December 20, 2018

International Trade

571 containers of toys and food have arrived at La Guaira´s port

The La Guaira port authority reports that 571 containers are being offloaded from the ship Balao, including 128 containers bearing toys and the remainder carrying food, to be distributed by the government nationwide. More in Spanish: (AVN, http://www.avn.info.ve/contenido/bolivariana-puertos-descarga-buque-balao-571-contenedores-insumos-para-navidad)

 

Oil & Energy

Gasoline queues are back in Caracas

Gasoline queues to buy fuel have begun again in Caracas due to supply problems and gas station closures. A source within PDVSA reports that diminished supplies have been caused by a fire in a distributing plant East of Caracas that reduced capacity. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/nacional/vuelven-las-filas-en-las-gasolineras-de-caracas-por-fallos-en-el-suministro)

 

Commodities

FEDECAMARAS reports: "2018 was the worst year in history for production "

Venezuela’s principal business organization, FEDECAMARAS has reported that 2018 has had “devastating results” as a result government policies “aimed at the destruction of economic freedom, private Enterprise, and free initiative”, which have “caused 2018 to be the worst year in history for all of the country’s productive sectors”. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/economia/fedecamaras-advierte-que-2018-fue-el-peor-ano-de-la-historia-en-produccion)

 

Economy & Finance

Trust for US bondholders sues Venezuela over defaulted debt

A trust representing holders of Venezuelan bonds filed suit in New York federal court Tuesday demanding payment on more than US$ 34 million in unpaid debt. The lawsuit is believed to be the first by a long list of investors not being paid by Venezuela's socialist government as it confronts a historic cash crunch worsened by hyperinflation and collapsing oil production. It was filed by Casa Express Corp., a firm registered in Coral Gables, Florida, and which said it represents investors in dollar-denominated bonds issued in 1998 and 2002. Last year Venezuela stopped paying interest and principal on US$ 65 billion in bonds issued by the government and state oil company PDVSA. Creditors had been reluctant to sue for fear of racking up huge legal fees with no repayment scenario in sight as long as President Nicolas Maduro remains in power and under U.S. financial sanctions barring new lending to his government. But their patience has worn thin as other stiffed lenders like ConocoPhillips have jumped ahead of them and sought to seize Venezuela's limited number of foreign assets, such as PDVSA's U.S. subsidiary Citgo. Last week, a group calling itself the Venezuela Creditors Committee hired top-flight law firm Cleary Gottlieb to explore its options in the face of efforts by individuals to satisfy claims that have "skewed recoveries in their favor to the detriment of bondholders." The group said it represents Wall Street investors holding some $8 billion in Venezuelan and PDVSA bonds. "There is likely to be a surge of lawsuits attempting to get at what is left of Venezuela's assets," said Russ Dallen, head of Caracas Capital, who was the first to draw attention to the bondholder lawsuit in a note to investors. (ABC News: https://abcnews.go.com/International/wireStory/trust-us-bondholders-sues-venezuela-defaulted-debt-59899426; Reuters, https://www.reuters.com/article/us-venezuela-bonds/florida-firm-sues-venezuela-for-34-million-over-unpaid-bonds-idUSKBN1OI073)

 

Latin American lender gives Venezuela U$ 500 million credit line

Latin American development bank CAF said on Monday it has approved a US$ 500 million credit line to Venezuela’s central bank, drawing criticism from opposition lawmakers for financing the government of President Nicolas Maduro amid economic chaos. The loan will “mitigate liquidity risks and provide macroeconomic support,” Caracas-based CAF Development Bank of Latin America said in a statement. The bank is owned by 19 countries primarily in Latin America and the Caribbean and 13 private banks in the region. “With this financing, CAF is supporting the dictatorship,” said opposition legislator Angel Alvarado, who has for years warned investment banks of the reputational risk of giving financial support to Maduro’s socialist government. (Reuters, https://www.reuters.com/article/venezuela-caf/latin-american-lender-gives-venezuela-500-mln-credit-line-idUSL1N1YM12J)

 

IMF projects 1.370.000% hyperinflation in Venezuela by the end of 2018

An IMF report indicates the yearly inflation rate for Venezuela could be 1.370.000% by the end of 2018, as the government is unable to cover the budget deficit by printing money. The revised report says inflation is 100 times quicker than their January 13000% estimate. More in Spanish: (El Universal, http://www.eluniversal.com/economia/28694/fmi-preve-hiperinflacion-de-1370000-al-finalizar-2018)

 

Venezuela isn’t the crypto use case you want it to be

Cryptocurrency enthusiasts love to talk about Venezuelan users – wracked by political oppression, economic collapse and food insecurity – as a prime example of bitcoin’s subversive potential. But the reality is far more complicated. Many Venezuelans are learning about cryptocurrency through forced exposure to the state-issued Petro, in addition to aggressive outreach strategies from projects like dash. Many don’t even know that bitcoin is useful itself, beyond its ability to ease the transfer of assets like dash or dollars. Some Venezuelans fleeing the country do so with their assets held in bitcoin, to avoid being harassed at the airport or the border. Expats become more involved with the broader bitcoin ecosystem when they leave Venezuela. In part, this is due to fear that public association with crypto inside Venezuela could attract attention from corrupt government officials. Although some local projects like EOS Venezuela have so far managed to provide liquidity to small groups of local users without such conflicts, those use cases are both nuanced and nascent. Some migration experts compare the Venezuelan crisis to the Syrian civil war, a mass forced-migration movement that leaves many unbanked and desperate for necessities. All things considered, there is still a long way to go until crypto is used for its own merits in Venezuela. Now, it’s often used as a tool for acquiring or liquidating fiat. (Coindesk: https://www.coindesk.com/venezuela-isnt-the-crypto-use-case-you-want-it-to-be)

