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Oil Report

UPDATE 3-Venezuela prosecutor seeks opposition chief arrest

* Chavez stepping up pressure on opponents

* Rosales is the most public face of divided opposition

* He could be sentenced to up to 10 years in prison (Adds details on arrest, actions versus opponents)

CARACAS, March 19 (Reuters) - Venezuela is seeking the arrest of top opposition leader Manuel Rosales on corruption charges, the latest move by President Hugo Chavez against opponents since he won new powers in a vote last month.

Prosecutor Katiuska Plaza said on Thursday a tribunal would rule on issuing an arrest warrant within 20 days. But Rosales, a former presidential candidate, said the final decision no doubt would come from the leftist leader.

“This is an order Chavez gave at the end of last year and has been insisting on. We all know that in Venezuela the separation of powers does not work,” an angry Rosales told reporters.

Rosales ran for president against Chavez in 2006. He is the most public face of Venezuela’s fractured opposition and is currently mayor of oil-rich Maracaibo, Venezuela’s second-largest city.

He denies the government’s charge that he grew inexplicably wealthy in public office.

Chavez has in the past threatened political opponents with legal action, but his government rarely jails them. Several opposition leaders were imprisoned after a 2002 coup against Chavez, and others have sought asylum overseas.

Since first winning office a decade ago, Chavez has nationalized large swathes of the economy in the OPEC nation. Falling oil revenue is hurting Venezuela’s finances but has not halted his plans to build a socialist state inspired by Cuba.

‘COWARD’

Chavez calls opposition politicians “oligarchs” who scheme to depose him. Last year the government used corruption charges to block several key figures from running in state and city elections.

Critics say the former soldier is excluding any challengers as he tries to forge a one-party state.

After easily winning a referendum in February that allows him to run for re-election as often as he likes, Chavez has stepped up pressure on opponents and moved to increase his power by taking over farms and rice mills and stripping control of ports and highways from states.

“Chavez is a coward,” said Rosales, who could be sentenced to up to 10 years in prison if he is found guilty of illicit enrichment during his time as governor of Zulia state.

Last year Chavez threatened to arrest Rosales ahead of elections in which the opposition won control of several key cities and states, including Caracas. Since then he has reduced the power of opponents by shifting some city hospitals and police forces to the central government.

The National Assembly last week proposed creating a governor’s post that would have ultimate authority over Caracas.

Citing drug trafficking and corruption, Chavez on Sunday ordered the military to take control of the country’s ports and airports, depriving opposition-controlled states of an important source of income.

In recent weeks the former paratroop commander has ordered troops to take over rice mills, nationalizing one belonging to U.S. food giant Cargill [CARG.UL] in a fight over the price of grain. He has threatened to nationalize the country’s top private employer that makes beer and staples like corn flour.

The government has also accelerated an agrarian reform campaign started in 2005 and aimed at boosting food production. It has expropriated several farms including one owned by Irish cardboard maker Smurfit Kappa SKG.LSKG.I. (Additional reporting by Patricia Rondon and Deisy Buitrago; Editing by Patrick Markey and Xavier Briand)

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