April 11, 2019

Oil & Energy

Venezuela reports collapse in oil supply, tightening global market

Venezuela’s oil output sank to a new long-term low last month due to U.S. sanctions and blackouts, the country told OPEC, deepening the impact of a global production curb and further tightening supplies. In a monthly report released on Wednesday, the Organization of the Petroleum Exporting Countries said Venezuela told the group that it pumped 960,000 barrels per day (bpd) in March, a drop of almost 500,000 bpd from February. Venezuela’s production figure brings its numbers closer to outside estimates, which have been saying the country’s economic collapse has taken a bigger toll on its oil industry. Output in Venezuela, once a top-three OPEC producer, has been declining for years due to economic collapse. In March, supply dropped due to U.S. sanctions on state oil company PDVSA designed to oust President Nicolas Maduro, and power blackouts. (Reuters: https://www.reuters.com/article/us-oil-opec-report/venezuela-reports-collapse-in-oil-supply-tightening-global-market-opec-idUSKCN1RM1BT)

 

Oil edges higher as Venezuela output collapses

Oil prices rose to their highest in more than five months Wednesday as a sharp decline in Venezuelan oil production more than offset the effect of a weekly report showing another increase in U.S. inventories of crude oil. West Texas Intermediate futures, the U.S. oil benchmark, ended 1% higher at US$ 64.61 a barrel on the New York Mercantile Exchange, the highest since Oct. 31. (The Wall Street Journal: https://www.wsj.com/articles/oil-edges-higher-as-venezuela-output-collapses-11554911649)

 

Venezuela congress authorizes parallel PDVSA board to negotiate foreign debt

Venezuela’s opposition-controlled National Assembly on Tuesday allowed a parallel board of directors of state-run oil company PDVSA to negotiate foreign debt ahead of a looming payment deadline that could put its crown jewel overseas asset, U.S. refiner CITGO, at risk. The board’s new head will be former PDVSA executive Luis Pacheco, said lawmaker Elias Matta, head of the assembly’s energy commission. The expanded board would also be able to represent the company overseas, Matta said in congress. The ad hoc board, which the Assembly on Tuesday expanded to nine members from five, is part an effort by opposition leaders who have disavowed the regime of Nicolas Maduro to control PDVSA’s overseas assets. Maduro’s ruling Socialist Party continues to control the company’s day-to-day operations. The move will allow the board to decide whether to make a US$ 71 million interest payment due April 27 on PDVSA’s 2020 bond, which is backed by a 49% stake in CITGO, said opposition lawmaker Elias Matta, the head of the Assembly’s energy commission. “They will evaluate if they are going to pay the bonds. That is now their decision,” Matta said in a telephone interview, adding that the board would have to inform the Assembly should it decide to pay. “We will do everything we have to do to protect the republic’s assets.” (Reuters, https://www.reuters.com/article/us-venezuela-politics-pdvsa/venezuela-congress-allows-parallel-pdvsa-board-to-negotiate-foreign-debt-idUSKCN1RL2CQ; https://www.reuters.com/article/venezuela-politics-pdvsa/venezuela-national-assembly-approves-expansion-to-pdvsa-ad-hoc-board-idUSL1N21R14F)

 

Two of Venezuela's four crude upgraders restart after blackout: document

Two of Venezuela’s four crude oil upgraders, which are necessary to process the country’s extra-heavy crude into exportable grades, have restarted after halting activities due to blackouts in March. The PETROCEDENO upgrader, a joint venture between state oil company PDVSA, France’s TOTAL SA and Norway’s EQUINOR ASA, and the PETROPIAR joint venture with U.S. CHEVRON Corp both restarted, according to the document. The upgraders, together with the Petrosinovensa mixing facility, were set to produce 298,000 barrels of upgraded crude on Tuesday. (Reuters, https://www.reuters.com/article/us-venezuela-oil/two-of-venezuelas-four-crude-upgraders-restart-after-blackout-document-idUSKCN1RL2FE)

 

Economy & Finance

Maduro is cut off from US$ 400 million in cash held at the IMF

As Nicolas Maduro steps up his search for cash overseas, another door is slamming shut. The International Monetary Fund suspended the Venezuelan strongman’s access to almost US$ 400 million of special drawing rights, citing political chaos since National Assembly President Juan Guaidó claimed in January that he was the nation’s rightful leader, said two people familiar with the matter. Venezuela already whittled its SDR holdings down from almost US$ 1 billion in March 2018. The IMF’s caution marks at least a temporary defeat for Maduro’s government as it seeks to gather money held abroad to stave off a devastating economic collapse that could undermine key support from top military commanders. The SDRs represent one of the regime’s last remaining sources of cash. Almost two-thirds of Venezuela’s US$ 9 billion in foreign reserves are in the form of gold, which has been difficult to liquidate because of U.S. sanctions. Guaidó’ s camp has all but declared victory in the battle over who has access to the SDRs. Ricardo Hausmann, a Harvard professor and economic adviser to Guaidó, said the IMF is safeguarding the assets until a new government takes over. “Those funds will be available when this usurpation ends,” he said in an interview at Bloomberg headquarters in New York. Venezuela’s relationship with the IMF has long been contentious. In 2007, then-President Hugo Chavez pledged to cut ties with the fund. That plan was never carried out because leaving the IMF risked triggering a technical default in which investors could demand immediate repayment on some bonds. Since then, Venezuela has defaulted on more than US$ 10 billion in payments. (Bloomberg: https://www.bloomberg.com/news/articles/2019-04-10/imf-freezes-venezuela-funds-as-members-debate-who-s-president)

 

Venezuela removes eight tons of gold from central bank

Venezuela removed eight tons of gold from the central bank’s vaults last week, and the cash-strapped socialist regime is expected to sell the bullion abroad as it seeks to raise hard currency in the face of U.S. sanctions, a lawmaker and one government source said. With sanctions imposed by Washington choking off revenues from exports by state oil company PDVSA, Nicolas Maduro’s increasingly isolated regime has turned to sales of Venezuela’s substantial gold reserves as one of the only sources of foreign currency. The government source said the central bank’s reserves had fallen by 30 tons since the start of the year before U.S. President Donald Trump tightened sanctions, leaving the bank with around 100 tons in its vaults, worth more than US$ 4 billion. At that rate of decline, the central bank’s reserves would nearly disappear by the end of the year, leaving Maduro’s regime struggling to pay for imports of basic goods. (Reuters, https://www.reuters.com/article/us-venezuela-gold-exclusive/exclusive-venezuela-removes-eight-tonnes-of-gold-from-central-bank-sources-idUSKCN1RL247)

