Demands Scaled Back as Government Is Said to Have Little Reason to Compromise

By Scott Wilson
Washington Post Foreign Service

CARACAS, Venezuela, Jan. 14 -- The opposition movement seeking to push President Hugo Chavez from office has scaled back its demands for lifting a
44-day-old general strike while quietly signaling to some hard-hit Venezuelan businessmen that they should reopen their doors.

Since the strike began Dec. 2, a diverse opposition, emboldened by large street demonstrations and key industry support, has called on Chavez to resign or hold
new elections within months as conditions for lifting the protest. Both demands have been ruled out by the twice-elected president. But the opposition has held firm
since the oil industry, which provides the government with almost half of its $20 billion annual budget, joined the strike in its early days and gave Chavez's opponents
their strongest weapon.

In recent weeks, however, Chavez has cobbled together a temporary supply system that has kept this country of 23 million in gasoline and food, albeit at enormous
inconvenience to the public and a high financial cost to the government. Now confident he has bested his opponents, Chavez has little incentive to compromise and
end a standoff that has thrown the third-largest U.S. oil supplier into political unrest, according to several of the president's adversaries and allies.

The hardening government position was reflected in comments today by Vice President Jose Vicente Rangel, who ruled out compromise proposals in a meeting with
foreign reporters. This has prompted many businesses sympathetic to the opposition to question whether Chavez is suffering the greater financial hardship.

In response to mounting frustration, opposition negotiators have softened their position in talks being mediated by Cesar Gaviria, secretary general of the
Organization of American States, in hopes ending the strike. Opposition negotiators have dropped their demand that Chavez resign before new elections can be
held; they are now focusing on whether a nonbinding referendum scheduled for Feb. 2 could be used to set an early election date.

But the government has refused to give ground, and Rangel today dismissed the opposition as being led by "fascists" and "coup mongers." He said a nonbinding
referendum, which must pass high-court review, was unconstitutional and that he would urge government supporters to boycott the vote. He also suggested that it
would be hard to pay the roughly $30 million cost of holding the referendum, given economic damage done by the opposition strike.

"We do not recognize it," Rangel said of the referendum. "This strike is a fiction, an obsession by people who want to remove Chavez."

Those comments came as opposition marchers demonstrated in favor of the referendum, which would be the first official public sounding on Chavez's four-year-old
administration. Meanwhile, government troops seized weapons and riot gear from Caracas police stations, prompting a fresh fight between the president and the
opposition mayor for control of the 8,000-member force.

The mayor, Alfredo Peña, warned in response that he would pull patrols out of the city's most dangerous neighborhoods, where Chavez supporters live. Elected in
1998 on a platform to lift Venezuela's poor majority, Chavez has antagonized the economic elite and many of his middle-class supporters with his authoritarian style
and a populist program that his opponents compare to Cuban-style communism.

U.S. diplomats arrived in Ecuador today to begin working with their counterparts from Latin America and Europe to form a "friends of Venezuela" advisory group.
The delegation would join Gaviria at the negotiating table, and perhaps offer its own proposal to end the political crisis that has consumed the country for the past
year.

The United States has taken a leading role in lobbying for the group, concerned about its oil supply as it prepares for a possible war with Iraq that could strain
Middle East oil shipments. Before the strike, Venezuela supplied the United States with 1.5 million barrels of oil a day, about 15 percent of its imports. That has
since slowed to a trickle.

But U.S. credibility here is suspect after the White House recognized the interim government that replaced Chavez in a short-lived military coup in April, and more
recently endorsed early presidential elections to resolve the crisis even though they are not allowed by the constitution. Washington backed away from that position a
few days later, endorsing a less specific "electoral solution" instead.

Chavez has embraced the "friends of Venezuela" proposal in the belief that foreign governments will endorse his legitimacy. But the idea is drawing criticism from
opposition negotiators, who have already ruled out Brazil and Colombia as members because they border Venezuela.

"We think it's a mistake," said Rafael Alfonzo, an opposition negotiator. "There is enough on the table right now for a solution if the government wants one. This
group is going to comprise equal parts for him and against him. For what? It's not going to change anything."

Despite the government's confidence, the strike has been punishing for a country whose $100 billion economy shrank 7 percent last year. Rafael Ramirez, the
minister of energy and mines, announced that the oil strike alone has cost the country $ 4 billion. That includes $105 million that the government has spent to import
gasoline, keeping most filling stations open but with lines lasting hours.

The cost to the private sector has also been severe. Opposition leaders have begun telling some businesses privately to do what they need to in order to save
themselves while maintaining the public position that the strike is still in place.

"We feel that the right decision is not one that kills the private sector," said Alfonzo, the opposition negotiator who represents Fedecamaras, the national umbrella
group of business organizations. "It's pretty much at the individual level now."

More and more businesses have opened in recent weeks, including the Italian restaurant Limoncello. Jose Ornelas, the managing partner, kept the restaurant closed
from Dec. 2 until the day after Christmas while continuing to pay employee salaries. He said he lost $100,000.

Ornelas is part of a restaurant federation that belongs to Fedecamaras and that initially supported the strike. After three weeks, however, the restaurant association
voted to allow members to reopen on Dec. 26. Ornelas said Fedecamaras approved the move, although it has not announced it.

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