October 27, 2015

International Trade

 

Cargo that has arrived at Puerto Cabello:

• 60.000 tons of yellow corn, 30,000 tons of bulk soy, 30,000 tons of wheat, and 9,999 tons of raw soy oil for state agency Corporación de Servicios y Abastecimientos Agrícolas (CASA)
• 387 trucks and 353 containers bearing auto parts for the government's transportation program.

More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Merchants have paralyzed pending imports due to an announcement by President Madura that they cannot use the parallel FOREX rate to establish costs and prices. Caracas Chamber of Commerce Executive Director Victor Maldonado reports that "due to the severe restriction in official FOREX, almost all trade turned to the parallel rate in order to keep afloat, but now no one will import something at a price that cannot be used in establishing cost". More in Spanish: (El Nacional; http://www.el-nacional.com/economia/Comerciantes-pararon-importaciones-proceso_0_727127490.html)

 

Venezuela-Colombia bilateral trade is now down 48% in Q3 2015

The Venezuelan-Colombian Economic Integration Chamber (CAVECOL) reports that trade between Venezuela and Colombia totaled US$ 281 million in the third quarter, versus US$ 544 million in the same period of 2014, for a 48% contraction in trade due to the shutdown of the Venezuela-Colombia border and the state of emergency decree issued by the Venezuelan government on August 19. (El Universal, http://www.eluniversal.com/economia/151026/venezuela-colombia-trade-down-48-in-third-quarter)

 

 

Logistics & Transport

 

Regime is evicting private import service companies from Maiquetía International airport

Officials at the Maiquetía International Airport have delivered an eviction notice to  private companies, such as  PG, SWISSPORT and PPG, which have operated customs and storage facilities there for over 10 years, and could leave over 800 workers without jobs. It is reported the move will begin with PG and continue on to over 10 companies operating on government premises. The National Guard has been called in to dislodge PG workers protesting the decision. More in Spanish: (El Nacional; http://www.el-nacional.com/economia/Gobierno-desaloja-empresas-Guaira_0_725327722.html; http://www.el-nacional.com/economia/Intentaron-desalojar-trabajadores-PG_0_727127472.html)

 

 

Oil & Energy

 

U.S. graft inquiries turn to Venezuelan oil industry

A top finance manager for Venezuela’s government-run oil company is suspected of taking millions of dollars in bribes to invest company pension money in an American hedge fund, according to court papers in one case. High-ranking Venezuelan government officials, including some at the oil giant, used shell companies, fake contracts and import scams to camouflage the illicit movement of more than US$ 4 billion through a European bank accused of being a money-laundering haven, according to a Treasury Department investigation. These cases and others like them show how American investigators are increasingly focusing on Venezuelan officials suspected of corruption, including officials at the government-owned oil company PDVSA. The cases have come together as American officials are stepping up investigations into narcotics trafficking that frequently involve government corruption as well. The inquiries have opened a window into what is believed to be widespread corruption at the oil company and elsewhere in Venezuela. Federal officials have not announced any indictments, but the possibility that American prosecutors might file charges against high-level Venezuelan oil officials is causing alarm among American oil companies that do business with the government-run corporation. Francisco J. Monaldi, a fellow in Latin American energy policy at the Baker Institute for Public Policy at Rice University in Houston, says oil executives had been encouraged by the signs that PDVSA was seeking to work more closely with American companies, but he added, “They’re worried that it will totally collapse, by the rumors they hear that a lot of the investigations that are happening around Venezuela have PDVSA in the middle of it.” (The New York Times, http://www.nytimes.com/2015/10/23/world/americas/us-graft-inquiries-turn-to-venezuelan-oil-industry.html)

 