 

Fund sues Venezuela for US$ 26 million in unpaid bonds, interest

Global fund manager PHARO has sued Venezuela for US$ 26 million in unpaid bond principal and interest, a U.S. court filing showed, as legal claims by creditors piled up against this nation whose economy is suffering from a hyperinflationary collapse. In a complaint filed with the New York State Supreme Court late on Monday, PHARO said two funds that it controls own US$ 1.5 million in bonds that matured in 2018 and more than US$ 200 million in bonds set to mature in October 2019. Venezuela failed to pay interest and principal on the 2018 bonds and missed three interest payments on the 2019 bonds, it added. (Reuters, https://www.reuters.com/article/us-venezuela-bonds/fund-sues-venezuela-for-26-million-in-unpaid-bonds-interest-idUSKCN1RL25D)

 

Venezuela unemployment nears that of war-ruined Bosnia, IMF says

Venezuela’s unemployment rate is soaring to levels unseen in the world since the Bosnian war came to an end more than two decades ago, according to the International Monetary Fund. Joblessness will reach 44.3% in 2019 and will slam nearly half of Venezuela’s labor force in 2020, the IMF said in its World Economic Outlook published on Tuesday. Bosnia and Herzegovina’s joblessness was 50% in 1996, immediately after its 3 1/2-year domestic war, according to the multilateral’s database. The Venezuelan depression is among the deepest economic catastrophes ever suffered by a nation outside of wartime. This year alone, the Andean nation’s output will shrink by a quarter -- the most worldwide since the 2014 start of the Libyan civil war, according to the IMF. The contraction has become so large that it’s generating “sizable drag” on growth not just in Latin America, but also in emerging markets as a whole. (Bloomberg, https://www.bloomberg.com/news/articles/2019-04-09/venezuela-unemployment-nears-that-of-war-ruined-bosnia-imf-says)

 

Politics and International Affairs

OAS votes to recognize Juan Guaidó’ s ambassador

The members of the Organization of American States (OAS) voted on Tuesday to recognize Juan Guaidó’ s ambassador as the country's official representative to the organization. The move solidifies Nicolas Maduro's exit from the regional body, further isolating Venezuela from its neighbors. The OAS is the second multilateral organization in the hemisphere to recognize representatives designated by Guaidó, after the Inter-American Development Bank accepted Ricardo Hausmann as its Venezuelan envoy last month. With 18 votes in favor, nine against, six abstentions and one absence, the OAS confirmed Gustavo Tarre as Venezuela's new delegate. After a heated debate, the OAS permanent council made the decision by a vote of 18 in favor, nine against, and six abstentions. One delegate was absent. The council asked OAS Secretary General Luis Almagro to send the text to UN Secretary General Antonio Guterres. The text states that "Nicolas Maduro's presidential authority lacks legitimacy and his designations for government posts, therefore, lack the necessary legitimacy." The countries that voted against Tuesday's decision were Venezuela, Antigua and Barbuda, Bolivia, Dominica, Grenada, Mexico, Saint Vincent and the Grenadines, Suriname and Uruguay.  (DW: https://m.dw.com/cda/en/oas-votes-to-recognize-juan-Guaidós-ambassador/a-48269376; France24: https://www.france24.com/en/20190409-oas-recognizes-Guaidó-envoy-until-new-venezuela-polls)

 

 ‘You shouldn’t be here’: U.S. pushes U.N. to pull Maduro envoy’s credentials

Vice President Mike Pence on Wednesday urged the United Nations to revoke the credentials of Nicolás Maduro’s ambassador to the world body, portraying him as a loyalist to the country’s disputed president, Nicolás Maduro, and to a government that has allowed crime, violence and starvation to rise. In a 20-minute speech to the United Nations Security Council, Mr. Pence called for a formal recognition of Juan Guaidó as the rightful leader of Venezuela, which he called “a failed state — and as history teaches, failed states know no boundaries.” Mr. Pence turned to Maduro’s representative, Samuel Moncada Acosta, telling him, “You shouldn’t be here.” “You should return to Venezuela and tell Nicolás Maduro that his time is up,” Mr. Pence said. “It’s time for him to go.” The Council meeting addressed the situation in Venezuela, which officials and experts are increasingly describing as a humanitarian crisis that has led about 3.5 million citizens to flee the country. Mr. Pence also accused China and Russia of meddling in efforts to remove Mr. Maduro. While “Russia and China continue to obstruct at the Security Council,” Mr. Pence said, “rogue states like Iran and Cuba are doing all they can to prop up the Maduro regime.” But on Wednesday, he did not give a firm answer when asked by a reporter where the United States would draw a line on Russia’s involvement. He also did not give a timeline when asked if the possibility of American military intervention, an option long played up by administration officials, was drawing closer as conditions in Venezuela worsened. In briefings held before Mr. Pence arrived to speak, (The New York Times: https://www.nytimes.com/2019/04/10/world/americas/pence-venezuela-un-envoy.html; Bloomberg, https://www.bloomberg.com/news/articles/2019-04-10/pence-demands-un-expel-venezuela-s-ambassador-support-Guaidó)

 

