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 27, 2015

February 27, 2015


International Trade

 

Cargo that has arrived at Puerto Cabello

  • 32,749 tons of rice from Louisiana, for state agency CASA.
  • 33,000 tons of corn from Argentina, also for state agency CASA.
  • Over 32,000 tons of paddy rice from TRC Trading Corporation for CASA
  • 3,800 tons in 161 containers bearing milk, coffee, beef and cooking oil from Caribbean Liquid Sugar RHJ, Centrolac, Colmenitas S.A., Eskimo S.A., Productos Lácteos La Perfecta, Alba Alimentos de Nicaragua, and Comercial San Martín, for Casa & Café Venezuela.
  • Over 669 tons of doors and bathrooms from Postar for Servicio Fondo Nacional del Poder Popular (Safonapp).
  • Over 150 tons of baby formula milk from México to Nestlé Venezuela.
  • Also vehicle parts, and personal care prodcts from Ford Motor and Procter & Gamble for their local affiliates.
More in Spanish: (Notitarde, http://www.notitarde.com/La-Costa/Luego-de-casi-tres-meses-atraco-el-buque-Pomorze-2355467/2015/02/24/491755/; http://www.notitarde.com/La-Costa/Llegaron-mas-de-3-mil-800-toneladas-de-alimentos-al-puerto-local-2356534/2015/02/25/492027/; and El Nacional; http://www.el-nacional.com/)

 

SIMADI FOREX rate is being used for customs clearances

Cipriana Ramos, President of the Customs and Port Affairs Committee of the National Trade and Services Council (CONSECOMERCIO) says "implementation of the new foreign exchange system in customs is a mess," since the customs clearance fee is being charged at the SIMADI foreign exchange rate of VEB 172/US$1, even when it had been announced that it would be charged at the foreign exchange rate traded at the Ancillary Foreign Currency Administration System (SICAD), currently standing at VEB 12/US$1. "It is not on paper, but that is what is happening at customs," she claimed. (El Universal, http://www.eluniversal.com/economia/150226/simadi-forex-rate-used-for-customs-clearance-in-venezuela; More in Spanish: El Universal; http://www.eluniversal.com/economia/150226/advierten-aplicacion-de-tasa-simadi-en-nacionalizaciones; El Nacional; http://www.el-nacional.com/)

 

 

Oil & Energy

 

Venezuela seeks annulment of Exxon award at World Bank tribunal

Venezuela has requested the annulment of a World Bank tribunal award that orders it pay Exxon Mobil Corp US$ 1.6 billion in compensation for nationalizations, both sides said on Wednesday. George Kahale, Venezuela's lawyer, said he did not know when the tribunal was likely to issue a decision on the request. "The first step is for the appointment of the committee to hear the annulment application, and that has not happened yet," said the lawyer with Curtis, Mallet-Prevost, Colt & Mosle LLP. "The schedule for the annulment process will not be determined until after the committee is appointed." (Reuters, http://www.reuters.com/article/2015/02/26/venezuela-exxon-mobil-idUSL1N0W007320150226; El Universal, http://www.eluniversal.com/economia/150226/venezuela-seeks-reversal-of-icsid-decision-on-exxon-mobil-case)

 

Foreign oil companies authorized to sell their FOREX

A dozen foreign oil companies operating jointly with PDVSA are now able to exchange their FOREX at the highest legal rate in use here through the new SIMADI system, at around VEB 172/US1. The step is meant as an incentive to improve the bolivar budget of these companies seeking to increase oil production in Venezuela. More in Spanish: (Panorama, http://panorama.com.ve/portal/app/push/noticia140684.php; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/reuters--autorizan-a-petroleras-extranjeras-a-camb.aspx)

 

Venezuela and Trinidad to seek joint gas exploration, jointly with international firms in the border areas. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/venezuela-y-trinidad-pactan-explotar-reservas-de-g.aspx#ixzz3SqUicm54)

 

Saudi Arabia says demand for crude oil growing, prices stabilizing

Saudi Arabia´s Oil Minister Ali al-Naimi says demand for crude oil is growing and markets are quiet. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/industria/demanda-de-crudo-crece-y-precios-se-estabilizan--a.aspx#ixzz3SqV18XyC)

 

