April 14, 2015

International Trade

 

Cargo that has arrived at Puerto Cabello

• Over 3000 tons of construction equipment and supplies arrived from China for the Foreign Trade Corporation (CORPOVEX) government agency
• Over 1,415 tons of tubing from China for Reyco Suministros.

There are a total of seven motorboats in the process of offloading, three of them move bulk cargo. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Llegaron-mas-de-tres-mil-toneladas-de-materiales-de-construccion-a-Puerto-Cabello/2015/04/11/505844)

 

Regime curbs cocoa exports, irks Japanese, Swiss chocolatiers

Venezuela's flavorful cocoa, coveted centuries ago by pirates and now a darling of specialty producers, will not be enriching foreign chocolate bars any time soon. The socialist government has drastically reduced export permits for cocoa in the last five months, according to Venezuela's cocoa industry group which reports some 5,000 tons from the January-February cocoa harvest are stuck in country, ruffling chocolatiers in top importers Japan and Switzerland and risking roughly US$ 17.5 million in export revenue. "They're ruining the reputation of Venezuela as a cocoa exporter," said group President Alejandro Prosperi. Local media says export license restrictions may be intended to bring down domestic chocolate prices. (Reuters, http://www.reuters.com/article/2015/04/10/venezuela-cocoa-idUSL2N0X715A20150410)

 

 

Oil & Energy

 

Maduro sees no improvement in oil prices this year

In a speech upon his return from the Summit, President Maduro said: "One cannot visualize a recovery in oil prices this year, we have done everything possible, but unfortunately the mistaken strategy by President Obama's advisors has led to 'fracking" in order to flood world oil markets." More in Spanish: (Últimas Noticias: http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ejecutivo-no-ve-recuperacion-de-precios-del-petrol.aspx#ixzz3XIIPCCPh)

 

 

Commodities

 

Venezuela alarmingly low on food

"There is a real storm developing due to the lack of dollars. The situation is desperate and may get a lot worse," says Russ Dallen, head of local investment bank Caracas Capital Markets, who has spent several years keeping a close eye on the Venezuelan situation. "In the next two or three months we are about to see a terrible shortages situation, much worse than we have seen so far -- not only because inventory levels are quite low already, but because at this point imports of the products needed within 8-12 weeks are not being allowed into the country." (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2383181&CategoryId=10717)

 

SIDOR steel production shutting down for lack of industrial gas

Two SIDOR major steel plants in the Guayana region have stopped their production due to lack of industrial gas from PDVSA. The situation arises while SIDOR is already operating at 20% of its installed capacity for lack of investment, supplies and spare parts. Average gas consumption at the plants averages 86,000 cubic feet of gas daily, but PDVSA has been supplying only 40-50,000 cubic feet. Union leader Carlos Ramírez adds: "they haven't told us how long we will be like this". More in Spanish: (Correo del Caroní: http://www.correodelcaroni.com/index.php/economia/item/30086-insuficiencia-de-gas-ha-paralizado-la-aceria-de-palanquillas-de-sidor)

 

 

Economy & Finance

 

Maduro vows to radicalize the "revolution", hit business harder

Upon his return from the Panama Summit, President Nicolás Maduro publicly told his Cabinet and other authorities: "enough with so many meetings with the private sector, so many papers...let's apply a hard hand, let's radicalize the revolution".  He added: "In the current phase of economic warfare two additional products have gone scarce because they are essential for adults. Every week and month there is a new product that is scarce". He said "I told the Vice President and others, with no delay, summon businessmen that received FOREX to import these two products. Investigate them, review their accounts, go to their storage facilities and if necessary turn them over to the Prosecutor because I am sure they are responsible for economic sabotage". He urged workers to take to the street and face off "bandit businessmen", and threatened to extradite and jail publishers of a Miami based webpage that reports on FOREX fluctuations. More in Spanish: (El Universal: http://www.eluniversal.com/nacional-y-politica/150413/maduro-basta-de-tanta-reunidera-vamos-a-radicalizar-la-revolucion; El Mundo, http://www.elmundo.com.ve/noticias/economia/politica/investigaran-a-empresarios-que-comercializan-dos-p.aspx#ixzz3XH8s0Rxa)

 

Cabello says 7,000 companies are now under investigation for irregular use of FOREX

National Assembly President Captain Diosdado Cabello reports the Prosecutor General has opened investigations of around 7,000 private companies for misuse of FOREX. More in Spanish: (AVN; http://www.avn.info.ve/contenido/7-mil-empresas-están-siendo-investigadas-país-uso-irregular-divisas)

 

Central Bank’s international reserves slumped US$ 3.2 billion to US$ 21 billion in March due to shrinking oil revenues and debt payments. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43449&idc=2)

 

