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, February 28, 2014

February 28, 2014

Economics & Finance
FEDECÁMARAS: Government seeks to impose a failed economic model
FEDECÁMARAS President Jorge Roig, head of the nation's largest business organization told President Nicolás Maduro that the Government is "trying to impose an economic model that has failed around the globe", in reference to the totalitarian socialist political-economic structure. Maduro heard from both critics and supporters at a “peace conference” in Caracas, wihich the main political opposition group skipped. “Our country is not well, Mr. President,” said Roig. “We have economic indicators that show us with one of the highest inflation rates in the world, with enormous shortages.” Also attending was billionaire beverage magnate Lorenzo Mendoza, whom Maduro praised for suggesting the government create a commission to analyze the country’s economic situation. The commission will be headed by Vice President Jorge Arreaza, who says all productive sectors are invited to create working groups. (El Universal, 02-27-2014;; Bloomberg,; and AVN, 02-27-2014;

U$D 13 billion debt to private sector swells government FOREX reserves to U$D 17.8 billion
The ECOANALÍTICA think tank estimates FOREX available to the government has risen to U$D 17.8 billion, up 60% from U$D 11 billion at the same time last year, due to steady oil sales and holding back FOREX from the private sector, pending a redefinition of the system to be applied. Backed up debt to the private sector for unpaid past imports is now estimated around U$D 13 billion. More in Spanish: (El Universal,

Venezuela: A country with four exchange rates
  • Venezuela's economy, under strict exchange controls since 2003, now faces four different foreign exchange rates:.
    Official rate: VEB 6.30/U$d, used for 82% of the FOREX the government received - mainly from oil sales - that is almost U$D 43 billion, strictly for priority areas such as food, health and education.
  • SICAD rate: VEB 11,80/U$D. The Ancillary FOREX Administration System (SICAD) auctions out U$D 220 million weekly for non priority activities and tourism.
  • SICAD 2 rate: A new system just announced which makes it possible for individuals and companies to freely trade dollars daily within a government established range, designed to bring down scarcity and inflation.
  • Black market: Estimated at 13 times the official rate. It arose from strict government controlls and distrust of the Bolivar.  More in Spanish: (El Mundo,

Companies must be one year old in order to participate in SICAD
The National Foreign Trade Center (CENCOEX) keeps piling up conditions for companies that want to use the SICAD system. The call for this week's auction now specifies that for companies to enter the process they must be at least one year old. More in Spanish: (El Mundo,

International Trade
Government established a Foreign Trade Corporation (CORPOVEX)
The Venezuelan Government has formally established a Foreign Trade Corporation (CORPOVEX), which will report to the Vice President for Economic Affairs and the Central Planning Commission. CORPOVEX will control foreign trade operations for a group of state-owned companies: AGROPATRIA, BARIVEN, CASA, CVG, SUVINCA, and VEXIMCA. (El Universal, 02-27-2014;

Brazilian exporters anticipate a drop in Venezuela trade
Brazil's Foreign Trade Association (AEB) expects "a U$D 1 billion reduction in exports to Venezuela this year". Brazil has a positive balance of payments relationship with Venezuela due to food exports. Bilateral trade was U$D 6 billion in 2013, with U$D 3.669 billion in Brazil's favor. More in Spanish: (El Universal,

Over 3,000 tons in scarce food staples have arrived at Puerto Cabello
  • Over 2,324 tons of frozen beef in 44 containers, for the state Supply and Agricultural Services Corporation (CASA), from Nicaragua
  • Over 1,121 tons of milk and cream milk in 48 vans, for CASA, from Costa Rica.
  • 230 tons of milk in 10 containers for CASA, from Nestlé Argentina.
  • Over 16 tons of baby milk formula, for CASA, from Nestlé Germany.
  • Over 439 tons of raw soya oil in 20 containers, for CAA, from ALBALINISA Nicaragua.
  • Over 267 tons of green coffee, for Café de Venezuela, from ALBALINISA Nicaragua.
More in Spanish: (El Carabobeño;,-leche-y-aceite-arribaron-al-puerto)

Logistics & Transport
Heavy cargo land transport is about 70% paralyzed
Members of ASOTRACONTAINER, the Puerto Cabello Association of Cargo Transporters, is warning that heavy load transportation is on the verge of a complete stoppage due to scarcities and the excessive increase of supplies and spare parts, as well as the lack of road safety. They report that 70% of the fleet is and an increase in freightage will be announced next week. More in Spanish: (El Carabobeño;; Notitarde;

Business protests impact of higher port rates
The Puerto Cabello Chamber of Commerce is concerned over rising rates of port services applied the National Port Authority (BOLIPUERTOS), following an 80% increase in rates at the port there. It is asking authorities to "reconsider" rates to lessen the economic impact. More in Spanish: (El Universal, 02-27-2014;

Student protests in Caracas end in clashes again
Security forces in Venezuela used tear gas to break up a student demonstration in Caracas. Thousands of protesters were demanding the release of fellow students detained during two weeks of unrest, and called a fresh march for Sunday. Attorney General Luisa Ortega said 13 people had died in the violence, although President Maduro put the figure of protest-related deaths at more than 50 on Wednesday. Despite the start of the long holidays students again gathered in Caracas. "There's no Carnival for anybody here. Here we are still on the streets, committed to the fight," student leader Juan Requesens told EFE news agency. Their peaceful demonstration ended in clashes with security forces when some masked protesters tried to block a road. On Wednesday, Maduro held a "national peace conference" without the participation of the opposition. (BBC,