Union leader reports Venezuela's 146,000 bpd El Palito refinery down

State oil company PDVSA's 146,000-barrel-per-day El Palito refinery has been halted since Monday due to problems with a compressor and a demineralization plant, union leader Ivan Freites said on Wednesday. "It's completely down," said Freites, adding there was no indication of when the refinery would restart. Amuay, the OPEC country's biggest refinery, is operating at 370,000 bpd, well below its 645,000-bpd capacity, because its flexicoker and a crude distillation unit remain out of service, Freites added. Cardon, which along with Amuay makes up the major Paraguana refining complex, is operating at about a third of its total 310,000-bpd capacity, according to workers and Freites. (Reuters, http://www.reuters.com/article/2015/02/26/venezuela-oil-refinery-idUSL1N0VZ28N20150226)

 

 

Commodities

 

Toilet paper-for-Venezuelan oil swap offered by Trinidad

Venezuela, plagued with shortages of basic goods, was offered a reprieve by the Prime Minister of neighboring Trinidad & Tobago: exchange oil for tissue paper. Prime Minister Kamla Persad-Bissessar suggested an oil-for-tissue swap in a news conference Tuesday following a meeting in Port of Spain with Venezuelan President Nicolas Maduro. She said the deal would benefit both countries. “The concept of commodity sharing is simple -– the Government of Trinidad and Tobago will purchase goods identified by the Government of Venezuela from T&T’s manufacturers, such as tissue paper, gasoline, and parts for machinery,” Persad-Bissessar said. (Bloomberg, http://www.bloomberg.com/news/articles/2015-02-25/tissue-paper-for-venezuelan-oil-swap-offered-by-trinidad)

 

There is no sugar because eight out of the 10 sugar mills in government hands are not operational, according to José Ricardo Álvarez, head of Venezuela’s Federation of Sugar Cane Producers’ Associations. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42924&idc=3)

 

 

Economy & Finance

 

New SIMADI FOREX system considered insufficient, government in "ideological straightjacket"

DATANALISIS President Luis Vicente León says the new SIMADI FOREX system is being operated with controls and a free market cannot operate that way. "The idea is that the market should set the price, not that the Central Bank will impose it; the exchange market is not open. If a company wants to sell at 180 it cannot, the Central Bank rejects the transaction because it is not the set price". Economists Ricardo Villasmil and Pedro Palma say "the government knows it should make economic sense, but it does not have it because it is trapped by its own ideological straightjacket". Palma says Venezuela is headed "toward an explosion", and that will "inevitably bring about the changes the country needs". More in Spanish:  (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/leon-simadi-podria-ser-un-sistema-disfuncional-si-.aspx#ixzz3SkjVuwQs; El Nacional; http://www.el-nacional.com/; El Universal, http://www.eluniversal.com/economia/150227/analistas-preven-mayores-niveles-de-escasez-e-inflacion)

 

Maduro crackdown raises risks for foreign companies

President Nicolas Maduro’s increasing pressure on his political opponents amid a crumbling economy is a warning to the governments of foreign investors operating here. Citing an “endless coup” against his two-year-old government, and amid shortages of basic goods, he has accused companies of fomenting an “economic war,” ordering the arrests this month of executives of the country’s biggest pharmacy retailer and taking control of a supermarket chain. “What the Venezuelan government has clearly transmitted to the world it that is willing to take extreme measures,” said Elsa Cardozo, a professor of international relations at the Central University of Venezuela. “How far will this go? It depends how desperate Maduro is facing the internal crisis in Venezuela, which is very grave.” Maduro is seeking to deflect criticism of his government as the economy heads toward a 7% contraction, according to the International Monetary Fund, and his party faces legislative elections. The country’s 69% inflation rate is the highest in the world. “Maduro will likely continue to crack down on the opposition and the private sector as he looks to blame scapegoats for the country’s growing problems,” says Risa Grais-Targow, an analyst at consulting company Eurasia Group. (Bloomberg, http://www.bloomberg.com/news/articles/2015-02-24/venezuela-crackdown-raises-risks-for-foreign-companies)

 