PDVSA's US$8 billion U.S. assets at risk in probe

A U.S. investigation of Venezuela’s national oil producer could jeopardize about US$ 8 billion in crude refineries, storage terminals and pipeline networks. Three U.S. oil refineries owned by Petroleos de Venezuela SA’s CITGO subsidiary have a combined capacity to process 749,000 barrels of oil a day. The company’s largest asset is its 425,000-barrel-a-day refinery in Lake Charles, Louisiana, which includes shipping docks and storage terminals. CITGO probably would be valued around US$ 8 billion, said Gurpal Dosanjh, an analyst at Bloomberg Intelligence. Most of that value -- about US$ 6 billion -- rests in the company’s pipeline and storage network, and the remaining US$ 2 billion represents the trio of refineries, he said. Citgo valued its assets at US$ 8.1 billion in a July 2014 bond offering. (Bloomberg, http://www.bloomberg.com/news/articles/2015-10-22/venezuela-s-pdvsa-has-8-billion-of-u-s-assets-at-risk-in-probe)

 

Algeria backs Venezuela on OPEC, Non-OPEC Summit to boost prices

Algeria supports Venezuela’s call for a summit among heads of state from OPEC and other oil-exporting nations in a bid to lift crude prices, Algerian Foreign Minister Ramtane Lamamra said: “We would only convene a summit if its success is guaranteed; meetings at the level of ministers and experts will therefore precede such an event.” Venezuela has proposed that heads of state from the Organization of Petroleum Exporting Countries and other oil producers meet in November to discuss the price needed to sustain investments in future supplies, the country’s Oil Minister Eulogio del Pino said on Oct. 21. Speaking in Vienna during a meeting of experts from OPEC and from outside the group, del Pino said Venezuela seeks to set an “equilibrium price” of about US$ 88 a barrel. (Bloomberg, http://www.bloomberg.com/news/articles/2015-10-26/algeria-backs-venezuela-on-opec-non-opec-summit-to-boost-prices)

 

 

Commodities

 

Maduro regime devises new controls for distribution of goods

The stage of setting the maximum price of public sales of goods in addition to exerting strict control of some services, such as health care, has arrived. After the recent measures intended to reform the Law on Fair Prices, the government has been working on control of distribution. Executive Vice-President Jorge Arreaza has made a presentation on the severity of sanctions, further control of the estimation of fair prices, ban on including costs arising from the so-called parallel dollar, and some other variables subject to analysis. (El Universal, http://www.eluniversal.com/economia/151026/venezuelan-govt-devises-control-for-distribution-of-goods)

 

Oliveros: New measures may worsen inflation and shortages

Venezuelan economist Luis Oliveros says the government "is not carrying out necessary adjustments to solve shortages of goods; therefore, there will be no goods available (...) and it will be impossible to make them available in stores." Oliveros says the announcement by President Nicolás Maduro establishing two pricing categories: maximum retail price and fair price, "is an invention that not even the government understands." "More inflation and more shortages await us...President Nicolás Maduro did not announce economic measures, he decreed further radicalization of price controls," which will result in "higher shortages of products in December this year and early in 2016." (El Universal, http://www.eluniversal.com/economia/151024/oliveros-economic-measures-may-worsen-inflation-and-shortages)

 

 

Economy & Finance

 

Venezuela sues black market currency website in United States

Venezuela's Central Bank has filed a lawsuit with allegations of "cyber-terrorism" against a U.S.-based website that tracks the OPEC member's currency black market. The DolarToday site has enraged President Nicolas Maduro's government by publishing a rate in Venezuelan bolivars for the greenback far higher than the three official levels under Venezuela's 12-year-long currency controls. The rate has become an unofficial marker in the crisis-ridden economy, with some Venezuelans using it in private transactions or to fix prices of imported goods. The lawsuit, in the U.S. District Court for the District of Delaware, named three Venezuelans in the United States as being behind the site: Gustavo Diaz, Ivan Lozada and Jose Altuve. (Reuters, http://www.reuters.com/article/2015/10/23/us-venezuela-currency-idUSKCN0SH2LC20151023; Bloomberg, http://www.bloomberg.com/news/articles/2015-10-23/venezuelan-central-bank-sues-to-block-exchange-rate-website)

 

