August 25, 2016

International Trade

MERCOSUR meets without Venezuela, Venezuela’s call to meet snubbed

MERCOSUR representatives from Argentina, Brazil, Paraguay and Uruguay met Tuesday to analyze ways out of the crisis within the organization after the major partners refused to acknowledge Venezuela’s President Nicolas Maduro as pro tempore chair for the next six months. The next day, Venezuela, acting as chair, called a formal meeting to discuss a work plan for the same period. It was ignored by all other MERCOSUR members, except Uruguay. (El Universal, http://www.eluniversal.com/noticias/daily-news/maduro-venezuela-leading-mercosur-despite-paraguays-refusal_441075; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/actualidad/internacional/coordinadores-de-mercosur-se-reunieron-sin-la-pres.aspx#ixzz4IFA7Yle6; El Universal, http://www.eluniversal.com/noticias/politica/mercosur-fija-sin-venezuela-calendario-trabajo-epoca-emergencia_433096m; Noticiero Venevisión, http://www.noticierovenevision.net/internacionales/2016/agosto/24/166849=venezuela-reafirma-su-presidencia-de-mercosur-y-marca-lineas-de-su-mandato; El Universal, http://www.eluniversal.com/noticias/politica/mercosur-solo-uruguay-asiste-reunion-convocada-por-venezuela_441092)

 

Wheat and medicine arrive at La Guaira

Five tons of wheat and 59 containers bearing medicine arrived at La Guaira port, according to the port authority. More in Spanish: (El Universal; http://www.eluniversal.com/noticias/economia/arriban-puerto-guaira-trigo-medicinas_441066)

 

Yellow corn offloaded in Maracaibo

30,000 tons of yellow corn are being offloaded at Maracaibo, according to the local port authority.(Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34464; El Mundo, http://www.elmundo.com.ve/noticias/economia/agro/llegaron-a-maracaibo-30-000-toneladas-de-maiz-amar.aspx; El Universal, http://www.eluniversal.com/noticias/economia/arriban-maracaibo-mil-toneladas-maiz-amarrillo_433063)

 

 

Oil & Energy

Argentina shuts down controversial escrow account with PDVSA

The Argentine government is shutting down a controversial escrow account set up by Cristina Kirchner’s government amid growing suspicions over corruption involving hundreds of millions of dollars, according to official sources. Around US$ 2 billion went through the account, which will now be controlled by Argentine authorities only. More in Spanish: (El Nacional, http://www.el-nacional.com/GDA/Gobierno-argentino-polemico-fideicomiso-Venezuela_0_908909165.html)

 

 

Commodities

Defense Minister assigns one military general per commodity, to oversee marketing and distribution

Defense Minister Vladimir Padrino López, who is in charge of supplies nationally, has assigned one military general per commodity, to monitor distribution for 18 key staples. “There will be one general in command of rice, for example, who will show a plan for marketing and distributing this commodity”, he explained. More in Spanish:  (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/padrino-ordeno-asignar-un-general-para-cada-rubro-.aspx#ixzz4IL9P9JnT)

 

 

Economy & Finance

Venezuela now bleeding cash

Venezuela’s cash position is deteriorating and that makes for a lack of clarity on the left wing government’s ability to pay its debts. Foreign exchange reserves held by the Central Bank are being depleted, with further depletion next year seen as the main risk to bond prices dated 2017, 2018 and 2019. Petrodollar inflows cannot cover the massive amounts of outflows due to a collapse in exports, a rise in imports, capital flight, and external debt payments. It will become increasing difficult for the country to manage its dollar denominated bills without pulling from the Central Bank and other assets. There are no obvious sources of financing now that China is standing down. If there were any other resources, officials would have already liquidated them in order to reduce the financing stress this year, says fixed income analyst Siobhan Morden, NOMURA Securities’ number one Venezuela “death watcher”.  For now, Venezuela’s Central Bank has a mere US$ 12.1 billion in reserves, including US$ 7.5 billion in gold, and just US$ 2.62 billion in cash. NOMURA says the country also has an US$ 820 million credit position with the International Monetary Fund and US$ 720 million in FOREX investments. Nevertheless, there has been a consistent decline in gold reserves as the primary source of financing with only small positions remaining for investment. Morden assumes there is less liquidity on the IMF net credit position and the investment position too, which then leaves primary funding from cash, gold and IMF currency known as Special Drawing Rights (SDR). The liquidity position shouldn’t be allowed to decline less than US$ 1 billion if the central bank is to provide the necessary operational liquidity it needs. “This leaves maybe less than US$ 500 million from the SDR position, another US$ 1.5 billion from the liquidity position and then US$ 7.5 billion gold reserves,” she says. There is high correlation between Venezuela’s external debt payments and the net reduction in FOREX reserves. This correlation likely reflects the tighter cash flow conditions. In other words, the central bank is using its rainy day fund to pay PDVSA’s and other Venezuelan debt. “If we simplistically assume that forex reserves finance the external debt service then the liquidity threshold reaches extreme stress in April 2017,” she predicts. It is unclear whether Maduro will be around by then. (Forbes: http://www.forbes.com/sites/kenrapoza/2016/08/23/failed-state-venezuela-now-bleeding-cash/#118be748a3f1)

