Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Tuesday, July 19, 2016

July 19, 2016


International Trade

Venezuela again reopens Colombian border to allow shoppers to cross

Venezuela has opened its border with Colombia for the second time this month to allow people to cross over to shop for basic foods and medicines.  Last week 35,000 crossed over for the first time since the border was closed a year ago by President Nicolas Maduro to fight cross-border crime.  Officials said at least 100,000 entered Colombia over the weekend. The border across a pedestrian bridge connecting Táchira in Venezuela and Cucuta in Colombia opened on Saturday, a day earlier than authorities from both countries had previously announced. Officials said they wanted to avoid the build-up of too many people. It stayed open into Sunday. (BBC News: http://www.bbc.com/news/world-latin-america-36818030; Bloomberg, http://www.bloomberg.com/news/articles/2016-07-18/venezuelans-tearful-amid-colombia-s-full-shelves-and-polite-cops; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2416673&CategoryId=10718;  http://www.laht.com/article.asp?ArticleId=2416678&CategoryId=10717; El Universal, http://www.eluniversal.com/noticias/daily-news/colombians-welcome-80000-venezuelans-cucuta-search-food-medicine_355797)

 

Colombian FM announces temporary border openings will be halted, permanent aperture sought

Colombia´s Foreign Affairs Minister María Angela Holguín visited the city of Cucuta, bordering on Venezuela, to review a roadmap in preparation for the reopening of the Venezuela-Colombia border, closed last August 19, official sources reported. Holguín has met with the governors of the Colombian departments of Norte de Santander, the capital city of which is Cucuta, and Arauca, the sites of the three border passages temporarily opened last weekend that gave access to Colombia of almost 130,000 Venezuelans who bought food, staples and medicines in short supply in Venezuela. She also met with Táchira state governor, Lieutenant José Vielma Mora, and announced it has been decided to not continue with temporary border opening. “The next aperture will be for good. Next weekend there will be no transit as was the case during the last two weeks, we will rather work now to have a border we are quickly able to open…a secure border that gives us peace, where we really control the law and the number of incidents provoked by gangs and criminal organizations that operate along these borders”. Governor Vielma said the reason for discontinuing border openings is to “not delay negotiations for a permanent border opening with the neighboring country”. (El Universal, http://www.eluniversal.com/noticias/daily-news/colombian-visits-venezuela-colombia-border-assess-potential-reopening_355880; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/holguin--este-fin-de-semana-no-habra-apertura-de-l.aspx#ixzz4EqlDwrfp; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/economia/frontera-colombia-no-estara-abierta-este-fin-semana/)

 

 

Oil & Energy

PDVSA seeks to securitize oil services debts

Eulogio Del Pino, President of state oil company PDVSA, has announced that the company is in talks with oil services companies to turn unpaid bills into financial instruments, a process known as securitization. Several oil services companies suspended or slowed operations this year due to difficulties in obtaining payment from PDVSA, which is struggling because of low oil prices and a decaying socialist economy. Del Pino last month said PDVSA signed financing agreements with WEATHERFORD International and HALLIBURTON and was close to a deal that would allow SCHLUMBERGER to boost its presence in here. (Reuters, http://www.reuters.com/article/venezuela-pdvsa-idUSL1N1A300E; El Universal, http://www.eluniversal.com/noticias/daily-news/pdvsa-deals-with-payment-providers-with-financial-instruments_355814)

 

Venezuela oil price falls below US$ 38

The price Venezuela receives for its mix of medium and heavy oil fell continued falling below US$ 40 as U.S. stocks continued to build, depressing prices.  According to figures released by the Ministry of Petroleum and Mining, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending July 15 was US$ 37.85, down US$ 1.75 cents from the previous week's US$ 39.60. According to Venezuelan government figures, the average price in 2016 for Venezuela's mix of heavy and medium crude is now US$ 31.70 for the year to date. Venezuela's average oil price for 2015 was US$ 44.65, down from 2014's US$ 88.42, below 2013's US$ 98.08, 2012's US$ 103.42 and 2011's US$ 101.06, 2010's US$ 72.43, and even 2009’s average price of US$ 57.01. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2416646&CategoryId=10717)

 

Del Pino claims oil output is on the rise at Orinoco Oil Belt

Eulogio Del Pino, Minister of Petroleum and Mining and head of state-run oil company PDVSA says the Orinoco Oil Belt continues working and producing for the country. He added that the industry has now a great number of PDVSA-owned equipment that includes 120 drills purchased in 2008-2009 and service lines for prospecting. (El Universal, http://www.eluniversal.com/noticias/daily-news/del-pino-oil-output-the-rise-orinoco-oil-belt_355789)

