June 06, 2019

Oil & Energy

Venezuela's oil exports drop 17% in May as sanctions kick in

Venezuelan PDVSA’s oil exports took another hit in May, following a deadline for customers to wind-down purchases in order to comply with U.S. sanctions, according to documents from the state-run company and Definitive Eikon data. The energy firm’s exports of crude and refined products fell 17% in May from the previous month to 874,500 barrels per day (bpd), mainly due to difficulty in selling off barrels of upgraded crude that used to be bought by U.S. refiners. Venezuela has drained oil inventories since late January, when Washington imposed sanctions on PDVSA, to offset declining crude output, according to analysts. That allowed the firm to maintain exports around 1 million bpd for the following three months despite the measures. But some customers ended purchases of Venezuelan oil in late April to comply with sanctions, leaving PDVSA with an accumulation of upgraded oil and further reducing its portfolio of regular buyers, according to the reports and data. (Reuters, https://www.reuters.com/article/us-venezuela-oil-exports/venezuelas-oil-exports-drop-17-in-may-as-sanctions-kick-in-data-idUSKCN1T521H)

 

Maduro’s PDVSA to open Moscow office this month

PDVSA plans to open an office in Moscow this month, Interfax cited the Maduro regime's oil minister as saying on Thursday during a trip to the Russian city of St. Petersburg. Caracas said earlier this year that it was moving its Lisbon-based office to Moscow in order to safeguard the country's assets. (The Moscow Times: https://www.themoscowtimes.com/2019/06/06/venezuelas-oil-company-office-to-open-in-moscow-this-month-a65901)

 

Commodities

Maduro claims that Venezuela has 1.2 billion Euros in mineral reserves

In a recent televised speech, Nicolas Maduro claimed that Venezuela has 1.2 billion Euros in mineral reserves, including gold, diamonds, nickel, bauxite, iron, and others. He added that Venezuela has been legally certified to have 2236 tons of gold, according to the regime’s news agency. More in Spanish: (AVN, http://www.avn.info.ve/node/472987)

 

Economy & Finance

Venezuela defaults on gold swap with Deutsche

Venezuela has failed to make interest payments on a gold swap agreement valued at US$ 750M with Deutsche Bank (NYSE:DB), leading the lender to take possession of the precious metal used as collateral. The loan that Deutsche Bank made in 2016 was backed by 20 tons of gold as collateral. The agreement was set to expire in 2021 but was settled early due to the missed interest payments. Meanwhile, Venezuela opposition leader Juan Guaido's parallel government has asked the bank to deposit US$ 120M into an account outside of Nicolas Maduro's control; that amount represents the difference in price from when the gold was acquired to its current level. Venezuela's gold holdings, one of Maduro's few sources of capital to keep his regime going and his military forces loyal, have been shrinking. In March Venezuela's Central Bank missed a March deadline to buy back gold from CITIGROUP For almost US$ 1.1B. And earlier, the Bank of England refused to give back US$ 1.2B worth of Venezuelan gold. (Bloomberg, https://www.bloomberg.com/news/articles/2019-06-04/venezuela-is-said-to-default-on-gold-swap-with-deutsche-bank)

 

90% drop in construction industry reported here

Mauricio Brin, head of Venezuela’s construction industry chamber, reports that construction here has dropped by 90% since 2019; and is currently totally paralyzed. He added that most public works have been paralyzed since 2010, “because the state has been unable to finance” them. More in Spanish: (El Universal, http://www.eluniversal.com/economia/42003/reportan-caida-de-mas-de-90-en-el-sector-construccion)

 

Politics and International Affairs

Leaked audio reveals Pompeo saying US has struggled to keep Maduro opposition united

