June 21, 2018

International Trade

Over 2,000 tons of food and medical supplies have arrived at Guanta port

2,382 tons of food, medical supplies and basic products were offloaded at the port of Guanta in Eastern Venezuela, in 270 containers aboard the CFS PALAMEDES, from Panama. Products include wheat flour, spaghetti, surgical gloves, medical kits among others. The shipment also included supplies and equipment for the petroleum industry. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=41128)

 

Economy & Finance

Maduro regime deploys soldiers to markets to check prices

The Maduro regime has deployed soldiers to almost 100 food markets in efforts to counter an "economic war" it says is being waged against it. President Nicolás Maduro ordered the measure, arguing that sellers were charging over the odds for price-controlled items. Venezuela has the highest inflation in the world and there are severe shortages of basic food items. Many Venezuelans report going hungry as they struggle to feed themselves. Maduro blames international sanctions and "greedy businesspeople" for the shortages. His critics say it is his government's policies and those of his predecessor, Hugo Chávez, who ruined the country's economy. President Maduro says that "the take-over of the municipal markets has been a huge success …A great number of mafiosi, wholesalers, thieves and capitalists have been arrested," he said of the markets. "We found everything there, even prostitution." Members of the army and of the National Guard patrolled food stalls across the country. Armed guards were posted at the entrances of the markets. The minister for industry and production, Tarek El Aissami, said they had found "[price] speculation, hoarding and fraudulent price manipulation" at the markets. Aissami was recently named to the newly created post, which is part of President Maduro's plan for a "rebirth" of the Venezuelan economy. The new minister was placed under US sanctions last year after being declared a "Specially Designated Narcotics Trafficker" by the US Treasury. He dismissed the allegations as an "imperialist aggression".  (BBC News: https://www.bbc.com/news/world-latin-america-44561089)

 

Maduro boosts minimum wage as inflation soars

Venezuela’s president says he is again raising the minimum wage, though it still will be below the equivalent of US$ 2 a month as inflation soars in the crisis-stricken country. President Nicolas Maduro made the announcement Wednesday before a cheering crowd of workers. It is the fourth such increase this year. The boost brings the monthly pay most Venezuelan workers bring home to little more than 5 million bolivars. That is about US$ 1.85 on the commonly used black market exchange. Maduro last raised the minimum wage in April, shortly before officials declared him the winner of a contested presidential election earning him a second term. (The Washington Post: https://www.washingtonpost.com/world/the_americas/venezuela-president-boosts-minimum-wage-as-inflation-soars/2018/06/20/c7c83b5c-74e7-11e8-bda1-18e53a448a14_story.html; Reuters: https://uk.reuters.com/article/uk-venezuela-economy/inflation-hobbled-venezuela-triples-minimum-wage-to-1-14-month-idUKKBN1JH02Z)

 

Venezuela burns US$ 1.77 billion in reserves in a month

Venezuela's international reserves fell US$ 1.765 billion from May 15 to June 15. On May 15, Venezuela's Central Bank reported that it held US$ 10.216 billion.  Venezuela's Central Bank reported that on June 15, it only held US$ 8.451 (after falling US$ 401 million overnight). That US$ 8.451 million is the lowest that Venezuela's reserves have been since September 1990. The US$ 401 million that Venezuela lost overnight on June 15 isn't the largest fall this month.  On June 8, Venezuela's reserves went down US$ 507 million in one day too. Venezuela's reserves hit a high of US$ 42.464 billion on January 7, 2009, but since then the government has liquidated most of its gold reserves and anything else it could sell.  To put Venezuela's US$ 8.45 billion in reserves in perspective, neighboring Colombia has US$ 47.5 billion.  Brazil has US$ 383 billion.  Argentina has US$ 50.8 billion.  Uruguay has US$ 18 billion.  Even Cuba reportedly has US$ 12.8 billion. Last month Venezuela pulled US$ 500 million from its Reserve Tranche Position at the IMF to redeem its gold from a securitized loan.   That US$ 500 million in gold showed up in the Central Bank's April gold balance, increasing Venezuela's gold holdings to US$ 6.88 billion.  That US$ 6.88 billion is down from US$ 21.269 billion in gold that Venezuela held in September 2011.  Venezuela also borrowed another US$ 70 million from its SDR Holdings account in May, leaving it almost empty.  Venezuela has now borrowed US$ 3.5 billion of its SDR allocation from the IMF. It is important to point out that this rapid destruction of reserves is happening while the country is not paying anything on most of its US$ 65 billion in bond debt -- on which, Venezuela and PDVSA would have had to pay over US$ 10 billion this year had they not defaulted.  (Caracas Capital: RMDallen@CaracasCapital.com)

