March 03, 2017

International Trade

529 food containers have arrived at the Port of La Guaira

529 containers bringing food from Mexico, aboard the container ship CNP PAITA, have arrived at the port of La Guaira. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36067; Ultima Hora Digital, http://ultimahoradigital.com/2017/02/alimentos-llegaron-de-mexico-para-repartirse-en-los-clap/)

Cargo that has arrived at Puerto Cabello

·         30.000 tons of rice

·         27 containers of agro chemicals for state agency AGROPATRIA

·         30.000 tons of wheat for state agency Corporación de Abastecimiento y Servicios Agrícolas (CASA)

·         30.000 tons of white corn

An additional 574 containers bearing food, personal care products and medicine arrived from Cartagena-Colombia on the MAERKS WISMAR. The shipment includes 139 containers of food: canned tuna, black beans, white rice, powdered milk, pasta and margarine. 19 containers of medicine, 12 of personal care products, and 404 bearing vehicle spare parts and machinery. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36065; http://www.bolipuertos.gob.ve/noticia.aspx?id=36074: Ultima Hora Digital, http://ultimahoradigital.com/2017/02/30-mil-toneladas-de-arroz-son-descargadas-en-el-puerto-de-puerto-cabello/; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/arribaron-a-puerto-cabello-30-000-toneladas-de-arr.aspx)

 

Cargo that has arrived at Maracaibo

·         3.278 tons of food packets from México for the state government of Zulia state. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36063; El Mundo, http://www.elmundo.com.ve/noticias/mundo-corporativo/sociales/contenedores-con-alimentos-llegaron-al-puerto-de-m.aspx)

Cargo that has arrived at El Guamache (Margarita Island):

113 containers from Kingston, Jamaica, including 384 tons of food items such as rice, pasta and coffee, plus 1165 tons of vehicle parts and accessories, textiles, clothing and footwear, furniture and household products, hardware, health and personal care products such as soap, toothpaste and shampoo. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36072)

 

Oil & Energy

Hitting Venezuela's Government where it hurts. Not yet two months into his tenure, U.S. President Donald Trump has demonstrated his intention to increase the pressure on Venezuela's government, whose imperatives are at odds with those of his own administration. Washington appears ready to impose further sanctions on Venezuelan officials and entities, perhaps even against the country's vital state oil and natural gas company, Petroleos de Venezuela (PDVSA). The U.S. government may find it easier to keep targeting Venezuela through sanctions than to organize a regional response. If the Trump administration imposes heavy sanctions on PDVSA, thereby preventing U.S. companies and businesses subject to Washington's jurisdiction from doing business with the oil firm, it could herald Maduro's ruin. Caracas depends on oil for about 95% of its total export revenue, and it has already had to slash imports over the past few years as a result of limited production capacity and sanctions. Tough sanctions on the state oil and gas company would only intensify the economic crisis and probably also the divisions within the government over whether Venezuela should continue down the path of international isolation. Whether more sanctions would cause the Maduro administration to change course depends on the ruling party's internal dynamics. (STRATFOR: https://www.stratfor.com/analysis/hitting-venezuelas-government-where-it-hurts)

 

Economy & Finance

Venezuela running out of cash

The Central Bank of Venezuela says the country is down to just US$ 10.5 billion in foreign reserves. At the same time, Caracas must meet debt obligations of US$ 7.2 billion this year. The country had nearly US$ 30 billion in reserve five years ago; in 2015, it was down to US$ 20 billion. According to economists, the trend can't go on much longer, but it’s not easy to predict how long it would take Venezuela to reach the bottom. Nearly US$ 7.7 billion of the country’s remaining reserves is in gold, according to the latest financial report for 2016. Venezuela had to ship gold to Switzerland to foot debt bills last year. Dwindling reserves are only exacerbating the humanitarian crisis in the country. The economic blow has led to food and medical shortages, as well as skyrocketing prices. Inflation is expected to rise to 1,660% this year and 2,880% in 2018, according to the IMF. Among the key factors boosting inflation experts see the crashing bolivar, huge government spending, poor management of the country's infrastructure, as well as high level of corruption. However, oil prices averaging US$ 55 remain the major problem for the country’s economy. As the largest holder of reported oil reserves in the world, Venezuela produced over 2.4 million barrels of crude and condensates per day at the end of the last year, as per ministry data. Oil shipments make up more than 90% of the country's exports. That makes it more and more difficult for Caracas to pay debts and import food, medicine and other essentials for its citizens. The country's imports dropped 50% from a year ago, according to Venezuelan research firm ECOANALITICA. (RT: https://www.rt.com/business/379160-venezuela-ten-billion-down-oil/; Fox News: http://www.foxnews.com/world/2017/03/02/venezuelas-foreign-reserves-tank-to-10-5-billion-report-says.html)

