International Trade
Recent cargo arrivals:
- 30,000 tons of white corn aboard the DL MARIGOLD,
at Puerto Cabello, for state agency CUSPAL
- 30,000 tons of sugar aboard the MV POLA PACIFIC,
at Puerto Cabello, for state agency CUSPAL
- 1052 head of cattle aboard MV GLAMAR, at Puerto
Cabello, for state agencies.
- 330 containers aboard MV SAN ANTONIO from
Cartagena-Colombia, at Guanta port, bearing food, basic products and
medical supplies, for the GMAS government program. The same vessel
reportedly offloaded 3048 tons of food, 544 tons of medicine and 21 tons
of personal care products at La Guaira port,
- 677 tons of basic products, 297 tons of medical
products, and 95 tons of personal care products, aboard the CONTSHIP PRO,
at La Guaira port
Oil & Energy
Saudi’s Al Falih discusses oil supply cuts extension
with Venezuela, Kazakhstan
A
further extension for at least three more months beyond March is now being
discussed before OPEC meets again in November. The deal to curb output
propelled crude prices above US$ 58 a barrel in January but they have since
slipped back to a US$ 50 to US$ 54 range as the effort to drain global
inventories has taken longer than expected. “Both countries agreed that the option to extend the voluntary market
rebalancing effort, beyond the first quarter of 2018, would be considered in
due course as market fundamentals may dictate,” the ministry said in a
statement on Al Falih’s meeting with Kazakh Energy Minister Kanat Bozumbayev.
Al Falih, who has held his meetings in Astana, also met Venezuelan Oil Minister
Eulogio Del Pino and both ministers “agreed
on the importance of leaving all options open” including the possible
extension of the oil output cuts beyond the first quarter of 2018, if needed,
according to a separate statement. Del Pino on Friday said global oil
inventories remain too high and urged producers to look at exemptions granted
to countries such as Libya and Nigeria and the effect of those exemptions on
the market. Both ministers discussed oil market developments and how the
OPEC-led pact “is improving market
stability, contributing to the rebalancing of supply and demand, and drawing
down excessive inventories,” the Saudi ministry said. “They both shared an optimistic outlook on market fundamentals in 2018.”
(Gulf News: http://gulfnews.com/business/sectors/energy/saudi-s-al-falih-discusses-oil-supply-cuts-extension-with-venezuela-kazakhstan-1.2088370;
Bloomberg, https://www.bloomberg.com/news/articles/2017-09-10/saudi-arabia-venezuela-agree-to-leave-rebalancing-options-open;
AVN, http://www.avn.info.ve/contenido/venezuela-attends-kazenergy-eurasian-forum-kazakhstan)
Congressman Mike Coffman targets oil imports to slow
Maduro regime in Venezuela
A House
Republican introduced legislation last week to bar the U.S. from importing
petroleum products from Venezuela in a push to cripple the growing
authoritarian regime here. Rep. Mike Coffman, R-Colo., introduced the
Protecting Against Tyranny and Responsible Imports Act, or the PATRIA Act, that
would target Venezuelan President Nicolas Maduro after he stripped the countries
democratically elected national assembly of its power and authority. According
to the bill, the proposed ban on imports would last until the assembly's power
is fully restored. "The goal is to
change the conduct, the character of the Venezuelan government under Maduro. I
think the window is closing," Coffman told the Washington Examiner.
