December 2nd

Economics, Trade & Business

Venezuela to Liquidate Banco Federal, Official Gazette Says

Venezuela ordered the liquidation of Banco Federal CA and three related companies, according to a resolution published in the Official Gazette today. The country’s banking regulator took over Federal in June, citing liquidity concerns, and has been paying the bank’s customers through government-run banks and the deposit guarantee fund. Venezuela will sell off assets to pay bank employees and repay the deposit fund, Finance Minister Jorge Giordani said Aug. 10. (Bloomberg, 12-02-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=awSl7cqXE8bI)

Morgan Stanley fears high import demand

The U.S. firm Morgan Stanley is very clear in its expectations for next year: the supply of local inputs will be limited by the negative impact of expropriations. Given this scenario, the bank believes that the Venezuelan authorities will focus directly on stimulating consumption by importing more goods. "We expect imports of goods to remain the most important component of the demand for dollars," says the report of the firm. (El Universal, 12-02-2010; http://www.eluniversal.com/2010/12/02/eco_art_morgan-stanley-teme_2124673.shtml)

Politics

U.S. views Chavez in "axis of mischief"

Cuban intelligence services directly advise Venezuelan President Hugo Chavez in what a U.S. diplomat called the "Axis of Mischief," according to a State Department cable released by the WikiLeaks website. Other releases by the group revealed U.S. anxiety at Chavez's "coziness" with Iran, and concerns by Venezuelan Jews over what they see as government prejudice against them. Worries over Cuba's role in Venezuela, a top U.S. oil supplier, were shown in a 2006 diplomatic message. "Cuban intelligence has much to offer to Venezuela's anti-U.S. intelligence services," said the cable posted on wikileaks.org on Wednesday. (Reuters, 12-01-2010; http://www.reuters.com/article/idUSN0115084120101202)

Key political risks to watch in Venezuela

President Hugo Chavez's latest nationalization drive, political tensions in parliament, moves against the oil industry and the long tail-end of a recession are all risks to watch in Venezuela in the coming months. Chavez has nationalized a lot of businesses in Venezuela and he will nationalize more before the next presidential election in 2012. After 12 years in office, the former soldier shows no signs of slowing his drive to recreate Venezuela as a socialist state. (Reuters, 12-01-2010; http://www.reuters.com/article/idUSRISKVE20101201)

Diplomacy a la Chávez

Always a master of diplomacy, Venezuelan President Hugo Chávez has given some advice to the U.S. Secretary of State: "Hillary Clinton should resign, it's the least she can do with all of this spying and delinquency in the State Department." Using WikiLeaks' publication of 250,000 diplomatic cables as a springboard to attack the U.S. Secretary personally, Chávez said that "Mrs. Clinton thinks she is superior to Obama. Since she is white, she thinks she is superior to the black guy." In a classic act of Freudian displacement, Chávez called the United States a 'failed, illegal state, which threw respect for its allies overboard in order to further pursue its domination and abuses." Other State leaders and diplomats don't interpret the leaks to be quite as damning. Some world leaders have stated they understand the comments are part of the reality in conducting foreign relations. One of Secretary Clinton's counterparts even joked that Mrs. Clinton need not worry, saying: "You should see what we say about you." (What´s Next Venezuela, 12-01-2010; http://en.whatsnextvenezuela.com/)

Business organizations from Latin America, Spain and Portugal asked the Venezuelan government to stop its “attacks” on the private sector, which they claim is destroying the productive system and causing thousands of jobs to disappear. They also expressed their concern over the “verbal and physical violence in this country against the business institutions and their leaders.” (Veneconomy, 12-02-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=24135&idc=3)

The Latinobarómetro poll

Support for democracy in Latin America continues to edge up, as does backing for private enterprise. Two related things stand out in the results of this year’s poll, taken in September and early October. The first is Latin America’s fairly sunny mood. The second is the increasing stability of attitudes towards democracy and its core institutions. Support for democracy has risen noticeably in several countries on the Pacific rim of South America. (The Economist, 12-02-2010; http://www.economist.com/node/17627929?story_id=17627929)

Transport & Logistics

Continued restriction of sailings in Puerto Cabello

The departure of vessels of less than 150 units of gross tonnage (UAB) is still suspended in Puerto Cabello. Oscar Benito Ramírez Petit, head of the Port Authority, said the sea conditions have not improved. The decision to prolong restrictions was given on Wednesday afternoon, following a reappraisal of weather conditions. (Notitarde, 12-02-2010; http://www.notitarde.com/notitarde/plantillas/nota.aspx?idart=1194548&idcat=9849&tipo=2)

Petroleum & Energy

Venezuelan crude oil and byproduct exports to the US decline 12 percent

Venezuelan oil exports continue to drop in 2010 compared to last year. According to data provided by the US Energy Information Administration (EIA), the statistical arm of the Department of Energy, sales of Venezuelan crude oil and byproducts to the United States amounted to 1,008,000 barrels per day in September 2010. The figure represents a 12 percent fall in Venezuelan oil exports to the United States compared to the amount of oil and byproducts exported in September 2009, when they averaged 1,146,000 bpd. (El Universal, 12-02-2010; http://english.eluniversal.com/2010/12/02/en_eco_art_venezuelan-crude-oil_02A4805811.shtml)

Eni, Repsol in gas pricing talks with Venezuela

Eni and Repsol are negotiating a price with Venezuela's PDVSA for natural gas they plan to extract starting in 2013; a document seen by Reuters shows, in a sign the country is closer to producing offshore gas. Venezuela has vast reserves of natural gas in the Caribbean but development of the fields has been slow -- in part because of concerns among foreign firms about what they see as unfavorable prices offered by PDVSA for the gas extracted. (Reuters, 12-01-2010; http://www.reuters.com/article/idUSN0114283320101201)

China's Sinopec to have a stake in Orinoco Oil Belt

China's Sinopec will partner with the state-run oil company Petróleos de Venezuela (Pdvsa) to develop the Junín 1 and Junín 8 oil blocks at the Orinoco Oil Belt. The joint venture is aimed at producing 200,000 bpd in each block, Venezuela's Energy and Petroleum Minister Rafael Ramirez said. Pdvsa also signed a joint venture agreement to develop the 400,000 bpd Junín 4 block together with state-owned China National Petroleum Corporation (CNPC), Pdvsa said in a press release. (El Universal, 12-02-2010; http://english.eluniversal.com/2010/12/02/en_eco_esp_chinas-sinopec-to-h_02A4806455.shtml)