March 15, 2016

International Trade

 

25,000 tons of baking wheat have arrived at Puerto Cabello, according to Nutrition Minister General Rodolfo Marco Torres, More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Llegaron-mas-de-25-mil-toneladas-de-trigo-panadero/2016/03/10/908661/)

 

Oil & Energy

 

Guri – source of 65% of Venezuela’s electricity – 3.56 meters from collapse

Experts say the Guri dam, which is the source of 65% of all of Venezuela’s electricity, is less than four meters from reaching the level where power generation will be impossible. “Venezuela had the money to make this work -- we shouldn’t be at this crisis stage," said Miguel Lara, an engineer that worked for OPSIS, the office that used to interconnect private and government electricity companies in Venezuela before the 2006-2007 nationalizations. "They were just careless with the installed capacity. I will not say that the system will collapse, but we are certainly operating in a dangerous area." Water levels at the hydroelectric dam are 3.56 meters from the start of a "collapse" of the national electric system, say experts. Guri water levels are at their lowest levels since 2003, when a nationwide strike against Hugo Chavez reduced the need for power, masking the problem. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2407640&CategoryId=10717)

 

Power demand in Venezuela falls upon measures adopted

The Venezuelan Electric Power Energy authoritu has confirmed that domestic electric demand has decreased as well as the water level of major local Guri dam in southeastern Bolívar state in the last two days due to, among other things, decisions made to strengthen the country's thermoelectric park and measures to reduce energy consumption. Experts supported a measure announced by President Nicolás Maduro declaring Easter as a non-working week. (El Universal, http://www.eluniversal.com/economia/160314/power-demand-in-venezuela-falls-upon-measures-adopted)

 

 

Commodities

 

Getting sick in Venezuela has become a death sentence

That Venezuela currently faces an acute shortage of medical supplies and medicines is one of the tragic results of the chaos wrought upon the country’s imports sector by the combination of plunging oil prices, economic mismanagement, and draconian currency controls. In particular, the state’s heavy-handed price control policies make importing pharmaceuticals and other medical goods a losing game. The Venezuelan government’s penchant for nationalization as an easy proxy for “decisive action” has led to its taking over key outfits within the domestic pharmaceutical sector over the years, further degrading its capacity to produce such products internally. As a result, everything from Tylenol to life-saving chemotherapy drugs, condoms, and even bug spray — here in the heart of the Zika Virus outbreak — have become unobtainable. Social media like Twitter and Facebook are awash with pleas for help acquiring urgently needed medications, often from anguished parents on behalf of their children. All too often the drugs cannot be found and the children die. Under present conditions only one in two hemophilia sufferers will be able to secure their prescribed medications. The Venezuelan Pharmaceutical Federation estimates that as many as 80% of all medicines are currently scarce or unavailable. With the human costs of the pharmaceutical crisis worsening daily, Venezuela’s National Assembly — which went over to the opposition in the December 2015 elections — has requested emergency assistance from the World Health Organization in a deal that could provide technical aid and much-needed supplies for the suffering population. The Assembly has also received formal unilateral offers of aid from the Spanish government, the Brazilian parliament, and the Panamerican Health Organization. Similar conversations are underway with the Red Cross and the United Nations. Unfortunately, such offers are dependent upon official cooperation, including a formal government request for aid from Maduro — who has ignored public calls to accept outside assistance.  Meanwhile the Venezuelan Association of Medical and Dental Equipment Suppliers, Laboratories and Related Industries has all but given up, complaining that inventories for medical and surgical equipment are effectively depleted. Nearly 70% of surgical wards in public hospitals have been rendered inactive. (Foreign Policy: http://foreignpolicy.com/2016/03/11/getting-sick-in-venezuela-has-become-a-death-sentence/)

 

