April 30, 2013

Economics & Finance

Maduro facing an economy in distress

President Nicolás Maduro is facing an economy requiring urgent care and an economic scenario in critical condition. Soaring inflation and rising shortages are two of the most pressing problems. Maduro will also have to deal with a stagnating foreign currency-allocation system, considerable fiscal deficit and significant debt, regardless of sustained oil revenues. The energy crisis is another major issue that must be immediately addressed. Despite Maduro's charges of "sabotage" during the electoral campaign the truth is that power-generation deficiencies abound and lack of maintenance remains a harsh reality. (El Universal, 04-27-2013; http://www.eluniversal.com/economia/130427/maduro-receives-an-economy-in-distress)

Central Bank to trade banking reserves for housing bonds

The Central Bank has approved a directive that allows for trading mandatory reserves within the banking system for certificates issued by the Simón Bolívar Reconstruction Fund for 2013, in order to finance official housing projects. Banks are required by law to 17 out of every 100 bolivars deposited, but they may now use these funds to acquire the special government papers. More in Spanish: (El Universal, 04-29-2013; http://www.eluniversal.com/economia/130429/bcv-emite-normas-sobre-el-encaje-legal)

Giordani reported clinging to power

In his first official act President Nicolás Maduro separated the Finance and Planning Ministries, but his decree empowered the former joint Ministry to take up to 180 days to make the transfers effective. High official sources report that hard line ideologue Jorge Giordani is entrenched in his former post and office, applying the technicality to its full extent and setting off alarms within the team of incoming Finance Minister Nelson Merentes, who would have to wait 6 months in order to take full charge of a stagnating economy. More in Spanish: (El Comercio, http://elcomercioweb.com/web/investigacion/giordani-se-niega-a-soltar-el-coroto/)

Commodities

PETROBRAS says no more contacts with Pdvsa over refinery

Brazilian state-owned oil company PETROBRAS reported on Monday that no further contacts have been made with its Venezuelan counterpart Petróleos de Venezuela (PDVSA), since the extension expired on the original term of a partnership agreement to build a crude oil refinery in Brazil. A senior executive officer of the Brazilian oil company told Reuters that political instability in Venezuela might have driven its Venezuelan partner away from the talks on the construction of Abreu e Lima refinery, in Pernambuco, where Pdvsa was expected to have a 40% interest. (El Universal, 04-29-2013; http://www.eluniversal.com/economia/130429/petrobras-points-to-no-more-contacts-with-pdvsa-over-refinery)

GRUMA vows to continue operating in Venezuela

According to GRUMA representatives, even though its facilities here are in the hands of government appointed receivers, the Mexican producer keeps on running the companies. They say "business remains as usual since expropriation". In its economic report for Q1 2013, GRUMA notes it was "stripped" of control over its subsidiaries Molinos Nacionales (MONACA) and Derivados de Maíz Seleccionado (DEMASECA). As a consequence it had to stop consolidating such assets together with those of the group in order to meet global accounting standards. (El Universal, 04-29-2013; http://www.eluniversal.com/economia/130429/gruma-vows-to-continue-operating-in-venezuela; El Impulso, 04-27-2013; http://elimpulso.com/articulo/mayor-empresa-productora-de-harina-de-maiz-emprende-retirada-en-venezuela#.UX7B57WTglS; CNN Expansión, http://cnnespanol.cnn.com/2013/04/26/gruma-emprende-su-retirada-de-venezuela/?iref=allsearch)

General Justo Noguera has been appointed new President of the Guayana Development Corporation, replacing Colonel Rafael Gil. He was previously chairman of the committee for control and follow up within basic industries and developed a positive relationship with labor representatives at SIDOR, ALCASA, VENALUM and CARBONORCA. More in Spanish: (El Mundo: http://www.elmundo.com.ve/Noticias/Economia/Empresas/Justo-Noguera-sera-el-nuevo-presidente-de-la-CVG.aspx)

