had hoped a negative outcome would have embarrassed Chavez into quitting.

Searching for a new strategy, the opposition Democratic Coordinator movement was gathering signatures to demand a constitutional amendment that would pave the way for early elections. The amendment would involve cutting Chavez's six-year term, currently due to run until 2006, to four.

Amending the constitution requires a popular referendum. Citizens can demand such a vote by collecting signatures from 15 percent of Venezuela's 12 million registered voters.

Chavez harshly criticized his opponents Sunday after arriving in Porto Alegre, Brazil, for the World Social Forum, where he was to meet with sympathizers among the 100,000 activists gathered in the southern port city to protest American-style capitalism.

"Our struggle against the terrorists and fascists has further strengthened the will of the Venezuelan people," Chavez said at the airport. "One thing is to try to get rid of me, and another thing is to succeed. I have the popularity to remain in power."

Exchange controls will help protect the bolivar and the government's depleting foreign reserves. But they will hurt many businesses as dollars are needed to buy food, about half of which is imported, medicines and other essentials, some of which already are in short supply.

Economists estimate capital flight, money sent out of Venezuela for safekeeping, at $1.8 billion since the strike began. The rush to dump bolivars is blamed for at least part of the currency's loss of 30 percent of its value this month alone.

New measures will give the government considerable leverage against its opponents in businesses that need to import goods to survive, said Luis Leon, head of Datanalisis, a polling and economic analysis firm. "Imagine what he'll do to the newspapers who don't print favorable things about him. They all have to import paper," Leon said.

The strike is strongest in the oil industry, which provides half of government income and a third of gross domestic product. But production in the world's fifth-largest oil exporter is slowly picking up.

The government claims most of the 40,000 employees at the state oil monopoly, Petroleos de Venezuela S.A., have returned to work and Chavez said Sunday that production was up to 1.32 million barrels of oil per day.

Striking executives put the production figure at 957,000 and deny most employees are back to work. Output was 3.2 million barrels a day before the strike. It reached a low of less than 200,000 last month.

Chavez was elected in 1998 with promises to fight corruption and ease poverty, which afflicts 80 percent of the population of 24 million people. Opponents say his leftist policies have steered the economy into recession and taken unemployment to 17 percent.