"They are dependent upon the export
of oil really to fund their government, and without that, they can't pay their
security forces." The Colorado Republican said passage of his bill is
time sensitive given the actions taken by the Maduro regime and the suffering
within the country, which he warns could become the next Cuban-style
dictatorship. Coffman said he has not discussed the bill with either the White
House or congressional leadership yet, but plans to do so soon. He estimates
that a ban on importing oil from Venezuela would have a US$ 10 billion impact
in lost income on the Venezuelan government. Despite criticisms of the ban and
how it could hurt affected Venezuelans, Coffman believes the ban would be much
preferred to the continued growth of the Maduro regime. All in all, Coffman is
optimistic the PATRIA Act ("patria" is Spanish for "nation")
could take hold and harm the regime, but he reiterates that time is of the
essence. (The Washington Examiner: http://www.washingtonexaminer.com/mike-coffman-targets-oil-imports-to-slow-maduro-regime-in-venezuela/article/2633691)
Economy & Finance
Maduro announces 40% increase in minimum wages, which
have shrunk 38% this year
President
Nicolas Maduro has announced another 40% increase in minimum wages here, the
second such increase in two months. This will bring the minimum wage to
slightly above US$ 40, if estimated at the highest official foreign exchange
rate. However, a report from TORINO Capital indicates that the real minimum wage
here has shrunk 38% so far, this year, and says the recent increase remains
below its projected 717% inflation scenario for this year. More in
Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/nacional/presidente-maduro-anuncio-aumento-de-40-del-salario-minimo;
El Universal, http://www.eluniversal.com/noticias/economia/gobierno-aumento-salario-minimo-integral-325544-bolivares_669170;
El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/torino-capital-afirma-que-salario-minimo-ha-caido-.aspx#ixzz4sSaamCQO)
Maduro regime radicalizes price controls
Claiming
that “all prices used today are over
1000% inflated”, President Nicolas Maduro has proposed to again set price
controls on over 50 basic products, including powdered and liquid pasteurized
milk, margarine, mayonnaise, mortadella, baking wheat, pasta, some fish species,
chicken, butter, canned sardines, hard white cheese, ham, soap, and oils. The
new regulation incorporates a system of “vigilantes” from local distribution
committees. Economist Luis Oliveros says: “The
government is radicalizing price controls, that´s the difference from previous
experiences.” More in Spanish: (El Nacional, http://www.el-nacional.com/noticias/economia/gobierno-radicaliza-control-precios-con-fiscales-los-clap_202976)
New economic measures by Maduro only benefit importers,
'bachaqueros'
The
economic measures announced by Nicolás Maduro on Thursday night are only aimed
at favoring the different mafia organizations controlling various "businesses" being conducted in
Venezuela. Among them are food importers and the so-called "bachaqueros," or resellers of
foodstuff and other consumer staples at higher prices than those regulated by
the Government or previously sold by retailers. Controlling prices is the same
recipe they have been using for years without any positive results, because
Venezuela’s "socialist"
inflation is the highest in the world. Price controls have resulted in
shortages. Such shortages are because domestic producers have decided to go out
of business for not being cost-effective. Those still in business are
struggling to survive trying to meet domestic demand, since they cannot make
new investments. This increases the dependency on imports of what the country
needs, while shortages is the best way to foster "bachaqueo" activities. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2442991&CategoryId=10717)
Venezuela has asked Russia for debt restructuring
Russian
Finance Minister Antón Siluánov has announced that Venezuela’s debt with his
country is being renegotiated both bilaterally and within the framework of the
Paris Club. Last August, Russian opposition leader Alexéi Navalni reported that
the Kremlin is financing the Maduro regime and has no intention of recovering
US$ 8.8 billion credits it has granted Venezuela. Also, in August Russian state
oil giant ROSNEFT advanced US$ 6 billion to Venezuela for oil supplies through
2019. More in Spanish: (El Universal: http://www.eluniversal.com/noticias/politica/rusia-negocia-reestructuracion-deuda-con-venezuela_669206)
Venezuela bond bull says sanctions may keep Maduro
paying
One of
the largest holders of Venezuelan bonds says U.S. sanctions are giving Nicolas
Maduro’s government greater incentive to pay its debts. The penalties imposed late
last month restrict the country’s ability to restructure its obligations,
meaning the president’s only option is to keep scraping up enough cash to keep
current on overseas notes. Maduro will put off default if possible because it
would be catastrophic for the oil industry and ultimately lead to a government
collapse, according to Bent Lystbaek, who oversees US$ 3.4 billion in
emerging-market debt at Danske Capital. “The
willingness to pay is extremely high and now they have further impetus to keep
the boat afloat,” Lystbaek said from Lyngby, Denmark. "Default would be the death sentence of
Maduro’s administration." Danske Capital is the 19th-largest holder of
Venezuelan bonds and 21st-largest holder of PDVSA debt as of June 30, according
to data compiled by Bloomberg. Here’s what else Lystbaek had to say about
Venezuelan politics and investment opportunities: “I don’t think Maduro could survive a default. It would be very, very
hard to export oil. Oil cargoes could be seized. Import compression is already
substantial and they couldn’t import anything then. Social unrest would
increase dramatically and I think that would be the end game.” “Now, they will turn to the Chinese and
Russians to muddle through. I don’t think they even consider the alternative. The
consequences of a default are devastating.” That said, “I don’t think they have a long-term chance.