International Trade

Maduro pledges continued alliance with Cuba

Cuba and Venezuela signed cooperation accords on Saturday for 51 projects as President Nicolas Maduro, on his first trip to the island since his election, pledged to maintain the close alliance forged by his late predecessor, Hugo Chavez. Maduro said they would jointly spend U$D 2 billion this year on "social development," but it was not clear if he was discussing the 51 projects, few details of which were disclosed, or other works. His visit appeared aimed in part at allaying Cuban worries about post-Chavez relations with the nation that is Cuba's biggest ally and benefactor. Venezuelan oil and money help keep the communist-ruled island's troubled economy afloat and the governments have about 30 joint ventures, most of them in Venezuela. (Reuters, 04-28-2013; http://www.reuters.com/article/2013/04/28/cuba-venezuela-maduro-idUSL2N0DF03T20130428; AVN, 04-27-2013; http://www.avn.info.ve/contenido/cuba-venezuela-sign-new-bilateral-agreements; El Universal, http://www.eluniversal.com/economia/130429/castro-maduro-pact-helps-shore-up-cubas-economic-plan; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=763027&CategoryId=10717)

Sixteen presidents to attend PETROCARIBE summit

A total sixteen heads of state and government will take part on the next Petrocaribe Summit, expected to be held on 4 May in Margarita island, says president Nicolas Maduro. (AVN, 04-29-2013; http://www.avn.info.ve/contenido/sixteen-presidents-attend-petrocaribe-summit)

Logistics & Transport

La Guaira port operations reported down 60% due to FOREX restrictions

Eduardo Quintana, Vice President of the Vargas State Chamber of Commerce estimates port operations at La Guaira have dropped 60% since "there is no easy and feasible way to acquire FOREX at the official 6.30 rate". He says customs agents and port operators are being hit by a paralyzed port system. He says government currency controls have smothered anything that might make private imports possible, and the only arrivals are for official activities; and reports companies are starting to cut down around 50% of their personnel. More in Spanish: (El Comercio; http://elcomercioweb.com/web/investigacion/operaciones-portuarias-caen-un-60-por-falta-de-dolares/)

Politics

Venezuela to audit votes without the opposition, Court challenge to follow

Venezuela's electoral body has said the audit of votes cast in the presidential election will start on 6 May. But it will not carry out the full recount demanded by opposition candidate Henrique Capriles, who appears to have lost narrowly to President Nicolas Maduro on 14 April. Capriles called the audit a fake, accusing the electoral council (CNE) of following the government's orders. CNE president Tibisay Lucena said Capriles' demands were "unfeasible". The opposition leader reacted angrily to her announcement on national television: "Again they think Venezuelans are fools! Without [comparing] the vote tallies, the audit is a fake!". He also wrote that it was "impossible that Mrs. Lucena would say anything against the order she was given" by the governing party. On Sunday, Capriles repeated that he would use "all the available instances" to fight Maduro's victory. He had already vowed to challenge it in the Supreme Court seeking to annul the election and allow Venezuelans to go back to the polls. (BBC; http://www.bbc.co.uk/news/world-latin-america-22333705)

Electoral officer: the election audit should dispel doubts

The National Electoral Council's sole independent member Vicente Díaz believes the electoral race was "unfair and anti-democratic," and therefore the Venezuelans questioning the results should be given the opportunity to conduct an audit. "We, as National Electoral Council, failed to ensure balance in this election (...) It is not the directors (of CNE) who have to be certain about the results, but voters, the country," Díaz said. (El Universal, 04-29-2013; http://www.eluniversal.com/nacional-y-politica/130429/electoral-officer-the-election-audit-should-dispel-doubts)

Vote gap between Capriles and Maduro down to 1,49 %

The Elections Board has divulged votes by Venezuelans abroad, which have tallied 53,845 (93.13%) for Capriles and 3919  (6.77%) for Maduro, thus bringing the gap between the two candidates to 1.49%. 21 polling stations abroad remain yet to be counted. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/elecciones-2013/130429/diferencia-entre-maduro-y-capriles-se-redujo-a-149)

Government and opposition trade accusations but hold off on escalating conflict

A postelection crisis appears to be setting into a slow boil in Venezuela, with the government and opposition trading bitter accusations but holding back for the moment from moves that would escalate into direct conflict. The government is threatening to jail opposition leader Henrique Capriles on charges of masterminding postelection violence but has given no indication it has any immediate intention of acting against him. Capriles, meanwhile, is boycotting an audit of the vote and plans to challenge his narrow loss in court. He is almost certain to lose in the government-controlled court system, but hasn’t hinted that he will call his followers to the streets anytime soon. (The Washington Post, 04-26-2013; http://www.washingtonpost.com/world/the_americas/venezuelas-government-opposition-trade-accusations-but-hold-off-on-escalating-conflict/2013/04/26/3e51139a-aeda-11e2-b59e-adb43da03a8a_story.html)

