August 20, 2019

International Trade

Cargo arrivals reported at Puerto Cabello

The local port authority is reporting the arrival of 10,743 ton of assorted merchandise at Puerto Cabello, including auto parts, personal care products, chemicals, textiles, and appliances, aboard vessels AS FABIANA, NIKOLAS, PERITO MORENO, CAP BEATRICE, CONTSHIP ZOE, FS IPANEMA and CFS PALAMEDES. It also reports the arrival of 81,290 tons of bulk products, such as 30,000 tons of soy on the BOSPHORUS PRINCE, and 40,000 tons of White corn aboard the CORAL ISLAND. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=43614)

 

Logistics & Transport

Vessels from Venezuela can still transit Panama Canal

The Panama Canal will allow vessels coming from Venezuela to transit the waterway provided they present the necessary paperwork, the canal authority’s chief said on Wednesday, suggesting a new round of U.S. sanctions on this country may not make any difference to canal traffic. (Reuters, https://www.reuters.com/article/us-panamacanal-venezuela/vessels-from-venezuela-can-still-transit-panama-canal-authority-idUSKCN1V41WM)

 

Oil & Energy

China CNPC suspends Venezuelan oil loading, worried about U.S. sanctions

China National Petroleum Corp, a leading buyer of Venezuelan oil, has halted August loadings following the latest set of U.S. sanctions. Two Beijing-based senior sources with direct knowledge of the matter told Reuters on Monday. "Trump's executive order gave a directive for the follow-up sanction measures that shall be announced by the U.S. Treasury... CNPC is worried that the company is likely to be hit by the secondary sanctions," said one source. A second person, an executive with a key marketer of Venezuelan oil in China, said his company had been notified of the suspension. "We were told that CHINAOIL will not load any oil in August. We don't know what will happen after." CHINAOIL is the trading vehicle of CNPC that lifts Venezuelan oil under term contracts and is one of Caracas' top oil clients. CNPC will wait for more guidelines from the U.S. Treasury before further moves in dealing with Venezuelan oil, said the first source. The suspension followed recent communications between the U.S. and Chinese governments, including a meeting between U.S. embassy officials in Beijing and top management at CNPC, the source added. Beijing has become increasingly pragmatic in recent years in an amply supplied global oil market and as Venezuela's economy plunged deeper into recession. For the first six months of this year, China imported 8.67 million tons of crude oil from Venezuela, or roughly 350,000 barrels per day, about 3.5% of its total imports, according to Chinese customs data. (Reuters, https://www.reuters.com/article/us-china-venezuela-oil-cnpc/china-cnpc-suspends-venezuelan-oil-loading-worried-about-u-s-sanctions-sources-idUSKCN1V909C)

 

Maduro battles for control of US-based refinery

The regime of President Nicolas Maduro on Thursday nullified the newly named board of Venezuela’s prized CITGO refineries in the U.S. amid a political battle for control of the country, saying opposition leaders had no right to appoint them. The opposition-run National Assembly appointed the 15-member CITGO board early this year after Guaidó declared presidential powers, arguing that Maduro’s re-election was illegitimate. CITGO is valued at an estimated $8 billion and includes three refineries in Louisiana, Texas and Illinois, in addition to a network of pipelines. Citgo is also at the center of court battles, such a lawsuit filed by Crystallex, which seeks to liquidate CITGO for payment following a disputed takeover of the Canadian mining firm by Venezuela’s late President Hugo Chavez. Russ Dallen, head of the Miami-based Caracas Capital Markets brokerage firm, said U.S. courts have already weighed in on who controls CITGO, deferring to the U.S. government’s recognition of Guaidó as Venezuela’s president, therefore recognizing his board appointments. Maduro’s state comptroller Elvis Amoroso, who made the announcement on state TV, also said the ad-hoc board members are banned from leaving the country and their Venezuelan bank accounts have been frozen. But it is unclear whether any of them continue to live here. Amoroso also said another five leading figures opposed to Maduro have been banned from politics for 15 years. They include former Attorney General Luisa Ortega, former Caracas Mayor Antonio Ledezma and three opposition lawmakers, all of whom are living in self-imposed exile. So far this year, Maduro’s government has stripped 18 opposition lawmakers of their immunity, exposing them to criminal prosecution in a sigh of heightened political tensions. (WTOP: https://wtop.com/latin-america/2019/08/venezuelas-maduro-battles-for-control-of-us-based-refinery/)

 

