Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Tuesday, March 21, 2017

March 21, 2017


International Trade

Cargo that has arrived at Puerto Cabello: 448 containers bearing food, spare parts, medicine and other supplies from Cartagena, Colombia. The shipment includes 39 containers of powdered whole milk, 31 with methionine animal feed, 25 with corn seeds, 20 containers of beef, 17 with yellow corn, one with frozen chicken and another with medicine. Also, 32 containers with turbines and other equipment, parts and spare parts; 2 with valves and fuses; 172 with corrugated roofing; 40 with metal doors; and 20 with tires. All of this consigned to state agencies CAA, CORPOELEC, HIDROVEN, CORPOVEX, Barrio Adentro, and PDVSA. Another shipment of 30,000 tons of wheat was received for CASA. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36153) http://www.bolipuertos.gob.ve/noticia.aspx?id=36158; Noticiero Venevisión, http://www.noticierovenevision.net/noticias/economia/arribaron-a-puerto-cabello-30-mil-toneladas-de-trigo; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/arribaron-30-mil-toneladas-de-trigo-a-puerto-cabel.aspx)

 

15O00 tons of baking wheat arrived at La Guaira port, as per the local port authority. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36154)

 

627 tons of food and electrical equipment have arrived at Guanta Port, in Eastern Venezuela. The shipment includes rice, pasta, mayonnaise, baby diapers, and surgical gloves. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36161; El Universal, http://www.eluniversal.com/noticias/economia/627-toneladas-alimentos-medicinas-insumos-medicos-arribaron-pais_644566)

 

Business group claims debt with Panama has been paid

The Venezuela-Panama Integration Chamber (CIVENPA) claims that Venezuela’s US$ 500 million outstanding debt to Panamanian businessmen has been paid up. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/aseguran-que-venezuela-ya-saldo-deuda-con-panama.aspx#ixzz4bxRRYYnc)

 

Oil & Energy

Venezuela oil price tumbles for 3rd week

The price Venezuela receives for its mix of medium and heavy oil fell for a third straight week as inventories continued to build and production increased in the USA, Russia and Brazil. As per figures released by the Ministry of Petroleum and Mining, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending March 17 fell to US$ 41.78, down US$ 3.39 from the previous week's US$ 45.17.
According to Venezuelan government figures, the average price in 2017 for Venezuela's mix of heavy and medium crude is US$ 45.38. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2433140&CategoryId=10717)

 

Venezuela's troubles put US heating oil charity in limbo

Venezuela's economic turmoil has placed in limbo that country's participation in a free heating oil program run by a Massachusetts-based nonprofit that has helped hundreds of thousands of people, signaling that the program may be kaput. This marks the second consecutive winter that Venezuela's CITGO Petroleum Corp. has not contributed to the "Joe-4-Oil" program, part of the nonprofit Citizens Energy created by businessman and former Democratic Massachusetts Congressman Joseph P. Kennedy II. The decision by the subsidiary of the Venezuelan national oil company coincides with plummeting oil prices and corresponding economic problems in oil-rich Venezuela. Citizens Energy continues to operate other programs. The nonprofit was created in 1979 to channel revenue from commercial enterprises to charitable programs. But the heating oil program may cease to exist. "Joe-4-Oil" did not run this year or last, and a message online said that applications for winter heating oil help were not being accepted. (The News Observer:  http://www.newsobserver.com/news/business/article139781388.html#storylink=cpy)

 

Guyana oil prospects stir friction between Venezuela and ExxonMobil

Guyana has emerged as one of the world’s most promising areas for offshore oil exploration, following significant discoveries made by ExxonMobil of the US that have started a wave of excitement in the global industry. However, the new-found oil wealth of Guyana has heightened tensions with its neighbor Venezuela, which is in the throes of an economic crisis caused in part by falling oil production and weak prices. It has also created further friction between Venezuela and ExxonMobil, which have been fighting a decade-long legal battle over compensation for oil projects expropriated by the government of the late Hugo Chávez in 2007. Since it started drilling in Guyana in 2015, Exxon has discovered an estimated 1.4 - 2-billion-barrel equivalent of recoverable oil and gas on its Stabroek exploration block in deep water about 120 miles offshore. John Hess, chief executive of Hess, the US oil group which is a junior partner of Exxon in Stabroek, told the Financial Times he saw “multibillion-barrel potential” for additional discoveries there. Exxon expects to take a final investment decision this year to develop its Liza discovery, starting production in 2020. However, Venezuela lays claim to the Essequibo region that covers about two-thirds of Guyana’s territory, and the waters off its coast including part of the Stabroek block.  Elías Matta, a Venezuelan opposition lawmaker and deputy president of the legislature’s energy and oil committee, said it suspected that some of Exxon’s wells are in disputed waters. Exxon said in a statement that the Liza wells were in the eastern portion of the block, which is the section furthest from Venezuela. António Guterres, secretary-general of the UN, in February announced the appointment of Norwegian diplomat Dag Halvor Nylander, who was successful in brokering a peace deal in Colombia, as his personal representative to work on resolving the dispute. (Financial Times: https://www.ft.com/content/013bfd26-0a8e-11e7-ac5a-903b21361b43)

 