A ‘hard hand’ in Venezuela

Any doubt that Nicolas Maduro is taking his cues from Cuba should have been dispelled by events over the weekend. As Maduro huddled with the Castro brothers in Havana and recommitted Venezuela to the heavy subsidies that keep the Cuban economy afloat, his functionaries back in Caracas made two announcements: first, that a promised audit of the questionable election that ratified him as the successor to Hugo Chavez would be perfunctory, excluding the materials that the opposition says would show evidence of fraud; and second, that a 35-year-old U.S. filmmaker arrested last week on ludicrous accusations of espionage had been criminally charged. Timothy Tracy, a Hollywood-based documentary maker who spent several months interviewing Chavez militants and opposition students before he was abruptly arrested at the airport last Wednesday. Maduro and the regime’s propaganda apparatus are nevertheless portraying him as a sinister secret agent who was financing “violent groups” to provoke “a civil war.” That claimed Interior and Justice Minister General Miguel Rodriguez “would lead to the intervention of a foreign power to bring order to the country.” The real danger in Venezuela is that Maduro will follow up with a full-scale crackdown on the opposition. Government spokesmen have taken to calling Henrique Capriles, who challenged Maduro in the presidential election and demanded an audit of the results, a “fascist murderer”; the prisons minister said she has a cell waiting for him. On Saturday, authorities arrested a retired general, Antonio Rivero, who is known for his denunciations of Cuban infiltration of the Venezuelan military. Maduro keeps promising he will soon apply “mano dura,” or a hard hand — a phrase that has been a favorite of Latin strongmen. He and his Cuban tutors will likely watch to see if there is any substantial response from the Obama administration or other South American governments to the seizing of Mr. Tracy. If there is not, don’t be surprised to see Venezuela’s jails filled by Mr. Capriles and other political prisoners. (The Washington Post; http://www.washingtonpost.com/opinions/a-hard-hand-in-venezuela/2013/04/29/96d0e5ee-b0ed-11e2-bbf2-a6f9e9d79e19_story.html)

Capriles: Miranda is the only Venezuelan state that has not received funds

Miranda state governor Henrique Capriles Radonski has charged his state is the only one in the country that has not received central government funding a mandated by the Constitution. "There is an order being enforced, which is not to provide the mandated allocation to Miranda state," the governor complained, and strongly demanded the national government to make the funds available - saying his political and personal position should not be turned against the people of Miranda. He called the move a crime and called Maduro a coward for his actions. (El Universal, 04-29-2014; http://www.eluniversal.com/nacional-y-politica/130429/capriles-miranda-is-the-only-venezuelan-state-that-has-not-received-fu and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/130430/capriles-le-dice-cobarde-a-maduro-por-retener-situado)

Spain would mediate in Venezuela, if asked, says Spanish Foreign Minister José Manuel García Margallo. More in Spanish: (El Universal, 04-30-2013; http://www.eluniversal.com/nacional-y-politica/130430/espana-se-ofrece-para-mediar-ante-tension-venezolana)

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.

April 26, 2013

Economics & Finance

Treasury needs an additional U$D 53 billion, says ECOANALITICA

A recent report by the ECOANALITICA research firm shows that the government needs U$D 53 billion, in addition to oil and tax income, in order to meet its current obligations. The firm estimates the gap can be covered through further indebtedness and by using money available in parallel funds, such as the National Development Fund, which is managed by the national treasury, but it warns that buffer funds that are outside the formal budget dropped by 35.3% last year. More in Spanish: (El Universal, 04-26-2013; http://www.eluniversal.com/economia/130426/calculan-que-el-fisco-necesita-53-millardos-adicionales)

Only U$D 638 million available for imports so far this year, 50% drop in imports estimated

Companies in Venezuela are being hit by a severe scarcity of FOREX badly needed for importing raw materials, spare parts, and finished products essential to the domestic supply chain. So far this year only U$D 638 million have been provided to the private sector through the Foreign Currency Administration Commission (CADIVI), as well as the former Transaction System for Foreign Currency Denominated Securities (SITME), and its substitute Ancillary Foreign Currency Administration System (SICAD). The meager supply of FOREX has meant lower stocks and more shortages nationwide. The National Trade and Services Council (CONSECOMERCIO) estimates there has been a 50% drop in imports during Q1 2013, based on data from national ports. There are only 10,000 companies registered within the exchange control system, this is 1.2% of all companies operating nationwide. (El Universal, 04-25-2013; http://www.eluniversal.com/economia/130425/only-usd-638-million-sold-under-alternative-mechanisms-this-year; and more in Spanish: http://www.eluniversal.com/economia/130426/consecomercio-estima-caida-de-50-en-las-importaciones; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/consecomercio-falta-de-divisas-tiene-paralizado-al.aspx)

