October 12, 2017

International Trade

3,411 tons of food and medical supplies have arrived at Guanta port in 142 containers aboard the SAN ANTONIO from Panama. The shipment includes wheat flour, sunflower oil, surgical masks, syringes. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=37703; El Universal, http://www.eluniversal.com/noticias/economia/llegan-puerto-guanta-mil-toneladas-mercancia_673416)

 

Logistics & Transport

Venezuela reels under ongoing transport crisis

Catching a bus in the Venezuelan capital today and making it to the desired destination on time can be quite an ordeal for commuters, as the country’s transport infrastructure is in shambles due to high maintenance costs, decreased tax revenue, rampant inflation and a system that is chronically understaffed. Venezuela’s spiraling transport crisis, trade union representatives say, is owing to government apathy and withdrawal of subsidies and a lack of investment in the sector. The president of a local union of transporters of Caracas, Hugo Ocando, told EFE that while salaries of drivers are fixed, maintenance costs are unpredictable as the country’s economy, in many areas, runs on the black market price of foreign exchange. According to Ocando, 70% of the country’s transport system has been paralyzed and in the Greater Caracas area alone, on-road vehicles have reduced from 18,000 to 6,000. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2444551&CategoryId=10717; EFE: https://www.efe.com/efe/english/life/venezuela-reels-under-ongoing-transport-crisis/50000263-3405419)

 

Oil & Energy

Big buyer of Venezuelan crude oil halts purchases from national oil company

The fifth largest U.S. buyer of Venezuelan crude, PBF Energy, has halted direct purchases from state-run oil company PDVSA, according to four sources, deepening a rift amid sanctions on this country. PBF is the second buyer in as many months to go elsewhere for its oil and further disagreements could spell new hardships for PDVSA, which owes bondholders US$ 1.2 billion in debt payments due this month. Venezuela relies on oil for over 90% percent of export revenue and U.S. refiners are among its largest cash-paying customers. PBF notified PDVSA last month it "is not going to take any more Venezuelan crude cargoes" from the state-run firm, said a PDVSA source who could not be identified because the information was not public. That notification came after a more than 40-day standoff over a previous shipment. In July, a Venezuelan heavy oil cargo intended for PBF sat off Louisiana awaiting a letter of credit to complete the sale. The tanker discharged in August. PBF has not directly purchased oil from PDVSA since early September, according to Thomson Reuters trade flows data. PDVSA's insistence that PBF prepay for cargoes hamstrung negotiations, the PDVSA source and one of the traders said, while the refiner suggested an open credit mechanism that would allow it to pay at least 30 days after delivery. In September, PDVSA also lost a supply contract for naphtha and natural gasoline to Brazilian petrochemical firm BRASKEM SA. Falling output and oil-quality issues have contributed to PDVSA's struggles to retain customers, and the situation worsened once its name appeared in a U.S. sanctions list. Venezuela in September sent less than 500,000 bpd of crude to the United States, its main destination for oil exports. The volume marked a 38% decline compared with the same month in 2016. Disruptions in imports from Venezuela also have affected Phillips 66, the firm said in August. PDVSA's supply to the U.S. refiner's Sweeny facility in Texas has dropped by more than two thirds this year in part due to oil quality issues forcing the firm to cancel cargoes and request price discounts. (CNBC: https://www.cnbc.com/2017/10/11/big-buyer-of-venezuelan-crude-oil-halts-purchases-from-national-oil-company.html; Reuters, http://www.reuters.com/article/us-pdvsa-pbf-energy-contract-exclusive/exclusive-pbfs-split-with-pdvsa-grows-as-u-s-refiner-halts-direct-deals-idUSKBN1CG24N)

 

Florida businessman admits to bribery scheme at Venezuela's PDVSA
The part owner of several Florida-based energy companies on Wednesday became the latest person to plead guilty as part of an ongoing U.S. investigation into bribery at Venezuela’s state oil company PDVSA. Fernando Ardila Rueda, 49, pleaded guilty in federal court in Houston to two counts, including that he violated the U.S. Foreign Corrupt Practices Act in connection with a scheme to pay bribes to PDVSA employees, the U.S. Justice Department said. He became the 10th person to plead guilty as part of a larger investigation by the Justice Department into bribery at Petroleos de Venezuela SA (PDVSA) that became public with the arrest of two Venezuelan businessmen in December 2015. The two men were Roberto Rincon, who was president of Tradequip Services & Marine, and Abraham Jose Shiera Bastidas, the manager of Vertix Instrumentos. Both pleaded guilty last year to conspiring to pay bribes to secure energy contracts. (Reuters: https://www.reuters.com/article/us-venezuela-usa-corruption/florida-businessman-admits-to-bribery-scheme-at-venezuelas-pdvsa-idUSKBN1CG2Z8)

 

Economy & Finance

Maduro came back empty handed from his recent trip to Moscow, with no announcement of any new money. Discussions were instead focused on solving existing issues. It is possible that Russia might prefer to see proof of Maduro’s strength before adding exposure, but in any case, Russia does not have the capacity to satisfy Venezuela’s financing needs. China’s potential support remains a more critical factor. While uncertainty is likely to remain elevated, overcoming the Q4 17 obstacles that both the opposition and the government face could be supportive of a possible negotiated solution to the crisis in 2018, which would be critical to avoiding default next year and/or in determining the conditions for a potential debt restructuring. (SEE ATTACHED BARCLAY’S REPORT)

 

IMF says Venezuela inflation may rise beyond 2,300%

Venezuela’s triple-digit annual inflation rate is set to jump to more than 2,300% in 2018, the highest estimate for any country tracked by the International Monetary Fund. An intensifying political crisis that’s spiraled since 2014 has weighed heavily on economic activity. Gross domestic product is expected to contract 6% next year, after shrinking an estimated 12% in 2017, the IMF said in its latest World Economic Outlook report published Tuesday. While Venezuela’s central bank stopped publishing inflation data in December 2015, the IMF argues the country’s consumer prices are estimated to leap 2,349.3% in 2018, the highest in their estimates, followed by the Democratic Republic of the Congo’s 44%. As oil production declines and uncertainty increases, unemployment is forecast to increase to about 30% in 2018, also the highest and followed by South Africa’s 28% and Greece’s 21%. The Bolivarian Republic is not current with most of its key economic statistics, leaving economists scant data to crunch. Venezuela’s debt is growing, and it is increasingly unable to make interest payments. Printing money is no longer an option which it has already done. (Financial Tribune: https://financialtribune.com/articles/world-economy/74038/venezuela-inflation-may-rise-beyond-2300; https://www.bloomberg.com/news/articles/2017-10-10/imf-sees-venezuelan-inflation-rate-rising-beyond-2-300-in-2018)