Venezuela indicts two PDVSA subcontractors in Jose port graft case

Venezuela has charged the presidents of two subcontractors with corruption for overbilling in equipment sales at the OPEC country's main oil-exporting port, the public prosecutor's office said on Monday. The former manager of state oil company PDVSA's Jose terminal has already been jailed over the purchase of two monobuoys costing US$ 76.2 million. A monobuoy is a floating platform where vessels, especially oil tankers, too large to get into port can moor and unload. The presidents of Venezuela-based Castillo Max and Guevara Training, Miguel Castillo and Hernan Guevara respectively, have been arrested and charged with graft over equipment sales in a tribunal in the eastern oil-producing state of Anzoátegui, according a statement from the public prosecutor's office. (Reuters,  http://www.reuters.com/article/us-venezuela-pdvsa-idUSKBN16R2MK)

 

PDVSA said to replace refining managers as shakeup deepens

Venezuela’s state oil company is replacing high-level managers at refining complexes and other divisions as it deepens a shake-up that began in January. Managers at several of PDVSA’s major refineries have been replaced in the past weeks, Ivan Freites, a union leader, said Monday in a telephone interview. Widespread staffing changes across PDVSA were confirmed by another person who works with PDVSA but isn’t authorized to speak about the matter publicly. The managerial changes come months after President Nicolas Maduro added two board members and installed new executives at PDVSA, including a rear admiral. In January, Maduro gave the job of oil minister -- a position that was formerly held by PDVSA President Eulogio Del Pino -- to Nelson Martinez, head of PDVSA’s Citgo Petroleum Corp. unit in the U.S. (Bloomberg, https://www.bloomberg.com/news/articles/2017-03-20/pdvsa-said-to-replace-refining-managers-as-shakeup-deepens)

 

Commodities

Venezuela's no-bread zone: week one of Maduro’s war on bread

One week after President Nicolas Maduro launched “la Guerra del pan”, there is no bread in downtown Caracas. Most bakeries are just closed -- their owners avoiding government intervention or just going out of business altogether, according to the federation that groups bakery owners -- even after the government ordered them to make bread and sell it at controlled prices round the clock. Only one bakery, El Guanabano, is selling, but to buy it, you have to endure a long line plus orders from “milicianos”, the auxiliary body of the Armed Forces created by Hugo Chavez, Maduro’s mentor and predecessor. The oven at “Minka” (formerly “Mansion’s Bakery”, the first expropiated “panaderia”), is not in use, said an old man. “They burned the oven”, he tells us. “You mean they burned the bread?” we ask back, in incredulity. “No! The oven, they (the occupiers), burned the oven!” he repeats. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2433181&CategoryId=10717)

 

Printing industry production dropped 80% during second half of 2016

Edgar Fiol, Executive Director of Venezuela’s Graphic Arts Industry Association (AIAG), reports that “The production drop in the printing industry during the second semester of 2016 is approximately 80%”. He said some industries had paralyzed production and none is operating under “even remotely normal” conditions.  More in Spanish: (El Universal, http://www.eluniversal.com/noticias/economia/produccion-industria-grafica-cayo-segundo-semestre-2016_644533)

 

Online bartering for food, medicines is the new shopping in Venezuela

Keila, a Venezuelan housewife who lives in the western town of Trujillo, is able to get the precooked corn flour she needs on the Internet in exchange for some toothpaste, a product that normally costs less than corn flour but is even harder to find in her country. Like Keila, thousands of people have joined groups created on the social network Facebook to obtain, by paying money or bartering, the food products and medicines that grow scarcer every day in this oil-producing nation plunged in a severe economic crisis. These groups are established by area, organization and even city by city to facilitate the meetings between those taking part in the bartering process. The exchange of one product for another is not ruled by their official sales prices but by supply and demand. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2433135&CategoryId=10717)

 

Economy & Finance

Real per capita income is down 28% over the past 4 years, as per the Torino Capital research firm, which faults “mistaken” economic policies applied since 1999: “nationalizations, absence of property rights, protectionism, excess regulations and barriers to a functioning price system”. In addition, it says Venezuela is “undergoing a massive external impact, which forces this or any other government to cut down on imports to ensure external sustainability”. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/economia/torino-senala-que-los-ultimos-anos-ingreso-per-capita-disminuyo_644582)

 

Venezuela taps small banks to handle dollar deals

Venezuela's government is using little-known banks, including a small Puerto Rican lender, as intermediaries for some international trade operations after CITIGROUP last year stopped providing such services. The government has turned to relatively unknown institutions to provide a service known as correspondent banking, as international banks are increasingly concerned about the risks of doing business with socialist-ruled Venezuela amid investigations into corruption and drug trafficking. Correspondent banks provide an essential service that allows countries to import goods and maintain links to the global financial system. ITALBANK, the Puerto Rican lender owned by Venezuelan entrepreneur Carlos Dorado, has served as one for Venezuela since 2016. Dorado told Reuters that ITALBANK offers correspondent services to state-owned Banco de Venezuela, which is the country's largest bank, and handles part of the government's offshore business transactions. He said about 10 or 15% of the dollar transfers from Banco de Venezuela go through ITALBANK. He added that another bank being used for correspondent services include southern Florida-based Eastern National Bank, partly owned by Venezuelan bank regulator SUDEBAN. "Thanks to Dorado we have been able to pay for food imports," said a person close to the Venezuelan government who asked not to be identified, adding that the bank "has processed hundreds of millions of dollars in payments." (Reuters: http://finance.yahoo.com/news/exclusive-venezuela-taps-small-banks-handle-dollar-deals-142407806--sector.html)