Economists warn inflation may hit 300%

There have been no official inflation numbers in Venezuela for the past nine months, but Tamara Herrera, the director of SÍNTESIS FINANCIERA says October inflation was easily above 200% and will be close to 300%  if problems are not faced at their roots. She says we will enter the club of nations with a government that is more scared of the truth being known than of the truth itself, and this is why they are trying to hide it and not solve it. She foresees devaluation in 2016 and continued use of multiple rates and FORE rationing, to the point where parallel rate devaluation will be uncontrolled. More in Spanish: (Notitarde; http://www.notitarde.com/Economia/Economistas-alertan-que-la-inflacion-sera-de-300-2535617/2015/10/24/675870; El Nacional, http://www.el-nacional.com/economia/Economistas-advierten-inflacion-errara-cerca_0_725927421.html)

 

Central Bank has drained liquidity for US$ 42.6 billion

As part of its monetary policy, the Central Bank of Venezuela (BCV) has placed securities in a combined manner in the market for USD 42.6 billion in order to drain the excess of liquidity. The information was posted on the BCV website. The astringent monetary policy implemented by the BCV is intended to curb the excess of liquidity which, if not absorbed by the system, may exert undesirable pressure. In the last 12 months, monetary liquidity in public hands has doubled, accounting for a variation of 100.31%. Thus far this year, means of payment have risen by 57.01%. This implies that liquidity has gone beyond the capacity of the economy to use these funds in productive activities. Therefore, the BCV must take steps to counteract the excess of liquidity in the system. (El Universal, http://www.eluniversal.com/economia/151024/central-bank-has-drained-liquidity-for-usd-426-billion)

 

 

Politics and International Affairs

 

BOFA: Venezuela: Winner takes all

A recent report from Bank of America-Merrill Lynch indicates that a simple majority of Venezuela’s legislative branch has "the capacity to approve laws, decree amnesties, ratify treaties, and override presidential vetoes. Yet these powers pale in comparison to those of larger supermajorities. A three-fifths majority of the National Assembly can revoke presidential decree powers and remove government ministers. Most importantly, a two thirds majority can call elections for a constituent assembly, which has the power to dissolve other branches of government – including the executive – and replace them with temporary appointees. Venezuela’s electoral system also disproportionately benefits the winner of the national popular vote. This is because 72% of deputies are elected through district level majority voting. We have estimated that the opposition would need to win the popular vote by a margin of at least 18.1% to capture a two-thirds supermajority. Most current polls put the opposition’s lead well above that threshold. Were the opposition to eventually reach power, one could visualize a new administration taking advantage of exiting winner-takes-all institutions to push through market reforms. This ability would offset the residual power of current appointees to the judiciary and accountability branches and thus reduce the risks of economic reforms being sidetracked. We think such a scenario would likely be well received by markets." (BOA full report: Attached.)

 

Colombia's Santos wants Jobim as the chief of Unasur electoral observation mission

Colombian President Juan Manuel Santos has asked the Venezuelan government to promptly approve Brazilian Nelson Jobim as the chief of the UNASUR mission for the parliament vote in Venezuela next December 6. Santos asked "respectfully the Venezuelan government to authorize as soon as possible the suggested chief of mission. The Supreme Tribunal of Justice (TSE) of Brazil had announced that it would not take part in the mission because of Venezuela's unresponsiveness on the assurances for "an objective and impartial observation" and due to a presumed veto on the Brazilian jurist. UNASUR later refuted statements by Brazil's Tribunal, using Twitter messages denying that Jobim had been vetoed. It also said elections "will allow Venezuelans to resolve differences without violence from polarization or media insults". (El Universal, http://www.eluniversal.com/nacional-y-politica/151026/santos-wants-jobim-as-the-chief-of-unasur-electoral-observation-missio; and more in Spanish: INFOLATAM, http://www.infolatam.com/2015/10/25/unasur-dice-no-hubo-veto-al-brasileno-nelson-jobim-para-mision-en-venezuela/)

 

