Logistics
& Transport
American Airlines to ax newly reinstated Caracas-New
York route
American
Airlines announced it will ax its Caracas to New York route on April 4 due to
low demand just over three months after reinstating it. The surprise move comes
amid a years-long battle between American Airlines Group and the Venezuelan
government in which the world's largest airline says it has not been able to
repatriate revenue. In January, the Fort Worth-based company wrote off US$ 592
million which it said was stuck in Venezuela due to the government's failure to
exchange it for hard currency. President Nicolas Maduro's cash-squeezed
socialist government has said it is negotiating solutions. "We are suspending service on the JFK-Caracas
route until market conditions improve," said Martha Pantin, a
spokeswoman for the airline. "This
suspension is due to demand not being strong enough to support this route."
Since reinstating the flight in December, many seats have remained unfilled
except around holiday periods. Many airlines have reduced routes in recent
years saying they were collectively owed several billion dollars in revenue for
tickets sold in the local bolivar currency. The flights are priced in U.S.
dollars, which put them out of reach for many Venezuelans amid the national
economic crisis. The airline continues to run two daily flights to Caracas from
Miami. (Reuters; http://www.reuters.com/article/us-americanairlines-venezuela-idUSKCN0WA24N)
Oil & Energy
Venezuela military company to start servicing PDVSA
soon
Deputy
Defense Minister Alexander Hernandez said CAMIMPEG, a new company formed by
Venezuela's military, will begin providing state oil producer PDVSA with
services including drilling, logistics and security in less than a month. It
will have a commercial relationship with PDVSA and work alongside foreign
companies. Hernandez's comments came after speculation among investors and
foreign oil partners that CAMIMPEG could be a means to shield assets from
seizure in the event of a debt default. PDVSA has a heavy repayment schedule
this year, and Venezuela's economy is in crisis. (Reuters, http://www.reuters.com/article/us-venezuela-pdvsa-military-idUSKCN0WA1XW)
Level of major Venezuelan dam reaches collapse zone
Venezuela's
National Electric Corporation (CORPOELEC) reported that the water level of
major Guri dam has hit 248.02 meters above sea level, below the minimum level
recorded in 2010 at that hydroelectric power station, located in Bolívar state,
in southeastern Venezuela. The Guri dam has reached the so-called "collapse zone" -a level below 248
meters above sea level- three times in the past. As water levels approach 240
meters above sea level, the operational safety of the turbines is endangered.(El
Universal, http://www.eluniversal.com/economia/160309/level-of-major-venezuelan-dam-reaches-collapse-zone)
Commodities
Local gold production dropped 47.12% during 2015
According
to the 2015 annual report from the Oil and Mining Ministry, national gold
production contracted 47.12% last year, from 1055.5 kilos in 2014 to 558.1
kilos in 2015. The report points to the performance of Venezuela’s General
Mining Company (MINERVEN) and says “the
development of plans was hit mainly by the drop in income from fine gold sales
as a result of lower production due to lack of materials and critical spare
parts, as well as the delay in investments.” More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/mineria/la-produccion-de-oro-en-el-pais-se-contrajo-47-12-.aspx#ixzz42UiMywLr;
Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/la-produccion-de-oro-en-el-pais-se-contrajo-47-12-.aspx)
Oil minister presents Venezuelan mining potential in
Canada
Oil
and Mining Minister Eulogio del Pino has urged Canadian investors to take part
in developing mining reserves in Venezuela. He briefed members of the Prospectors
and Developers Association of Canada (PDAC) on the nation’s potential in gold,
coltan, copper, diamond, and bauxite. (El
Universal, http://www.eluniversal.com/economia/160308/oil-minister-displays-in-canada-venezuelan-mining-potential)
Economy & Finance
Venezuela's new dual FOREX rate launched
Venezuela's
new dual foreign exchange system, with one rate fixed at 10 bolivars to the
dollar and another "floating"
at a starting rate of 206 bolivars, is now coming into operation, according to the
vice president for economy. Miguel Perez has reiterated that the socialist
government is "religiously"
honoring foreign debt payments and did not have solvency problems despite the
current "economic emergency."
