January 11th, 2013

Economics & Finance

Moody's warns Venezuela faces risk of civil unrest, places debt rating under watch

With President Hugo Chavez unable to attend the inauguration for his next Presidential term originally scheduled to take place yesterday due to his seemingly terminal cancer, Venezuela faces a period of heightened political uncertainty. The current situation appears to revive the possibility that an opposition candidate could take over the presidency and with it begin to usher in economic reforms that could improve Venezuela's credit picture in the medium term. Regardless of who succeeds Chavez and which part of the political spectrum they represent, however, this potential opportunity is outweighed in the shorter term by risks associated with the political transition that could negatively impact Venezuela's rating if they crystallize. Moody's one of the major rating agencies in the global economy announced it would review Venezuelan short term debt short term in view of the instability triggered by a political transition in the absence of President Hugo Chavez. The Moody's statement mentions "risks associated with the political transition that could adversely affect the rating of Venezuela". The Moody's rating Venezuela's debt is B2 with a stable outlook, supported by high oil prices. (Latin American Herald Tribune, 01-09-2013; http://www.laht.com/article.asp?ArticleId=661215&CategoryId=10717; More in Spanish: El Universal; http://www.eluniversal.com/economia/130110/moodys-coloca-en-observacion-calificacion-de-la-deuda-venezolana)

Venezuela ranks lowest in Latin American in economic and individual freedoms

The Fraser Institute of Canada has presented a study on human freedom, which includes both individual and economic freedoms, in a total of 123 countries: Venezuela ranks 109, the lowest among Latin American nations. More in Spanish: (El Nacional, 01-11-2013; http://www.el-nacional.com/)

Economy on hold

President Chavez's absence has put important economic decisions on holds, among them a highly expected devaluation. (Tal Cual, 01-11-2013; http://www.talcualdigital.com/index.html)

Commodities

Minister Osorio blames the right for failures in food distribution

Food Minister Carlos Osorio is saying that recent failures in the distribution staples are caused by the Venezuelan right in order to create anxiety in the population. He claims that private processing plants, sugar mills, warehouses retained key products in order to destabilize the country. More in Spanish: (AVN; http://www.avn.info.ve/contenido/osorio-derecha-venezolana-provoc%C3%B3-fallas-distribuci%C3%B3n-alimentos)

National Guard in sugar mills, government regulates domestic and industrial sugar marketing

The National Guard has been sent to all sugar mills in order to check packaging and distribution of sugar, after the government ordered that 70% of sugar production must be assigned to domestic, not industrial use; and that dispatches must go directly to points of sale, not intermediaries. More in Spanish: (AVN; http://www.avn.info.ve/contenido/gobierno-regula-comercializaci%C3%B3n-az%C3%BAcar-para-uso-dom%C3%A9stico-e-industrial; El Universal, http://www.eluniversal.com/economia/130110/el-70-de-la-produccion-de-azucar-sera-para-los-hogares)

All SIDOR production lines closed with lower production

SIDOR's liquid steel production closed last year at levels going back to the 1980's; production of Direct Reduced Iren closed 18.2% lower; lime production dropped 21.5%; and steel slab production was paralyzed for weeks due to a deficit in raw material. More in Spanish: (El Universal; http://www.eluniversal.com/economia/130110/todas-las-lineas-de-produccion-de-sidor-cerraron-en-baja)

Logistics & Transport

Food bearing ships remain at bay for 3 weeks

A report this Monday on the situation at the Puerto Cabello Terminal shows 8 ships unloading bulk food and a total of 32 vessels remain at bay, some of them for more than 3 weeks. More in Spanish: (El Universal; http://www.eluniversal.com/economia/130110/barcos-con-alimentos-llevan-hasta-3-semanas-fondeados; Notitarde, http://www.notitarde.com/La-Costa/Buques-con-arroz-y-az%C3%BAcar-permanecen-en-el-%C3%A1rea-de-bah%C3%ADa/2013/01/09/158837; El Carabobeño, http://www.el-carabobeno.com/impreso/articulo/45331/baha-alberga-25-buques-en-cola-para-ingresar--a-los-muelles-de-puerto-cabello)

Politics

Supreme court rules that Chavez is on parliamentary approved leave

The Supreme Court has interpreted Article 231 of Venezuela's Constitution and ruled that the President's absence cannot be considered either temporary or permanent since the National Assembly unanimously voted to give him leave for more than 5 days. The Court's President, Luisa Estela Morales, also said that there are is no reason to call for a medical board. (AVN, 01-09-2013; http://www.avn.info.ve/contenido/supreme-court-chavez-leave-passed-parliament; Reuters, http://www.reuters.com/article/2013/01/09/us-venezuela-chavez-idUSBRE9080WP20130109; CNN; http://amanpour.blogs.cnn.com/2013/01/09/venezuelan-lawmaker-cuba-making-decisions-for-venezuela/?iref=allsearch; Fox News, http://www.foxnews.com/world/2013/01/09/venezuela-lawmakers-postpone-chavez-inauguration-opposition-says-it-violates/)

Maduro's hands are "tied" in key areas

Among other legal and Constitutional experts consulted, Gustavo Linares Benzo, says "the Court's ruling makes it very clear that the ruling President is Hugo Chavez and the Vice President cannot do anything beyond the Constitution or powers assigned to him in December". He added: "From today on he (Maduro) cannot name Ministers, Ambassadors or any military positions. Neither can he approve legal regulations, because the President did not delegate his regulatory powers". More in Spanish: (El Universal, 01-11-2013, http://www.eluniversal.com/nacional-y-politica/130111/juristas-alertan-que-maduro-esta-atado-en-asuntos-claves)

