(opposition) Venezuelan youths gather to celebrate Youth Day in Caracas, Venezuela, Wednesday, Feb. 12, 2003. (AP Photo/Howard Yanes)
Posted on 02/13/2003 12:36:31 AM PST by Cincinatus' Wife
CARACAS, Venezuela (Reuters) - Venezuela's President Hugo Chavez on Wednesday introduced price controls and announced subsidies to soften the impact of an economic crisis after a two-month opposition strike slashed the nation's vital oil production.
Chavez, a populist former paratrooper locked in a bitter struggle with foes of his self-styled "revolution," said the government planned to subsidize basic food items such as rice, beef and milk that are covered by the new price controls.
"We're preparing subsidies. Why? To sell the goods whose prices we are setting even more cheaply, for the poor ... We'll subsidize as much as money allows," Chavez told cheering supporters at a youth rally (in La Victoria).
Thousands of anti-government demonstrators later packed an eastern Caracas avenue for a series of concerts in support of the opposition campaign for elections to oust Chavez, who is resisting their demands he go to the ballot box.
(opposition) Venezuelan youths gather to celebrate Youth Day in Caracas, Venezuela, Wednesday, Feb. 12, 2003. (AP Photo/Howard Yanes)
The opposition strike, which started on Dec. 2, initially crippled the oil sector that provides half of state revenue for the world's fifth largest oil exporter. The stoppage fizzled in recent weeks after many businesses reopened under the threat of bankruptcy.
Still, the shutdown battered Venezuela's recession-bound economy. Chavez suspended foreign exchange trading on Jan. 22 before announcing austere currency controls to shore up international reserves and the bolivar currency.
Currency markets were still closed Wednesday, leaving much of the economy paralyzed as businesses were starved of the U.S. currency they need for transactions in a nation that imports more than 60 percent of its goods.
Officials at the new currency control board CADIVI are still hammering out details of the new mechanisms. CAVIDI said in a statement Wednesday that it could be several months before Venezuelans are allowed to use their credit cards overseas.
The government on Wednesday also introduced price curbs on 106 basic foods and more than 60 other essential items. Officials have said priority under the new control regime will go to medicines and imports of basic goods.
CLEARING OUT PDVSA
Chavez, whose foes accuse him of ruling like a corrupt dictator, has threatened to use the curbs to limit access to dollars to private sector groups he accuses of trying to topple his government by destroying the economy.
Opposition leaders, an alliance of unions, business bosses and political parties, warn the government's measures will create a black market, hike inflation and deliver a blow to a private sector already reeling from sharp recession.
The president, who has struggled to restore oil output using troops and replacement crews, said Wednesday that production was at about 2 million barrels per day compared with pre-strike levels of 3.1 million barrels per day (bpd).
But a spokesman for the rebel oil workers said output was at 1.39 million bpd, down from volumes pumped on Tuesday.
Chavez, who was elected in 1998 and survived a coup in April, has toughened his stance against the opposition since their strike failed to budge him from office. He has fired more than 11,000 employees of the state oil firm PDVSA as part of his crackdown on the industry.
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