The Chavistas are just living from one day to the next. It cannot go on forever
and the end day is moving closer and closer.” How would regime change impact
bondholders? “If there was a regime
shift, the opposition would go for a restructuring and they could be successful
and strike a deal. There’d be a radical shift in policy: they’d invite the IMF
and it would all be very, very positive … We could envisage a benign debt restructuring characterized by high
recovery rates substantially above the levels where low coupon, longer-dated
PDVSA bonds are trading today at 30 cents per dollar … In the case of a default, there will be a relatively swift transition of
power and a pretty swift debt restructuring along the lines of what we saw in
Ukraine in 2015.” Still, “there’s a
risk that at a later stage when free elections have been held and the
opposition regains power, they’ll say the loans weren’t legal and we annul all
deals done with the Russians and Chinese.” (Bloomberg: https://www.bloomberg.com/news/articles/2017-09-11/venezuela-bond-bull-says-sanctions-may-keep-maduro-paying-debt)
For
Venezuela’s true believers, the ultimate risky bet beckons
For years, investors in Venezuela and its state oil company, Petroleos de Venezuela SA, took comfort knowing that in the event of a default, there’d be assets
they could potentially seize to recoup some of their losses. But for bond
buyers with an even bigger appetite for risk, those willing to throw themselves
at the mercy of President Nicolas Maduro’s survival and track record of making
good on debt payments, there’s another option: Electricidad de Caracas, the state-run electric utility. The company’s US$ 650 million of bonds
coming due in April trade at just 67 cents on the dollar with a whopping 96%
yield, making them the riskiest notes maturing over the next year in the
world’s riskiest nation. And with good reason. In the event of default, PDVSA
bondholders, and possibly even owners of Venezuela’s sovereign debt, could lay
claim to the crude producer’s oil, tankers and U.S. refining unit. But ELECAR,
which PDVSA bought a decade ago, has nothing for overseas investors to seize.
(Bloomberg, https://www.bloomberg.com/news/articles/2017-09-08/for-venezuela-s-true-believers-the-ultimate-risky-bet-beckons)
Venezuela crisis raises talk of ‘odious debt’ doctrine
An
archaic, often-mentioned but never-invoked legal doctrine called “odious debt” could get tested for the
first time in history in Venezuela should the current regime be ousted from
power. The concept of ‘odious debt’
has gained in prominence and been called a doctrine despite never being
enshrined in any sovereign or international law, or having been in practice
invoked by any country restructuring its debts after the previous regime has
been ousted. But some legal experts think that the move by Venezuela’s
government led by Nicolás Maduro to scrap its National Assembly for a more
supine Constituent Assembly this summer, followed by the US government
unveiling sanctions on the country, could open an unusually fertile environment
for the legal gambit. If the current regime is ousted, a new government could
invoke odious debt as an excuse to refuse to recognize any new loans incurred
by the Constituent Assembly. Given Venezuela’s lack of market access that would
probably primarily affect any new loans extended by the likes of China or
Russia, not existing bondholders. (Financial Times: https://www.ft.com/content/fa6850cc-96c3-11e7-b83c-9588e51488a0)
OP-ED: Venezuela is about to ditch the dollar
President
Nicolas Maduro said Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next
week. He will look to use the weakest of two official foreign exchange regimes
(essentially the way Venezuela will manage its currency in relation to other
currencies and the foreign exchange market), along with a basket of currencies.
