Ben Barber
THE WASHINGTON TIMES

     Venezuela's populist President Hugo Chavez softened his harsh rhetoric after a week in which the United States began a diplomatic counteroffensive, two of his
military officers called for his ouster and the currency plunged to new lows.
     "Our policy was 'watch what [Mr. Chavez] does and not what he says,'" a State Department official said.
     "Now it has changed to 'don't let him get away with half-truths and misrepresenting American policy,'" the official said, speaking on the condition of anonymity.
     "It means we are going to lead a little or react publicly when he goes on his weekly radio shows and says the U.S. is no better than the people they are hunting
down in the war on terrorism."
     The Venezuelan leader appeared to back off on Tuesday, dropping his insulting references to the opposition and offering to try to "sheath my sword" in a
nationwide address.
     Yesterday, the bolivar plunged to 1,135 per dollar, down more than 30 percent since Wednesday when exchange controls were scrapped in an effort to boost an
economy hit hard by falling oil prices and investor fears. The troubled currency did regain some strength, ending the day at 850.50 to a dollar after the country's
central bank intervened to prop it up.
     Some banks refused to sell dollars to Venezuelans eager to dump their rapidly devaluing currency.
     The new U.S. diplomatic offensive against Mr. Chavez came after he had clashed with the Catholic church, railed against the opposition media and irked U.S.
officials by visiting Iraq and Cuba, which got a sweetheart deal on Venezuelan oil.
     Mr. Chavez also said civilian deaths caused by U.S. bombing in Afghanistan were as bad as the actions of those America was hunting.
     "We have been concerned with some of the actions of Venezuelan President Chavez and his understanding of what a democratic system is all about, ... and he
drops in some of the strangest countries" such as Cuba and Iraq, Secretary of State Colin L. Powell said in testimony on Capitol Hill last week.
     Mr. Chavez also faced a mini-insurrection as two military officers attracted large crowds on the streets last weekend with calls for his ouster. Ironically, Mr.
Chavez spent several years in jail after leading a failed coup in 1992. He was elected president in 1998 after his release.
     Over the weekend, Air Force Col. Pedro Soto and National Guard Capt. Pedro Flores had called on Mr. Chavez to resign and hold new elections.
     They turned themselves in to military authorities over the weekend and were released immediately.
     Clearly concerned about a potential coup, the secretary-general of the Organization of American States, Cesar Gaviria, said, "President Hugo Chavez was
elected democratically and thus it is unacceptable for an official of the armed forces to seek to disregard the rule of law."
     The State Department official said, "As a democratically elected leader, the only way for the process to go forward is mutual respect on all sides."
     Despite Mr. Chavez's rhetoric, Venezuela continues to be the third largest oil supplier to the United States, after Canada and Saudi Arabia.
     Venezuela also sells oil to Cuba under a deal that has raised some eyebrows as it allows the Cubans to resell the oil on world markets for a tidy profit.
     Cuba stands to earn $2.6 billion over five years from the deal Mr. Chavez has worked out with his acknowledged close friend Fidel Castro, said Jose Toro
Hardy, a former board member of the Venezuelan national oil company PDVSA.
     The State Department official said he had no knowledge of the diversion of oil bound for Cuba, but added: "It wouldn't surprise us since the Cubans did the same
thing with Soviet oil a few decades ago."
     Venezuelan media also reported that Mr. Chavez had cut a deal with the Revolutionary Armed Forces of Colombia (FARC) to allow the rebels to receive
material support if they kept the Venezuelan border region calm. U.S. officials say they are not yet convinced of the credibility of these reports.

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