 

PDVSA prepares to make debt payments for US$ 3.1 billion

In March and April, the Republic, PDVSA and ELECAR must make US$ 3.16 billion in capital and amortization, around one-third of the total US$ 9.7 billion due to be paid this year, as per financial firm Torino Capital. The think tank, says a “key date” is April 12. Then PDVSA must pay US$ 2.23 billion of interest and principal on the PDVSA 5.25% 2017, 5.375% 2027 and 5.5% 2037 bonds. “Although the market is expecting the payment to be made, the current 56% yield on the 5 Œ PDVSA 2017s suggests that concerns about a default event remain among some participants,” Torino Capital indicated. “PDVSA still has available for use most of the US$ 1.5 billion ROSNEFT loan signed last year, and we expect it to be able to cover the remainder of the payments from its own cash flow,” says the Torino. (El Universal, http://www.eluniversal.com/noticias/daily-news/pdvsa-prepares-make-debt-payments-for-usd_644456)

 

Misery seen from space too much for this Venezuela bonds fan

There are plenty of reasons why BlueBay Asset Management LLP cut its holding in Venezuelan bonds, from the empty shelves in the supermarkets of Caracas to a nationwide dearth of spare auto parts. But few were more compelling than the satellite photograph of Puerto Cabello on the Caribbean coast, home to the country’s biggest port, which shows a once-vibrant terminal bereft of vessels. “If you can see a country’s economic decline from space, you know it’s in big trouble,” said Graham Stock, the head of emerging-market sovereign research in London at BlueBay, which reduced its holdings of the nation’s debt to below-benchmark levels. He estimates Venezuela’s imports have declined by as much as 50% in the last two years. (Bloomberg, https://www.bloomberg.com/news/articles/2017-03-19/misery-seen-from-space-too-much-for-this-venezuela-bond-investor)

 

Supreme Tribunal again validates extension of Emergency Economic Decree

Venezuela’s Supreme Tribunal has once more validated President Nicolas Maduro’s latest extension of the Economic Emergency Decree for yet another 60 days. More in Spanish:  (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/tsj-declara-constitucional-pr%C3%B3rroga-60-d%C3%ADas-del-decreto-emergencia-econ%C3%B3mica; El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/tsj-declara-constitucional-prorroga-del-decret--1-.aspx)

 

Politics and International Affairs

Regime's greatest threat comes from within

In the face of troubles that seem to never end, the Venezuelan government has fended off challenges from its political opponents in the Democratic Unity coalition by using offers of conciliation to drive a wedge between them. Caracas' biggest concern, however, is not what the opposition might do next, but what its own armed forces are capable of. As per unnamed STRATFOR sources, the Venezuelan government has taken to keeping a closer eye on its troops. The General Directorate of Military Counterintelligence has reportedly begun to monitor midranking military officers deployed to the country's Strategic Defense Regions (REDI) and Strategic Defense Zones (ZODI). Venezuela's eight REDI, which are administered by major generals appointed by the president, contain dozens of ZODI commanded by additional officers. And it is apparently these figures' loyalty that has Caracas worried. The government's primary concern lies in the fact that REDI and ZODI officers have room to act — and encourage their subordinates to follow — without their superiors' immediate knowledge. REDI and ZODI commanders have the authority to issue direct orders to the units under their control, and in theory they could lead military action against the state while keeping the defense minister and Strategic Operational Command in the dark as to their intentions. In hopes of preventing an uprising from someday unfolding, the government has begun to scrutinize the comings and goings of these units' lower ranks. Even if the threat of military insurrection is presently low, the possibility of soldiers unhappy with their country's direction mounting a coup cannot be ruled out. Food shortages and high prices, after all, affect soldiers as much as they do civilians, particularly as imported goods become few and far between for the average Venezuelan citizen. But though most of the rank and file are suffering alongside the rest of the population, the armed forces' midlevel and senior leaders probably aren't. Either way, Caracas will continue to keep a wary eye on its military officers as its economic straits grow dire. The Venezuelan government is no stranger to surveilling those who might pose a threat to its rule, including opposition figures and political activists. And as hardship breeds popular frustration with Caracas, the ruling administration will continue to keep its gaze fixed on its own forces for fear of the threat rising within. In a recent speech, President Nicolas Maduro said a group of “traitors” – which he did not identify – was working on a “reform plan” against his regime and against socialism. “Be alert, “chavistas”, they want to stab Nicolás Maduro in the back, a new brand of traitors to take over a reform plan to deliver the Bolivarian revolution to international capitalism”. He said they should e “unmasked”. At the same time, Defense Minister General Vladimir Padrino, announced that the Armed Forces Operating Strategic Command was holding a videoconference with all operating military commanders to “evaluate all threats” to “political stability” and “territorial integrity”,whatever their instruments or mechanisms may be”. (Stratfor: https://www.stratfor.com/analysis/venezuelas-greatest-threat-comes-within; and more in Spanish: (Infolatam: http://www.infolatam.com/2017/03/19/maduro-dice-traidores-tienen-plan-reformista-gobierno/; http://www.infolatam.com/2017/03/20/fuerza-armada-se-reune-evaluar-amenazas-venezuela/)

