December 01, 2015

International Trade

 

Fertilizers and soy flour have arrived

The national port authority BOLIPUERTOS reports 6,500 tons of fertilizers were offloaded at La Ceiba port. It adds some 30,000 tons of soy flour arrived at Puerto La Cruz; along with 2,000 tons of general cargo and 8,000 tons of container cargo at Guanta port. More in Spanish: (El Universal; http://www.eluniversal.com/economia/151201/fertilizantes-y-harina-de-soya-arribaron-al-pais)

 

 

Oil & Energy

 

PDVSA says Crystallex US$2.8 billion claim unfounded

PDVSA says that Canadian miner Crystallex has no justification for a complaint in a U.S. court seeking to recover US$ 2.8 billion from the state oil company. Crystallex filed the complaint Monday in Delaware, saying PDVSA and its U.S.-based refining unit Citgo Holding designed a refinancing deal to lower Citgo's value and dissuade asset seizures stemming from arbitration awards. Crystallex is engaged in a US$ 3.1 billion arbitration claim against Venezuela before an international tribunal over the termination of its Las Cristinas gold asset in Venezuela. (Reuters, http://www.reuters.com/article/2015/11/27/us-venezuela-crystallex-idUSKBN0TG2H620151127#8tGYiptGaq0yGzC7.99)

 

Venezuela oil price barely budges off 6 year low

Venezuela's weekly oil basket rose slightly off a 6 year low as oil prices around the world bounced off the previous week's collapse. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending November 27 was US$ 34.93, up 37 cents from the previous week's US$ 34.46. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2400919&CategoryId=10717)

 

 

Commodities

 

Greater scarcity anticipated for early 2016

Juan Pablo Olalquiaga, President of the Food Industry Council, warns that the new year will begin with low inventories, empty storerooms and no raw material. He says this will translate into greater scarcity and no ability to carry out contingency plans. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/mercados/advierten-mayor-escasez-para-primeros-meses-de-201.aspx#ixzz3t3tTUtn6)

 

Gold Reserve could seize Venezuela's US assets if not promptly paid

On November 20th the US District Court in Washington DC turned down a petition by the Maduro regime to postpone enforcement of a US$ 760 million 2004 arbitration ruling in favor of the Gold Reserve mining company, and ordered its immediate execution. The Venezuelan government, aided by Patton Boggs can still go before the DC Court of Appeals as their last possibility. This means that Gold Reserve could soon start seizing any Venezuelan government assets in US territory, including what is left of CITGO. As payment is delayed, interests and legal costs continue to rise. More in Spanish: (El Blog de Coronel: www.lasarmasdecoronel.blogspot.com)

 

Paralyzed PEQUIVEN plant leads to food packing crisis

PEQUIVEN's "Ana María Campos" plant which produces low density polyethylene has been paralyzed since September, with no renewed activity in sight. Their product is key to manufacturing "flexible" packaging for the food industry. One source says "there is inventory only for a few days in companies that provide packing for food, and companies are beginning to stop their activity". The food industry will begin feeling this impact within the next few weeks. More in Spanish: (Konzapata, http://konzapata.com/2015/11/paralizacion-de-planta-de-pequiven-causa-crisis-en-produccion-de-empaques-para-alimentos/)

 

 

Economy & Finance

 

MORGAN STANLEY: Venezuela: Triggers and Transitions

Despite polls pointing to a landslide victory by the opposition, we think the outcome of the National Assembly elections is most likely to be a thin majority to either party, not enough to trigger meaningful policy changes. 2016 likely to be tougher than 2015: With oil prices likely to remain low, unchanged external debt service and less room to compress imports, the dollar deficit in 2016 could be wider than US$ 25 billion, exceeding the dollar deficit this year. Liability management unlikely to help: We think an offer to extend the 2016 and 2017 PDVSA maturities would have to include increased incentives for investors to participate. Additionally, it would only save about US$ 3 billion of financing while the coupon payments remain high enough to run the risk of a credit event. The government is likely to implement changes to avert the worst: Increasing strain on the population could lead to social unrest that, alongside the threat of a default due to the eroding asset base, may force the current government to implement policy adjustments. However, this is likely to be closer to a piecemeal approach than a drastic change of the economic model, and policy mistakes cannot be ruled out either. In the absence of policy changes, a credit event may materialize around the heavy debt-servicing payments in 4Q. (FULL REPORT ATTACHED).