 

Venezuela's creditors working on eventual debt restructuring

Venezuela’s public and private creditors are working on how to one day restructure its debt, though U.S. sanctions make that impossible for now, a source close to the Paris Club of government creditors said on Wednesday. Crippled by a hyperinflationary economic crisis, the cash-strapped Venezuelan government and state oil company PDVSA are in default on most of their $60 billion in outstanding bonds. Including debt owed to other governments and official lenders, the nation’s foreign debt is estimated to stand at US$ 140 billion, with China owed US$ 20-25 billion and Paris Club creditors US$ 5.8 billion. However, any restructuring is all but impossible for now because of U.S. sanctions under which that could be seen as illegal financing by Washington. Any future restructuring is complicated by the fact that some Venezuelan sovereign bonds and no PDVSA bonds are covered by so-called collective action clauses, meaning a minority of bondholders could have scope to hold out in a restructuring deal. “The complexity of a Venezuelan debt restructuring is an issue, the day that it happens. It will be very, very complicated,” the source said. (Reuters: https://www.reuters.com/article/us-venezuela-debt/venezuelas-creditors-working-on-eventual-debt-restructuring-source-idUSKBN1JG3CA)

 

PETRO currency superintendent ousted

According to information published by Carlos Vargas himself on June 20, the official has been dismissed as Superintendent of Cryptoactives and Related Activities and will return to occupy his seat in the illegal National Constituent Assembly (ANC). Using social networks, Vargas greeted Joselit Ramírez, saying he will be taking the reins of the institution. Vargas was appointed superintendent as of the creation of this government entity in December 2017. He claimed on Twitter that he has been summoned to the ANC to defend the PETRO. Although there has not been an official confirmation, Vargas said goodbye to the institution and the position through this social network. Analysts believe Vargas was removed when the PETRO project failed to meet its target objectives. More in Spanish: (El Nacional, http://www.el-nacional.com/noticias/economia/destituido-responsable-implantar-petro_240881)

 

Maduro taps CITGO Engineer Ortega as new central bank chief

Venezuela on Tuesday tapped industrial engineer Calixto Ortega as the country’s new central bank chief as it struggles amidst a hyperinflationary collapse of the national economy. Ortega has served as vice president of finance at CITGO, a U.S. refiner owned by Venezuelan state oil company PDVSA. He replaces outgoing central bank chief Ramon Lobo, who has been leading an effort to cut three zeroes off the country’s bolivar currency and working to rein in consumer price inflation that has unofficially neared 25,000% per year. Ortega was designated by the country’s all-powerful Constituent Assembly, which is 100% controlled by allies of the ruling Socialist Party. He is the hird Venezuelan central bank chief to be named in less than two years. (Reuters, https://www.reuters.com/article/venezuela-cenbank/update-1-venezuela-taps-citgo-engineer-ortega-as-new-central-bank-chief-idUSL1N1TL25R)

 

New US$ 100 million lawsuit filed against Venezuela in US Federal Court

Another ICSID award recipient has just filed a lawsuit against Venezuela to try to collect it’s US$ 100 million award. The VESTEY GROUP, a British food products, cattle and sugar cane business founded by Lord Vestey and his younger brother Sir Edmund in 1895, filed to register and enforce its $102 million ICSID expropriation award against Venezuela in U.S. Federal Court in D.C. This marks the second ICSID award enforcement filed against Venezuela this month, after TENARIS filed on June 9 to enforce its US$ 234 million. VESTEY Had begun its operations in Venezuela in 1909 and by the time of expropriation in 2005, they operated a cattle ranching business with 290,000 hectares of land with over 100,000 heads of livestock. VESTEY originally filed for ICSID arbitration in March of 2006 after then President Chavez expropriated VESTEY's cattle and lands in Venezuela by sending troops to seize them. VESTEY stayed the arbitration after they reached an agreement with Chavez in exchange for giving Chavez the 32,000 acre El Charcote ranch and the 106,000-acre San Pablo Paeno ranch.  In exchange, Chavez allowed VESTEY to retain ownership of 9 of their other ranches. He ended up reneging on the deal and in 2011, expropriated the rest of Vestey's land and cattle.  After VESTEY was unable to get paid, the ICSID arbitration was taken off ice in 2012 and went forward. (Caracas Capital: RMDallen@CaracasCapital.com)

 

