International Trade
Food and construction material have arrived at El
Guamache port from Jamaica
503
tons of food in 24 containers bearing rice, pasta, oil, lard, wheat and sauces
have arrived from Jamaica into El Guamache port in Anzoátegui state; along with
77 containers bearing 1774,43 tons of construction material, and another 44
containers with miscellaneous products. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34877)
Cuba says economy shrank this year in tandem with
Venezuela crisis
Cuba's
economy shrank 0.9% this year in tandem with the crisis in key trading partner
Venezuela, President Raul Castro told the National Assembly in a closed-door
speech, predicting a slightly brighter outlook for 2017. The figure suggests
sharp economic contraction in the second half after the cash-strapped
government slashed imports, investment and fuel in response to lower exports
and a drop in cheap oil deliveries from Venezuela. "Restrictions in cash and in the provision of fuel worsened in the
second half," Castro said. "Financial
tensions and challenges that might intensify again in certain circumstances
will persist, but we hope that gross domestic product (GDP) will grow
moderately, by around 2% (in 2017)." Key ally Venezuela has slashed
its provision of cheap oil and the drop in global commodities prices is
punishing Cuban exports of nickel, refined oil products and sugar. (Reuters: http://www.reuters.com/article/us-cuba-economy-idUSKBN14G1E0)
Oil & Energy
State
oil company Petroleos de Venezuela (PDVSA) has announced that the volume of
sales stipulated in main crude oil sale contracts would be reduced by January
1, 2017 “in compliance with the terms and
conditions of their valid contracts.” According to PDVSA’s official
website, the decision is grounded on the production cut of 95,000 barrels per
day (bpd) approved by the Organization of Petroleum Exporting Countries (OPEC)
last November 30 in Vienna. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelas-pdvsa-reduce-sales-volume-its-clients_632933;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2427960&CategoryId=10717)
Oil Minister claims CITGO still belongs to Venezuela
Eulogio
del Pino, Oil Minister and President of state oil company Petroleos de
Venezuela (PDVSA), has denied that PDVSA has pledged its US subsidiary CITGO,
and explained that it had only used it as collateral for bond swap operations. On
December 23, a report showed that PDVSA had mortgaged CITGO to Russian oil
company ROSNEFT.
Minister Del Pino says PDVSA used 51% of CITGO’s capital as a collateral to motivate bondholders in bond swap operations. The remaining 49% was used for new financing. (El Universal, http://www.eluniversal.com/noticias/daily-news/citgo-belongs-venezuela-oil-minister-confirms_632928; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2427926&CategoryId=10717)
Minister Del Pino says PDVSA used 51% of CITGO’s capital as a collateral to motivate bondholders in bond swap operations. The remaining 49% was used for new financing. (El Universal, http://www.eluniversal.com/noticias/daily-news/citgo-belongs-venezuela-oil-minister-confirms_632928; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2427926&CategoryId=10717)
Commodities
President
Nicolas Maduro has turned to the military to manage the country's diminished
food supply, putting generals in charge of everything from butter to rice. But
instead of fighting hunger, the military is making money from it. With much of
the country on the verge of starvation and billions of dollars at stake, food
trafficking has become one of the biggest businesses in Venezuela. And from
generals to foot soldiers, the military is at the heart of the graft. As a
result, food is not reaching those who most need it. The U.S. government has
taken notice. Prosecutors have opened investigations against senior Venezuelan
officials, including members of the military, for laundering riches from food
contracts through the U.S. financial system. When people responded to scarcity with
violent street protests, Maduro handed the generals control over the rest of
food distribution, and the country's ports. The government now imports nearly
all of Venezuela's food, and corruption is rampant, jacking up prices and leading
to shortages. The Food Ministry's annual report shows significant overpayments