Venezuela last month made a US$ 1.5 billion debt payment, but investors are
fretting as to whether it will be able to pay state oil company PDVSA's heavier
obligations later in the year. "Venezuela
does not have a solvency problem," Perez said. "We have a cash-flow problem." The
official said details of the new foreign exchange mechanism would be published today,
meaning the system should come into being from now. The 10 bolivar rate at the
newly-named DIPRO system would be used for priority food and medicine sectors,
Perez said. (Reuters, http://www.reuters.com/article/us-venezuela-economy-idUSKCN0WB28P;
Bloomberg, http://www.bloomberg.com/news/articles/2016-03-09/venezuela-to-implement-new-foreign-exchange-system-on-thursday;
El Universal, http://www.eluniversal.com/economia/160309/floating-exchange-rate-for-travel-quotas-in-venezuela)
Most economists call the new exchange system more of
the same failed policies
- Pedro Palma, former President of the National
Economic Council, says: “These
announcements are more of the same. Exchange controls remain
untouched…This all will have a large inflationary impact, and I doubt they
will allow really free fluctuation. The black market rate will not
disappear.”
- Alejandro Grisanti, of BARCLAYS, says “I unfortunately see no change in the
announcement by Pérez Abad. The step repeats previous forex rules with a
different name and does not deal with the main economic problem, which is
the black market rate”. He believes it illogical for PDVSA to deliver
FOREX to the Central Bank at the SIMADI rate (VEB 206.92/US$1) and for the
bank to reallocate them at VEB 10/US$1.
- Luis Vicente León, of DATANÁLISIS, says “There are no surprises in the exchange
announcements. Neither is there any change as to what has not worked to
date….it goes from an absurd 6.3 rate to another absurd rate of 10 for
basic goods, which will be allocated on a discretionary basis….to allocate
foreign exchange at 10 or 200 is an economic crime that simply favors
manipulators, no matter their political inclination”
- Juan Pablo Olalquiaga, president of the National
Industry Federation (CONINDUSTRIA) says: “there will be no great change because the issue is the volume of
FOREX, and apparently there isn’t any, unless they have enough or get an
international loan”. He adds that “they
will not bring a change to the economy”.
- Leonardo Buniak, of Planificación Estratégica,
says the underlying problem is: “How
much FOREX does Central Bank have to support the fluctuating rate?”
- Arístides Maza Tirado, President of Venezuela’s
Banking Association, says “this new
stage of a dual exchange is a start in the right direction” which will
lead to “a single rate, which is
what the country needs.”
Venezuela seeks new repayment system with China
Oil
and Mining Minister Eulogio Del Pino says Venezuelan and Chinese authorities
are analyzing adjustments to the multibillion-dollar financing arrangement,
where the nation repays China by delivering oil. More in Spanish: (Notitarde; http://www.notitarde.com/Economia/Venezuela-evalua-con-China-metodos-para-pagar-prestamos-2629988/2016/03/08/906286/;
El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/del-pino--evaluamos-con-china-hacer-ajustes-en-acu.aspx)
Venezuelans will pay 1500% more for FOREX to travel
abroad
Miguel
Pérez Abad, Vice President for Productive Economics said the new exchange rate
to be applied to Venezuelans trying to purchase FOREX for travel abroad will be
1500% more than it is now. It will go from VEB 13/US$1 to around VEB 200/US$1.
The government will continue subsidizing foreign travel, but much less than it
has been doing. Rigid procedures will remain in place and Pérez Abad did not
specify how much each traveler would be allocated. More in Spanish: (Infolatam:
http://www.infolatam.com/2016/03/09/venezolanos-pagaran-un-1-500-mas-por-un-dolar-para-viajar-al-exterior/)
Hedge fund plows half its money into Venezuela bond
and wins big
When
Carmelo Haddad and Francisco Ghersi invested half their hedge fund’s money into
a soon-to-mature Venezuela bond in mid-January, only two outcomes were possible:
the trade could go horribly wrong or it could pay off fabulously. After all,
the odds that Venezuela would make the Feb. 26 payment were far from good.
