October 7th, 2010

Economics, Trade & Business
 

Venezuela is the only country in the region that will remain in recession

In 2010, The Latin American and Caribbean (LAC) economies will average 5.7% growth and an inflation rate of 6%, according to a report published by the International Monetary Fund released on Wednesday. Venezuela is the only LAC country hit by recession in 2010, with a -1.3% GDP contraction in 2010 and a minute growth projection of 0.5% for 2011. According to the report, "Venezuela's recession will continue in 2010, reflecting severe supply bottlenecks, challenges from capital flight, and generally weak policy frameworks." Venezuela also suffers from the highest inflation rate in the hemisphere (29.2 percent), followed by Argentina (10.6 percent), the only other country with double-digit inflation. Peru, Chile and Bolivia exhibit a lower inflation, at 1.7%, the report highlighted. (El Universal, 10-06-2010; http://english.eluniversal.com/2010/10/06/en_eco_esp_venezuela-is-the-onl_06A4571017.shtml)

IMF Wrong on Continuing Recession in Venezuela, Giordani Says

Venezuelan Finance Minister Jorge Giordani rejected the IMF’s conclusions that the government’s poor fiscal policy is causing a five-quarter recession to continue into the second half of 2010. Venezuela will be constrained by “severe supply bottlenecks” and a “weak policy framework,” the IMF said in its World Economic Outlook published today. The country’s economy will shrink 1.3 percent this year before returning to growth of 0.5 percent in 2011, the report said. “It’s the IMF that’s in crisis,” Giordani said in an interview on Union Radio. “They did not foresee the world crisis.” (Bloomberg, 10-06-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a7MYKPmHg2Sc)

Food Basket (basic goods price index) increased to Bs.F.2.616,97, up Bs.F.28.36 or 1.1%.  The food basket is based on the cost of feeding a five-member family, according to estimates by the Analysis and Documentation Center (Cendas). Food staples have gone up Bs.F.609.72 (30.4%) so far this year. Over two minimum wages are required to meet its cost. (Veneconomy, 10-07-2010; http://www.veneconomy.com/site/?ids=44&idt=23381&idc=2)

Venezuelan government makes seizure of farming company Agroisleña official

As expected, the decree that makes official the seizure of farming supply company Agroisleña (an Enrique Fraga Afonso company) was published on Tuesday in the Venezuelan Official Gazette No 39,523. President Hugo Chávez announced on Monday night that he had signed the decree against the will of the board of directors of the Spanish firm who had requested the Venezuelan head of state to reconsider the decision. Chávez argued that the farming company had become an oligopoly in the market of agriculture inputs, contrary to the provisions of the Constitution. (El Universal, 10-05-2010; http://english.eluniversal.com/2010/10/05/en_eco_esp_venezuelan-governmen_05A4564773.shtml)

Expropriation of Friosa was published in Gaceta Oficial (October 5), circulating today. The measure establishes the occupation of the main office of Complejo Comercial Hermanos García (GAISA) which includes Frigorífico Ordaz, S.A. (Friosa), Inversiones Koma and Delicateses Las Fuentes and nine branches in Bolívar state. (Veneconomy, 10-06-2010; http://www.veneconomy.com/site/?ids=44&idt=23379&idc=3)

Fall in prices of agricultural supplies will be notable in a few days

Venezuelan Minister of Agriculture and Lands, Juan Carlos Loyo, affirmed that “in the short run we will see a notable fall in prices of agricultural supplies such as fertilizers.” In a visit to a community in the central state of Guarico, Loyo took part in a special session carried out by the legislative council of the state, in order to support the measure agroindustrial emporium Agroisleña’s foreceful expropriation. (AVN, 10-07-2010; http://www.avn.info.ve/node/21835)

Didn’t he insist there should be no profits in Socialism?

President Chávez ordered the “intervention” of Maiquetía International Airport in order to turn it into a profitable business. Chávez wondered how such a large airport fails to yield profits while in Cuba the José Martí Airport provides the government with annula earnings of $100 million. (Veneconomy, 10-06-2010; http://www.veneconomy.com/site/index.asp?idt=23370&idc=3&ids=44&Var_Send=1&mmD=10&ddD=06&mmH=10&aaD=2010&ddH=07&aaH=2010&Send=Buscar)

Politics

Venezuela, Colombia foreign ministers meet in Cúcuta

The Colombian Minister of Foreign Affairs María Ángela Holguín and her Venezuelan counterpart Nicolás Maduro are assessing on Thursday the progress made thus far after the resumption of bilateral relations. The two foreign ministers are meeting in the Colombian city of Cúcuta, on the border with Venezuela. The ministers of Energy, Trade, Defense and Transport of the two countries are attending the meeting. (El Universal, 10-07-2010; http://english.eluniversal.com/2010/10/07/en_pol_esp_venezuela,-colombia_07A4575491.shtml)