POLAR warns malt barley supply levels are critical, along with other staples

Lorenzo Mendoza, President of POLAR Enterprises, has warned that malt barley supplies for producing beer and malt are at critical levels, along with oatmeal, tomato paste, wheat and tuna. He said the Margarita Tuna plant in Sucre state remains completely paralyzed for lack of supplies.More in Spanish: (Notitarde; http://www.notitarde.com/Economia/Polar-alerta-que-inventarios-de-cebada-malteada-son-criticos/2016/03/15/912244/; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/lorenzo-mendoza-celebra-75-anos-de-empresas-polar.aspx; El Nacional, http://www.el-nacional.com/economia/Lorenzo-Mendoza-presente-dificil-trabajar_0_811119109.html;  http://www.el-nacional.com/economia/Lorenzo-Mendoza-Inventarios-tomate-criticos_0_811119028.html)

 

Food production in Venezuela can only recover in 2017

Favorable consequences for domestic food production can arise should specific measures be adopted in this field, sayd Carlos Albornoz, head of National Livestock Federation (FEDENAGA). He notes the food issue here will not be solved in 2016. "It is virtually impossible for us to tackle it this year," due to a lack of supplies, tools, and equipment to overcome the crisis. "There is a catastrophe in primary production sector which translates into lack of goods and services." He says fields are currently facing "uncertainty and unprofitability". (El Universal, http://www.eluniversal.com/economia/160314/food-production-in-venezuela-can-get-recovered-in-2017)

 

 

Economy & Finance

 

Maduro regime seeks to extend economic emergency powers, will seek legislative approval

The Maduro regime has published a decree extending his economic emergency powers through next May, and the National Assembly has announced it will be in full session for the next eight days to decide whether his request is granted or not. Henry Ramos Allup, President of the parliament, says economic affairs ministers will be called in to explain what has been done and what they expect to accomplish. Executive Vice President Aristóbulo Istúriz has been called up before the Assembly to explain why the decree should be extended. Pro regime party leader Diosdado Cabello has confirmed that Istúriz will go before the Assembly; and former Vice President – now legislator – Elías Jaua has said that government officials “are always willing to cooperate, report and abide by the Constitution and laws, but not to be a part of a circus”. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/160315/cabello-confirmo-asistencia-de-isturiz-hoy-a-la-asamblea; http://www.eluniversal.com/nacional-y-politica/160314/an-interpelara-a-isturiz-por-decreto-de-emergencia; Infolatam: http://www.infolatam.com/2016/03/13/parlamento-citara-a-ministros-de-maduro-antes-de-decidir-emergencia-economica/;  Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/an-declaro-sesion-permanente-para-estudiar-decreto.aspx; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/isturiz-no-he-recibido-comunicacion-por-parte-de-l.aspx#ixzz42s7XaVO5; El Nacional, http://www.el-nacional.com/politica/AN-Isturiz-revisar-prorroga-decreto_0_810519027.html;

 

Economic VP claims "DICOM is a floating forex rate and will operate as a market" with up to US$ 7 billion available

Miguel Pérez Abad, Venezuela’s VP for Economic Affairs and Minister for Industry and Trade, says the newly-implemented foreign exchange systems will fluctuate freely, and that the government expects to allocate between US$ 5.5 billion and US$ 7 billion to private business through this system during 2016. He adds that the nation is seeking voluntary debt renegotiations to improve cash flow.  The newly created rate rose to VEB 225.22/US$1, for a jump of VEB 18.44 in less than one week. Perez Abad expects the new policy to bring about a “deflation” this year, and trusts that inflation will slow down. He says he is sure that when the new system is fully operational the black market will start to disappear. (El Universal, http://www.eluniversal.com/economia/160312/dicom-is-a-floating-forex-rate-and-will-operate-as-a-market; Reuters, http://www.reuters.com/article/us-venezuela-economy-idUSKCN0WC2M2; Bloomberg, http://www.bloomberg.com/news/articles/2016-03-10/venezuela-will-retain-right-to-intervene-in-new-forex-market; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/simadi-sigue-en-alza-y-cierra-en-bs--225-22-por-do.aspx#ixzz42xzaYoEL; El Nacional, http://www.el-nacional.com/economia/Dolar-flotante-cerro-lunes-BsUSD_0_811119072.html; Infolatam: http://www.infolatam.com/2016/03/10/venezuela-vendera-de-5-500-a-7-000-millones-de-dolares-en-nuevo-sistema-cambiario/; http://www.infolatam.com/2016/03/13/vicepresidente-de-economia-venezolano-augura-deflacion-para-finales-de-2016/)