 

Cash shortages here are expected to worsen
Cash shortages are expected to worsen here, despite efforts by Venezuela’s Banking Association and the Bank Superintendent’s office. Currency exports, obsolete ATM’s and the absence of decisions by monetary authorities are causing the crisis. The Central Bank issued 289.3 million new VEB 500 and VEB 1000 bills, and data shows the amount distributed was VEB 393.322 billion, which is only 60% of cash required in July. There seems to be no end in sight for the shortages, which are expected to worsen. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/economia/proyectan-agudizacion-falta-efectivo-pais_673446)

 

Fears of a big Venezuela default subside
Investors are gaining confidence that Venezuela will make its next big bond payments. Notes from the state oil company that mature in November climbed to 94.5 cents on the dollar Wednesday, a three-year high, while amortizing bonds due in 2020 rose to their highest price since they were issued last year. There’s a US$ 985 million payment due Oct. 27 for the 2020 bonds, and US$ 1.2 billion due Nov. 2 on the securities maturing next month. While investors assign a 99% probability to Petroleos de Venezuela SA defaulting sometime in the next five years, according to credit-default swaps trading, optimism on the near term has been growing as the government assures investors it will pay. (Bloomberg: https://www.bloomberg.com/news/articles/2017-10-11/venezuela-default-fears-subside-as-shortest-pdvsa-bonds-climb)

 

Buchheit calls for post-Maduro Venezuelan debt standstill

Any incoming regime in Venezuela replacing President Nicolas Maduro will have to consider how to gain temporary relief from paying its creditors without giving them legal grounds to accelerate their outstanding debts, according to legal experts. One solution will be to create “some form of temporary standstill on creditor actions”, according to Lee Buchheit, partner at law firm Cleary Gottlieb, and Mitu Gulati, law professor at Duke University. Venezuela is struggling to service debts with a combined face value of US$ 63 billion after a collapse in oil prices left it with dwindling revenues and a huge fiscal shortfall. Talks are already being carried out bilaterally between Venezuela and its sovereign creditors, China and Russia, which are owed US $37.2 billion between them, but policy-makers in the country still face complex challenges to find a long-term solution. (Reuters, http://www.reuters.com/article/buchheit-calls-for-post-maduro-venezuela/buchheit-calls-for-post-maduro-venezuelan-debt-standstill-idUSL8N1ML2ZL)

 

Politics and International Affairs

US hopes Maduro regime will allow Venezuela to “speak up and decide” in regional elections

US Under Secretary of State for Political Affairs Thomas Shannon says the Maduro regime must allow the people to “speak up and decide” in Venezuela’s upcoming regional elections next Sunday. He also said the United States and Spain have joined in a “special association” in favor of the people of Venezuela, and that both governments have clearly “condemned repression that feeds the Venezuelan political crisis”. He said both the U.S. and Spain are promoting dialogue as a way out of the ongoing crisis here, within the European Union and the Organization of American States, “pressing on behalf of the Venezuelan people’s right to self-determination and not for the government’s own perpetuation”. He called on the European Union “to do more” in sanctioning the Maduro regime for “violating democratic rules”, More in Spanish: (El Nacional: http://www.el-nacional.com/noticias/mundo/confia-que-venezuela-hable-decida-las-regionales_207184)

 

Is Venezuela a dictatorship? A key election will offer clues.
Venezuelans go to the polls this Sunday in state elections seen as a test of President Nicolás Maduro’s willingness to share power. But with polls showing the ruling socialists at risk of landslide losses, the authoritarian government appears to be falling back on a trifecta of tactics.  Two and half months after the creation of a super congress that gave the government nearly absolute power, Maduro has called the vote for state governors clear evidence that democracy remains alive here. Nevertheless, opposition leaders are decrying a dirty campaign by the Venezuelan government, which President Trump has denounced as a “socialist dictatorship.” State media is airing almost round-the-clock supportive coverage of pro-government candidates, while portraying their challengers as hypocritical and inept. All candidates, meanwhile, are being limited to four minutes of political ads per day on independent networks that now survive by self-censoring. Food baskets are being doled out to hungry voters at pro-government rallies. In a move seen as purposely misleading, the ballots for Sunday’s election will include a host of candidates who lost in the primaries and are not supposed to be running. This week, the government abruptly announced it would relocate a number of voting centers for “security reasons.” Opposition leaders said the move involved 205 locations in heavily anti-government districts in 16 states. That, critics say, amounts to manipulation and confusion. In Vargas, a coastal state just north of Caracas, for instance, the brother of opposition candidate Jose Manuel Olivares was detained last week by intelligence police for allegedly stealing a car — a charge his family denies. While stumping for votes, the candidate is often shadowed, he said, by state agents. Winning candidates from the opposition will likely find their powers restrained. Maduro has said that all governors will come under the authority of the Constituent Assembly, a government-controlled super congress created in a July vote marred by allegations of massive fraud. That body is likely to make life tough for any governor who is not in line with Maduro. Yet the vote is still seen as a key test. If turnout is high, polls suggest the opposition could capture governorships in up to 19 of Venezuela’s 23 states. Analysts are watching to see whether the government faces allegations of vote rigging, similar to those that emerged during the July election. Despite the polls, Maduro last weekend said his party is “expecting a historic success.” Given their strategy of subordinating governors to the government-controlled assembly, authorities might risk little by allowing a clean vote — while gaining much from the optics. The government may be calculating that such an event could defuse international pressure and appease its domestic opponents. Maduro is deeply unpopular, in part due to a severe economic crisis brought on by declining oil prices and what many view as government mismanagement. Recent polls show the president's approval rating at 23%. But opposition leaders have also lost support due to infighting and alleged disorganization. Some critics have pilloried them for even participating in the state elections, arguing the move is validating the government and playing into Maduro’s hands. Still, the election is an important bellwether for the opposition, which has largely failed to sustain the large-scale street protests that rocked the nation earlier this year. The activists’ concern now is that government tactics — and a general sense of helplessness among voters — may depress turnout on Sunday. (The Washington Post: https://www.washingtonpost.com/world/the_americas/is-venezuela-a-dictatorship-a-key-election-will-offer-clues/2017/10/11/d4301382-ad01-11e7-9b93-b97043e57a22_story.html)

 

Mexico confirms it will join talks between Maduro regime and pro-democracy coalition