Economy & Finance

Turkish BANK ZIRAAT closes door on Venezuela amid U.S. sanctions

ZIRAAT BANK, Turkey’s largest bank by assets, has stopped offering services to Venezuela’s Central Bank in wake of tougher U.S. sanctions that raise the stakes for companies that do business with the Caribbean nation. The Ankara-based state bank confirmed the closing of its account without providing further details. Venezuela’s Central Bank was relying on ZIRAAT to pay contractors, move money and import products in Turkish liras. (Bloomberg: https://www.bloomberg.com/news/articles/2019-08-15/turkish-bank-ziraat-closes-door-on-venezuela-amid-u-s-sanctions)

 

Politics and International Affairs

In Venezuela talks, Maduro allies said they would consider fresh elections

Allies of Nicolas Maduro had discussed holding a presidential election in the coming months during talks to find a breakthrough in the country’s political crisis, four sources told Reuters on Monday. Opposition politicians will travel to Washington to speak to U.S. officials this week, the sources said. Maduro representatives and a delegation representing opposition leader Juan Guaidó have been meeting in Barbados as part of talks to resolve a political stalemate in the struggling nation that is suffering from a hyperinflationary economic collapse. Guaidó’s delegation had proposed a presidential vote in six to nine months on several conditions including changes to the election’s council and supreme court, said the sources, who asked not to be identified because the talks are confidential. The government had in theory agreed to a presidential vote on the condition that the United States lift economic sanctions, Maduro be allowed to run as the Socialist Party candidate, and that the vote be held in a year, one of the sources said. U.S. officials have expressed support for an election but without Maduro as a candidate, which may be a point of discussion, two of the sources said. Preparing groundwork for an election requires a raft of changes to state institutions, including both the elections council and the supreme court - both of which have aggressively intervened in election processes to favor Maduro. Another possible roadblock would be the existence of the Constituent Assembly, an all-powerful legislative body controlled by Socialist Party supporters that opposition leaders say could also intervene in any potential vote. (Reuters: https://www.reuters.com/article/us-venezuela-politics/in-venezuela-talks-maduro-allies-said-they-would-consider-fresh-elections-sources-idUSKCN1V91SF)

 

US talks secretly to Venezuela socialist boss

The U.S. has opened secret communications with Venezuela’s socialist party boss as members of Nicolás Maduro’s inner circle seek guarantees they won’t face retribution if they cede to growing demands to remove him, a senior U.S. administration official has told The Associated Press. Diosdado Cabello, who is considered the most-powerful man in Venezuela after Maduro, met last month in Caracas with someone who is in close contact with the Trump administration, said the official. A second meeting is in the works but has not yet taken place. The talks are still preliminary. It’s not clear whether the talks have Maduro’s approval or not. Cabello, 56, is a major power broker inside Venezuela, who has seen his influence in the government and security forces expand as Maduro’s grip on power has weakened. But he’s also been accused by U.S. officials of being behind massive corruption, drug trafficking and even death threats against a sitting U.S. senator. The administration official said that under no circumstances is the U.S. looking to prop up Cabello or pave the way for him to substitute Maduro. Instead, the goal of the outreach is to ratchet up pressure on the regime by contributing to the knife fight the U.S. believes is taking place behind the scenes among competing circles of power within the ruling party. Similar contacts exist with other top Venezuelan insiders, the official said, and the U.S. is in a listening mode to hear what it would take for them to betray Maduro and support a transition plan. At a press conference Monday, Cabello shied away from discussing any details of the meeting, at one point likening it to “a lie, a manipulation.” But he also said he has long stood welcome to talk to anyone, so long as any discussions take place with Maduro’s approval. An aide said the U.S. has been increasingly knocking on Cabello’s door, desperately looking to establish contact. The aide rejected the notion Cabello was somehow betraying Maduro, saying that Cabello would only meet with Americans if it contributes to lifting sanctions, he blames for crippling the oil-dependent economy. The aide spoke on the condition of anonymity because he isn’t authorized to discuss political affairs publicly. The U.S. has repeatedly said it would offer top socialists’ relief from sanctions if they take “concrete and meaningful actions” to end Maduro’s rule. As head of the constitutional assembly, Cabello has the power to remove Maduro, a position that could come in handy in any negotiated transition. The news site AXIOS reported Monday morning that Mauricio Claver-Carone is the U.S. official that has been in contact with Diosdado Cabello, the number two man in Venezuela and President of the polemical Constituent Assembly legislative. An opposition politician briefed on the outreach said Defense Minister Vladimir Padrino and Interior Minister Néstor Reverol are among those in indirect contact with the Americans, underscoring the degree to which Maduro is surrounded by conspirators even after an opposition-led military uprising in April was easily quashed. (AP: https://www.apnews.com/a3e6b0da8c5648558e61bbaa466fbb42; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2482306&CategoryId=10717)

