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.

Friday, August 1, 2014

August 01, 2014

International Trade

Incoming cargo at Puerto Cabello:
  • Over 25,000 tons of soybean meal from Desa Industries for Agrolucha C.A., Grupo Souto C.A., Alimentos Balanceados and Avícola La Guásima C.A.
  • 19,000 tons of fertilizers from Phosagro-Cherepovets for BARIVEN S.A. and PEQUIVEN
  • Over 4,000 tons of milk, coffee, beef and beans from Conaprole, Albanisa, Comercial San Martín, Centrolac, Productores de Lácteos La Perfecta, Mataderos Nuevo Carnic for Corporación de Abastecimiento y Servicios Agrícolas (Casa), Café Venezuela and Corporación Venezolana de Alimentos (CASA).
  • 56 tons of medicines from FARMACUBA for Fundación Oro Negro
  • Over 2,000 tons of clothing, shoes, auto parts, electronics and tires for private importers.
  • Toilet paper and sanitary napkins from México for Procter & Gamble Venezuela.

Maduro, Santos to discuss border smuggling
Colombian President Juan Manuel Santos is meeting with President Nicolás Maduro in the Colombian city of Cartagena to discuss the issue of border smuggling, which has intensified due to economic crisis in Venezuela. The presidents will discuss the economic agenda between both countries, especially regarding smuggling of goods and staples in the Colombia-Venezuela border. According to the Venezuelan government, smuggling is definitely increasing shortage of basic products in Venezuela, which is already around 29%. (El Universal,; AVN,

Logistics & Transport

Venezuela starts clearing debts owed to airlines, several express interest in resuming operations
Venezuela's Minister of Economy, Finance, and Public Banking General Rodolfo Marco Torres says "foreign currency payments due in 2013 and 2014 are being made" to international airlines; but did not reveal amounts. He, and Air and Water Transport Minister, General Luis Graterol, have met with several international airlines over the last two weeks, including COPA, DELTA, LUFTHANSA, Air France, UNITED, Caribbean Airlines, AVIANCA, VARIG, and IBERIA to arrange a plan of repatriation of earnings. ALITALIA and Air Canada have said they hope to resume operations here; and the government reports it has approved FOREX deliveries to DELTA and IBERIA. (El Universal,;;; and Veneconomy,

Oil & Energy

Russia’s ROSNEFT signs bonus agreement for oil-field access in Venezuela
Russian state-owned oil company ROSNEFT has signed a deal with Venezuelan counterpart PDVSA corresponding to a US$440 million partial payment for access to a heavy-oil project here. “We’ve signed... an agreement for the collection of Rosneft’s first payment of US$440 million for access to PetroVictoria’s area on Sept. 1,” Venezuela’s vice president responsible for the economy, Rafael Ramirez, said at a press conference. PetroVictoria, a joint venture in which PDVSA has a 60% stake and Rosneft has the remaining 40%, owns the Carabobo-2 project in eastern Venezuela’s Orinoco Belt. (Latin American Herald Tribune,; Bloomberg,; AVN,

Venezuela weighs sale of CITGO
Venezuela, strapped for cash at home and staring down costly litigation overseas, is considering a deal for its U.S.-based refinery company CITGO Petroleum Corp. as well as a stake in a refinery run with Exxon Mobil Corp. XOM -1.45% , according to a CITGO document and people familiar with the matter. People close to Petroleos de Venezuela SA, or PDVSA, say the state-run oil giant is in the early stages of considering a deal for Houston-based CITGO, which operates three refineries. It is separately shopping its 50% stake in the Chalmette refinery in Louisiana, a process that is further advanced, they said. PDVSA, the principal source of hard currency in Venezuela, is seeking to bolster the country's stumbling economy, redirect more oil exports from the U.S. to its top creditor China and get some protection from the seizure of foreign assets as settlements in disputes before the World Bank draw near, analysts said. Some estimate that the most PDVSA stands to make from a sale of CITGO is between US$8 and US$10 billion. "Venezuela is looking under couch cushions for coins because they need money," said Russ Dallen, head of Caracas Capital Markets. "The Exxon and ConocoPhillips judgments are coming any day now and the easiest place to enforce those judgments will be the United States." (The Wall Street Journal,; Bloomberg,

PDVSA seeks gasoline on the open market
State owned PDVSA oil company is offering to buy 4 500,000 barrel shipments of heavy gasoline on the open market, for shipment to any of its ports in September-December. In a document seen by Reuters, the company states it could buy up to 3 additional shipments of heavy naphta. More in Spanish: (El Mundo,

Italy's ENI gets Venezuelan jet fuel cargo in June
State-run PDVSA has sent Italy's ENI a 240,000 barrel jet fuel cargo tendered in May on the open market. The jet cargo, was sent to Rotterdam from Guaraguao, one of PDVSA's main terminals, on the tanker Tverskoy Bridge. (Reuters,