Mexican Foreign Minister Luis Videgaray has showed the Mexican Senate a letter from Venezuela’s Foreign Minister Jorge Arreaza inviting Mexico to be a part of the group of countries that will accompany possible talks between the Maduro regime and the pro-democracy MUD coalition. Jorge Rodríguez, who heads the regime’s team in proposed talks, claims that a cohabitation agreement will emerge after Sunday’s regional elections. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/politica/rodriguez-asegura-que-luego-de-elecciones-el-gobierno-y-oposicion-concretaran-acuerdo; http://www.noticierovenevision.net/noticias/internacional/mexico-confirma-acompanara-negociacion-entre-gobierno-y-oposicion-venezolana)

 

Opposition denies Maduro’s claim of progress in dialogue

The negotiator for the Venezuelan opposition in the process of developing a dialogue with the government of President Nicolas Maduro said on Tuesday that the president’s claim that negotiations have progressed 95% is totally false – the fact is they are losing ground. “Once again we must contradict the government. Political negotiations have not moved forward – they are losing ground every day,” opposition lawmaker and negotiator Luis Florido told the press in a statement. Florido said that Maduro’s remarks and those of the Venezuelan ambassador to the Dominican Republic, Jesus Uzcategui, are untrue, and since the government has not complied with the conditions required by the opposition, the dialogue is going nowhere. “From the MUD (opposition coalition) we repeat that... rather than the exploratory process being completed, it has gone backwards, because they took away our electoral guarantees by not allowing us to substitute candidates and they’re trying to get away with electoral fraud,” he said. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2444509&CategoryId=10717)

 

DATANALISIS director says democratic movement could gain 13-16 gubernatorial seats

José Antonio Gil Yepes, director of the DATANALISIS polling firm says that the pro-democracy movement could gain 13-16 governorships in Sunday’s upcoming elections, in addition to the 3 it currently controls out of a total of 23 states. He said some United Socialist Party candidates “will emerge ahead of the regime”, because he said: “The regime could lose with a margin of 84-16 which is President Nicolas Maduro’s approval rating over the past 4 months”.  He said abstention by disappointed opponents would not significantly lower the traditional rate of 40-50%. Gil added that 78% of the population distrusts the National Elections Council, and called the current voting system “obsolete”. (2001: http://www.2001.com.ve/en-la-agenda/172122/oposicion-podria-ganar-13-o-16-gobernaciones--segun-director-de-datanalisis.html)

 

BARCLAY’S: Venezuela: Obstacle course

Doubts over the competitiveness of elections in Venezuela are keeping the country’s outlook uncertain. The October 15 regional elections are therefore an important test in this regard. The most recent DATANALISIS poll shows the opposition has a strong lead, with more than twice the number of voting intentions than the government. There are 14 states in which polls suggest the opposition has an unassailable lead, which could make manipulating the outcome hard. Conditions favor the government in just three states. The remaining six states have a bias towards the opposition, but the outcome will depend on turnout and the ability of the opposition to overcome the obstacles imposed by the government. In any case, the opposition could obtain sizeable gains. More important than the number of states will be which states each side wins and the distribution of the national vote, which would be an indicator for a potential presidential election in 2018. (SEE ATTACHED BARCLAY’S REPORT)

 

Maduro again says elected governors must pledge allegiance to his ANC

President Nicolas Maduro has again said all governors elected next Sunday must be subordinate and pledge allegiance to his sham “National Constitutional Assembly” (ANC). He said those who do not will not be able to exercise their authority. He claimed all those who vote will be validating the ANC, “because it called up these elections”. The MUD pro-democracy coalition immediately called a press conference to reply to Maduro’s claim, saying: “People do not vote to endorse the ANC, they vote because it is their Constitutional right to do so”.(2001: http://www.2001.com.ve/en-la-agenda/172128/maduro-ratifico-que-gobernador-electo-debera-subordinarse-y-juramentarse-ante-la-anc---video-.html; http://www.2001.com.ve/en-la-agenda/172151/mud--la-gente-no-vota-para-avalar-la-anc--vota-porque-es-su-derecho-constitucional.html)

 

Exiled Attorney General says rule of law no longer exists in Venezuela

Venezuela’s Attorney General Luisa Ortega – deposed by the sham National Assembly - said on Tuesday in Bogota that the rule of law and democracy no longer exist in her country. “I want you to know that in Venezuela there exists neither rule of law nor democracy nor any freedom … In Venezuela there is a breakdown in the constitutional order,” Ortega added during a conference on human rights in Colombia, organized by the Political Science, Government and International Relations Faculty of Rosario University. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2444521&CategoryId=10717)

 

Opposition magistrates holed up in Chile residence flee Venezuela: source

Five magistrates named by the opposition-run congress who had been holed up in the Chilean ambassador’s residence to avoid arrest fled in the early hours of Monday and escaped over the border to Colombia, a source said on Tuesday. The Chilean Foreign Ministry said in a statement that Elenis Rodriguez, Luis Marcano, Jose Nunez, Beatriz Ruiz, and Zuleima Del Valle had left the premises on Monday, but did not offer further details. “Relatives came to get them at 5 a.m. yesterday. They escaped via (the Colombian border city of) Cucuta,” said the source close to the five, who have been granted asylum by the Chilean government. (Reuters, http://www.reuters.com/article/us-venezuela-politics/opposition-magistrates-holed-up-in-chile-residence-flee-venezuela-source-idUSKBN1CF2XB)

 

Venezuelans are told their expired passports will be valid for another two years

Venezuelans have been told expired passports are valid for another two years because they have run out of paper and ink to print new ones. President Maduro has signed an emergency decree to extend their validity because of chronic shortages at the national passport agency. At least a million Venezuelans have been waiting months for new documents and cannot travel in the interim. Demand for travel documents is at a record high as Venezuelans seek to escape from political crisis and deep recession. (The Daily Mail: http://www.dailymail.co.uk/news/article-4972088/Venezuela-runs-paper-ink-print-new-passports.html#ixzz4vIrZvYCP)

 