Protests, barricades bring San Cristóbal to a halt
Piles of glass, a trashed refrigerator and the burned remains of a car litter the streets of the Pirineos neighborhood in San Cristobal, giving it the look of a community under siege. Residents of this middle-class area have created the disorder themselves as part of anti-government protests demanding President Nicolas Maduro resign. Open sewer grates expose gaping holes in the street. Debris piled across intersections blocks traffic. Residents set the rules as to which cars can pass through and when. "This barricade is a community effort. The neighbors held an assembly and we're all in agreement," said one burly man who asked not to be identified, as hooded teenager’s unloaded sacks of rocks from the back of a pick-up. "We call this resistance. We're not going to ease up no matter what the governor or the president says." Businesses are mostly shut and public transport suspended. The sporadic demonstrations that kicked off two months ago in San Cristobal have turned into a national opposition protest movement and shuttered this city of 250,000. (Reuters, 02-27-2014;

CNN en Español, media under siege as unrest continues
The media remains under siege in Venezuela as anti-government street protests continue to escalate. CNN en Español anchor Patricia Janiot, abruptly left the country after receiving threats from the government. President Nicolas Maduro threatened on Thursday to expel CNN from Venezuela unless it “rectified its coverage” of the recent demonstrations and has ordered his administration to begin the process of blocking CNN’s signal in the country. In response, CNN en Español has countered that it has reported in an “accurate and balanced manner.” Colombian regional news network NTN24 was pulled off the air and its Internet feed blocked in Venezuela for its uncensored reports. Last Tuesday, a CNN crew was robbed at gunpoint while covering the street protests. As CNN’s Karl Penhaul described it, a group of armed thugs on motorcycles surrounded him and his crew after they rammed into a group of anti-government protesters. “Next thing I knew, I was staring down the barrel of a chrome-plated 9mm pistol and three armed men then proceeded to rob our crew of all the camera gear and all the transmission gear as well,” he reported. With local television networks, radio stations and even newspapers effectively stifled by the Maduro government, most Venezuelans have been relying on YouTube, Twitter, Facebook and other social media to get uncensored information. Newspapers not toeing the line have seen their paper supply restricted, forcing some to close down or in the case of broadsheet El Nacional, cut down the number of sections in the paper. Meanwhile, even the Internet is under siege. Twitter reported that Venezuela had blocked live images on it service on Friday while U.S. company Zello said that state-run CANTV had blocked access to its popular “walkie-talkie” app, widely used by protesters worldwide to organize their marches. (Variety,

Maduro bets 6-day holiday will diffuse protests
President Nicolás Maduro expanded annual Carnival festivities by decreeing February 27-28 as national holidays, in addition to the scheduled days off on March 3-4. Next March 5 will also be a holiday marking the first anniversary of the death of Hugo Chavez. While the extended vacation weekend may send some to the country’s beaches, Maduro will still need to offer concessions to extend any lull in the violence beyond the holidays, said Carlos Romero, a political analyst at the Central University of Venezuela in Caracas. (Bloomberg:; Reuters,

Kerry: The United States will not "sit around and be blamed for things we've never done".
US Secretary of State John Kerry says the United States looks forward to restoring relations with Venezuela, yet "we're not going to sit around and be blamed for things we've never done." The statement came in response to accusations made by Nicolás Maduro's Government, which blamed the US Administration for its alleged role in Venezuelan demonstrations. Kerry's words followed Venezuela's surprise move to name Maximilian Sánchez Arveláiz a possible new ambassador to the US. (El Universal, 02-26-2014;; Reuters,

US Senate resolution targets Venezuelan rights violators
Senate Foreign Relations Committee Chairman Robert Menendez (D-NJ) and U.S. Senator Marco Rubio (R-FL) today introduced a Senate Resolution deploring the violent repression of peaceful demonstrations in Venezuela, calling for full accountability for human rights violations. “This action sends an unequivocal message by condemning the violence perpetrated against innocent Venezuelans by President Maduro, Venezuelan security forces, and armed pro-government supporters," said Chairman Robert Menendez. "Now is the time to pursue a course of targeted sanctions by denying and revoking visas, and freezing the assets of Venezuelan officials complicit in the deaths of peaceful protestors... This Resolution urges President Obama to immediately impose targeted sanctions that are already possible under existing law and encourage a process of dialogue between Venezuela’s government and the political opposition,” Rubio added. (Capitol Hill,

US expels Venezuelan diplomats in tit-for-tat move over unrest
The United States on Tuesday ordered three Venezuelan diplomats to leave in reprisal for President Nicolas Maduro's expulsion of three American embassy staff accused of fomenting unrest that has killed at least 13 people. The U.S. State Department said two first secretaries and a second secretary at the Venezuelan embassy in Washington had been declared personae non grata in response to Caracas' February 17 move against the three Americans. "They have been allowed 48 hours to leave the United States," it said. (The New York Times)