Maduro was referring to Venezuela’s current official exchange rate, known as
DICOM, in which the dollar can be exchanged for 3,345 bolivars. At the
strongest official rate, one dollar buys only 10 bolivars, which may be one of
the reasons why Maduro wants to opt for some of the weaker exchange rates. He
hinted that the country would look to using the yuan instead, among other
currencies. “If they persecute us with
the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the
euro,” Maduro also said. (Lew Rockwell: https://www.lewrockwell.com/2017/09/no_author/venezuela-ditch-dollar/)
Politics and International Affairs
France says Venezuela talks to take place Wednesday,
warns of sanctions
Venezuela’s
government and opposition will hold a round of talks in the Dominican Republic tomorrow,
France’s foreign minister said today, warning Caracas’s leadership that it
risked EU sanctions if it failed to engage in negotiations. “I was happy to learn that dialogue with the
opposition would restart tomorrow in the Dominican Republic,” Jean-Yves Le
Drian said in a statement after meeting his Venezuelan opposite number, Jorge
Arreaza Montserrat in Paris. He said the meeting would be under the auspices of
Dominican President Danilo Medina and former Spanish prime minister José Luis
Rodriguez Zapatero. Maduro routinely calls for dialogue with the opposition,
but his adversaries see dialogue as a stalling mechanism that burnishes the
government’s image without producing concrete results. A dialogue process
backed by the Vatican in 2016 did little to advance opposition demands, which
include release of political prisoners and respect for the opposition-run
congress. Many Maduro critics believe opposition leaders were duped in that
dialogue process, and have grown suspicious of former Zapatero as an intermediary.
“This (dialogue) is good news and I hope
that it will rapidly lead to concrete steps on the ground.” Le Drian said. Like
fellow-EU member Spain a few days earlier, Le Drian also warned that if the
situation continued there would be consequences. “I reminded him of the risk of European sanctions and the need to
rapidly see evidence from Venezuela that it is ready to relaunch negotiations
with the opposition and engage in a sincere and credible process.”
(Reuters: https://www.reuters.com/article/us-northkorea-sanctions-treasury/treasurys-mnuchin-china-may-face-new-sanctions-on-north-korea-idUSKCN1BN1P1;
The New York Times: https://www.nytimes.com/reuters/2017/09/12/world/europe/12reuters-venezuela-politics-france.html)
Venezuela sets Oct. 15 for regional vote favoring
opposition
Venezuela’s
government has set a date for long-delayed gubernatorial elections that the
opposition is heavily favored to win. Electoral authorities say voting in all
23 states will take place Oct. 15. Monday’s announcement came a day after the
main opposition alliance held primaries to select candidates to run against
some of socialist President Nicolas Maduro’s closest allies. Francisco Castro,
chairman of the Primaries Commission within the Democratic Unity opposition
alliance said the primaries were “massively”
attended “by hundreds of thousands of
citizens”. Legislator Henry Ramos Allup said that participation in the
primaries being to select single candidates for the gubernatorial elections
next month is “above expectations.” The
decision to participate in the elections had sparked tensions within the
opposition since the government seated a special assembly to rewrite
Venezuela’s constitution amid allegations that the elections to choose
delegates were marked by fraud. The gubernatorial elections were supposed to
have taken place last year but were scrapped as the country’s economic problems
mounted and polls indicated Venezuelans heavily favored removing Maduro before
the end of his term. (The
Washington Post: https://www.washingtonpost.com/world/the_americas/venezuela-sets-oct-15-for-regional-vote-favoring-opposition/2017/09/11/42f958a4-9764-11e7-af6a-6555caaeb8dc_story.html; Latin American Herald
Tribune, http://www.laht.com/article.asp?ArticleId=2443067&CategoryId=10717; and more in Spanish: Noticiero
Venevisión, http://www.noticierovenevision.net/noticias/politica/elecciones-de-gobernadores-se-realizaran-el-15-de-octubre; http://www.noticierovenevision.net/noticias/politica/oposicion-venezolana-voto-en-primarias-sin-incidentes-ni-aglomeraciones; El Universal, http://www.eluniversal.com/noticias/politica/cne-fija-elecciones-gobernadores-para-octubre_669719; http://www.eluniversal.com/noticias/politica/oposicion-anuncia-candidatos-entidades_669550; Agencia Venezolana de
Noticias; http://www.avn.info.ve/contenido/comicios-regionales-ser%C3%A1n-15-octubre; El Mundo, http://www.elmundo.com.ve/noticias/actualidad/politica/elecciones-de-gobernadores-se-realizaran-el-15-de-.aspx; El Nacional, http://www.el-nacional.com/noticias/oposicion/mud-anuncio-los-nombres-los-candidatos-las-regionales_203013)
U.N. rights boss sees possible "crimes against humanity" in Venezuela
The United Nations human rights chief said on Monday that
Venezuelan security forces may have committed crimes against humanity against
protesters and called for an international investigation. “My investigation suggests the possibility that crimes against humanity
may have been committed, which can only be confirmed by a subsequent criminal
investigation,” Zeid Ra‘ad al Hussein told the U.N. Human Rights Council.