Thousands are fleeing Venezuela by two-lane border bridge
For weeks, Venezuelans have been flocking by the busload to San Antonio del Táchira, a border town of some 62,000 residents, fleeing as President Nicolas Maduro consolidates autocratic power. The Simon Bolivar International Bridge is the avenue for an outpouring unprecedented in the history of this oil-rich nation. Crowds stream toward the bridge, attended by street hawkers selling juice, fried pastries and bus tickets and men who ferry their meager possessions to a new life. According to Colombia’s migration authority, the number of foreigners entering Cucuta, the first major city across the bridge, more than doubled this summer. Over 50,000 came in August, up from 22,700 in June. The numbers don’t reflect dual nationals returning to their homeland, or thousands simply crossing into Colombia without passing official checkpoints. Named after the South American hero who freed both nations from Spanish rule, the Simon Bolivar International Bridge was a once major commercial artery. Now, lanes once filled with trucks bearing potatoes, onions and lettuce are reserved for pedestrians trundling handcarts, laden with shopping bags and even walking their dogs along with them. As almost a dozen airlines have pulled out of the country, the bridge has become a concrete bottleneck for the masses fleeing this crisis-torn land. Most Venezuelans stay in Cucuta only long enough to have their passport stamped and catch a ride. Those who arrive late have taken to sleeping in parks or bus stations. Church groups have been doling out food to weary travelers or those who simply cross for the promise of a free meal. Border security has been reinforced, temporary visas are being issued, but the growing exodus has the Colombian government contemplating “refugee camps” if Venezuela’s crisis spirals completely out of control. Few predict an end to Venezuela’s exodus soon. The United Nations has urged governments across Latin America to issue temporary protections to Venezuelans, yet many who are leaving seem unconcerned about permission. (Bloomberg: https://www.bloomberg.com/news/features/2017-10-12/thousands-are-fleeing-venezuela-by-two-lane-border-bridge)

 

No visas, bad jobs: Venezuelan emigrants reluctantly return home

Early last year, Leandro Colmenares sold his car and his apartment and fled Venezuela’s profound economic crisis, joining a wave of emigration to other Latin American countries. Colmenares, a medical equipment repairman, first set up in Panama with US$ 7,000 in hand. When he could not get a visa and struggled to find work, he ended up with odd jobs like painting houses and doing electrical wiring for US$ 25 a day. He then tried his luck in Colombia, where he again took odd jobs, mostly cooking. He opened a small cafe with other Venezuelans but it failed.And once again, he could not get a visa. Crushed and having run out of money, Colmenares decided in February he had no choice but return to Venezuela empty-handed and by bus - one of an apparently growing number of Venezuelan emigrants forced to go home after failing to start a new life elsewhere in Latin America. (Reuters, http://www.reuters.com/article/us-venezuela-migration/no-visas-bad-jobs-venezuelan-emigrants-reluctantly-return-home-idUSKBN1CH1XA)

 

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.

August 29, 2017

International Trade

Venezuelan exports to the US drop to US$ 9.202 billion, which is a 75% decrease since 2006, according to a report from the Latin American Economic System (SELA). US exports to Venezuela dropped down to US$ 5.009 billion, a reduction of 41% since 2006. More in Spanish: (El Universal; http://www.eluniversal.com/noticias/economia/exportaciones-venezolanas-estados-unidos-descienden-9202-millones_667523)

Recent cargo arrivals:

• 88,000 tons of white corn and rice, at Puerto Cabello, aboard the ERHAN, AEC ABILITY II and the
• y UBC TARRAGONA
• 557 containers bearing oatmeal, beef, beans, white rice, vehicle tires, toothpaste, corn flour, wheat flour, milk, medicine, shampoo and diapers, arriving from Colombia on the NIKOLAS, at Puerto Cabello.
• 140 tons of fertilizer for state agency AGROPATRIA, aboard the SUDKAP, at Puerto Cabello.
• 2477 pieces of steel tubing, aboard the QING HUA SHAN, also at Puerto Cabello
• 6,101 tons of food packages for the government’s CLAP food distribution program have arrived at La Guaira port in 289 containers aboard MV VIKING MERLIN from Veracruz – México. Food items received include pasta, rice, beans, cooking oil, canned tuna, and powdered milk.
• 2.878 tons of food, medicine and personal care products arrived at La Guaira port aboard the CONTSHIP PRO from Jamaica, and the MELBOURNE STRAIT, from Curazao. The products received include rice, milk, pasta, tuna, beans, kits for dialysis, disinfectants, cosmetics, detergents, soap and children’s products.

More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx; El Nacional, http://www.el-nacional.com/noticias/economia/arribaron-2800-toneladas-alimentos-productos-higiene-medicinas_200865; http://www.bolipuertos.gob.ve/noticia.aspx; Noticiero Venevisión, http://www.noticierovenevision.net/noticias/economia/aduana-principal-de-puerto-cabello-recibe-100-mil-toneladas-metricas-de-maiz-y-arroz; El Universal; http://www.eluniversal.com/noticias/economia/llegan-puerto-guaira-mil-800-toneladas-productos_667689; http://www.eluniversal.com/noticias/economia/alrededor-millones-alimentos-para-los-clap-llegaron-guaira_667188;  El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/mas-de-6-mil-toneladas-de-alimentos-clap-arribaron.aspx#ixzz4qlgcty2l)

 

Oil & Energy

Oil Minister and state oil firm chief switch roles, Del Pino heads for Russia ahead of OPEC meeting

Venezuelan oil minister Nelson Martinez and state oil company president Eulogio Del Pino will switch roles as the country’s production wanes and money dries up. Del Pino will soon go on a series of foreign trips to strengthen alliances ahead of a meeting of heads of state which will seek accords on oil and gas prices, President Nicolas Maduro said on state television. Maduro’s moves come after the almost 90% drop in profits at Petroleos de Venezuela SA last year amid declining output and a plunge in oil prices. Venezuela and PDVSA are under intense scrutiny from investors as U.S. sanctions against key government officials and a power grab by President Nicolas Maduro threaten to disrupt financial flows. Maduro said Martinez as head of PDVSA will seek to strengthen partnerships with foreign companies operating in the Orinoco Belt by improving their stakes, while increasing refining capacity and boosting production. Del Pino will visit Russia and Saudi Arabia ahead of a joint OPEC, non-OPEC monitoring ministerial committee meeting in Vienna set for Sept. 22, the TASS news agency cited the minister as saying on Monday. During his meeting with Russian counterpart Alexander Novak, the Venezuelan oil minister will discuss the implementation of the OPEC+ global oil output cut deal, and “the introduction of changes, if need be”, the agency reported, giving no detail. (Bloomberg: https://www.bloomberg.com/news/articles/2017-08-25/venezuela-oil-minister-pdvsa-head-to-switch-roles-maduro-says; Reuters, http://www.reuters.com/article/us-opec-meeting-venezuela-russia-idUSKCN1B80PP)

 