 

Chilean president says Trump concerned about Venezuelan crisis

U.S. President Donald Trump expressed concern about the political and humanitarian situation in Venezuela in a call on Sunday with Chilean President Michelle Bachelet, the Chilean president told reporters on Monday. Bachelet said she talked with Trump about the actions regional leaders were taking with regard to Venezuela, which has been wracked by an economic crisis in the last three years and is facing external pressure to make political reforms. "(President Trump) presented to me his worries about the situation in Venezuela," Bachelet told reporters at the La Moneda presidential palace in Chile's capital, Santiago. "I told him about the actions (Chile's) foreign ministry is carrying out together with other foreign ministries, and we are staying in contact to see how we can help Venezuela have a peaceful exit from its domestic situation." Trump also discussed Venezuela with Brazilian President Michel Temer this week. (Reuters: http://www.reuters.com/article/us-usa-trump-venezuela-chile-idUSKBN16R1YH; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2433170&CategoryId=10717; El Universal, http://www.eluniversal.com/noticias/daily-news/trump-speaks-with-bachelet-temer-venezuela_644461)

 

Perú calls for applying the Democratic Charter in Venezuelan crisis

Peru’s Foreign Minister Ricardo Luna says the Organization of American States should call out the Democratic Charter to deal with the crisis in Venezuela. Doing so “does not mean suspending and isolating a country, but rather using the options it offers to get it to commit to solving the problem”, he said. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/peru-pide-invocar-carta-democratica-por-crisis-venezuela_644110)

 

Costa Rica calls for solving Venezuela’s problems is through “voting

When asked about OAS Secretary General Luis Almagro’s proposal to apply the Democratic Charter and suspend Venezuela, Costa Rican President Luis Guillermo Solís said he “would not endorse any specific action, I believe the way out of the process in Venezuela is through elections”. He added: “We believe we should not move ahead on matters until we have enough evidence to determine if voting has been sufficiently developed” but did not elaborate on what type of elections he was referring to. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/actualidad/internacional/costa-rica-no-apoya-suspension-de-venezuela-de-la-.aspx#ixzz4ba0ApQCz)

 

Relatives of Venezuelan political prisoners beg OAS for help

Relatives of three prominent Venezuelan political prisoners Monday joined the leader of the Organization of American States in pleading for action to free the country from what they described as the repressive regime of President Nicolas Maduro. Patricia de Ceballos called for the release of her husband, Daniel Ceballos, imprisoned since August. The former mayor of the western city of San Cristobal had been under house arrest in Caracas since 2014, when he was accused of fomenting political unrest — a charge he denied. Also at the news conference was Oriana Goicoechea, sister of Popular Will youth leader Yon Goicoechea, who was arrested in August and charged with carrying explosives. Yon Goicoechea won a 2008 prize from the Cato Institute, a Washington-based libertarian organization, for purportedly advancing democracy in Venezuela. Lilian Tintori, married to former Chacao mayor Leopoldo López, called on OAS members to intervene and “help us to rescue democracy in Venezuela. … The Venezuelan people have … to fight for elections, humanitarian aid and the freedom of political prisoners.” Venezuela’s ambassador to the OAS, Carmen Velasquez, interrupted the news conference to accuse Almagro of waging a “provocative media [and] political campaign against the legitimate and constitutional government. …” Meanwhile, Monday in Caracas, Maduro again dismissed Almagro as “a bandit, a traitor” for recommending the country’s suspension from the regional organization. But a group of opposition leaders went to OAS offices in the capital city to show support for the suspension. (VOA: http://www.voanews.com/a/venezuela-political-prisoners-oas-call-for-democracy/3774987.html)

 

Venezuela rebuffs UN recommendations to release political prisoners

The Venezuelan government has rebuffed a number of recommendations by the United Nations Human Rights Council, including the release of political prisoners or the visit of UN experts to assess the situation on site. In a paper recently released, Venezuela addressed 274 recommendations made last November; explicitly rejected 53 and “took note” of other 28, a term considered by the UN as a “refusal.” In a document, the Venezuelan government labeled all the suggestions as “biased, confounding, politically wicked, prepared on false grounds, contrary to the spirit of cooperation and respect.” The UN paper was the result of the Universal Periodic Review (UPR), an examination on human rights that should be passed by all UN Member States. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuela-rebuts-recommendations-release-political-prisoners_644368)

 

Venezuelans getting grumpier faster than any nation on earth, happiness report says

Venezuela’s food shortages, rampant crime and hyperinflation are taking their toll. As per the 2017 World Happiness Report released Monday, Venezuelans are getting grumpier faster than any country on the planet. The plummeting numbers come even after President Nicolás Maduro in 2013 created the “Vice Ministry of Supreme Happiness for the Socialist People” to try to improve the national mood. Comparing the periods 2005-2007 to 2014-2016, the study found that Venezuelan’s level of contentment fell faster than any of the 126 countries studied, including Central African Republic, Botswana and Greece. (The Miami Herald: http://www.miamiherald.com/news/nation-world/world/americas/venezuela/article139621203.html#storylink=cpy)

 

Investigators find three headless corpses in mass grave of 15 at Venezuela prison