South America's last bastion of Socialism is falling to pieces

The currency is worth a dime, though probably not even that much. The brain drain is immense. People are starving. Unemployment is in the double digits. Inflation is triple digits. And its president, Nicholas Maduro of the disastrous United Socialist Party of Venezuela, talks to deceased president Hugo Chavez who comes to him in the form of a little bird. South America's last hold-out of pre-colonial times is going broke. It has US$ 10 billion in foreign currency reserves. There are now individuals in South America that have more money than Venezuela's central bank. If Maduro wanted to be more like Cuba, he's got it, maybe minus the 57 Chevy's and armies of doctors. It's not just the popping of the oil bubble that's hurt Venezuela. Every other one trick pony has managed to survive. Venezuela's economy has contracted an impressive 18.6% in 2016. If there is a failed state in the America's, Maduro is running it. Dwindling oil revenues have knocked Venezuela out. It faces unprecedented social, political and economic crisis. The only thing that is keeping incomes up is the fact that Maduro keeps giving poor people money. In the absence of structural reforms and without a resolution to the political impasse between the ruling Socialists and the opposition, the country is set for another challenging year. The absence of real sector and inflation information makes any assessment of the economy difficult. (Forbes: https://www.forbes.com/sites/kenrapoza/2017/03/02/south-americas-last-bastion-of-socialism-is-falling-to-pieces/#3b804a292fd8)

Job losses, low wages add to Venezuela economic hardship

Multiple companies - local and foreign - are closing doors or cutting payrolls across Venezuela, which despite its oil wealth is suffering deep recession, triple-digit inflation and chronic shortages. As per CONSECOMERCIO, the major retail industry group, Venezuela in the past 18 months lost close to 1 million private sector jobs. "Who is creating jobs? Nobody," said CONSECOMERCIO Vice President Alfonso Riera. "That unemployed population unfortunately is migrating to the street, informal work or worse." Government critics say nationalizations of businesses and more than a decade of price and currency controls have crippled private enterprise, but President Nicolas Maduro says Venezuela is a victim of an "economic war" led by business leaders with U.S. help. Venezuela has not reported official unemployment figures since April 2016, when the rate was at 7.3%. A survey by three universities showed unemployment at the end of 2016 remained at that level. But the study also found 38% of those surveyed were working informal jobs ranging from buying and reselling goods to freelance work without benefits. Only 28% said they were public employees and 27% had a job in the private sector. Union sources said major companies such as food and beermaker POLAR, carmaker FORD and bottler COLA-COLA FEMSA all are reducing their workforce by negotiating redundancies and offering employees buyouts. "People are taking the packages," said Johnny Magdaleno, who leads a POLAR union. He said workers were being offered the equivalent of US$ 2,500 at the black-market exchange rate. "Production has fallen too much," he said. "The workers who are left are making 4,000 bolivars weekly ($1 at the black-market rate). That doesn't even enable them to buy a pack of flour."  (Reuters: http://www.reuters.com/article/us-venezuela-economy-idUSKBN16926M)

 

Politics and International Affairs

US Senate unanimously passes resolution demanding Trump act on Venezuela
US Senators unanimously passed a resolution Wednesday urging President Donald Trump to take further action against Venezuelan officials. The bill also expressed support for a controversial move by Organization of American States (OAS) head Luis Almagro to invoke the Democratic Charter. If invoked, Venezuela would be suspended from the OAS. When Almagro first announced the move in 2016, he also demanded President Nicolas Maduro be “immediately” removed from office, prompting many Latin American leaders to accuse the OAS head of overreach. Despite the controversy, the Senate bill called on Trump to “provide full support for OAS efforts in favor of constitutional and democratic solutions to the political impasse and to instruct federal agencies to hold officials of the Venezuelan government accountable for violations of US law and abuses of internationally recognized human rights.” The bill will now head to the House of Representatives. One of the main supporters of the bill, Senator Marco Rubio, thanked both Republicans and Democrats for supporting the move. The bill was co-sponsored by prominent Democrats including Senators Bob Menendez and Bill Nelson, along with Hillary Clinton’s 2016 presidential running mate Tim Kaine. (Venezuelanalysis.com: https://venezuelanalysis.com/news/12953; El Universal, http://www.eluniversal.com/noticias/daily-news/senate-lobbies-for-release-political-prisoners-venezuela_641844; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2431988&CategoryId=10717)