Washington responds coolly to Maduro's ambassadorial proposal
The State Department responded coolly to President Nicolás Maduro's surprise announcement that he would name Maximilian Sánchez Arveláiz as Venezuela's Ambassador to Washington. Venezuela expelled the last US Ambassador here in July 2010. Maduro announced his decision on television with no prior consultation. State Department spokesperson Jen Psaki responded that the US is open to improving relations with Venezuela, even appointing ambassadors, but indicated that Venezuela must first "show seriousness" in its intentions. "The exchange of ambassadors is a mutual decision. We have said for months that we are open to an exchange, but Venezuela must show seriousness on its aperture so that a positive relationship can move forward." More in Spanish: (El Universal,

US government condemns attacks on human rights in Venezuela
The US State Department Country Report on Human Rights Practices for 2013, presented by Secretary of State John Kerry has condemned the absence of a balance of powers in Venezuela, saying "we will continue to support those without a voice in Venezuela, where the government had met peaceful demonstrators with a show of force in the streets and by jailing students...the resolution of Venezuela's problems will not come through violence, but through dialogue". "The principal human rights abuses" recorded in Venezuela included "corruption, politicization of the judicial system, and government actions to impede freedom of expression and restrict freedom of the press". It notes "practical limitations on freedom of speech and press" as a result "of the combination of laws and regulations governing libel and media content, as well as legal harassment and physical intimidation of individuals and the media." (El Universal, 02-27-2014;; and more in Spanish: ABC Spain,

European Parliament holds regime responsible for violence in Venezuela
The European Parliament - by an ample majority vote - called on the regime of Nicolás Maduro to "immediately" disarm and dissolve "armed groups that are controlled by the government". The declaration calls for an end of impunity by these groups. It says that instead of promoting peace authorities "have threatened an armed revolution". It also reminded Maduro of his "duty to guarantee the safety of all citizens in the country, without regard to their political views or affiliations". The resolution calls for a parliamentary group to visit Venezuela urgently "to gage the country's situation as soon as possible".  European Union Commissioner Algirdas Semeta told the European Parliament: “We are deeply concerned by the continuing unrest... We reject all acts of violence and intolerance from all side..."nobody should be detained for exercising their rights to freedom of speech and assembly". (El Universal, 02-27-2014;; and more in Spanish: La Razón,

Pope pleads for 'end to violence' in Venezuela
Pope Francis says he is concerned about recent unrest in Venezuela, in which at least 13 people have died. The Pope said he hoped that "violence and hostility will cease as soon as possible". He called on the Venezuelan people "to promote reconciliation through mutual forgiveness and sincere dialogue". (BBC)

Colombia demands respect for former President Uribe from Venezuelan authorities
Colombian Foreign Affairs Minister María Ángela Holguín complained about consistent oral attacks by the Venezuelan regime on former Colombian President Álvaro Uribe, accusing him of being the mastermind of the ongoing crisis in Venezuela. "When one hears such unfortunate remarks as those made... by Foreign Minister (Elías) Jaua, it is time to ask Venezuela to abstain from speaking thus about former President Álvaro Uribe," Holguín said. (El Universal, 02-26-2014;

The OAS has postponed its debate on Venezuela
The Organization of American States temporarily postponed its call for a special session on Venezuela which had been requested by Panama "for administrative reasons". Venezuelan Foreign Minister Elías Jaua, who is on a regional support seeking tour of South America, objects to the OAS taking a position and would rather take the case to UNASUR, the Union of South American Nations. (Infolatam)

Russia seeks increased military presence in Venezuela and Cuba
Russian Defense Minister Sergei Shoigu has said the Kremlin intends to expand its military presence to other nations and is pursuing high level contacts in Venezuela, among other nations. More in Spanish: (ABC Spain,

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, February 25, 2014

February 25, 2014

Economics & Finance
Ramírez says new FOREX market to take wind out of black market
Venezuela's top economy official has vowed that a new currency exchange platform will undermine the spiraling black market for U.S. dollars by adding a market-based mechanism to existing currency controls. Economy Vice President Rafael Ramirez told reporters that the system known as SICAD 2 would be based on supply and demand and would create an exchange rate through a bond swap system known locally as "permuta." SICAD 2 will add a third rate to the 11-year-old currency controls that sell dollars at VEB 6.3 bolivars for preferential goods and at VE 11.8 for other items, both of which are far below the rate that greenbacks fetch on the black market. "We are going to let the (exchange) rate be determined by supply and demand," Ramirez told reporters during a press conference. "The enemy is the parallel exchange rate; we are going to bring it down." The government has now reformed the Exchange Crimes Law to allowed businesses and individuals to take part in foreign exchange transactions. The new market will take effect only when the Central Bank draws up a new set of currency regulations. Ramirez said he hoped that mechanism would be ready by Tuesday. SICAD 2 will hold auctions every day, with the amount on offer to be based on demand rather than a set amount. Buyers will not have to describe what the dollars will be used for when they bid, unlike other foreign exchange mechanism that exist under the currency controls. (Reuters, 02-24-2014;; Veneconomy,; AVN,; El Universal,