 

Cuba admits troubles from shorter supply of Venezuelan oil

Cuban President Raúl Castro admitted that the domestic economy undergoes “adverse circumstances” due, among others, to Venezuela’s standstill and “contraction” in supply of Venezuelan oil. However, he ruled out a “collapse” or return to the Special Period. At the end of the plenary session of the Cuban National Assembly, Castro confirmed that the domestic economy has grown only 1% so far this year, half than expected. Such outcome is due to declining revenues from exports of goods, such as nickel and oil, and the plunge of their world prices, in addition to the effects on Cuba of the crisis in Venezuela, the main partner of the island. According to Castro, Venezuela is subject to “an economic war to weaken people support to its revolution.” (El Universal, http://www.eluniversal.com/noticias/daily-news/cuba-admits-troubles-from-shorter-supply-venezuelan-oil_346568)

 

 

Commodities

No fuel for fishermen that sell their catch abroad

Admiral Ernesto Herrera Balsa, the newly appointed commander of Venezuela’s insular authority, says he has issued an order blocking the sale of subsidized fuel to those fishermen who sell their catch at sea, saying “the fish … must be delivered to the people, not sold in the Antilles, if the government subsidizes fuel …it is to benefit the people.” The price of fish is controlled by the government. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/venezuela/suspenderan-cupo-gasolina-pescadores-que-vendan-fuera-del-pais_355865)

 

 

Economy & Finance

CONINDUSTRIA says government is bankrupting remaining enterprises here

Juan Pablo Olalquiaga, President of the National Industry Confederation (CONINDUSTRIA) says the government is fully aware of the reasons why companies have been losing the ability to operate. “The government and all of its agencies inspect plants regularly and are aware of their operating déficit….the economic problem is not due to lack of information, it is due to lack of understanding on how the economy works”.  He added “raw material has not arrived, qualified Venezuelans continue to migrate, industrial installations continue deteriorating and factories keep on closing. We will never rebuild industry this way.” He pointed out that debts to foreign suppliers are around US$ 12 billion. Olalquiaga said CONINDUSTRIA’s proposals have been disregarded. The institution has “proposed legalizing the black market, repaying debt, removing price controls and returning companies to the private sector”. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/economia/2016/julio/18/162956=conindustria-asegura-que-el-gobierno-esta-quebrando-las-empresas-que-quedan-en-el-pais; Notitarde; http://www.notitarde.com/Olalquiaga-Ejecutivo-no-rectifica-el-rumbo-economico/Economia/2016/07/18/1011860/; El Universal, http://www.eluniversal.com/noticias/economia/conindustria-gobierno-esta-quebrando-las-empresas-que-quedan-pais_355746)

 

National Assembly votes down decree extending “economic emergency” powers

The opposition majority within the National Assembly voted down a decree by President Nicolas Maduro extending emergency powers for 60 more days and terms it “unconstitutional”. The legislature also said conditions have worsened sharply since the first decree was imposed by the Supreme Court. Hector Rodríguez, leader of the pro-regime caucus, called on Venezuelans to work together to overcome the economic crisis and claimed the government’s social achievements. President Nicolas Maduro had previously published the decree extending emergency powers for the fourth time since January 14th.  Emergency powers empower Maduro to allocate funds with no legislative controls, dispose of private goods and services, and impose currency restrictions. The government controlled Supreme Court here has upheld the decree. More in Spanish: (Infolatam: http://www.infolatam.com/2016/07/14/gobierno-venezolano-extiende-por-60-dias-mas-decreto-de-emergencia-economica/; Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/julio/14/162626=an-rechaza-extension-del-decreto-de-emergencia-economica; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/politica/an-debate-sesion-especial-prorroga-del-decreto-estado-excepcion/)

 