Gold Reserve moves to seize Venezuela bond payments over US$ 750 million judgment

Gold Reserve has served banks in Luxembourg with the equivalent of writs of garnishment relating to around US$ 700 million in interest payments on Venezuelan bonds and funds, cranking up its push to collect an arbitration award from this country. "These banks were chosen because they are designated as paying agents or transfer agents in listing memoranda relating to various bonds issued by Venezuela and listed on the Luxembourg Stock Exchange," the Toronto-listed gold mining company said in a statement. The fresh push by Gold Reserve to collect its arbitration award is likely to worry cash-strapped Venezuela, which is struggling to foot hefty bond payments and seeking to delay payment of major arbitration awards. Targeting banks could also unnerve bondholders amid worries over the country's debt servicing. "Venezuela is going to have to turn around and be very careful now about paying and how it pays interests on coupons. Clearly Gold Reserve is going to look for assets to seize or freeze," said Russ Dallen head of Caracas Capital Markets in Miami. Still, Dallen said Venezuela would likely ultimately pay the award when it runs out of dilatory actions. It was not clear when a Luxembourg court might decide on the issue. (Latin American Herald Tribune: http://laht.com/article.asp?CategoryId=10717&ArticleId=2383455)

 

Venezuela bonds rise after new FOREX restrictions

Venezuela's global bonds rose after the government restricted supply of hard currency for foreign travel, potentially improving the nation's capacity to repay debt amid concerns about a potential default. A new resolution limits the amount of dollars that Venezuelans can receive at a preferential exchange when traveling abroad. One Wall St. analyst said that could save US$ 2.8 billion in hard currency in 2015. "This could represent savings for the government of about US$ 2.8 billion in FOREX allocations in 2015, a non-negligible amount that could provide needed relief for Venezuela's tight cash flows," wrote Alejandro Grisanti of Barclays in a research note. (Reuters, http://www.reuters.com/article/2015/04/13/venezuela-economy-idUSL2N0XA0S420150413; El Universal, http://www.eluniversal.com/economia/150413/venezuelan-bonds-climb-after-restrictions-in-usd-quotas)

 

Almost five million people could move to public banks

José Grasso, a Venezuelan economist and the CEO of Softline Consultores, estimates that almost five million card holders in private banks could move to public banks to finance their foreign travel and use the quota allocated in official exchange rate to e-purchases. The new ruling by the Finance Ministry "authorized exchange brokers are those belonging to public banks." The financial expert said that there are 11 million credit cards throughout Venezuela, for around seven million people, taking into account that some individuals hold at least two credit cards. However, public banks cannot issue credit cards to request foreign currency for travel due to plastic shortages. This is what bank customers are reporting after they flocked to Banco de Venezuela and other public banks on Monday to partially or totally migrate from private banking. Private banks can only receive and process requests for FOREX for travelers with credit cards and cash for children and teens through May 9, but major banks are already announcing they will cease such operations ahead of that date. (El Universal, http://www.eluniversal.com/economia/150413/almost-five-million-people-could-move-to-public-banks; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43461&idc=2; http://www.veneconomy.com/site/index.asp?ids=44&idt=43460&idc=2; http://www.veneconomy.com/site/index.asp?ids=44&idt=43452&idc=2; http://www.veneconomy.com/site/index.asp?ids=44&idt=43451&idc=2)

 

Opposition warns of increase in gasoline prices, interest rates and bank transaction taxes

Enrique Márquez, President of the Un Nuevo Tiempo party, was told media that President Nicolás Maduro is about to announce measures which will further impoverish Venezuelans, including raising gasoline prices and bank interest rates, as well as bringing back the tax on banking transactions. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/150414/unt-alerta-que-aumentaran-gasolina-tasas-de-interes-y-retomaran-idb)

 

 

Politics and International Affairs

 

Obama meets Maduro amid high tension

U.S. President Barack Obama met Venezuelan President Nicolas Maduro in a brief informal encounter at the regional summit on Saturday and tried to ease tensions that surged after the United States recently placed sanctions on Venezuela. Maduro had earlier challenged Obama to discuss his decision to sanction seven Venezuelan officials, saying that he had been trying to arrange a meeting with Obama for two years but never received a response. Obama was not present at the time but the two later met. A U.S. official said it was a brief conversation just as Obama was leaving for his return to the United States. Maduro later said “the possibility exists of moving to a process of talks.” He also reported he visited with Fidel Castro for four hours after the Summit to review its results, and proclaimed "this triumph belongs to Fidel". (Reuters, http://www.reuters.com/article/2015/04/12/us-cuba-usa-maduro-idUSKBN0N20QK20150412; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2383405&CategoryId=10717; http://www.laht.com/article.asp?ArticleId=2383223&CategoryId=10718; El Universal, http://www.eluniversal.com/nacional-y-politica/150413/venezuela-us-uphold-peaceful-dialogue; and more in Spanish: Correo del Orinoco: http://www.correodelorinoco.gob.ve/caracas/presidente-maduro-dedica-a-fidel-victoria-dignidad-y-soberania-cumbre-americas/)