He said the government was using criminal proceedings against opposition
leaders, arbitrary detentions, excessive use of force and ill-treatment of
detainees, in some cases amounting to torture. However, Venezuela’s Foreign
Minister Jorge Arreaza dismissed the allegations as "baseless" and demanded that Mr Zeid "cease his aggression against Venezuela". He also said that the
report by the UN Office for Human Rights was "riddled with lies". He accused protesters of using firearms
and “home-made weapons” against
security forces, but noted that the last death was on July 30. “Our country is now at peace,” he added.
Diego Arria, who was Venezuela’s ambassador to the United Nations in New York
from 1991 to 1994, told a separate Geneva event organized by activists and
action group UN Watch that Venezuela should be referred to the prosecutor of the
International Criminal Court. “I am
convinced that the killing in the streets equates to crimes against humanity,”
he said. The Hague-based court defines such crimes as including torture,
murder, deprivation of liberty, sexual violence and persecution, he said.
(Reuters: https://www.reuters.com/article/us-venezuela-politics-un/u-n-rights-boss-sees-possible-crimes-against-humanity-in-venezuela-idUSKCN1BM0UI;
BBC News: http://www.bbc.com/news/world-latin-america-41227441;
Al Jazeera: http://www.aljazeera.com/news/2017/09/venezuela-warns-crimes-humanity-170911210836001.html)
OAS begins hearings this week on crimes against
humanity in Venezuela
The OAS
will begin hearings this week to determine whether the Venezuelan regime has
committed “crimes against humanity”,
and whether there is any basis to take the case to the International Criminal
Court. The hearings will be run by former ICC Prosecutor Luis Moreno Ocampo,
who has been specially appointed by OAS Secretary General Luis Almagro,
Hearings have been scheduled with NGO and Armed Forces representatives. More in Spanish. (El Universal, http://www.eluniversal.com/noticias/politica/oea-inicia-jueves-audiencias-por-crimenes-lesa-humanidad-venezuela_669711)
Pope Francis: United Nations must help in Venezuela
crisis
Aboard
his overnight flight from Colombia to Rome Sunday, Pope Francis touched on the
dire political and human rights crisis that continues to unfold in Venezuela,
stating that the U.N. needs to be involved in reaching a solution. “It seems that it's a very hard thing, and
the most painful is the humanitarian problem, the many people who escape or
suffer...we must help to resolve it in any way (possible). I think the U.N.
must also make itself felt there to help,” the Pope said Sept. 10. “I think that the Holy See has spoken
strongly and clearly,” he said, also mentioning the many times he has
spoken about the situation in Venezuela during his Angelus addresses.
Journalists also asked Pope Francis about President Nicolás Maduro’s
conflicting rhetoric, in particular his claim to be “with” Pope Francis, while at the same time speaking out violently
against the bishops. About this, Francis replied: “What President Maduro says, he can explain. I don't know what he has in
his mind…” The Pope also mentioned the extensive work of the Holy See to
promote dialogue in the country, including the agreement to send a group of
four ex-presidents as facilitators in a meeting between the Venezuelan
government and the opposition Oct. 30, 2016.