 

Legislator says "government could undertake economic adjustments after Sunday"

Pro government legislator Elvis Amoroso, first Vice President of the National Assembly, does not discard the possibility of economic adjustments after legislative elections next Sunday: "Economic affairs can be very volatile, and adjustments are always necessary. If the price of oil, which is our main source of income, goes down, of course they must be carried out", he said. More in Spanish: (Notitarde; http://www.notitarde.com/Economia/Elvis-AmorosoGobierno-podria-hacer-ajuste-economicos-despues-del-6D/2015/11/30/722703/; El Nacional, http://www.el-nacional.com/economia/Elvis-Amoroso-descarto-realicen-economicos_0_748125278.html)

 

Official says "foreign exchange unification should go through a transition"

Miguel Pérez Abad, presidential commissioner for Economic Development, says the national FOREX system has a hole and it has already shot ahead, and adds that exchange unification could be the solution to this issue. However, he says it must previously go through a long-term transition stage, including a dual exchange rate in the first phase, and then stabilize the exchange rate. "I don't see the exchange unification in the short term. It seems to me that there must be a dual exchange rate; one that can cover the seven or eight products of the basic (food) basket and a Foreign Exchange Marginal System (SIMADI) exchange rate," he remarked. Pérez Abad claims companies are willing to switch to SIMADI's exchange rate, which is more reasonable and suitable for the country economic situation and would avert price distortions. (El Universal, http://www.eluniversal.com/economia/151128/foreign-exchange-unification-should-pass-a-transition-phase)

 

 

Politics and International Affairs

 

CREDIT SUISSE: How big could the opposition win?

Legislative elections next Sunday may be the greatest electoral test that Chavismo has ever faced. Our model suggests that it would need at least 59% of the popular vote in order to capture the two-thirds majority, which is 112 of the National Assembly’s 167 seats. We think that this is a realistic possibility. A victory of this magnitude could give the opposition momentum to push for more meaningful political changes. Such a big loss could also amplify serious questions about President Maduro’s leadership and fuel cracks within Chavismo. We would expect preliminary results on Sunday night, although these could be released quite late. The National Electoral Council (CNE) will likely make an announcement on national television and figures should eventually be published on its website. Local press and social media should also have information. The new national assembly will be seated on 5 January 2016. We see potential for political instability if the electoral results differ substantially from what opposition auditors report. The consequences of this scenario are rather unpredictable. One option for the government could be to tighten its grip and shift in a more autocratic direction. Alternatively, the military, which has allies in many gubernatorial offices and the majority of economic cabinet posts, could also play a role in a regime change scenario. We would not expect economic policies to be modified in the midst of a power struggle, but would be more concerned about continuity of debt service in a chaotic environment. We also note our concerns that possible perception of a large-scale electoral fraud, which could occur if the PSUV retains the majority, could lead to political and social instability as well as a potential interruption in debt service. (FULL REPORT ATTACHED)

 

World leaders tell Maduro that democracy doesn't work when opposition is intimidated

Five world leaders have written to Venezuelan President Nicolás Maduro, publicly calling for an end of persecution against Venezuelan opposition and for transparent elections next Sunday. The letter has been signed by British Prime Minister David Cameron, Spain's President Mariano Rajoy; Thorbjørn Jagland, Secretary General of the European Council; Spain's former president Felipe González, and Chile's former president Ricardo Lagos. The group condemned the disqualification of opposition candidates and the Venezuelan Elections Council refusal to allow qualified observers from the OAS and the European Union. They mention that OAS Secretary General Luis Almagro has "received no explanations, but rather unacceptable insults". More in Spanish: (El Nacional, http://www.el-nacional.com/politica/Lideres-mundiales-Maduro-democracia-oposicion_0_748125411.html)

 

OAS' Almagro replies to Maduro's insult

President Nicolás Maduro called  OAS Secretary General Luis Almagro  "trash", after the top OAS official protested the killing of opposition leader Luis Manuel Díaz during a recent rally. Almagro promptly replied by publicly writing to Maduro saying that "reports of the lack of guarantees during the elections process have multiplied recently." He added: "One is not trash, Mr. President Nicolás Maduro, by condemning the murder of a politician and calling for a stop to violence underway in the country....One would be trash if one were lenient towards violent deaths, toward threats and fear mongering; one would be trash if one did not feel for those killed in Venezuela." He called on Maduro to disarm armed civilian groups "particularly those who depend on the government or the government party", and to investigate 43 murder cases pending from past demonstrations. More in Spanish: (INFOLATAM: http://www.infolatam.com/2015/11/30/almagro-a-maduro-ser-basura-seria-que-no-dolieran-los-muertos-de-venezuela/)

 

Opposition warns against potential "technical plot" in parliamentary vote, will have the election results at 8-10 p.m.