U.N. Aid Chief says 'very real humanitarian problem' in Venezuela

United Nations aid chief Mark Lowcock told the U.N. Security Council on Wednesday that there is a "very real humanitarian problem" in Venezuela and that the world body is ready to do more if it gets more help and support from all parties. "The scale of need is significant and growing. The United Nations is working in Venezuela to expand the provision of humanitarian assistance," Lowcock said. "We can do more to relieve the suffering of the people of Venezuela, if we get more help and support from all stakeholders." He briefed the council on a recent U.N. report on the situation that estimates about a quarter of Venezuelans are in need of humanitarian assistance and painted a dire picture of millions of people lacking food and basic services. Some 3.4 million Venezuelans have left the country, Lowcock said. This number was expected to rise to some 5 million by the end of the year, said Eduardo Stein, the joint envoy for Venezuelan refugees and migrants for the U.N. refugee agency and the U.N. migration agency. Lowcock stressed the need for humanitarian efforts to be neutral, impartial and independent. Lowcock said the number of U.N. staff in Venezuela had nearly doubled since 2017 to some 400 and that U.N. agencies were working in all 24 Venezuelan states. (The New York Times: https://www.nytimes.com/reuters/2019/04/10/world/americas/10reuters-venezuela-politics-un.html)

 

US, EU at odds over Venezuela sanctions

The crisis in Venezuela is causing divisions between the Trump administration and EU governments, which have failed to back Washington's call for tougher sanctions against Nicolas Maduro. Disregarding evidence presented at a NATO summit last week indicating that Maduro is digging in with the aid of Russia, the EU decided against widening Venezuelan sanctions during a foreign ministers’ meeting Monday. “The EU is against implementing sanctions on Venezuela as a country,” said Spanish Foreign Minister Josep Borrel at a press briefing following the meeting. He left open the possibility of applying individual sanctions against some members of Maduro’s government. Last week, the United States expanded sanctions to block Venezuela’s oil exports by targeting its tanker fleet, declaring that 34 of its vessels could be embargoed or seized through new measures announced by the U.S. Department of Energy. Europe, on the other hand, continues receiving oil from Venezuela despite crippled production. Spain’s oil company REPSOL recently reached an agreement with the cash-strapped Maduro government to pay down the company’s US$ 2 billion investment with added shipments of oil. And almost 100 Spanish companies continue operating in Venezuela, including one of Spain’s largest banks, BBVA, which could be vulnerable to future sanctions. Borrel has said he discussed Spain’s financial stake at a meeting with U.S. Secretary of State Mike Pompeo last week in Washington and complained about administration plans to toughen the embargo on Cuba. Spain’s large presence in Venezuela — where the Spanish expatriate community numbers about 250,000 dual nationals — makes Madrid the lead government on EU policy toward the Latin American country. Italy and Portugal also have substantial expatriate communities and commercial interests in Venezuela including investments by Italy’s oil company ENI. The Trump administration used last week’s NATO summit to argue Venezuela presented a new threat from Russia, which has supplied sophisticated arms and military advisors to revamp Maduro’s air force, armored units and special forces. Borrel has said Russia’s presence in Venezuela is small and should not constitute a “problem” for NATO. Spanish Prime Minister Pedro Sanchez has said that Spain would “roundly oppose” any U.S. military action against Venezuela and that he would urge the rest of the European Union to do the same. Spanish officials say they are doubling down on efforts to find a political solution through negotiations between Maduro and Guaidó. Speaking from Brussels Monday, Borrel said Maduro had requested an “activation” of the EU-led Montevideo group, which includes Mexico, Uruguay and other Latin American governments offering mediation. (VOA: https://www.voanews.com/a/us-eu-at-odds-over-new-sanctions-against-venezuela/4869617.html)

 

Honduran, Nicaraguan, Venezuelan leaders not invited to Salvadoran's swearing-in

El Salvador’s incoming president Nayib Bukele said on Tuesday he would not be inviting the leaders of Honduras, Nicaragua and Venezuela to his June 1 inauguration after criticizing them as illegitimate rulers. In a Twitter post, the 37-year-old Bukele confirmed news reports that invitations were not being extended to Juan Orlando Hernandez, president of neighboring Honduras, Daniel Ortega, president of Nicaragua, or Venezuelan President Nicolas Maduro. Bukele, who won an election in February, did not say why the presidents would not be asked, but he has previously criticized all three as men who did not deserve to be in power due to controversies that have clouded their administrations. (Reuters, https://www.reuters.com/article/us-elsalvador-inauguration/honduran-nicaraguan-venezuelan-leaders-not-invited-to-salvadorans-swearing-in-idUSKCN1RM0BD)

 

Maduro says Venezuela ready to receive international aid

Nicolas Maduro has said his country was ready to receive international aid following a meeting with the Red Cross chief, as this nation plunged into a new round of blackouts. "We confirm our readiness to establish cooperation mechanisms for international assistance and support," Maduro said on Twitter on Tuesday. Maduro, who denies that the current situation in Venezuela can be described as a humanitarian crisis, reiterated after the meeting that collaboration with the International Committee of the Red Cross (ICRC) should respect "the Venezuelan legal order." An ICRC delegation led by its president Peter Maurer has been here since Saturday and is due to finish its visit on Wednesday. The ICRC said last Friday in a statement it was "concerned by the serious impact that the current situation has on Venezuelans, especially those who do not have access to basic services." (Al Jazeera: https://www.aljazeera.com/news/2019/04/maduro-venezuela-ready-receive-international-aid-190410083550252.html)

 

Red Cross regains access to Venezuela jails, military prisons

The International Committee of the Red Cross has regained access to prisons in Venezuela, including highly guarded military facilities where dozens of inmates considered political prisoners are being held, as strongman Nicolas Maduro seeks to counter mounting criticism of his government’s human rights record. International Red Cross President Peter Maurer on Wednesday wraps up a five-day visit to Venezuela, where the Geneva-based group is among international organizations trying to carve out a space to deliver badly needed humanitarian aid and technical assistance free of the winner-take-all politics contributing to the country’s turmoil. The group had been denied access in Venezuela at least since 2012. The renewed visits in Venezuela began March 11 when a Red Cross delegation visited a model prison in Caracas, the Simon Bolivar Center for the Formation of New Men. Eighty-seven foreigners are being held. But more significant was the visit two weeks later to the military-run Ramo Verde prison outside Caracas, which holds 69 people the opposition considers political prisoners. Most people held at the Ramo Verde are military personnel accused of plotting to overthrow Maduro. Many more, including five oil executives with U.S. passports, are being held in the basement jail of the military counterintelligence headquarters in the capital. In another attempt to counter growing criticism, Maduro last month welcomed a delegation sent by the United Nations’ High Commissioner for Human Rights. He previously had called s999uch visits a politically biased threat to Venezuela’s sovereignty. (NBC News: https://www.nbcnews.com/news/latino/red-cross-regains-access-venezuela-jails-military-prisons-n992981)