Tens of thousands rally for ailing Hugo Chavez in symbolic inauguration in Venezuela

Nothing shows the extent of Hugo Chavez’s grip on power quite as clearly as his absence from his own inauguration. Authorities gathered foreign allies and tens of thousands of exuberant supporters to celebrate a new term for a leader too ill to return home for a real swearing-in. In many ways, it looked like the sort of rally the president has staged dozens of times throughout his 14 years in power: The leader’s face beamed from shirts, signs and banners. Adoring followers danced and chanted in the streets to music blaring from speakers mounted on trucks. Nearly everyone wore red, the color of his Bolivarian Revolution movement, as the swelling crowd spilled from the main avenue onto side streets. (The Washington Post, 01-09-2013; http://www.washingtonpost.com/world/the_americas/venezuela-supreme-court-chief-says-president-hugo-chavezs-inauguration-can-be-postponed/2013/01/09/f5607c02-5aba-11e2-b8b2-0d18a64c8dfa_story.html; Fox News, http://www.foxnews.com/world/2013/01/10/venezuelan-government-plans-show-support-for-chavez-as-ailing-leader-swearing/)

Chavez allies gather as leader too ill for oath; PETROCARIBE and ALBA government express support

Regional allies of President Hugo Chavez will gathered to express support for the cancer-stricken leader whose absence from an inauguration is raising uncertainty in Venezuela. Bolivian President Evo Morales, Nicaragua’s Daniel Ortega and Uruguay’s Jose Mujica attended a government- organized rally in Caracas to express solidarity with the socialist leader, who is struggling to recover from surgery last month in Cuba. Other regional allies, including the presidents of Argentina and Ecuador sent their foreign ministers. A joint meeting of Petrocaribe-ALBA in Caracas member governments reaffirmed support for president Hugo Chavez. Among them, the Prime Minister of Saint Vincent and the Grenadines called Chavez "the light that illuminates the world". (Bloomberg, 01-10-2013; http://www.bloomberg.com/news/2013-01-10/chavez-allies-gather-as-venezuela-leader-too-ill-for-oath.html); (AVN, 01-10-2013; http://www.avn.info.ve/contenido/latin-american-caribbean-governments-back-chavez; http://www.avn.info.ve/contenido/alba-petrocaribe-countries-back-chavez; El Universal, http://www.eluniversal.com/nacional-y-politica/130110/petrocaribe-alba-support-venezuelan-presidents-continuity-in-office)

Uruguayan President says life will continue if Chavez does not survive

During his visit to Caracas, Uruguayan President José Mujica reaffirmed his solidarity with ailing President Hugo Chávez, and added "Chávez's legacy is enduring and hopefully he will overcome the terrible situation he is going through, but if he does not, life will continue." He also urged Venezuelan people to remain "calm" and stressed that he remains alert to "uncertain" situations. (El Universal, 01-10-2013; http://www.eluniversal.com/nacional-y-politica/130110/uruguayan-president-urges-venezuelans-to-remain-calm)

Dissenters convene January 23 rally against top court's ruling

Opposition legislators have signed a document rebutting the Supreme Court of Justice's decision ruling the president-elect's inauguration is "unnecessary" on the grounds of administrative continuity; and are calling a protest rally for January 23rd. 23rd. The document says the ruling "runs counter to the Constitution and undermines the State's democratic order." (El Universal, 01-10-2013; http://www.eluniversal.com/nacional-y-politica/130110/dissenters-convene-rally-on-january-23-against-top-courts-ruling)

Capriles: Court decision solves nothing but a problem within Chávez's party

Miranda State Governor Henrique Capriles has demanded that leaders of the ruling United Socialist Party of Venezuela (PSUV) "to respect their own followers and million Venezuelans who think differently" in referring to threats posed by authorities in government media against opposition leaders.
"Enough with threats and hatred! Venezuelans are tired of intimidation," he said during a press conference. (El Universal, 01-09-2013; http://www.eluniversal.com/nacional-y-politica/130109/capriles-court-decision-solves-nothing-but-a-problem-in-chavezs-party)

OAS respects Supreme Court decision

OAS Secretary General José Miguel Insulza says the organization respects the decision on delaying President Chavez's oath of office. More in Spanish: (AVN, 01-11-2013; http://www.avn.info.ve/contenido/oea-respeta-decisi%C3%B3n-poderes-del-estado-venezolano-sobre-juramentaci%C3%B3n-del-presidente)

US expects inclusive transition in Venezuela, confirms contact with Maduro

State Department spokesperson Victoria Nuland said the US hopes any political transition in Venezuela is democratic, transparent and includes all Venezuelans. She said Washington has been in direct contact with the Chavez regime and made specific proposals for an improved bilateral relationship, but that it is too soon to move forward. She confirmed Vice President Nicolás Maduro has had telephone contact with Roberta Jackson, Under Secretary of State for Latin America. More in Spanish: (Tal Cual, 01-11-2013; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/130111/eeuu-espera-una-transicion-transparente-y-democratica-en-venezuela)

Spain calls for "serenity" in "delicate situation"

Spain's Secretary of State for Iberoamerican affairs Jesús Gracia has expressed his trust that President Chavez can recover and take on his duties; and called for "serenity" and "harmony" in facing the nation's uncertain situation. He said was speaking "prudently" because the situation is "delicate". More in Spanish: (Tal Cual, 01-11-2013; http://www.talcualdigital.com/index.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.