In a closed-door meeting last week, Secretary of State Mike Pompeo said the U.S. has struggled to keep the opposition to Venezuelan President Nicolás Maduro united, according to The Washington Post. “Our conundrum, which is to keep the opposition united, has proven devilishly difficult,” Pompeo said in audio obtained by the Post. “The moment Maduro leaves, everybody’s going to raise their hands and [say], ‘Take me, I’m the next president of Venezuela.’ It would be forty-plus people who believe they’re the rightful heir to Maduro.” The secretary of State made the remarks last week during a meeting with Jewish leaders, according to the Post, at one-point declining to answer a sensitive question because “someone’s probably got a tape recorder on.” Pompeo added that while he believed Maduro would inevitably be ousted, he “couldn’t tell you the timing.” The secretary of State said the problems in uniting the opposition have been present since he became director of the CIA in 2017 and that internal squabbles among Maduro’s enemies were preventing a successful uprising. Maduro, Pompeo said in the recording, "is mostly surrounded by Cubans," adding, "He doesn’t trust Venezuelans a lick. I don’t blame him. He shouldn’t. They were all plotting against him. Sadly, they were all plotting for themselves." The sentiments Pompeo expresses in the recording are “a sober but accurate view,” Shannon O’Neil, a Venezuela expert at the Council on Foreign Relations, told the newspaper. “They remain divided over how to take on the Maduro regime — whether or not to enter into dialogue, whether or not to engage with the military, whether or not to run a presidential candidate or boycott elections,” she told the Post. “They don’t even retweet each other.” Pompeo blamed the disarray among the opposition for the failure of the April 30 coup attempt by a group of soldiers, which fizzled out within 24 hours. The Washington Post said Pompeo made the comments at a meeting last week in New York of which it had a recording, despite the official US support for interim president Juan Guaido. Diosdado Cabello, the US-sanctioned head of Maduro’s puppet “Constitutional Assembly” quickly called Pompeo “incompetent” for failure to unite the opposition and for “believing in their lies”; and invited him to visit Venezuela. (The Washington Post: https://www.washingtonpost.com/...pompeo...venezuelas.../85385a33-8eae-4ba5-a9ac-6; The Hill: https://thehill.com/policy/international/americas/447159-pompeo-reveals-in-leaked-audio-us-has-struggled-to-keep-maduro; RT: https://www.rt.com/news/461180-pompeo-opposition-unite-fail/; France24: https://www.france24.com/en/20190606-pompeo-warns-divided-venezuela-opposition-report; and more in Spanish: El Universal, http://www.eluniversal.com/politica/42042/cabello-ravell-debe-pagar-30-mil-millones-de-bolivares-para-la-construccion-de-escuelas-para-ninos)

 

Venezuelan troops trained rebels to fire rockets, Colombia says

Venezuelan soldiers loyal to embattled Nicolas Maduro have trained members of South America’s most dangerous guerrilla force to use heat-seeking anti-aircraft missiles, according to Colombian authorities. National Liberation Army fighters were instructed in how to use the Russian-manufactured IGLA surface-to-air missile system, according to General Luis Navarro, Colombia’s top-ranking soldier. The Marxist force known as the ELN has long used Venezuelan territory as a refuge and has a close ideological affinity with Maduro’s socialist government, which the U.S. is trying to topple. Colombia’s intelligence services don’t know whether the ELN actually has acquired its own missile launchers, nor do they know whether the training was organized by a faction within Venezuela’s military or sanctioned at the highest levels in Caracas. The ELN received training clandestinely rather than at Venezuelan army bases, Navarro said. “These are weapons used by the Venezuelan armed forces,” he said in an interview at a Bogota air base. “We have the clear evidence and the necessary intelligence to affirm that the ELN is considered as part of the defense of the revolution of the Maduro regime.” Now, the military intelligence report says, 45% of the ELN’s fighters - including its commanders - are hiding in Venezuela and receiving protection from Maduro. Venezuela’s Socialist regime has over the years acknowledged that the ELN enters the country but denies supporting the rebel group. “The ELN considers Venezuelan states bordering Colombia as their strategic rearguard,” said Navarro, adding that growth in the ELN and FARC ranks was “a risk and we have to contain them.” The ELN is present in 12, or roughly half, of Venezuela’s states, according to Insight Crime, a Washington-based research organization that monitors Latin America, a report recently underscored in Twitter by the US Southern Command. (Bloomberg: https://www.bloomberg.com/news/articles/2019-05-06/venezuelan-troops-trained-rebels-to-fire-rockets-colombia-says; SOUTHCOM: https://twitter.com/Southcom/status/1136314020162654209; Reuters: https://af.reuters.com/article/worldNews/idAFKCN1T62LM)

 

U.S. Bars Cruises to Cuba in Retaliation for Venezuelan Role

The U.S. State Department is barring cruise ships from going to Cuba as part of a crackdown on travel to the island, citing government repression and its role in the humanitarian crisis in Venezuela. “The United States will no longer permit visits to Cuba via passenger and recreational vessels, including cruise ships and yachts, and private and corporate aircraft,” the department said Tuesday. The action threatens to cut off a burgeoning tourist trade with Cuba that got underway during the Obama administration. Major cruises operators, including market leader Carnival Corp. and No. 2 Royal Caribbean Cruises Ltd., have regular itineraries delivering thousands of American tourists to Havana and other Cuban cities. The decision caught industry analysts and executives by surprise. Even as the threat of a Trump crackdown loomed, cruise lines had been adding sailings to the island, and Havana was making plans to triple the size of its cruise-ship terminal. (Bloomberg, https://www.bloomberg.com/news/articles/2019-06-04/u-s-to-bar-cruise-ships-from-cuba-in-retaliation-for-venezuela)

 