PDVSA negotiating Curacao refinery lease, open to China partners

Venezuelan state oil company PDVSA on Thursday said on Friday it was negotiating the continuation of its lease of Curacao’s Isla refinery but was open to Chinese partners following a preliminary deal between the island and China’s Guangdong Zhenrong Energy to operate the complex. PDVSA has for decades operated the refinery, which opened in 1918, under a lease agreement. But the cash-poor company has been reluctant to invest some US$ 1.5 billion that Curacao authorities requested several years back to modernize the 335,000 barrels-per-day facility. (Reuters, http://www.reuters.com/article/us-venezuela-refinery-curacao-idUSKCN1B52GM)

 

OP-ED: Why the oil market should not misread Venezuela

For trading markets every tragedy is a business opportunity. That is the spirit in which parts of the oil market are viewing the continuing trauma in Venezuela. The country is on the verge of becoming a failed state. But are these events likely to trigger the rise in oil prices that bulls in the market have long been hoping for? Will the implosion of the regime of President Nicolas Maduro and the open civil conflict that could follow push oil prices up to US$ 60, US$ 70 a barrel or even more? I don’t think so. There are good reasons, however, why the reality might be rather different. First, a complete cessation of production and exports is extremely unlikely. Venezuela depends on oil for 95% of its export revenues. Protecting that trade and maintaining production will be the absolute priority for any government. Oil installations will be guarded by troops if necessary and production will continue. If any of the producing facilities do grind to a halt the impact is likely to be limited. There could be a spike in prices but that is likely to be temporary. Venezuela is no longer the power in the oil market it was a decade ago, when it produced and exported around 2.5m b/d. Its crudes were an important part of the mix for refineries on the US Gulf coast. A loss of production of say half a million barrels a day would be inconvenient for the refiners accustomed to relying on the country’s supplies and damaging to the international companies involved, such as REPSOL and CHEVRON, but globally, any such shortfall could soon be matched by increased supplies from elsewhere. Nor would production stay cut off. Any government will need the export revenue and those who have invested in Venezuela or made loans in return for oil supplies also have a direct interest in seeing production maintained. That includes both China, which has stopped lending Venezuela new money but in 2016 still had a reported US$ 20 billion of loans outstanding, and Russia, which has recently increased its lending through the state-controlled oil company ROSNEFT. That debt is secured against the trading subsidiary of PDVSA, Citgo. No government can afford to alienate such powerful creditors. Venezuela could easily sustain production of 3m b/d or more and, given the existing infrastructure and the experience in what remains of the PDVSA, could probably reach that level within 18 months of a new administration. In countries dependent on oil revenue, production and exports become the imperatives of an incoming government — the way new leaders can secure power. Venezuela today is a sad and miserable place, its population the victims of dictatorship and mismanagement of the economy. But the market would be wrong to see what is happening on the streets of Caracas as a leading indicator of the next upward wave in oil prices. (By Nick Butler: Financial Times: https://www.ft.com/content/38c15c42-74e6-3410-9c70-eacc4b0fd449)

 

Commodities

35,000 hectares of citrus are endangered by spreading bacteria

The National Agriculture Producers Federation has called for a sanitary emergency due to the spread of a bacteria named HLB, which is endangering around 35,000 hectares of citrus. Carlos Romero, President of the National Fruit Growers Federation says the bacteria needs to be controlled through fumigation every 25 days, but it cannot be donet due to lack of pesticides at state agency AGROPATRIA. More in Spanish: (Ultima Hora Digital, http://ultimahoradigital.com/2017/08/una-bacteria-pone-en-riesgo-35-mil-hectareas-de-citricos-en-venezuela/)

ALCASA says it has been allocated US$ 403 million for projects

State company ALCASA reports the Maduro regime has given them US$ 403 million that it has invested in transforming, distributing and rolling aluminum, and will soon become the first transformation facility in Latin America. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/industrias/alcasa-recibio--403-millones-para-seguir-desarroll.aspx#ixzz4r91pzzBv)

 

SIDOR says it has completed a second delivery of tin foil for canning tuna and sardines

The state run SIDOR steel complex says it has delivered 1804 tons of tin foil to be processed into cans for tuna and sardines. It made a previous delivery in March to 27 processing companies. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/industrias/sidor-realiza-segunda-entrega-de-hojalata-para-env.aspx#ixzz4r92VnCNt)

 

Economy & Finance

Maduro now owns Venezuela’s economy—and its collapse

Venezuela’s socialist regime has consolidated near-total political control after installing an all-powerful constituent assembly. Resolving the economic crisis and coming up with US$ 3.5 billion for bond payments through November however will prove trickier. President Nicolas Maduro has thrived in the face of vicious street demonstrations, talk of military force by the U.S. and several rounds of sanctions. His new constituent assembly is bypassing congress and is expected to start rewriting the nation’s charter this week. But the result may be that Maduro has sole ownership of the once-rich nation’s terminal financial collapse. Maduro has been hunting for new financial lifelines in Russia as he’s slashed imports, called in debts and sold or mortgaged assets at a deep discount. As of July 31, the government had amassed US$ 2.8 billion for its November payments, according to Caracas-based consultancy ECOANALITICA. Beyond this year, however, director Asdrubal Oliveros was skeptical the government could make good if it continues to alienate investors and regional leaders. “The government remains trapped in the same dynamic,” he said. “It’s sustaining an unsustainable system.” The noose keeps tightening. Last week, the Trump administration barred trading of new debt issued by the Venezuelan government and state oil company PDVSA, and blocked dealing in some existing bonds owned by the country’s public sector. The ban is meant to keep Venezuelan government entities from selling bonds into the secondary market. As Venezuela has become economically isolated, inflation has spiked and the nation has been wracked by shortages of everything from car parts to basic medicines. Infant mortality and diseases like malaria have soared, while shaky services and unreliable food programs have fueled violent unrest among those once loyal to Maduro. Maduro has been vague about how he will improve Venezuela’s penury. He has hinted he may be tapping his Russian counterpart, Vladimir Putin -- whom he referred to as the world’s principal leader -- for even more financing, saying he would visit Russia soon to discuss accords. Still, Moscow’s aid hasn’t been enough. Venezuela’s ruling socialists have turned to printing money to maintain spendthrift policies. The nation’s money supply increased almost 30% in July alone, pushing prices even higher. Jose Manuel Puente, an economist at the Institute of Advanced Studies in Administration in Caracas, said Venezuela could be approaching hyperinflation. “It’s impossible to have a coherent macroeconomic policy while internal politics are in chaos,” he added. (Bloomberg: https://www.bloomberg.com/news/articles/2017-08-29/defying-logic-and-sanctions-venezuela-s-economy-slumps-alongI