Alimentos Polar has warned that future production of pre-cooked corn flour will be seriously at risk in the next few months due to a reduction of the domestic crop and government controlled prices which makes it impossible to cover production costs. According to the Central Bank (BCV), shortage of corn flour exceeds 25%. Nutrition Minister General Hebert García Plaza says he has been meeting with Polar representatives to seek a solution to the problem, (Veneconomy,; and more in Spanish: AVN;; El Universal,

Economy & Finance

BARCLAYS sees only partial adjustments, few benefits, as Ramírez again delays trip to NYC
In their latest report on Venezuela, BARCLAY's Capital analysts say everything indicated the Maduro regime will carry out a late and incomplete economic adjustment. They say this reveals that the so-called "pragmatic" wing is weak and their influence has been overestimated. Pending steps include additional devaluation, narrowing the list of products under price controls, raising interest rates and lowering Central Bank subsidies to PDVSA, extending foreign debt service payments, and consolidating FOREX funds currently held in FONDEN, BANDES and Treasury accounts into international reserves. It is reported that Economic Affairs Vice President Rafael Ramírez once again postponed his trip to New York, to meet with financial markets, due to the lack of decisions on economic policy. More in Spanish: (El Universal,; and

ECOANALÍTICA estimates 3% drop in GDP in the first semester
ECOANALÍTICA Director Asdrúbal Oliveros says their numbers point to a recession and an accelerated increase in prices that his hurting purchasing power in Venezuela. Their estimates are a 3% drop in GDP during the first semester, for a 2.5% contraction during all of 2014, along with 75% inflation, and buying power would plummet 14% this year. The think tank says the most probable scenario is for the government to eliminate SICAD II and establish a single exchange rate at VEB 25/US$. More in Spanish: (El Universal,

Ramírez claims that Venezuela has all the FOREX it needs, admits hurdles for private sector
Addressing the 3rd Congress of the pro-government United Socialist Party (PSUV), Economic Affairs Vice President Rafael Ramírez claimed the nation has "all the FOREX needed to meet international obligations and carry out its development plans." At the same time he admitted the non-oil sector "has serious problems that we must address and overcome". (El Universal,; and more in Spanish: AVN;; Ultimas Noticias,; El Mundo,

Maduro calls for national debate on setting fair domestic fuel prices

World Bank's ICSID Arbitration Panel says Gold Reserve US$2.1 billion Venezuela expropriation case closed
The World Bank's arbitration tribunal, the International Center for Settlement of Investment Disputes (ICSID), has declared the proceedings brought by Gold Reserve Inc. against Venezuela closed, meaning that a decision is imminent.
"The closure of the proceedings by the ICSID tribunal signals the end of the parties' presentation of their case and the tribunal's determination that it does not require any further information from the parties," said Doug Belanger, President of Gold Reserve. "Typically, ICSID tribunals issue the final award soon after declaring the proceedings closed."
"The closure of the proceedings is a welcome development. It marks the end of a five-year effort by counsel, technical, legal and financial experts and Company personnel to present Gold Reserve's claim against Venezuela. Gold Reserve now looks forward to receiving the tribunal's award," Belanger concluded. (Latin American Herald Tribune,

Overseas insurance repayment at SICAD 2
Venezuela's Supreme Court has ruled that if any individual with a Venezuelan insurance policy has a contingency overseas, the firm must pay in bolivars at the SICAD 2 rate (around Bs.50) in the event it cannot pay in dollars. (Veneconomy,


U.S. revokes visas for Venezuelan officials
The U.S. government has announced that it has revoked the visas of several top Venezuelan officials allegedly involved in human rights violations. “Venezuela in recent months has witnessed large-scale protests by demonstrators concerned about deteriorating economic, social, and political conditions. Government security forces have responded to these protests in many instances with arbitrary detentions and excessive use of force,” the State Department said. “While we will not publicly identify these individuals because of visa record confidentiality, our message is clear: those who commit such abuses will not be welcome in the United States,” the department’s deputy spokesperson, Marie Harf, said in a statement. (Latin American Herald Tribune,; Veneconomy,;