Jesús Torrealba, Secretary Executive of Venezuela's opposition coalition Democratic Unity (MUD) has warned of a possible "technical plot" by the government of local President Nicolás Maduro if he fails to recognize or if he falsifies the results of the upcoming parliamentary election. As to the electoral mission of the Union of South American Nations (UNASUR, Torrealba again said he does not believe this group plays an independent role but rather one closer to the regime during the election. Torrealba, also says that the opposition coalition has all the necessary conditions to have specific results between 8 and 10 p.m. next December 6. "Gentlemen, we know that you know what we know," Torrealba told the National Elections Council (CNE). However, Torrealba clarified that the CNE will be the first one to issue the official results of the parliament vote. (El Universal, http://www.eluniversal.com/nacional-y-politica/151130/mud-warns-against-potential-technical-plot-in-parliament-vote; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/151130/mud-we-will-have-the-election-results-at-8-10-pm)

 

Opposition demands that the Armed Forces respect the will of the people on Sunday

Five days prior to parliamentary elections, the opposition coalition Democratic Unity has send a message with two clear demands of the National Bolivarian Armed Forces: that in this "crucial hour" for the nation they should respect the Constitution and the will of the people on December 6th. Defense Minister General Vladimir Padrino has said that there will be no violence next Sunday, nor will there be "a coup d'etat or a self-coup (by the government)"..."there will be no military-civic junta, and much less a military one, but there will not be any violence either". He said 163,000 soldiers will guard the elections process. (El Universal, http://www.eluniversal.com/nacional-y-politica/151130/a-total-of-163000-army-officers-to-safeguard-parliament-vote; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/151201/ministro-padrino-garantiza-fiesta-electoral-el-6-d; El Nacional, http://www.el-nacional.com/politica/MUD-FANB-respetar-voluntad-ciudadanos_0_748125413.html)

 

Zapatero seeks end to "inflammatory" speeches here

Spain's former President, José Luis Rodríguez Zapatero has called for an end to "inflammatory" speeches in Venezuela, leading up to Sunday's parliamentary elections. Zapatero will travel to Venezuela this week as part of a delegation to attend the upcoming vote. He said the group will seek a "clean and transparent" process. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/151201/zapatero-pide-fin-de-discursos-inflamados; Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/rodr%C3%ADguez-zapatero-es-invitado-especial-del-poder-electoral-para-elecciones-6d)

 

Three arrested over opposition leader's killing

Venezuela has arrested three people suspected of the murder of a regional opposition leader at a campaign rally last week ahead of parliamentary elections next Sunday. Opposition leaders blamed the shooting of Luis Manuel Diaz on the ruling Socialist Party.  Diaz was killed by a man who approached the stage after a rally in the town of Altagracia de Orituco in central Guarico state. Lilian Tintori, the wife of jailed opposition leader Leopoldo Lopez, addressed opposition supporters alongside Diaz shortly before the shooting. Opposition leaders blamed last week's shooting on the ruling Socialists. But President Nicolas Maduro's government has furiously denied that. Officials claimed Diaz was a well-known criminal caught in a gang dispute linked to unions in Guarico, whose death was being manipulated to discredit the Socialist Party. Yet opposition politicians say their candidates have been attacked on numerous occasions in the past weeks. Miguel Pizarro, an opposition politician running for re-election in Caracas, said he was confronted by armed men who shot into the air in the neighborhood of Petare on Sunday. Miranda state governor Henrique Capriles said he was attacked by a group of masked men in the town of Yare earlier this month. Correspondents say the killing of Diaz has increased concerns about volatility in the run-up to the election for a new National Assembly. (BBC News: http://www.bbc.com/news/world-latin-america-34971297?; Reuters, http://www.reuters.com/article/2015/11/30/us-venezuela-election-idUSKBN0TJ2KV20151130#UsSDfpbIDaf41j63.99)

 

Lilian Tintori rejects regime protection

The wife of Venezuelan opposition leader Leopoldo López, Lilian Tintori, rejected the protection offered by the local government after they warned her she "is the target" of hirelings who charge USD 30,000 "per political crime." Tintori said that she had been summoned late Saturday to meet with agents of the Bolivarian Intelligence Service (SEBIN) to coordinate how she would be given police protection, yet she refused to attend: "I decided not to attend because who is pursuing me and threatening me is SEBIN, (which is) the state police", Tintori said, as she recalled her husband turned himself in the authorities last February after the local government reported there was evidence of a plot to kill him. (El Universal, http://www.eluniversal.com/nacional-y-politica/151130/lilian-tintori-rejects-venezuelan-govt-protection)

 

 

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.