 

Raúl Castro pledges Cuba will never abandon Venezuela

Raúl Castro has promised that Cuba will never abandon its leftist ally Venezuela despite US “blackmail”, even as the Trump administration threatened more sanctions over its support. In a speech to the national assembly, the head of the Cuban Communist party said the island had been increasing defense preparedness in recent months in view of mounting US hostility. The island nation had also been adopting economic measures to contend with the Trump administration’s tightening of the decades-old US trade embargo, Castro told legislators. “We will never abandon our duty of acting in solidarity with Venezuela,” Castro said. “We reject strongly all types of blackmail.” Shortages of basic goods have increased recently, including flour, eggs and chicken, with the state even reducing the size and circulation of its newspapers due to a lack of newsprint. The situation could worsen further in coming months in view of the tightening US trade embargo, Castro warned. (The Guardian: https://www.theguardian.com/world/2019/apr/10/raul-castro-cuba-never-abandon-venezuela)

 

U.S. ready to take on Russia and other 'foreign powers' in Venezuela, John Bolton says

President Donald Trump's national security adviser John Bolton has warned nations seen as obstacles to U.S. plans for Latin America that they must leave Venezuela and stop defending the socialist government opposed by the Trump administration. Responding to Tuesday's Newsweek article discussing the recent arrival of Russian, Chinese and Iranian planes intended to support Maduro and his government, Bolton told radio host Hugh Hewitt that "President Trump is determined not to see Venezuela fall under the sway of foreign powers."  "Look, our objective is a peaceful transition of power to Juan Guaidó and the opposition," Bolton said during Wednesday's program. "But let’s not forget we’ve got between 40,000 to 50,000 American citizens in Venezuela." "We’ve got countries, as you mentioned, Colombia and Brazil on the border with millions of Venezuelan refugees who have come across. We’ve got terrorist organizations like the ELN [National Liberation Army] and FARC [Revolutionary Armed Forces of Colombia] who threaten Colombia," he added. "We’re going to protect American national interest, and Maduro and his cronies ought to know that President Trump is very serious when he says all options are on the table." (Newsweek: https://www.newsweek.com/bolton-russia-china-iran-venezuela-powers-1392304)

 

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.

April 09, 2019

Logistics & Transport

 

US-blacklisted Iranian airline may begin direct flights to Venezuela

A plane belonging to MAHAN Air, a private Iranian airline accused by the West of transporting military equipment to Middle East war zones, landed in Caracas on Monday, and the two countries will discuss launching a direct flight “in the coming months,” Minister Jorge Arreaza told reporters. An Iran Foreign Ministry delegation left Tehran early Monday on a MAHAN Air flight in route to Caracas, Iran’s IRNA news agency reported. The spokesman of Iran's Civil Aviation Organization, Reza Jafarzadeh, told MEHR news agency the delegation included a group representing the private airline that was traveling to Caracas to discuss maintaining regular flights between the two countries. MAHAN Air, established in 1992 as Iran’s first private airline, has the country’s largest fleet of aircraft. But the U.S. blacklisted MAHAN in 2011 after accusing it of providing support to Quds Force, an elite unit of Iran’s Revolutionary Guard. The carrier recently halted flights to Germany and France due to U.S. sanctions over its military transport flights to Syria, where Iran supports President Bashar Assad’s forces. The United States views private Iranian airline Mahan Air’s launch of a direct flight from Tehran to Caracas as a “politically motivated gesture” with “no commercial reason,” a White House official said on Monday. “This is a politically motivated gesture that is unhelpful to the Venezuelan people because it doesn’t accelerate the change that we’re looking for,” the official said. (Fox News: https://www.foxnews.com/world/us-blacklisted-iranian-airline-begins-direct-flights-to-venezuela; Reuters, https://www.reuters.com/article/us-iran-venezuela-airlines-usa/no-commercial-reason-for-irans-mahan-air-flights-to-venezuela-white-house-official-idUSKCN1RK2CJ; https://www.reuters.com/article/us-iran-venezuela-airlines/iranian-delegation-travels-to-venezuela-to-discuss-direct-flight-route-idUSKCN1RK1VM; https://www.reuters.com/article/iran-venezuela-airlines/irans-mahan-air-launches-direct-flights-to-venezuela-idUSL8N21Q11T)

 

As the Maduro regime blocks aid and makes arbitrary arrests, locals turn to an app as a lifeline

In a crumbling country where almost all but state-owned media outlets have been shuttered, food and medicine are scarce, unrest is rising, and authorities could throw you behind bars at any moment – there is an app that is being accredited as something of a lifeline for desperate Venezuelans and for their compadres abroad. ZELLO, which functions akin to a walkie-talkie and is a push-to-talk voice messaging app, introduced the Venezuela-specific channel Venezuela Hasta Los Tuétanos to provide information about the burgeoning political, social, economic, and humanitarian calamity. The app creators are purporting not only to help Venezuelans coordinate protests, elude security and mobilize their marches, but it also endeavors to assist in pinpointing where crucial humanitarian resources such as food and medicine can be located. Since the contested Nicolas Maduro took a self-styled oath for a new term, which has not been recognized by most of the international community, there has been a 135% uptick in downloads. Overall, there have been 735,696 downloads in Venezuela, and over 13,600 in the ailing nation this year alone. Furthermore, the 24/7 channel itself is documented to now has over 70,000 subscribers and on average, there are 200 to 2,000 listeners connected at any given time. And as the once oil-swathed and wealthy nation continues to fall apart at the seams, the app doesn’t come at a cost. Yet on the ground in the poverty-stricken country, views on the app were mixed. Some expressed concern that it had been penetrated by government intelligence and that even though identities were not disclosed, efforts to challenge the regime could still be intercepted and ultimately crushed. (Fox News: https://www.foxnews.com/tech/as-venezuelas-government-blocks-aid-and-arbitrarily-arrests-locals-turn-to-an-app-as-a-lifeline)