Venezuelan opposition coalition Secretary Executive Ramón Guillermo Aveledo has resigned, saying he was stepping aside “without leaving the group.” Aveledo’s resignation seems to be the first result of a meeting in which representatives of all the Democratic Unity’s (MUD) parties met to air their differences. Major parties within the MUD roundly criticized attacks that have been made on the Democratic Unity and Aveledo, and pointed to the achievements it has consolidated over the past two years. Miranda Governor and former Presidential candidate Henrique Capriles says the group has entered into a process of "debate and decision-making." He remarked that "regrouping of forces of those of us who are building a change is not ruled out." Capriles added: "It is very easy to criticize and destroy. The difficult thing is to build, and Ramón Guillermo Aveledo made an unselfish effort to consolidate unity". One critic, former legislator María Corina Machado the resignation "closing a cycle" in order to conduct deep restructuring inside the opposition coalition "not to divide it, but to strengthen it, along with increasing sectors of national life that understand that it is necessary to go beyond electoral matters". Aveledo’s deputy, legislator Ramón José Medina, also resigned, calling anything that divides the opposition "criminal". Primero Justicia leader Julio Borges said those who proposed a quick fix called "La Salida" (The Way Out) last February "sold people a hope that has been deflated". (Veneconomy,; El Universal,;;;

Aruba says Venezuelan warships surrounded the island; Cabello denies it
Aruba's Attorney General Peter Blanken charged Venezuela pressured the island military and economically in order to get the Netherlands to free former Venezuelan intelligence chief general Hugo Carvajal. He says Venezuelan warships surrounded Aruba during the discussions over Carvajal - who is charged with drug trafficking by the US. Captain Diosdado Cabello, President of Venezuela's National Assembly denied the charged. More in Spanish: (El Universal,; and El Nacional;

Prosecutor General refuses to identify dummy companies involved in FOREX frauds
Venezuela's Prosecutor General, Luisa Ortega Díaz, says she will not publish the names of dummy companies that are under investigation for fraud in FOREX transactions with the former Currency Board (CADIVI). She did say they are investigating high officials, including governors, mayors, military officers and legislators. More in Spanish: (Noticiero Digital,

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.

Tuesday, July 29, 2014

July 29, 2014

International Trade

Incoming cargo at Puerto Cabello:
  • 146 chicken and beef containers from Brazil and Argentina for Corporación de Abastecimiento y Servicios Agrícolas (CASA)
  • Over 45 tons of toilet paper and other personal care products from Procter & Gamble Int México for its subsidiary in Venezuela
  • 21 tons of yellow corn from Desa Industries for Agrolucha, Alfonca Alimentos Fontana C.A. and Avícola La Guásima C.A.

Venezuela says MERCOSUR is open to relations with the Pacific Alliance
Following a proposal by Brazil's President Dilma Rousseff for speeding up a free trade agreement between MERCOSUR and the Pacific Alliance, Venezuela's Foreign Minister Elías Jaua said the MERCOSUR group is open to this idea. More in Spanish: (Infolatam,

Logistics & Transport

IATA seeks meeting with Maduro over money owed to airlines
A leading air transport industry body has called for a top-level meeting with the Venezuelan president to discuss ways to restore over U$D 4 billion of airlines' money that is trapped in the country due to its currency controls. President Nicolas Maduro's government requires airlines to sell tickets in the bolivar currency but has been slow to allow them to repatriate the earnings. The International Air Transport Association (IATA), which represents around 240 global airlines, said on Monday that while Venezuela had permitted repatriation of U$D 424 million shared among some airlines, U$D 4.1 billion of airline ticket sales remained trapped in the country. "The goal should be to clear the debts quickly in a way that is fair and acceptable to the airlines involved," IATA Director General Tony Tyler said in a statement, calling for Maduro to lead talks with IATA on behalf of the carriers that have money trapped in the country. IATA said that international capacity on routes to Venezuela is down 36% year-on-year, or down 49% from 2013 peaks. "Confidence in the market is falling sharply," Tyler said. "Venezuela risks becoming disconnected from the global economy." (Reuters,

Oil & Energy

CITGO’s net profits dropped 63% to U$D 170 million in the first quarter of this year, well below the U$D 461 million posted in the same period in 2013. This was due to lesser volumes of crude oil sold and the behavior of oil prices, according to financial information of PDVSA’s subsidiary in the United States. Net sales were down to U$D 1.2 billion. (Veneconomy,

PDVSA weighs sale of its 50% stake at Chalmette refinery
Venezuelan state-run oil company Petróleos de Venezuela (PDVSA) has been pondering the sale of its refineries in the United States; thus, it has been holding talks with investment banks. The industry has approached Deutsche Bank in the search of buyers for its 50% stake in Chalmette refinery, located in Luisiana, and whose capacity amounts to 184,000 barrels per day (bpd), a PDVSA officer told Argus Media. (El Universal,

Economy & Finance

Central Bank adds obstacles to the process of acquiring FOREX under SICAD II
Venezuela's Central Bank and Finance Ministry have established additional requirements for parties trying to acquire FOREX through the SICAD II system (VEB 50/U$D1). Individuals need to show they reside in Venezuela, present an original copy of the income certificate for payees dated no more than 30 consecutive days prior to the date of the transaction, a copy their last income tax filing and its payment, and an original and duplicate copy of their tax number. Companies need to provide copies of their last two income tax returns. Financial analysts say the new requirements will limit the number of people and companies that can go through the SICAD II system. One analyst says "if the company is new o the individual has just entered the labor market they cannot use this system." More in Spanish: (El Nacional;