New central bank's head to face inflation and nose-diving reserves

Former Trade Minister Edmée Betancourt is slated to become the next president of the Central Bank of Venezuela (BCV) upon being nominated to the National Assembly by President Nicolás Maduro. The Bank has become an appendage of the President's Office which prints bills to finance state-owned companies, fosters the unlimited growth of currency to provide the sense of a booming economy, and transfers the nation's international reserves to the National Development Fund (FONDEN) -which is managed by the president.
Under these conditions, Betancourt's doesn't seem likely to encourage a reform aimed at reversing practices. As a result investment banks such as Barclays Capital have reported to their clients that Betancourt's nomination is not a good signal for the economy. (El Universal, 04-24-2013; http://www.eluniversal.com/economia/130424/new-central-banks-head-to-face-inflation-and-nose-diving-reserves)

S&P revises outlook on Venezuela’s PDVSA to negative

Standard & Poor’s Ratings Services revised its outlook on Petroleos de Venezuela S.A. (PDVSA) to negative from stable. At the same time, the agency affirmed its ‘B+’ foreign and local currency ratings on PDVSA.
In accordance with the agency’s criteria on government-related entities and assuming no changes in the current likelihood of extraordinary support from the government, the outlook revision on PDVSA reflects the fact that a potential downgrade of Venezuela would lead to a similar rating action on the company. This is due to the agency’s assessment that there is an almost certain likelihood that the government would provide timely and extraordinary support to PDVSA, in case of financial distress. (Latin American Herald Tribune, 04-23-2013; http://www.laht.com/article.asp?ArticleId=756553&CategoryId=10717)

... as well as on CORPOELEC

Standard & Poor’s Ratings Services revised its outlook on Corporacion Electrica Nacional S.A. (CORPOELEC) to negative from stable. At the same time, the agency affirmed its ‘B’ corporate credit rating on the company. The outlook revision follows the April 19 outlook revision on Venezuela (B+/Negative/B). (Latin American Herald Tribune, 04-23-2013; http://www.laht.com/article.asp?ArticleId=757627&CategoryId=10717)

Devaluation hits multinational companies quarterly profits, as at least seven major firms in different areas have listed Venezuela and its weakened currency as the cause for losses or reduced earnings. More in Spanish: (El Mundo, 04-26-2013; http://www.elmundo.com.ve/Noticias/Economia/Empresas/Devaluacion-afecta-ganancias-trimestrales-de-empre.aspx)

Maduro announces Special ALBA-MERCOSUR productive investment economic areas

At a meeting yesterday, President Nicolás Maduro announced the government would establish special economic areas in several parts of the country in order to foster domestic production and exports. More in Spanish: (VTV, 04-26-2013; http://www.vtv.gob.ve/articulos/2013/04/25/presidente-maduro-anuncia-zonas-especiales-de-inversion-productiva-alba-mercosur-472.html; AVN; http://www.avn.info.ve/contenido/maduro-debemos-avanzar-hacia-expansi%C3%B3n-fuerzas-productivas-del-pa%C3%ADs)

Government will create a national fund for FOREX savings

President Maduro also announced his government is moving toward creating a national fund for savings in foreign currency, under special conditions to attract investment and seek capital repatriation. More in Spanish: (AVN, 04-26-2013; http://www.avn.info.ve/contenido/ejecutivo-crear%C3%A1-fondo-nacional-ahorros-divisas; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/maduro-plan-de-inyeccion-de-divisas-comenzara-el-2.aspx)

Commodities

Govt plans to bolster energy industrialization

Newly appointed Electricity Minister Jesse Chacon says the Government will bolster industrialization within the nation's electric sector aiming to manufacture tools and supplies to meet the domestic demand and even export to foreign markets. He added that the midterm goal is to "manufacture in Venezuela the supplies which will be used in the electrical sector and, beyond that, export them to ALBA (Bolivarian Alliance for the Peoples of Our America) and Mercosur (Common Market of the South)." (AVN, 04-25-2013; http://www.avn.info.ve/contenido/bolivarian-govt-bolster-energy-industrialization; El Universal, http://www.eluniversal.com/economia/130425/venezuelan-government-orders-intervention-of-electricity-utility)