 

Politics and International Affairs

Venezuela denies Russia building military base, but missiles deployed as nation starves

A video posted to Twitter shows multiple missiles being deployed by truck around Venezuela Wednesday, less than 48 hours after embattled head of state Nicolas Maduro promised to “strengthen the air defense” in case of a joint U.S.-Colombia-Brazil invasion. At roughly the same time the video above was being made public, Maduro’s number two, Diosdado Cabello, publicly denied Tuesday night that Russia was establishing a new base on Venezuelan soil. “I wish it were true that Russia is preparing the installation of a military base in La Orchila,” Cabello, a former Army lieutenant who participated with Chavez in a coup attempt in 1992, said during a session of the Constituent Assembly, an illegitimate parallel legislature that is controlled by the government. Social media users however ignored Cabello’s unwanted clarifications, choosing instead to focus on the available evidence: armaments being moved around. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2471811&CategoryId=10717)

 

Brazil's Bolsonaro says he will target Venezuela, Cuba

Brazil’s President-elect Jair Bolsonaro said on Tuesday that he would take all action “within the rule of law and democracy” to oppose the governments of Venezuela and Cuba. Bolsonaro, who takes power Jan. 1, is a fervent anti-communist who frequently targets Venezuela and Cuba for verbal attacks, a drastic change from Brazil’s governments under the leftist Workers Party that ruled from 2003 to 2016 and had warm relations with those regimes. Brazil’s incoming president did not provide any details when he made his most recent comments on Venezuela and Cuba. (Reuters, https://www.reuters.com/article/us-brazil-politics-bolsonaro/brazils-bolsonaro-says-he-will-target-venezuela-cuba-idUSKBN1OH2F8)

 

Uruguay’s president says he is willing to be an “intermediary” in the Venezuelan situation

Uruguay’s President Tabaré Vázquez has said he is willing to act as an “intermediary” in Venezuela, if asked and if this country restores democracy and leaves violence aside. Vásquez had been asked about that nation’s position on Venezuela, which has been termed lukewarm by the local opposition. More in Spanish: (El Universal, http://www.eluniversal.com/politica/28719/presidente-uruguayo-se-muestra-dispuesto-a-intermediar-en-situacion-venezolana)

 

Why the low turnout in Venezuela?

A high turnout rate when Venezuela is going through a serious crisis could make us think that the masses would be encouraged to go out and vote in order to overcome it: citizens have lost connection with the government and should be encouraged to vote against him if only 19% approve the administration of the President; 13% defines itself as "chavista"; 12% is identified with the government party (PSUV) because the negative assessment of the situation of the country is located at 94%; Venezuela has lost more than 50% of GDP in 5 years and has the highest inflation in the world. However, opposition parties have also lost connection with citizens and are not channeling their discontent: The massive marches and street protests staged in previous years are unthinkable today since the identification of citizens with opposition parties has dropped to 26% this year from 47% in November 2016; it also dropped to 8% from 27% in late 2017 as a lack of coordination prevails among its members. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2471813&CategoryId=10717)

 

President Maduro points to Iván Duque as the main promoter of threats against Venezuela

President Nicolás Maduro claims that his Colombian counterpart, Iván Duque, is the main promoter of the threats against Venezuela. "Iván Duque is responsible if one day, Colombia militarily attacks Venezuela, for your ambition, selfishness, for your hatred against Venezuela, for your immaturity," he said in a joint radio and television. He also repeated his accusation against US Security Adviser John Bolton: "He personally directs the preparation of actions against Venezuela, so I denounce it to the world with the support, with the financing of the White House, of John Bolton, Secretary of Internal Security of the USA". (AVN, http://www.avn.info.ve/contenido/president-maduro-points-iv%C3%A1n-duque-main-promoter-threats-against-venezuela)

 

Chilean expats return home from Venezuela

A Chilean air force plane landed in Santiago, Chile, with Chilean expatriates who decided to abandon Venezuela amid a protracted political and economic crisis in that nation, officials said. The aircraft stopped in Caracas on the return from Port-au-Prince after a mission to bring 175 Haitians back to their country as part of a voluntary repatriation plan. The flight was the third one under the plan that has so far returned 500 Haitians to their homeland at no expense to them, on condition that they not try to enter Chile for nine years. The plane that touched down Tuesday at an airbase in Santiago carried 47 Chilean nationals along with eight Venezuelan-born dependents. Eight Argentines were also aboard under an accord between Santiago and Buenos Aires. The Chilean returnees were received by their families and by Chile's acting foreign minister, Carolina Valdivia. On Nov. 27 around a hundred of Chilean expats were greeted on their return by President Sebastian Piñera. (The San Diego Union Tribune: https://www.sandiegouniontribune.com/efe-3846550-14951225-20181218-story.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.