across the board, compared to market prices. And the prices the government pays
for imported foods have been increasing in recent years, while global food
prices remain stable. Internal budgets from the ministry obtained by AP show
the overpayment continues. By putting the military in charge of food, Maduro is
trying to prevent soldiers from going hungry and being tempted to participate
in an uprising against an increasingly unpopular government. However, it also
opened the door to widespread graft and further squeezed the food supply. The
three largest global food traders — U.S.-based Archer Daniels Midland Co.,
Bunge Ltd. and Cargill — have stopped selling to the Venezuelan government, largely
due to concerns of corruption following the government's takeover of the food
industry, A major scam involves the strict currency controls that have been a
hallmark of the administration. The government gives out a limited amount of
coveted U.S. currency at a rate of 10 bolivars to the dollar. The holders of
licenses to import food are among the select few who get to buy dollars at the
vastly cheaper rate. Some officials distribute these much-desired licenses to
friends. The friends then use only a fraction of the dollars to import food,
and share the rest with the officials. Some contracts go to companies that have
no experience dealing in food or seem to exist only on paper. From time to
time, the government carries out raids of warehouses holding smuggled goods and
arrests lower-ranking military officers accused of graft. And yet the
corruption persists from the port to the markets. Sometimes the officials who
control access to the docks keep ships waiting until they are paid off. After
ships unload their cargo, customs officials take their share. Bribes are also
required for any missing paperwork. Rotting food is also a problem even as 90%t
of Venezuelans say they can't afford enough to eat. In some cases, partners buy
food that is about to expire at a steep discount, then bill the government for
the full price. When the food is no longer usable, the military tries to get
rid of it quietly. Just as bribes are needed to get food into the port, they
are also required to move food out, truckers said. The roads near the port are
lined with trucks waiting to be let in. When the food is finally loaded onto
the trucks, soldiers come by to take a cut. On the roads, truck drivers face an
obstacle course of military checkpoints. Truckers say soldiers at about half
the checkpoints demand bribes. The surest way to move food through the network
of checkpoints is to transport it under military guard. For a percentage of the
product's value, military officers on the take will assign a moonlighting
soldier to ride along in the truck. Sugar and flour are among the items most in
demand because they have become virtually impossible to find legally, and some
businesses, like bakeries, cannot function without them. The theft extends to
the very end of the food supply chain. At one market in Valencia, the military members
who were appointed in August to stop contraband confiscated vendors' produce.
They said the vendors did not have the right permits. The food was piled in an
olive-green cargo truck. In Puerto Cabello, hungry residents said it feels like
corrupt soldiers are taking food off their children's plates. (Associated
Press: https://apnews.com/64794f2594de47328b910dc29dd7c996/Venezuela-military-trafficking-food-as-country-goes-hungry)
Economy & Finance
According
to the National Workers Union (UNETE), one million private sector jobs were
destroyed during 2016 due to the government’s erratic economic and labor
policies. UNETE’s coordinator Servando Carbone says “uncertainty remains that due to worsening conditions in 2017 more
companies and businesses will close, placing another 500,000 jobs at risk”.
More in Spanish: (El Nacional, http://www.el-nacional.com/noticias/economia/sector-privado-perdio-millon-empleos-2016_73028)
Venezuela must pay out US$ 6.4 billion due in debt
service during 2017
TORINO
Capital estimates that Venezuela must pay out US$ 6.4 billion in debt service
during 2017, and will required US$ 6.6 billion in outside financing. They
believe that renewing part C of the China-Venezuela Mixed Fund, US$ 5 billion,
would get “most of the job done”.