The group was made up of former Colombian president Ernesto Samper
Pizano, the secretary general of UNASUR (the Union of South American Nations);
José Luis Rodríguez Zapatero of Spain; Martín Torrijos of Panama; and Leonel
Fernández of the Dominican Republic. The Vatican also sent Archbishop Claudio
Maria Celli to participate as a nuncio of the Holy See. Pope Francis said that
after “speaking with the people,” the
Holy See has also spoken to Venezuela in a private manner, possibly referring
to a private meeting that occurred between him and President Maduro at the
Vatican last October. The country was on Pope Francis' mind throughout his
visit to Colombia, beginning with the flight over the nation. As his plane took
off for Bogota, he greeted journalists, telling them they were going to fly
over Venezuela and asking them “to pray
so there can be dialogue, that there will be stability, with dialogue with
everyone.” He also met briefly with five bishops from Venezuela present in
Colombia for his visit, welcoming them to the sacristy after celebrating Mass
in Bogota Sept. 7. Among the prelates Francis met were Cardenal Jorge Urosa,
Archbishop of Caracas; Cardenal Baltazar Porras, Archbishop of Mérida; Jesús
González de Zárate, Auxiliary Bishop of Caracas; Bishop Mario Moronta of San
Cristóbal; and Bishop José Luis Azuaje of Barinas, who is also President of the
Latin American branch of CÁRITAS. (Angelus News: http://angelusnews.com/articles/pope-francis-united-nations-must-help-in-venezuela-crisis)
The Economist Intelligence Unit Country Report:
Venezuela, August 2017
The
results of the July 30th election and the events in the subsequent days have prompted
a revision to our baseline forecast scenario. We had previously expected the
government to hold the December 2018 presidential election as scheduled, under growing
pressure from the international community, with the opposition well-placed to
win power. However, we no longer believe that this will occur. Maduro seems little
concerned about the ever more damning criticism from the international community,
with even the veiled threat of US economic sanctions proving no deterrent to
the president's plans for constitutional reform and consolidation of power. We
no longer believe that he will feel pressured into holding an election that he
risks losing. However, we do not expect that he will manage to cling to power
for our entire 2017-21 forecast period, on the basis that international oil
prices are not expected to rise to such a level to provide the funds to ease
chronic consumer goods shortages. We therefore believe that a transition involving
the opposition is likely. Given the highly volatile political situation, accurately
forecasting when and how this will occur is challenging. We believe that there
are two main ways in which a transition of power might play out. The most
likely scenario (to which we attach a 60% probability) involves Maduro muddling
through for the remainder of 2017 and much of 2018, running down reserves to
pay external debt repayments, but being unable to avoid a debt default later in
2018 or in 2019. This would be likely to bring about Maduro's demise, as his
allies in government and the military would be hit financially, and remaining
popular support from his constituents (chiefly the poor and public-sector workers)
would fade owing to heightened economic hardship. At the same time, Maduro's
ability to muddle through until 2019 will be limited, and we view the main risk
to our newly revised, baseline forecast to be a military coup at some point
during the remainder of 2017 or in 2018, prompted by a worsening of the
economic and humanitarian crisis. We believe that there is a 40% risk of this
occurring. (FULL REPORT ATTACHED)
OP-ED: China, Russia increase leverage in Venezuela
amid crisis, by Evan Ellis
The
most important question regarding the unfolding crisis in Venezuela is not
whether U.S. sanctions and international pressures will force its populist
regime to restore democracy. That will not happen anytime soon. Rather, it is
whether the Venezuelan regime will be able to successfully transition power to
a more rationally managed authoritarian government, backed by Russian and
Chinese resources, that protects those who have systematically looted the
country, while providing a sufficient façade of democratic process and
compromise that a weary and distracted international community lends it
legitimacy. As the crisis in Venezuela has deepened, Russia and China have
leveraged the Maduro regime’s growing international isolation, financial needs,