Venezuela still seen defaulting in 2015 by Deutsche Bank

Deutsche Bank AG and Jefferies LLC still see Venezuela running out of money to pay debt in 2015. They’re the only ones out of 10 firms surveyed by Bloomberg, which included Goldman Sachs Group Inc. and Credit Suisse Group AG. While the country has raised almost US$ 5 billion in the past month and oil has jumped 21%  from an almost six-year low, Deutsche Bank’s Armando Armenta says that’s still not enough. Venezuela needs US$ 32 billion to finance itself this year, according to his estimates. “The financing gap that they are facing for this year with current oil prices is just too large...I don’t see a path out in which they can avert default.” Venezuela, which relies on crude for more than 95% of exports, and its state oil company have about US$ 10 billion of debt due this year, according to Armenta. That’s equal to 43% of the country’s US$ 23 billion in foreign reserves. The nation will also need about US$ 40 billion to import everything from milk to toothbrushes, according to Armenta’s estimates. Venezuela’s latest measure to ease a shortage of hard currency will also prove insufficient, says Deutsche’s Armenta. “All these measures they might announce or might not announce in coming months, even though they would’ve helped a few months ago, would not be enough during this year,” Armenta said. “Some sort of external financing for the economy is needed. I don’t know what could be a source.” (Bloomberg, http://www.bloomberg.com/news/articles/2015-02-24/venezuela-still-seen-defaulting-to-deutsche-bank-andes-credit)

 

How long will China prop up Venezuela?

China has poured some US$ 100 billion into Latin America and the Caribbean through loans and infrastructure projects. Cui Shoujun, of Beijing's Renmin University, says all is part of a long term strategy to establish global multilateral alliances and "reconstruct the world order". "The short term benefits or losses are secondary", he says. But Chinese loans to Venezuela are over US$ 45 billion, including a US$ 10 billion credit backed up by future oil supply. Venezuela will this be a Litmus test for China in the area. China is already sending out signals that there are limits to its generosity and the pace of financing has slowed down from 50% annually (2009-2011) to 10% in 2014, and that tied to specific projects. There are about US$ 150 billion investment projects currently signed and in limbo as they have not been carried out. What is unusual about China´s credit policy in the region is the way it is done. Beijing has chosen a particularly opaque bilateral method which rarely discloses the terms or use of funds. Venezuela's legislature has not authorized debts with China since the government treats them as "financing" to be paid for in oil, not dollars. Under this dubious argument funds do not enter official accounting and escape all forms of public control. If Nicolás Maduro is caught in the choice of paying debt or feeding the population, few analysts doubt that his instinct for political self preservation he will invoke a credit event and even interrupt oil shipments to China in order to sell them on the spot market. Venezuelan Professor Ricardo Hausmann, of the Harvard University Center for International Development de la Universidad de Harvard, says Beijing is paying the price of its inexperience as financier to emerging nations. "China has ignored the main reason lender nations turn to the IMF to evaluate the macroeconomics of the recipients: Lending money to support unsustainable policies simply delays the day of reckoning." More in Spanish: (Infolatam, http://www.infolatam.com/2015/02/24/hasta-cuando-sostendra-china-venezuela/)

 

 

Politics and International Affairs

 

Teenager killed by police in San Cristobal protest, city tense during funeral

A 14 year old teenager has been killed in the western city of San Cristobal in a protest over the worsening economic crisis. He was hit in the head by a bullet during a clash between hooded protesters and the police. Home Affairs Minister Admiral Carmen Melendez confirmed the arrest of a 23-year-old policeman has been arrested in connection with the death. President Maduro went on national television to regret the death of the student and call for an end to violence. He said hatred against the government has led to dozens of deaths in Venezuela and promised a full investigation. The streets of San Cristobal, the Venezuelan city that sparked riots nationwide last year, were deserted Wednesday after the funeral of a teenager shot by police the day before. Schools were closed and businesses shuttered in the eastern neighborhoods of the city of 700,000 near the Colombian border. Small groups of youths burned trash in the streets to protest the killing. About 100 people gathered at the spot where Roa was shot near the Catholic University of Tachira Wednesday evening for an informal mass. Classes at all colleges and schools in Tachira state have been suspended to minimize the risk of violence, said Joanna Fernandez, a governor’s office spokeswoman. (BBC News, http://www.bbc.com/news/31616847?utm_source=Sailthru&utm_medium=email&utm_term=%2AMorning%20Brief&utm_campaign=2014_MorningBrief; Bloomberg. http://www.bloomberg.com/news/articles/2015-02-25/venezuela-riot-center-tense-ahead-of-killed-student-s-funeral)

 

Student leaders, opposition and NGO's seek repeal of "mortal force" resolution

A group of student leaders, jurists, academicians and opposition leaders have asked the Supreme Tribunal to annul resolution 8610 by Defense Minister General Vladimir Padrino calls for the "use of potentially mortal force" if required during demonstrations, and say it "flagrantly violates the Constitutional and is a license to kill". The Roman Catholic clergy, led by the Episcopal Conference, is also asking authorities to refrain from using illegal methods and weapons. San Cristóbal Bishop Mario Moronta says "we beseech civil, millitary and police authorities to refrain from illegal using methods or weapons against the dignity of human beings". More in Spanish: (Infolatam, http://www.infolatam.com/2015/02/27/plantean-otro-recurso-contra-el-uso-de-fuerza-mortal-en-venezuela/)