More in Spanish: (El Universal, http://www.eluniversal.com/noticias/economia/estiman-que-amortizacion-2017-destinara-millardos-pagos-bonos_633019)
Politics and International Affairs
Luis
Almagro, Secretary General of the Organization of American States (OAS), has
called on the Maduro regime not to interfere in the appointment of the
opposition-led Congress authorities, warning that it would be “one more step towards the consolidation of
an authoritarian regime.” “Any
interference in the appointment of the AN (National Assembly) by the Executive
Office or the Judiciary means full disregard of the essential principles of
democracy, namely separation and independence of powers,” Almagro said in a
communiqué. According to the document, interference from other powers in the
Congress internal procedures would put “aside
the legitimacy the Venezuelan people granted to the AN.” (El Universal, http://www.eluniversal.com/noticias/daily-news/oas-asks-venezuelan-govt-not-interfere-congress-board-appointment_632931)
Maduro regime says it will continue dialogue in 2017,
will not tolerate opposition “violence”
Downtown
Caracas Mayor Jorge Rodríguez, one of the Maduro regime’s representatives at
the Vatican sponsored talks with the opposition, says that pro government
representatives will maintain the political dialogue during 2017 and will not
tolerate acts of “violence” by the Democratic
Unity (MUD) opposition coalition. The MUD has notified the Vatican that there
are no conditions for a dialogue once the government reneged on commitments
made during the past session. New meetings had been scheduled for January 13th. More in Spanish: (Infolatam: http://www.infolatam.com/2016/12/28/chavismo-dice-seguira-dialogo-2017-no-permitira-violencia-opositora/)
Maduro calls on the military to set up a new
“intelligence” system in 2017
President
Nicolás Maduro has called on the armed forces here to set up a new “strategic, proactive and popular”
intelligence system to counteract threats and attacks before they occur, and accused
paramilitaries and criminals of causing recent food riots at several locations.
More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/maduro-llamo-fan-construir-sistema-inteligencia-2017_633003)
U.S.-Venezuela relations will probably deteriorate
under Trump. Ask ExxonMobil why.
President-elect
Donald Trump recently nominated ExxonMobil CEO Rex Tillerson to be secretary of
state. That company and Venezuela have been hostile toward each other over the
past decade — which means Tillerson’s nomination suggests that the United
States and Venezuela have a tense relationship ahead. In 2007, Venezuela tried
to buy majority stakes in all oil ventures within its borders. Although most
corporations accepted the deals offered by the government, ExxonMobil and
ConocoPhillips rejected them. When the government offered to pay ExxonMobil the
book value for its assets, the company asked for what it considered the market
value. As a result of the disagreement, Chávez sent state oil workers, along
with members of the military, to seize ExxonMobil facilities that May. ExxonMobil
had transferred its Venezuelan holdings to a subsidiary based in the
Netherlands. And so ExxonMobil sought international arbitration based on a
bilateral investment treaty between the Netherlands and Venezuela, within the
World Bank’s International Center for Settlement of Investment Disputes. In
October 2014, ICSID ordered Venezuela to compensate ExxonMobil for US $1.6
billion. Because ExxonMobil had requested nearly US$ 15 billion, Venezuela
claimed a victory. Less than a year later, ExxonMobil directly confronted the
Venezuelan government in Guyana. For more than 100 years, the Venezuelan and
Guyanese governments had both claimed the territory known as the Essequibo,
which borders both countries — and for decades, no oil companies explored it.
But in May 2015, ExxonMobil announced that it had discovered oil reserves off
the coast of the disputed region and would work with the newly elected Guyanese
president, David Granger, to extract the Essequibo’s resources. Maduro
announced that ExxonMobil was trying to destabilize peace in the region by
siding with Guyana, and the Venezuelan military began to hold exercises along
the disputed border. In an interview in July 2015, Maduro asserted that there:
“is a brutal campaign against Venezuela,
financed by ExxonMobil. It’s a campaign to corner Venezuela, to lead it to
high-intensity conflict [with Guyana], to undermine the policy of peace that we
have implemented.” For its part, ExxonMobil has repeatedly complained about
the Venezuelan government to U.S. diplomats stationed around the globe. Given
Tillerson’s background at ExxonMobil, we can expect the Trump administration to
take an aggressive stance toward Venezuela. This may include sanctions on more
Venezuelan state officials and even an end to high-level diplomatic meetings.