US Council on Foreign Relations: Options for U.S. Policy in Venezuela, prepared for the US Senate Committee on Foreign Relations. Venezuela’s economic, political, and social situation represents both a regional problem and a global affront to democratic values. As such it should be a priority for the current U.S. government, which should invest in the necessarily complex, time consuming, and fragile diplomatic processes to push for change, as well as to prepare for the day when it in fact may come. (Full presentation: ATTACHED)

Maduro looks to get on Trump’s good side with praise for Congressional address

Venezuela’s socialist dictator Nicolás Maduro appears to be attempting to ingratiate himself with his American counterpart Donald Trump, praising the president’s joint address to Congress on Tuesday as “the first time I hear a U.S. president speak of the struggle against drug trafficking.” He highlighted as significant President Trump’s emphasis on combatting drug addiction from the United States, particularly in poorer communities. Maduro’s compliments follow a month in which the U.S. Treasury Department designated his vice president, Tareck El Aissami, a “Specially Designated Narcotics Trafficker” for his ties to various cocaine-trafficking outlets and President Trump personally welcomed Lilian Tintori, wife of Venezuelan political prisoner Leopoldo López, to the Oval Office. Maduro nonetheless highlighted that he and President Trump “have differences” but reiterated that he wished to engage in respectful diplomatic relations with the White House, a departure from his regular warnings that President Barack Obama was preparing a ground invasion of Venezuela during his tenure. Among those differences is the fact that Maduro employs a known high-level drug trafficker as his second-in-command. According to the U.S. Treasury Department, El Aissami has cooperated with “groups as varied as the Mexican Zetas cartel and Hezbollah.” Reports — published prior to the Treasury using the Drug Kingpin Act to freeze El Aissami’s U.S. assets — accused him of, among other crimes, recruiting Latin American Muslims to join Hezbollah and running his own cocaine trafficking outfit the Cartel de los Soles. Diosdado Cabello, the Socialist Party’s minority leader in Venezuela’s National Assembly, is widely believed to be the Cartel de los Soles’s boss. While Maduro himself has never been accused of drug trafficking, reports have indicated he has funded political campaigns with drug money generated by Cabello and El Aissami. El Aissami responded to the Treasury sanctions with a full-page ad attacking the United States in the New York Times. In addition to sanctioning El Aissami, the Trump administration has called for the release of all political prisoners under Maduro’s chavista dictatorship. In February, Trump welcomed Tintori, an anti-socialist activist and wife of Popular Will party leader Leopoldo López, to the White House, publishing a photo standing next to her, Vice President Mike Pence, and Senator Marco Rubio on Twitter. (BREIBART: http://www.breitbart.com/national-security/2017/03/02/venezuela-tries-get-trumps-good-side-drug-war/)

 

…but falls back on familiar defiant discourse after US Senate vote

Embattled President Nicolas Maduro warned Wednesday of a resurgence in “racism and xenophobia”, the day after the US Senate unanimously voted a resolution expressing “profound concern” about the present Venezuelan crisis.
It is a familiar pattern for Cuban and Venezuelan leaders, and, in his first public speech after the U.S. Senate’s vote, Maduro re-adopted it with ease. “I am making a worldwide alert in the face of surging dangerous, segregationist, racist and xenophobic currents that threaten to divide mankind even further, threaten to fill the whole world with war. That’s why I am calling and asking for the Venezuelan people to unite, to keep on making the revolution and keep on defending our identity,” Maduro said during an event of the CLAP, a new government mechanism to ration price-controlled foodstuffs administered by ruling party PSUV militants. Maduro didn’t mention the U.S. vote specifically, but he denounced “white supremacy” and it was enough for a crowd of hundreds, clad in red, to cheer for him. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2432136&CategoryId=10717)

 

US State Department reports Venezuela has “failed demonstrably” on drug traffic control

“During the past 12 months, the Venezuelan government failed demonstrably to make sufficient efforts to meet its obligations under applicable international counter-narcotics agreements or to uphold the counter-narcotics measures set forth in the Foreign Assistance Act.  Due to Venezuela’s porous border with Colombia, its weak judicial system, sporadic international counter-narcotics cooperation, and permissive and corrupt environment, Venezuela remains a major drug-transit country.  It is one of the preferred trafficking routes for illegal drugs, predominately cocaine, from South America to the Caribbean region, Central America, the United States, Western Africa, and Europe. In 2015, the Venezuelan government engaged in minimal bilateral law enforcement cooperation with the United States.  Venezuelan authorities do not effectively prosecute drug traffickers, in part due to political corruption. Although the Venezuelan government, as a matter of policy, neither encourages nor facilitates illicit drug production or distribution, and although it is not involved in laundering the proceeds of the sale of illicit drugs, public corruption is a major problem in Venezuela that makes it easier for drug-trafficking organizations to operate.  Additionally, the Venezuelan government has not taken action against government and military officials with known links to FARC members involved in drug trafficking.” US Department of State: https://www.state.gov/documents/organization/268025.pdf)