Maduro says Venezuela will strengthen its reserve position
Speaking to the 3rd Party Congress of the PSUV government party, President Nicolás Maduro said that financial operations are being carried out in order to increase international reserves, and consolidated several funds held in FOREX. The move has been announced at different times by Venezuelan officials over the past year. Maduro also claimed "Venezuela has sufficient dollars for the market this year and those to come." More in Spanish: The Government has been making similar announcement over the years. (El Universal,

Exchange houses will sell foreign currency and traveler’s checks, via bank transfers, to individuals pending formal notice that the practice is approved by Venezuelan Central Bank (BCV). (Veneconomy,

Venezuela's comptroller: Dummy corporations are a huge racket
Venezuela's Comptroller General Adelina González has confirmed reports that dummy corporations may have bought huge amounts of FOREX through the Foreign Exchange Administration Commission (CADIVI). (El Universal,


Aruba frees Venezuelan ex-general sought by U.S. over drugs, terrorism connection
A former Venezuelan military intelligence head detained on the Caribbean island of Aruba over U.S accusations of drug-trafficking was released and flew home on Sunday. Instead of being extradited to the United States, retired General Hugo Carvajal flew home after the Netherlands government ruled he had diplomatic immunity, his lawyer and Venezuelan officials said. Carvajal, who ran military intelligence from 2004 to 2008 during the presidency of the late Hugo Chavez, was arrested on Wednesday after flying to the semi-autonomous island that is part of the kingdom of the Netherlands. Jubilant Venezuelan officials at a congress of the ruling Socialist Party celebrated his release as a "victory" over their ideological foes in the United States. Carvajal was declared persona non grata in Aruba after the Netherlands admitted his diplomatic status on Sunday. Aruba’s Attorney General Peter Blanken said he cannot return to the island lest he will be arrested again. The State Department spokesperson added “We are concerned over credible reports we have received that indicate the Venezuelan Government threatened the governments of Aruba and the Netherlands to get this result...this is not the way in which legal enforcement affairs should be handled", and said US will continue efforts to bring Carvajal to justice. In less than 48 hours the Dutch government did a complete about face on the issue of general Carvajal's diplomatic immunity. The accused general now says that Aruba's Attorney General and judge are corrupt were bribed to detain him. He thanked his comrades and the people of Venezuela for their "solidarity". (Reuters,; Bloomberg,; Latin American Herald Tribune,,; Fox News,,; Veneconomy,; Fox News, neral-wanted-by-us-on-drug-charges/)

Venezuelan officers linked to Colombian cocaine traffickers
The head of Venezuelan military intelligence was on the payroll of a Colombian drug lord, invested his own money in drug shipments and personally coordinated the shipment of thousands of kilograms of cocaine, according to prosecutors in Miami and New York. And Venezuela’s liaison with Interpol took hundreds of thousands of dollars in bribes from another trafficker, the Miami prosecutors said. Three federal indictments unsealed last week open a window onto accusations of ties between Venezuelan military and law enforcement officers and Colombian narcotics traffickers, a connection that officials in Washington have long warned about and that has been roundly dismissed by the authorities here. Experts said the indictments help connect some of the dots between traffickers and the Cartel of the Suns, a loosely defined group of Venezuelan government and military officials suspected of having drug ties. Full report: (The New York Times)

Venezuela's ruling socialist party holds first post-Chavez convention amid internal dissent
Venezuela's socialist party is holding its first national convention since the death last year of President Hugo Chavez, with delegates hoping to quell infighting and discontent about party leadership. Behind the scenes pragmatists and hard-liners will be battling to hammer out a vision for the coming year. Hundreds of delegates will consider proposals from members all over the country, many of which concern the escalating economic crisis that has gripped the oil-rich country, provoking widespread shortages and soaring inflation. (Fox News,

Maduro hints at a new constitutional assembly to "go deeper into socialism"
Following on calls by what he called "right wing elements" to call for constitutional assembly, President Nicolás Maduro told the PSUV 3rd party congress that "we could use a constitutional assembly to go deeper into socialism". More in Spanish: (El Universal,

Venezuelan court remands in custody retired military official
Venezuela's Court-Martial has ordered the arrest of retired General José Vietri Vietri, former chief of the Presidential Escort Corps under the late President Hugo Chávez. Vietri has been charged with incitement to military rebellion, his lawyer, Alonso Medina Roa, stated on Monday. Vietri was arrested on July 25 at his residence in Caracas, and taken to the headquarters of the Military Counter-intelligence Directorate, said his attorney. The retired official attended a hearing on Monday at the Military Court, which remanded him in custody, Medina Roa told AP in a telephone interview. (El Universal,