 

White House sanctions may scare off Venezuela vulture investors
The Trump administration’s ban on new Venezuelan debt could scare off so-called vulture investors by making it nearly impossible for the country to restructure its obligations. That means in the event of default -- which investors view as pretty much a certainty within the next five years -- the country and its creditors may struggle to come up with an agreement that would assign any value to its outstanding bonds. It also will make smaller debt swaps much more difficult to get done, possibly hastening the day of reckoning. Such restrictions may throw a wrench into the tried-and-true methods of so-called vulture investors, typically hedge funds that swoop into a country’s distressed debt shortly before or in the aftermath of a default with the goal of extracting value from bonds too toxic for most investors. These funds may now demand a much lower price if there’s no regime change that would prompt the U.S. to lift restrictions, largely because of the complications in negotiating a restructuring.  Because a default with no hope of restructuring would expose the country to international lawsuits and seizures of its assets, it could increase the chances of a regime change in the aftermath of a missed payment. The same day the new sanctions were announced, Maduro asked holders of Venezuelan bonds to meet with Economy Minister Ramon Lobo this week to discuss the effects of the U.S. sanctions. U.S.-based holders of Venezuela bonds will be hurt the most by the penalties. The additional penalties strengthen Maduro’s argument that his nation is under attack from outside interests, likely pushing him toward lenders of last resort in China and Russia. The Treasury Department’s Office of Foreign Asset Control has traditionally interpreted sanctions broadly, so any attempt to circumvent their objective by clever structuring of a debt deal would be risky. The odds of a sovereign credit event over the next five years rose to 96% and Petroleos de Venezuela’s default probability hit 99%. (Bloomberg: https://www.bloomberg.com/news/articles/2017-08-28/white-house-sanctions-may-scare-off-venezuela-vulture-investors)

US sanctions to pile misery on moribund Venezuelan economy

While President Nicolas Maduro celebrates having calmed Venezuela’s streets after months of deadly protests, the country’s imploding economy poses an ever more severe threat. And the misery is likely to get even worse due to financial sanctions imposed by the Trump administration in efforts to isolate Maduro for taking the country down an increasingly authoritarian path. But while daylong bread lines have eased, the newest scourge is the way galloping inflation has reached even the basic staples whose prices were long controlled by rigid price and currency restrictions. In recent months authorities have started allowing companies to import everything from canned food to new cars and letting them pass the dollar prices on to consumers at the black-market exchange rate, where the greenback is worth 1,685 times more bolivars than it as at the strongest of three official exchange rates. The result of the de-facto dollarization has been a devil’s bargain: Shelves are fuller than Venezuela has seen for months, but with prices that are out of reach for the poor Venezuelans. Inflation, which has been running in the triple digits for more than two years, hit a record last month and has risen to 650% over the past 12 months. That’s not to say shortages have gone away. Most shelves contain a single variety of any given product, much of it imported from China. Former Foreign Minister Delcy Rodriguez, leader of the pro-government constitutional assembly whose creation triggered the U.S. action, said Sunday that the “financial blockade” means Venezuela won’t be able to pay for essential imports like food and medicine. The Trump administration denies it is seeking to punish ordinary Venezuelans. The sanctions, enacted by executive order last week, prohibit American banks from providing new money to the government or state-run oil company PDVSA. They also bar PDVSA’s U.S. subsidiary, CITGO, from sending dividends back to Venezuela. But they don’t affect financing for most commercial trade, including the shipment of crude oil, of which the U.S. is the OPEC nation’s biggest buyer. Still, by depriving Maduro of badly needed hard currency, the sanctions make it more likely that Venezuela will stop payment on its debt, or reduce what few goods it still imports at the official rates. Worse, if Maduro doesn’t yield to Trump’s demand to disband the constitutional assembly and call elections, even tougher sanctions are likely to follow. To cope, Maduro says he will look to increase commercial ties with China and Russia, although it’s not clear how generous its allies will be, given Venezuela’s growing reputation as an international outlaw in the mold of Cuba, Syria and North Korea. (AP: https://apnews.com/97841a2444b544fca6b4b3803f0e7d2c/US-sanctions-to-pile-misery-on-moribund-Venezuelan-economy)

Scraping the bottom of the barrel: Disposable reserves down to US$ 700 million; Capriles calls emergency

International reserves available for imports, debt service, contingencies and FOREX stabilization were down to US$ 9.855 billion on August 22^nd, the lowest level in 15 years. And the situation is even worse because the nation is now more dependent on imports and has a heavier debt burden. Central Bank sources say disposable reserves are only US$ 700 million because most reserves are being held in gold bullion: This means even fewer imports and increased scarcity. The is not much chance disposable reserves can increase in the short term because PDVSA must pay US$ 2.900 billion in debt service during October and November. The government is considering using gold bullion to leverage additional resources. The ECOANALÍTICA think tank estimates gold reserves to be around US$ 7.8 billion, some of which it has reexported to the Bank of England. The government could sell some of this gold, or use it as collateral for loans, but this would liquidate available options, or as ECOANALÍTICA describes it: “scraping the bottom of the barrel”. Miranda state governor and opposition leader Henrique Capriles Radonski says “we are in an emergency. We are reaching a crossroads where we either pay debt or get embargoed; and if they pay debt, what will we do for imports?” More in Spanish: (Notiminuto: http://www.notiminuto.com/noticia/reservas-liquidas-caen-a-700-millones/#; http://www.notiminuto.com/noticia/segun-capriles-venezuela-entre-el-defaul-o-importar-alimentos/)

 

Venezuelan bonds drop sharply after sanctions

Venezuelan bonds dropped severely in secondary markets after new financial sanctions were announced by the Trump administration. PDVSA bonds were the hardest hit, dropping an average 4.3%. The PDVSA 21 bond fell by 6.37%, Sovereign bonds also receded an average 4%, with the Venezuela 2022 dropping 5.4%, The bonds were also hurt by an additional drop in oil prices. More in Spanish: (El Nacional: http://www.el-nacional.com/noticias/economia/bonos-venezolanos-cayeron-mas-luego-sanciones-estados-unidos_201005)

 

