July 18, 2019

Logistics & Transport

U.S. Department of Transportation suspends air service to and from Venezuela

The U.S. Department of Transportation Office issued a notice this week announcing the suspension of air service to and from Venezuela. Venezuela imports fresh crab meat that is flown into the U.S., and the suspension of air service could potentially impact the market. Most of this product is used on the East Coast of the U.S. With the summer season quickly approaching, this suspension is coming at a time that is the highest demand period of the year. (Seafood News: https://www.seafoodnews.com/Story/1141620/US-Department-of-Transportation-Suspends-Air-Service-to-and-from-Venezuela)

 

Oil & Energy

Opposition-controlled CITGO plans to borrow US$ 1.9 billion as 2020 bond payment nears

CITGO Holding Inc., the refining company whose operations are largely under the control of Venezuela’s political opposition, plans to issue new debt to pay back US$ 1.9 billion of bonds that mature in February. The refinancing would include US$ 1.4 billion of senior secured notes due in 2024 and a US$ 500 million senior secured term loan B facility that matures in four years, the Houston-based company said in a statement. It didn’t say who is advising on the proposed deal. That offering’s success may depend upon a Delaware court’s ruling about the legitimacy of two rival corporate boards at state-owned oil giant Petroleos de Venezuela SA, the parent of CITGO. One board was appointed by Nicolas Maduro; the other one by the National Assembly leader Juan Guaidó. Oral arguments are set to be held Thursday. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2481128&CategoryId=10717)

 

Fitch raises Venezuela's opposition-controlled Citgo rating on new bond

Fitch Ratings has upgraded the long-term IDR of CITGO Holding, Inc. (Holdco) to 'CCC+' from 'CCC', upgraded the ratings of all senior secured debt at Holdco to 'B+'/'RR1' from 'B'/'RR1', and assigned a 'B+'/'RR1(EXP)' rating to the new Holdco secured notes and term loan. Proceeds from the new secured notes and term loan will be used to pay off the company's existing 10.75% 2020 Holdco notes. Fitch has also affirmed the long-term IDR of CITGO Petroleum Corp. (Opco) at 'B and affirmed the 'BB'/'RR1' ratings for Opco's secured notes, term loan and IRBs. The Outlook at Opco remains Stable. The main drivers for today's actions are the company's successful expected refinancing of its US$ 1.875 billion 2020 Holdco maturity, which addresses near-term refinancing issues at HOLDCO and helps reduce contagion risk for CITGO through favorable revisions to change in control indenture language. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2481121&CategoryId=10717)

 

Moody's rates new CITGO US$ 1.9 billion debt issue Caa1

Moody's Investors Service (Moody's) assigned a Caa1, LGD4 rating to CITGO Holding, Inc.'s proposed up to US$ 1.37 billion in senior secured notes due 2024 and up to US $500 million in proposed senior secured term loan B due 2023. Proceeds from the transactions will be used to refinance US$ 1.87 billion in senior secured notes due 2020. The outlook is stable. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2481133&CategoryId=10717)

 

S&P rates new US$ 1.9 billion CITGO Debt at B

S&P Global Ratings today assigned its 'B' issue-level rating and '2' recovery rating to CITGO Holding Inc.'s US$ 500 million senior secured term loan B due 2023 and US$ 1.37 billion senior secured notes due 2024 and put the issue-level ratings on CreditWatch with developing implications, where we placed all of our ratings on the company on Dec. 7, 2017. The '2' recovery rating indicates our expectation for substantial (70%-90%; rounded estimate: 80%) recovery in the event of a default. The company intends to use the net proceeds from the senior notes to refinance its existing outstanding $1.87 billion 10.75% notes. Therefore, we view this transaction as leverage neutral. Our issuer credit ratings on CITGO Holding Inc. and subsidiary CITGO Petroleum and the issue ratings on their debt are unchanged and remain on CreditWatch with developing implications, where they were placed Dec. 7, 2017. CITGO Holding Inc. is the direct parent of CITGO Petroleum Corp., a U.S. refinery and petroleum product marketer and distributor. The company is owned by Petroleos de Venezuela S.A. (PDVSA), Venezuela's state-owned oil company. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2481132&CategoryId=10717)

 

Economy & Finance

Venezuela's debts to China, Russia would be restructured through Paris Club

Loans to Venezuela from Maduro allies Russia and China would be renegotiated though the Paris Club if Maduro leaves power, an advisor to the opposition said on Wednesday, responding to concerns about favorable treatment for the two countries. Ricardo Hausmann, who represents opposition leader Juan Guaidó at the Inter-American Development Bank (IADB), said Guaidó's team has not determined how loans might be restructured under its governance because bilateral debt talks typically take place under the auspices of the Paris Club creditor group. "It is not as if the chapter on bilateral debt says we are going to treat it differently. It is treated differently in international practice through the Paris Club," said Hausmann, a Harvard economics professor and former planning minister, at the IADB's annual meeting in Guayaquil, Ecuador. "We have not come out with any specific guidelines on the treatment of bilateral debt for that reason." Earlier this month, Guaidó's advisers published a plan pledging equal treatment for creditors during an eventual restructuring process of Venezuela's $200 billion in debt if Maduro leaves power. The document carved out some exceptions, including for the billions of dollars in loans from Russia and China, which drew criticism from a group of bondholders known as the Venezuela Creditors Committee, who said the "burden" should be shared equally between public and private creditors. (The New York Times: https://www.nytimes.com/reuters/2019/07/17/world/americas/17reuters-latam-economy-iadb-venezuela.html; Reuters: https://www.reuters.com/article/us-latam-economy-iadb-venezuela/venezuelas-debts-to-china-russia-would-be-restructured-through-paris-club-Guaidó-advisor-idUSKCN1UC2JI

 

Venezuela may switch from SWIFT to Russian payment system to skirt US sanctions

Venezuela is considering using the Russian alternative to the traditional SWIFT international payment system, as the country braces for new US sanctions that could further weaken its financial sector. Venezuela’s central bank has sent a request on the matter to the Central Bank of Russia (CBR) as the regulator’s approval is necessary if Caracas wants to use the payment platform, the report said, citing sources. However, neither of the sides involved, nor the world’s largest payment system, SWIFT, has commented on the report. The Russian alternative payment system already includes nearly 400 users, including the country’s major banks. Last month, the Central Bank of Russia (CBR) said that foreign banks had shown interest in joining the platform and are already testing it. (RT: https://www.rt.com/business/464389-venezuela-russia-swift-alternative/)

 

Venezuela's opposition congress names ad-hoc central bank board

Venezuela’s opposition-controlled National Assembly on Tuesday appointed an ad-hoc board for the country’s central bank with the aim of “protecting its international reserves” from Nicolas Maduro’s regime. The assembly head, Juan Guaidó, named five people to the ad-hoc board. Guaidó did not explain how the ad-hoc board would function, but the opposition has previously sought to prevent Maduro’s government from accessing central bank gold kept at the Bank of England. (Reuters, https://www.reuters.com/article/us-venezuela-politics/venezuelas-opposition-congress-names-ad-hoc-central-bank-board-idUSKCN1UB2HP)

 

Politics and International Affairs

Colombian president says Maduro regime harbors, funds leftist guerrillas

Colombian President Ivan Duque said in an interview with EFE that the National Liberation Army (ELN) guerrilla group is recruiting minors in Venezuela and has the backing of that neighboring country's leftist president, Nicolas Maduro. Duque said Maduro supports not only the ELN but also dissident elements of a former rebel army - the Revolutionary Armed Forces of Colombia (FARC) - that signed a peace deal three years ago with Colombia's previous government and has transformed itself into a leftist political party. “The ELN has a situation and that's that in Venezuela, Nicolas Maduro, the dictator of Venezuela, is protecting them. He's giving them money and sponsoring their efforts to recruit children to work in illegal mining in parts of Venezuela. And on top of that, the ELN's leaders are in Venezuela and protected by Maduro. Alias "Pablito" is there. Another leader, "Antonio Garcia," is there. They also have groups of recruiters there, and many of the criminal attacks they're planning in border areas are planned in Venezuela”, he said; and added: “That dictator in Venezuela is protecting not only the ELN leaders, but also those dissident leaders of the FARC. It's no secret to anyone that that's happening, and that "Ivan Marquez" is in Venezuela and "El Paisa" is in Venezuela and "Romaña" is in Venezuela. And it'd be no surprise if "Santrich" were there. All indications are that he's there under the protection of the Venezuelan dictatorship. That shows that they're looking to sponsor a sort of union of criminal clans to perpetrate violent actions in Colombia.” (EFE: https://www.efe.com/efe/english/portada/colombian-president-venezuela-harbors-funds-leftist-guerrillas/50000260-4024978)

 