Racked by political turmoil, the economy was on the brink of collapse as
slumping oil prices deprived the government of much-needed income. At the time,
traders put the chance Venezuela would default in the next 12 months at 80% --
by far the highest probability in the world. Venezuela went on to make
the US$ 1.5 billion payment, handing the founders of Knossos Asset Management a return of 12% in
just 45 days -- or an excess of 150% on an annualized basis. (Bloomberg, http://www.bloomberg.com/news/articles/2016-03-08/hedge-fund-plows-half-its-money-into-venezuela-bond-and-wins-big)
Politics and International Affairs
Venezuela lawmakers call for recall vote, renewed
protests
Venezuelan
opposition parties united to call for a referendum to oust President Nicolas
Maduro and renewed protests starting this Saturday to get him to leave office
before his term ends in 2019. Lawmakers, led by Jesus “Chuo” Torrealba,
outlined a three-pronged campaign to seek to shorten term limits through a
constitutional amendment, launch the recall referendum and mount a campaign to
pressure Maduro into resigning. “The
current state of the country demands that we place greater emphasis on
mobilization and pressure,” Torrealba said, calling a for national protest
against Maduro on Saturday. "Change
is coming and no one can stop it," Jesus Torrealba, the head of the
Democratic Unity (MUD) coalition, told reporters. Miranda state governor Henrique
Capriles Radonski, speaking on the issue, said the "recall referendum may take place in October". He added: "My proposals have always included (a
constitutional) amendment and a recall referendum, since the amendment may be
requested right now and be subject to consultation once approved. And the
recall referendum is the measure that will lead us to the political change we
all want". (Bloomberg, http://www.bloomberg.com/news/articles/2016-03-08/venezuela-lawmakers-call-for-recall-vote-protest-against-maduro;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2407324&CategoryId=10717;
Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKCN0WA1UK;
El Universal, http://www.eluniversal.com/nacional-y-politica/160309/capriles-recall-referendum-may-take-place-in-october)
Regime withdraws its top representative in the US in
protest over renewed executive order
President
Nicolas Maduro has ordered the withdrawal of Venezuela’s main US representative
in Washington DC, Maximilien Sánchez Arvelaiz, acting charge d’affaires at the
embassy, in protest for the renewal of US President Barack Obama’s executive
order calling Venezuela “an extraordinary
and unusual threat”. Arveláiz spent 18 months in Washington without
receiving approval from the US State Department. In making the announcement,
Maduro said: “Obama had plenty of chances
to rectify”, adding that one gesture would be to approve Arveláiz’s
nomination. “Eighteen months, what was
stopping him?”, says Maduro, adding that Obama acted “at the request of the oligarchic right”. More in Spanish: (El
Universal, http://www.eluniversal.com/nacional-y-politica/160310/maduro-retiro-a-encargado-de-negocios-en-washington;
Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/maduro-retira-a-encargado-de-negocios-en-washingto.aspx)
National Assembly will investigate US$ 142 billion
allocations for food supplies
At
the request of National Assembly Deputy Manuela Bolívar, the legislature’s
Comptroller Committee will look into what happened to US$ 142 which allegedly
went to nutrition programs, despite which, “the
nation is undergoing a food scarcity crisis”. Legislator Bolivar says: “50% of Venezuelans have only two meals a
day, but US$ 142 billion have been delivered to the “Mission Alimentation” food
program. Where is that money? We believe there has been a mixture of theft and
inefficiency in managing those resources.” More in Spanish: (El Nacional, http://www.el-nacional.com/politica/Investigaran-destino-millardos-alimentos_0_808119433.html)
Maduro orders militarization of mineral-rich zone
after miners’ disappearance
President
Nicolas Maduro has created a “special
military zone” to protect the Orinoco “mining
arc”, a zone rich in minerals, after the disappearance of 28 miners in the
region, all of them presumably murdered, according to relatives. “I have decided to create a special military
zone of protection for all the mining municipalities and to deploy ...
strengthened military units,” said Maduro. He also said that the alleged
massacre of the miners was part of a “national
and international media campaign” against his government directed by a
sector of Venezuela’s opposition in the town of Tumeremo, near Essequibo, a
part Guyana claimed by Venezuela, and along the route to the border with
Brazil. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2407342&CategoryId=10718;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2407314&CategoryId=10717;
El Universal, http://www.eluniversal.com/nacional-y-politica/160309/maduro-situation-south-venezuela-may-be-due-to-gang-confrontation)
Ombudsman admits evidence suggests crimes were
perpetrated south Venezuela
Ombudsman
Tarek William Saab said that a government joint task force investigating a
situation involving a group of miners missing in Tumeremo town (southeastern
Bolívar state) managed to collect convincing evidence of criminal interest,
which reveals that crimes were committed. He indicated there is evidence that a
number of Colombian nationals took part in the event. (El Universal, http://www.eluniversal.com/nacional-y-politica/160309/ombudsman-evidence-suggests-crimes-were-perpetrated-south-venezuela)
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