 

International condemnation of Maduro regime grows, HRW asks UNASUR to condemn abuses in Venezuela

  • Human Rights Watch (HRW) has encouraged the Union of South American Nations (UNASUR) to condemn serious human rights abuses perpetrated by the Venezuelan government against political opponents and demonstrators. HRW lamented that "neither UNASUR nor its Member States –except for Colombia and Chile- have voiced concern over the detention of political opponents and widespread abuses perpetrated against demonstrators or pedestrians during demonstrations in Venezuela last week".
  • Federica Mogherini, spokesperson for the European Union says "the recent detention of Caracas mayor and veteran opposition leader Antonio Ledezma is a cause for alarm, as well as reports of alleged intimidation and mistreatment of other imprisoned opposition leaders and students that took part in last year's protests".
  • US Secretary of State John Kerry called the murder of the child in Táchira horrible and said the Venezuelan regime "continues to move in the wrong direction", he told Congress that US authorities have not yet frozen assets of Venezuelan officials accused of violating human rights because of legal steps necessary in order to implement the sanctions law.
  • The European Parliament held a plenary session on Venezuela's political situation and a majority of members demanded the liberation of Caracas Mayor Antonio Ledezma and an end to violence and repression here. Christos Stylianides, second in charge of the European foreign action group, called the jailing of opponents and restricting their rights "deplorable". 
  • Nobel Peace Prize winner Oscar Arias, former President of Costa Rica, lamented the "absolute indifference" of Latin American governments to what is going on in Venezuela. Brazil’s Lower House Plenary passed a “condemnation motion” against the Venezuelan government, with the support of almost all of the 28 political organizations in its Congress. In it, it accuses the Venezuelan government of “breaking democratic principles, with crimes against individual freedoms and due process.”


 

Colombia's Santos offers to mediate between Venezuela's government and opposition

Colombian President Juan Manuel Santos has said he is willing to mediate between Nicolás Maduro's regime and Venezuela's opposition "if asked by both parties", in order to help solve the crisis the neighboring country is going through, and said the so-called "troika"" made up of the Foreign Ministers of Brazil, Ecuador and Colombia stand ready to help as soon as it is asked. He pleaded for respect for the rights of jailed opponents here and "guarantees for a due process". More in Spanish: (Infolatam, http://www.infolatam.com/2015/02/26/entrevista-santos-cuatro-noticias-editar/)

 

UN, OAS AND international organizations seek a peaceful solution to Venezuelan crisis

UN Secretary General Ban Ki-Moon expressed his "worry about new reports of violence and loss of life in Venezuela" and backed UNASUR efforts to reinitiate dialogue between the government and opposition. OAS Secretary General José Miguel Insulza regretted the death of a 14 year old student and called for renewed dialogue. The Union of South American Nations (UNASUR) also expressed grief over the death of the student and repeated its availability to help find democratic and peaceful solutions. Former U.N. secretary-general Kofi Annan has also asked Venezuela to resolve its domestic political differences in a peaceful manner without resorting to violence. (El Universal, http://www.eluniversal.com/nacional-y-politica/150226/oas-calls-for-dialogue-to-stop-violence-in-venezuela; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2375895&CategoryId=10717; and more in Spanish: El Nacional; http://www.el-nacional.com/; El Universal, http://www.eluniversal.com/nacional-y-politica/150227/onu-inquieta-por-los-reportes-de-violencia-y-respalda-a-unasur)

 

Maduro charges paramilitary infiltration from Colombia

President Nicolás Maduro called on policy and military to be on "maximum alert" because the US is "trying to infiltrate a group of paramilitaries from Colombia, dressed as civilians, to cause violence". More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/150226/maduro-denuncia-que-desde-colombia-infiltran-paramilitares; El Nacional; http://www.el-nacional.com/)

 

Venezuela to ask HSBC to name officials with Swiss bank accounts

Venezuela will ask British bank HSBC Holdings PLC for a list of state officials who have accounts in its Swiss subsidiary, the State Prosecutor General said on Wednesday, following media reports that Venezuelans were among the bank's leading clients. Venezuela and its citizens had some US$ 14.8 billion in assets in HSBC's Swiss private banking arm in 2007, the third-largest for any country, according to data obtained by the International Consortium of Investigative Journalists (ICIJ). (Reuters, http://www.reuters.com/article/2015/02/25/hsbc-venezuela-idUSL1N0VZ1UU20150225; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42920&idc=2)

 

Primary dates for opposition and government party have been set for May 17th and June 21st, respectively. The National Elections Council has just made the announcement. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/150225/cne-fijo-fecha-de-primarias-de-mesa-de-unidad-y-psuv)

 

 

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.