EU readies sanctions on Venezuelan security officials

The European Union is preparing new sanctions against Venezuelan security forces involved in human rights violations, the bloc’s foreign policy chief said on Tuesday, following the death in custody of a navy captain amid allegations of torture. Federica Mogherini said the death of Rafael Acosta while in custody for alleged participation in a coup plot was a “stark example” of the deteriorating situation in the country, amid a crackdown by the government of President Nicolas Maduro. “The EU is ready to start work toward applying targeted measures for those members of the security forces involved in torture and other serious violations of human rights,” Mogherini said in a statement. (Reuters, https://www.reuters.com/article/us-venezuela-politics-eu/eu-readies-sanctions-on-venezuelan-security-officials-idUSKCN1UB1L9)

 

MERCOSUR bloc calls for Venezuela elections

South American trade bloc MERCOSUR called for "free, fair and transparent presidential elections, as soon as possible" in Venezuela, at its summit in Argentina on Wednesday. The political and economic crisis in Venezuela was the center of the political debate among the heads of state that, this Wednesday, met in Santa Fe, Argentina in the MERCOSUR semi-annual summit, a block from which this country is currently suspended. The host of the regional meeting, the Argentine president, Mauricio Macri, affirmed that he recognizes the National Assembly as the legitimate State organ of the country, and expressed his solidarity with Venezuela and the humanitarian crisis that he blames the regime of Nicolás Maduro. Also, he called on him to “stop obstructing the democratic transition and stop with the violations of human rights of Venezuelans.” The president of Brazil, Jair Bolsonaro, maintained that the social, political and economic crisis that Venezuela is experiencing was born “from the populism and the irresponsibility of a project of a country that had no limits.” “We do not want what happens unfortunately with Venezuela. We ask God to give us strength and intelligence and that the destiny of Venezuela is the same as we have, that is, democracy, freedom, and prosperity,” said Bolsonaro. For his part, the Paraguayan president, Mario Abdo Benítez, reminded everyone present that “one of the fundamental pillars of Mercosur is the political agreement, which must be translated into mechanisms that guarantee the full validity of the Rule of Law and Democracy.” Three of Mercosur's members -- Brazil, Argentina and Paraguay -- have backed Guaidó, while only Uruguay, under a socialist government, has not done so. (France24: https://www.france24.com/en/20190717-south-american-bloc-calls-venezuela-elections; MERCOSUR Press: https://en.mercopress.com/2019/07/18/what-did-the-mercosur-s-leaders-say-about-venezuela-in-santa-fe)

 

Eight countries call for Inter-American Commission on Human Rights to enter Venezuela

A group of 8 countries submitted a draft resolution condemning human right violations in Venezuela to the Permanent Council of the Organization of American States (OAS), demanding an investigation and requesting access by the Inter-American Commission on Human Rights into the country. The draft resolution seeks to “firmly condemn the grave and systematic violations” of the rights in Venezuela. the project also seeks to “demand immediate, complete and unimpeded access” to Venezuela by the IACHR. (2NYZ: https://2nyz.com/2019/07/17/eight-countries-call-for-inter-american-commission-on-human-rights-to-enter-venezuela/)

 

In a United Nations report, a Socialist details Venezuela’s horrors

Twenty years after Hugo Chávez gained power in Venezuela, promising a workers’ paradise, the United Nations has finally acknowledged that his regime and that of his successor, Nicolás Maduro, is a brutal dictatorship guilty of widespread human-rights abuses and of policies that have led to economic deprivation. The acknowledgment comes in the form of a scathing report, coincidentally released on July 4, that officially confirms the Venezuelan inferno that has been obvious for a long time. That the report was issued by Michelle Bachelet, U.N. high commissioner for human rights, should have special meaning. Bachelet, a former president of Chile (2006–10), is a socialist whose father died in prison after being tortured by the military dictatorship of Augusto Pinochet. She had long resisted efforts to condemn the Venezuelan tyranny, preferring to warn against outside intervention and to call for a new “dialogue” every time negotiations between the regime and the opposition reached a stalemate. (News Yahoo, https://news.yahoo.com/united-nations-report-socialist-details-103013098.html;_ylt=AwrC1DFLly9dC2oAYiHQtDMD;_ylu=X3oDMTBydDI5cXVuBGNvbG8DYmYxBHBvcwM2BHZ0aWQDBHNlYwNzcg--)

 

Opposition calls for mass rally on Tuesday

Venezuela's opposition leader announced a mass street rally set for Tuesday to move forward the “next stage” of their US-backed attempt to gain power in the oil-rich country. "We call on all of Venezuela to mobilize. Together, with the citizen power and the work of the National Assembly, we will advance to a next stage in our struggle. Everyone to Caracas!”  Hampered by opposition from the Venezuelan army and popular challenges to his legitimacy, Guaidó's delegation agreed to take part in Oslo and Barbados initiatives for negotiation talks with the government. Both the EU and MERCOSUR made a fresh call to Venezuela to hold elections. Addressing the migratory, humanitarian and political crisis, the MERCOSUR called Venezuela to hold free, fair and transparent presidential elections "in the shortest time possible", following Tuesday's EU Council statement. On Tuesday, the EU Council reaffirmed that crisis in Venezuela requires an "urgent" political solution, which can only be achieved through "a peaceful, democratic and Venezuelan-owned" process leading to "free and fair presidential elections". (AA: https://www.aa.com.tr/en/americas/venezuela-opposition-calls-for-mass-rally-on-tuesday/1535081)

 

US to redirect Central America aid to Venezuela's Juan Guaidó

The US is planning to divert nearly US$ 42 million from development funding for Guatemala and Honduras to Venezuela's opposition. The move comes just months after the Trump administration announced it would be ending aid to Guatemala, Honduras and El Salvador, the three countries at the center of the current migration wave to the US. In the memo, USAID, the government's international development agency, said the "deviation” of the money was "necessary due to unforeseen events and exceptional circumstances.” USAID stressed in the memo that Venezuela's political crisis was "a significant, exigent event in the US national interest" that required the diverted funds. A portion of the money would finance Guaidó directly. The memo said the funds could cover the "interim government staff salaries or stipends, work-related travel and other costs necessary to ensure full deployment of a transparent financial management system and other activities necessary for a democratic transition." Some US$ 2 million will go to support diplomatic efforts by Guaidó's supporters as they negotiate with the Maduro regime, and US$ 7.5 million will be dispensed to support independent media with the goal of providing Venezuelans with "unbiased and unfiltered sources of news and information," the memo said. Other funds will go address other aspects, including strengthening human rights groups, election monitoring and civil society. (DW: https://www.dw.com/en/us-to-redirect-central-america-aid-to-venezuelas-juan-Guaidó/a-49626538; France24: https://www.france24.com/en/20190717-us-diverts-central-america-aid-boost-venezuelas-Guaidó)

 

… but drags its feet on TPS for Venezuelans

The Trump administration also signaled on Wednesday that it would not grant protection to Venezuelans seeking refuge in the US. In a response to a request by Democratic Senator Dick Durbin, the US Citizens and Immigration Services said it was not planning on adding Venezuela to the list of countries eligible for its Temporary Protected Status (TPS) program, which would allow citizens from that country stay in the US until the situation at home improves. In a letter to U.S. Senators made public on July 16, acting director of U.S. Citizenship and Immigration Services (USCIS) Ken Cuccinelli signaled an unwillingness on the part of the Trump administration to extend Temporary Protected Status (TPS) to Venezuelans. According to U.S. Sens. Dick Durbin and Bob Menendez, the administration will not grant Venezuelans Temporary Protected Status, or TPS. "President Trump cannot do both. He cannot warn Americans that Venezuela is such a dangerous place that they should not travel there, and then tell the Venezuelans in the United States that they are forced to return," said Senators and Menendez said in a written statement. In January, Miami U.S. Reps. Mario Diaz-Balart and Donna Shalala proposed TPS for Venezuelans. That same month, Rep. Darren Soto, an Orlando Democrat, filed the Venezuela TPS Act of 2019. It would allow Venezuelans who came to the United States after early 2013 and who don’t have legal status to temporarily — and legally — stay in this country, shielded from deportation. They would be able to secure work permits. In March, Florida’s Sen. Marco Rubio, along with Sens. Patrick Leahy and Cory Booker — plus Menendez and Durbin — introduced the Venezuela Temporary Protected Status Act of 2019. In addition, Rubio was one of 24 senators, and the only Republican, to sign a letter dated March 7 that was sent to the president on this issue. It said, in part: “In light of the ongoing violence, deteriorating security situation, and humanitarian crisis in Venezuela caused by the illegitimate regime of Nicolás Maduro, we respectfully request that your administration promptly designate Venezuela for Temporary Protected Status (TPS) to ensure that Venezuelan nationals currently present in the United States are not forced to return to Venezuela at this time. Returning non-violent individuals back to Venezuela during this critical time of transition is not in the best long-term interests of the United States or our partners in the region.” In a letter dated July 11, Kenneth Cuccinelli II, acting director of U.S. Citizenship and Immigration Services responded, in part: “The U.S. government continues to monitor the situation in Venezuela. In addition, there may be other relief measures available to Venezuelan nationals affected by current condition in Venezuela.” The Washington Office on Latin America (WOLA), a leading research and advocacy organization that advocates a regional response to broaden access to formal protection status and essential services for Venezuelan migrants and refugees, is alarmed by the Trump administration’s inaction. “Inaction on TPS sends the absolute wrong message: The United States is only concerned about Venezuelans right up until they are forced to flee their country,” said WOLA Assistant Director for Venezuela Geoff Ramsey. (The Miami Herald: https://www.miamiherald.com/opinion/editorials/article232813137.html; WOLA: https://www.wola.org/2019/07/venezuela-letter-tps-regional-response/)