OAS Democratic Charter action on Venezuela hinges on Vatican

In response to the US Senate resolution, Luis Almagro, Secretary General of the Organization of American States (OAS) says: “As long as the Vatican remains there we will definitely take no action to apply the Democratic Charter. If we are told that dialogue is over and we receive notice from the opposition and the Vatican about it, we will recommend the timely steps to take”. Talks between the Maduro regime and the Venezuelan opposition remain paralyzed since December, with the opposition charging that the government has reneged on agreements. Spain has said it continues to support efforts by its former President José Luis Rodríguez Zapatero to prop up talks here. More in Spanish: (Notiminuto: http://www.notiminuto.com/noticia/para-la-carta-democratica-todas-las-miradas-van-al-vaticano/#

Colombia’s FM says dialogue is the only way to face Venezuela’s great problems

Colombian Minister of Foreign Affairs María Angela Holguín has called for more dialogue between the Venezuelan government and the opposition, sponsored by former presidents José Luis Rodríguez Zapatero (Spain), Martín Torrijos (Panama) and Leonel Fernández (Dominican Republic), in order to face up to this nation’s "great difficulties." During a press conference in Madrid, after a meeting with his Spanish counterpart, Alfonso Dastis, Holguín said Rodríguez Zapatero, “has made a great effort” for dialogue in Venezuela. “Polarization in Venezuela is immense, but through dialogue a solution will be found to a crisis that worries many countries around the world; we, in Colombia, have it closer,” the minister said. (El Universal, http://www.eluniversal.com/noticias/daily-news/holguin-dialogue-the-only-way-face-great-problems_642023; http://www.eluniversal.com/noticias/daily-news/colombia-backs-dialogue-venezuela_641837)

 

European Foreign Service asks Venezuela to abide by its Constitution

Adrianus Koetsenruijter, Head of the South America Division of the European External Action Service (EEAS), has strongly recommended that the Venezuelan government must abide by the Constitution and made an appeal for renewed dialogue between government authorities and the dissent. “It has to do with respect for the Constitution, respect for fundamental rights and liberties, such as freedom of speech, opinion and association,” Koetsenruijter while speaking at the European Parliament Committee on Foreign Affairs. He reported that many Venezuelans have been incarcerated in the absence of proper conditions of transparency, and insisted that the government ought to observe the “basic principles of democracy”. (El Universal, http://www.eluniversal.com/noticias/daily-news/european-external-service-exacts-venezuela-observance-constitution_641647)

 

New charges brought against imprisoned Defense Minister

A military court here has brought new charges against former Defense Minister General Raúl Isaias Baduel, who was due to be freed today after serving seven years and eleven months for alleged corruption. He is now being accused of “treason”, and was forcibly transferred to the military court by the Military Counter-Intelligence agency. Baduel’ s legal counsel termed the charges “unfounded military criminal persecution”. Baduel had been on conditional freedom since mid-2015, but was detained again on January 12^th for allegedly violating the conditions of his parole. Baduel was Defense Minister under the late President Hugo Chavez and one of his closest advisors. He is considered to have been the key force in bringing Chavez back to power after he was ousted for 48 hours in April 2002, but signed a 2010 manifesto publicly calling on the late president to resign, thus becoming a key opposition figure. More in Spanish: (Infolatam: http://www.infolatam.com/2017/03/03/dictan-nueva-privativa-libertad-exministro-baduel-e-imputan-otros-cargos/
 

In search of Venezuelan pilots of a plane in flames in Honduras

Honduras police authorities are searching for the pilots of a plane with Venezuelan registration that entered the country on Monday morning and landed to the north of the nation. Honduran investigators suspect that the plane had been used to carry narcotics, in keeping with the standards of such flights related to drug trafficking, such as arriving in the early hours of the morning, landing on non-authorized areas and setting fire to the plane after the unloading, DPA cited. The aircraft with Venezuelan registration landed in a field in the city of Choloma, around 280 kilometers from Tegucigalpa. (El Universal, http://www.eluniversal.com/noticias/daily-news/search-venezuelan-pilots-plane-flames-honduras_641648)

 

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.