 

Oil & Energy

Venezuela pledges to honor oil commitments to Cuba despite sanctions

Venezuela will “fulfill its commitments” to Cuba despite United States sanctions targeting oil shipments from this country to its ideological ally, Foreign Minister Jorge Arreaza said on Monday. Washington on Friday imposed sanctions on 34 vessels owned or operated by state-run oil company Petroleos de Venezuela as well as on two companies and a vessel that have previously delivered oil to Cuba, aiming to choke off a crucial supply of crude to the Communist-run island. Venezuela has long sent subsidized crude to Cuba. The United States describes the arrangement as an “oil-for-repression” scheme in which Havana helps socialist Nicolas Maduro weather an economic crisis and power struggle with the opposition in exchange for fuel. Arreaza said he would not reveal Venezuela’s “strategy,” but that the sanctions would not stop the shipments. “When the conventional power of capitalism attacks you, you have to know how to respond through non-conventional means, always respecting international law,” Arreaza told reporters. Venezuela’s legislature last month ordered an end to oil shipments to Cuba, but PDVSA - controlled by military officers loyal to Maduro - has continued the exports. The most recent fuel shipment to Cuba left Venezuela’s Jose port on April 4, carrying liquefied petroleum gas, according to REFINITIV EIKON data. In the second half of March, two tankers carrying crude and two tankers carrying refined products left for Cuba. The only tanker sanctioned on Friday, the Despina Andrianna, is currently returning to Jose after unloading crude at Cuba’s Cienfuegos refinery in March. Another three vessels are waiting off Venezuela to load with shipments destined for Cuba. (Reuters: https://www.reuters.com/article/us-venezuela-politics-cuba/venezuela-pledges-to-honor-oil-commitments-to-cuba-despite-sanctions-idUSKCN1RK2HZ)

 

US sanctions 34 tankers that transport oil from Venezuela to Cuba

The US Treasury Department announced on Friday economic sanctions against 34 oil tankers that transport petroleum from Venezuela to Cuba, a new pressure tactic against the regime of Nicolas Maduro. “The United States is holding accountable those responsible for Venezuela’s tragic decline and will continue to use the full suite of its diplomatic and economic tools to support Interim President Juan Guaidó, the National Assembly, and the Venezuelan people’s efforts to restore their democracy,” Treasury Secretary Treasury Steven Mnuchin said in a statement on Friday. “Cuba continues to profit from, and prop up, the illegitimate Maduro regime through oil-for-repression schemes as they attempt to keep Maduro in power,” Mnuchin said. “The United States remains committed to a transition to democracy in Venezuela and to holding the Cuban regime accountable for its direct involvement in Venezuela’s demise,” he added. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2477067&CategoryId=10717; Reuters, https://www.reuters.com/article/us-venezuela-politics-pence-houston/u-s-ratchets-up-pressure-on-venezuela-cuban-backers-idUSKCN1RH1B5; Bloomberg, https://www.bloomberg.com/news/articles/2019-04-05/u-s-sanctions-two-companies-over-venezuela-cuba-oil-shipments)

 

Lawyers for Venezuela's Guaidó ask U.S. court to protect CITGO

Representatives of Venezuelan interim president Juan Guaidó have asked a U.S. court to overturn a prior ruling allowing Canadian miner CRYSTALLEX to seize part of U.S. refiner CITGO, which is owned by state oil company Petroleos de Venezuela. Last year, a judge ruled CRYSTALLEX could seize shares in CITGO and auction them in its bid to get paid on a US$ 1.4 billion award tied to the 2008 nationalization of its gold mining operations by the now cash-strapped country. That conflicts with Guaidó’s efforts to preserve the country’s assets abroad, especially CITGO, which is pledged as collateral to multiple creditors. His lawyers argued to an appeals court that a lower court’s ruling in favor of CRYSTALLEX be reversed considering the new political circumstances. In its March 20 ruling allowing Guaidó’ s representatives to intervene in the case, the judge said CRYSTALLEX would have until April 10 to respond to its arguments. (Reuters: https://www.reuters.com/article/us-venezuela-politics-crystallex/lawyers-for-venezuelas-Guaidó-ask-u-s-court-to-protect-citgo-idUSKCN1RH2JA)

 

Restoring Venezuela's electricity system may take up to one year — regime to cut electricity 18 hours per week

Works to restore Venezuela's electricity system may take up to a year, the country's Electricity Minister Igor Gavidia told Venezolana de Television TV channel on Monday. "We will solve the problem in accordance with the plan set for us by President Nicolas Maduro. We are talking about plans for several terms - for up to 30 days, for 30-60 days, for 60-90 days, and for a year," Gavidia, who was appointed as Electricity Minister on April 1, said. The Nicolas Maduro regime released on Friday its schedule for electricity rationing for Venezuela, with the exception of Caracas and three other states, according to which the general public will be without electric power for at least 18 hours per week. The Electric Energy Ministry and the state-run CORPOELEC electricity company designed a schedule dividing 20 of the country’s 23 states into five sectors with different rationing schemes with the idea of implementing daily three-hour blackouts six days per week. According to this plan, on one day per week each sector will have electricity for the full 24 hours. The rationing measure specifically excludes the state of Vargas near Caracas where Venezuela’s main airport is located, along with the southern state of Amazonas and the northeastern state of Delta Amacuro, border regions far from the capital. (TASS: http://tass.com/world/1052742; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2477054&CategoryId=10717)

 

UNICEF sends generators to Venezuela’s hospitals

With no end to the political crisis in sight, UNICEF has provided generators to guarantee power to 7 hospitals. Many regions of Venezuela continue to be deprived of electricity and drinking water, as more and more supplies are cut off due to the ongoing political crisis. In response the charity UNICEF has deployed portable generators to guarantee a supply of electricity to pediatric hospitals and maternity wards. Much of UNICEF’s work is being coordinated with the government ministry for health. UNICEF reports supplying generators to 7 state run hospitals to guarantee enough electricity to allow surgeries and births to take place. It is estimated that up to 24,000 children will benefit as a result of these measures. UNICEF has also increased its supply of vaccines for diseases such as measles, diphtheria, malaria and HIV, aiding another 150,000 people. The country’s water supply has also been affected by the crisis, with much of the infrastructure being neglected, depriving many areas of a reliable supply of clean water. UNICEF reports that it has distributed water purification tablets to over 12,000 families, with a further 4,200 receiving oral rehydration salts as well. (Vatican News: https://www.vaticannews.va/en/world/news/2019-04/unicef-sends-generators-to-venezuela-s-hospitals.html)