... minister pledges to stabilize electric sector within 100 days, or resign

Chacón also undertook a plan to stabilize the national electric system within 100 days, and said he will resign if he cannot meet the goal.  The plan includes maintenance and strategies to lower demand for electricity. More in Spanish: (AVN, 04-26-2013; http://www.avn.info.ve/contenido/ministro-chac%C3%B3n-se-compromete-estabilizar-sector-el%C3%A9ctrico-100-d%C3%ADas; El Universal, http://www.eluniversal.com/economia/130426/deciden-intervenir-y-determinar-responsabilidades-en-corpoelec)

Logistics & Transport

Former workers threaten to paralyze port operations

Former workers at the now defunct National Ports Institute have threatened to block entrances to the nation's main port - Puerto Cabello - if they are not paid at least 20% of what they are currently owed, after they congregated at the entrance of the administration building for Bolivarian Ports (BOLIPUERTOS), unsuccessfully expecting to receive their checks. More in Spanish: (Notitarde, 04-26-2013; http://www.notitarde.com/La-Costa/Ex-trabajadores-del-extinto-INP-amenazan-con-parar-el-puerto/2013/04/25/181651; El Carabobeño, http://www.el-carabobeno.com/impreso/articulo/57713/ex-trabajadores-del-inp-amenazaron--con-paralizar-el-puerto-si-no-les-pagan)

Politics

Elections Board steadfastly refuses to allow access to voting registers in audit

To this date the National Elections Board - with the sole exception of independent member Vicente Díaz - has refused requests by opposition election experts to review voting registers and check for duplicate fingerprints, a key part of the audit on 46% unaudited polling centers, as demanded by presidential candidate Henrique Capriles Radonski and the opposition Democratic Unity Conference. The pro-government majority within the Board insists that the system's reliability can be proven by simply matching numbers in poll minutes, voting tickets and the number of voters who signed the registers - but not review each voter. More in Spanish: (El Universal, 04-26-2013; http://www.eluniversal.com/nacional-y-politica/130426/cne-mantiene-decision-de-verificacion-sin-acceso-a-cuadernos)

Opposition says it will formally contest the election, seek new vote

Opposition leader Henrique Capriles Radonski has announced that he and the National Democratic Conference (MUD) will contest presidential elections held on April 14th. He says: "We will contest the elections and comply with all legal steps, because in the end this will be known worldwide and what would come out of all this is a new election". He also said they would not take part in a fake audit: "We will not take part if there is no checking of voting registers in order to verify fingerprints and signatures, because that would be taking part in a sham and we will not accept it." Capriles said they will take the case to the Supreme Court as part of the required procedures, and that "if Venezuelan justice does not provide an answer we will take this internationally. What has happened here will go all around the world". More in Spanish: (El Nacional, 04-26-2013; http://www.el-nacional.com/)

Maduro declares there was no fraud, claiming "this is the same system used to elect members of the National Assembly and Governors." More in Spanish: (El Nacional, 04-26-2013; http://www.el-nacional.com/)

Machado says "Some in UNASUR feel cheated by the Elections Board"

National Assembly member María Corina Machado says the opposition has been in touch "with all legislatures in Latin America, Europe, and the World Inter Parliamentary Union, and all have roundly condemned what is happening at the National Assembly and the betrayal of a commitment by Tibisay Lucena and the National Elections Board to fully audit April 14th presidential elections". She added that some UNASUR representatives "believe they were cheated" by the Board, and that what is at stake is whether the regional organization "will be an organization known to defend democracy, or a club of nations meant to cover up each other's serious violations of democracy". More in Spanish: (Tal Cual, 04-26-2013; http://www.talcualdigital.com/index.html)

Fernández and Rousseff meet, discuss Venezuela

Argentine President Cristina Kirchner and Brazilian President Dilma Rousseff met yesterday in Buenos Aires and among other issues discussed the UNASUR declaration on the situation in Venezuela, which the termed "democratic". The UNASUR statement supported the decision to expand the election audit to the total number of voting centers. More in Spanish: (AVN, 04-26-2013; http://www.avn.info.ve/contenido/presidentas-fern%C3%A1ndez-y-rousseff-destacan-calidad-declaraci%C3%B3n-unasur-sobre-venezuela)