and political receptivity, to increasingly control the country’s finances, oil,
and markets. While Russian and Chinese companies in fact compete in Venezuela
in these areas, their strategic and business interests arguably coincide in the
survival of an anti-U.S. regime near the U.S., granting its benefactors
privileged access to the country and its petroleum and mineral wealth. Of the
two extra-hemispheric actors, it is the PRC which holds the greatest leverage
over the fate of the Venezuelan regime, particularly as its access to
conventional financial markets and oil sales are reduced by U.S. sanctions. The
PRC has the money to lend, and indeed has already lent an estimated US$ 60.2
billion to the regime during the past decade. In addition, the PRC controls the
financial instruments in Venezuela key to the regime’s survival. China’s CITIC
bank currently manages PDVSA’s current accounts for its oil transactions, after
the latter moved them from Portugal’s Banco Espiritu Santo (BES), probably to
protect those accounts from claimants in lawsuits against the company. More
importantly, China Development Bank manages the principal lines of credit for
Venezuela’s “loans-for-oil”
contracts, and thus controls the regime’s main vehicle for obtaining consumer
goods for its supporters, and resources for building the petroleum,
electricity, and transport infrastructure that the regime requires to bring the
considerable deposits of heavy oil in the Orinoco tar belt and bring it to
market, to pay its bills. During a recent meeting of the China-Venezuela
High-Level Mixed Commission, the two nations signed 22 agreements involving US$
2.7 billion in projects, including construction of the Jienyang refinery to
process Venezuelan heavy oil in the PRC. While the PRC has been in talks with
individual members of the Venezuelan opposition, China neither needs to turn
against the current Venezuelan regime, and indeed, it is strongly in its
interest not to do so. Because most Chinese loans to Venezuela over the past
decade have been short-term and repaid on time, and because China has become
stingier with credit as the Venezuelan crisis has deepened, its outstanding
debt exposure in Venezuela may be as little as US$ 10-20 billion, hardly worth
risking its relationship with a strategically useful regime sitting on top of
300 billion barrels of recoverable oil. Moreover, the recent successful seating
of the Venezuelan constituent assembly raises the possibility that the regime
could reform the constitution, permitting it to hand over even greater portions
of Venezuela’s oilfields and other assets, in return for needed cash. Like
China, Russia will also continue to support the Maduro regime or its
replacement, for the same reasons as the PRC will, albeit with more limited
resources and fewer financial and commercial instruments for doing so. In the
oil sector, while the more commercially-oriented Russian oil firms such as
LUKOIL have long-since pulled out of Venezuela, the state-owned firm ROSNEFT,
led by former Russian senior intelligence operative and sometimes Putin ally
Igor Sechin, has sunk an estimated US$ 6 billion into the country since 2010,
including over US$ 1 billion in 2017 alone. As other companies have pulled out
of Venezuela, ROSNEFT has negotiated to leverage Venezuela’s need for cash to
gain expanded stakes in oil joint ventures such as PETROMONOGAS, PETROVICTORIA,
and PETROMIRANDA. As the situation in Venezuela deteriorates, both Russia and
China both have a strong interest in providing resources to ensure the
continuation of a friendly, anti-U.S. regime in Caracas, but their resources
are not infinite. In addition, each must move cautiously to avoid that the
United States perceive hostile intent in their maneuverings in Venezuela, and
attempt to block them. Moreover, both extra-hemispheric actors must use their
leverage to advance a transition of power in the country toward a leadership at
least minimally capable of managing the Venezuelan economy and oil sector in a
sustainable fashion. Yet they must not pressure the regime so hard that it
collapses, and the transition must give a sufficient appearance of legitimacy
and legality so that the U.S. and international community accepts the
domination over Venezuelan assets that Russia and China achieve. The U.S. is
right to impose escalating sanctions on Venezuela, yet as they do so, they must
also deny Russia and China from leveraging their position as an alternative
source of capital and support, to expand their own positions in the country.
