January 05, 2016

International Trade

 

Imports from Nicaragua decrease

Imports from Nicaragua have dropped over 10% for the first time since 2008. They shrank 13.59% in volume and 16.28% in value. Milk exports, which is the main Nicaraguan export to Venezuela, increased. Sugar, cooking oils and coffee exports dropped in value and volume. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/disminuyen-envios-desde-nicaragua.aspx#ixzz3wMmSquan)

 

 

Oil & Energy

 

Venezuela delays gas exports to Colombia, citing climate

Venezuela's state oil company, PDVSA, has delayed the export of natural gas to Colombia because of climate factors, the Colombian Mines and Energy Ministry said on Friday. In a letter to the Colombian government on Wednesday, PDVSA said the exports would not begin because of "climate variability," the ministry said in a statement. The exports are part of a deal between the two countries, which includes provisions for the neighbors to supply their own markets if necessary before exporting. "The contract specifies the delivery of 39 million cubic feet a day from Venezuela, which corresponds to just over 3% of daily supply in Colombia," the statement said. Colombian state oil company ECOPETROL has asked PDVSA to give a new date by which the exports could begin. (Reuters, http://www.reuters.com/article/colombia-venezuela-gas-idUSL1N14L0EH20160101; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2402783&CategoryId=10717; El Universal, http://www.eluniversal.com/economia/160104/venezuelas-pdvsa-blames-el-nino-for-halt-in-gas-export-to-colombia)

 

Maduro says Venezuela oil price finishes 2015 below US$30

The price Venezuela receives for its mix of heavy oil continued tumbling throughout December finishing the year below US$ 30 a barrel, according to President Nicolas Maduro. "The oil price today closed at US$ 29.26," Maduro said. "That's the key foreign exchange earnings of the country. However, Venezuela is not going to stop. We have to generate the national wealth. With that in mind, I have been preparing a set of actions to shield us and prepare for 2016 and take decisions that guaranteed the works delivered in 2015 to the people." He then promulgated 4 new laws as his ability to rule by decree ended that evening. According to Venezuelan government figures, the average price in 2015 for Venezuela's mix of heavy and medium crude was US$ 45.23 for the year. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2402814&CategoryId=10717)

 

Venezuela says a meeting between OPEC and non-OPEC countries is necessary

Eulogio del Pino, Minister of Petroleum and President of state-run oil company Petróleos de Venezuela (PDVSA) has stressed the need to hold an urgent meeting with oil producing countries members and non-members of the Organization of Petroleum Exporting Countries (OPEC) in January. "We have been discussing the need to urge leaders of OPEC and non-OPEC countries to hold an urgent meeting in January, since this is statistically the month with the lowest energy consumption worldwide, and with current supply levels, the price of the oil barrel could drop some US$ 10 more. That is why a joint action by all oil producing countries is necessary, in accordance with the fundamental principles of the OPEC (...), including the defense of fair prices of a non-renewable natural resource," Del Pino stressed. (El Universal, http://www.eluniversal.com/economia/160104/venezuela-deems-necessary-a-meeting-between-opec-and-non-opec-countrie)

 

 

Economy & Finance

 

Maduro limits Congress's power over Central Bank

President Nicolas Maduro has limited the National Assembly's powers over the Central Bank.  The president will now no longer need legislative approval to hire and fire Central Bank directors. The change was announced shortly before a new assembly, controlled by an opposition coalition, is due to be sworn in later on Tuesday. Maduro approved the change to the law governing Venezuela's Central Bank on 30 December, one day before his power to legislate by decree expired. The amended law not only curtails the powers of the assembly over Central Bank appointments, it also allows the bank to withhold data if it deems its publication a threat to national security or economic stability. Under the new law, the Central Bank can also allocate money to the state without the approval of the National Assembly. Opposition politicians said it was the latest in a series of moves to undermine the power of the legislative following last month's elections. "The reform [of the Central Bank law] is a legal monstrosity to protect a highly questioned president," opposition lawmaker Jose Guerra said. The opposition had announced that it would make economic reform one of its legislative priorities. (BBC News, http://www.bbc.com/news/world-latin-america-35231562)

 

New law now penalizes dollar transactions

President Nicolás Maduro has decreed that the use of an informal dollar FOREX rate to set prices for goods and services nationwide is now illegal and carries penalties of up to 12 years in jail. The new law creates a domestic production certificate as a new way to obtain FOREX for the government. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/hasta-12-anos-de-carcel-por-fijar-precios-a-dolar.aspx#ixzz3wMlLFL2O; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/las-nuevas-sanciones-por-ilicitos-cambiarios.aspx; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/hasta-12-anos-de-carcel-por-fijar-precios-a-dolar-.aspx; AVN; http://www.avn.info.ve/contenido/prohibici%C3%B3n-fijaci%C3%B3n-precios-d%C3%B3lar-especulativo-proteger%C3%A1-ingresos-venezolanos)