Maduro says the "little bird" spoke to him again and told him Chavez is happy
During a ceremony in Barinas state, marking the late president's 60th birthday, President Nicolás Maduro called Chavez a "great prophet" and said that the "little bird" again spoke to him and said Chavez was happy. En enormous cake was cut at the ceremony and a statue of Chavez - donated by Russia's ROSNEFT oil company - was unveiled. (Infolatam)

Arial, Times New Roman ... and now the 'Hugo Chavez' font
Supporters of Venezuela's late socialist leader Hugo Chavez have unveiled yet another novel way of keeping his memory alive - a font for typing in "El Comandante's" handwriting style. The distinctive 'ChavezPro' font was launched by a group of young "anti-imperialists" to coincide with nationwide commemorations of the 60th anniversary of his birth. Chavez's bold scrawl became famous to Venezuelans as he used to spend hours on national TV writing and drawing on boards and papers to explain policies, develop ideas and sign deals. His signature, in red for socialist, adorns T-shirts, baseball caps and the walls of buildings around the nation. (Reuters,

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.

Friday, July 25, 2014

July 25, 2014

International Trade

Incoming cargo at Puerto Cabello:
  • 25,000 tons of wheat from Canada for MOLVENCA.
  • Over 1,000 tons of gutted and frozen chicken from Bunge Alimentos S.A. and BRF S.A. for CASA
  • 563 tons of powdered whole milk in 25 containers from Argentina for CASA
  • 474 tons of milk in 17 containers from Paraguay for PARMALAT.
  • 207 tons of unsalted butter in 8 vans, from Uruguay for CASA
  • 108 tons of frozen beef cuts , from Uruguay for CASA
  • 44 tons of whisky from the United Kingdom, for DESTILERÍAS UNIDAS.

Brazil to ask MERCOSUR to speed up application of a no tariff policy toward Pacific Alliance countries
Brazil will ask MERCOSUR to apply no tariffs to trade with Peru, Chile y Colombia, in December 2014, as opposed to the scheduled 2019 date. More in Spanish: (Ultimas Noticias,; El Mundo,

Logistics & Transport

Government meets with seven airlines
General Luis Graterol, Water and Air Transport Minister, along with General Rodolfo Marco Torres, Minister of Finance and Public Banking met again with AIR FRANCE, UNITED AIRLINES, CARIBBEAN AIRLINES, AVIANCA, LACSA-TACA, IBERIA, and VARIG GOL in order to reach agreements on the terms of repatriation of their funds. (El Universal,;

Oil & Energy

Weatherford is to expand operations in Venezuela
Weatherford International denies reports of the sale of their Venezuelan assets to ROSNEFT, and says it will increase investments in infrastructure, machinery and training, as well as support local communities here. More in Spanish: (El Universal;


Tata Motors gears up for South American drive with first car plant in Venezuela
Tata Motors is setting up a full-fledged car assembly plant in Venezuela to penetrate the 4.5-million-unit South American market. The plant, to be operated jointly with a partner, would initially assemble the MANZA sedan and INDICA eV2 models from completely knocked down (CKD) kits exported from India, and later be expanded to manufacture other products, sources in the know told FE. While an announcement is likely by September, the assembly plant is expected to have an initial capacity of 20,000 units a year. (The Financial Times,

Economy & Finance

Economic Vice President heads for NYC to contact international banks
Vice-President for Economic Affairs and Minister of Petroleum and Mining, Rafael Ramírez, will soon travel to New York to meet with international banks and investment funds. One and a half months ago, Ramírez visited London and told investors that an exchange convergence would take place in the short term, along with unification of parallel funds. (El Universal,

FORTUNE: How to fix Venezuela’s troubled exchange rate
Most people think that the Venezuelan economy is a basket case on the verge of collapse, and that has been a widespread belief for most of the last decade. During the past two years, however, a number of problems worsened. Inflation has hit annual rates of more than 60%, and the country has faced an increasing shortage of essential consumer goods like milk and toilet paper. Venezuela currently has four different exchange rates. Most dollars are bought from the government at the official rate of 6.3 VEB per U$D and is intended for essential goods, such as food and medicine. Some other importers can buy dollars from the government at a rate of about 11 VEB per dollar on a limited exchange called SICAD 1. There is also SICAD 2, which was introduced in March and involves private sellers, at a rate of 50 VEB per dollar. Finally, there is the unregulated black market where dollars currently sell for about 79 VEB per dollar. A lot of the current problems do seem to be connected to the exchange rate system. Prior to adoption of the SICAD 2 system, the black market rate for the dollar had risen from 12 VEB in October 2012 to 88 VEB in March. Once the black market differential is big enough it increases the incentive for corruption as you can get access to official dollars at 6.3 VEB and sell them on the black market. If inflation continues at current levels, even the SICAD 2 rate of 50 VEB per dollar would eventually become an overvalued exchange rate in real terms. According to the Bank of America’s March report, Venezuela has about U$D 50 billion in foreign exchange reserves (although most of the central bank’s reserves are in gold, these can be easily sold – currently at a sizeable profit relative to their purchase price.) Imports have been shrinking over most of the past year. All of this should give the government a comfortable margin of foreign exchange with which to manage the transition. (Fortune,