 

Venezuela oil production 'bad, getting worse,' IHS Markit's Yergin says

Daniel Yergin, vice chairman at IHS Markit, discusses Venezuela's oil production, the Trump administration's sanctions on Iran, and possible Permian basin energy firm consolidation. He speaks with Bloomberg's David Westin and Alix Steel on "Bloomberg Markets: Balance of Power." (Bloomberg, https://www.bloomberg.com/news/videos/2019-04-05/venezuela-oil-production-bad-getting-worse-ihs-markit-s-yergin-says-video)

 

 

Economy & Finance

World Bank sees Venezuela GDP contracting another 25% by year end

The economy in crisis-hit Venezuela is expected to contract a further 25% in 2019, the World Bank said on Thursday. "Real GDP contracted by 17.7% in 2018 and is likely to fall by 25.0% in 2019, which would imply a cumulative fall in GDP of 60% since 2013," the bank said in its most recent biannual report on Latin America and the Caribbean. The report attributes this "continuing implosion" in Venezuela, which has the most oil reserves of any country in the world, to the management of the country's economy rather than the global drop of oil prices and called the Venezuelan crisis "by far the worst in the region's modern history." Together with declining oil prices, "highly distortionary policies, from price controls to directed lending, a disorderly fiscal adjustment, monetization of the public sector deficit, and overall economic mis-management have led to hyperinflation, devaluation, debt defaults, and a massive contraction in output and consumption" in Venezuela, according to the World Bank. The bank repeated the estimate that the country would see inflation of 10 million per cent by the end of the year, a figure that was already predicted by the International Monetary Fund (IMF) in October. The report, by the World Bank's Latin America and Caribbean chief economist Carlos Vegh, stressed the "tragic growth collapse" here as "economic and social conditions continue to deteriorate rapidly." "Hunger and disease are spreading throughout the country," it said, citing the 90% poverty rate (according to unofficial estimates) and highlighting a rising infant mortality rate of 26 per every thousand live births between 2013 and 2017, a rate similar to the 1980s. "Crime and violence have also increased substantially, with Venezuela becoming the country with the highest homicide rate in the region (89 homicides per 100,000 inhabitants), a rate almost three times as high as that of countries at war," it added. (Times Now: https://www.timesnownews.com/business-economy/world-news/article/world-bank-sees-venezuela-gdp-contracting-another-25-by-year-end/394956)

 

Without water, Venezuela Central Bank said to send workers home

Venezuela’s central bank has been operating with an emergency team of only about 100 workers since a power outage left its headquarters without running water two weeks ago, according to four people with direct knowledge of the situation. Most of the bank’s 2,000 employees were sent home when the lights went off in Caracas on March 25 -- and haven’t been able to return since, said the people on condition of anonymity. The emergency group has been working from a library with the help of water tanks, focused on vital tasks to keep operations going, such as transactions between local banks and reserves, they added. The central bank’s situation underscores the disarray inside President Nicolas Maduro’s administration. Bathrooms have no water and the building has no air conditioning as a power crisis exacerbated water shortages in the Venezuelan capital amid a drought. Employees don’t know when they will be able to return to work. While a power rationing announced by Maduro late last month has so far exempted the capital, electricity has been intermittent, keeping vital pumps from reservoirs off line. Caracas, 900 meters (2,950 feet) above sea level, gets its water from the Tuy system of reservoirs, whose pumping stations require a minimum of 600 megawatts to operate. Venezuelans poured into the streets on Saturday, demonstrating against the near-total breakdown in public services and rallying behind National Assembly leader Juan Guaidó, who claims to be the country’s rightful president. (Bloomberg: https://www.bloomberg.com/news/articles/2019-04-09/without-water-venezuela-central-bank-said-to-send-workers-home)

 

Venezuela Needs Recovery Before Bond Talks, Hausmann Says

Ricardo Hausmann, professor at the John F. Kennedy School of Government at Harvard University and former Venezuela minister of planning, discusses opposition leader Juan Guaidó’ s plans to address the economic and humanitarian crisis in Venezuela. He speaks with Bloomberg's Vonnie Quinn and Amanda Lang on "Bloomberg Markets." (Bloomberg, https://www.bloomberg.com/news/videos/2019-04-05/venezuela-needs-recovery-before-bond-talks-hausmann-says-video)

 

Politics and International Affairs

Venezuelans demand power, water, Maduro's ouster

After weeks of power cuts and limited access to water, tens of thousands of Venezuelans took to the streets Saturday to back opposition leader Juan Guaidó and protest Nicolas Maduro, whom they accuse of wrecking the economy. Venezuelans, already suffering from hyperinflation and widespread shortages of food and medicine, say the crisis has worsened over the past month. That is when crippling nationwide power outages began to leave vast swaths of territory in the dark for days at a time, cutting off water supplies and cellphone service. Guaidó, head of the opposition-controlled National Assembly and recognized as Venezuela's legitimate head of state by most Western nations, had called for rallies on Saturday to mark the start of what he has billed as a new wave of "definitive" protests to oust Maduro. In Caracas, thousands of opposition supporters assembled at a main rally point in the eastern El Marques district. Protesters said their homes had been without water for days and many had taken to drawing it from unsanitary pipes or streams running off the Avila mountain overlooking Caracas. "We haven't just come to demand water and power. We've come to demand freedom and democracy," Guaidó said at the Caracas rally, surrounded by a cheering crowd. "We can't let ourselves become used to this. We can't put up with it. We aren't going to let these crooks keep hold of our country." While no protest-related violence was reported in Caracas, witnesses reported clashes between protesters and police in the steamy oil hub of Maracaibo. Demonstrators in the city, in the western state of Zulia, told Reuters that police had fired rubber bullet rounds and tear gas to disperse them. The National Assembly, on its Twitter account, said two of its lawmakers had been arrested and then released by authorities at the Maracaibo protest. The ruling Socialist Party staged a rival march in Caracas' center on Saturday, with mostly state workers clad in red shirts and red baseball caps, banging drums and dancing salsa. The U.S. government on Friday took another step in its efforts to force Maduro out, by imposing new sanctions on Venezuelan oil shipments, and promising "stronger action" against key ally Cuba for helping to keep his government afloat. (VOA: https://www.voanews.com/a/venezuelans-demand-power-water-maduro-s-ouster/4864903.html; France24: https://www.france24.com/en/20190407-venezuela-protest-juan-Guaidó-declares-escalation-maduro)