 

Canadian miner RUSORO awarded over US$1 billion in Venezuela lawsuit

RUSORO Mining Ltd, a small Canadian gold miner says it was awarded more than US$ 1.2 billion in damages as a World Bank tribunal ruled that Venezuela had unlawfully seized the company's gold mine. The company, which had a market value of C$82.6 million (US$ 64 million) as of Monday's close, had in March 2013 filed a statement of claim against Venezuela and was seeking US$ 3.03 billion in compensation over the nationalization of its gold assets here. (Reuters, http://www.reuters.com/article/rusoro-mining-lawsuit-idUSL3N1B43S9)

 

 

Politics and International Affairs

Process to recall Maduro heads to next stage

Venezuela’s electoral body officially set the next stage in the process to hold a referendum on President Nicolas Maduro’s rule for the last week of October. The National Electoral Council ordered an internal committee to develop by Sept. 13 a timeline and a proposal for locations where citizens can sign to support the recall, according to an e-mailed statement. The subsequent stage requires 20% of voters registered as of April 30, or about 19.6 million voters, to sign the petition for the process to advance. The decision comes after the CNE, as the electoral council is known, thwarted the opposition’s preferred choice of holding a referendum vote this year. Electoral council chief Tibisay Lucena this month announced a new 90-day verification period that would clearly push the referendum into the coming year. (Bloomberg, http://www.bloomberg.com/news/articles/2016-08-25/venezuela-s-process-to-recall-maduro-heads-to-next-stage; and more in Spanish: Noticiero Venevisión, http://www.noticierovenevision.net/politica/2016/agosto/24/166862=cne-aprobo-informe-de-la-copafi-y-habra-recoleccion-de-20-de-firmas; Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/cne-aprob%C3%B3-solicitud-recolecci%C3%B3n-del-20-firmas-para-referendo; El Universal, http://www.eluniversal.com/noticias/politica/rondon-cne-aprobo-dar-inicio-otra-fase-del-revocatorio_441118; El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/cne-aprobo-solicitud-de-recoleccion-de-firmas-del-.aspx; El Nacional, http://www.el-nacional.com/politica/CNE-informe-Copafi-recoleccion-firmas_0_908909345.html)

 

Prosecutor General asks CNE for information on recall signature collection

The Prosecutor General’s office has asked the National Elections Council (CNE) for information on the collection of 1% voter signatures required to initiate recall referendum proceedings. The move comes after Caracas Mayor Jorge Rodríguez – who heads a committee appointed by President Nicolas Maduro to review signatures - initiated a number of legal actions seeking to block the process. The Prosecutor’s request was reported by pro-regime CNE member Tania de D’Amelio. (El Universal, http://www.eluniversal.com/noticias/politica/ministerio-publico-pidio-cne-informacion-sobre-firmas_441081; El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/mp-solicito-al-cne-informacion-sobre-primera-fase-.aspx)

 

Venezuela confirms plan to purge state workers who signed recall

Venezuela will remove state employees appointed to their positions by the government who signed a petition to recall President Nicolas Maduro as the opposition seeks to remove him amid an economic crisis. In the first confirmation by a cabinet member, Information Minister Luis Jose Marcano said the government is free to name as well as remove high-level bureaucrats it has appointed. “Whoever has a position that is freely appointed and removable, those referred to yesterday by the PSUV on President Maduro’s instructions, evidently cannot be allowed to attack the Bolivarian revolution,” Marcano said in an interview, referring to the ruling party. “A lot of these people end up sabotaging the revolution.” Socialist Party (PSUV) spokesman Jorge Rodriguez had previously announced that those in senior public positions who had signed the petition would have to leave their posts. "Today, by order of the [governing Socialist] party president Nicolas Maduro, five ministries ... cannot have people that are against the Revolution and the president in management positions". He said that Maduro has given the ministries of food, basic industries and finance among others a deadline of 48 hours to dismiss those in senior positions who had signed the petition. The announcement follows reports by pressure groups and opposition parties that public sector workers who had signed the petition were pressured and sometimes sacked. Pro government Ombudsman Tarek William Saab, however, says that there can be no dismissals for political reasons. (Bloomberg, http://www.bloomberg.com/news/articles/2016-08-23/venezuela-confirms-plan-to-purge-state-workers-who-signed-recall; BBC News: http://www.bbc.com/news/world-latin-america-37164447; and more in Spanish: Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/agosto/23/166771=defensor-del-pueblo-aseguro-que-los-trabajadores-no-pueden-ser-despedidos-por-razones-politicas)