 

Wednesday, February 25, 2015

February 24, 2015


International Trade

 

Venezuela-Colombia bilateral trade shrank 19.4% in 2014

Colombia-Venezuela trade in 2014 totaled US$ 2.15 billion, 19.4% below US4 2.67 billion in 2013, as reported by the Venezuelan-Colombian Chamber of Economic Integration (CAVECOL). Exports from Venezuela to Colombia thinned out 1%, from US$ 421 million in 2013 to US$ 416 million in 2014; while exports from Colombia to Venezuela dove 22.8% from US$ 2.25 billion in 2013 to US$ 1.73 billion in 2014. (El Universal, http://www.eluniversal.com/economia/150221/venezuela-colombia-trade-shrinks-194-in-2014)

 

 

Logistics & Transport

 

Not a single international ticket sold so far in 2015, according to the Venezuelan Association of Travel Agencies. This is due to the fact foreign air carriers operating in the country have not opened the inventory of tickets available as a result of the debt the Venezuelan government has with them. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42869&idc=3)

 

 

Oil & Energy

 

Venezuela to invest UDS$ 24 million in an Antigua refinery

Antigua and Barbuda have reached an agreement with the Maduro regime for a US$ 24 million investment in the West Indies Oil Company, in which a Chinese investor will also contribute US$ 30 million. The agreement was reached between Antiguan Prime Minister Gaston Browne and Venezuelan Foreign Minister Delcy Rodríguez. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

 

Economy & Finance

 

FX supply in doubt as Venezuelans free to trade dollars at market rate

For the first time in several years the government has allowed citizens to buy and sell dollars at exchange houses and banks, but most experts doubt that the new system will offer enough hard currency to significantly narrow the budget gap or breathe new life into the country’s moribund economy, which contracted 2.8% last year and may contract up to 7% this year, according to the International Monetary Fund. Tamara Herrera, senior economist with Caracas-based research firm SÍNTESIS FINANCIERA says: “I don’t think it will help with the lack of dollars in the economy, because Venezuela is collecting only half of the oil income of last year. That’s a deficit of around US$30 billion dollars,” she added. Banks are limited to selling currency to its own clients and barred from interbank trading and purchasing hard currency for their own accounts, factors typically used in shaping exchange rates, according to Russ Dallen, a partner at brokerage Caracas Capital Markets. The government also hasn’t published the amounts traded, further stirring doubts of the effectiveness of the new market. “The initial proportion of the FX supply that the government seems willing to move on this market strikes us as too small to have a meaningful effect,” said Alejandro Arreaza, a Barclays analyst. (The Wall Street Journal, http://www.wsj.com/articles/venezuelans-free-to-trade-dollars-at-market-rate-1424378019?KEYWORDS=venezuela)

 

Corruption at all levels spreads as Venezuela squanders its oil wealth

To make ends meet, most Venezuelans exploit the perks of their jobs to trade goods and services informally, mirroring networks that developed amid the scarcities in the former Soviet Union and came to be known as "blat." The prevalence and spread of such small-scale graft shows the failure of President Nicolas Maduro's strategy of expropriation, arrests and inspections to boost production and end shortages, said Anabella Abadi, a public policy analyst at Caracas-based ODH Grupo Consultor. "State intervention at all levels of economic activity is driving employers out of business, slashing the number and quality of formal jobs," Abadi says. "This is pushing Venezuelans to the informal activities authorities set out to eradicate in the first place." Maduro's ban on firing means most Venezuelans can join the "blat" economy. "This can be seen in practically all formal positions in Venezuela that have power to facilitate a bureaucratic errand or secure a product," said Abadi. (The Chicago Tribune, http://www.chicagotribune.com/news/sns-wp-blm-news-bc-venezuela22-20150222-story.html)

 

 

Politics and International Affairs

 

Regime charges Caracas mayor Ledezma with 'conspiracy'