FEDECAMARAS: new decree "addresses many business needs"; CONINDUSTRIA " it is no panacea"
Jorge Roig, president of the nation's main business organization FEDECÁMARAS, says the new exchange system addresses many of the needs for the private sector, but adds: "It could have been excellent news for both international markets and the Venezuelan economy, because it will quench the fiscal need for foreign currency", but adds it arrives at the most unfortunate and inconvenient time for the nation. The new law removes penalties from the exchange system and allows parties other than PDVSA to acquire FOREX freely in the market.  Eduardo Garmendia, head of the National Industry Council (CONINDUSTRIA) says the new system is no panacea because "a market that starts out under controls is never a good sign", adding: "We will study the decree...up to now what official spokesmen have said is that it will be a market controlled within two brackets". More in Spanish: (El Mundo,;; El Universal,

Venezuela bonds rally after move to ease dollar shortages
Venezuelan dollar bonds rallied the most in emerging markets after the country moved to allow for more dollar sales and amid optimism there will be a political fix to end protests that have left at least nine people dead. The extra yield investors demand to own Venezuelan bonds instead of Treasuries fell 0.44 percentage point to 13.73 percentage points at 1:26 p.m. in New York, according to JPMorgan Chase & Co.’s EMBIG Diversified index. Dollar bonds due 2027 jumped 1.9 cents on the dollar to 68 cents, the highest price on a closing basis since Jan. 29. In an effort to mitigate record shortages of everything from food to medicine that spurred a month of protests, Venezuela distributed rules today allowing state oil producer Petroleos de Venezuela SA, companies and individuals to buy and sell dollars in a regulated market. The move will create a new exchange rate for dollar purchases given the scarcity of foreign currency available at the official rate of about 6.3 bolivars per dollar as Venezuela bleeds reserves. (Bloomberg, 02-24-2014;

Experts warn scarcities will worsen in the next few months
Companies that manufacture, process and import such consumer products such as food, cleaning items, spare parts, and packaging material are alarmed at the drop in product inventories and supplies. They say scarcity will become worse in March - if urgent steps are not taken - as there is no plan to access funds and pay foreign suppliers in order to start importing again. Prices on controlled items have also been frozen for the past two years, with no adjustment. More in Spanish: (El Nacional;

Unions call for recovery of the national productive system
Pro and anti government unions agree that imports must be brought down by reactivating the industrial system. The Bolivarian Workers Union have admitted to failures in the management of companies taken over by the government and has called for a review of the effectiveness of in order to generate employment, recover the 25 industrial areas and devise a special plan for infrastructure. More in Spanish: (El Universal,

Oil & Energy
PDVSA, PERENCO discuss U$D 600 million financing for venture
Venezuelan state oil company PDVSA and Anglo-French oil firm PERENCO are in talks for a U$D 600 million financing deal to boost production at the PETROWARAO joint venture, says Oil Minister Rafael Ramirez. PDVSA says that since the start of last year it has brought in close to U$D 10 billion in financing from joint venture partners to help boost stalled oil production, shoring up its financing after it sharply cut back on bond issues. "PERENCO is going to bring another U$D 600 million more, just like we've been doing with other countries," Ramirez said. (Reuters, 02-24-2014;

Has food rationing begun?
Government PDVAL food distribution network will have a centralized system within three months to limit customer purchases of basic food items to only once a week. Customers will need to register their ID card number before entering their stores and will not be allowed to buy there again in that week. The pilot program has begun at the San José’s PDVAL Diana. (Veneconomy, 02-24-2014;

Food will be imported from Argentina to ensure supply
Economy Vice President Rafael Ramírez claims "we are defeating scarcity by importing many more products" and says officials have travelled to Argentina to purchase U$D 1.6 billion worth of food. More in Spanish: (El Universal,

Maduro may raise agriculture product prices

President Nicolas Maduro says he will not rule out increasing agriculture prices, in order to "regularize the economy". More in Spanish: (Ultimas Noticias,; El Mundo,

International Trade
In-bound cargo at Puerto Cabello:
  • 5,000 tons of milk from New Zealand in 86 containers, on the "Atlantic Voyager", for state owned Supply and Agricultural Service Corporation (CASA). 
  • 511 tons of milk, for CASA, from Argentina.
  • Over 3,000 tons of frozen chicken, also for CASA, from Brazil
  • 4,304 tons of black beans, for CASA and other consignees, from Panama.
  • 6,050 heads of cattle, from Brazil, for several consignees.
  • Over 199 tons of white newsprint, from Vancouver, for Distribuidora y Almacenaje Graneles.
  • Over 272 tons of toilet paper from Kingston, Jamaica, for Papeles Venezolanos

Colombia's economy is being hit by Venezuelan unrest
Social tensions in Venezuela are causing Colombia losses around U$D 4.8 million daily for land carriers, a U$D 1 million freeze on remittances and an increase in staple prices. Over the past few days Venezuelan nationals have blocked the international bridges that join both nations thus blocking cargo transport. Pedro Aguilar, President of the Colombian Truckers Associations, says 500 merchandise bearing trucks are parked at the borders. “This is more than U$D 4.8 million in daily losses”. More in Spanish: (El Mundo,

Logistics & Transport
Airlines are on stand-by to leave Venezuela
An anonymous inside source reports some international airlines operating here are awaiting approval from headquarters to cease all operations in Venezuela due to the high unpaid debt the government owes them, adding that Venezuela does not have the funds to meet the U$D 3.5 billion debt due this past January. "The decision will be reversed only if there is payment within the next few days, if not, it will stand." More in Spanish: (El Nacional,