 

Venezuelan teen blinded after 52 rubber pellets to the face

16-year old Rufo Chacon lost both of his eyes just two weeks ago, during a July 2 protest in the Andean city of San Cristobal, Venezuela, which turned bloody when police began firing rubber bullets into the crowd. The doctors who tried to save his eyes said that 52 rubber buckshot pellets hit his face, 16 of them flying directly into his eyes. A police report investigating the accident said state security forces forcefully repressed the crowd without warning. Two other underage protesters also received head injuries the report says. One of them was Chacon's younger brother, Adrian, 14, who received a blow to his skull from a police baton. Both were there with their mother, Adriana Parada, to protest shortages of cooking gas in the region. After the protest, Venezuelan authorities announced that two officers had been charged for "attempted murder, improper use of weapon and cruel treatment" in dealing with the protesters. They are currently awaiting trial. The announcement came hours after the Office of the UN High Commissioner for Human Rights, Michelle Bachelet published a report that denounced "patterns of violations of all human rights" at the hands of the Venezuelan state—a report which the regime of Nicolas Maduro has refuted as biased. Doctors at San Cristobal Central Hospital say they could only remove what was left of Chacon's eyes. He is still at risk of infection, doctors say as pieces of the rubber pellets remain embedded in his face and head, too deep for the surgeon to reach. After being shot, Chacon's plight swiftly became known in the Spanish-speaking world. On the same night of the protest, Puerto Rican music star Don Omar published a picture of the injured and bloodied Rufo on his Instagram account, blaming the soldiers for allegedly firing too low. Offers to pay for treatment have come in from around the world, including Mexico, Spain and the US. One clinic in Colombia has offered to perform an eyelid transplant on Chacon for free. His mother, Adriana, has also opened an Instagram account to crowdsource financial help for the family. But due to currency controls on the country, Venezuela's economy is effectively sealed off from the outside world, and they can only receive donations from inside the impoverished country. (ABC News: https://www.cnn.com/2019/07/17/americas/venezuela-rufo-chacon-blind-teenager-protest-intl/index.html)

 

Regime frees musician jailed after blasting Maduro online

Karen Palacios who plays the clarinet and was cut from the National Philharmonic for criticizing the government, and who was detained for 6 weeks, was released today. Karen Palacios' Yamaha clarinet still rests where she left it atop sheet music of a Mozart concerto that she practiced diligently the night before two strangers dressed in black lured her away in a luxury SUV. The 25-year-old musician's captors duped her into believing she was needed for an interview with a victims' unit at the presidential palace. Instead, they drove her to Venezuela's most-notorious military prison, locking her up alongside the socialist regime's top opponents for violating Venezuela's highly subjective hate law. Her crime: posting a message on social media venting frustration at President Nicolás Maduro's government over having been cut from the state-funded National Philharmonic, where she had recently debuted as first clarinetist. On Tuesday, the family's nightmare ended. After 45 days in jail alongside some of Venezuela's most-hardened female criminals — and a full month after a judge ordered her immediate release — Palacios walked through a giant metal gate at a penitentiary outside Caracas. She remains on probation and is banned from speaking to the media. But the scars from her confinement will take time to heal. Meanwhile, her plight has drawn attention to what the United Nations in a report this month signaled as the government's growing use of arbitrary detentions to intimidate opponents — real or imagined — and stifle free expression.

Meanwhile, her imprisonment has reopened debate on Venezuela's hate law, which was passed by the rubber-stamping, pro-Maduro constitutional assembly in 2017 and carries prison sentences of between 10 and 20 years for anyone found guilty of publicly instigating violence against people based on their race, ethnicity or political views. Free speech advocates say the law is selectively enforced and consider it a tool of repression and censorship. Last year, 24 people were detained for expressing criticism of the government online, according to local NGO Espacio Publico. (ABC News: https://abcnews.go.com/International/wireStory/venezuela-frees-musician-jailed-blasting-maduro-online-64383127)

 

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.

July 11, 2019

Oil & Energy

CHEVRON's Venezuela oil assets threatened as Trump weighs extending joint venture waiver

The Trump administration faces an important decision later this month, one that could either maintain the status quo, or one that could escalate the “maximum pressure” campaign on Caracas. In January, the U.S. government tightened sanctions on Venezuela, but issued a series of waivers to oil companies operating in joint ventures with PDVSA in Venezuela. The waivers expire later this month, and the U.S. government is considering letting them expire to force some of the companies out in order to further tighten the fiscal noose around the Venezuelan government. That could affect operations for CHEVRON, HALLIBURTON, SCHLUMBERGER, BAKER HUGHES and WEATHERFORD International, according to S&P Global Platts. If the Trump administration followed through, the companies would have 60 to 90 days to wind down their operations, S&P reported. CHEVRON plays a crucial role in keeping Venezuela’s oil sector running, such as it is. The American oil major is active in four joint ventures with PDVSA, and its share of production accounts for 42,000 b/d, although total output from the four sites exceeds 200,000 b/d. The exit of Chevron and other international companies would be especially painful for Maduro’s regime because the joint ventures have proven to be much more resilient than PDVSA’s sole operations. Foreign companies bring capital and technical expertise, and when the industry really began to deteriorate in 2017 and 2018, output from the joint ventures held up better than production from projects run only by PDVSA. The upshot is that if the U.S. lets the waivers expire in late July, Venezuela’s oil production could resume its downward slide, ending a several-month hiatus that saw output stabilize. “The service companies leaving will have some additional effect since they are involved in the operation of at least a third of the rigs in activity. However, the U.S. government is also wary of allowing oil companies from China and Russia to step into the void. The prospect of greater influence for Moscow and Beijing in Venezuela might be enough for the Trump administration to extend the waivers to CHEVRON. The tradeoff is hardly theoretical. Venezuela's government threatens to nationalize CHEVRON's oil assets if the Trump administration does not extend a sanctions waiver that expires July 27. In perhaps an attempt to clarify what is at stake, an unnamed official in the Venezuelan presidential palace told Argus Media that if the Trump administration lets the waivers expire, Maduro’s government would seize Chevron’s assets and “offer Russian, Chinese and other non-US oil companies an ‘opportunity to acquire’ them,” Argus reported. In fact, the official said that “discreet discussions” have already started with ROSNEFT and CNPC. It’s unclear how the Trump administration will approach what appear to be competing geostrategic goals, but Venezuela’s oil sector hangs in the balance. White House advisor Larry Kudlow said yesterday the administration was considering a possible waiver extension. “It is under discussion,” Kudlow said. “I don’t know about the license. That will be determined in the future. It’s under discussion right now,” he said. (Reuters, https://www.reuters.com/article/us-venezuela-politics-usa-chevron/white-house-discussing-renewing-license-for-chevron-to-operate-in-venezuela-idUSKCN1U42NG; Bloomberg, https://www.bloomberg.com/news/articles/2019-07-09/venezuela-license-for-chevron-under-discussion-kudlow-says; The Fuse: http://energyfuse.org/venezuela-faces-more-outages-as-trump-admin-mulls-escalation/; Seeking Alpha: https://seekingalpha.com/news/3476997-chevrons-venezuela-oil-assets-threatened-seizure)

 

Vessels change names or go dark to ship Venezuelan crude to Cuba

Stopping the flow of Venezuelan oil to its ally Cuba might prove harder than the U.S. expected. Tankers are being renamed and vessels are switching off their transponders to sail under the radar of the U.S. government. The vessel Ocean Elegance, an oil tanker that has been delivering Venezuelan crude to Cuba for the past three years, was renamed Oceano after being sanctioned in May. The ship S-Trotter, another one that’s on the sanctions list, is now known as Tropic Sea, according to data compiled by Bloomberg. (Bloomberg, https://www.bloomberg.com/news/articles/2019-07-08/vessels-change-names-go-dark-to-ship-venezuelan-crude-to-cuba)  

 

Economy & Finance

Venezuela creditors push back on Guaidó's debt restructuring plan

Creditors holding Venezuelan debt on Tuesday pushed back on debt restructuring plans backed by opposition leader Juan Guaidó, urging a “fair and effective” framework for talks and improved communications with investors holding defaulted bonds. The main committee of Venezuela creditors said it opposed requests for a U.S. executive order that would prevent asset seizures by investors and disagreed with a proposal to give different treatment to debts owed to Russia and China. But the statement added that restructuring would not begin until the end of a “humanitarian crisis,” in reference to the hyperinflationary collapse overseen by President Nicolas Maduro that has fueled malnutrition and disease. “A new government should work with creditor parties, such as the Committee, to agree on the design of the restructuring process and to negotiate the financial and other terms of the restructuring,” the statement said. (Reuters, Venezuela creditors push back on Guaidó's debt restructuring plan)

 

