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.

Thursday, August 6, 2015

August 06, 2015

International Trade


Venezuela is working with China on a development plan for 2025 by strengthening productive chains, claims Planning and Knowledge Minister Ricardo Menéndez. Reported representatives from 11 Chinese companies are seeking for business opportunities in Venezuela, as part of said plan to reactivate domestic production and are holding meetings with public officials this week. (Veneconomy,; El Universal,


Oil & Energy


PDVSA has received at least six offers from foreign oil firms

Royal Dutch SHELL, STATOIL, CHEVRON, Reliance Industries, ESSAR Oil and PETROCHINA are interested in supplying light crude oils to dilute its extra-heavy crude oil, sources from the companies involved told Reuters. Last month, PDVSA asked oil suppliers to present offers to sell it some 70,000 bpd of light crude oil, via up to five year long contracts. (Veneconomy,



Economy & Finance


Conindustria suggests securitizing Venezuela's debt to foreign providers

The Venezuelan Confederation of Industries (CONINDUSTRIA) proposed on Tuesday "five actions" that could help substituting imports, apropos the government's initiative to set up a High Level Committee for the Substitution of Imports. Juan Pablo Olalquiaga, President of CONINDUSTRIA, pointed out that that initiative should have concrete results. In that regard, he suggested some changes in public policies aimed at "increasing domestic production" in the short term, including securitizing debt incurred with international providers, which roughly amounts to some US$ 9.92 billion. (El Universal,;


Empresas Polar’s workers will be meeting with government authorities in Caracas to determine on a new location for the distribution center that was expropriated in La Yaguara. They will also go over the situation at the brewery plants and their conditions in view of the shut-down and loss of benefits due to production drops. (Veneconomy,


Headhunters woo low-cost Venezuela talent amid crisis

Headhunters across Latin America are tapping Venezuela for low-cost professionals as a deepening economic crisis has left many skilled workers earning less money than taxi drivers and waiters. Highly-trained Venezuelans are seeking to escape a decaying socialist economy in which they often have to work second jobs and spend hours in line to buy basic goods such as milk or diapers. (Reuters,



Politics and International Affairs


STRATFOR: Russia, Venezuela hold anarchy at bay

Two countries stand out as high-risk targets for significant social unrest in the coming months. Not surprisingly, both are oil producers terrified at the sight of Brent crude falling below US$50 per barrel. The first is Venezuela, where even the most optimistic of government-manufactured statistics should give observers a feeling of deep foreboding. Venezuela burns through its oil reserves at a dizzying rate of roughly US$ 1 billion per month. Not only that, but the country is actually down to about US$ 16.9 billion in total reserves, with only a fraction of that amount — estimated at less than US$ 1 billion — held in liquid reserves. Given the country's heavy dependence on oil revenue, it hardly takes an expert statistician to see that Venezuela is in an untenable financial situation. The lack of foreign exchange to finance imports has led to severe food shortages. And the Dec. 6 legislative election only complicates matters, as an already hamstrung government is going to be all the more resistant to imposing structural economic reforms that are as unpopular among voters as they are necessary to the country's financial viability. Exacerbating Venezuela's economic difficulties is widespread corruption. Government-affiliated mafias with powerful military links rely on Venezuela's overvalued exchange rates and capital controls to profit from arbitrage. So far, Venezuelan President Nicolas Maduro has shown neither the inclination nor the ability to crack down on these corrosive elements. Nor is Maduro willing to take the politically precarious step of cutting fuel subsidies in the lead-up to an election where his party is already at risk of losing significant support. The threat of spontaneous unrest is still very much alive. On July 31, hundreds of people in San Felix, Bolivar state, angered by high food prices, shortages and a recent fivefold increase in local bus fares, started looting supermarkets. One of the rioters was killed in the melee.  We can expect the Venezuelan government to rely largely on the National Guard and the national police to put down such riots, followed by less disciplined colectivos should the situation warrant reinforcements. And should economic difficulties breed divisions within the government, a weaker government will be even less able to cleanly and effectively contain widespread social unrest. (STRATFOR,


Venezuela is close to a humanitarian crisis

It has become usual in Venezuela for pregnant women to go to up to 5 hospitals before finding one able to take them in, amid a general collapse of the economy and public institutions nationwide. And the situation threatens to become much worse, according to NGO Crisis Group, which warns the nation is headed for a humanitarian crisis due to the implosion of the "chavista" economic model. One of the most alarming consequences is the sharp decay of medical care here.  FOREX restrictions are directly hitting health conditions since most medicines sold in Venezuela are either imported or have imported components. Human Rights Watch says "we seldom have seen as rapid a deterioration in access to medicine as we have in Venezuela, except for war zones". For thousands of Venezuelans suffering from cancer, AIDS or chronic disease such as diabetes or high blood pressure, lack of medication translates into a death sentence. Hunger also looms as a possibility after agriculture and agribusiness have been destroyed and the regime now lacks funds to continue importing food. More in Spanish: (El Nuevo Herald,