Caracas Mayor Antonio Ledezma has been indicted for plotting violence against Venezuela's government - a move condemned by the country's opposition. The prosecutor general's office said Ledezma, 59, would remain in a military prison pending his trial. Opposition leaders have asked people to not take the "government's bait" by staging large protests, a scenario which would make violence more likely. Many analysts argue that protests benefit the government as they create a common threat unifying the government's supporters, and giving Maduro grounds to condemn the opposition. The opposition's strategy this time is different. It aims to win parliamentary elections later this year by capitalizing on Maduro's declining popularity. That would be a outcome not seen for decades in Venezuela. Opposition leader Henrique Capriles asked: "Does Maduro think that putting everyone in prison is going to get him 50 popularity points or that he's going to win elections?" (BBC News, http://www.bbc.com/news/world-latin-america-31564149?utm_source=Sailthru&utm_medium=email&utm_term=%2AMorning%20Brief&utm_campaign=2014_MorningBrief%202.23.15)

 

Amid a slump, a crackdown for Venezuela

Faced with tumbling approval ratings as Venezuelans reel from the economic shock, President Nicolás Maduro is intensifying a crackdown on his opponents, reflected in last week’s arrest of Antonio Ledezma, the mayor of Caracas, and his indictment on charges of conspiracy and plotting an American-backed coup. The move by Maduro points to a hardening in how opposition figures here are treated. Thirty-three of the 50 opposition mayors in the country are now facing legal action in connection with antigovernment protests last year, according to Gerardo Blyde, the mayor of Baruta, a Caracas municipality. The arrest of Ledezma has even some pro-Chávez analysts questioning the wisdom of Maduro’s move. “Fueling suspicion is a distraction tactic from the huge currency devaluation we’ve had to withstand,” said Nicmer Evans, a pro-Chávez political consultant who is among those on the left here now openly criticizing Maduro. “What’s not clear is the proof of wrongdoing in this case.” Even for some Chávez loyalists, Maduro seems to be in over his head in dealing with the scramble for hard currency. Jorge Giordani, one of the late president’s top economic advisers, said this month that Venezuela was emerging as Latin America’s “laughingstock,” citing corruption and labyrinthine bureaucracy as factors accentuating the economic quagmire. “The system is going haywire,” said Francisco Rodríguez, chief Andean economist at Bank of America Merrill Lynch. But ahead of congressional elections this year in which Maduro’s supporters seem vulnerable, the president is also seeking to shore up his base. (The New York Times, http://www.nytimes.com/2015/02/23/world/americas/amid-venezuelas-economic-chaos-a-political-crackdown.html?emc=eta1&_r=1#story-continues-8)

 

A crackdown in Caracas

After being taken into custody from his office without a warrant, Caracas Mayor Antonio Ledezma is now being charged with conspiring to overthrow the government of President Nicolás Maduro. He is now being held in the Ramo Verde military prison, where Leopoldo López and several other opposition leaders are also in detention. Ledezma’s imprisonment marks a dangerous new watershed for Venezuela’s escalating political and economic crisis, one whose solution becomes more difficult to visualize with each passing week. The polarization in the country, caused by the government’s harsh treatment of the opposition, makes it practically impossible for Venezuelans to address their country’s challenges on their own. The tragedy is that there seem to be no honest brokers left to help usher in a peaceful solution. Everyone in Caracas seems to be pondering when, not if, a coup will occur. As popular frustration builds, the potential for violence is increasing. The best way to avoid a violent outcome is through dialogue — dialogue that produces tangible results. It would require a trustworthy, independent arbiter — presumably a group of foreign governments — willing to push negotiations. But the international community’s response to the recent crackdown has been lackluster, with most countries expressing “concern” over Venezuela’s increased polarization while stopping short of condemning the government outright. As a result, foreign governments have lost much of the opposition’s trust. As a result, the possibility of a democratic solution to the crisis is shrinking fast. The parties in the Venezuelan conflict need to come together and discuss their differences. Failure to do so is likely to result in outcomes that will be much harder for the international community to untangle. (Foreign Policy, http://foreignpolicy.com/2015/02/23/a-crackdown-in-caracas-ledezma-maduro-venezuela/)

 

Jailed mayor Ledezma asks a united opposition to jointly seek Maduro's resignation