Analysts warn U$D 15 billion are needed to dismantle Venezuelan FOREX control
The Venezuelan regime plans to announce its plan to unify the three types of current exchange rate into one in August. However, experts insist the process must be accompanied by an elimination of market restrictions and a series of tax and monetary corrections to prevent the mega-devaluation that would ensue pushes the country into a hyper-inflationary spiral. (Veneconomy,

China increasingly cautious toward Venezuela
The Eurasia Group reports that the Chinese government is increasingly cautious about financing Venezuela. They demand specific projects and seek to keep the same amounts in hard currency deliveries. During Chinese President Xi Jinping's recent to Caracas they only agreed to renew one tranche of the Bi National Fund, for U$D 4 billion. "However, they did not renew the U$D 20 billion Long Term Great Volume Fund which Venezuela was interested in". More in Spanish: (El Mundo,


Retired Venezuelan General Hugo Carvajal detained on U.S. Petition over drug trafficking
A former chief of Venezuela’s military intelligence agency, accused by the U.S. of having ties to drug trafficking and Colombian Marxist rebels has been detained in Aruba and handed over to the DEA on an extradition petition by the U.S government in charges cocaine trafficking. Retired General Hugo Carvajal, a confidant of the late President Chávez, was awaiting confirmation as President Nicolás Maduro’s consul general to Aruba. In 2008, along with the current state governors of Guárico (Captain Ramón Rodríguez Chacín) and Trujillo (General Henry Rangel Silva), he was put on a U.S. Treasury Department blacklist alleging they protected drug shipments for Colombia's terrorist FARC guerrilla, and also provided the rebel group with weapons and logistical help. Venezuela’s foreign ministry claims the arrest by Dutch authorities is a violation of a 1961 international convention governing diplomatic relations and demanded that Carvajal be freed, warning that commercial and energy relations with Aruba could be damaged if he isn’t. President Nicolás Maduro declared "He is kidnapped ... I put my hand in the fire for Major General Carvajal and I will defend him with all the possibilities and strength of the Venezuelan state ... We will not allow Venezuela's honor to be stained.... this ambush strengthens our civilian-military union". Carvajal was arrested upon landing in a private aircraft and at first providing a fake passport. The Dutch government had rejected his appointment as consul due to charges against him. Aruba's Prosecutor says "He had no function here in Aruba, he is not Consul General, and he therefore has no immunity". The U.S. plans to formally request extradition and Carvajal will be taken before a local judge to determine whether his detention complies with international treaties. According to El Nuevo Herald of Miami, he has seven cases pending against him in U.S. courts. In a May 2013 indictment Carvajal is accused of assisting Colombia's North Valley Cartel, including the late Wilber Varela, alias "Jabon", to ship cocaine from Venezuela between 2004 and 2008, while bribing high-ranking military and law enforcement officials. (Reuters,; El Universal,;; Fox News,; The New York Times:; and more in Spanish: El Universal,; and AVN;; El Nacional;

Former Venezuelan judge arrested in Miami for drug trafficking
Another former Venezuela official was hauled into federal court in Miami, accused of taking bribes from South American drug cartels in exchange for help moving large shipments of cocaine to the United States. Benny Palmeri-Bacchi, 46, an attorney and former Venezuelan judge, pleaded not guilty to charges of distributing cocaine to the United States, conspiracy to obstruct justice, money laundering, and extortion in a Miami federal court. He was arrested after he flew into Miami on a family vacation to Disney World. He is charged with Rodolfo McTurk, ex-director of Interpol in Venezuela. The pair allegedly helped Jaime Alberto Marin Zamora, a drug kingpin with Colombia's North Valley Cartel, ship "thousands of kilograms of cocaine" from Venezuela to the United States, according to a federal grand jury indictment in the Southern District of Florida unsealed in December 2013. Prosecutors are seeking to seize U$D 2.5 million from Wells Fargo and Espirito Santo Bank accounts owned by the men. (The New York Times,