New demands for the National Elections Board to reform observer rules

Brazil's refusal to join the group of UNASUR "escorts" at the upcoming legislative elections has revived the debate here. The Catholic University's Political Studies Center has issued a statement saying the procedure used by the National Elections Board (CNE) for election observers is inadequate and asks for it to rectify. Center Director Benigno Alarcon says: "Unfortunately, less than two months prior to the election, the CNE has chosen to disregard international standards for election observers and is using the term "escorts" as a political devise to legitimize its actions, and this damages transparency and credibility in elections proceedings". More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Regime invites Uruguayan allied party as viewer of D-6 vote

Venezuela´s former Minister of Foreign Affairs Elías Jaua has asked the Uruguayan political FRENTE AMPLIO party to join UNASUR as a viewer of the parliament vote next December 6. Jaua is reported to have traveled as an "emissary" of President Nicolás Maduro, and met with former President José "Pepe" Mujica and the Executive Secretary of FRENTE AMPLIO. Jaua is said to have promised that the ballots "will be held in compliance with legal and constitutional rules." (El Universal, http://www.eluniversal.com/nacional-y-politica/151026/venezuelan-govt-invites-uruguayan-party-as-viewer-of-d-6-vote)

 

Venezuelan prosecutor says falsehoods used to convict Leopoldo Lopez

Franklin Nieves, one of the Venezuelan prosecutors in the trial that sent Leopoldo Lopez to jail says he fled the country because the Venezuelan government had pressured him into bringing “false” accusations against the opposition leader.
“I decided to leave Venezuela with my family because of the pressure applied by the executive branch and my hierarchical superiors to make me continue defending the false evidence used to convict Leopoldo Lopez,” the prosecutor said. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2398738&CategoryId=10717)

 

...and Prosecutor General sacks prosecutor after trial criticism

Prosecutor General Luisa Ortega says she has sacked the prosecutor who criticized the conviction and imprisonment of opposition leader Leopoldo Lopez. She said Franklin Nieves, who fled the country, had abandoned his post, and also denied that officials had been pressured to provide false evidence at Lopez's trial. "At the state prosecutors' office we don't pressure anyone," she said, adding that Nieves had given in to "pressures from foreign and domestic elements", but was not specific. Prosecutor Ortega also rejected that the allegations by Nieves were grounds for overturning the verdict in Lopez's trial. Lopez's wife, Lilian Tintori, repeated her call for his release on Monday. "It is clear that the case was manipulated, a complete farce," she says. (BBC News, http://www.bbc.com/news/world-latin-america-34644434; Reuters, http://www.reuters.com/article/2015/10/26/us-venezuela-opposition-idUSKCN0SK2E520151026; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45923&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/151026/attorney-general-dismisses-prosecutor-in-lopezs-trial)

 

Venezuela has the highest number of political prisoners in the continent, surpassing even Cuba, claimed NGO Foro Penal Venezolano’s CEO Alfredo Romero. He said "Regretfully, Venezuela is world leader in political persecution and justice manipulation. This stands out even more clearly with statements such as those of prosecutor Nieves in Leopoldo López’ case.” (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45935&idc=5)

 

Venezuela to run for re-election to the United Nations HR Council

Foreign Affairs Minister Delcy Rodríguez has confirmed that Venezuela will be a candidate to serve another term on the United Nations (UN) Human Rights Council for the 2016-2018 terms. It will compete against Ecuador, Panama, and Bahamas for one of the three seats in representation of Latin America and the Caribbean at the UN Human Rights Council for three years. (El Universal, http://www.eluniversal.com/nacional-y-politica/151026/venezuela-to-run-for-re-election-to-the-united-nations-hr-council)

 

FM meets with UN representative to address Essequibo dispute

Foreign Affairs Minister Delcy Rodríguez met last week in New York with Susana Malcorra, the Chef de Cabinet to the United Nations Secretary General Ban Ki-moon, to revise the work conducted by the UN Technical Committee on the Essequibo border controversy. Malcorra, who heads the UN committee, had initially met with Guyanese President David Granger and then with Venezuelan President Nicolás Maduro on October 14. (El Universal, http://www.eluniversal.com/nacional-y-politica/151026/venezuelan-fm-meets-with-un-representative-to-address-essequibo-disput)

 

 

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.