International Trade
MERCOSUR
to discuss enforcement of democratic clause against Venezuela
The Common Market of the South
(MERCOSUR) will hold a meeting "in
the upcoming days" to discuss whether the democratic clause should be
enforced against Venezuela, informed Uruguayan President Tabaré Vázquez at a
press conference, along with his Argentinian counterpart Mauricio Macri. "As for the democratic clause, MERCOSUR has
to hold a meeting to discuss the matter, and Uruguay will attend that meeting
and it is going to discuss it with the integrity and responsibility we seek to
prosecute in our governance," said Vázquez, who specified neither date
nor place of the meeting. For his part, President Macri noted that both Uruguay
and Argentina were “very concerned about
how things have worsened” in Venezuela. "Under these terms, Venezuela cannot be part of Mercosur,” and added
that this country has to be "deplored
by all American nations and the entire world" as "human rights are not being respected." (El Universal, http://www.eluniversal.com/noticias/daily-news/mercosur-discuss-enforcement-democratic-clause-against-venezuela_624077)
Oil & Energy
Venezuela
winning bondholder relief as 39% accept PDVSA swap
Petroleos de Venezuela SA, maneuvering to repay a
ballooning debt load, says that creditors holding US$ 2.8 billion of bonds have
agreed to extend maturities after weeks of tense negotiations that included
dire warnings from Caracas of a possible financial collapse. The deal, while
far short of the US$ 5.325 billion that PDVSA had been seeking to exchange, was
still seen as significant enough to win the state-run oil giant the relief it
needs to continue servicing its debts for the time being. Notes from the
company and Venezuela’s government surged after the announcement. The deal
comes at a hefty cost. While the country’s oil minister touted it as a victory
for the “fatherland,” Venezuela had
to pawn one of its most attractive assets -- CITGO Petroleum Corp., the U.S.
unit of PDVSA -- to persuade investors to accept the deal. Years of
declining output and a crash in oil prices have left PDVSA and the government,
which relies on crude for almost all its hard currency income, struggling to
find enough cash to make payments and import basic necessities. (Bloomberg, http://www.bloomberg.com/news/articles/2016-10-24/venezuela-wins-relief-from-bondholders-as-39-accept-pdvsa-swap;
El Universal, http://www.eluniversal.com/noticias/daily-news/bond-swap-5257-pdvsa-says_624128)
Commodities
Agriculture Ministry, NESTLÉ sign agreement to expand
production
Venezuela’s Agriculture and NESTLÉ have signed an
agreement to create 1500 direct and indirect jobs and substitute imports worth
US$ 15 million through investments seeking to increasing production in 30
items, including milk, cocoa, rice, fruit and fruit pulp. More in Spanish: (El
Universal, http://www.eluniversal.com/noticias/economia/acuerdo-con-nestle-permitira-ahorro-millones-dolares_624125)
Economy & Finance
U.S.
said to be closing in on PDVSA-linked seizures
U.S.
Federal prosecutors are preparing to charge several individuals and confiscate
their property over the alleged looting of Venezuela’s state oil company in
what may amount to one of the biggest asset seizures in U.S. history. Three
people familiar with the case say the government has been investigating at
least a dozen Venezuelans and is expected to file charges in Houston against a
few of them as soon as next month. Those on the list, including former
executives of Petroleos de Venezuela SA, known as PDVSA, are suspected of
having taken bribes from middlemen to award contracts at inflated prices,
helping to siphon more than US$ 11 billion out of the country. All three
people spoke on condition of anonymity because the investigation is ongoing and
sensitive due to its impact on U.S. foreign policy. The government has set its
sights on a number of U.S. assets, including about 20 residential properties,
some in West Palm Beach and the Houston suburbs. Switzerland has seized US$ 118
million in assets from Swiss banks related to the matter and sent US$ 51
million to U.S. authorities, Bloomberg reported on Tuesday. Venezuela’s
opposition-run congress is separately seeking to recover US$ 11.3 billion that
went missing from PDVSA between 2004 and 2014 while Rafael Ramirez, currently
Venezuela’s ambassador to the United Nations, was company president. It seeks
to hold him politically responsible. Ramirez has rejected the
congressional accusations as lies. Investigators are also looking at the
dealings involving PDVSA and a number of companies, including Pratt &
Whitney, General Electric and Rolls Royce Holdings, as well as ProEnergy
Services, a Missouri-based firm. The prosecutors have been tracking money that
flowed through Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo &
Co., they added. The people under investigation include current Venezuelan
government officials, prominent businessmen and individuals suspected of
involvement with cocaine trafficking, two of the people said. Homeland Security
Investigations, the Drug Enforcement Administration and the FBI are all
involved in the investigation, which has been under way for at least three