Politics and International Affairs

Maduro regime and opposition talks conclude in Barbados, no deal announced; Putin remains hopeful

Talks between Venezuela's government and the opposition about how to address the country's political crisis concluded on Wednesday (Jul 11) with no announcement of a deal. "This round of talks for dialogue and peace in Barbados has concluded," Information Minister Jorge Rodriguez, who led the government's delegation, wrote on Twitter late on Wednesday, describing it as "a successful exchange promoted by the government of Norway." Rodriguez tweeted that the discussions in Barbados had ended and served as a space for the "settlement of disputes through constitutional and peaceful channels." A Venezuelan opposition source who asked not to be identified said the two sides could meet again on Monday in Barbados. The press team for opposition leader Juan Guaidó, who has been recognized by more than 50 countries as Venezuela's legitimate leader, said the opposition would make a statement about the talks in the coming hours. Rumors have been circulating in recent days that the opposition was seeking a presidential election within nine months and that Maduro would not be in power during the vote. Socialist Party Vice President Diosdado Cabello, who is influential in Maduro's regime, on Wednesday night dismissed the idea that any presidential election was in the works. "Here there are no presidential elections; here the president is named Nicolas Maduro," Cabello said during a televised broadcast. Russian President Vladimir Putin said on Thursday he hoped Norway-brokered talks between Venezuela's government and the opposition would normalize the situation in country and bring an end to political turmoil. In referring to the talks, interim president Juan Guaidó had previously asked one and all “not to commit the mistake of seeing a single mechanism as the solution,” and for that reason insisted on maintaining both internal and foreign pressure on the party in power. (Channel News Asia: https://www.channelnewsasia.com/news/world/venezuela-talks-with-opposition-conclude-in-barbados--no-deal-announced-11712606; EFE: https://www.efe.com/efe/english/world/venezuelan-government-says-talks-with-opposition-concluded-successfully/50000262-4020424; The Jerusalem Post: https://www.jpost.com/Breaking-News/Putin-I-hope-Venezuela-talks-will-normalize-situation-595359; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2480869&CategoryId=10717)

 

U.S. military plans to battle Russia, China and Iran's 'most disturbing' influence in Venezuela

The head of the Pentagon's Southern Command warned that Russia, China and Iran were expanding their influence in Latin America, particularly in Venezuela, where they support a government the United States seeks to depose. In his testimony to the Senate Armed Services Committee, Southern Command chief Air Force Admiral Craig Faller identified Moscow, Beijing and Tehran as the primary international obstacles to Washington's interests as the trio backed Nicolás Maduro in the face of a challenge posed by interim leader Juan Guaidó. The National Assembly head declared him acting president in January and was almost immediately recognized by the U.S., which cut ties with Maduro and has attempted to isolate him globally. "Russia, in their own words, is protecting their 'loyal friend,' to quote, by propping up the corrupt, illegitimate Maduro regime with loans and technical and military support," Faller said. "China, as Venezuela's largest single-state creditor, saddled the Venezuelan people with more than $60 billion in debt and is exporting surveillance technology used to monitor and repress the Venezuelan people. Iran has restarted direct flights from Tehran to Caracas and reinvigorated diplomatic ties." "Along with Cuba, these actors engage in activities that are profoundly unhealthy to democracy and regional stability and counter to U.S. interests," he added, calling for the "right, focused and consistent military presence" to counter these countries' "most disturbing" growing influence in the region. "These geopolitical tensions are inimical to stability across the world and we look forward to world leaders to continue to do their best to ensure that conflicts on trade and military are avoided”, he added. (NEWSWEEK: https://www.newsweek.com/venezuela-us-battle-russia-china-iran-influence-most-disturbing-1448545)

 

Russian equipment to be part of military drills in Venezuela

Russia on Thursday said its military equipment will be part of military drills in Venezuela scheduled for July 24. "Weapons and military equipment that are currently present in Venezuela and that the National Bolivarian Armed Forces use is mostly Russia-made. So, it just cannot be otherwise. I don't know if they have purchased any kinds of equipment in other countries, but the army is equipped with our weapons to a significant extent, so it will be used as well," Sputnik quoted Russian Deputy Foreign Minister Sergei Ryabkov as saying. Ryabkov also noted that there are almost no Russian military experts in Venezuela right now. "A rotation has taken place. As I see it, the presence of our personnel there is close to zero. However, this does not mean that it will not appear there when the need may arise to maintain the equipment", he said. "We are concerned about a continuous melody from Washington, where there is a tendency to talk about all options being on the table and nothing can be excluded. That deliberately creates a sense of uncertainty, of what is possible and what is not in terms of U.S. participation," Ryabkov told Spanish newspaper El Pais on Wednesday. (Business Standard: https://www.business-standard.com/article/news-ani/russian-equipment-to-be-part-of-military-drills-in-venezuela-119071100712_1.html; NEWSWEEK: https://www.newsweek.com/venezuela-us-battle-russia-china-iran-influence-most-disturbing-1448545)

 

Against family wishes, Venezuela government buries navy captain who died in captivity

The Maduro regime on Wednesday buried the remains of a navy captain who died in military custody last month, despite the opposition of family members who say he was tortured to death and want an independent autopsy.  Rafael Acosta was detained in June 21 for alleged participation in a coup plot but died following a week in custody of military intelligence agency DGCIM. Lawyers said he showed signs of severe beatings.  “What can be interpreted is that government authorities are (saying) ‘I killed him, I bury him,’” said Alonso Medina, a lawyer representing Acosta’s family. Acosta’s wife, Waleswka Perez, had demanded that the government hand over his body and called for an U.N. investigation into his death, which was condemned by the United States as well as the Lima Group of Latin American nations. An official autopsy showed that Acosta died of “polytrauma with a blunt object,” Medina said. (Reuters: https://www.reuters.com/article/us-venezuela-politics-captain/against-family-wishes-venezuela-government-buries-navy-captain-who-died-in-captivity-idUSKCN1U52M0)

 

U.S. sanctions Venezuela's counter-intelligence agency after death of navy captain

The United States on Thursday imposed sanctions against Venezuela's military counter-intelligence agency following the death in custody of a Venezuelan navy captain amid allegations of torture. The U.S. Treasury said on its website that it had sanctioned the General Directorate of Military Counterintelligence. U.S. Treasury Secretary Steven Mnuchin said the "politically motivated arrest and tragic death" of Rafael Acosta was "unwarranted and unacceptable." The Maduro regime confirmed the death on June 29 of Acosta, who was arrested eight days earlier for alleged participation in a coup plot. Human rights organizations and political leaders have accused Maduro's government of torturing Acosta to death and refusing to clarify the circumstances. (CBC: https://www.cbc.ca/news/world/us-sanctions-venezuela-counterintelligence-navy-death-1.5208073)

 

Ex-Venezuela spy chief says Maduro ordered illegal arrests

As Nicolás Maduro began to lean on the brawny 55-year-old General Manuel Cristopher Figuera to do his dirty work — ordering him to jail opponents and victims of torture — the Cuban and Belarusian-trained intelligence officer gradually lost faith. In a show of nerve, he betrayed the leader he met with almost daily and secretly plotted to launch a military uprising that he said came close to ousting Maduro. Now one of the most prominent defectors in two decades of socialist rule in Venezuela has come to Washington seeking revenge against his former boss. It’s unclear whether Cristopher Figuera still has influence inside the government and can collect evidence against his former comrades. But he’s talking a big game. Cristopher Figuera for the first time provided details of what he said was Maduro’s personal commissioning of abuses, including arbitrary detentions and the planting of evidence against opponents. As the deputy head of military counterintelligence and then director of the feared SEBIN intelligence police, Cristopher Figuera stood alongside Maduro as Venezuela was coming apart. During the freefall, he said, he witnessed and played a role in abuses, including not speaking out when confronted with evidence of torture by others and the arbitrary detention of a prominent journalist. But he said Maduro’s most-brazen order — and one of Cristopher Figuera’s biggest regrets — was his role trying to break opposition leader Juan Guaidó’s resolve by going after his inner circle. Initially, he said, Maduro wanted to arrest Guaidó’s mother. When Cristopher Figuera pointed out that she was undergoing cancer treatment, the focus shifted to Roberto Marrero, Guaidó’s chief of staff, who has been held since March on accusations of running a “terrorist cell” bent on carrying out assassinations. Cristopher Figuera said he then told Maduro that he did not have legal cause. “How can I jail him?” Cristopher Figuera recalled asking Maduro in a tense meeting with top officials at Fort Tiuna in Caracas less than 72 hours before a violent raid on Marrero’s house. “He told me, ‘That’s not my problem. Plant some weapons on him. Do what you have to do.'” Cristopher Figuera expects one day to be called as a witness by the International Criminal Court, which is carrying out a preliminary investigation into the Maduro government at the request of several Latin American nations, France and Canada. Still, he acknowledges that he obediently carried out orders to spy on 40 or so of Maduro’s top opponents, using wiretaps as well as electronic and on-the-streets surveillance, and reporting to his boss every two hours any noteworthy movements. He claims to have tried to persuade Maduro to change course, sending him a two-page letter in early April that urged him to appoint a new electoral council and call early elections. He thought the move would have been a strategic retrenchment to regain the upper hand amid mounting international pressure.  He said he’s in constant contact with high-level officials — generals, deputy ministers and heads of government institutions — all of whom despise Maduro and want to see him leave but are afraid to act. (AP: https://www.columbian.com/news/2019/jul/04/ex-venezuela-spy-chief-says-maduro-ordered-illegal-arrests/)