Spanish Judge believes that ETA and FARC produced weapons in Venezuela

Spain's National Court Judge Eloy Velasco, who is investigating the alleged links between Basque separatist group ETA and the Revolutionary Armed Forces of Colombia (FARC), a guerrilla group, thinks that both armed organizations developed and produced weapons in Venezuela. Judge Velasco, who instructed the Spanish police to travel to Colombia to interrogate nine former FARC members who claimed they had met with ETA members in camps established in Venezuelan territory, has also ordered Spanish security forces to prepare an expert report about the activities of ETA and the Colombian guerrilla in the development of new weapons. (El Universal, 10-07-2010; http://english.eluniversal.com/2010/10/07/en_pol_esp_spanish-judge-believ_07A4575413.shtml)

Chavez denies that Venezuela helped train Basque separatists

Venezuelan President Hugo Chavez denied an allegation that his government helped train Basque separatists trying to create an independent state. The allegations surfaced Monday, when Spanish media reported that two captured members of the outlawed Basque separatist organization known as ETA told authorities they had received arms training in Venezuela in 2008. Juan Carlos Besance and Xabier Atristain, members of an ETA cell known as Imanol, were arrested September 29. And a Spanish judge said in March that the Venezuelan government facilitated a long-time cooperation between leftist rebels in Colombia and ETA. (CNN, 10-05-2010; http://edition.cnn.com/2010/WORLD/americas/10/05/venezuela.terrorist.training/index.html)

NGO Ojo Electoral: Venezuelan opposition could have won 80 deputies

Carlos Genatios, a director of Venezuelan NGO Ojo Electoral (Electoral Eye) said on Thursday that the most complex problem in the parliament election held on September 26 involved some irregularities the Organic Law on Election and Political Participation introduced in the voting process. "Had legislative elections been conducted according to the proportional representation system and had the Organic Law on Election and Political Participation not introduced such tricks, the opposition would have won 80 deputies and the government would have won 85 seats," Genatios said. (El Universal, 10-07-2010; http://english.eluniversal.com/2010/10/07/en_pol_esp_ngo-ojo-electoral:-v_07A4576093.shtml)

Chávez Doubles Down on Expropriations

Following the opposition’s popular vote victory in Venezuela’s parliamentary elections, observers around the world have wondered how Venezuelan President Hugo Chávez would react. Now we know. In lieu of accepting the election results as a mandate from the Venezuelan people to change course on his policies, including his repeated assaults on private property, President Chávez has reportedly dismissed the opposition’s victory calling it “15 minutes of drunkenness.” In addition, President Chávez has promised to further “radicalize” his socialist revolution, despite the depleted majority his party (PSUV) is soon to hold in the National Assembly. "We are going to continue forward, democratically radicalizing the socialist revolution because it is necessary," Chávez said. (What’s Next Venezuela, 10-06-2010; http://en.whatsnextvenezuela.com/#)

Compulsory military service

Nearly a year ago, the new Military Conscription and Enlistment Act was published in the Official Gazette. This law establishes that registration in the Bolivarian National Armed Force’s database shall be compulsory for all Venezuelans of “military age,” in other words for every man and woman between the ages of 18 and 60. According to the law’s first transitory provision, October 21, 2010, is the deadline for enrolling in the military service register. While the law establishes that no one may be recruited by force, it also establishes that military service is a duty binding on those subject to the law. (Veneconomy, 10-07-2010; http://www.veneconomy.com/site/)

Petroleum & Energy

PDVSA resumes operations at the BOPEC terminal in Bonaire today after a bolt caused a fire in one of its fuel tanks last September 8. The authorities on the island gave the Venezuelan State oil company all the necessary permits. (Veneconomy, 10-07-2010; http://www.veneconomy.com/site/?ids=44&idt=23390&idc=4)

Venezuela’s Nuclear Projects

Venezuela is “carrying out the first studies” toward building a nuclear energy program, Venezuelan President Hugo Chávez announced on September 27. “We’re taking on the project of nuclear energy for peaceful purposes, and they aren’t going to stop us,” Chávez told a news conference. Venezuela also has a deal with Moscow for Russia to build a nuclear reactor in the country. Yet these are probably not the most concerning of Venezuela’s nuclear projects. (The Trumpet, 10-07-2010; http://www.thetrumpet.com/index.php?q=7531.6102.0.0)

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.