 

Maduro enacts new laws to increase taxation

President Nicolás Maduro has enacted several laws that aim to increase taxes and government revenue. One is a tax on large financial transactions which will now be charged 0.75% per transaction. Maduro claims this new tax will apply only to some 3,000 people and entities who hold large amounts of capital and will not hurt workers. He also announced that the government will henceforth not allow companies to adjust for inflation in order to avoid “fiscal evasion” More in Spanish: (AVN; http://www.avn.info.ve/contenido/impuesto-grandes-transacciones-financieras-generar%C3%A1-ingresos-para-inversi%C3%B3n-social; http://www.avn.info.ve/contenido/contribuyentes-gran-capital-pagar%C3%A1n-impuestos-ajustados-sus-ganancias)

 

Law on Labor Stability extended for three years

President Nicolás Maduro has extended Venezuela’s Labor Stability Law for three years, through 2018, which forbids companies from laying off workers and employees without government approval. Business has criticized the decree, saying it does not foster productivity. More in Spanish: (AVN; http://www.avn.info.ve/contenido/ley-inamovilidad-laboral-se-extiende-tres-a%C3%B1os; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/en-gaceta-oficial-ley-que-establece-inamovilidad-l.aspx)

 

Maduro says he may decree a national emergency on the economy, announce new cabinet

President Nicolas Maduro announced that he has received a proposal to set forth a constitutional national emergency plan for economic recovery: “I am evaluating, within the framework of a national economic recovery plan, decreeing a constitutional national emergency to face the great challenges of the economy and raise production, trade, distribution and price regulation…and I expect the National Assembly to support and approve it”. He said “specific plans are being drawn up by segments: milk, beef, cleaning goods, consumer products”.  Maduro added that “within the next few hours I will announce the makeup of the new Bolivarian government, its new structure”. More in Spanish: (Noticias24, http://www.noticias24.com/venezuela/noticia/306748/maduro-evalua-decretar-una-emergencia-nacional-constitucional-para-la-economia/)

 

2015 inflation was 270.7%, the highest in Venezuela’s history

Inside sources at Venezuela’s Central Bank are reporting 2015 inflation was the highest in the nation’s history, and closed at 270.7% for the year. President Maduro has ordered the bank to conceal all economic statistics. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Inflacion-cerro_0_769123206.html)

 

China study says Venezuela is the riskiest nation on earth for Chinese investments

A study by the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, published by Zhou Xin in the South China Morning Post, evaluates 57 nations that receive Chinese investment funds, and finds that Venezuela is the riskiest market for Chinese investors, worse even tan Iraq and Sudan. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Venezuela-riesgos-inversiones-China_0_767923241.html)

 

 

Politics and International Affairs

 

Opposition taking over Congress, showdown looms

Venezuela's opposition is taking control of Congress for the first time in 16 years, setting up a power struggle with President Nicolas Maduro amid a worsening economic crisis. The Democratic Unity coalition won a two-thirds majority in December's legislative election by capitalizing on anger over a shrinking economy, soaring prices and chronic product shortages reminiscent of Soviet-bloc economies. The coalition plans to swear in all of its 112 elected deputies but the Supreme Court has ruled that three of them cannot take office because their election victories face legal challenges. The court did not describe the underlying arguments against the election of the deputies, all of whom are from the rural and sparsely populated southwestern state of Amazonas. Disputing all the results in that state required the Socialist Party to contest the seat won by its own candidate. The opposition dubbed the ruling a "judicial coup" meant to strip it of its two-thirds majority in the National Assembly. Opposition lawyers say the ruling is "incoherent" and insist it cannot take precedence over election results. But former Supreme Court justice Luis Martinez has warned that swearing in the blocked deputies could allow the Socialist Party to argue that Congress has been illegally constituted and thus its decisions are null and void. Legislator Henry Ramos, who was tapped by the opposition coalition to be the National Assembly's next speaker, said the legislature's microphones have been sabotaged and television equipment removed from Congress to impede a live broadcast of the change of leadership. Opposition leaders accuse the government of undermining the incoming assembly with last-minute appointments of Supreme Court justices and by changing a central bank law to eliminate congressional control over the bank's leadership. Maduro has dismissed the new assembly as "right-wing" and "bourgeois. Government allies and opposition sympathizers have planned marches to downtown Caracas today, a scenario that has in the past has led to street violence as protesters clash with one another or with security forces. Although the opposition's victory was driven by anger over the economy, it has few options to resolve the crisis because Maduro's government handles economic policies. Opposition lawmakers have instead promised to take up an amnesty law seeking the freedom of opposition activists jailed for protesting against Maduro, and a measure to grant property titles to those who received homes from the government. President Maduro made a last minute call for a peaceful event saying “Tomorrow let us contribute so that the Assembly is installed in peace, as the Constitution mandates, with respect toward the Constitution, the laws and all branches of government”. He ordered the Ministry of the Interior, Justice and Peace to protect all political party movements called for this day. (The New York Times, http://www.nytimes.com/reuters/2016/01/05/world/americas/05reuters-venezuela-politics.html); and more in Spanish: (AVN; http://www.avn.info.ve/contenido/bienvenida-instalaci%C3%B3n-asamblea-nacional)