Jailed mayor Antonio Ledezma sent a message to the United Democratic Conference (MUD) asking them to consider taking a joint position on requesting the resignation of President Nicolás Maduro. He also said: "I do not seek clemency, simply timely solidarity to save democracy in risk of disappearing." Conference leaders repudiated government persecution of opponents and charged that Ledezma was "kidnapped and abused". Speaking for the opposition alliance, Henry Ramos Allup, of AD, said the "agreement for a transition" document was "closely analyzed and does not evidence any conspiratorial intent… or slightest insinuation of a coup", and demanded Ledezma's immediate release. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Christian Democrat party adheres to proposal on Maduro's resignation, squatters grab their offices amid crackdown

In a gesture of civic rebellion, Venezuela's Christian Democrat party (COPEI) has announced its support of the "transition agreement" proposed by jailed leader Leopoldo López, María Corina Machado and recently arrested Caracas Mayor Antonio Ledezma. The agreement is one of the key charges the Maduro regime has leveled against Mayor Ledezma as "proof" of a conspiracy.  COPEI joined a number of prominent Venezuelans who have decided to sign the agreement calling for the resignation of President Nicolás Maduro in order to start "reconstructing" the nation. Almost immediately, squatters protected by pro-government militia and soldiers took over COPEI's offices in around 12 cities. About 24 families occupied the Montral building owned by COPEI. Four party employees remained in the building. (Bloomberg, http://www.bloomberg.com/news/articles/2015-02-23/squatters-grab-venezuela-opposition-party-office-amid-crackdown; and more in Spanish: Infolatam, http://www.infolatam.com/2015/02/23/copei-respalda-acuerdo-para-transicion-que-impulsan-opositores-en-venezuela/)

 

Arrest shows Venezuelan leader panicking: mayor's wife

President Nicolás Maduro is panicking over falling popularity and has revealed his authoritarian face by arresting Caracas's mayor Antonio Ledezma, the opposition politician's wife said. In an interview, his wife Mitzy said it was in fact Maduro displaying his dictatorial tendencies by locking up the veteran politician ahead of important parliamentary elections due for later in 2015. "Maduro is terrified, panicked by the opposition. He knows that every day there are more opponents," Mitzy Ledezma said. (Reuters, http://www.reuters.com/article/2015/02/22/us-venezuela-opposition-idUSKBN0LQ0QI20150222; http://www.reuters.com/article/2015/02/21/us-venezuela-opposition-idUSKBN0LP0O320150221; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2375142&CategoryId=10718)

 

Pro regime legislators ask Prosecutor General to start proceedings against Julio Borges

Government legislator Pedro Carreño, head of the Comptrollership Committee of the National Assembly, has asked the Prosecutor General's office to begin proceedings to strip opposition legislator Julio Borges of PRIMERO JUSTICIA, of his parliamentary immunity. More in Spanish: (El Universal: http://www.eluniversal.com/nacional-y-politica/150224/chavismo-pidio-a-fiscalia-investigar-a-julio-borges; El Nacional; http://www.el-nacional.com/)

 

Widespread international rejection of Maduro regime repression

  • OAS Secretary General José Miguel Insulza says “the detention of the Mayor of Caracas, Antonio Ledezma, has caused alarm due to the way in which it took place and because it deals with an elected leader exercising his duties.” He repeated his call to “stop those acts that lead to a spiral of polarization that envelops Venezuelan society and makes it impossible to reach agreements that bring together the will of all sectors."
  • US Democratic Congressman Eliot L. Engel current Ranking Member and former Chairman of the U.S. House of Representatives Committee on Foreign Affairs, has called for OAS intervention and on President Maduro to "respect the human rights of every Venezuelan".
  • Kerry Kennedy, President of Robert F. Kennedy Human Rights calls upon Venezuela to release political prisoners Ledezma, Lopez, others.  "I am outraged by the treatment of Antonio Ledezma, Leopoldo López, and other peaceful opposition leaders in Venezuela," she said. "No one should be persecuted for exercising the human right to free expression. President Maduro must immediately free all political prisoners and respect the human rights of all Venezuelans."
  • State Department spokesperson Jen Psaki, again insisted that the Venezuelan regime's charges are "ridiculous" and said the US is talking to several Latin American nations on the matter.
  • The Brazilian government expressed "deep concern" about the political crisis in Venezuela and pledged to work to resume "a comprehensive, constructive political dialogue," according to a statement issued by the Brazilian Foreign Ministry.
  • Peru promotes restart of dialogue in Venezuela, says Peruvian Minister of Foreign Affairs Gonzalo Gutiérrez. He hinted that a meeting of ministers of foreign affairs of the Union of South American Nations (UNASUR) could be held.
  • 15 former Peruvian prime ministers, headed by former UN Secretary General Javier Pérez de Cuellar, have asked the International Red Cross to inspect conditions under which political prisoners are being held in Venezuela.
  • Panama expressed concern about recent political events in Venezuela and called on the parties to engage in talks necessary to ease tensions and "restore social peace '' in Venezuela.
  • Tania González, a European Parliament legislator in Spain's radical PODEMOS party criticized the arrest of mayors in Venezuela saying: "we don't like to see mayors arrested, or political representatives arrested in any country, in any part of the world...without due process". Spain's government has said it is attentive to the situation in Venezuela.