 

“The black market will continue to rise unstoppably”, says Luis Vicente León

DATANALISIS President Luis Vicente León explains that the growth of Venezuela’s black market is due to an absence of FOREX, exchange controls, and mistrust of monetary authorities by those who hold local currency. “One does not need to be too sharp to understand that the black market will continue on an unstoppable path, where the sky’s the limit”, he says. He says stagnant FOREX allocations are due to the short cash flow which arises from low oil prices. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Luis-Vicente-Leon-crecimiento-imparable_0_809919071.html)

 

Venezuelan military forces control an industrial empire of 17 companies

Venezuela’s “socialist” and “chavista” military have decided to diversify: they produce goods and services for their own consumption, such as bullets and vests, food, vehicles, water and even import light bulbs from China. They have 17 wholly owned or mixed ventures under their control: in building infrastructure, manufacturing equipment, and providing goods and consumer products. Their latest business venture is CAMIMPEG, to provide services for the oil industry. Rocío San Miguel, of the Citizen Control NGO says: “these companies distort the functions of the armed forces.” Former Defense Minister, retired General Fernando Ochoa Antich, says “they go beyond the Constitutional functions of the Armed Forces …unfair competition is created…that is not more efficient than the private sector, but guarantee a monopoly”. He adds that the ratio and TV concession is absurd, “their ratings must be zero”, and says the beneficiaries are power centers “more or less committed to “chavismo” and “madurismo”. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/FANB-emporio-industrial-empresas-propias_0_810519026.html)

 

 

Politics and International Affairs

 

National Assembly has approved new Referendum Law in first round of voting

A majority of the National Assembly has passed the draft Organic Law on Referendums in its first round of voting (two rounds are required) in a move to cut short President Nicolás Maduro’s term of office, and hold new presidential elections this year. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/160311/ley-de-referendos-aprueba-an-en-primera-discusion; El Nacional, http://www.el-nacional.com/politica/Ley-referendos-protegera-identidad-solicitantes_0_808719384.html)

 

Maduro vows not to resign, refutes charges of foreign birth

President Nicolas Maduro has repeated that he will not resign and said the opposition can do “whatever it wants,” but it will fail in its attempt to cut short his time in office. “They can do what they want! I am here to fight and Maduro will be here until the very last day!” of his term, which ends in 2019, the head of state said. To achieve this he counts on “the support of the people, of the armed forces, on history and with the absolute determination that here, nobody will cave in. Let them come for me, because there are plenty of people willing to confront them and conquer them,” he said. Addressing charges that he was born in Colombia or has dual citizenship through his mother, Maduro said he was born in Caracas, and that his mother – who hailed from the Colombian side of the border - travelled to this city to give birth. “Where was I born? I am proudly Caracanean and Bolivarian”. He said his birth certificate is readily available “a public document” and that the Elections authority has shown it, calling the whole issue a “stupidity”. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2407634&CategoryId=10718; Summarium: http://sumarium.com/maduro-reitera-que-nacio-en-caracas/)

 

Regime reproaches National Assembly President for being “rude”

Venezuela’s Executive Vice President Aristóbulo Istúriz has criticized the president of the local Parliament and opposition leader Henry Ramos Allup, saying that he “cannot behave like a rude troublemaker” and must respect the country’s president, Nicolas Maduro. The public recrimination came one day after Ramos Allup called Maduro “a fool” and referred to his government as an “outlaw.” (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2407689&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/160314/congress-to-question-vp-isturiz-over-emergency-decree)

 

Obama concerned about Venezuela's struggling economy

U.S. President Barack Obama has voiced concern about the struggling Venezuelan economy and said he did not want to see the country fail despite the tense relations between Washington and Caracas. "It's not in America's interest to see Venezuela fail, because if Venezuela fails then that could have an impact on the economies of Colombia or Central America or Mexico, and that in turn can affect U.S. economies," Obama told CNN Espanol. "The sooner the Venezuelan people can determine a government that they have confidence in that is legitimate, and that can start instituting economic policies that pull them out of the spiral that they're in, the better off it's going to be for all of us," Obama said. (Reuters: http://www.reuters.com/article/us-usa-venezuela-obama-idUSKCN0WH05H)