 

82% of Venezuelans polled believe Maduro should leave office in 2019

The latest poll by DATANALISIS shows 85.1% of the population has a negative view of the Maduro administration, and only 12.9% called it positive. 64.8% of Venezuelans pointed to the economy as the worst problem they are facing, and 18.3% mentioned social issues, as well as 16.3% pointed to political issues. More in Spanish: (El Nacional, https://www.elnacional.com/venezuela/datanalisis/)

 

US Southern Command head focused on ‘day after’ in Venezuela

The head of U.S. Southern Command says military officials are focusing on preparing for “the day after” once an “isolated” Nicolás Maduro leaves power. Navy Adm. Craig Faller warned Monday against Venezuela’s “formidable weapon system” and criticized Cuba, Russia and China for assisting Maduro, saying it was important to put “continuous pressure” on the “illegitimate regime” and organize humanitarian efforts. (Military Times: https://www.militarytimes.com/video/2019/08/06/saudi-special-forces-go-all-out-for-hajj-display/)

 

Trump has considered naval blockade of Venezuela

President Trump has reportedly suggested that the U.S. place ships along the coast of Venezuela to blockade goods from coming into the fraught nation. According to five current and former officials, the Pentagon hasn’t taken the suggestions by the president seriously because of its impracticability and because it would divert naval assets away from countering Iran and China, Axios reported. “He literally just said we should get the ships out there and do a naval embargo,” one official said. “Prevent anything going in.” “I’m assuming he's thinking of the Cuban missile crisis,” the official added. “But Cuba is an island and Venezuela is a massive coastline. And Cuba, we knew what we were trying to prevent from getting in. But here what are we talking about? It would need massive, massive amounts of resources; probably more than the U.S. Navy can provide.” (Washington Examiner: https://www.washingtonexaminer.com/news/trump-has-considered-naval-blockade-of-venezuela)

 

Russia warns US against imposing blockade on Venezuela

Russia on Tuesday warned the U.S. against "incautious steps" in tightening sanctions on Venezuela, and throwing a total blockade over the country. Speaking to reporters in Moscow, Deputy Foreign Minister Sergey Ryabkov called on Washington to assist Venezuelans in bridging existing chasms instead of hindering talks between the government and opposition. He said he would discuss the situation in Venezuela with Delcy Rodriguez, the country's vice president, who arrived in Russia on Monday for a working visit. "We will examine the situation, referring to the strengthening by Washington of illegal, illegitimate sanction measures, attempts to set up a blockade [on Venezuela]. We warn Washington against incautious steps in this area," Ryabkov said. (AA: https://www.aa.com.tr/en/world/russia-warns-us-against-imposing-blockade-on-venezuela/1560476)

 

Venezuelan exodus may soon double, triggering a bigger regional crisis

One of the things that surprised me the most during a lengthy interview with Juan Guaidó, the Venezuelan National Assembly president who is recognized by the United States and more than 50 countries as Venezuela’s legitimate leader, was his forecast that the number of Venezuelan exiles may “easily” reach 8 million by next year. It’s a mind-boggling figure because it would be twice the 4 million exiles that, according to a recent United Nations report, have already fled the country since dictator Nicolas Maduro took office five years ago. Eight million people would amount to about 25% of Venezuela’s population. Twice the current number of Venezuelan exiles would cause a much bigger economic, and perhaps political, earthquake for many Latin American countries. Asked about the Trump administration’s new economic sanctions on Venezuela, which ban U.S. transactions with state-owned Venezuelan businesses, Guaidó told me in the Aug. 12 interview that, “They seek to prevent the regime’s use of those resources to finance irregular (paramilitary) groups or to steal the Venezuelan people’s money.” Dismissing Maduro’s claims that Venezuela’s humanitarian crisis has been caused by U.S. sanctions, Guaidó said that, “The sanctions went into effect three days ago, whereas the 65% contraction of the economy has been taking place over the past six years. The Maduro regime bears total responsibility for the crisis.” Asked about the Cuban presence in Venezuela, Guaidó told me that there are “between 2,000 and 3,000 Cubans who are carrying out intelligence, counterintelligence, repression and even torture” for Maduro’s armed forces. I asked Guaidó whether he’s fearful that international pressure to restore democracy in Venezuela may weaken soon. Guaidó responded that governments come and go, noting that El Salvador’s new government, for instance, has switched sides to support him. He added that Maduro, too, is becoming weaker, as nearly 90% of Venezuelans want him to leave power, according to a recent MEGANALISIS poll. “Time is running against (all) Venezuelans, including Maduro, who is collapsing,” Guaidó told me. “What’s important is to take advantage of the window of opportunity we have to prevent an even bigger humanitarian catastrophe” and to “step up international diplomatic pressures to end the suffering of the Venezuelan people.” (The Oppenheimer Report: https://tribunecontentagency.com/article/venezuelan-exodus-may-soon-double-triggering-a-bigger-regional-crisis/