 

With tenacity and torture, Venezuela’s awful regime is hanging on

Almost six months since Juan Guaidó began his attempt to remove Venezuela’s leftist dictatorship, the strain is showing. The 35-year-old’s jet-black hair is peppered with grey. His eyes seem weary. He has dropped his snappy slogan, “vamos bien” (“we are doing well”). Now his demoralized supporters utter it sarcastically. But the need to end the rule of Nicolás Maduro is as strong as ever. His mismanagement, plus sanctions imposed in January on Venezuela’s oil industry by the United States, will cause the economy to shrink by more than 25% this year. In dollar terms, the drop in output since Maduro became president in 2013 will be around 70%. Francisco Rodríguez, an economist in New York who has advised the moderate opposition, warns of famine. On July 5th the un High Commissioner for Human Rights published evidence that security forces loyal to the government, such as the FAES, had murdered at least 6,800 people from January 2018 to May 2019. It documented cases of torture, including the use of electric shocks and waterboarding. Days before it was published, Rafael Acosta, a reserve naval captain accused of plotting to overthrow Maduro, appeared in court in Caracas, bruised and unable to say anything but “help me” to his lawyer. He died hours later. Mr. Guaidó, the head of the opposition-controlled legislature, had hoped to lead a velvet revolution. That plan has suffered one reversal after another. Although Maduro claims to “sleep like a child” he has cause for insomnia. The April uprising revealed splits in the regime.  The state-owned oil giant PDVSA, the main foreign-exchange earner, is trying to shift exports from the United States to Asia. Corruption, mismanagement by executives chosen for their loyalty to the regime and now sanctions has caused output to plunge. Although Venezuela has the world’s largest proven oil reserves, much of the country is suffering from shortages of petrol. “The regime’s entire focus now is survival,” says a Caracas-based diplomat. “The rulebook has been thrown away.” Maduro has quietly abandoned elements of the socialism brought in by his predecessor. The dollar has become accepted almost everywhere. Inflation has plummeted, to a still stratospheric 445,482%. But these moves towards saner economic policies have so far done little to ease hardship for most people. The main hope for a political transition. It is hard to imagine a resolution to Venezuela’s agony that does not include Maduro’s departure and a plan to hold elections with international monitoring. If that is to happen, the president will have to sleep less and worry more. (The Economist: https://www.economist.com/the-americas/2019/07/13/with-tenacity-and-torture-venezuelas-awful-regime-is-hanging-on)

 

John Bolton uses Twitter to try to flip Venezuela's defense minister

It looks like the White House national security adviser is trying to get Venezuela's defense secretary and military chief to flip. Four out of six John Bolton tweets since Monday evening have targeted Venezuelan defense minister Vladimir Padrino. Bolton's focus has been warning Padrino that he serves an illegitimate leader and that he will be held accountable for deaths that the Venezuelan military inflict under Nicolás Maduro's orders. In the first of what would be a three-day series of tweets addressed to the Maduro regime’s Defense Minister General Vladimir Padrino, Bolton argued that Maduro "deprived your soldiers, relied on illegal armed groups & 'colectivos' to violate the rights of Venezuela's people & has systematically executed political opponents." "Why do you support a tyrant whose inability to govern is visible for all to see?" Bolton asked. Shortly after Guaidó tried and failed to overthrow Maduro in late April, Bolton alleged that Padrino was among the socialist leader's top officials who agreed to switch sides, but ultimately failed to do so. Padrino has denied the claim and Monday was neither the first nor last time Bolton went off against Maduro and his administration on Twitter. "Do you want to be held to account for the arrest, torture and extrajudicial killings of your fellow Venezuelans, including members of the FANB? The atrocities are being documented for the world to see," Bolton tweeted Tuesday, using an acronym for Venezuela's National Bolivarian Armed Forces. "Are you proud to serve Maduro, a despot who has ordered the killing of thousands of your fellow Venezuelans in the last 18 months?" On Wednesday, Padrino responded, tweeting that Bolton "insists on an unhealthy attitude against me, like an obsessive-compulsive disorder, through recurrent, persistent and intrusive statements, characteristic of the insidious political blindness to which they resort to failing to divide the FANB." Padrino linked Bolton's "obsessive doubt" to the "clumsy and failed strategy he sold to Trump" and said that his continued position as defense minister "represents a mental torture for Bolton." Bolton hit back about 15 minutes later, arguing that the "Venezuelan Constitution does not call for the death of over 9,000 of your fellow Venezuelans because they voice disagreement with Maduro." He continued: "Remember your responsibilities to defend the constitution and the Venezuelan people."  It's not at all clear that Bolton's latest effort here will have any more success than the last time around. For one, Maduro has just reappointed Padrino as defense minister. While that might be a case of friends close and enemies closer, it's equally likely to reflect Maduro's increased confidence. (NEWSWEEK: https://www.newsweek.com/us-twitter-iran-venezuela-bolton-1448591; The Washington Examiner: https://www.washingtonexaminer.com/opinion/john-bolton-uses-twitter-to-try-to-flip-venezuelas-defense-minister)

 

Maduro regime’s war on children at a 'breaking point' over lack of medical care

The cries of millions of children still languishing inside Venezuela all too often go unanswered as the deteriorating conditions and the iron-grip of the Maduro regime has set the stage for once eradicated diseases to run rampant, trauma medicine to vanish, infant mortality to drastically spike, and for simple health skirmishes to morph into life-threatening plagues. “The current health situation is at a very delicate breaking point,” Ephraim Mattos, executive director of Stronghold Rescue & Relief, told Fox News. “We will never know the exact numbers of people who have died due to the corruption of the Maduro government, but what is happening in Venezuela – especially to the children – is nothing short of genocide.”  “One of the biggest health crises facing children fleeing Venezuela is simple dysentery caused by the contaminated food and water they are forced to eat and drink just to survive in Venezuela.  The dysentery causes the children to become even more malnourished and dehydrated which only compounds the issue further,” Mattos, who endeavors to reach some of the most famished and dangerous pockets of Venezuela with vital assistance, said. “Children who should be able to not only survive but also thrive, are needlessly dying every single day.” Paloma Escudero, the Global Director of Communication for UNICEF, concurred to Fox News that the UN children’s agency is concerned that Venezuela has reduced children’s access to essential services and increased their vulnerability. “Under-5 mortality increased by more than half between 2014 and 2017. Venezuela went from being a model for malaria eradication in the Americas, with its northern region declared malaria-free by the WHO in 1961, to becoming the largest contributor to the malaria burden in the region,” she said. “Between 2016 and 2017, reported malaria cases increased by over 70 percent. The number of people who died from malaria increased from 54 in 2010 to 456 in 2017.” In addition, UNICEF has recorded 190 suspected cases of diphtheria since the beginning of 2019, leading to 13 deaths. Escudero continued, noted that families are being forced to wake at the crack of dawn to trek their children across the border to the ravished Colombian city of Cucuta, to get them immunized or treated for common childhood illnesses. (Fox News: https://www.foxnews.com/health/venezuelas-war-children-medical-care-lacking)

 

Trinidad criticized for lack of action as Venezuelan migrants flee to the island nation

While large numbers of desperate Venezuelans have flocked to their Spanish-speaking neighbors in South America, more than 98,500 have fled to the Caribbean, according to a 2018 report from the United Nations. There are an estimated 40,000 Venezuelans residing in Trinidad and Tobago, just 10 miles off the coast of Venezuela. With unrest at their shores, Trinidad and Tobago’s government continues to avoid formal asylum legislation. The island nation remains the only country to take in large numbers of Venezuelan migrants without having an official asylum policy in place. It has also not taken political sides on the unraveling situation in Venezuela, instead choosing to remain officially neutral. As a result, the islands’ government is receiving condemnation from world leaders, the country’s own opposition, and asylum-seekers who say the country needs to do more. This leaves desperate families to choose between remaining in their divided homeland or moving to islands where they are unsure if they are safe and welcome. The side effects have led to reports of unlawful detention by the police and the deportation of 82 refugees, actions which the U.N. condemned as illegal. The uncertainty has Venezuelans there living in fear and seeking financial assistance on the black market, where reports of human trafficking are rampant. (NBC News: https://www.nbcnews.com/news/nbcblk/trinidad-criticized-lack-action-venezuelan-migrants-flee-island-nation-n1028246)

 

Spain arrests suspect sought by Venezuela for deadly arson

A Spanish National Court spokesman says that a man sought by Venezuela for allegedly burning a 22-year-old man during anti-government protests two years ago has been jailed in Madrid. Enzo Franchini Oliveros’ arrest was first announced on Wednesday by Venezuela’s top prosecutor, Tarek William Saab. Saab tweeted that Oliveros was sought for public disorder, intentional homicide and terrorism charges related to the burning of Orlando Figuera during a demonstration in May 2017. A Spanish National Police spokeswoman said Oliveros was arrested on Monday in a town near Madrid. A National Court spokesman says the man told Judge Santiago Pedraz during questioning Thursday that he didn’t want to be extradited. A hearing needs to be scheduled for magistrates to decide. (CBS: https://www.cbs42.com/news/international/spain-arrests-suspect-sought-by-venezuela-for-deadly-arson/)

 

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.