Pulling Venezuela back from the brink

In just the past few weeks, President Obama has opened official ties with Cuba and clinched a nuclear deal with Iran. Now Venezuela, another longtime US adversary, might be next in line for a bit of reconciliation with Washington. Secretive negotiations between the two countries have picked up in recent months, perhaps reversing years of belligerency and estrangement. The talks have come none too soon. Venezuela’s economy is faltering fast, even more so than Greece’s, with mobs looting supermarkets, inflation reaching triple digits, and opposition figures like Leopoldo López being thrown in jail by President Nicolás Maduro. The country has experienced an average of 14 protests a day. A collapse of the Venezuelan economy or its government is in no one’s interest, especially its neighbors. The US has been rightly cautious in seeking rapprochement with the Maduro regime. It should not undercut the efforts of the country’s political opposition. It must welcome actions from others in Latin America. And it must first emphasize universal concerns, such as human rights violations and a humanitarian concern for the growing food crisis. But the most urgent step is for the regime to allow the international community to monitor the elections without hindrance. A credible vote would begin to restore confidence in the country while contested elections might worsen it. (The Christian Science Monitor,


Paintings of Chavez and Maduro burned as food seeking protesters attack Sinamaica municipality

Enraged inhabitants of Venezuela's Goajira peninsula on the northern border with Colombia, mostly populated by Wayuu tribes, attacked and burned the Sinamaica municipality during a protest over scarcity and food rationing. The area has endured weeks without receiving supplies, and the protest broke out when four lorries filled with food tried to go through the Colombian frontier. It was reported that during the protest, paintings of the late President Chavez and President Maduro were taken out and burned by the population. Pro government authorities promptly blamed Colombian smugglers for the event. More in Spanish: (El Nacional,


Regime uses military to control desperate food queues

Thousands of people who line up for many hours to receive food at subsidized prices - an average family needs 8 minimum salaries to pay for one food basket - are now being controlled by armed military officials, amid charged of brutality against those who protest and corruption by officers who privilege their friends and neighbors. More in Spanish:  (Correo del Caroní,


Venezuela’s electoral "remix" 

The electoral subject is back on the table as December 6 nears, a date belatedly set by the National Electoral Council (CNE) on purpose for an election in which Venezuela’s two only political rivals will square off for a majority of seats in the Parliament. The Government and its public powers find themselves fine-tuning every little detail so they can tilt the balance in their favor when the time comes, knowing that popular support has never been weaker. Sixteen years of outdated policies that have proved a failure are felt in every corner of the country, while its populist speech doesn’t convince the staunchest supporters of chavismo anymore. (Latin American Herald Tribune,


Foreign Ministry here rejects U.S. call to Venezuela to scrap ban on opposition political candidates

The United States has called on Venezuela to reverse a ban on opposition members from holding office and participating in the Dec. 6 parliamentary elections. Washington made the request after opposition leader Maria Machado said she had tried to register as a candidate but her application was rejected. The State Department said in a statement that the decisions by Venezuelan electoral officials "clearly have the intention of complicating the ability of the opposition" to contest the poll and to limit the field of candidates. Venezuela's Foreign Ministry immediately issued a statement rejecting the call and asked the US to respect international law "in order to continue friendly talks that lead to normalizing bilateral relations". (Reuters,; El Universal,; and more in Spanish: El Universal,


Brazilian corruption boss had business dealings with Chávez, Maduro

José Dirceu, who is at the center of the PETROBRAS corruption scandal that is shaking the base of Brazil's governing Workers Party, spoke on behalf of former President Luiz Inácio “Lula” da Silva in a number of mystery projects that involved the Brazilian leader, the late Hugo Chavez and Cuba's Castro brothers, according to documents published by Miami's El Nuevo Herald include reports by Maximilian Arbeláez, then Venezuelan ambassador to Brazil, detailing meetings by Lula and Dirceu meeting with Venezuelan officials on behalf of Brazilian businessmen. In one of them, written by Arbeláez himself, Lula himself asked the ambassador directly to meet with his own lawyer and with "a businessman of his entire trust" who wanted to import iron rods and petroleum coke from Venezuela. Dirceu travelled to Venezuela several times and met with Chavez and then Foreign Minister Maduro, as a Lula representative. Dirceu, Lula's chief cabinet chief from 2003 to 2005, was recently arrested at his home in Brasilia where he was under house arrest on an 11 year sentence for taking part in a mass vote buyout in the Brazilian Congress. He is being accused of being the mastermind of the PETROBRAS corruption network. More in Spanish: (El Nuevo Herald,


The Carter Center is pulling out of Venezuela

The Carter Center has decided to pull out of Venezuela in order to "focus limited resources on other countries that have sought it's support". It will continue monitoring current elections from its Atlanta offices after 13 years of working within the country. Center Director Jennifer McCoy left the organization earlier this year to become director of the Global Studies Institute at the University of Georgia. 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.

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