Fifteen corpses, three of them headless, have been found in a mass grave at a Venezuelan prison and more may be discovered. The grisly find at the General Penitentiary in central Guarico state has thrown a spotlight on this nation’s crowded, violent and gang-dominated prisons where scores of inmates die each year. The public prosecutor’s office said 20 forensic experts combing the site at a prison stable had found the remains of at least 15 people, three missing skulls. “We presume there are more corpses,” it said in a statement. Authorities have given no explanation for the deaths and there has been little national outcry given the litany of horror in Venezuela’s prisons in recent decades. The country’s more than 30 facilities house about 50,000 people but were built for a third of that, rights groups say. Prisons in Venezuela are notorious for ease of access to weapons and drugs as well as mobile phones and computers hooked up to the internet, allowing inmates easy access to the outside world, often to run criminal activities. Some prisons have discos and even swimming pools. (The Guardian: https://www.theguardian.com/world/2017/mar/18/venezuela-prison-mass-grave-headless-corpses)

 

Venezuela's spiraling mental healthcare crisis

The country's economic strife has left the healthcare system struggling to cope with a growing mental health crisis. In 2013 Venezuelans had access to 70 types of anti-psychotics; today there are only five, says Adalberto Rodriguez, president of the Venezuelan Society of Psychiatry. "There's a 95% shortage of anti-psychotics," said Dr. Rodriguez. "It's an extremely complex situation because one anti-depressant cannot cure a variety of depressions." As is the case with staple foods, many Venezuelans are often forced to turn to the black market to buy medication at exorbitant prices. "All patients are receiving the same kind of treatment, which means that many of them aren't getting any better and the symptoms then become chronic," explained Rodriguez. The steep reduction in anti-psychotics in Venezuela is partly a result of the country's financial strife. Rodriguez reports that President Nicolas Maduro's socialist government has often been unable to pay the foreign companies providing Venezuela with medication. Thus, many mental health patients in Venezuela are regressing to a state of psychosis and anguish that cannot easily be treated. And although helplines and counselling groups have become increasingly common, this has not halted the rising suicide rate. While there are no accurate figures yet, psychologist Dr. Yorelis Acosta is adamant that there has been a stark rise in suicides. The shortage of drugs, which began in mid-2016, has resulted in many patients being re-admitted into under-equipped hospitals. Despite a surge in people needing to be hospitalized, doctors have been forced to turn away desperate cases owing to lack of food, water, medical equipment and even staff. Working to take care of the mentally ill has become an ordeal in Venezuela's understaffed hospitals. With sedatives, no longer readily available, physical restraint has become a common practice, which also has its hazards for the staff. While patients and their dwindling access to drugs is a prime concern in a country where mental health problems are on the rise, family members have also become victims of scarcity, forced to supervise patients in an almost oppressive manner in the hope that they will not slip into psychosis and harm themselves or others. (Al-Jazeera: http://www.aljazeera.com/indepth/features/2017/03/venezuela-spiralling-mental-healthcare-crisis-170307070622370.html)

 

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

Saturday, March 4, 2017

March 03, 2017


International Trade

529 food containers have arrived at the Port of La Guaira

529 containers bringing food from Mexico, aboard the container ship CNP PAITA, have arrived at the port of La Guaira. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36067; Ultima Hora Digital, http://ultimahoradigital.com/2017/02/alimentos-llegaron-de-mexico-para-repartirse-en-los-clap/)


Cargo that has arrived at Puerto Cabello

·         30.000 tons of rice

·         27 containers of agro chemicals for state agency AGROPATRIA

·         30.000 tons of wheat for state agency Corporación de Abastecimiento y Servicios Agrícolas (CASA)

·         30.000 tons of white corn

An additional 574 containers bearing food, personal care products and medicine arrived from Cartagena-Colombia on the MAERKS WISMAR. The shipment includes 139 containers of food: canned tuna, black beans, white rice, powdered milk, pasta and margarine. 19 containers of medicine, 12 of personal care products, and 404 bearing vehicle spare parts and machinery. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36065; http://www.bolipuertos.gob.ve/noticia.aspx?id=36074: Ultima Hora Digital, http://ultimahoradigital.com/2017/02/30-mil-toneladas-de-arroz-son-descargadas-en-el-puerto-de-puerto-cabello/; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/arribaron-a-puerto-cabello-30-000-toneladas-de-arr.aspx)

 

Cargo that has arrived at Maracaibo

·         3.278 tons of food packets from México for the state government of Zulia state. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36063; El Mundo, http://www.elmundo.com.ve/noticias/mundo-corporativo/sociales/contenedores-con-alimentos-llegaron-al-puerto-de-m.aspx)


Cargo that has arrived at El Guamache (Margarita Island):

113 containers from Kingston, Jamaica, including 384 tons of food items such as rice, pasta and coffee, plus 1165 tons of vehicle parts and accessories, textiles, clothing and footwear, furniture and household products, hardware, health and personal care products such as soap, toothpaste and shampoo. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36072)

 