July 09, 2019

Oil & Energy

Squeezed by sanctions, Venezuela sells oil to tiny Turkish firm

With U.S. sanctions blocking Venezuela from selling oil to the United States, state-owned energy firm PDVSA has turned to several little-known buyers that include a tiny Turkish company with no refineries but ties to Nicolas Maduro’s regime. U.S. sanctions have driven away many customers. PDVSA’s exports have slumped by more than a fifth since sanctions were imposed. Its biggest buyers today are Chinese and Indian companies. Directors at a March 14 meeting of Maduro’s PDVSA board temporarily waived some requirements for new customers or suppliers, including that of having at least two years’ experience in the oil industry. In the wake of the changes, a Turkish company called Grupo IVEEX INSAAT started buying Venezuelan oil in April. Istanbul Chamber of Commerce records show that IVEEX INSAAT was formed less than a year ago with capital of just US$ 1,775 and listed “residential construction” as its main activity. It was one of only five firms that loaded tankers to take Venezuela’s upgraded crude - among its most valuable oil - from April through June, the documents showed. IVEEX loaded four cargoes of Venezuelan crude and products in April - equivalent to just under 8% of Venezuela’s oil exports - and nothing in May or June, according to PDVSA documents. Turkish corporate records show IVEEX INSAAT is owned by Miguel Silva, a Venezuelan businessman who heads the Caracas-based Venezuelan Exporters’ Chamber and served as a housing ministry commissioner in Maduro’s administration. Silva registered IVEEX INSAAT with a Turkish partner named Erhan Kap, an Istanbul tour guide, on Sept. 27, 2018, just a week after Maduro visited Istanbul. IVEEX reportedly has agreed to deliver refined products to Venezuela in exchange for receiving crude. With its refinery network crippled by maintenance issues, the OPEC nation has struggled with severe fuel shortages in recent months. The two other companies that only began chartering tankers to take PDVSA’s oil after sanctions hit are Panama-registered MELAJ Offshore Corp and Sahara Energy, a unit of Nigeria-based Sahara Group. The two loaded PDVSA oil cargoes shortly after the sanctions were announced. (REUTERS: https://www.reuters.com/article/us-venezuela-oil-turkey/squeezed-by-sanctions-venezuela-sells-oil-to-tiny-turkish-firm-idUSKCN1U324M)

 

OPEC wants quick resolution to tensions between US and Iran, Venezuela

OPEC has asked on Monday for a timely settlement to the tensions that have flared up between the United States and Iran and Venezuela. Iran and Venezuela, both founding members of OPEC, are both exempt once again from the production cut extensions that the cartel announced last week and will remain exempt for as long as they remain under sanction. Both Iran’s and Venezuela’s production woes have contributed significantly to the cartel’s over compliance to the group’s production cut quota, with Iran’s crude production falling from an average of 3.813 million barrels per day in 2017 to 2.370 million barrels per day in May 2019, and Venezuela’s crude production falling from 1.911 million bpd on average in 2017, to an abysmal 741,000 bpd in May 2019. But while the two countries combined seemingly did OPEC a favor by taking more than 2.6 million barrels of crude oil per day out of the market within that time frame, the tensions in the Persian Gulf and the dire situation in Venezuela are creating a market that OPEC is finding it difficult to both predict and manage. (Oil Price: https://oilprice.com/Latest-Energy-News/World-News/OPEC-Wants-Quick-Resolution-To-Tensions-Between-US-And-Iran-Venezuela.html)

 

Amuay and Cardon refineries halted by blackout

Venezuela’s Amuay and Cardon refineries are halted following a blackout in the early morning hours, two oil industry sources with knowledge of the issue said on Sunday. The twin refineries together form the 955,000 barrel-per-day (bpd) Paraguana Refining Center, which has been operating well below capacity for years because of chronic operational problems that have been aggravated by Venezuela’s economic crisis. “Blackout in both refineries,” one employee who works in the complex wrote in a text message. “It’s going to be difficult to get the system back up.” (Reuters, https://www.reuters.com/article/refinery-operations-pdvsa-amuay/update-1-venezuelas-amuay-and-cardon-refineries-halted-by-blackout-sources-idUSL2N24802S)

 

CHEVRON is playing a long game in Venezuela’s oil fields

Donald Trump may have slammed Venezuela with sanctions in an effort to change the regime of President Nicolás Maduro, but the country’s energy industry has an unlikely ally: CHEVRON Corp. Despite the U.S. administration’s push to disrupt the financial resources available to Venezuela’s leadership, the second-biggest U.S. oil company is working to bolster one of the Maduro government’s chief economic pillars—its ability to produce crude oil. CHEVRON is helping tap four fields in the country while testing new injection technologies to maximize production in one. CHEVRON is also helping pay for supplies, expenses, and even health care for workers at state-owned oil producer PDVSA to keep the crude flowing. CHEVRON’s actions are an attempt to play the long game in economically ravaged Venezuela. If Maduro retains power, CHEVRON will keep its tenuous—but still profitable—foothold in Venezuela. If he’s forced out and U.S. sanctions end, the company could be first in line to gain from the country’s vast geologic riches. The gamble puts CHEVRON in the same group as state-controlled producers from Russia and China that have been supportive of the Maduro regime—and potentially at odds with its home country. The company is working under a Department of the Treasury waiver of U.S. sanctions against Venezuela that expires on July 27. A decision by the U.S. government not to renew the waiver could cripple the production of more than 200,000 barrels a day at the four projects Chevron is keeping afloat, even though most of that production goes to PDVSA. And it could lead Maduro to hand CHEVRON’s stakes in these fields to other explorers.  Positioning itself to outlast Maduro won’t be easy. Last year two Chevron employees were arrested and held for seven weeks for reasons neither the government nor the company disclosed. Still, the oil producer continues to work with the government to keep its operation intact. That could mean braving Trump administration pressure and weathering the worsening humanitarian crisis, but the payoff might be worth the risks. “Whatever government that is coming in will be dealing with very diverse issues and doing it with very little cash in the bank, and that presents a unique opportunity,” says Schreiner Parker, vice president for Latin America at consulting firm RYSTAD Energy. “In the medium to long term with regime change, we believe Venezuela will become very investor-friendly, out of necessity more than anything.” (Bloomberg: https://www.bloomberg.com/news/articles/2019-07-09/chevron-is-playing-a-long-game-in-venezuela-s-oil-fields)

 

Economy & Finance

JP Morgan to cut Venezuela weight to zero in key indexes over five months

JP Morgan will reduce the weight of Venezuela's sovereign and PDVSA bonds to zero in its widely tracked indexes, the bank said on Tuesday, phasing them out over five months starting on July 31. Venezuela's weight was 0.5%, 0.9% and 1.2% in the EMBI Global Diversified, EMBI Global and EMBI+ indices, respectively, it added. As a result of dialing down the weighting, JP Morgan said the headline EMBIGD yield and spread were estimated to compress by about 45 basis points. JP Morgan said it could open another index watch process in "the event of any favorable official guidance around easing of trading restrictions or consistent, observable improvements in liquidity and replicability of Venezuela bonds." (NASDAQ: https://www.nasdaq.com/article/jp-morgan-to-cut-venezuela-weight-to-zero-in-key-indexes-over-five-months-20190709-00584)

 

Maduro regime says U.S. sanctions hit debt refinancing, oil sales

Nicolas Maduro’s Vice foreign minister William Castillo also Venezuela charged on Friday that U.S.-led sanctions had stopped foreign debt refinancing, blocked vital food and medicine imports, and cost billions of dollars in lost oil assets. Maduro’s government says Venezuela is the victim of a U.S. plot to topple him, eradicate socialism and hand the world’s largest oil reserves to multinationals. (Reuters, https://www.reuters.com/article/us-venezuela-un/venezuela-says-u-s-sanctions-hit-debt-refinancing-oil-sales-idUSKCN1U014B)

 