years and looks at activity going back to 2005. The investigation comes
at a time when the cost of corruption is vividly apparent in Venezuela’s
crumbling economy. A former finance minister, Jorge Giordani, has said that as
much as US$ 300 billion was embezzled from Venezuela in the last decade through
high-level corruption. The U.S. has a strong legal interest in the case because
the allegedly ill-gotten money passed through its banks and was used to buy
property here. The people under investigation have been linked to billions of
dollars of gains, much of which was transferred to offshore accounts in Panama,
the people said. (Bloomberg: http://www.bloomberg.com/news/articles/2016-10-25/u-s-said-to-be-closing-in-on-venezuelan-asset-seizures-charges)
Central
Bank orders higher denomination currency
It has
been reported that Venezuela’s Central Bank has ordered a VEB 1000 coin and
currency bills denominated at VEB 5,000; 10,000 and 20,000 for delivery toward
the end of this year due to inflationary pressure here, which the International
Monetary Fund expects will close at 700% by year end. More in Spanish: (El
Universal:
Venezuelan
foreign debt only payable in foreign currency, says Rodriguez of TORINO
“Converting foreign currency bonds to local
currency would of course be an event of default under the terms of the bond
indentures and would trigger Credit Default Swaps,” said Francisco
Rodríguez, Chief Economist of TORINO Capital, in reference to a claim filed by
company Corporation XT 46 with the Supreme Tribunal of Justice (TSJ). “The claim argues that Article 128 of the
Law on the Central Bank (of Venezuela), which stipulates that payments in foreign
currency must be made in a currency of legal tender at the place of payment,
allows (state-run oil company Petróleos de Venezuela) PDVSA to pay in bolivars
the coupons and amortizations of its foreign currency bonds,” according to
Rodríguez’s report. “Coming as it did on
the eve of Friday’s (since extended) deadline for PDVSA’s exchange offer for
its two issuances due on 2017, and given that the claim explicitly referenced
these issuances (as well as the Pdvsa 2016 bonds due October 28), the news
generated concern that the government may have been looking for ways to avoid
upcoming payments (…),” the economist noted. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-foreign-debt-only-payable-foreign-currency_624117)
Politics and International Affairs
Enraged
Venezuela opposition escalates anti-Maduro protests
Venezuela's
increasingly militant opposition stepped up its push to remove leftist leader Nicolas
Maduro on Wednesday with rallies that drew hundreds of thousands of protesters
and calls for a general strike and march on the presidential palace. Enraged by
last week's suspension of their push for a referendum to remove Maduro and
determined to end 17 years of socialism here, Venezuela's opposition has
sharply ramped up its tactics in recent days.
Maduro, the unpopular 53-year-old successor to Hugo Chavez who has
presided over an unprecedented economic crisis, accuses the opposition of
seeking a coup with U.S. help. "They
are desperate, they have received the order from the north to destroy the
Venezuelan revolution," he told a counter-march of red-shirted
government loyalists. After launching a political trial against Maduro on
Tuesday in the National Assembly, the opposition coalition held nationwide
marches dubbed "Takeover of
Venezuela" on Wednesday. "This
government is going to fall!" crowds chanted, many wearing white and
waving national flags as they filled one of Caracas' main highways. Protesters clashed with security forces in
several cities across Venezuela, including the volatile western town of San
Cristobal that was an epicenter of violence during 2014 anti-Maduro protests.
Opposition leaders said there were dozens of injured, with two protesters
reportedly struck by bullets in the Western city of Maracaibo near Colombia.
Both were hospitalized and expected to recover.
Coalition leaders called for a national strike for Friday, and a Nov. 3
march to the Miraflores presidential palace in Caracas, unless the election
board allows the referendum. In apparent
tactics to impede the opposition demonstrations, authorities set up roadblocks
and closed some underground metro stations in Caracas. Reuters journalists in
several cities reported big crowds at the opposition rallies, especially in the
capital, collectively numbering hundreds of thousands. Wary of trouble, many
businesses stayed shut and some parents kept children away from school. In the
restive city of San Cristobal, masked protesters threw rocks and petrol bombs
in clashes with security forces and attacked the local headquarters of the
electoral council. Maduro convened a
special Committee for the Defense of the Nation at the presidential palace to
analyze the National Assembly's actions against him and a tentatively scheduled
dialogue with the opposition this weekend. National Assembly head Henry Ramos,
a veteran politician who swaps insults with Maduro almost daily, declined an
invitation to attend. "Here's his
chair, empty again," said Maduro, urging participation in talks
supported by the Vatican, regional bloc UNASUR and various ex-heads of state.