Oil & Energy

Hitting Venezuela's Government where it hurts. Not yet two months into his tenure, U.S. President Donald Trump has demonstrated his intention to increase the pressure on Venezuela's government, whose imperatives are at odds with those of his own administration. Washington appears ready to impose further sanctions on Venezuelan officials and entities, perhaps even against the country's vital state oil and natural gas company, Petroleos de Venezuela (PDVSA). The U.S. government may find it easier to keep targeting Venezuela through sanctions than to organize a regional response. If the Trump administration imposes heavy sanctions on PDVSA, thereby preventing U.S. companies and businesses subject to Washington's jurisdiction from doing business with the oil firm, it could herald Maduro's ruin. Caracas depends on oil for about 95% of its total export revenue, and it has already had to slash imports over the past few years as a result of limited production capacity and sanctions. Tough sanctions on the state oil and gas company would only intensify the economic crisis and probably also the divisions within the government over whether Venezuela should continue down the path of international isolation. Whether more sanctions would cause the Maduro administration to change course depends on the ruling party's internal dynamics. (STRATFOR: https://www.stratfor.com/analysis/hitting-venezuelas-government-where-it-hurts)

 

Economy & Finance

Venezuela running out of cash
The Central Bank of Venezuela says the country is down to just US$ 10.5 billion in foreign reserves. At the same time, Caracas must meet debt obligations of US$ 7.2 billion this year. The country had nearly US$ 30 billion in reserve five years ago; in 2015, it was down to US$ 20 billion. According to economists, the trend can't go on much longer, but it’s not easy to predict how long it would take Venezuela to reach the bottom. Nearly US$ 7.7 billion of the country’s remaining reserves is in gold, according to the latest financial report for 2016. Venezuela had to ship gold to Switzerland to foot debt bills last year. Dwindling reserves are only exacerbating the humanitarian crisis in the country. The economic blow has led to food and medical shortages, as well as skyrocketing prices. Inflation is expected to rise to 1,660% this year and 2,880% in 2018, according to the IMF. Among the key factors boosting inflation experts see the crashing bolivar, huge government spending, poor management of the country's infrastructure, as well as high level of corruption. However, oil prices averaging US$ 55 remain the major problem for the country’s economy. As the largest holder of reported oil reserves in the world, Venezuela produced over 2.4 million barrels of crude and condensates per day at the end of the last year, as per ministry data. Oil shipments make up more than 90% of the country's exports. That makes it more and more difficult for Caracas to pay debts and import food, medicine and other essentials for its citizens. The country's imports dropped 50% from a year ago, according to Venezuelan research firm ECOANALITICA. (RT: https://www.rt.com/business/379160-venezuela-ten-billion-down-oil/; Fox News: http://www.foxnews.com/world/2017/03/02/venezuelas-foreign-reserves-tank-to-10-5-billion-report-says.html)


South America's last bastion of Socialism is falling to pieces
The currency is worth a dime, though probably not even that much. The brain drain is immense. People are starving. Unemployment is in the double digits. Inflation is triple digits. And its president, Nicholas Maduro of the disastrous United Socialist Party of Venezuela, talks to deceased president Hugo Chavez who comes to him in the form of a little bird. South America's last hold-out of pre-colonial times is going broke. It has US$ 10 billion in foreign currency reserves. There are now individuals in South America that have more money than Venezuela's central bank. If Maduro wanted to be more like Cuba, he's got it, maybe minus the 57 Chevy's and armies of doctors. It's not just the popping of the oil bubble that's hurt Venezuela. Every other one trick pony has managed to survive. Venezuela's economy has contracted an impressive 18.6% in 2016. If there is a failed state in the America's, Maduro is running it. Dwindling oil revenues have knocked Venezuela out. It faces unprecedented social, political and economic crisis. The only thing that is keeping incomes up is the fact that Maduro keeps giving poor people money. In the absence of structural reforms and without a resolution to the political impasse between the ruling Socialists and the opposition, the country is set for another challenging year. The absence of real sector and inflation information makes any assessment of the economy difficult. (Forbes: https://www.forbes.com/sites/kenrapoza/2017/03/02/south-americas-last-bastion-of-socialism-is-falling-to-pieces/#3b804a292fd8)


Job losses, low wages add to Venezuela economic hardship
Multiple companies - local and foreign - are closing doors or cutting payrolls across Venezuela, which despite its oil wealth is suffering deep recession, triple-digit inflation and chronic shortages. As per CONSECOMERCIO, the major retail industry group, Venezuela in the past 18 months lost close to 1 million private sector jobs. "Who is creating jobs? Nobody," said CONSECOMERCIO Vice President Alfonso Riera. "That unemployed population unfortunately is migrating to the street, informal work or worse." Government critics say nationalizations of businesses and more than a decade of price and currency controls have crippled private enterprise, but President Nicolas Maduro says Venezuela is a victim of an "economic war" led by business leaders with U.S. help. Venezuela has not reported official unemployment figures since April 2016, when the rate was at 7.3%. A survey by three universities showed unemployment at the end of 2016 remained at that level. But the study also found 38% of those surveyed were working informal jobs ranging from buying and reselling goods to freelance work without benefits. Only 28% said they were public employees and 27% had a job in the private sector. Union sources said major companies such as food and beermaker POLAR, carmaker FORD and bottler COLA-COLA FEMSA all are reducing their workforce by negotiating redundancies and offering employees buyouts. "People are taking the packages," said Johnny Magdaleno, who leads a POLAR union. He said workers were being offered the equivalent of US$ 2,500 at the black-market exchange rate. "Production has fallen too much," he said. "The workers who are left are making 4,000 bolivars weekly ($1 at the black-market rate). That doesn't even enable them to buy a pack of flour."  (Reuters: http://www.reuters.com/article/us-venezuela-economy-idUSKBN16926M)