Politics and International Affairs

Maduro ally named leader of Venezuela's ruling assembly

Venezuela's all-powerful Constituent Assembly on Tuesday elected Diosdado Cabello as its new president, a month after he was slapped with US sanctions. Cabello, deputy leader of the ruling Socialist Party, was elected by a show of hands of the 545-member Assembly and replaces Delcy Rodriguez, a former foreign minister who President Nicolas Maduro last week appointed as his vice-president. Rodriguez had headed the all-powerful, pro-Maduro Constituent Assembly since its inception in 2017. "I swear I will do what I have to defend the Constitution....I swear I will accompany our beloved brother President Nicolas Maduro in constructing Bolivarian socialism," Cabello said as he was sworn-in. A former speaker of parliament, Cabello was targeted by US sanctions along with his wife and brother. US Treasury Secretary Steven Mnuchin, who announced the sanctions on May 18, said "figures like Diosdado Cabello....exploit their official positions to engage in narcotics trafficking, money laundering, embezzlement of state funds and other corrupt activities." The US Treasury also accused Cabello of working with other blacklisted individuals to move narcotics from Venezuela to Europe via the Dominican Republic, while moving cash back to Venezuela, as well as to Panama and the Bahamas. Swiss and EU authorities had already blacklisted Cabello earlier this year, citing grave human rights abuses. The 2017 vote to elect the Constituent Assembly was boycotted by Venezuela's opposition and not recognized by much of the international community, as it effectively usurped the powers of the opposition-dominated parliament. (The Daily Star: https://www.thedailystar.net/backpage/maduro-ally-named-leader-venezuelas-ruling-assembly-1592977; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2459252&CategoryId=10717; Reuters, https://www.reuters.com/article/venezuela-politics/venezuela-constituent-assembly-elects-cabello-as-its-new-leader-idUSL5N1SY002; https://www.reuters.com/article/us-venezuela-politics/veteran-chavez-ally-cabello-to-lead-venezuelan-constituent-assembly-idUSKBN1JF32Q; AVN, http://www.avn.info.ve/contenido/cabello-appointed-president-anc-and-saab-front-truth-commission; Bloomberg, https://www.bloomberg.com/news/articles/2018-06-19/venezuela-constituent-assembly-names-cabello-as-new-president)

 

Maduro regime sends 'coup plotters' to jail

Five members of Venezuela's armed forces and three civilians were imprisoned today, convicted of taking part in a 2015 coup plot against President Nicolas Maduro, a prisoners' rights group said. A military court handed down sentences of between three and six years, the group Foro Penal announced. Maduro publicly denounced a coup plot in February 2015 that he said was backed by sectors of the opposition and financed by the US government. The socialist president referred to it as the "blue coup" – a reference to the color of Venezuela's air force uniform, saying the plot had been "dismantled." At the time, the socialist president said the plot involved bombing the Miraflores presidential palace, other government buildings and the headquarters of the state television. Another rights group, Venezuelan Justice, said Wednesday that around 150 members of Venezuela's armed forces are in prison "for political reasons." (Jamaica Observer: http://www.jamaicaobserver.com/latestnews/Venezuela_sends_coup_plotters_to_jail)

 

European Union approves more sanctions on Maduro regime officials

The 28-nation European Union has agreed to impose additional sanctions on Venezuelan officials “linked to organizing” the snap presidential election held here on May 20th, which most of the international community consider a sham. Nations within the Union must apply the sanctions individually. More in Spanish: (El Universal, http://www.eluniversal.com/politica/12845/la-ue-da-luz-verde-a-nuevas-sanciones-contra-responsables-venezolanos)

 

Spain’s King Felipe VI calls for joint Venezuela policy during Trump meeting

Spain’s King Felipe VI has called for a “joint effort” to restore democracy to Venezuela during his state visit yesterday with US President Donald Trump. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/internacional/rey-felipe-sostuvo-encuentro-con-trump-para-unir-esfuerzos-y-resolver-crisis-de-venezuela)

 

Colombia’s president-elect will not appoint Ambassador to Venezuela

Colombia’s president-elect, Ivan Duque, says he will not appoint an Ambassador to Venezuela as long as Nicolás Maduro – whom he considers “illegitimate”- remains in office. He will maintain “consular relations”. More in Spanish:  (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/internacional/presidente-colombiano-ivan-duque-no-enviara-embajador-a-venezuela; El Universal, http://www.eluniversal.com/politica/12740/presidente-electo-de-colombia-presionara-diplomaticamente-por-elecciones-libres-en-venezuela; El Nacional, http://www.el-nacional.com/noticias/mundo/duque-enviara-embajador-venezuela-por-gobierno-ilegitimo-maduro_240705)

 