PDVSA seeking ways to deliver gas to the Andean region
Street protests in Mérida and Táchira states have made it difficult to transport goods, as well as fuel - amid conflicts in which bonfires are being lit. This has hurt distribution of propane gas tanks and is leading PDVSA to "seek contingency means to distribute gas", according to PDVSA President Rafael Ramírez. More in Spanish: (El Universal;

Protests make cargo transport deficiencies worse
Giovanni Lupi, who heads the Central Venezuela Transport Chamber (CATRACENTRO) says distribution has been hit by 20% due to circulation delays because of protests in major cities. "Carriers are afraid as some trucks and lorries have been burned". In some areas, vehicles that have an accident are plundered by mobs for their cargo, such as a cattle-bearing lorry that was overturned near Morón (Carabobo state), and its cattle was slaughtered and quartered by a raiding mob. Transport was hurting even before the protests, as 40% of the entire fleet is paralyzed for lack of spare parts. More in Spanish: (El Universal,

Protest ranks grow broader
The biggest protests since the death of the longtime leader Hugo Chávez nearly a year ago are sweeping Venezuela, rapidly expanding from the student protests that began this month on a campus in this western city into a much broader array of people across the country. Residents in Caracas, the capital, and other Venezuelan cities have piled furniture, tree limbs, chain-link fence, sewer grates and washing machines to block roads in a coordinated action against the government. President Nicolas Maduro has taken a hard line on expressions of discontent, squeezing the news media, arresting a prominent opposition politician and sending the National Guard into residential areas to quash the protests. Unlike the protests in neighboring Brazil last year, when the government tried to defuse anger by promising to fix ailing services and make changes to the political system, Maduro calls protesters fascists conducting a coup against his government. He has largely refused to acknowledge their complaints, focusing instead on violence linked to the unrest. Maduro’s stance is mirrored by the intensity among the protesters. While he has called for a national conference and some opposition politicians have urged dialogue, a majority of protesters here, most of them longtime government opponents, rejected that option. “They’ve been mocking us for 15 years, sacking the country,” said Ramón Arellano, 54, a government worker, while a burning refrigerator in the street behind him blotted out the sky with a cone of black smoke. “A dialogue from one side while the other turns a deaf ear, that’s not fair.”  Like most of the protesters here, Arellano said he wanted a change of government. Protesters say that could be achieved by having Maduro resign, or be removed through a recall election or changes to the Constitution. (The New York Times:;

Opposition cancels Maduro talks as unrest grows, 13 dead in protests
Opposition leader Henrique Capriles pulled out of talks with President Nicolas Maduro after the death toll rose to 13 and both sides traded insults over the weekend. Maduro last week called on governors to meet at the presidential palace in Caracas today for talks, warning there would be legal consequences for skipping. Capriles said Feb. 22 he would attend while demanding the government free opposition leader Leopoldo Lopez, who was imprisoned last week on charges of inciting violence at rallies. “How can I go amid the repression, amid the violation of human rights,” Capriles, a two-time presidential hopeful and currently a state governor, told reporters. “The presidential palace is not the place for dialog in the country...I will not go there to whitewash a dying regime” 13 people have died in nearly two weeks of protests against the leftist regime, according to Attorney General Luisa Ortega. With regard to two of the three deaths in Caracas after an opposition rally on Feb. 12 outside her office, Ortega said that “it is very clear how the incidents occurred” and there are three agents of the SEBIN intelligence service in custody. (Bloomberg, 02-24-2014;; El Universal,; Latin American Herald Tribune, 02-24-2014;; Reuters,

Excessive repression criticized by party loyalist, asks for release of political prisoners
A senior member of Venezuela's governing United Socialist Party (PSUV) has criticized the government's handling of recent opposition protests. Jose Gregorio Vielma Mora - the governor of western Táchira state, where the current wave of protests began - said the deployment of troops to his region was "unacceptable". The governor also called for the release of protesters and opposition leaders who have been detained in the wave of protests which started earlier this month. "All those who are in jail for political reasons, send them home," he said. He insisted that students had the right to demonstrate peacefully and said they should be applauded for wanting to make their voices heard. Vielma Mora said he opposed "the use of weapons and abusive behavior at peaceful demonstrations"; and added he had asked the National Guard to respect demonstrators' right to protest. He also said that after an "excessive use of force" by the National Guard during protests in Táchira on Thursday, he had demanded the replacement of the officer in charge, Gen. Noel Bermudez Pirela. The governor also said that it had been a "grave error" by the government to order military planes to fly over the state capital, San Cristobal: "I'm against that, and it made me angry It was unnecessary to have military planes fly over San Cristobal". PSUV official and Foreign Minister Elias Jaua said the party would be contacting Vielma Mora to "discuss his opinions". (BBC; El Universal, 02-24-2014;

U.S. urges calm in Venezuela, encourages dialogue, rejects Maduro's request to talk to Obama
The United States is working with the Organization of American States (OAS) and regional partners to urge calm in Venezuela, the White House said on Monday, as the country faces its most sustained unrest in a decade. White House spokesman Jay Carney expressed concern about developments in Venezuela and said the United States has made clear that with the OAS and regional partners "we are working to urge calm and encourage a genuine dialogue among all Venezuelans...Another way of putting this is that when President (Nicolas) Maduro calls for a dialogue with the U.S. president and an exchange of ambassadors, he should focus instead on a dialogue with the Venezuelan people - because that it what is at issue here," Carney told a news briefing. (Reuters, 02-24-2014;; El Universal,