 

Venezuela: Crossing the Line

President Maduro’s arrest of Caracas Mayor Antonio Ledezma reflects a new level of vindictiveness and almost desperation at home – and threatens to leave his government more isolated than ever in Latin America.  The increasingly repressive nature of the Maduro regime is drawing scorn from throughout Latin America, including countries that previously tolerated the excesses of deceased President Hugo Chávez.  UNASUR has announced it will hold an extraordinary meeting soon on the deepening crisis caused by Ledezma’s arrest, and the Foreign Ministers of Brazil, Colombia and Ecuador will make an urgent visit to Caracas this week.  Chilean President Bachelet and Senate President (and daughter of the assassinated President) Isabel Allende expressed their “concern” over the arrest.  Colombian President Santos, heretofore restrained in his criticism, told the press he was “worried.”  Amnesty International also condemned the action.  Washington’s vehement denials of Maduro’s allegations that it was involved have not been challenged. Even the left appears to regret that recent events confirm the monumental squandering of the Chávez revolution’s opportunity to carry out a radical project of redistribution and propose an alternative model for the region.  It is impossible to say how and when the impasse will break, and hard to identify who’s capable of ending the misery – be it the military or a faction within Maduro’s own party.  It’s clear, though, that this crisis is not sustainable and regional patience with it is growing thin. (Center for Latin American and Latino Studies - American University, http://aulablog.net/2015/02/23/venezuela-crossing-the-line/)

 

HINTERENLACES: Six out of 10 citizens blame the government for shortages

According to the latest Monitor Country poll conducted by pro government research firm HINTERLACES, six out of 10 Venezuelans blame the government's economic strategy for the current crisis in the supply of food and medicine.
The survey found that only 35% of respondents believe that a so-called economic war causes shortages in the country. When asked about the government's decision to keep the value of the US dollar at VEB 6.3 for imports of food and medicine, most people termed it positive, and only 30% see it as negative.
(El Universal, http://www.eluniversal.com/nacional-y-politica/150223/six-out-of-10-citizens-blame-the-government-for-shortages)

 

Is Venezuela's 'economic war' giving organized crime a free pass?

It is worth asking how much the political and economic turmoil swirling around Venezuela is going to sap energy from problems where the government very desperately needs to apply its attention: Long-unaddressed high-level official corruption and insecurity. Recently, a government official from an opposition party accused Rear Admiral Rui Miguel de Sousa of running a contraband network that smuggled at least three million liters of gasoline into Colombia. De Sousa was one of the highest-ranking authorities combating contraband in Venezuela at the time, a thriving industry that defines life for many along the Venezuela-Colombia border.  Accusations against authorities overseeing the very criminal activities they are supposed to be combating strikes a familiar chord in Venezuela. The country's biggest drug trafficking network is believed to be the Cartel of the Suns, which is made up of corrupt military officials involved in cocaine smuggling. In January 2015, a former bodyguard accused Diosdado Cabello, the president of Venezuela's National Assembly, of leading a group of drug-trafficking government officials.  While Venezuela's security forces are perennially short-staffed and under-equipped, the current level of insecurity in Venezuela "has exceeded the capabilities of police forces,” Pedro Rangel Rojas, Director of the security think tank INCOSEC in Caracas, told InSight Crime.  The past year has seen reports of Caracas gangs carrying higher caliber weapons, while second city Maracaibo has witnessed the rise of more sophisticated criminal structures. Aside from neglecting the public security issue, the Maduro government's unwillingness to go after corruption will undoubtedly continue to strengthen organized crime networks in the country. As the Chavista regime crumbles under the weight of a flailing economy, political upheaval, and widespread corruption, criminal groups may well seize this opportunity to become ever more powerful -- and wreak even greater havoc on the Venezuelan population. (InSight Crime, http://www.insightcrime.com/news-analysis/venezuela-economic-war-organized-crime)

 

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.