One of the few worse problems than a hostile, unstable Venezuelan regime
flirting with Russia and China, is a hostile, stable one economically and
politically dominated by them. (NEWSMAX: https://www.newsmax.com/EvanEllis/venezuela-crisis-china-russia/2017/09/07/id/812212/)
Maduro makes whirlwind visit to the Middle East
President
Nicolas Maduro arrived Saturday night in Kazakhstan’s capital of Astana, to
attend an Organization of Islamic Cooperation (OIC) summit, trying to end to
his regime’s diplomatic isolation, strengthen its financial independence and
avoid Venezuela’s possible economic collapse due to a new round of US sanctions
targeting his government-issued bonds. He met with Iranian President Hassan
Rouhani and Turkey’s Recep Tayyip Erdogan. On Sunday night, he stopped in
Algiers for a 24-hour visit on his way back from Astana, but it was not clear
whether he met with his 80-year old counterpart Abdelaziz Bouteflika, and has
now been reported to be back in Caracas. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2443064&CategoryId=10717); and
more in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/internacional/presidente-maduro-y-lideres-turcos-evaluaron-relaciones-bilaterales; El Universal, http://www.eluniversal.com/noticias/politica/nicolas-maduro-llega-argelia-para-visita-horas_669549;
Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/presidente-maduro-regresa-venezuela-luego-gira-internacional-diplomacia-paz;
El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/presidente-maduro-finalizo-visita-oficial-en-argel.aspx)
Britain’s Theresa May meets with Venezuelan democratic
leaders
British
Prime Minister Theresa May has met with the President of Venezuela’s National
Assembly, Julio Borges, who is on a tour of Europe to present this nation’s
political and humanitarian crisis.
May
welcomed Borges and expressed “firm
support for democracy and human rights in Venezuela”, the legislator
reported. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/politica/primera-ministra-de-inglaterra-se-reunio-con-julio-borges)
Venezuela is aiding Cuba, Antigua and Barbuda after
hurricane Irma
President
Nicolas Maduro has ordered his government to prepare an assistance plan for
Cuba following damages caused by hurricane Irma. Foreign Minister Jorge Arreaza
also announced that Venezuela is sending humanitarian aid, supplies and
medication to Antigua and Barbuda. He said two Venezuelan aircraft would
participate, and seek material from other nations. 34 rescue specialist will be
sent, with medical and paramedical teams. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/internacional/venezuela-envia-ayuda-humanitaria-a-antigua-y-barbuda-tras-paso-de-irma;
Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/venezuela-env%C3%ADa-ayuda-humanitaria-antigua-y-barbuda;
El Universal, http://www.eluniversal.com/noticias/politica/venezuela-envio-ayuda-humanitaria-antigua-barbuda_669135;
El Nacional, http://www.el-nacional.com/noticias/gobierno/gobierno-venezolano-prepara-plan-apoyo-para-cuba-tras-paso-irma_202987)
ODEBRECHT denies paying Venezuela politician US$ 100
million
Scandal-hit
Brazilian construction company ODEBRECHT denied accusations it paid US$ 100
million to Venezuelan Socialist Party Vice President Diosdado Cabello, as
alleged by the country’s fugitive chief prosecutor. In a statement, the company
said: "After conducting a comprehensive
search of its legacy systems and of the statements given by its former team
members who collaborated in (investigations), Odebrecht denies the accusations
that it made a $100 million payment to ... Cabello." Chief Prosecutor
Luisa Ortega had said the payment was made through Spanish company TSE ARIETIS.
ODEBRECHT denied payments to the company. (Reu https://af.reuters.com/article/commoditiesNews/idAFL2N1LO0UPters)
11 died in shootout with soldiers in Venezuela's
southeast
Eleven
people died in an exchange of gunfire with soldiers in Venezuela's southeast,
where criminal gangs dispute control of gold mines, the national prosecutor's
office said on Monday. The gunfight occurred on Sunday in the town of Tumeremo
when a patrol following up reports of an "armed organization" in the area were "surprised by a group of unidentified
individuals," the office said in a statement. The violence followed a
similar confrontation on August 14 between a suspected gang and a mixed patrol
of soldiers and police, in the nearby town of El Callao. Eight people died in
that incident. The region has a reputation for lawlessness and violence, fueled
by the mining and trading in gold. (AFP: https://sg.news.yahoo.com/11-die-shootout-soldiers-venezuelas-southeast-234116466.html)
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.