Walls close in on Venezuela with U.S. bond sanctions

Fresh restrictions on trading Venezuelan debt have drawn the financial noose more tightly around the neck of the struggling nation. The Trump administration on Friday barred the purchase in U.S. markets of new securities issued by the government and its state oil company and blocked dealing in some existing bonds owned by the country’s public sector to further clamp down on President Nicolas Maduro’s autocratic regime. Trump imposed sanctions designed to prevent Maduro from carrying out a "fire sale" of government assets. "We will not stand by as Venezuela crumbles," White House press secretary Sarah Sanders said Friday. "These measures are carefully calibrated to deny the Maduro dictatorship a critical source of financing to maintain its illegitimate rule, protect the United States financial system from complicity in Venezuela's corruption and in the impoverishment of the Venezuelan people, and allow for humanitarian assistance." That move won Trump bipartisan praise on Capitol Hill. The U.S., which will still allow the continued import of Venezuela’s lifeblood oil, acted in response to Maduro’s moves to consolidate authority amid a crippling recession and months of violent protests. The measures follow sanctions on top officials, and decrease maneuvering room for a nation fast running out of money. Venezuela has US$ 3.5 billion in bond payments coming due by November, which the government will struggle to pay as reserves dwindle. The Trump administration’s ban on new Venezuelan debt could scare off so-called vulture investors by making it nearly impossible for the country to restructure its obligations. That means in the event of default -- which investors view as pretty much a certainty within the next five years -- the country and its creditors may struggle to come up with an agreement that would assign any value to its outstanding bonds. It also will make smaller debt swaps much more difficult to get done, possibly hastening the day of reckoning. Such restrictions may throw a wrench into the tried-and-true methods of so-called vulture investors, typically hedge funds that swoop into a country’s distressed debt shortly before or in the aftermath of a default with the goal of extracting value from bonds too toxic for most investors. These funds may now demand a much lower price if there’s no regime change that would prompt the U.S. to lift restrictions, largely because of the complications in negotiating a restructuring. (Reuters, http://www.reuters.com/article/us-usa-venezuela-sanctions-idUSKCN1B5216; http://www.reuters.com/article/us-usa-venezuela-sanctions-market-idUSKCN1B52BD; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2442308&CategoryId=10718; Bloomberg, https://www.bloomberg.com/news/articles/2017-08-25/with-u-s-bond-sanctions-walls-close-in-on-venezuela-s-regime; https://www.bloomberg.com/gadfly/articles/2017-08-25/it-s-hard-to-quit-venezuela-s-debt-when-it-pays-so-well; https://www.bloomberg.com/news/articles/2017-08-28/white-house-sanctions-may-scare-off-venezuela-vulture-investors;)

 

.... and Goldman's hunger bonds dodge U.S. sanctions that bypass traders

The U.S. levied additional sanctions on Venezuela on Friday, but one of the nation’s largest bondholders may be breathing a sigh of relief. Goldman Sachs Asset Management, which bought US$ 2.8 billion of notes issued by the state oil company in May, has faced sharp criticism for a deal that appeared to supply fresh funds to President Nicolas Maduro. While observers thought the securities would be a prime target for new penalties, they were exempt from the order. In fact, the only bonds covered by the trading ban are notes due in 2036 that appear to never have been sold outside Caracas. “That was somewhat surprising,” said Francisco Rodriguez, the chief economist at Torino Capital in New York. “I guess the logic is that those bonds are already in the hands of bondholders, so you wouldn’t be really blocking new financing.” (Bloomberg, https://www.bloomberg.com/news/articles/2017-08-25/goldman-s-hunger-bonds-dodge-u-s-sanctions-that-bypass-traders)

 

Hausmann says Venezuela needs US$ 100 billion to begin recovery

Economist Ricardo Hausmann, Venezuela’s former Planning Minister and currently teaching at Harvard University’s Kennedy School of Government, estimates Venezuela will require US$ 100 billion to begin recovery. Following the nation’’s unprecedented collapse, with almost 40% reduction in GDP over the past 4 years and an 88% reduction in purchasing power, and a severe health crisis: “To get the country moving we must restore the ability to import, to a level of US$ 35 billion; and to do so we need to restructure sovereign debt, there is no other way. Besides, we of course will need specific international support.  We believe the documented debt is around US$ 118 billion, with another US$ 60 billion in unpaid commitments and delayed payments. All totaled, it is near US$ 170 billion. And our exports have dropped by US$ 26 billion. We are the most indebted nation in the world, as per the balance of debt and exports. We believe we will need around US$ 100 billion, half because of liquidity shock and the other half to restructure and reprogram our debt.  Venezuela has unfortunately been devastated and when the time to reconstruct comes it will be a terribly poor country”. Hausmann says that thanks to sanctions such as those implemented by the Trump administration US$ 500 million were located in accounts controlled by Vice President Tareck El Aissami. Also, “the latest sanction makes a lot of sense. Venezuela cannot now go to financial markets and that gives the international community leverage it has not had.” More in Spanish: (Clarin: https://www.clarin.com/mundo/venezuela-necesitara-100-000-millones-dolares-ponerse-marcha_0_rkvo6ryKZ.html)

 

Ramírez claims the US wants Venezuela to default, faults regime’s FOREX policy

Venezuela’s Ambassador to the UN, Rafael Ramírez, a former Vice President for Economic Affairs, has said that US sanctions on Venezuela are seeking to bring about a default, but he said sanctions are not the root of the crisis the nation has been undergoing for the past 3 years, but that restrictions on letters of credit will have an economic impact. He said the nation’s economy is afflicted by “serious” structural exchange rate problems. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/ramirez-eeuu-busca-que-venezuela-caiga-estado-default_667727)

 

Pro-regime legislator claims Venezuela is negotiating bond sales to China

Juan Carlos Alemán, a member of the pro-regime “Constitutional Assembly” has claimed that the Maduro regime is negotiating with China for the resale of Venezuelan bonds, and that there soon will be an announcement in this. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/mercados/negocian-recompra-de-bonos-con-china.aspx#ixzz4r91jsi6A)

 

Cash scarcity now hits banks

Cash shortages hurting Venezuela over the past few months have now left the banking system with scarce tender available for clients, and in some cases with no cash at all. Employees at six government held banks report that ATM operations are now limited due to the cash shortage, and daily withdrawals at tellers are now limited to 50,000 bolivars per person.  The banking superintendent’s office (SUDEBAN) is denying it has ordered banks to cap withdrawals and cash transfers. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/economia/escasez-de-efectivo-deja-a-bancos-con-pocos-billetes-a-sus-usuarios; http://www.noticierovenevision.net/noticias/economia/sudeban-desmintio-que-se-haya-limitado-los-montos-para-retirar-o-transferir-dinero; El Mundo, http://www.elmundo.com.ve/noticias/economia/banca/hasta-bs-50-000-es-el-limite-de-retiro-en-agencias.aspx#ixzz4r926ONp2; http://www.elmundo.com.ve/noticias/economia/banca/sudeban-afirma-que-no-han-limitado-los-retiros-o-t.aspx; El Universal, http://www.eluniversal.com/noticias/economia/sudeban-desmiente-limites-retiros-banca_667612)