 

Guaidó to host world leaders in Venezuela

Venezuela’s interim President Juan Guaidó announced on Saturday an upcoming gathering of world leaders here to address what the opposition calls a humanitarian emergency in this nation. “We will have a great global encounter here in Venezuela of leaders to talk about the situation in Venezuela, about the humanitarian emergency, about the solution and the alternatives for change in Venezuela,” he told thousands of supporters in Caracas. The speaker of the opposition-controlled National Assembly provided no details about the date of the encounter and did not name the participants, but his press team said that more information would be provided in the coming days.
The rally Guaidó addressed in the capital was one of more than 350 planned demonstrations across Venezuela to denounce the leftist regime of Nicolas Maduro for a series of nationwide power blackouts, including one that lasted five days. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2477093&CategoryId=10718)

 

U.S., Brazilian Vice Presidents discuss Venezuela pressure at White House

U.S. Vice President Mike Pence met with his Brazilian counterpart Hamilton Mourao at the White House on Monday to discuss sanctions and diplomatic efforts aimed at increasing the pressure on Venezuelan President Nicolas Maduro to exit. In his first-ever talks with Mourao, Pence aimed to encourage the former Brazilian general to use his experience and influence to urge Venezuelan military leaders - as well as China and Russia - to pull back on their support of Maduro, a White House official said. Mourao, who was a defense attaché in Caracas, "has a very unique perspective" when it comes to helping convince Venezuelan military leaders to switch sides, the White House official said, speaking on condition of anonymity. "He speaks with a unique credibility from within the region as a senior political leader with a military background. That voice is very important, and he is using that voice to advance the cause," the official said. Mourao is also well-positioned to confront Russia and China over their support of Maduro, since Brazil is a partner with the nations in the BRICS group of largest emerging markets economies, the official said. (The New York Times: https://www.nytimes.com/reuters/2019/04/08/world/americas/08reuters-venezuela-politics-usa-brazil.html)

 

Brazil's Bolsonaro says working with U.S. to sow 'dissent' in Venezuela army

Brazilian President Jair Bolsonaro said on Monday he is working with the U.S. government to sow dissent within the Venezuelan Army. Bolsonaro, during an interview with Jovem Pan radio, said that if there is a military invasion in Venezuela, he would ask to seek the counsel of Brazil’s National Defense Council and Congress on what, if any, action his country should take. “We cannot allow Venezuela to become a new Cuba or North Korea,” the right-wing president said. Bolsonaro said that if any military intervention deposed Nicolas Maduro, it is quite likely that the country would see guerrilla warfare waged by Maduro’s diehard backers and whomever took power. (Reuters: https://www.reuters.com/article/us-venezuela-politics-brazil/brazils-bolsonaro-says-working-with-u-s-to-sow-dissent-in-venezuela-army-idUSKCN1RK2JC)

 

U.S. military wary of China’s foothold in Venezuela

As U.S. President Donald Trump’s national security team mulls a military intervention to oust Venezuela’s strongman Nicolás Maduro, the Pentagon is watching China’s commercial and financial creep in the crisis-gripped nation with growing alarm. In an interview with Foreign Policy, Adm. Craig Faller, the four-star military officer who heads U.S. Southern Command, pointed to a Chinese disinformation campaign designed to blame the United States for the blackouts that devastated Venezuela in recent weeks. Maduro has himself publicly accused the U.S. Defense Department of causing the blackouts. Following the power failures, Beijing offered to help the Venezuelan government restore its grid. “China came out publicly, a state spokesman, implying the blackouts were attributable to U.S. cyberattacks,” Faller said during a recent trip to Washington, D.C. “That is just such a blatant lie. The blackouts are attributed to Maduro’s inept leadership, corruption, inattention to his people, and lack of concern for any humanity.” “I think the biggest threat to democracy and the way of life around the world is the trend that we see in China,” Faller said. He said China was trying to assert economic control in Venezuela by investing in infrastructure and providing hefty loans that Caracas would have difficulty paying back. Faller would not discuss specific U.S. plans for a military intervention to oust Maduro in favor of opposition leader Juan Guaidó. He said the military is “looking at a range” of options and “will be ready” for whatever decision the president makes. “We are on the balls of our feet,” Faller said. “The crisis in Venezuela could approach that degree by the end of this year if Maduro still remains in power. It’s that bad,” said Faller, who served previously as the director of operations at U.S. Central Command. (Foreign Policy: https://foreignpolicy.com/2019/04/08/us-military-wary-of-chinas-foothold-in-venezuela-maduro-faller-Guaidó-trump-pentagon/)

 

Pompeo to visit Venezuela border on South America tour

US Secretary of State Mike Pompeo will travel to the Venezuela border in Colombia to highlight the plight of refugees during a four-nation trip to Latin America, the State Department announced Monday. Pompeo will pay a brief visit on Sunday to the Colombian city of Cucuta after stops in Chile, Paraguay and Peru -- all four countries led by right-wing or center-right leaders favorable to the tough US approach on Venezuela. In Cucuta, Pompeo will "visit entities supporting Venezuelan refugees and assess the challenges due to the closed border," the State Department said in a statement. In Peru, the State Department said Pompeo on Saturday will discuss support for Venezuelan refugees as well as the country's role in leading the Lima Group -- the group of Latin American nations and Canada that meets on the crisis in Venezuela. (France24: https://www.france24.com/en/20190408-pompeo-visit-venezuela-border-south-america-tour)