 

Politics and International Affairs

US Senate unanimously passes resolution demanding Trump act on Venezuela
US Senators unanimously passed a resolution Wednesday urging President Donald Trump to take further action against Venezuelan officials. The bill also expressed support for a controversial move by Organization of American States (OAS) head Luis Almagro to invoke the Democratic Charter. If invoked, Venezuela would be suspended from the OAS. When Almagro first announced the move in 2016, he also demanded President Nicolas Maduro be “immediately” removed from office, prompting many Latin American leaders to accuse the OAS head of overreach. Despite the controversy, the Senate bill called on Trump to “provide full support for OAS efforts in favor of constitutional and democratic solutions to the political impasse and to instruct federal agencies to hold officials of the Venezuelan government accountable for violations of US law and abuses of internationally recognized human rights.” The bill will now head to the House of Representatives. One of the main supporters of the bill, Senator Marco Rubio, thanked both Republicans and Democrats for supporting the move. The bill was co-sponsored by prominent Democrats including Senators Bob Menendez and Bill Nelson, along with Hillary Clinton’s 2016 presidential running mate Tim Kaine. (Venezuelanalysis.com: https://venezuelanalysis.com/news/12953; El Universal, http://www.eluniversal.com/noticias/daily-news/senate-lobbies-for-release-political-prisoners-venezuela_641844; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2431988&CategoryId=10717)

US Council on Foreign Relations: Options for U.S. Policy in Venezuela, prepared for the US Senate Committee on Foreign Relations. Venezuela’s economic, political, and social situation represents both a regional problem and a global affront to democratic values. As such it should be a priority for the current U.S. government, which should invest in the necessarily complex, time consuming, and fragile diplomatic processes to push for change, as well as to prepare for the day when it in fact may come. (Full presentation: ATTACHED)

Maduro looks to get on Trump’s good side with praise for Congressional address
Venezuela’s socialist dictator Nicolás Maduro appears to be attempting to ingratiate himself with his American counterpart Donald Trump, praising the president’s joint address to Congress on Tuesday as “the first time I hear a U.S. president speak of the struggle against drug trafficking.” He highlighted as significant President Trump’s emphasis on combatting drug addiction from the United States, particularly in poorer communities. Maduro’s compliments follow a month in which the U.S. Treasury Department designated his vice president, Tareck El Aissami, a “Specially Designated Narcotics Trafficker” for his ties to various cocaine-trafficking outlets and President Trump personally welcomed Lilian Tintori, wife of Venezuelan political prisoner Leopoldo López, to the Oval Office. Maduro nonetheless highlighted that he and President Trump “have differences” but reiterated that he wished to engage in respectful diplomatic relations with the White House, a departure from his regular warnings that President Barack Obama was preparing a ground invasion of Venezuela during his tenure. Among those differences is the fact that Maduro employs a known high-level drug trafficker as his second-in-command. According to the U.S. Treasury Department, El Aissami has cooperated with “groups as varied as the Mexican Zetas cartel and Hezbollah.” Reports — published prior to the Treasury using the Drug Kingpin Act to freeze El Aissami’s U.S. assets — accused him of, among other crimes, recruiting Latin American Muslims to join Hezbollah and running his own cocaine trafficking outfit the Cartel de los Soles. Diosdado Cabello, the Socialist Party’s minority leader in Venezuela’s National Assembly, is widely believed to be the Cartel de los Soles’s boss. While Maduro himself has never been accused of drug trafficking, reports have indicated he has funded political campaigns with drug money generated by Cabello and El Aissami. El Aissami responded to the Treasury sanctions with a full-page ad attacking the United States in the New York Times. In addition to sanctioning El Aissami, the Trump administration has called for the release of all political prisoners under Maduro’s chavista dictatorship. In February, Trump welcomed Tintori, an anti-socialist activist and wife of Popular Will party leader Leopoldo López, to the White House, publishing a photo standing next to her, Vice President Mike Pence, and Senator Marco Rubio on Twitter. (BREIBART: http://www.breitbart.com/national-security/2017/03/02/venezuela-tries-get-trumps-good-side-drug-war/)

 

…but falls back on familiar defiant discourse after US Senate vote

Embattled President Nicolas Maduro warned Wednesday of a resurgence in “racism and xenophobia”, the day after the US Senate unanimously voted a resolution expressing “profound concern” about the present Venezuelan crisis.
It is a familiar pattern for Cuban and Venezuelan leaders, and, in his first public speech after the U.S. Senate’s vote, Maduro re-adopted it with ease. “I am making a worldwide alert in the face of surging dangerous, segregationist, racist and xenophobic currents that threaten to divide mankind even further, threaten to fill the whole world with war. That’s why I am calling and asking for the Venezuelan people to unite, to keep on making the revolution and keep on defending our identity,” Maduro said during an event of the CLAP, a new government mechanism to ration price-controlled foodstuffs administered by ruling party PSUV militants. Maduro didn’t mention the U.S. vote specifically, but he denounced “white supremacy” and it was enough for a crowd of hundreds, clad in red, to cheer for him. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2432136&CategoryId=10717)

 

US State Department reports Venezuela has “failed demonstrably” on drug traffic control