Around 93% of Venezuelans abroad voted for Capriles, further closing vote gap

A preliminary count of the votes cast abroad in the Venezuelan presidential election of April 14 show that opposition candidate Henrique Capriles Radonski won 93% of the ballots. However, these are unofficial results from a manual count conducted by the opposition campaign team, based on the manual tally sheets from the polling stations located in consulates and embassies. These preliminary results are available for consultation on the website comandoexteriorvenezuela.com. (El Universal, 04-24-2013; http://www.eluniversal.com/nacional-y-politica/130424/some-93-of-venezuelans-abroad-vote-capriles)

Opposition, government wrestle on web, airwaves over clinic firebombing claims

Hours after barely winning Venezuela’s presidential election, the ruling party started to flood state media with accusations that opposition provocateurs were firebombing Cuban-run neighborhood health clinics across the country in revenge. More than a week later, a national dispute is raging as the opposition wages a remarkably successful media counteroffensive showing the claims to be seriously exaggerated and in some cases entirely false. With meticulously dated amateur photos of undamaged clinics, opposition supporters have vividly illustrated how cellphone cameras, Twitter and Facebook can help even the playing field against a government that came to dominate broadcast media during the late Hugo Chavez’s 14-year presidency. (The Washington Post, 04-24-2013; http://www.washingtonpost.com/world/the_americas/opposition-government-wrestle-on-internet-airwaves-over-clinic-firebombing-claims/2013/04/24/51ef7e34-ad11-11e2-a8e6-b6e4cc7c49d1_story.html; Fox News, http://www.foxnews.com/world/2013/04/24/opposition-government-wrestle-on-internet-airwaves-over-clinic-firebombing/)

Cabello now says he will not pay National Assembly legislators who do not recognize Maduro

National Assembly President Diosdado Cabello, who has refused opposition members the right to speak at the National Assembly unless they first recognize Nicolás Maduro as President, now says he will not pay dissident Assembly members: "This is logical and coherent. How am I to pay a ghost? If they do not work they will not be paid, and they are not working because they do not recognize Maduro". More in Spanish: (El Universal, 04-26-2013; http://www.eluniversal.com/nacional-y-politica/130426/cabello-no-cobraran-diputados-que-no-reconozcan-a-maduro)

Parliament launches probe into Capriles

The government-controlled parliament set up an inquiry into violence over the disputed election that authorities blame on opposition leader Henrique Capriles. Nine people died and dozens were injured after opposition protests against Nicolas Maduro's narrow April 14 presidential poll win turned violent around the nation. The government said the unrest was evidence the opposition was planning a coup. Capriles' camp rejects that, saying officials exaggerated the violence and included deaths from common crimes to bolster the toll and discredit the opposition. (Reuters, 04-25-2013; http://www.reuters.com/article/2013/04/25/us-venezuela-opposition-idUSBRE93N0Z320130425)

Deputy Calixto Ortega, appointed chargé d’affaires to the United States, says he will do everything possible to keep improving relations “with the precise instructions our President and the Venezuelan Foreign Affairs Ministry". (Veneconomy, 04-24-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34434&idc=1; El Universal, 04-24-2013; http://www.eluniversal.com/nacional-y-politica/130424/venezuela-appoints-calixto-ortega-as-charge-daffaires-to-the-us)

American filmmaker detained in Venezuela post-vote crackdown

A 35-year-old filmmaker from California has been arrested by authorities who are accusing him of fomenting postelection violence on behalf of the U.S. government. President Nicolas Maduro says he personally ordered Timothy Tracy's arrest on suspicion of "creating violence in the cities of this country." The interior minister said Tracy was working for U.S. intelligence, paying right-wing youth groups to hold violent demonstrations in order to destabilize the country after Maduro's narrow election win last week. Friends and family of Tracy say he has been in Venezuela since last year making a documentary about. The Georgetown University English graduate produced the recent Discovery Channel program "Under Siege," about terrorism and smuggling across the U.S./Canada border. He is the first American in recent memory to be detained in Venezuela on politically related charges. (Fox News, 04-25-2013; http://www.foxnews.com/world/2013/04/25/us-man-detained-in-venezuela-post-vote-crackdown-family-says-innocent-filmmaker/#ixzz2Ra0WOOjX) 

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.