Opposition leaders, however, said they would not attend talks until the
government allowed the referendum process to continue. (Reuters: http://www.reuters.com/article/us-venezuela-politics-idUSKCN12Q0B6)
National
Assembly votes to put President Nicolas Maduro on trial; military brass backs
him
Venezuela’s
opposition-led National Assembly voted on Tuesday to put President Nicolas
Maduro on political trial, but the legislature’s dwindling power means the
decision will likely have no practical effect. The vote was an attempt to put
new pressure on Maduro a day before the opposition planned a show of force on
the streets. The legislature charged Maduro with abandoning the presidency and
carrying out a coup against the Constitution. “Let him respond for the actions that have destroyed, broken, denied the
right to choose in a democracy,” said Julio Borges, the leader of the
Assembly’s opposition bloc. In response to the vote, Edwin Rojas, a lawmaker
from Maduro’s Socialist Party, said, “This
is a cheap copy of impeachment.” Referring to the impeachment of former
President Dilma Rousseff of Brazil, he added, “We are not Brazil.” Venezuela’s political turmoil has grown more
intractable by the day, with the opposition reacting furiously to a decision by
the Electoral Council last week that blocked a drive for a referendum to recall
Maduro. The referendum has been seen as the most effective legal avenue to
challenge Maduro’s increasingly autocratic rule, which many Venezuelans blame
for the collapsing economy. Polls have shown that an overwhelming majority of
Venezuelans would vote to remove him. Addressing a crowd outside the
presidential palace on Tuesday, Maduro disregarded the Assembly vote. Instead,
he blamed President Obama for Venezuela’s political standoff. “These attacks from the right are an attack
by Obama because he is close to leaving,” Maduro said. He also invited the
opposition president of the National Assembly, Henry Ramos Allup, to meet with
him and other members of the government. As he spoke, the crowd chanted, “Dissolve the Assembly!” Maduro has just
returned from a five-day trip overseas, where he met on Monday with Pope
Francis and early Tuesday with the incoming secretary general of the United
Nations, António Guterres. The Vatican has been attempting since May to mediate
between Venezuela’s government and the opposition, and it appeared to have made
a breakthrough on Monday, when the pope’s special envoy to Venezuela,
Archbishop Emil Paul Tscherrig, said both sides would begin a dialogue on
Sunday. But leading opposition figures said they would not take part in the
session, suggesting instead that the government wanted to buy time by agreeing
to discussions. “In a possible dialogue,
the opposition has nothing to offer, only to demand,” Ramos Allup said. As
the crisis mounted, the army came down squarely in support of Maduro. Defense Minister General Vladimir Padrino Lopez, in a rare televised address, accused congress of trying to promote instability
and said the country’s armed forces would uphold the rule of law here. Congress’s
“real intent is nothing less that to
gravely affect the institutionality of the country through chaos and anarchy,”
he said in a prepared statement. “They
want to overthrow the lawfully established government of Nicolas Maduro Moros,
who for us is not partial to politics but rather the constitutional president
and commander in chief of the Bolivarian Armed Forces, with supreme authority
and to whom we reiterate our unconditional loyalty and unwavering commitment.”
(The Wall Street Journal: http://www.nytimes.com/2016/10/26/world/americas/venezuela-nicolas-maduro.html;
Reuters, http://www.reuters.com/article/venezuela-politics-idUSL1N1CV102;
Bloomberg, http://www.bloomberg.com/news/articles/2016-10-25/venezuela-s-military-backs-maduro-in-dispute-with-congress)
Pope
urges Maduro to alleviate people's suffering
President
Nicolas Maduro made a surprise visit on Monday to Pope Francis, who urged the
embattled leader to alleviate people's suffering and negotiate with the
opposition to solve his country's crisis. The private, evening meeting took
place in the framework of the "worrying"
situation in Venezuela which was "weighing
heavily on the entire population", a Vatican statement said. It said
the pope had urged Maduro to "courageously
take up the path of sincere and constructive dialogue to alleviate the
suffering of the people, most of all the poor, and to promote a climate of
renewed social cohesion, which will allow people to look to the future of the
nation with hope". (Reuters, http://www.reuters.com/article/us-pope-venezuela-maduro-idUSKCN12O2A9;
http://www.reuters.com/article/pope-venezuela-maduro-idUSL8N1CU5PA;
Bloomberg, http://www.bloomberg.com/news/articles/2016-10-24/venezuela-s-maduro-meets-pope-francis-as-vatican-joins-talks;
El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelas-maduro-meets-with-pope-francis_624163)
Papal
Representative announces start of a dialogue; opposition says no talks without
recall referendum
The
Pope’s Special Representative, Monsignor Emil Paul Tscherrig, announced that President
Nicolas Maduro’s government and the opposition MUD alliance agreed to initiate
a dialogue next week in pursuit of a solution to this nation’s political
crisis. The agreement to begin talks emerged from a meeting of the parties
under the auspices of the Union of South American Nations (UNASUR), through the
former presidents of the Dominican Republic, Leonel Fernandez, and Panama,
Martin Torrijos, and former Spanish President Jose Luis Rodriguez Zapatero, the
papal representative said. But opposition leaders balked at the terms of the
announcement. "No dialogue has begun
in Venezuela," said two-time presidential candidate Henrique Capriles.
