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.

Tuesday, March 10, 2015

March 10, 2015


International Trade

 

Cargo that has arrived at Puerto Cabello:

  • 134 containers of milk and coffee from Nicaragua for state agencies CASA and Café Venezuela
  • Over 487 tons of personal hygiene products from Procter & Gamble for its subsidiary in Venezuela
  • Over 356 tons of shaving equipment from Eurologísticas for Venezuela's Foreign Trade Corporation (CORPOVEX)


 

Aluminum products and coaxial cable exported from Puerto Cabello

Over 7,000 tons of aluminum products were shipped from Puerto Cabello in 262 containers headed for Genoa, Veracruz, Barranquilla, Cartagena and Port Everglades. The products were shipped by JAOTOL S.A., ALUVENCO C.A. and The Company Metal C.A., and consigned by Instals Spa, Dianostro, Casa Homs, Ecoster Industries, Empresa Metalmecánica de Aluminio, The Shopping Metal, Tecnoglass S.A. and Olympic Metal. Over 657 tons of coaxial cable were also sent to Houston and North Chicago by Interamericana de Cables Venezuela and TRANSWORLD 2.000 C.A. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Cargas-de-exportacion-salieron-desde-el-puerto-carabobeno-2366304/2015/03/09/494131)

 

 

Oil & Energy

 

No direct effects on Venezuela oil sector from new U.S. sanctions -U.S. official

The new U.S. action declaring Venezuela a national security threat and sanctioning seven individuals will have no direct impact on Venezuela's energy sector, a senior U.S. administration official said on Monday. "There's no direct effect from these sanctions," the official told reporters on a conference call, noting that the action would not affect any industry, individual or entity that is not specifically named in the executive order. (Reuters, http://www.reuters.com/article/2015/03/09/usa-venezuela-oil-idUSL1N0WB18O20150309)

 

February crude oil exports from Venezuela to the US up by 8%


 

The crude oil market will balance in the second half of this year, says OPEC Secretary General Abdullah al-Badri. He says there is still a tremendous opportunity in the oil market despite the recent volatility and uncertainty, and added that the outlook of the oil industry in the long term is still positive. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43038&idc=4)

 

 

Economy & Finance

 
Venezuela's currency circus

Currency controls here have evolved into the byzantine tiered system by which the government’s oil dollars are sold at three different official prices — while hard-currency dollars fetch a fourth, higher price on the black market. An importer who pledges to purchase basic necessities to bring into the country can buy a dollar for about six bolívars. But walk up to a bank teller and the same dollar costs 178 bolívars: nearly 3,000% more. For the 264 bolívars that it cost at the time of this writing to buy one black-market dollar, you could buy 42 dollars at the official rate. The system gives rise to a mind-bending tangle of economic distortions. For the last two weeks, the bolívar has been in free fall, evoking fear of devastating hyperinflation, rarely seen in Latin America since the turn of the century. What’s strange is that Venezuela’s chaos is entirely self-inflicted. Unifying the exchange rate would be an important first step in reform. The current currency regime offers nothing to consumers facing empty shelves, so devaluation could prove popular, even in the short run. But Venezuela, between a rock and a lounge chair, has thrown itself against the rock. So why doesn’t Mr. Maduro take action? Maybe because those people pocketing twenties are friends of the government. Or because the Maduro administration just doesn’t understand the economic consequences of walking back its earlier mistakes. And as discontent mounts, a government at wits’ end is turning paranoid — pouncing on even the mildest expressions of dissent. In January, the police detained student opposition activists for handing out coffee and water to people who were in line outside a Caracas supermarket to buy food. The students’ crime? On each cup, the message: “Don’t get used to this, we can live better.” (The New York Times, http://www.nytimes.com/2015/03/07/opinion/francisco-toro-dorothy-kronick-venezuelas-currency-circus.html?_r=4#story-continues-4)

 

Venezuela's minimum wage is now US$20 a month

The poor citizenry of Venezuela are finding out in the greatest economic implosion of a society since Zimbabwe collapsed that there’s a lot of ruin in a nation - as Adam Smith said - if idiots gain political power and then proceed to wreck the economy by enacting their fantasies. It’s not that the government didn’t mean well with their Bolivarian socialism. It’s just that the actual implementation violated near every economic rule. The results of this simply are not good: Venezuela’s minimum wage, which many workers receive, has tripled in local currency in the past three years to about 5,600 bolivars today. Using the weakest legal exchange rate, the minimum wage has tumbled from about US$ 360 a month in 2012 to US $31 a month today. If we value that minimum wage at the more realistic black market exchange rate then it’s around US$ 20 a month, on a par with the minimum wage in Ethiopia. (Forbes: http://www.forbes.com/sites/timworstall/2015/03/07/venezuelas-minimum-wage-is-now-20-a-month-congratulations-to-bolivarian-socialism/)

 