2 sentenced in US$ 100 million Venezuela money laundering scheme in Miami

Luis Diaz Jr. and Luis Javier Diaz were sentenced to eight months and four months in prison, respectively, for their roles in funneling more than US$ 100 million through the U.S. financial system on behalf of various foreign businesses based predominantly in Venezuela, according to Geoffrey S. Berman, the United States Attorney for the Southern District of New York.  They did so through their Miami-based import/export company, which, for nearly five years, the defendants also used to operate an unlicensed money transmitting business. Luis Diaz Jr. and Luis Javier Diaz were convicted of operating an unlicensed money transmitting business and international money laundering following a jury trial in November 2017 before U.S. District Judge William H. Pauley III, who also imposed today’s sentences. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2459251&CategoryId=10717; Reuters, https://www.reuters.com/article/us-venezuela-usa-crime/florida-men-sentenced-to-prison-for-laundering-funds-from-venezuela-idUSKBN1JF394)

 

Singapore is world’s safest destination, Venezuela most lawless — Gallup report

Singapore, Norway and Iceland have emerged as the safest destinations in a new law and order report from Gallup, which polled residents about how secure they feel in their respective countries. According to the results of the Gallup poll, which surveyed 1,000 adults in 142 countries, the top 10 safest places can be found across Asia and Western Europe. At the other end of the index, however, only 17% of Venezuelans said they feel safe walking alone at night, placing the country at the bottom of the heap for the second consecutive year, after war-torn Afghanistan and South Sudan. For the report, Gallup asked respondents four yes or no questions and compiled the responses into an index score for each country. Countries are scored on a 100-point scale. Participants were asked if they had confidence in their local police; felt safe walking alone at night; if they had money or belongings stolen in the last year; and if they had been assaulted or mugged in the last year as well. Globally, the survey reveals that the majority of the world feels safe, with more than two in every three people worldwide expressing confidence in their local law enforcement and the same ratio of respondents saying they feel safe walking alone at night. (Lifestyle Enquirer: http://lifestyle.inquirer.net/298061/p2fb-singapore-worlds-safest-destination-venezuela-lawless-gallup-report/#ixzz5J3yoTJ4Q)

 

For Venezuelan refugees, this bridge connects past and present

The Simón Bolívar bridge, which connects Venezuela and Colombia, has become the epicenter of this massive migration. Thousands of Venezuelan refugees walk across Simón Bolívar bridge into Cúcuta, Colombia, each day. Soon after the border opens in the early hours of the morning, thousands cross by foot from Venezuela to Colombia. Many are ready to leave everything behind, planning not to return to their home country. Some expect to stay in Colombia and others are moving through to different destinations. Another group crosses the bridge to shop for basic items. The number of daily pedestrians varies, but it’s estimated that about 35,000 people are now crossing the bridge every day. Although the region has experienced multiple population movements, this exodus is thought by some to be Latin America’s worst-ever migration crisis. Over the last four years, amid a long and dire economic downfall, Venezuela has seen the impoverishment of its citizens and a resulting mass exodus. The latest re-election of President Nicolás Maduro to a second term hasn’t helped the already tenuous situation, igniting a simmering desire of many Venezuelans to leave the struggling nation. Hyperinflation of the economy, hospitals without supplies, and the rampant spread of hunger have fueled their flight. This mass migration, however, started even earlier, when now-deceased leader Hugo Chavez took office in 1999. Millions of Venezuelans have fled the country in the last 20 years. More than one million Venezuelans have moved to Colombia since 2017, according to the Red Cross. And that number covers only those who passed through approved checkpoints. Crossing the border by foot at spots like the Simón Bolívar bridge is the only option for those unable to pay for a plane ticket. Under the blazing sun, Venezuelan travelers pass into Colombia, juggling overstuffed suitcases and backpacks. Some travel alone, while others walk with family, carrying their children. The route takes refugees through a sea of people, from gold traders who buy desperate Venezuelans’ precious metals to vendors selling one-way tickets to Peru, Chile, and Ecuador. Many queuing to stamp their passports will only stay in Cúcuta temporarily. They have plans to go to other countries and were lucky enough to save sufficient money for bus tickets. Others don’t cross with the same fortune. Some run out of money before completing their planned trip and get stuck in the city. The migration crisis has prompted the Colombian government to allocate more than US$ 3.5 million (U.S.) for health services to migrants from bordering countries, and Cúcuta locals are also doing their part. (National Geographic: https://www.nationalgeographic.com/photography/proof/2018/06/refugees-venezuela-colombia-election-crisis-simon-bolivar-culture/)

 

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.