April 23, 2013

Economics & Finance

Central bank's Merentes named new Finance Minister

President Nicolas Maduro has replaced Venezuelan Finance Minister Jorge Giordani, appointing central bank chief Nelson Merentes in his place two days after being sworn in as the late Hugo Chavez's successor. It will be the third stint as finance minister for Merentes, a mathematician by training who is seen as a more pragmatic economist than his ideologically driven counterpart Giordani, a Marxist academic who was nicknamed "the Monk." "I've great faith in Nelson Merentes. We've known each other for many years," Maduro said. In his speech, he also confirmed Oil Minister Rafael Ramirez, Defense Minister Diego Molero, Foreign Minister Elias Jaua and Vice President Jorge Arreaza in their current roles. (Reuters, 04-22-2013; http://www.reuters.com/article/2013/04/22/us-venezuela-election-merentes-idUSBRE93L01S20130422; El Universal, 04-22-2013; http://www.eluniversal.com/economia/130422/venezuela-reshuffles-nine-economy-related-ministries; Bloomberg, http://www.bloomberg.com/news/2013-04-22/venezuela-s-maduro-names-merentes-as-finance-head-in-new-cabinet.html; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=756368&CategoryId=10717; The Washington Post, http://www.washingtonpost.com/world/the_americas/shortly-after-narrow-election-victory-venezuelas-nicolas-maduro-shuffles-cabinet/2013/04/22/e9a98cd6-ab29-11e2-9493-2ff3bf26c4b4_story.html)

Edmée Betancourt nominated as Central Bank President

President Nicolás Maduro Moros is nominating former Trade Minister Edmée Betancourt to be President of the Central Bank, replacing Nelson Merentes. Her nomination will go to the National Assembly for approval. More in Spanish: (AVN, 04-23-2013; http://www.avn.info.ve/contenido/ejecutivo-propone-edm%C3%A9e-betancourt-como-presidenta-del-bcv; El Universal, http://www.eluniversal.com/economia/130423/proponen-a-edmee-betancourt-para-presidir-el-banco-central; El Mundo, http://www.elmundo.com.ve/Noticias/Actualidad/Noticias/Maduro-designa-a-Edmee-Betancourt-como-presidenta-.aspx)

Increase in FOREX supply is expected

Financial circles see the return of Nelson Merentes to the Finance Ministry, replacing Jorge Giordani, as a sign that the Maduro regime will make more FOREX available to grow the economy and stave off inflation. Giordani has radicalized the system over the past three months, attacking "consumerism" through diminished FOREX supply. The result has been a sizeable increase in the black market rate, inflation, and an abrupt increase in scarcities. More in Spanish: (El Universal; http://www.eluniversal.com/economia/130423/esperan-mayor-oferta-de-divisas-con-merentes-en-finanzas)

Commodities

Venezuelan oil basket plummets to U$D 96.51

The Venezuelan oil basket plunged (U$D 4.96) last week and ended at U$D 96.51 per barrel, according to the Ministry of Petroleum and Mining. As a result, the oil basket average annual price is now U$D 103.14 per barrel. (El Universal, 04-22-2013; http://www.eluniversal.com/economia/130422/venezuelan-oil-basket-plummets-stands-at-usd-9651)

Military men will run the electric system

President Nicolás Maduro has announced the national electric system is to be a "national security service" and has named General Wilmer Barrientos to supervise the entire grid. He also named former Lieutenant Jesse Chacón as Minister for Electric Affairs. More in Spanish: (El Universal, 04-23-2013; http://www.eluniversal.com/economia/130423/disciplina-militar-para-el-sistema-electrico)

Union demands an end to land takeovers at SMURFIT

Luis Zerpa, President of the Forest Workers Union at SMURFIT KAPPA Cartón de Venezuela, which has been run by the Government since September 2011, is leading a group of over 50 union members protesting at the National Land Institute (INTI) to demand an end to land invasions at their installations. Zerpa says their work has been hindered by informal land takeovers and they fear for their jobs. More in Spanish: (El Universal; http://www.eluniversal.com/economia/120510/exigen-al-inti-solucion-a-invasiones-de-tierras-en-smurfit)

