- The Washington Times - Thursday, January 2, 2003

RIO DE JANEIRO, Brazil, Jan. 2 (UPI) — Brazil's new president met with the embattled leader of Venezuela Thursday and discussed the possibility of Brazil sending oil experts to aid its northern neighbor, which has been crippled by a widespread general strike.

Brazilian President Luiz Inacio Lula da Silva, who took office Wednesday in the country's first peaceful transition of power between opposing parties in four decades, told his counterpart, Hugo Chavez, he would confer with officials of the state-run oil company Petrobras before agreeing to send technicians to Venezuela.

A general strike in protest of Chavez's rule has paralyzed Venezuela for a month, and has severely hampered the country's state-run oil company, PDVSA, which has seen 30,000 employees join the strike. Chavez has begun firing some employees and has been trying to find replacements.

"We are going to begin the conversations between the two companies (Petrobras and PDVSA) to see how this technical cooperation can be formed," Chavez told reporters after meeting with Lula, as he is popularly known.

"The striking oil workers have stabbed the heart of Venezuela," Chavez said. "They are traitors of the homeland."

Venezuela is the world's fifth-leading exporter of oil and a key source for the United States.

Chavez — in Brazil for Lula's inauguration along with representatives of 120 other countries — told reporters early Thursday that Venezuela's oil output is now at 800,000 barrels a day, up from its recent low of 200,000 barrels.

Officials in Venezuela's opposition insisted Thursday, however, that production sits at 190,000 barrels a day. The country's full capacity is 3 million barrels a day, which Chavez said Venezuela would reach in 45 days.

The crisis in Venezuela has largely contributed to the recent spike in world oil prices, now above $30 a barrel.

Last Saturday, a Brazilian tanker arrived in Venezuela with 525,000 barrels of gasoline as the strike has led to shortages of fuel and long lines at gas stations that are still functioning.

On Thursday, Chavez said he asked Lula if he would send more Brazilian gasoline to Venezuela, and if Brazilian tankers could transport Venezuelan petroleum to the Virgin Islands.

Opposition leaders in Venezuela — led by the business chamber, the largest labor union and thousands of workers at PDVSA — are demanding Chavez call a referendum on his rule or resign outright. Chavez says early elections would be unconstitutional. He says the law only permits a binding referendum in August 2003, halfway into his six-year term.

The opposition also claims Chavez is trying to impose a heavy-handed rule like that of Cuba's Fidel Castro, with whom Chavez met with for several hours early Thursday in Brazil.

Castro was also in Brazil for Lula's inauguration. The two leaders were to have dinner Thursday night.

Lula, 57, is also scheduled to meet Thursday with officials from other countries including Canada, Germany, Sweden and Portugal.

In his inauguration address on Wednesday, Lula promised to end hunger and battle the protectionist trade practices of the United States and Europe.

Brazil is one of the most ardent critics of agricultural subsidies and tariffs, as its economy heavily relies on the exportation of raw goods such as beef, oranges and steel.

"Brazil will combat protectionism and will fight for the elimination of barriers, and we will try to get rules that are more just for out state as a developing nation," Lula said in his address Wednesday.

He also emphasized that Brazil will aggressively seek foreign investment and trade on more equal terms.

Brazil will have to rely on its exporting sector to ignite a stagnant economy that is burdened by some $230 billion in debt.

Lula's successful presidential bid contributed significantly to the crash of the country's stock and currency markets, the flight of foreign capital and the severe cutback in foreign credit extended to the country and its corporate sector. Brazil did, however, post a trade surplus of $13.1 billion in 2002, and says it can expand that if the United States and Europe will lower their import barriers on its key products — steel, soybeans and orange juice.

As he has in the past, Lula emphasized in his address that he wants to strengthen ties with other South American countries and bolster the fledgling Mercosur trade bloc — made up of Brazil, Argentina, Uruguay and Paraguay, with Chile and Bolivia as associate members.

"The great priority of foreign policy during my government will be the construction of a politically stable South America that is prosperous and united," Lula said. "For that, it is essential to take action to revitalize Mercosur, which is weak for the crises of each one of its members."

Lula also emphasized, however, that a key to success was improving trade relations with the United States, with whom he said he wanted to have a "ripe partnership."

The Bush administration sent U.S. Trade Representative Robert Zoellick to represent the country at Lula's inauguration. Zoellick told reporters that Bush wants to "work with Brazil."

Lula will need all the willing trade partners he can find, with annual inflation hitting double-digits for the first time in years just as he takes office. The Brazilian government did release higher-than-expected growth statistics for 2002, with the economy growing by 1.4 percent.

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