20,000 fingerprint scanners will be set up in markets nationwide in an effort to allegedly control food hoarding. Nicolás Maduro reported seven big private supermarket chains agreed to set up the fingerprint scanners. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43035&idc=3; El Universal, http://www.eluniversal.com/economia/150309/gov-t-to-install-20000-fingerprint-readers-in-stores-in-venezuela; More in Spanish: Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/instalaran-20-mil-captahuellas-antibachaqueo.aspx#ixzz3Tsdn74SO; AVN; http://www.avn.info.ve/contenido/instalación-20000-máquinas-captahuellas-comienza-este-lunes)

 

 

Politics and International Affairs

 

U.S. declares Venezuela a national security threat, sanctions top officials

The United States has declared Venezuela a national security threat and ordered sanctions against seven officials. U.S. President Barack Obama signed and issued the executive order, which senior administration officials said did not target Venezuela's energy sector or broader economy. Declaring any country a threat to national security is the first step in starting a U.S. sanctions program. The same process has been followed with countries such as Iran and Syria, U.S. officials said. The White House said the order targeted people whose actions undermined democratic processes or institutions, had committed acts of violence or abuse of human rights, were involved in prohibiting or penalizing freedom of expression, or were government officials involved in public corruption. "Venezuelan officials past and present who violate the human rights of Venezuelan citizens and engage in acts of public corruption will not be welcome here, and we now have the tools to block their assets and their use of U.S. financial systems," White House spokesman Josh Earnest said in a statement. "We are deeply concerned by the Venezuelan government's efforts to escalate intimidation of its political opponents," he added. U.S. officials told reporters in a conference call that the executive order did not target the Venezuelan people or economy and stressed that upcoming legislative elections should be held without intimidation of government opponents. President Nicolas Maduro denounced the sanctions as an attempt to topple his government. He said he would seek decree powers to counter the "imperialist" threat, and called home his charge d'affaires in Washington for consultations. Maduro accused Obama of a "colossal mistake" and "imperialist arrogance" similar to his predecessors Richard Nixon and George W. Bush. He also paraded the seven officials, hailing them as "heroes" and naming national intelligence head General Gustavo Gonzalez, whom Washington accuses of complicity in violence against protesters, as new interior minister. Opposition leader and twice-presidential candidate Henrique Capriles said the sanctions were a problem for corrupt elite in the Maduro government, but not ordinary Venezuelans. (Reuters: http://www.reuters.com/article/2015/03/10/us-usa-venezuela; Latin American Herald Tribune, http://laht.com/article.asp?ArticleId=2377482&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/150309/obama-imposes-new-sanctions-on-seven-venezuelan-officials; http://www.eluniversal.com/nacional-y-politica/150309/venezuela-recalls-charge-daffairs-to-the-us-for-consultations)

 

Cabello terms new US sanctions "aberrant and immoral", calls them prelude to invasion

National Assembly President Captain Diosdado Cabello rejected the new sanctions imposed by the United States on seven government officials. Cabello said it was "aberrant and immoral" for President Barak Obama to declare Venezuela a threat to the US national security. "They (the US) are a threat to the whole world," he remarked.

Cabello urged Venezuelans "to take (the matter) very seriously...and "strongly reject the pretensions of North American imperialism, because what comes next (...) are the attacks on our land, on our country, military attacks." (El Universal, http://www.eluniversal.com/nacional-y-politica/150309/congress-speaker-terms-aberrant-and-immoral-new-us-sanctions; and more in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/gobierno-venezolano-llama-consulta-encargado-negocios-estados-unidos; http://www.avn.info.ve/contenido/gustavo-gonzález-lópez-nuevo-ministro-interior-justicia-y-pazEl Nacional; http://www.el-nacional.com/)

 

