May 26, 2016

International Trade

 

World City organization reports US-Venezuela trade shrank by 48.09% in Q1 2016

According to World City trade between Venezuela and the United States dropped almost 50% during the first quarter this year. World City President Ken Roberts says “Venezuela had US$ 23.880 billion in trade with the US in 2015 and the total for the first quarter this year was US$ 3.250 billion. During an event organized by the Florida International Bankers Association and the Latin America Banking Federation, Roberts said “The numbers are overwhelming, and anyone who reads know what is happening there. Venezuela is a disaster”. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Comercio-Venezuela-EE-UU-trimestre_0_853714913.html)

 

 

Oil & Energy

 

Venezuela nominates Ali Rodriguez as next OPEC Secretary General

Venezuela has nominated the country's former energy minister, Ali Rodriguez, as the next secretary general of the

Organization of the Petroleum Exporting Countries (OPEC), to succeed Abdullah al-Badri, who was elected acting secretary general in December until the end of July after serving full terms. Rodriguez previously served as secretary general of OPEC in 2001-2002. (Reuters, http://www.reuters.com/article/opec-secretary-general-idUSL5N18M49H)

 

Maduro says Venezuela, Trinidad & Tobago will boost energy cooperation

After a meeting with Keith Rowley, Prime Minister of Trinidad & Tobago, Venezuela’s President Nicolas Maduro announced that the two countries had signed an agreement that will enable both nations to develop shared gas fields. He added that there is a plan to establish a US$ 50 million revolving fund to promote an increase in trade between the two countries. (AVN, http://www.avn.info.ve/contenido/venezuela-trinidad-and-tobago-boost-energy-cooperation)

 

 

Commodities

 

Venezuela to rejoin global group fighting conflict diamonds

Venezuela expects to rejoin the global watchdog established to stop trade in conflict diamonds as it seeks to resume diamond exports, its central bank director said on Tuesday. "We are certain we will rejoin this year," says Jose Khan. He also said Venezuela was a tiny exporter of around 3,000 carats a month until, unable to verify the legitimacy of its diamonds, it stopped issuing export certificates in 2005 and unilaterally removed itself as an active participant in the Kimberley Process in 2008. After its withdrawal, it was not officially allowed to export diamonds, although some smuggling continued in subsequent years, traders told Reuters. (Reuters, http://www.reuters.com/article/us-venezuela-diamonds-idUSKCN0YF10K)

 

 

Economy & Finance

 

Venezuela sells more gold, borrows from IMF

Venezuela shipped 11,948 kilograms of gold to Switzerland in April for a total value of US$ 466.3 million, after shipping 12 metric tons of gold in March, 12 metric tons in February and 36 metric tons in January.  According to the Swiss government, in the last four months, Venezuela has shipped 72 metric tons of gold worth US$ 2.63 billion to Switzerland so far in 2016. According to our best estimates, April’s gold sales mean that Venezuela is now down to US$ 7.3 billion in gold, now just half of the US$ 14.5 billion it had at the start of 2015. The sad thing is that the gold was not enough and last month Venezuela also had to turn to the world’s lender of last resort, the International Monetary Fund (IMF). According to April IMF statistics, Venezuela borrowed US$ 374 million (266 million SDR) from its Special Drawing Rights (SDR) account at the IMF.  While that is the first SDR borrowing by Venezuela this year, Caracas has now quietly borrowed US$ 2.734 billion in total since if first drew SDR from the IMF in April of last year.  Venezuela counts its Special Drawing Rights as part of its reserves.  The country cut its gold reserves by 16% in the first quarter, following a 24% reduction in 2015, according to data from the International Monetary Fund. Meanwhile, Venezuela’s foreign reserves hit a new decade low of $12.10 billion last week, less than half of what they were just last March. (Bloomberg, http://www.bloomberg.com/news/articles/2016-05-25/venezuela-s-gold-holdings-contract-16-as-maduro-battles-crisis; Reuters, http://www.reuters.com/article/gold-reserves-imf-idUSEON401AR2; El Universal, http://www.eluniversal.com/noticias/daily-news/imf-venezuela-sold-gold-reserves-february-march_311738; Caracas Capital Markets: http://boards.fool.com/venezuela-sells-more-gold-borrows-from-imf-32256156.aspx?sort=postdate

 

Maduro advisor is reported to be pushing  for a PDVSA default

According to sources close to state oil company PDVSA, President Nicolas Maduro’s economic advisor, Alfredo Serrano Mancilla, of Spain, is seeking to overrule local economic authorities in order to impose a hostile bond swap in PDVSA which would be tantamount to a default. Serrano has invited Alejandro Vanoli, who headed up Argentina’s Central Bank under Cristina Kirchner, to help him convince Maduro. The proposal is the opposite of the strategy pursued by PDVSA President Eulogio del Pino, who is working on a rescheduling of company debt. More in Spanish:

(El Nacional, http://www.el-nacional.com/economia/Gobierno-estudia-realizar-declarar-default_0_854314837.html)

 

 

Politics and International Affairs

 

National Assembly demands referendum schedule from the National Elections Board

Venezuela’s legislature has passed a resolution demanding that the National Elections Board publish the schedule for the recall referendum sought by the opposition, and named a special committee of legislators to take the resolution to the electoral authority, More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/aprueba-acuerdo-que-exige-cne-cronograma-para-referendo_311640)

 

OAS Secretary General Almagro will deliver report on Venezuela next week, backs referendum

OAS Secretary General Luis Almagro announced he will present his report on Venezuela next week “at the very latest”, a sign that he will probably call a meeting of the full 34-member nation organization soon to discuss the situation here under Article 20 of the Democratic Charter. The unprecedented step will open up a process of meetings and votes that could lead to resolutions and diplomatic moves which could end up suspending Venezuela as a member state. Two thirds of the member states must approve such a step, which was only taken after the coup in Honduras in 2009. If he does, he will be the first Secretary General to call for such action against the will of the government in question. Almagro has previously said that the recall referendum promoted by Venezuela’s opposition to recall President Nicolas Maduro us the “only solution” here. He also said that the recall vote “does not belong to Maduro or (Henrique) Capriles. It belongs to the people. These people need to resolve their own situation and they want to make a decision.” Almagro had also announced his report will include “food and medicines shortages, the cases of corruption that may exist, human rights situation and freedom of expression, and a way for Venezuela to move ahead.” (El Universal, http://www.eluniversal.com/noticias/daily-news/oas-almagro-says-recall-vote-the-only-solution-crisis-venezuela_311744; and more in Spanish: (Infolatam: http://www.infolatam.com/2016/05/25/almagro-presentara-informe-sobre-venezuela-la-proxima-semana-a-mas-tardar/; http://www.infolatam.com/2016/05/25/la-aplicacion-de-la-carta-democratica-pende-sobre-venezuela/

 

Argentina and Brazil seek “conciliation” in Venezuela

There is a drastic change in MERCOSUR, the South American Common Market. Argentina and Brazil are hoping Venezuela finds a “way towards reconciliation”. During a visit to Argentina, Brazil’s new Foreign Minister José Serra has said “Venezuela is in a critical shape”, after meeting with his Argentine counterpart, Susana Malcorra. He termed the political crisis here “a significant situation for Latin America”; and added: “We are attentive. Brazil and Argentina are interested in the possibility of a mediation”, and expressed support for initiatives by Pope Francis and Spain’s former President José Luis Rodríguez Zapatero. More in Spanish: (Infolatam: http://www.infolatam.com/2016/05/24/argentina-y-brasil-piden-conciliacion-en-venezuela-y-un-mercosur-dinamico/)

 

Spain offers to head a humanitarian aid fund for Venezuela

Spain’s Foreign Minister José Manuel García-Margallo says there is a “gigantic political crisis in Venezuela” and a “deadlocked situation” since a Supreme Tribunal that was “altered at the last moment” by the outgoing legislature is systematically declaring all decisions by the National Assembly as unconstitutional. He added that Spain has offered to head a humanitarian aid fund for Venezuela’s “extraordinarily needy” population and that “the political crisis makes the economic crisis worse”. “The economic crisis has become a gigantic humanitarian crisis”, he says.  García-Margallo reported scarcity is at 82% and the health system is in a “state of war”; adding that the opposition here “has scrupulously moved through constitutional means to shorten the term of office” of President Nicolas Maduro, and that Spain’s position is that the deadlock needs to be broken and make way for talks that lead to national climate and getting Venezuela out of “economic misery”. He also reported that his government has offered support to Albert Rivera, leader of Spain’s opposition “Citizens” party during his visit to Venezuela. Rivera travelled to Venezuela to support talks between the government and the opposition but was barred from meeting with jailed Caracas mayor Antonio Ledesma. Rivera addressed the Domestic Policy Committee of the opposition controlled National Assembly. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2412882&CategoryId=10717; and more in Spanish: Infolatam: http://www.infolatam.com/2016/05/26/espana-se-ofrece-a-liderar-un-fondo-de-ayuda-humanitaria-para-venezuela/;  El Universal, http://www.eluniversal.com/noticias/politica/prohiben-visita-albert-rivera-presos-opositores_311660)

 

Cuban Foreign Minister expresses “solidarity” with Maduro

Cuban Foreign Minister Bruno Rodriguez has brought President Nicolas Maduro a message of solidarity from Cuban President Raul Castro. Rodriguez spoke on Venezuelan state-run television and expressed “Cuba’s full solidarity, which is the message from Raul, the embrace of Fidel and the Cuban people, which is what I’ve brought to Caracas.” (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2412902&CategoryId=10717)

 

 

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.