 

STRATFOR: The US cannot end Venezuela's crisis

Caracas is running out of lifelines. For now, Maduro will have to rule with the ever-present possibility of protests. The long-running economic crisis could soon become an existential crisis for the ruling United Socialist Party. The rapid economic decline has clearly affected the government's public approval, and the polling trend in recent months shows a clear deterioration of political support for the government. Maduro's administration will probably not be able to reverse the trend ahead of legislative elections simply by spending more. As it is, there is just not enough petroleum income to sustain the central government. Venezuela's leaders realize that the current situation is unsustainable, but political factions within the ruling party do not want to make changes that could bring down the government or threaten their current positions. Members of the political and military elite, for example, currently benefit from currency arbitrage through the country's overvalued exchange rate. Some of these officials are concerned that they may face U.S. criminal charges, primarily for drug trafficking. To move ahead with a serious negotiation toward a political transition, the United States and the political opposition in Venezuela would have to take these individuals' interests into account. Legislative elections will be crucial to watch. If the opposition makes significant gains, it could gain some power within the legislature and potentially acquire leverage to pressure Maduro into making concessions, such as releasing political prisoners. Such a vote may not proceed peacefully. And Washington, along with an array of willing mediators in Latin America, will be pushing Caracas toward such concessions in an effort to cushion Venezuela's fall. (STRATFOR: https://www.stratfor.com/sample/analysis/united-states-cannot-end-venezuelas-crisis)

 

Chile's Lagos and Frei join efforts to free political prisoners in Venezuela, Bachelet refuses to meet wives

Chilean former Presidents Eduardo Frei y Ricardo Lagos met with the wives of Antonio Ledezma and Leopoldo López (Mitzy Capriles and Lilian Tintori) and joined a list of 26 former democratic heads of state - including Chile's Sebastián Piñera - that are pressing the Maduro regime for the release of political prisoners in Venezuela. Lagos proposed the state of political prisoners here should be verified by the International Red Cross, as was the case during Pinochet's dictatorship in Chile. Chile's Socialist President Michelle Bachelet declined to see the wives of the two imprisoned opposition leaders alleging her country's involvement in mediation efforts between Venezuela's regime and the opposition here. More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

In  Panama, Capriles charges regime with prioritizing ideology above  local problems

Opposition Governor of Miranda state Henrique Capriles has charged that President Nicolás Maduro prioritizes "socialism and brotherhood among countries" over the Venezuelan economic crisis, high prices, and the border dispute with Guyana. He  added that the government "sought to transform the freezing of assets and suspension of entry into the US against some Venezuelan officials into ‘an imperial interventionist action and meddling.” (El Universal, http://www.eluniversal.com/nacional-y-politica/150413/dissenter-ideology-is-prioritized-over-local-problems)

 

HUFFINGTON POST: United States, Venezuela and UNASUR: Four Questions

Sanctions adopted by the U.S. government against seven mid-ranking Venezuelan state officials, who are involved in or are responsible for severe human rights violations, have prompted some strong reactions in Latin America for the past month. All this triggers four questions. And the first of these questions must be whether these reactions are proportional to the cause. The measures were not taken against the country as a whole, its economy or its population, but only against seven mid-ranking state officials who do not benefit from state immunity under international law. These seven individuals are banned from entering U.S. territory and entry restrictions for foreigners are always a prerogative of any sovereign state. Furthermore, the U.S.-based assets of these seven officials have also been subject to freezing orders - and it seems unclear whether any such assets actually exist. The next question is whether these rather symbolic sanctions are legal. Was UNASUR right to question its legality? The justification given by the Obama administration was the need to enforce respect for human rights and to safeguard democratic institutions within the framework of international law. These rules are enshrined in treaties to which Venezuela and the United States are parties as well as in customary international law. UNASUR -- which curiously enough does not include a legal adviser among its recently recruited senior staff -- gives the impression of dismissing these measures as illegal without thorough examination. The third question is: Why the United States? Isn't this a case of double standards? It is true that despite the hierarchy of human rights in the international system, countries generally tend to avoid taking actions when human rights are violated in another state. But this reluctance does not mean non-directly injured States cannot, individually and within certain parameters, adopt sanctions: some will take small steps, others may take more substantial ones. And to do that, international law does not ask for an unblemished own record which no country has. (Huffington Post: http://www.huffingtonpost.com/paz-zarate/united-states-venezuela-a_b_7034284.html)

 

 

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.