 

UNASUR's Samper calls for "institutional dialogue" in Venezuela

Ernesto Samper, Secretary General of the Union of South American Nations (UNASUR), has called for an "institutional dialogue" between the government and the opposition, as he deemed that polarization was not "the best way" for understanding. Samper has stressed the need to adopt economic measures aimed at overcoming the political and economic crisis in Venezuela, Efe reported. (El Universal, http://www.eluniversal.com/nacional-y-politica/160314/unasurs-samper-calls-for-institutional-dialogue-in-venezuela)

 

Newspaper editor receives four years in prison

A court in Venezuela has sentenced a newspaper editor to four years in prison for defamation after the paper investigated alleged corruption at a major company, the newspaper has said.  Critics denounced the sentence by the court yesterday in the southern state of Bolivar against Correo del Caroni chief David Natera as an attack on press freedom and a form of preventive censorship aimed at discouraging investigative reporting.  The newspaper published a series of investigative articles between May and September 2013 accusing several businessmen linked to the iron ore miner CVG FERROMINERA ORINOCO of embezzlement, extortion and conspiracy. Critics jumped on the news of Natera's sentencing.  “Correo del Caroni was found guilty for exercising its editorial independence and contributing to transparency," the paper's editor Oscar Murillo tweeted. This sentence is aimed at intimidating Venezuelan media "to force them to submit to censorship and self-censorship that is unnecessary in a democratic country," Tinedo Guia, president of the National Journalists' Union, told reporters. Natera’s sentence is not yet final, but the judge has imposed a steep tax penalty, prohibited him from leaving the country, and barred him from publishing news about the mining company. Once a final sentence is issued, Natera will have ten days to appeal. Freedom House issued the following statement: “Venezuela’s justice system is criminalizing free and independent journalism by imprisoning a news director and striving to silence criticism of any kind,” said Carlos Ponce, director for Latin America programs. “The court’s ruling highlights the government’s efforts to intimidate journalists and muzzle investigations into corruption within state-run companies.” (Business Standard: http://www.business-standard.com/article/pti-stories/venezuelan-newspaper-editor-receives-four-years-in-prison-116031200085_1.html; Freedom House: https://freedomhouse.org/article/venezuelan-court-sentences-journalist-prison)

 

Missing Venezuela miners' bodies found, regime held responsible for negligence

The bodies of 17 miners have been found in a mass grave in Venezuela, from among 28 missing after an armed attack, officials said Monday. The bodies were found in a pit in the town of Tumeremo, in far southeastern Venezuela near the border with Brazil. Family members say the miners failed to return home from their shifts on 4 March, and reports soon emerged that they had been gunned down by attackers trying to take over their unlicensed small-scale gold mine. Chief prosecutor Luisa Ortega earlier said investigators were still seeking to determine the motive for the crime. Some witnesses say that a gang shot the miners and cut some up with a chain saw on March 4. The government has pointed the finger at foreign paramilitaries, while opponents have accused security forces of being negligent. President Nicolas Maduro last week ordered the army into the remote area in southeastern Venezuela, calling the case "a possible massacre in a war between gangs." Interior Minister Gustavo Gonzalez said authorities suspect the attack on the miners was ordered by an Ecuadoran man with ties to Colombian paramilitaries named Jamilton Andres Ulloa Suarez, alias ‘The Mole’. Carlos Chancellor, the head of Sifontes, the municipality that includes Tumeremo, charges that access to the area where the killings took place is controlled by the Venezuelan military; and human rights NGPO CONFAVIC has blamed the government for the lack of precautions that led the killings. (Reuters: http://uk.reuters.com/article/uk-venezuela-miners-idUKKCN0WG2AJ; Sigmalive: http://www.sigmalive.com/en/news/international/142838/missing-venezuela-miners-bodies-found#sthash.2o1GoteJ.dpuf; and more in Spanish: Globovision: http://globovision.com/article/cofavic-masacres-en-tumeremo-no-han-sido-suficientemente-investigadas)

 

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.