 

U.N. pleads for more help to relieve Venezuelan refugee crisis

United Nations High Commissioner for Refugees Filippo Grandi appealed on Sunday for more humanitarian aid for Venezuelan refugees pouring into neighboring countries where they are overwhelming social services and sparking local tensions. Grandi had planned to visit the Brazilian border town of Pacaraima this weekend, but authorities advised him to cancel due to protests by residents unhappy with the arrival of more than 500 Venezuelans a day. The UNHCR estimates 4.3 million Venezuelans have fled economic and political turmoil in their country, mainly to Colombia where there are 1.2 million and to Peru, Chile and Ecuador. Some 180,000 have stayed in Brazil. The U.N. and NGOs put out a humanitarian appeal for US$ 770 million at the start of the year and has received less than US$ 180 million, Grandi said in a telephone interview after visiting Chile and Brazil. “This is really one of the most under-funded humanitarian appeals in the world for one of the biggest crises,” he said. Financial institutions such as the World Bank and the Inter-American Development Bank are engaged but need to speed up their help, he said, to help sustain health and education systems. Grandi said there were signs of anti-immigrant sentiment spreading across the region, reflected in mounting restrictions on the movement of Venezuelans in Andean countries. But he praised Chile, which has received 400,000 Venezuelans, for granting safe passage and a guarantee of asylum. (Reuters: https://www.reuters.com/article/us-venezuela-brazil-refugees/u-n-pleads-for-more-help-to-relieve-venezuelan-refugee-crisis-idUSKCN1V80M8)

 

Colombia’s armed groups prey on Venezuela migrants

A new report by Human Rights Watch (HRW) on violence in the department of Norte de Santander, Colombia, shows how vulnerable Venezuelan migrants are to the criminal groups that dominate the region. The report, entitled “The War in Catatumbo” and published August 8, documents abuses by armed groups against Venezuelan and Colombian civilians in Norte de Santander’s Catatumbo region in northeast Colombia along the border with Venezuela. It explains that groups like the National Liberation Army (Ejército de Liberación Nacional – ELN), the Popular Liberation Army (Ejército Popular de Liberación – EPL), and the dissidents of the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia – FARC), are responsible for an uptick in killings and other crimes. The affected Venezuelan citizens live in Catatumbo’s urban areas, including the municipalities of Tibú, Ocaña, El Tarra, Ábrego, Convención and Sardinata. In these areas, the migrants — including many minors and women — live in precarious conditions which leave them at the mercy of criminals, according to HRW. “We have documented on the ground that armed groups in Catatumbo commit all types of abuses: murders, disappearances, kidnappings, recruitment of minors, sexual violations, threats and displacements,” HRW Director José Miguel Vivanco told Semana. There are currently close to 25,000 Venezuelans in Catatumbo who, despite being aware of the security risks in the region, have crossed the border in search of work, food and medicine, according to Vivanco. The Venezuelans have arrived as tens of thousands of Catatumbo’s residents have been displaced by the conflict among the various armed groups. Desperate, the migrants find themselves caught in areas where these groups are vying for territory and control of criminal economies. Officials with the United Nations Office for the Coordination of Humanitarian Affairs (OCHA) on the border city of Cúcuta told InSight Crime that fear of being deported or arrested keeps Venezuelan nationals from seeking help from local authorities. (InSight Crime: https://www.insightcrime.org/news/brief/armed-groups-colombia-receive-venezuela-migrants/)

 