Politics

Poll audit stalls

Disagreements by Election Board members and a lack of information paralyzed the beginning of the auditing process on 46% of the polling stations that operated during the April 14th elections. Audits were scheduled to start yesterday (April 22). Ramón José Medina, spokesman for the opposition in this matter, has demanded a formal written response by the Board to all technical issues raised. "We will not accept a fake or partial audit. It must take place under technical rules. Results are not irreversible; this is precisely what the audit is about". Earlier, Election Council Vice President Sandra Oblitas threw the process into confusion by claiming the scheduled audit isn't about "reversing" the outcome and warning against "false expectations." She added that only the Supreme Court can change the outcome. At the same time, Council member Tania D'Amelio says the Council has not yet received any request to contest election results, and that there is nothing to sustain a claim of fraud. She said the election must be contested within 15 days after the President-elect is proclaimed by the Council, which is May 10th. In order to contest election results the claim must name specific cases, providing full details: stations, voting tables and poll log where a fraud is suspected. Finally, Council member Socorro Hernández says a timetable for audits is being set up and that the starting date will be announced on April 28th at the latest. (Fox News, 04-20-2013; http://www.foxnews.com/world/2013/04/20/venezuela-election-official-offers-confusing-prognosis-for-audit/#ixzz2REqmB5TW; AVN, 04-22-2013; http://www.avn.info.ve/contenido/election-results-contests-not-received-so-far; and more in Spanish: El Nacional; http://www.el-nacional.com/; El Universal, http://www.eluniversal.com/nacional-y-politica/130423/no-vamos-a-participar-en-una-auditoria-chucuta)

Henrique Capriles does not rule out repeating election

Opposition Presidential candidate Henrique Capriles hopes for the best scenario: a repetition of elections in the short term. He believes this would be the inevitable result an electoral audit to be conducted this week on 46% of the ballot boxes not audited on April 14 after the presidential vote. When asked what, in his view, would be the results of the audit, Capriles replied that "an election re-run" would be necessary. He added that, under the law, the vote has to be repeated when irregularities are found. According to Capriles, the election would be repeated at least partially, but the number of voters involved would be large enough "not only to close the gap, but to give us the victory." (El Universal, 04-22-2013; http://www.eluniversal.com/nacional-y-politica/130422/henrique-capriles-does-not-rule-out-election-re-run)

"In the matter of an audit, some countries defend the status quo"

Opposition leader Henrique Capriles rejected meddling by Argentine President Cristina Fernández de Kirchner in Venezuelan affairs and says she interferes in domestic affairs as "if she were part of the Chavista government."

Capriles says he is troubled by the position "some presidents" have taken regarding the audit requested on election results, according to which ruling party candidate Nicolás Maduro won the presidential vote held on April 14, DPA informed. (El Universal, 04-22-2013; http://www.eluniversal.com/nacional-y-politica/130422/stance-of-some-countries-about-audit-is-in-defense-of-status-quo)

Jaua warns the US against imposing sanctions

Venezuela threatened on Monday to take measures affecting energy and trade if the United States resorts to sanctions in a row over the disputed presidential election in Caracas earlier this month. "If the United States takes recourse to economic sanctions, or sanctions of any other kind, we will take measures of a commercial, energy, economic and political order that we consider necessary," Foreign Minister Elias Jaua warned in a television interview. US Assistant Secretary of State Roberta Jacobson was reported over the weekend to have urged a recount in order to give the public confidence in the outcome, which has been challenged by opposition candidate Henrique Capriles. Asked whether the United States would impose sanctions if Venezuela refused to recount the votes, Jacobson said she could not say one way or another, according to CNN en Español. (El Universal, 04-22-2013; http://www.eluniversal.com/nacional-y-politica/130422/venezuela-cautions-the-us-against-sanctions and AFP, http://www.channelnewsasia.com/news/world/venezuela-threatens-oil-trade-measures-i/647850.html)

NGO complains about "serious" attacks on detainees for political reasons

NGO Foro Penal Venezolano (Venezuelan Penal Forum) has collected documentary evidence to file a complaint with local and international organizations over "serious and systematic" violations of due process and human rights abuses against minors and youngsters captured for exercising their right to protest. NGO Director Alfredo Romero says there were attacks and torture, including degrading treatment –unprecedented action in the country- and pellets fired at point-blank at areas such as faces and arms. (El Universal, 04-22-2013; http://www.eluniversal.com/nacional-y-politica/130422/ngo-complains-about-serious-attacks-on-detainees-for-political-reasons)

Paraguay millionaire president-elect speaks highly of Venezuela

Paraguay’s president-elect, Horacio Cartes, said Monday that he’ll urge Congress to approve Venezuela’s entry into Mercosur. A millionaire businessman, Cartes said he transferred his interests in his dozens of companies before the campaign began to avoid conflicts of interests after he takes office Aug. 15. (The Washington Post, 04-21-2013; http://www.washingtonpost.com/business/paraguayans-elect-tobacco-magnate-horacio-cartes-returning-colorado-party-to-presidency/2013/04/21/9d9b7c9e-aae5-11e2-9493-2ff3bf26c4b4_story.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.