Venezuelan military had big role in economic woes

President Nicolas Maduro’s announcement this week that the military will lead the battle against widespread food shortages overlooks one key fact: The armed forces have played a big role in Venezuela’s economic mess.  Since Maduro took office in 2013, he has named a number of active and retired generals to run the economy. All five of his food ministers who manage one of the government’s largest budgets have come from the armed forces. And they in turn have placed dozens of their military cohorts to lead everything from a state-run chain of supermarkets to an agency overseeing food imports. But leaning on the military is unlikely to yield the economic miracle Venezuela desperately needs — at least judging by its record so far. In addition to the military’s inexperience in economic matters, there are also concerns that it is profiting from the mounting problems. Troops have been seen taking goods for themselves or demanding bribes at military checkpoints that have proliferated across the country in the past year. One of Maduro’s former food ministers is wanted on charges of profiting from overseas purchases. Two others, including current head Gen. Rodolfo Marco Torres, are being investigated by the opposition-controlled National Assembly for allegedly inflating contracts and embezzlement. In April, lawmakers demanded Torres’ removal for failing to appear before the legislature.  Some fear the military’s enhanced role will only stain the institution. “They’ve given the military total power to fix a problem they helped create and for which there’s no solution,” said Fernando Ochoa Antich, a retired general and former defense minister in the pre-Chavez era. “The only result is they’ll now share responsibility for the failure.” (The Washington Post: https://www.washingtonpost.com/world/the_americas/analysis-venezuelan-military-had-big-role-in-economic-woes/)

 

 

Politics and International Affairs

 

Venezuela nears constitutional crisis as opposition nullifies Supreme Court appointments

Venezuela is heading toward a constitutional crisis to add to its economic collapse after the opposition-controlled National Assembly challenged the power of the Supreme Court that backs President Nicolas Maduro. The National Assembly last week voted to nullify the appointment of 13 of 32 Supreme Court judges, stripping them of their powers and said any decisions these justices take part in will be null and void. A report by a Special Committee indicated the process for appointing these justices by the outgoing legislature after the December 6th elections had been fraudulent and corrupted and that several of those identified do not have the qualifications required for such offices. Congress now is studying the appointment of new judges, according to congressional President Henry Ramos Allup. The Supreme Court’s Constitutional Chamber, which includes some of the cancelled justices, reacted by declaring that the National Assembly’s Special Committee is “illegitimate and constitutionally non-existent”. (Bloomberg, http://www.bloomberg.com/news/articles/2016-07-18/venezuela-nears-constitutional-crisis-as-opposition-changes-tack; and more in Spanish: Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/julio/14/162676=parlamento-nacional-dejo-sin-efecto-designacion-de-13-magistrados-principales-del-tsj-por-irregularidades-en-el-proceso; El Mundo, http://www.elmundo.com.ve/noticias/actualidad/politica/tsj-anulo-comision-de-la-an-que-reviso-designacion.aspx#ixzz4EqmO3Yaw)

 

EU backs former presidents' efforts in Venezuela, calls for "urgent dialogue"

Foreign ministers of the European Union have “fully” supported efforts by former Presidents José Luis Rodríguez Zapatero (Spain), Leonel Fernández (Dominican Republic) and Martín Torrijos (Panama) “to facilitate an urgent, constructive and effective dialogue” between the government and the parliamentary majority in Venezuela. “These efforts provide a crucial opportunity to create enabling conditions and a framework for peaceful and shared solutions to the country's multidimensional challenges,” the ministers highlighted in the EU Council conclusions on Venezuela. They urged all institutions and political players “to engage in this process in full respect of the democratic and constitutional framework, including those of jailed opponents who cannot exercise their rights.” They refrained from appointing Zapatero as the European Union’s mediator, urged the group’s High Commissioner for Foreign Affairs, Federica Mogherini, to keep in touch with him, and called for other ways for the European Union to further talks and help overcome the most urgent needs. Mogherini, who will consider naming Zapatero as special envoy for Venezuela, says the matter has not been discussed politically or institutionally. Spain’s former President Felipe González wrote that Venezuela is undergoing a “triple crisis” that must be urgently tended to. “It is an institutional, socioeconomic and citizen safety crisis. The first thing the sides must agree upon are the items for the agenda as well as who will do the mediating”. Venezuela’s opposition has demanded that the mediating group be expanded by including the Vatican, the OAS and other former presidents. (El Universal, http://www.eluniversal.com/noticias/daily-news/backs-ex-presidents-efforts-venezuela-requests-urgent-dialogue_355878; and more in Spanish: El Nacional: http://www.el-nacional.com/politica/Rodriguez-Zapatero-confirmado-mediador-UE_0_886711631.html)

 

Capriles says Zapatero has mistaken view of the crisis in Venezuela

Opposition leader and former Presidential candidate Henrique Capriles says Spain’s former President José Luis Rodríguez Zapatero has a mistaken view of the economic crisis here. Capriles says “When they say Venezuela’s economic crisis is due to a lack of dialogue…there is a clear failure in understanding what we Venezuelans are going through.” He invited the Spanish politician to go see people going hungry or visit a hospital. The opposition leader indicated that Zapatero is not in Venezuela “to seek a solution” for the people, but instead wants to solve “the crisis the government is facing”. More in Spanish: (Infolatam: http://www.infolatam.com/2016/07/14/capriles-dice-que-zapatero-falla-en-su-diagnostico-sobre-crisis-venezolana/)