Brazilian President accepts credentials of Guaido’s envoy

President Jair Bolsonaro accepted on Tuesday the credentials of Maria Teresa Belandria, the envoy to Brazil of Venezuela’s National Assembly speaker, Juan Guaido, who is recognized by Brasilia as that country’s “legitimate and interim” head of state. Belandria arrived in Brazil in February, less than a month after Guaido took oath as Venezuela’s interim president following the National Assembly’s refusal to accept the legitimacy of Nicolas Maduro, who was sworn in for a new six-year term in January that the opposition and dozens of countries do not recognize following what they called “fraudulent” elections in May 2018. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2479470&CategoryId=10717; Reuters, https://www.reuters.com/article/us-venezuela-politics-brazil/brazils-bolsonaro-formally-recognizes-venezuelan-opposition-envoy-idUSKCN1T5312)

Venezuelan reporters push past police to enter Parliament

A group of reporters backed by several opposition lawmakers forced their way into Venezuela’s National Assembly after more than a month of being kept out by police. Led by the National Press Workers Union (SNTP), the reporters broke through the security cordon by pushing past some officers lined up in front of an entrance to the Federal Legislative Palace. On hand were several lawmakers who helped the journalists get into the building after a brief argument with the police. “Today, by a decision, and I have to say it, of the lawmakers of the National Assembly, we have finally been able to enter the building and do the work we are supposed to do,” said the president of the SNTP, Marco Ruiz. The legislators welcomed the press, while accusing the Maduro regime of seeking to censor the news. (Latin American Herald Tribune, http://wwwaht.com/article.asp?ArticleId=2479467&CategoryId=10717)

 

Putin says Russia and China want situation in Venezuela to stabilize, denies military support for Maduro

Russian President Vladimir Putin said on Wednesday after talks in Moscow with Chinese leader Xi Jinping that Moscow and Beijing wanted the situation in Venezuela to stabilize. Putin also said that Moscow has no plans to send troops to shore up Nicolás Maduro. Asked about US President Donald Trump's tweet earlier this week that Moscow had informed Washington it had pulled its personnel out of Venezuela, Putin said that Russian experts come and go to service Russian-made weapons bought by Caracas. "We aren't building any military bases there, we aren't sending troops there, we have never done that," Putin said. "But we have fulfilled our contract obligations in the sphere of military-technical cooperation, and we will keep doing that." He warned US military intervention in Venezuela would be a disaster. Even Washington's allies did not support such a course of action, Putin said. (Reuters: https://www.reuters.com/article/us-venezuela-politics-putin-xi/russia-and-china-want-situation-in-venezuela-to-stabilize-putin-idUSKCN1T61VC; TRT World: https://www.trtworld.com/americas/putin-says-no-plans-to-send-troops-venezuela-crisis-26278)

 

Lavrov confirms Russia’s contacts with Venezuelan opposition

Russian Foreign Minister Sergey Lavrov said in a recent interview that Moscow hasn't ended contact with Venezuela's opposition. "As for your question about working with the opposition, we are not quitting this work. As I said, in Venezuela we responded several times to requests for contact. These contacts took place", Lavrov said in an interview with RBC. "During these conversations, we reaffirmed our position in favor of a national dialogue, expressed disagreement with the fact that in response to the call by the 'Montevideo Mechanism' to start such a dialogue, when President [Nicolas] Maduro agreed, [opposition leader Juan] Guaido haughtily refused", he said. (Sputnik International: https://sputniknews.com/russia/201906061075669431-russia-venezuela-oslo-talks/)

 

Xi says China will play 'constructive role' on Venezuela

China will work with the international community to play a constructive role with Venezuela and help the country to get back on a normal development path as soon as possible, Chinese President Xi Jinping told Russian media. Xi told TASS news agency and Rossiyskaya Gazeta newspaper that China opposes foreign interference, unilateral sanctions, the use of force, or threats of the use of force, when it came to Venezuela. (Reuters, https://www.reuters.com/article/us-venezuela-politics-china/xi-says-china-will-play-constructive-role-on-venezuela-idUSKCN1T606W)

 