Expect more friction over the next few years. (The Washington Post: https://www.washingtonpost.com/news/monkey-cage/wp/2016/12/29/u-s-venezuela-relations-will-likely-deteriorate-under-trump-ask-exxonmobil-why/?utm_term=.f074ac99eb31)
Venezuelans
hawk snacks on Dominican streets as revolution dies
This is
not the life Edgar Leon hoped for when he voted for the socialist revolution of
Hugo Chavez in Venezuela -- standing on a street corner in the Dominican
Republic selling snacks and lemonade out of a bucket to support his wife and
children back home. “We were a rich
nation,” said Leon. “This is an
embarrassment. I never wanted to leave my country.” He’s one of the record
number of Venezuelans who arrived in the Dominican Republic this year, escaping
chronic shortages and spiraling prices back home. But these latest emigrants
aren’t the Venezuelan doctors, lawyers and university students of the kind who
can be found working in cities from Santiago to Miami. The streets of Santo
Domingo are hosting a new group of emigrants -- the very people who were meant
to benefit from subsidized food, cheap housing, labor protection and free
education guaranteed by Chavez’s government. (Bloomberg, https://www.bloomberg.com/news/articles/2016-12-28/venezuelans-hawk-snacks-on-dominican-streets-as-revolution-dies)
Hunger is driving up crime in Venezuela as violence
hits new highs
Venezuela’s
violence hit new peaks in 2016 amid a breakdown in the law enforcement and
judicial systems and a spike in hunger-related crimes. According to the
Observatory of Venezuelan Violence, or OVV, this country saw at least 28,479
violent deaths this year for a total of 91.8 deaths per 100,000 residents. If
the number proves accurate, Venezuela would have the second-highest homicide
rate in the world after El Salvador and ahead of Honduras. In its annual
report, the group said that Venezuela’s judiciary had shed all vestiges of
independence and was being used as a political bludgeon. In addition, increased
poverty and shortages “had promoted
increased violence in the country.” Also, for the first time, the group
said it had observed “the presence of
hunger-related generalized violence.” With the nation suffering from both
hyperinflation and food shortages, looting of supermarkets and food trucks has
become almost a regular occurrence. In addition, criminals are becoming more
brazen, using hand grenades and military-issue automatic weapons in their
crimes, the report found. Police have been particularly hard hit by the
violence. In the capital alone, there was an average of 2.5 police murders each
week, the report found. “At the same time, we’ve observed an increased number
of police who are involved in crimes,” the study added. The Miami Herald: http://www.miamiherald.com/news/nation-world/world/americas/venezuela/article123341959.html#storylink=cpy
In Venezuela, lynching kills one person every three
days
Roughly
one person is being lynched in crisis-ridden Venezuela every three days as
frustrated residents take revenge on suspected criminals, a monitoring group
said on Wednesday. The Venezuelan Observatory of Violence (OVV), which monitors
crime, said mob killings have become a generalized phenomenon across the
country, with 126 deaths reported in 2016 versus 20 last year. "Due to being repeated victims of crime for
more than a decade, and the feeling of not being protected, many people have
decided to take justice into their own hands," the OVV said in its
latest annual report. In the past, it said, lynching of suspected murderers and
rapists were relatively uncommon, but this year angry crowds have increasingly
attacked petty criminals too, with police often turning a blind eye. The OVV, a
group of academics who compile data from police sources and the media, said
Venezuela, with an estimated 28,479 homicides this year - or more than three
killings per hour - was the world's second most murderous nation after El Salvador.
That would represent 91.8 murders per 100,000 inhabitants this year, up from 90
in 2015, it said. The OVV put the homicide rate at more 140 per 100,000 people
in Caracas, making it one of the murder capitals of the world. President Nicolas Maduro's socialist
government rejects the OVV figures as inflated for political reasons. Whatever
the right statistics, crime remains an all-pervasive worry for Venezuelans,
especially in poor slums that are run by gangs and rife with guns. Numerous
state security plans and disarmament drives have failed to curb the problem.
"Violence is killing the future of
our country," opposition leader Henrique Capriles said during a visit
on Wednesday to rescue services in the Miranda state, which he governs. "The government has spent 17 years without
resolving the problem," he added, referring to Maduro and his
predecessor Hugo Chavez's rule since 1999. (Reuters: http://www.reuters.com/article/us-venezuela-violence-idUSKBN14H1PJ)
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.