SPECIAL REPORT: Venezuelans fear 'Syria scenario'
A former socialist guerrilla and leader of the Left Revolutionary Movement (MIR) says the current political climate - where armed pro-government collectives are asserting themselves in poor neighborhoods - "is part of a worldwide experience with paramilitary groups... These groups are often better armed than the police." They have been intimidating government critics, including those on the left, during recent unrest. A state official who trains Venezuelan security forces and spoke on condition of anonymity adds:"Let's not mince words. Objectively, these are paramilitary groups... They might run some positive community development projects [in poor areas] but they are out of control. Since 2005 they have become the avant-garde for certain sectors of Chavismo". Motorcycles are the preferred transportation for collective members. Pro and anti-government intellectuals agree that urban, armed conflict between unconventional actors is a dangerous, if still unlikely, possibility. Some collective members now work as security operatives in the Caracas mayor's office or in other government departments, the state official said. Some analysts blame them for intensifying the spiraling crime rate in Venezuela - which claimed around 20,000 lives in the past year - and for recent violence targeting student demonstrators who oppose the government. The government official confirmed that armed collectives have been known to be responsible for street crime and alleged political intimidation. "The government has instructed the police not to interfere with things in the territorial spheres of the collectives," he said. Juan Montoya, a leading figure in the collectives, and a supporter of political violence against his opponents died after being shot in the head in what appears to be a targeted killing during the February 12th protest that began peacefully. National Assembly President Diosdado Cabello then said the "revolutionary" Montoya was "vilely assassinated by the fascists". In an April 2013 interview, Montoya claimed to have a direct line of communication to Cabello's office, from which he would receive directives on where to aim his violence. "Juan wasn't any regular collective member. He was informed, educated and had military training. He was a member of the board of directors of 107 collectives in Caracas. We believe it was a deliberate assassination. The aim of that was to awaken the hate of armed groups to start a confrontation," says Armando, a member of the collectives. Maduro later said the SEBIN, Venezuela's intelligence service, was instructed to stay in its barracks that day. But some members of the group took to the streets with their weapons, apparently disobeying a direct order, leading some analysts to question how much control Maduro has over the security forces. (AL-JAZEERA,

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, February 21, 2014

February 21, 2014

Economics & Finance
Investors seized by fear due to instability in Venezuela
Demonstrations leading to dead and injured people add to a Venezuelan economy signaling weakness. In this scenario, investors, holders of Venezuelan bonds in their portfolios, are seized by fear. A report issued by BBO Financial Service and quoted by Reuters explains that if the economy is an issue to worry about for those who invest in Venezuela, it is even more concerning amid political conflict and escalation of violence which point to an uncertain future particularly to politics. Any of the parties involved may radicalize confrontations to levels not seen in Venezuela in a decade, and the consequences may be unpredictable, the report states. (El Universal, 02-20-2014;

Maduro signs decree creating new FOREX system
President Nicolas Maduro signed a long-awaited decree creating a new foreign exchange system, "Sicad 2", and said full details would be provided later. Venezuela's complex currency control system uses two rates, one for preferential goods such as food and medicine and a less-preferential Sicad rate, used for items such as foreign travel and remittances. Maduro signed the decree creating Sicad 2, which he said would work better than its predecessor. And he said his vice president for the economy, Rafael Ramirez, would explain how it works. (Reuters, 02-19-2014;;; El Universal,

Oil & Energy
More PDVSA production declines expected
According to a Bloomberg News Survey, state oil company PDVSA saw production down to 2.45 million BPD in December, from 2.9 million BPD a year earlier, and has sought to import more oil as accidents cut into its refining capacity. Experts expect a further decline:

  • David Voght, of IPD Latin America says: "We estimate that Venezuelan crude production was roughly 2.75 million BPD at the end of 2013, though annual output averaged 2.85 million BPD. Production hikes in joint venture projects, including three major heavy oil efforts, were..not enough to fully offset declines in the country's western fields and in North Monagas...Nationally, we expect continued production decline in 2014. Last year's joint venture gains will not be replicated... While PDVSA is currently negotiating big loans and worthwhile contract adjustments with some partners, the benefits will not be seen this year."

  • Dan Hellinger, of Webster University adds: "It is not good enough for PDVSA to simply hold steady... Venezuela exports 310,000 bpd against loans, mainly from China, only some of which target boosting production. Venezuela also discounts financing on oil exports to a number of hemispheric neighbors...the exports involved are earning less than full market value. Domestic consumption has crept close to 800,000 bpd, all produced at a loss."

  • Richard Obuchi, from IESA in Caracas, and Barbara Lira, at ODH Grupo say: "PDVSA needs high investment, and recent events point to limited resources: financial debt increased from U$D 15.5 billion in 2008 to U$D 43.4 billion in 2013; accounts payable to suppliers also increased; and in 2013, PDVSA tried to reach agreements with partners... to receive loans 'attached' to production. These agreements are probably trying to substitute the issuing of regular debt, since financial costs are now higher due to perceived risk of the company and the country. Also, PDVSA has to deal with the burden of some social expenses, but currently its biggest burden is to supply almost all the currency the republic needs. Oil represents 96% of exports".