Venezuela, now a top source of U.S. asylum claims, poses a challenge for Trump

Nearly 3.9 million people have fled Venezuela, with millions more expected to follow this year, according to William Spindler, spokesman for the United Nations refugee agency. As a result, Venezuela has overtaken China to become the No. 1 country of origin for those claiming asylum in the U.S. upon arrival or shortly after, with nearly 30,000 Venezuelans applying for asylum with U.S. Citizenship and Immigration Services in 2018. Nearly one-third of claims filed with the agency come from Venezuelans, the most of any country by far, according to the latest data. That has created a dilemma for the Trump administration in which its foreign policy, which considers Maduro’s government an oppressive dictatorship, is colliding with its immigration policy, which has sought aggressively to hold down the number of people admitted to the country through asylum. President Trump has railed against asylum applicants, saying that many are engaging in a “hoax” and a “big, fat con job.” Many Central American asylum seekers, who are Trump’s primary target, fall into a different category than the Venezuelans. But because of the foreign policy focus on Venezuela, the asylum seekers from that country pose a more direct challenge to the administration’s anti-immigration agenda. Only about 2% of those granted asylum in the U.S. are Venezuelan, according to a Homeland Security report in March. While approval rates appear to be increasing, about 50% of Venezuelan asylum claims are denied, on average. Those denied asylum are at risk of deportation back to their home country. The administration has resisted a bipartisan push — including from Florida Republican Sen. Marco Rubio, an avowed hawk on Venezuela — to grant Venezuelans the right to stay in the U.S. under so-called temporary protected status. That program, designed to deal with people fleeing natural disasters or civil unrest, offers recipients protection from removal and the right to work legally in the U.S. But administration officials have sought to dismantle the program as part of their wider efforts to reduce immigration. In fact, the Trump administration has stepped up deportations of Venezuelans. U.S. Immigration and Customs Enforcement deported 336 Venezuelans last year, far fewer than the tens of thousands of Central Americans being removed each year, but a 35% increase over the year prior. Sen. Richard J. Durbin (D-Ill.), who has pushed for granting temporary status to Venezuelans, said Trump’s policy is counterproductive. “Blocking Venezuelan refugees from seeking safe haven and forcing them to return home at this very dangerous time plays right into Maduro’s hands,” Durbin said. (Los Angeles Times: https://www.latimes.com/politics/la-na-pol-trump-venezuela-asylum-immigration-20190605-story.html)

 

Maduro court forces publication to pay US$ 4.7 million to alleged socialist drug lord

Venezuela’s Supreme Court, run by loyalists to socialist dictator Nicolás Maduro, ordered the online news outlet La Patilla to pay senior chavista official, television show host, and alleged cartel chief Diosdado Cabello US$ 4.7 million for aggregating a 2015 article in which Hugo Chávez’s former security chief accused Cabello of drug trafficking.  La Patilla is a Venezuelan online publication that posts anti-socialist material, usually curating news from other sources rather than publishing original reports, as well as entertainment and lifestyle news. The story that Cabello sued over was an original report in the Spanish newspaper ABC revealing that the former security chief, Leamsy Salazar, had left Venezuela and was under DEA protector, willing to testify to Cabello being the head of the Cartel de los Soles (“cartel of the suns”). The Cartel de los Soles is thus named because it is made up of members of the Venezuelan military, who wear sun medallions on their uniforms. It is an intercontinental cocaine trafficking operation, according to American law enforcement. Cabello responded to the report with a lawsuit rampage targeting La Patilla, two other Venezuelan outlets, ABC, and the Wall Street Journal. A U.S. court threw the case against the Wall Street Journal out in 2018 because, the judge ruled, Cabello did not provide any evidence that disproved “that he is, in fact, under investigation for his potential involvement in drug trafficking and money laundering activities.” Responding to the ruling, La Patilla owner Alberto Ravell called it “judicial terrorism.” Cabello is one of several senior Maduro officials under severe U.S. sanctions. The U.S. Treasury accused him in a 2018 statement announcement sanctions on him of being “directly involved in narcotics trafficking activities.” A June 2018 report revealed that the Treasury had confiscated US$ 800 million in assets that Cabello had hidden in the United States. (Breitbart: https://www.breitbart.com/the-media/2019/06/05/venezuela-court-forces-publication-to-pay-4-7-million-to-alleged-socialist-drug-lord/)

 

How Maduro 'spent thousands of state funds on Cuban rituals'

Nicolas Maduro allegedly spent thousands of state funds on religious rituals in Cuba, according to a former intelligence official. Hugo Carvajal, former director of the country’s military intelligence, lashed out at Maduro in an open letter. Responding to a claim from the Venezuelan ruler that he was dismissed for gross misconduct, Carvajal made several explosive claims about Maduro’s religious beliefs and financial conduct. He wrote: "The people should also know that your religious sacrifice rituals in Cuba were paid by your minister of finance, who on at least one occasion sent a briefcase with US$ 500,000 in cash to Havana in a PDVSA plane." Maduro was accused of performing Santeria rituals in Cuba while leaving ordinary citizens with desperate shortages back in Venezuela. Carvajal continued: “How dare you call yourself Christian when you follow any belief you come across? “You are a devout Santero, follower of Sai Baba and who knows what other religion. I suppose that you must by some means justify all the atrocities you have committed against the Venezuelan people.” Maduro was raised as a Roman Catholic and claims to maintain his Christian beliefs – but some fear his relationship with Cuba is religious as well as political. The Santero faith combines Roman Catholicism and Yoruba beliefs. (Express: https://www.express.co.uk/news/world/1136689/venezuela-crisis-maduro-cash-cuba-ritual-santeria-spt)

 

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.