 

Special Representative Abrams to discuss Venezuela crisis with Portuguese and Spanish officials

Special Representative for Venezuela Elliott Abrams will meet with Portuguese and Spanish officials in Lisbon and Madrid April 9-11 to discuss the deteriorating situation in Venezuela. The United States, Portugal, and Spain support a Venezuelan-led transition toward free and fair elections. The United States is committed to supporting the restoration of democracy in Venezuela, as outlined in their constitution and through the actions of Interim President Juan Guaidó and the National Assembly. (US State Department: https://www.state.gov/r/pa/prs/ps/2019/04/290958.htm)

 

EU must step up diplomacy on Venezuela crisis: Spain

EU and Latin American efforts to resolve the Venezuela crisis peacefully are too slow and must be accelerated, Spain's foreign minister Josep Borrell said Monday. In Montevideo on February 7, an International Contact Group of European Union and Latin American countries gave themselves 90 days to pave the way for new elections in Venezuela, which President Nicolas Maduro rejects. With less than a month before the deadline, the work of the Contact Group is "too slow", Borrell said at talks in Luxembourg with fellow EU foreign ministers. "We did not feel a sense of urgency," Borrell said of the last Contact Group talks Thursday in Ecuador. "After today's meeting (in Luxembourg), we all left convinced that the work must be speeded up." A diplomat added that the foreign ministers were "disappointed" with the lack of progress made by the contact group. In Ecuador, EU foreign policy chief Federica Mogherini last week reiterated her "firm rejection of the use of force to address the current crisis". She called for "the full restoration of the democratic constitutional order and the rule of law". Borrell raised the possibility of more sanctions against members of the Maduro government. (France24: https://www.france24.com/en/20190408-eu-must-step-diplomacy-venezuela-crisis-spain)

 

Mexico is open to mediating Venezuela crisis, president says

President Andres Manuel Lopez Obrador said Monday that Mexico was willing to serve as a mediator between the opposing sides in Venezuela after Nicolas Maduro announced that he was open to having a third-party help end the political crisis here. "Mexico has its doors open so that a peaceful path can be found to resolving Venezuela's conflict," Lopez Obrador, the founder and leader of the leftist National Regeneration Movement (Morena), said during his daily press conference at the National Palace. The president said Mexico proposed that the parties sit down and talk. "That's the best thing, find a peaceful way (out of) the conflict in Venezuela," Lopez Obrador, popularly known as AMLO, said. "We're willing to help so that a dialogue can take place," the president said, noting that this was the Mexican tradition in foreign policy. The president warned, however, that there must be "acceptance by the opposition group" before a dialogue could take place. "The two parties have to request it. Request it, and we will help. We have already said that there are very good diplomats in Mexico and we even talked about mediation by diplomats," Lopez Obrador said. AMLO said it would be a positive move to use Mexico as the location for any dialogue. On Saturday, Maduro asked Mexico, Bolivia, Uruguay and the Caribbean Community (CARICOM) to reactivate the Montevideo process, an initiative to promote dialogue between the opposing sides in Venezuela. The opposition, led by National Assembly Speaker Juan Guaidó, has said on numerous occasions that it would only back a dialogue that resulted in Maduro stepping down. (EFE: https://www.hoylosangeles.com/efe-3947552-15313250-20190408-story.html)

 

Maradona fined after dedicating win to Venezuela's Maduro

Diego Maradona has been fined for dedicating a recent victory by his Mexican club to Venezuelan President Nicolas Maduro, Mexico's football federation said on Monday (Apr 8).  The Argentine, who coaches Dorados de Sinaloa, had dedicated a 3-2 win over Tampico Madero to Maduro and Venezuela in a news conference at the end of last month. The body said in a statement that Maradona had been fined an unspecified sum for violating the federation's code of ethics which mandates political neutrality. Maradona had said he was dedicating the victory to Maduro and Venezuelans caught up in an economic crisis. He also criticized US President Donald Trump. (Channel News Asia: https://www.channelnewsasia.com/news/sport/football-maradona-fined-after-dedicating-win-to-venezuela-s-11424974)

 

OP-ED: Showdown of world powers in Venezuela enters dangerous, new phase, by Fred Kempe

The first major showdown of our new era of great power competition, unfolding with accelerating speed over the past ten weeks in Venezuela, has entered a dangerous new phase. How this drama turns out may mark the most significant test yet of the Trump administration’s credibility, following a highest-level chorus this week of President Donald Trump, Secretary of State Mike Pompeo and National Security Advisor John Bolton, who all declared – in one way or another – that Russia had to get out of the country. What raised the stakes was Russia’s well-publicized and provocative move on March 23 to land two planes with some 100 soldiers in Caracas. The ostensible reason for their arrival was to service Venezuela’s Russian-made S-300 air defense systems, which are said to have been damaged in recent energy blackouts. Other Russian military contractors and mercenaries are already believed to be providing security support for the Maduro regime. That was accompanied by this week’s decision of Maduro’s puppet National Constituent Assembly to strip interim President Juan Guaidó of his immunity. That raises the possibility, perhaps as early as this weekend, that the Maduro regime could arrest and imprison Guaidó. What concerns US officials is that Vladimir Putin may be laying the ground for making Venezuela the defining foreign policy debacle for President Trump in the same way Syria became that for the Obama administration. Though there is a great deal that differentiates Venezuela and Syria, what connects them is considerable: a weakened dictator, who would be much more likely to fall without Moscow’s support, a U.S. declared red-line that the Kremlin finds unconvincing, and a chance for Putin to shore up his global reputation at the expense of Washington –this time in the Western Hemisphere. As is so often the case in the Trump administration, there is also a personal element for a president who has refrained from the tough language toward Putin and Russia employed by the top US officials around him. Putin is betting big that Trump has neither the will nor a plan. (CNBC: https://www.cnbc.com/2019/04/05/showdown-of-world-powers-in-venezuela-enters-dangerous-new-phase.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.