  • Gustavo Coronel, a PDVSA founder adds: "In 2012, PDVSA imported an average of 85,000 barrels per day of refined products from the United States at a huge loss, since these imports are essentially sold in the domestic market at minimum prices. Venezuelan refineries today operate at around 75% capacity...Most new production would have to come from the heavy oil deposits of the Orinoco River region, but this oil needs deep conversion refining to be commercial. These installations are quite expensive and take years to build. In the last 15 years none have been built.

  • Asdrúbal Oliveros, of ECOANALÍTICA sums up: "The need to increase production is almost desperate... Last year, according to PDVSA reports, production in the east fell 4.1% and, in the oil belt, it fell 3.2%. Things don't look any better for 2014... The stagnation of oil prices has led to an urgent need to increase oil production, given the constant fiscal needs, while the state company is tied to an over-valued exchange rate, high debt levels, and agreements like PETROCARIBE, which reduce its income. A true restructuring of the nation’s oil policy is necessary to allow PDVSA recover its position as a company devoted to production."
(LATINVEX, - as republished by permission from the Inter-American Dialogue's weekly Energy Advisor)

Ramírez says oil industry is operating normally

80,000 BPD are shipped to Cuba, according to Oil Minister and Economy Vice President Rafael Ramírez, who announced that the Cienfuegos refinery mixed venture has concluded its first stage and is currently processing 64,000 BPD. He says the oil is processed in Cuba and sold jointly, and will be expanded with the support of China. More in Spanish: (El Universal;

Sidor steelworks are paralyzed due to lack of lime and serveral other operational problems. More in Spanish: (El Universal,

Logistics & Transport
Incoming cargo at Puerto Cabello
  • Over 3,552 tons of poultry arrive at Puerto Cabello for government agency CASA from Santos, Brazil.
  • 511 tons of powdered milk arrived there for CASA, from Puerto Zárate, Argentina.
  • 6,050 heads of cattle arrived from Vila do Conde, Brazil. An additional 10,200 heads arrived the next day from the same port.
  • Over 199 tons of newsprint arrived from Vancouver, Canada, from Catalyst Pulp And Paper Sales.
  • 1,052 tons of construction machine parts from China
  • 1,632 tons of black beans from China, for CASA
  • 66.900 kilos of powdered soy protein from China, for Agropecuaria Los Tres Robles
  • 825 tons of asbestos for Desarrollos Urbanos
  • 1,356 tons of steel structures, nuts, bolts and washers for VENIRAUTO

Food distribution is down more than 60% due to protests and demonstrations, according to reports from several transportation trade associations. Distribution was already down by 40% due to a scarcity of spare parts, restricted access to FOREX and crime. (El Mundo,

Maiquetía International Airport has adjusted user tariffs upwards to the newly established tax unit of VEB 127. Domestic charges rose from VEB 86.60 to 101.60; and international charges went from VEB 406.60 to 482.60. More in Spanish: (El Universal,