Bitcoin trading activity goes ballistic in Venezuela as rule of law erodes

The worse the political, social, and economic conditions in Venezuela get, the more that residents suffering under the Maduro regime pile into Bitcoin. According to Coin Dance, more than 47 billion Venezuela bolivars were traded against Bitcoin in the first week of July. This broke a previous record that had been set in mid-June. While the rising amounts of bolivars being spent on buying Bitcoin could be attributed to the fact that the Venezuelan currency is perpetually weakening, it also coincides with the price of the flagship cryptocurrency appreciating considerably in the last couple of weeks. As of April, the inflation rate in Venezuela was estimated to have hit 1,300,000%. Mid last month, the country announced a 50,000-bolivar bill designed to ease business transactions. Maduro will have released new banknotes for the second time in less than a year. Still, Venezuela ranks among the top 30 countries whose national currencies are the most traded for Bitcoin, according to Coinhills. While BTC/VES volumes have been on a steady increase since the beginning of 2018, Venezuela now has a national cryptocurrency, the Petro, which is competing for attention with Bitcoin. With Venezuelans already witnesses to how government-issued money can quickly lose its purchasing power in the face of hyperinflation, this move will only be beneficial to Bitcoin: The Maduro regime may be force-feeding the Petro on the people, but that will likely just serve as a gateway drug to Bitcoin. (CCN: https://www.ccn.com/crypto/bitcoin-trading-volume-venezuela/2019/07/08/)

 

Politics and International Affairs

Guaido announces fresh talks with Maduro regime

Venezuelan opposition leader Juan Guaido on Sunday announced fresh talks with the government of President Nicolas Maduro. Guaido, who became acting president earlier this year, said the Norway-brokered talks aim "to establish a negotiation on the end of the dictatorship," referring to Maduro's regime. "The Venezuelan people, our allies and the world's democracies recognize the need for a truly free and transparent electoral process that will allow us to surpass the crisis and build a productive future," he said. Guaido is hoping the negotiations eventually lead to Maduro stepping down and "free elections with international observers." In May, delegations representing both parties met in Oslo under Norwegian mediation. However, the talks have yet to provide a path forward for the political impasse here. But Venezuela's opposition is wary of talks with Maduro's regime. Previous attempts to end the country's political crisis have failed, with critics saying they have only served to further solidify his rule. Norway which hosted the preliminary talks and is mediating the protracted process says the aim of the upcoming round of discussions in Barbados, is to move further forward towards a constitutional settlement. The opposition led by Juan Guaido wants a transitional government to replace the regime of Nicolas Maduro, and then free elections monitored by international observers. Guaido insists he`s the legitimate Interim President, recognized by more than fifty nations all around the world.  While Maduro states he`s the democratically elected President. (DW: https://www.dw.com/en/venezuelas-guaido-announces-fresh-talks-with-maduro-regime/a-49507748; Vatican News: https://www.vaticannews.va/en/world/news/2019-07/venezuela-cardinal-government-opposition-dialogue.html; Reuters, https://www.reuters.com/article/us-venezuela-politics/venezuela-opposition-says-it-will-meet-maduro-envoys-in-norway-mediated-talks-idUSKCN1U20TF; https://www.reuters.com/article/us-venezuela-politics-norway/venezuela-talks-to-resume-this-week-norway-idUSKCN1U30GU)

 

Barbados welcomes being the site for talks as CARICOM leverages ties with Caracas

Barbados Prime Minister Mia Amor Mottley Monday welcomed plans by both sides to hold talks in Barbados. “Since January, the government of Barbados along with other CARICOM governments has made it clear that the time for dialogue is never over. As a zone of peace, we will want to see a very peaceful resolution to the problems in Venezuela,” Mottley told reporters. Caribbean Community (CARICOM) leaders who have in the past adopted a position of non-interference and non-intervention in the affairs of this country, last week re-affirmed that position during their annual summit held in St. Lucia. Mottley made it clear that apart from hosting the meeting, Barbados will be playing no major role in the discussions. “This is a matter that requires the utmost patience, so it is not something that you should be asking me or anybody about on a daily basis, let the people talk. When you have deep divisions, it takes time and I have every confidence in the government of Norway being able to do what CARICOM has wanted done since January,” she said. Caribbean nations that used to rely on cheap Venezuelan oil are now hoping to leverage their ties with Caracas to help broker a negotiated settlement to the political crisis there. "This issue is one for the Venezuelans to work out," Trinidad´s prime minister Keith Rowley said. Norway's prime minister Erna Solberg was a guest at the CARICOM summit, and the group is playing the role of an honest broker in the Venezuelan crisis, St. Kitts-Nevis prime minister Timothy Harris said. (Caribbean Broadasting Corporation: http://www.cbc.bb/wordpress/2019/07/09/pm-pleased-with-plans-for-negotiations-to-end-venezuela-crisis/; Argus Media: https://www.argusmedia.com/en/news/1935802-caribbean-sets-stage-for-thorny-venezuela-talks)

 

Maduro 'optimistic' as crisis talks resume

Nicolás Maduro said he was "optimistic" as talks between his regime and the opposition to resolve the country's political crisis resumed on Monday. Preliminary talks held in May in Oslo petered out without an agreement. Maduro said a six-point agenda was being discussed at the meeting which is being hosted by Barbados. He did not give further details. The Norwegian foreign ministry is again acting as a mediator, as it did at the previous meeting in Oslo, but has so far only commented to confirm the meeting was taking place. Maduro revealed that Monday's meeting lasted five hours. He also said he thought "a path to peace" could be found. Just a week ago Guaidó ruled out a return to negotiations, citing as a reason the death in custody of an army captain whose body showed signs of torture. Guaidó has not said why his stance has changed. Some in the opposition say the talks are a ruse by the government to buy itself more time in power. On Friday Maduro said he doesn’t think it necessary to hold presidential elections in the country right now. "What does the people of Venezuela need today? Elections? I don’t think so," he told journalists. "The people of Venezuela needs economic revival, peace and constitutional stability. And it is necessary to reelect the National Assembly for that," he said. "The opposition wants no elections," he said. "If we say elections will be held in 30 days, they will begin inventing reasons to dodge them." (BBC: https://www.bbc.com/news/world-latin-america-48904193; TASS: https://tass.com/world/1043923)

 

Venezuela's rule of law has crumbled under Maduro, international legal group reports

The rule of law has crumbled in Venezuela under the regime of Nicolas Maduro which has usurped the powers of the legislative and judicial branches, an international legal watchdog said on Monday. The International Commission of Jurists (ICJ) called on Venezuelan authorities to reinstate democratic institutions as part of a solution to the political, economic and humanitarian crisis engulfing the OPEC member. The government and a compliant Supreme Court effectively stripped the National Assembly of most powers after the opposition won a majority in 2015 elections. Lawmakers loyal to Maduro generally do not attend the sessions but go to meetings of the Constituent Assembly, a legislative body that meets in the same building. The Constituent Assembly, created in a 2017 election boycotted by the opposition, is controlled by the ruling Socialist Party and its powers supersede the National Assembly. Sam Zarifi, ICJ secretary-general, presented its latest report on Venezuela: “No Room for Debate”. “The focus of this report is on the usurpation of the authority of the legislative by the government in Venezuela. This comes after the judiciary was taken over,” he told a news briefing. The Constituent Assembly was “formed improperly and illegitimately” and has gone far beyond its stated role, Zarifi said, adding: “In fact it seemed to do everything but really discuss a new Constitution”.  “Addressing the problem of the National Constituent Assembly is a crucial step in any political solution to the crisis that has gripped Venezuela,” ICJ’s Zarifi said, urging the government to engage with the opposition-led legislature. (NBC News: https://www.nbcnews.com/storyline/venezuela-crisis/venezuela-s-rule-law-has-crumbled-under-maduro-international-legal-n1027406)

 

Poll shows 64,6% of Venezuelans would vote in any new presidential election

A recent poll by the Catholic University’s Center for Political Studies and Government, along with DELPHOS, shows that 64.6% of Venezuelans are willing to vote if new presidential elections are called; and the number goes up to 70.2% if Nocolás Maduro resigns and stays out of the process, the National Elections Council is changed and there are international observers. An opposition candidate would get 67% of all votes (12.9 million) and a regime candidate would receive 33% (6.3 million). Another 15.1% of those polled indicated they might vote. More in Spanish: (El Universal, http://www.eluniversal.com/politica/44895/646-de-los-venezolanos-votarian-en-elecciones-presidenciales)

 

Venezuelans deserve better life, free from fear, UN Human Rights Chief says

The United Nations High Commissioner for Human Rights said on Friday that Venezuelans deserve a better life that is free from fear and whereby they have access to food, water and health services during the presentation of her report on Venezuela before the Human Rights Council. “The fate of more than 30 million Venezuelans rests on the leadership’s willingness and ability to put the human rights of the people ahead of any personal, ideological or political ambitions,” Michelle Bachelet said during presentation of her report in Geneva. The report accuses the Nicolas Maduro regime of grave human rights violations and documents, among other serious incidents, more than 6,800 extra-judicial killings by the Venezuelan armed forces between January 2018 and May 2019. These killings, “should be fully investigated, with accountability of perpetrators, and guarantees of non-recurrence,” added Bachelet. The UN High Commissioner for Human Rights also denounced a pattern of torture reports during arbitrary detentions and mentioned the recent death of Rafael Acosta, a retired navy captain, who died in custody. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2480704&CategoryId=10717)

 

Maduro slams UN human rights report, says it's full of lies

Nicolás Maduro on Monday said he had demanded the rectification of what he described as lies included in the latest United Nations report on human rights in this country. He also said that the United Nations High Commissioner for Human Rights and former president of Chile, Michelle Bachelet, had "made a wrong call" with the report's outcome. (EFE: https://www.efe.com/efe/english/world/venezuela-s-maduro-slams-un-human-rights-report-says-it-full-of-lies/50000262-4018799)