 

Cabello says “there will be no talks” with the opposition and that there will be no recall vote this year

Former lieutenant Diosdado Cabello, Vice President of the ruling PSUV party, says there “will be no talks” with the opposition because it has made it a precondition that there must be set a timetable for a recall referendum, and there will be no recall referendum “this year…we guarantee it” and “at the rate we are going” there will be no vote “next year” either. He said the “chavistas” will negotiate “nothing” with the opposition and will not allow them to “set conditions”. More in Spanish: (Infolatam: http://www.infolatam.com/2016/07/14/cabello-dice-no-habra-dialogo-con-oposicion-porque-no-va-a-haber-referendum/; Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/julio/16/162826=cabello-advierte-al-)

 

Borges says no date has been set for talks with the government

Julio Borges, head of the National Assembly’s opposition majority caucus, says no date has been targetted for talks between the Maduro regime and the Democratic Unity opposition coalition (MUD). “I don’t know who they are talking to, but it is not with the MUD”, he said. He added that the government’s call for talks “is a way to wash their faces internationally”, and that any talks must lead to a recall referendum. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/politica/borges-nego-haya-fecha-dialogo/)

 

MERCOSUR to debate transferring pro tem chair to Venezuela next week

Uruguay has called a meeting of MERCOSUR foreign ministers next July 30th, to discuss transferring the pro tem chair of the organization to Venezuela for the next semester.  The group will try to solve the crisis that emerged after Paraguay, Brazil and Argentina expressed reservations over Venezuela’s “credentials” due to undemocratic practices and human rights violations under the Maduro regime. More in Spanish: (Infolatam: http://www.infolatam.com/2016/07/17/uruguay-convoca-al-consejo-del-mercosur-para-tratar-el-traspaso-de-mando/; Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/cancilleres-del-mercosur-discutir%C3%A1n-traspaso-presidencia-pro-t%C3%A9mpore-pr%C3%B3ximo-30-julio; El Mundo, http://www.elmundo.com.ve/noticias/actualidad/politica/mercosur-discutira-traspaso-de-presidencia-pro-tem.aspx; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/politica/venezuela-presidencia-mercosur-reglamento/; Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/julio/17/162855=canciller-rodriguez--aseguro-que-la-oposicion-mantiene-vinculos-con-lideres-de-la-union-europea-)

 

UN concerned at the lack of information on state of emergency in Venezuela

The United Nations Deputy High Commissioner for Human Rights, Kate Gilmore, said the body has expressed concern to President Nicolas Maduro over the lack of information on the state of emergency recently decreed in Venezuela. Her remarks came in a response to a communication addressed to the UN last May 23 by the board of the National Assembly, signed by Speaker Henry Ramos, and vice-presidents Enrique Márquez and Simón Calzadilla. (El Universal, http://www.eluniversal.com/noticias/daily-news/concerned-the-lack-information-states-emergency-venezuela_355909)

 

CONATEL is asked to shut down Colombian ELN guerrilla radio stations here

Javier Tarazona, President of the Tachira state Teacher’s Union, has demanded that the National Telecommunications Commission (CONATEL) close down radio stations run by Colombia’s ELN guerrilla in Venezuelan territory because they transmit illegal content and indoctrinate children and young people, mainly in Zulia, Apure, Tachira and Apure states. Tarazona demands the closure of radio stations 95.5 FM Voz de la Libertad, Antorcha Estéreo 96.7 FM and 96.6 FM, owned by Colombia’s ELN guerrilla, designated as a terrorist organization by the United Nations. “CONATEL has shut down 120 radio stations nationwide…but cynically does not monitor these stations”, he said, charging Venezuelan institutions with “complicit silence” on this matter. More in Spanish: (CARACOL: http://caracol.com.co/radio/2016/07/18/internacional/1468877431_907135.html)

 

Anibal Chavez, brother of late Venezuelan President Hugo Chavez, dies at 60

Anibal Chavez, brother of late Venezuelan President Hugo Chavez, died on Sunday in Caracas from a stomach ailment, media reports said. He was 60. Chavez was the mayor of Sabaneta, a city in western Venezuela. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2416663&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.

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