Protests against government repression escalated, with thousands of demonstrators burning tires and cars and security forces fighting back to gain control of the streets in the capital and in other cities.
  • President Nicolas Maduro's government is keeping dozens of student protesters behind bars Friday as unrest still rumbled across Venezuela following this week's violence. Demonstrators gathered again in various cities, blocking roads and burning tires in some cases, to denounce the repression of protests and make a litany of complaints against Maduro ranging from rampant crime to shortages of basic products. At least five people, four protesting the government, have died since protests by university students over high crime and a crumbling economy turned violent last week.
  • Dozens of others have been injured or jailed, including opposition leader Leopoldo López, a former mayor whom the government has accused of instigating the violence. López leads the more confrontational wing of Democratic Unity (MUD), an alliance of opposition parties. Like Henrique Capriles, a former presidential candidate and the leader of MUD’s moderate wing, he preaches non-violence. But unlike Capriles, López believes that demonstrations can prompt a change of government. The government is charging him with intentional arson, inciting violence, damage to public property and conspiracy. Maduro has called the opposition politician a "murderer" and alleged he is being paid the the US Central Intelligence Agency to topple his government. Maduro warned that other opposition leaders could follow him into prison: "One of them is in jail ...the others will, one by one, end up in the same jail cell." José Miguel Vivanco of Human Rights Watch, a lobbying group, said that the Venezuelan authorities had provided no evidence linking López to any crime—just “insults and conspiracy theories”.
  • Many protesters are calling for Maduro to resign, but beyond that, the rallies seem to be general expressions of outrage. So far, Maduro’s response has been to crack down, but that has only fanned the flames. He threatened to declare a form of martial law known as a “state of exception” in the western state of Táchira, bordering Colombia, a traditional opposition stronghold where protests have been particularly intense. “I’m ready to declare it and send in the tanks, the troops, planes, all of the military force of the country,” the president said. In Táchira, the government's Russian-built SUKHOI fighters screamed overhead. Interior Minister, Major General Miguel Rodríguez Torres announced that a battalion of paratroopers has been deployed around San Cristóbal, the state capital. He said they would secure highways and prevent Colombians, who are often blamed of fomenting trouble here, from bringing in weapons for the student demonstrators. He blamed local antigovernment city officials for triggering the violence.
  • The government’s response to days of opposition protests has been brutal. Police and national-guard riot squads have made generous use of batons and tear gas. Officers of SEBIN, the state-security service, and plainclothes gunmen have fired live rounds. Dozens of detainees describe sustained beatings, electric-shock torture and death threats. In Valencia, west of Caracas, Génesis Carmona, 22, a student and former beauty queen, died after being shot in the head during a march in Valencia. Protesters said attackers on motorcycles had fired on the march. But Rodríguez Torres, said one of her fellow demonstrators fired the shot. One protester in Caracas was shot by what appeared in a video to be members of the National Guard. Parts of the capital, Caracas, and some other cities have become battlegrounds. National guard soldiers on motorcycles patrol Caracas at night, using tear gas and rubber bullets to drive off protesters who block streets with barricades of burning trash. On one night, a group of soldiers fired rubber bullets at apartment buildings where people were banging pots to protest the crackdown. Maduro belittles the protesters and has largely ignored their complaints, trying to focus attention on smaller groups involved in violent clashes. “These aren’t students. They’re fascist vandals,” he says.
  • Far from exploiting the split in the MUD, the government crackdown has forced moderates to take to the streets in support of López. Henrique Capriles, a leading opposition figure who narrowly lost to Maduro in a contested election last April has promised to call his own march in the next few days. He says: "The government came out to kill people, to try to shut up people with bullets". He scoffs at the president's claim that a coup was taking place. "Civilians don't launch coups," he said, "the military does." He suggested instead that a weakening administration would benefit the National Assembly president, Diosdado Cabello, a former military officer who is seen as Maduro's rival. A coup, opposition leaders say, would most likely come from inside the army. "That would be the worst thing that could happen to the country," says Capriles. He again rejected violence and said he was ready for dialogue, but claimed the government was not willing to listen: "We call on the students and on those on the streets not to fall into the trap of violence".
  • While demonstrators condemn a wide range of perennial problems, including rampant crime, high inflation and shortages of basic goods like sugar and toilet paper, the intensity of the protests has been fueled by something more subtle and perhaps stronger — a sense that the spaces to voice disagreement with the government are shrinking and disappearing. Cowed by the country’s media watchdog, TV and radio stations have eschewed live coverage of the protests while marches organized by the government got lots of air time. A score of journalists have been beaten, detained or had their material erased. Last week Maduro ordered a Colombian news channel, NTN24, removed from cable because of its coverage of the demonstrations. Maduro has also accused U.S. cable channel CNN of producing skewed coverage of the protests and said he had begun an administrative process to kick the channel off the air in Venezuela unless it moved to "rectify" its coverage. "Enough war propaganda, I won't accept war propaganda against Venezuela. If they don't rectify themselves, out of Venezuela, CNN, out," he said. There is little live news coverage of the wave of protests, while government television has relentlessly vilified the demonstrators.
  • It is unclear to what extent Maduro is actually calling the shots. After images emerged of SEBIN officers apparently firing on demonstrators, the president claimed they had disobeyed his orders and sacked the general in charge. He also attempted to distance himself from pro-regime gunmen on motorcycles by saying such groups “had no place in the revolution”. But Iris Varela, the prisons minister, tweeted gleefully that the opposition was “shit-scared” of the colectivos, calling them a “fundamental pillar in the defense of the homeland”. And the same black-clad irregulars staged an armed raid on the headquarters of Popular Will, López’s party. If not the president, who is putting the thugs on the street? A prime suspect is Diosdado Cabello, the hardline president of the National Assembly. Perhaps the two men are playing good cop/bad cop. Either way, discontent within the army is said to be growing. Repeated government calls for “unity” in the armed forces suggest all is not well in the barracks.
(BBC; The Economist:; The New York Times:; The Wall Street Journal:;  Bloomberg, 02-20-2014;;;< CNN,;; Fox News,;; El Universal,; Reuters, 02-20-2014;;; The Washington Post,

Obama urges Maduro to release demonstrators in custody, UN, OAS, European Union calls for dialogue
US President Barack Obama has condemned violence in Venezuela, and urged President Nicolás Maduro both to release demonstrators held in custody, and open dialogue. "Along with the Organization of American States, we call on the Venezuelan government to release protesters it has detained and engage in real dialogue," Obama told reporters after a North American leaders' Summit in the Mexican city of Toluca. The Ministry for Foreign Affairs rejected the statements issued by Obama and claimed his words mean "a new and grotesque interference in the domestic affairs" of the country."  Panama, Peru, Canada and the United States asked for dialogue in Venezuela At the OAS meeting on Wednesday while Argentina, Ecuador, Bolivia and Nicaragua expressed their endorsement to the Venezuelan regime in view of what they called “destabilizing maneuvers.” Venezuelan Ambassador to the OAS Roy Chaderton insisted on the official stand of blaming “the empire.” (El Universal, 02-20-2014;;< The Washington Post,; Veneconomy, 02-20-2014;; El Universal,

Venezuela and Panamá mutually recall ambassadors
Panamanian President Ricardo Martinelli called that nation's ambassador to Venezuela back for consultations after deploring "the violent situation Venezuela is undergoing".  President Nicolás Maduro accused Panama of meddling in Venezuela's internal affairs and also withdrew this nation's representative in Panama. 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.