Fears grow of Venezuela malnutrition time bomb

The graffiti scrawled across a wall in Caracas is short but heartfelt. “Tengo hambre,” it reads. “I am hungry”. It is a cry increasingly heard across Venezuela. As Nicolás Maduro and western-backed opposition leader Juan Guaidó battle for the country’s future amid an economic collapse that has sparked severe shortages of food, fuel and medicine, millions of people are going hungry for extended periods and risking long-term damage to their health, humanitarian organizations have warned. “Six to eight million people are living in a state of undernourishment,” said Susana Raffalli, a veteran Venezuelan humanitarian adviser who has worked across the world with the Red Cross and UNICEF, the UN agency for children. Speaking before the latest US sanctions, she said: “That means the state cannot guarantee they have an adequate supply of food.” Ms. Raffalli’ s assessment is supported by the UN’s Food and Agriculture Organization. José Graziano da Silva, outgoing head of the FAO, said in a press interview last month that there had been a “dizzying increase” in hunger in Venezuela in recent years. In a recent report on global food security, the FAO estimates that between 2016 and 2018, about 21.2% of the Venezuelan population was undernourished. When Maduro came to power in 2013 the figure was 6.4%, it says. In a June report, UNICEFs estimated that 3.2m children in Venezuela were “in need of assistance”. Millions of poorer Venezuelans rely on monthly deliveries of government-subsidized food boxes for survival, a system critics denounce as a form of social control, alleging supplies are skewed towards supporters of the government. Delivery has become increasingly erratic, and the contents of the boxes are of variable quality, say aid workers. Washington has meanwhile accused the Maduro government of skimming off hundreds of millions of dollars from the food program, and last month-imposed sanctions on Maduro’s three stepsons over their alleged roles. One businessman with knowledge of the food situation in Venezuela, who spoke to the Financial Times on condition of anonymity for fear of government reprisals, said data show a large proportion of Venezuelans are living on between 1,500 and 1,900 calories a day. Malnutrition is particularly acute in the provinces, say aid workers. North-western Zulia state, on the border with Colombia, is one of the worst-hit areas. In a survey late last year, the Commission for Human Rights in Zulia State (CODHEZ), a local NGO, found that three-quarters of households in the state capital Maracaibo were suffering from hunger. Eight in 10 people said they could no longer afford protein such as chicken and beef and survived largely on arepas — traditional corn flour patties — margarine, pasta and rice. Since then, the situation has worsened as wages have failed to keep pace with galloping inflation. “The price of food went up 8,165% between last October and this June,” said Juan Berríos, a researcher at CODHEZ. Nine months ago, the monthly minimum wage bought 24kg of corn flour but now it buys less than 4kg. Venezuela will face long-term consequences from chronic undernourishment, especially of children, humanitarian organizations warn. NGO data seen by the FT show the weight and height of Venezuelan children have fallen significantly below the average for comparable populations. (Financial Times: https://www.ft.com/content/b6459434-b531-11e9-8cb2-799a3a8cf37b)

 

EDITORIAL: US sanctions are worsening Venezuela’s agony

“One of the worst man-made humanitarian disasters in the modern world.” US secretary of state Mike Pompeo’s assessment of Venezuela is sweeping, but fair. A nation which has the world’s biggest oil reserves but has descended into such economic chaos that up to a quarter of its population has fled should qualify by any standards. Those left behind face severe shortages of food, medicine and fuel. Malnutrition is stunting a generation of Venezuelan children. Top officials stand accused of corruption, drug trafficking and gold smuggling. Sadly, the cure adopted by the Trump administration is only making the patient sicker. Evidently the blame for the suffering of the Venezuelan people lies principally at the door of Chávez and his chosen successor, Nicolás Maduro, under whose rule the country has plumbed new depths. The Trump administration believes that by choking Venezuela’s economy harder Maduro can be ejected. The remedy is not working; other countries under drastic sanctions, such as Cuba, have similarly strangled economies, but long-lived leaders. The key to ending the agony lies in a much broader diplomatic effort. EU and Latin American nations have brokered talks between the government and opposition, but these have failed because Maduro’s key backers — Cuba, Russia and China — are missing. If Moscow, Beijing and Havana have nothing to gain from Maduro leaving power, they will continue to back him. Broad international talks to negotiate Maduro’s exit to a third country, installation of a respected interim president, equal treatment of all creditors and fresh elections are the way forward. This will not be popular with some in Washington. But the Venezuelan people’s suffering is rapidly worsening. Russian president Vladimir Putin suggested to this newspaper in July that Moscow’s interests in Venezuela were purely commercial and vowed that if Guaidó won an election, the Kremlin would work with him. That pledge should be put to the test. (Financial Times: https://www.ft.com/content/f7dd72a4-c044-11e9-b350-db00d509634e)

 

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.