Opposition leader Leopoldo Lopez on trial
The trial of one of Venezuela's main opposition leaders, Leopoldo Lopez, has begun in Caracas. He is accused of inciting violence during anti-government demonstrations and has been in custody since 18 February, when he handed himself in to the authorities. Lopez has accused the government of President Nicolas Maduro of jailing Venezuelans for seeking democratic change. There was heavy police presence and road blocks near the Justice Palace, but hundreds of supporters, including Lopez's wife, Lilian Tintori, and parents, gathered outside the court to call for his release. Lopez faces a maximum sentence of 10 years in jail if convicted. During the first session of his trial, López professed that they are "rendering the bill" for his political stance. "This trial will measure the quality of democracy," said the ex-mayor of Chacao municipality. (BBC News,; El Universal,; Reuters,; Fox News,

Denunciations of purported coup plots escalate
Announcements of foiled coups and plots against the government have long been a part of the Chavista discourse. A study by the Caracas-based newspaper Ultimas Noticias counted 63 alleged assassination plots between when Chavez took office in 1999 and his death in 2013. Since then, such claims have come even more frequently. President Nicolas Maduro's government has denounced more than a dozen purported plots since coming to power 15 months ago, according to a tally by The Associated Press. (Fox News,

Venezuela maintains claim on the Essequibo
Foreign Minister Elías Jaua says Venezuela's claims against Guyana over the Essequibo territory remain legal and current under UN rules. More in Spanish: (AVN;

German press reports illegal weapons sales to Venezuela
Germany's "Süddeutsche Zeitung" journal reports that Sig Sauer exported weapons to Venezuela through a Rumanian intermediary, despite a ban by Angela Merkel's government. The arsenal was sent to Rumania for final processing to avoid requesting the German government's permission. More in Spanish: (El Universal,

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.

Wednesday, July 23, 2014

July 22, 2014

International Trade

Incoming cargo at Puerto Cabello:
  • 26, 698 tons of food have arrived for state agency CASA, including powdered whole milk, tuna, semola noodles, soy oil, green peas, margarine, chicken and frozen beef.
  • 753 of air  conditioning units in 50 vans from Lilly Associates Intl to their local affiliate
  • 144 tons of tires from Ecuador for Logística Multimodal (Logimodal)
  • 626 tons of whole and skim milk from Ecuador for Lechera Andina. 

CENCOEX allocating FOREX to priority areas
FOREX allocation for pending import debt has improved for priority pharmaceutical and food areas over the past weeks. Food industry sources indicate payments are around 30% of the total overdue debt, and even higher in some cases. POLAR Foods, the nation's largest food producer, reports a slight lowering of outstanding FOREX obligations. More in Spanish: (El Universal,

Logistics & Transport

LATAM Airlines says agreed deal with Venezuela to repatriate funds
LATAM Airlines, Latin America's biggest airline, has agreed to a deal with Venezuela for the repatriation of funds owed to the company. The total debt of around U$D 148 million for fiscal 2013 would be repaid according to a payment plan proposed by the government and accepted by LATAM. A number of airlines have reduced flights to Venezuela over a dispute over ticket sales revenue. (Reuters,; Bloomberg,; El Universal,

International airlines cut 4,528 seats from and to Venezuela
A group of international airlines flying to different destinations has decided to lower flight frequency and seat supply as of August, the very month’s children are on their school break. The group includes AEROLÍNEAS ARGENTINAS, Caracas-Buenos Aires; Spain's AIR EUROPA, to Madrid; Panama's COPA Airlines, which diversifies connections from Caracas, Valencia, and Maracaibo to Panama and from Caracas to Bogotá; DELTA Air Lines, in flights to Atlanta; and Germany's LUFTANSA, which offers connections to several European countries. The companies' move follows after the adoption of cuts by other airlines. (El Universal,

CONVIASA provides aircrafts for passengers stranded in Madrid
State-run airline CONVIASA says that it has taken action to assist passengers in Madrid and Buenos Aires left stranded after the airline experienced operating difficulties. (El Universal,

Oil & Energy

Venezuela plans to ship one million barrels a day to China in 2016, according to PDVSA CEO, Mining and Oil Minister and Vice President for the Economic Area Rafael Ramírez. He said 524,000 bpd is currently dispatched to China. (Veneconomy,

China and Venezuela agreed to exploit gold in the Sifontes Sur area says Mining and Oil Minister Rafael Ramírez. (Veneconomy,


Venezuela and China going in to joint ventures to manufacture chemicals for agriculture, cement Joint ventures are also planned in cement production and building new housing. More in Spanish: (AVN;;

Economy & Finance

China to provide Venezuela with an additional U$D 4 billion in exchange for oil
China will provide Venezuela with a new U$D 4 billion credit line, with funds to be repaid through oil shipments. The deal was inked during a 24-hour visit to Venezuela by Chinese President Xi Jinping, and will go into the Joint Chinese-Venezuela Fund, which focuses on infrastructure and economic development here. President Nicolas Maduro says the Venezuelan government will also put U$D 1 billion into the fund, but officials later said that amount was in fact U$D 2 billion. (Reuters,; More in Spanish: CNN,