 

Venezuelan bishops condemn death of naval captain while in custody, other atrocities

The Venezuelan bishops' justice and peace commission have condemned the death in custody of Rafael Acosta Arévalo, a naval captain who was arrested over an alleged assassination plot against president Nicolas Maduro. Acosta's lawyer alleges the officer had been tortured while in custody. Two members of Venezuela's military counterintelligence agency have been charged in relation to Acosta's death. The bishops also protested that police had allegedly disfigured and left blind Rufo Chacón Parada, a youth, as he was demonstrating about the lack supplies in the country. “The Venezuelan state is responsible. We will not consent to the manipulation, dissimulation and downplaying of these grave incidents,” the bishops' justice and peace commission stated July 4. The bishops said that “the forced disappearance, torture, cruel, inhuman or degrading treatment, excesses committed by the police … against Venezuelans are practices that have taken hold in the military and police corps, and are occurring on an ongoing basis, like a secret that cries out in our consciences.” “Silence is not an option in face of so much outrage,” the bishops said. The bishops noted that the men charged in relation to Acosta's death, Lt Ascanio Tarascio and Sgt Esteban Zarate, are 22 and 23, and asked: “This is the generation the armed forces are passing the baton to? Who taught these young men how to do so much harm to their brothers? What are the responsibilities of their superiors in the chain of command in these institutions?” They emphasized that “these young perpetrators are also victims of a system that has allowed this moral and spiritual degradation in our country.” In addition, a Venezuelan Cardinal is accusing the Maduro regime of intimidation and has reiterated his appeal to Nicolas Maduro to engage in dialogue. In an interview with the Pontifical Foundation ‘Aid to the Church in Need’, Archbishop Baltasar Porras of Merida, apostolic administrator of Caracas and President of Caritas Venezuela, shone the light on the limitations and intimidation perpetrated by the government against Church officials and organizations. He decried the fact that those who are bringing aid to the impoverished population and even parishes are continuously under pressure to stop their work.  (Catholic News Agency: https://www.catholicnewsagency.com/news/venezuelan-bishops-condemn-death-of-naval-captain-while-in-custody-74364; Vatican News: https://www.vaticannews.va/en/world/news/2019-07/venezuela-cardinal-government-opposition-dialogue.html)

 

Venezuelan journalist Braulio Jatar conditionally released, barred from leaving country

Venezuelan online and radio journalist Braulio Jatar was formally released from house arrest today after receiving official notification from a criminal court in his home state of Nueva Esparta. As mandated by the court, Jatar - who was charged but not tried for money laundering -- is barred from leaving Nueva Esparta and is required to present himself before that court every 15 days, according to his statement. Jatar's release was first announced by U.N. High Commissioner for Human Rights Michelle Bachelet on July 5, according to press reports. According to the reports, Bachelet had requested the release of Jatar and other high-profile prisoners during her June visit to Venezuela. The news came after the U.N. Human Rights Council held a debate on Bachelet’s report of a visit to Venezuela in June. The report accused Venezuelan security forces of sending death squads to murder young men but a vice minister rejected that in a speech to the Geneva forum on Friday. “The welcome releases of 62 detainees then (in June), with a further 22 – including journalist Braulio Jatar and judge (Maria) Lourdes Afiuni – set free yesterday and the authorities’ acceptance of two human rights officers in the country, signify the beginning of positive engagement on the country’s many human rights issues,” Bachelet said. (Committee to Protect Journalists: https://cpj.org/2019/07/venezuelan-journalist-braulio-jatar-conditionally-.php; Reuters, https://www.reuters.com/article/us-venezuela-un-prisoners/venezuela-releasing-judge-journalist-20-students-u-n-idUSKCN1U016V)

 

US expresses concerns for wrongfully detained U.S. persons (CITGO 6) in Venezuela

The United States demands that the former Maduro regime release the wrongfully detained “CITGO 6” in Venezuela. These men are suffering serious health conditions and must be released immediately. Maduro loyalists continue to prevent the families and attorneys of American prisoners from assisting with basic access to food and medicine, without regard for mental health and general well-being of those detained. These affronts to basic dignity will not be ignored.  The Department of State continues to press Maduro’s representatives for their assurance of the safety and welfare of Americans wrongfully detained in Venezuela. (US Department of State: https://www.state.gov/concerns-for-wrongfully-detained-u-s-persons-citgo-6-in-venezuela/)

 

UN agencies welcome regional road map to help integrate ‘continuing exodus of Venezuelans’

A new road map adopted by Latin American and Caribbean countries, to help better integrate refugees and migrants from crisis-hit Venezuela into new host societies, drew a warm welcome from two UN agencies on Monday. UN refugee agency UNHCR, and the International Organization for Migration (IOM) lauded the joint declaration that agrees to reinforce cooperation, communication and coordination between the countries of transit and destination; strengthen measures against people-smuggling and trafficking; and protect the most vulnerable by combatting discrimination, xenophobia and sexual and gender-based violence. The road map was adopted late last week during the International Technical Meeting of the Quito Process, in the Argentine capital, Buenos Aires, with the participation of 14 Latin American and Caribbean governments, UN agencies, regional organizations, development banks and civil society The meeting highlighted the actions and efforts of the regional countries, not only in terms of reception, documentation and humanitarian assistance, but also in promoting access to health, education, employment, and housing on behalf of Venezuelan refugees and migrants. The Road Map of the Buenos Aires Chapter sets out specific actions on human trafficking, healthcare and for recognizing academic qualifications of Venezuelan professionals, as well as establishing information and reception centers. A so-called Information Card for Regional Mobility is a priority commitment, to complement and strengthen the documentation and registration processes at national levels where it exists or is being developed. According to data from national immigration authorities and other sources, the number of refugees and migrants from Venezuela around the world has now exceeded four million. (UN News: https://news.un.org/en/story/2019/07/1042041)

 

On Venezuelan Independence Day Maduro called for “dialogue” as Guaido slammed 'dictatorship'

Venezuela’s bitterly divided political factions held competing commemorations of the country’s independence day on Friday, with President Nicolas Maduro calling for dialogue and opposition leader Juan Guaido decrying alleged human rights violations by Maduro’s “dictatorship.” Speaking to a gathering of top military officials, Maduro reiterated his support for a negotiation process mediated by Norway between his socialist government and Guaido, the leader of the opposition-held National Assembly who argues Maduro’s 2018 re-election was a fraud. (Reuters, https://www.reuters.com/article/us-venezuela-politics/on-venezuelan-independence-day-maduro-calls-for-dialogue-as-guaido-slams-dictatorship-idUSKCN1U022E)

 

Maduro ratified General Padrino as Defense Minister

Nicolas Maduro on Sunday announced he will maintain Defense Minister General Vladimir Padrino in his post, following months of rumors that top military brass would be replaced after a failed uprising in April. The Trump administration identified Padrino among the top officials involved in negotiations with opposition leader Juan Guaido to create a transition government on April 30, in response to the country’s economic meltdown. Since then, General Padrino has publicly professed loyalty to Maduro along with the majority of the armed forces, which are seen as the main reason why Maduro held on to power despite a hyperinflationary collapse. (Reuters, https://www.reuters.com/article/us-venezuela-politics-military/venezuelas-maduro-ratifies-padrino-as-defense-minister-idUSKCN1U305G)

 

OP-ED: Will more talks that do not include the military resolve Venezuela’s crisis?

Representatives from Venezuelan President Nicolás Maduro’s government and the opposition are expected to meet this week in Barbados for another round of talks mediated by Norway. Previous discussions to end the country’s ongoing political crisis have ended in deadlock. The talks so far have involved two parties: Maduro’s government, which still controls state institutions largely due to military backing; and the opposition led by Juan Guaidó, who is recognized as Venezuela’s acting president by more than 50 countries. Guaidó, like many in the opposition, is skeptical of dialogue. Maduro’s critics see it as a stalling tactic. What to expect: Guaidó has demanded a solution this time, but the talks could again be limited by the two-party approach, said Moises Rendon, the associate director of the Americas program at the Center for Strategic and International Studies. “The new round of negotiations has a flaw that hasn’t been addressed in the last rounds: who is representing Maduro’s government and who is representing Guaidó’s government,” Rendon said. “I don’t think it’s going anywhere, because you don’t have the full representation of all the forces within the Maduro regime”—including the military.” Last week, the United Nations released a report alleging thousands of extrajudicial killings carried out by Venezuelan special forces over the past 18 months. “That will help on the leverage of the Guaidó side,” Rendon said. But it could have limited impact on this week’s negotiations. “The [U.N.] report did not go that far in terms of connecting the human rights violations they described to the Maduro government,” he added. “It’s not shedding light on who’s responsible.” (Foreign Affairs: https://foreignpolicy.com/2019/07/09/another-round-of-talks-for-venezuela-maduro-guaido-iran-europe-trump-uk-darroch/)

 

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.