 

Opposition picks leader ahead of Congress takeover

Venezuela’s newly elected opposition lawmakers have chosen Henry Ramos Allup as president of Congress, as they prepare to take power with a legislative majority in the recession-battered country for the first time in sixteen years. The legislators, who are set to take control of Congress today, voted in a secret ballot, said Jesus Torrealba, secretary of the anti-government coalition. Ramos Allup, 72, heads the Democratic Action political party that is part of the coalition.

“We’re going to legislate,” Ramos Allup said Monday, promising to probe allegations of corruption within President Nicolas Maduro’s government. “We’re going to regulate. Many ministers and government officials will be called in for questioning.” Ramos Allup reported on Monday that the security chief of the administrative headquarters of the Parliament, located in downtown Caracas, banned him from entering that building. He was also insulted by gangs of Maduro regime supporters in the area. Ramos Allup later said he has information that the Armed Forces will guarantee order today when the new Assembly takes office, by “ensuring the perimeter”. He called upon the government to “tell their people” to join their representatives “in peace and quiet”. (Bloomberg, http://www.bloomberg.com/news/articles/2016-01-04/venezuela-opposition-chooses-henry-ramos-allup-to-lead-congress; The Miami Herald, http://www.miamiherald.com/news/nation-world/world/americas/venezuela/article52817875.html; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2402847&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/160104/opposition-deputy-henry-ramos-banned-from-entering-the-congress; BBC News, http://www.bbc.com/news/world-latin-america-35220773?utm_source=Sailthru&utm_medium=email&utm_campaign=New%20Campaign&utm_term=%2AMorning%20Brief; and more in Spanish: Infolatam, http://www.infolatam.com/2016/01/04/impiden-ingreso-del-nuevo-presidente-del-parlamento-venezolano-al-legislativo/)

 

US says Venezuelan government interfering in new National Assembly

The United States expressed concern on Monday about what it said was interference by the Venezuelan government in the country's National Assembly, which convenes on today for its first session with an opposition majority in more than 16 years. "We are concerned by the Venezuelan government's efforts to interfere with the newly elected National Assembly exercising its constitutionally mandated duties," State Department spokesman John Kirby told reporters. (Reuters, http://www.reuters.com/article/us-venezuela-usa-idUSKBN0UI1Y520160104?feedType=RSS&feedName=worldNews)

 

Is Venezuela's opposition strong enough to rule?

Venezuela turned staunchly against the ruling United Socialist Party (PSUV) in parliamentary elections Dec. 6, giving the opposition a two-thirds supermajority in the National Assembly. MUD leaders have two different ideas on how to move forward. One option is to forcefully dismantle the legal protections built up over 17 years to guard the presidency and to eventually call a referendum against Maduro. The other is to negotiate legislative solutions to the country's political and economic problems. Regardless of which option opposition leaders choose, they will have to negotiate with the most powerful components of Venezuelan politics, including the security elements, dissident chavistas and, most challenging of all, the multiple and unstructured political patronage networks known colloquially as 'colectivos.' The opposition announced in late December that it intends to remove Maduro in 2016 through legal maneuvers; and in the short term, government officials are not likely to negotiate with MUD, but as civil strife intensifies, with the almost certain political gridlock ahead, leaders and supporters of the ruling party will become more willing to work with MUD leaders. In the meantime, Venezuela’s economic problems will only worsen in 2016. (Stratfor, https://www.stratfor.com/analysis/venezuelas-opposition-strong-enough-rule)

 

SPECIAL REPORT: Venezuela into the abyss? Through the opposition victory in the December 6 Venezuelan elections, it is possible to foresee an eventual end to 17 years of populist socialism which has destroyed the Venezuelan economy and governing institutions and polarized its people.  Yet in approaching that end, Venezuela is arguably passing through one of the most dangerous periods in its contemporary history.  The actions taken by all parties in Venezuela, by the United States, and by the rest of the international community, will have an enduring effect far beyond Venezuela’s borders. (Special report by Dr. R. Evan Ellis)

 

 

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.