"These devils want to use the good
faith of Pope Francis to buy more time." The opposition Democratic
Unity coalition's major parties mostly said they would not be engaging in the
talks unless the recall referendum process is reinstated. They also demanded
that any talks be held in Caracas, not Margarita Island as originally proposed.
The secretary general of the opposition coalition, Jesus Torrealba, who met
Monsignor Tscherrig, said that while talks are important and Papal mediation
has been sought by them, "it can't
continue to be a strategy for the government to gain time". Capriles later emphasized that he is willing
to discuss how to solve the nation’s problems, saying: “If I have to meet with the devil, I would do so, with witnesses, with
the Vatican”; and emphasized that he distrusts government representatives
and those from UNASUR, particularly Rodríguez Zapatero; and would ask for
conditions such as incorporating other heads of state, such as Spain’s Felipe
Gonzalez; clear rules and a clear agenda that includes restoring the
Constitution, freeing political prisoners,
accepting humanitarian aid, access for media and calling up a recall
vote. “The opposition has nothing to
negotiate. The government calls for talks because it is drowning…Talks are not
to save Maduro and his regime”. He said that through talks he could agree
to new general elections, through a Constitutional amendment, “Signed, because one cannot believe anything
from those people, and endorsed by the people.” (Latin American Herald
Tribune, http://www.laht.com/article.asp?ArticleId=2423857&CategoryId=10717;
El Universal, http://www.eluniversal.com/noticias/daily-news/vatican-envoy-announces-govt-opposition-talks-venezuela_624009;
Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKCN12O27N;
BBC News: http://www.bbc.com/news/world-latin-america-37758515;
and more in Spanish: El Nacional, http://www.el-nacional.com/politica/Capriles-oposicion-negociar_0_946105681.html)
Head of
Roman Catholic Bishops Conference says talks have not begun
Monsignor
Diego Padrón, Chairman of Venezuela’s Roman Catholic Bishops Conference, says
that talks between the government and its opposition have not yet begun. He
said that on Sunday, October 30th there may be a meeting to set an
agenda. He added that the Vatican continues to explore what disposition there
is on both sides towards talks, and emphasized that talks cannot replace the
people’s right to revoke President Maduro. More in Spanish: (Noticiero
Venevision: http://www.noticierovenevision.net/politica/2016/octubre/25/173405=monsenor-diego-padron-aclaro-que-dialogo-entre-gobierno-y-oposicion-aun-no-ha-comenzado)
UNASUR praises
talks in Venezuela, calls for more democracy
The
Union of South American Nations (UNASUR) on Monday embraced the decision made
by the Venezuelan government and the opposition to engage in talks, adding that
political crisis may be solved only with more democracy. In a communiqué,
Colombian ex-President and UNASUR’s Secretary General Ernesto Samper said that
“today more than ever, it makes sense to
call on all Venezuelans to find, through dialogue, the solution to differences
that have them confronted with each other”. Likewise, Samper pointed out
that the decision made by the National Electoral Council (CNE) to halt the
collection of signatures for a recall vote against the term in office of
President Nicolás Maduro could have intensified the differences. (El Universal, http://www.eluniversal.com/noticias/daily-news/unasur-praises-talks-venezuela-calls-for-more-democracy_624148)
HRW calls
for international pressure in Venezuela’s humanitarian crisis
Human Rights Watch is urging “strong international pressure,” in particular from the countries of
the Americas, to get the Nicolas Maduro government to take “immediate measures” to deal with the “profound humanitarian crisis” in
Venezuela, according to a lengthy report released Monday. “The Venezuelan government has seemed more vigorous in denying the
existence of a humanitarian crisis than in working to resolve it,” said HRW
Americas director Jose Miguel Vivanco. “Its
failures have contributed to the suffering of many Venezuelans who now struggle
every day to obtain access to basic health care and adequate nutrition,” he
added. In preparing the report, in which HRW denounces the “severe shortages” of medicines and food
in Venezuela, as well as the “inadequate
and repressive” government response, the human rights organization last
June interviewed more than 100 people in Caracas and six Venezuelan states and
visited several public hospitals. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423839&CategoryId=10717;
El Universal, http://www.eluniversal.com/noticias/daily-news/hrw-calls-for-intl-pressure-over-maduro-tackle-crisis-venezuela_623999)
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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