During the past 12 months, the Venezuelan government failed demonstrably to make sufficient efforts to meet its obligations under applicable international counter-narcotics agreements or to uphold the counter-narcotics measures set forth in the Foreign Assistance Act.  Due to Venezuela’s porous border with Colombia, its weak judicial system, sporadic international counter-narcotics cooperation, and permissive and corrupt environment, Venezuela remains a major drug-transit country.  It is one of the preferred trafficking routes for illegal drugs, predominately cocaine, from South America to the Caribbean region, Central America, the United States, Western Africa, and Europe. In 2015, the Venezuelan government engaged in minimal bilateral law enforcement cooperation with the United States.  Venezuelan authorities do not effectively prosecute drug traffickers, in part due to political corruption. Although the Venezuelan government, as a matter of policy, neither encourages nor facilitates illicit drug production or distribution, and although it is not involved in laundering the proceeds of the sale of illicit drugs, public corruption is a major problem in Venezuela that makes it easier for drug-trafficking organizations to operate.  Additionally, the Venezuelan government has not taken action against government and military officials with known links to FARC members involved in drug trafficking.” US Department of State: https://www.state.gov/documents/organization/268025.pdf)

OAS Democratic Charter action on Venezuela hinges on Vatican
In response to the US Senate resolution, Luis Almagro, Secretary General of the Organization of American States (OAS) says: “As long as the Vatican remains there we will definitely take no action to apply the Democratic Charter. If we are told that dialogue is over and we receive notice from the opposition and the Vatican about it, we will recommend the timely steps to take”. Talks between the Maduro regime and the Venezuelan opposition remain paralyzed since December, with the opposition charging that the government has reneged on agreements. Spain has said it continues to support efforts by its former President José Luis Rodríguez Zapatero to prop up talks here. More in Spanish: (Notiminuto: http://www.notiminuto.com/noticia/para-la-carta-democratica-todas-las-miradas-van-al-vaticano/#

Colombia’s FM says dialogue is the only way to face Venezuela’s great problems
Colombian Minister of Foreign Affairs María Angela Holguín has called for more dialogue between the Venezuelan government and the opposition, sponsored by former presidents José Luis Rodríguez Zapatero (Spain), Martín Torrijos (Panama) and Leonel Fernández (Dominican Republic), in order to face up to this nation’s "great difficulties." During a press conference in Madrid, after a meeting with his Spanish counterpart, Alfonso Dastis, Holguín said Rodríguez Zapatero, “has made a great effort” for dialogue in Venezuela. “Polarization in Venezuela is immense, but through dialogue a solution will be found to a crisis that worries many countries around the world; we, in Colombia, have it closer,” the minister said. (El Universal, http://www.eluniversal.com/noticias/daily-news/holguin-dialogue-the-only-way-face-great-problems_642023; http://www.eluniversal.com/noticias/daily-news/colombia-backs-dialogue-venezuela_641837)

 

European Foreign Service asks Venezuela to abide by its Constitution
Adrianus Koetsenruijter, Head of the South America Division of the European External Action Service (EEAS), has strongly recommended that the Venezuelan government must abide by the Constitution and made an appeal for renewed dialogue between government authorities and the dissent. “It has to do with respect for the Constitution, respect for fundamental rights and liberties, such as freedom of speech, opinion and association,” Koetsenruijter while speaking at the European Parliament Committee on Foreign Affairs. He reported that many Venezuelans have been incarcerated in the absence of proper conditions of transparency, and insisted that the government ought to observe the “basic principles of democracy”. (El Universal, http://www.eluniversal.com/noticias/daily-news/european-external-service-exacts-venezuela-observance-constitution_641647)

 
New charges brought against imprisoned Defense Minister
A military court here has brought new charges against former Defense Minister General Raúl Isaias Baduel, who was due to be freed today after serving seven years and eleven months for alleged corruption. He is now being accused of “treason”, and was forcibly transferred to the military court by the Military Counter-Intelligence agency. Baduel’ s legal counsel termed the charges “unfounded military criminal persecution”. Baduel had been on conditional freedom since mid-2015, but was detained again on January 12th for allegedly violating the conditions of his parole. Baduel was Defense Minister under the late President Hugo Chavez and one of his closest advisors. He is considered to have been the key force in bringing Chavez back to power after he was ousted for 48 hours in April 2002, but signed a 2010 manifesto publicly calling on the late president to resign, thus becoming a key opposition figure. More in Spanish: (Infolatam: http://www.infolatam.com/2017/03/03/dictan-nueva-privativa-libertad-exministro-baduel-e-imputan-otros-cargos/
 

In search of Venezuelan pilots of a plane in flames in Honduras

Honduras police authorities are searching for the pilots of a plane with Venezuelan registration that entered the country on Monday morning and landed to the north of the nation. Honduran investigators suspect that the plane had been used to carry narcotics, in keeping with the standards of such flights related to drug trafficking, such as arriving in the early hours of the morning, landing on non-authorized areas and setting fire to the plane after the unloading, DPA cited. The aircraft with Venezuelan registration landed in a field in the city of Choloma, around 280 kilometers from Tegucigalpa. (El Universal, http://www.eluniversal.com/noticias/daily-news/search-venezuelan-pilots-plane-flames-honduras_641648)

 

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.