 

Legislature formally denounces Supreme Tribunal for attempting to nullify its work

National Assembly President Henry Ramos Allup has filed a complaint with the nation’s Prosecutor General, denouncing the Supreme Tribunal, and particularly its Constitutional Chamber for issuing sentences that would nullify the legislature’s work in seven sessions. The formal charge denounces “new attempts by the Constitutional Chamber of the TSJ to initiate procedures that violate and misinterpret the Constitution as well as the functions of the National Assembly”. He described the ruling handed down by the TSJ as “meaningless” and repeated that the legislature with its opposition majority will not accept any order of the Supreme Tribunal because, in his opinion, it is not correctly constituted; and added that the National Assembly will not abide by “the sentence or decision of any body which disregards the Constitution and prevents the right to defense.” He asked the Prosecutor to launch an investigation against the Tribunal for “criminal actions”, and added that the Tribunal is not properly constituted since “six out of seven magistrates” do not fill the legal requirements for appointment, and one of them is being investigated for not even having a law degree. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2419396&CategoryId=10717; El Universal, http://www.eluniversal.com/noticias/daily-news/congress-reject-venezuelan-top-courts-decision_433074; and more in Spanish:  El Universal, http://www.eluniversal.com/noticias/politica/allup-gobierno-perdio-control-por-eso-nos-quiere-liquidar_441084; Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/agosto/23/166729=ramos-allup-denuncia-al-supremo-por-sentencias-contra-la-asamblea-nacional)

 

Venezuelan students “take over” public transport to back recall referendum

The Central University of Venezuela’s Federation of University Centers, or FCU-UCV, on Wednesday staged a “takeover of public transportation” in Caracas, marking the start of a series of activities leading to a Sept. 1 march to demand a recall referendum for President Nicolas Maduro. The takeover is a call being made by the student movement as part of a series of actions to be undertaken by students opposing Maduro’s government in every Venezuelan state. “Early this morning, we were at the Plaza Venezuela metro station in Caracas at rush hour ... We’re going to board different buses to talk with passengers and encourage the activities,” FCU-UCV president Hasler Iglesias told reporters. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2419474&CategoryId=10717)

 

Head of European Parliament warns democracy is in danger in Venezuela

Germany’s Martin Schulz, President of the European Parliament, says he is convinced that democracy is in danger in Venezuela. During a press conference in Bogotá, Schultz said events in Venezuela are dramatic and worrying, and called on both Maduro’s government and the opposition to keep open the road towards a national dialogue. He added that a government’s options depend on its legitimacy. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/internacionales/2016/agosto/24/166800=presidente-del-parlamento-europeo-senalo-que-la-democracia-en-venezuela-esta-en-peligro)

 

Almagro: The recall vote is a constitutional right that must be observed

Luis Almagro, Secretary General of the Organization of American States (OAS), has again called on the Venezuelan government to allow the holding of a recall vote promoted by the opposition political forces. “People’s right to elect a president is as important as their right to remove him or her if they want to,” Almagro stressed in an interview. The OAS top representative also said he is willing to meet with President Nicolas Maduro over the crisis hitting the Caribbean nation, as long as the initiative does not mean “wasting time.” (El Universal, http://www.eluniversal.com/noticias/daily-news/almagro-the-recall-vote-constitutional-right-that-must-observed_441087; http://www.eluniversal.com/noticias/daily-news/oas-almagro-venezuela-there-neither-democracy-nor-rule-law_433000)

 

Losing the social media war, Maduro retreats online

President Nicolas Maduro took the unprecedented move of making his Instagram account private Tuesday, as the recall petition against him keeps on moving forward and his popularity deteriorates steadily. “This is a private account”, a message in Maduro’s Instagram page read. “Follow to view pictures and videos”. Maduro apparently objected to criticism of his administration over Instagram, according to all-news website SUMARIUM. In Instagram, Maduro has 100,000 followers. Venezuela has almost 3 million civil servants, with the government being the largest employer in the country. The President seems to be scaling down his social media presence. Maduro, who has been called a “petty dictator” by OAS Secretary General Luis Almagro, blocked main opposition figure and Miranda state governor Henrique Capriles in Twitter days ago. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2419434&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.