UNASUR insists on elections in Venezuela, opposition slams Samper

Ernesto Samper, Secretary General of the Union of South American Nations (UNASUR), says his recent visit to Caracas, along with the foreign ministers of Brazil, Colombia and Ecuador, shows that "the best way out" of the current crisis in Venezuela would be a "rapprochement" between the governments of Venezuela and the US. He reported that President Nicolás Maduro has requested a new visit by the group, and said he had received with "concern" government information about alleged coup plans against President Maduro. Samper repeated that UNASUR would reject interference by outside parties or the disruption of democratic institutions. He underscored the importance of elections to be held this year in solving the crisis, saying that Elections Board Chairperson Tibisay Lucena assured them the date would be soon announced. Samper refused to address the issue of political prisoners, and said the UNASUR group had met its goal of obtaining full information on the matter. Samper said the government and opposition have a "democratic disposition" to move ahead. President Nicolás Maduro thanked UNASUR for its support in strengthening local food distribution networks, and Foreign Minister Delcy Rodríguez said UNASUR was acting to forestall a US military invasion. The UNASUR group met with individual opposition leaders and parties, but not with the coalition Democratic Unity Conference (MUD) or its Secretary General Jesús Torrealba who said the meeting "had a positive result somehow", although he objected to the way the meeting was held. MUD's two time presidential candidate Henrique Capriles described it as an "informal meeting" in which "the real situation in Venezuela" was presented, "starting with the nonexistent separation of powers”. Delsa Solórzano, Vice-President of opposition Un Nuevo Tiempo party (A New Time, UNT) and coordinator of the Human Rights Committee for the described meetings as "a prelude". She said that although "no goal was reached," the meeting was not "totally useless," for they were able to deliver to all those present a report on the legal proceedings against the 103 political prisoners. (El Universal, http://www.eluniversal.com/nacional-y-politica/150309/opposition-unified-democratic-panel-terms-prelude-meeting-with-unasur; http://www.eluniversal.com/nacional-y-politica/150309/opposition-at-odds-with-sampers-attitude-during-visit-to-venezuela; and more in Spanish: Infolatam, http://www.infolatam.com/2015/03/08/maduro-agradece-apoyo-de-unasur-y-dice-que-oposicion-reacciono-como-vampiro/; http://www.infolatam.com/2015/03/09/samper-la-fecha-de-elecciones-en-venezuela-la-definiran-sus-autoridades/)

 

Attorney says false charges were made against Mayor Ledezma

Omar Estacio, an attorney for imprisoned Metropolitan Caracas Mayor Antonio Ledezma, says "charges against him are based on false facts, contaminated and non credible evidence, contemptible evidence, and twisted legal terms and judgments". Ledezma has been accused of conspiracy and criminal association. More in Spanish: (Infolatam, http://www.infolatam.com/2015/03/08/imputan-hechos-falsos-al-detenido-alcalde-opositor-ledezma-segun-su-abogado/)

 

Why Venezuela's neighbors keep quiet

For anyone following Venezuela's slow-motion crackup, U.S. President Barack Obama's announcement of targeted sanctions is proof that what's bad can always get worse in blunt contrast to the tiptoe diplomacy that the rest of Latin America has always deployed in its dealings with the rogue neighbor. Some Latin leaders have publicly cooled to Maduro's belief there is a yanqui cabal in every shadow, but despite those doubts, anyone looking for a bold Latin reprimand to Chavismo truculence against its critics -- including serial jailing of opposition leaders -- may be in for a letdown because of a couple of cherished conceits. The first is that Latin American problems are Latin Americans' business, and the second, that sovereignty trumps human rights. But the code of silence among Venezuela's neighbors also speaks to less obvious concerns. Few heads of state have been willing to speak out against their club-footed peers, whether in Cuba, Ecuador or Venezuela. Amherst College political scientist Javier Corrales says calls this "incumbency bias," sitting leaders' automatic defense of their peers, even those that go rogue, for fear of becoming targets of international scorn themselves. "That makes Latin leaders more interested in defending incumbents than in defending democracy," he says. Then there's legacy bias. "Latin America took a left turn starting with the election of Hugo Chavez," says Alejandro Velasco, a historian at New York University. "To break the silence over Venezuela would be a tremendous loss to a powerful regional narrative of the new left in power." (Bloomberg, http://www.bloombergview.com/articles/2015-03-08/why-venezuela-s-neighbors-might-stay-quiet-after-unasur)

 

CARICOM supports Guyana, not Venezuela, in border dispute; Venezuela buys rice from Guyana

José Ramón Sánchez, deputy to the Latin American Parliament for opposition coalition Unified Democratic Conference (MUD) says an agreement by recent Caribbean Community Summit (CARICOM) pledged to support Guyana's stance regarding the Essequibo border dispute with Venezuela. He questioned why "after all these years, of Venezuela distributing of so many resources through the PETROCARIBE model, the CARICOM still regards the Essequibo as Guyana's territory, without taking into consideration the sovereignty of the Bolivarian Republic of Venezuela." Nicolás Maduro’s regime signed a new annual agreement with Guyana for the purchase of $120 million in rice. Negotiations concluded last week and shipments will begin at the end of the month after the first crop begins, according to a statement just released by the Guyanese Agriculture Ministry. (El Universal, http://www.eluniversal.com/nacional-y-politica/150309/caricom-supports-guyana-not-venezuela-in-border-dispute; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43033&idc=3)

 

Venezuela's oil minister says PETROCARIBE social investment in the Caribbean totals US$ 3.9 billion

Asdrúbal Chavez, Venezuela's Minister of Petroleum and Mining and President of the Ministerial Council of PETROCARIBE, Asdrúbal Chávez, asserted that their social investment in the Member States amounts to US$ 3.94 billion in 432 projects. He added that there are 16 joint ventures in the region. (El Universal, http://www.eluniversal.com/economia/150309/oil-minister-social-investment-in-the-caribbean-totals-usd-39-billion)

 

 

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.

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