Maduro claims Chinese financing does not create a heavy debt burden

Venezuela´s debt to China is higher than international reserves
Venezuela and China have put U$D 56 billion into several joint funds, U$D 45 billion of which are f China Development Bank financing for 245 projects in industry, oil, mining, housing, and air, among others. U$D 13.7 billion in the so-called Great Volume Fund remain outstanding. The Binational Fund was originally U$D 20 billion and has not been renewed, Venezuela has repaid U$D 8 billion through oil shipments and still owes China U$D 12 billion from that fund. ECOANALÍTICA says both debts add up to U$D 25.7 billion, and total Venezuelan international reserves are around U$D 20.7 billion, according to this nation's Central Bank. More in Spanish: (El Nacional;

China Development Bank opens branch in Venezuela
As part of the meetings leading up to the arrival today of China President Xi Jinping, the China Development Bank opened an office in Caracas – only its second office in Latin America. "Our office in Caracas is the second financial institution we have established in Latin America after Rio de Janeiro," says Hu Huaibang, President of the China Development Bank. Trade between the two nations exceeded U$D 20 billion in 2012 and China is the second largest buyer of Venezuelan oil after the U.S.A. Venezuela has signed loans-for-oil deals valued at more than U$D 50 billion, making it the biggest recipient of Chinese financing in the region. (Latin American Herald Tribune,

Venezuela, China signed 38 bilateral cooperation agreements
Venezuela and China signed 38 bilateral cooperation agreements during the visit of Chinese President Xi Jinping in Caracas. The agreements are related to exploitation of oil blocks; supplementary binational projects; agricultural exchange and cooperation, promotion of industrial and technological investments, as well as cultural and social exchanges. Since the beginning of the Bolivarian Revolution in 1999, Venezuela and China have strengthened their trade relations gradually by evolving from 20 agreements between 1974 and 1998, to 450 from 1999 to date, says National Assembly President, Captain Diosdado Cabello. (El Universal,; AVN,;

China-Venezuela economic relations at a glance
- U$D 41 billion in loans from the China Fund, plus U$D 4 billion just signed for.
- 524.000 BPD are being sent to China.
- U$D 254 million in Venezuelan non-oil exports sent to China in 2013.
- U$D 7.6 billion in imports from China during 2013.
- Venezuela has invested U$D 580 million to build and launch 2 satellites with China.
- China has 5 joint ventures with Petróleos de Venezuela (PDVSA) for exploring and extracting crude oil here. More in Spanish: (El Mundo,

Deutsche Bank doubts the economy will improve
A report by Deutsche Bank indicates potential conflicts within "chavista" ranks create doubt about the sustainability of policies, and warns that "the complexity of the current economic situation also impacts any expectation of a quick improvement in performance". It also indicates that risk perception has improved slightly, based on the behavior of sovereign bonds. More in Spanish: (El Nacional;


Opposition mayor murdered in his home
Enrique Franceschi, mayor of Río Caribe and the only opposition mayor in Sucre state in Eastern Venezuela, was found stabbed to death at his home. Opposition leader and Miranda State governor Henrique Capriles Radonski made the announcement. César Rincones, a legislator in the National Assembly for Sucre state, said Franceschi's body was found approximately at 5:00 a.m. by a maintenance worker. The mayor lived there together with his wife, grandmother and five-year-old son. All of them were in Caracas at the time of the killing. (El Universal,; Latin American Herald Tribune,; More in Spanish: CNN,

Amid low voter turnout in government party voting Maduro seeks a single vision
The pro-government United Socialist Party has elected 537 delegates to its upcoming 3rd Congress and - despite claims of 7.6 million members - a very low turnout has been reported, some as low as 12%. A prominent "chavista" intellectual, Nicmer Evans accused the party of "lying" about its number of members enrolled, and National Assembly President and Party vice president Diosdado Cabello reported that it would be very difficult to count the votes, but announced the elected delegates. The party has been racked with dissent after former Chavez ministers published letters highly critical of Maduro and he retorted there is no excuse to "betray" the revolutionary project, and criticized "big egos" in some "comrades". Maduro says the 3rd Congress will seek to "unify us around a single vision"...for the next 20-30 years". More in Spanish: (El Universal,; NTN24,; and Infolatam)

Lopez is taken out of isolation
Attorneys for Leopoldo López report he now enjoys the same rights as other prisoners and can receive third party visits, interact with other prisoners and visit the prison patio, as well as send and receive uncensored correspondence. More in Spanish: (El Universal,

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.