 

Politics and International Affairs

Venezuelan lawmaker says hunger, not politics, will drive Maduro from power

National Assembly member Gaby Arellano has travelled to Bogotá to warn local lawmakers about a looming humanitarian crisis across the border, as tens of thousands of Venezuelans continue to head to Colombia every day looking for food and refuge. She says the route to change will come through measures that “asphyxiate” the government, diplomatically or economically. Arellano believes that President Nicolás Maduro and the ruling United Socialist Party of Venezuela (PSUV) are on borrowed time. “The dictatorship is incredibly weak,” she said. “It’s only being propped up by the military, which has lost its legitimacy, and the errors of the political class — myself included — that opposes it. We had the dictatorship cornered,” Arellano said of the recent demonstrations. In the middle of the bloodshed and mass detentions, though, Maduro called for a National Constituent Assembly (ANC) to draft a new constitution — superseding all other branches of government. “It became clear that they were going to impose the [ANC] whether they had one vote or 100, whether there was one-person dead, or 1,000,” she says, adding that the opposition didn’t plan for how to confront the assembly once it was functioning. Even as Venezuela has quit seething with daily protests, Arellano says they’re lurking just beneath the surface, waiting for a new outrage to fan them back to life. She predicted the next “detonator” might come when the administration realizes it will lose October’s regional elections and postpones them or cancels them altogether. “Regardless of what the opposition does, or the dictatorship does, these protests are a product of the people’s needs,” she explains, and adds: “The barbarity is at the end, the worst is at the end, the most shocking is at the end.” (The Miami Herald: http://www.miamiherald.com/news/nation-world/world/americas/venezuela/article169903307.html)

 

ANC plans to begin rewriting Constitution this week, claim it is subject to referendum
Delcy Rodríguez, who heads the so-called National Constituent Assembly (ANC) says the group will begin rewriting Venezuela’s 1999 Constitution this week, focusing primarily on the justice and welfare systems. She announced that the group’s key operating rules have been approved, and that their work will be subject to approval by referendum, More in Spanish:  (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/politica/anc-empezara-a-redactar-capitulos-de-la-nueva-constitucion-la-semana-proxima; El Mundo, http://www.elmundo.com.ve/noticias/actualidad/politica/anc-empezara-el-lunes-a-redactar-una-nueva-carta-m.aspx; El Universal, http://www.eluniversal.com/noticias/politica/anc-aprobo-realizacion-del-referendum-aprobatorio-nueva-constitucion_667240)

 

Maduro regime eyes censoring social media after public shaming wave
The Maduro regime is considering banning messages that promote “hate” and “intolerance” on social media and messenger services, according to Delcy Rodriguez, the president of the country’s all-powerful constituent assembly. Rodriguez told reporters on Monday she is looking to limit messages that fuel bigotry and confrontation between Venezuelans in a so-called anti-hate law, which is currently being debated by the legislative super body, known as the “constituyente”. Rodriguez didn’t provide details on how the government plans to monitor social media and on penalties for offenders. The new assembly will meet again tomorrow. The anti-hate law comes as the government of President Nicolas Maduro has intensified a clampdown on the media, blocking the transmission of Colombian networks CARACOL and RCN last week. In a bid to consolidate power amid a crippling recession, Maduro installed the “consituyente” earlier this month with the mandate to rewrite the country’s constitution. The new legislative body has since bypassed the opposition-led congress and has been targeting the last strongholds of dissent in public institutions. Rodriguez singled out a growing practice among Venezuelan expats of publicly heckling top-ranking government officials on trips outside of the country. The practice, known locally as “escrache”, is filmed on smart phones and is wildly shared on services like Instagram, Twitter and WhatsApp. (Bloomberg: https://www.bloomberg.com/news/articles/2017-08-28/venezuela-eyes-censoring-social-media-in-wake-of-public-shaming)

 

Exiled Attorney General says contract killers set after her
Venezuela's exiled attorney general, Luisa Ortega, accused the government Monday of hiring contract killers to go after her and other justice officials denouncing alleged abuses committed under President Nicolas Maduro. "I have come specifically to lodge a complaint before the Costa Rican justice ministry and the Inter-American Commission on Human Rights," she told a news conference in Costa Rica's capital of San Jose alongside that country's chief prosecutor, Jorge Chavarria. "I have information that the persecution is continuing against me and that the government has contracted hitmen to end my life." Ortega, 59, is a fugitive from Venezuela. She fled with her husband on August 18, two weeks after a new loyalist assembly established by Maduro booted her from office. (AFP: https://www.yahoo.com/news/venezuela-ex-attorney-general-says-contract-killers-set-201550045.html)

 

MUD pro-democracy coalition supports US Sanctions, warns of unapproved transactions

Venezuela's Mesa de Unidad (MUD) pro-democracy coalition spoke out Sunday in a statement in which it set its sights on the decisions of President Donald Trump's government over Venezuela. Following is the MUD statement:
1. Sanctions for violators of human rights and looting of public resources will always have our support, in the absence of impartial justice in Venezuela. 2. We will also support and solicit all the world's diplomatic support that contributes to the constitutional and democratic restoration in Venezuela. 3. We urge the entire international community to warn all citizens and companies in their respective countries that they should refrain from carrying out financial transactions or contracts of national interest with the Venezuelan government that are in violation of the National Constitution because they have not been approved by the only Constitutional body to authorize them as the National Assembly. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2442371&CategoryId=10717)

 

US sanctions against Venezuela won’t work, warns Beijing
On Friday, US President Donald Trump signed an executive order prohibiting Americans from dealing with new debt and equity issued by the Venezuelan government and by its state oil company PDVSA. Beijing says the sanctions won't work. Chinese Foreign Ministry spokeswoman Hua Chunying said on Monday at a daily news briefing that: “The experience of history shows that outside interference or unilateral sanctions will make the situation even more complicated and will not help resolve the actual problem”. China and Venezuela have extensive business links; oil being the largest, where the countries have a loan-for-oil deal. Venezuela owes China more than US$ 62 billion and is behind in the oil shipments. (RT: https://www.rt.com/business/401167-us-sanctions-against-venezuela-wont/; Reuters, http://www.reuters.com/article/us-usa-venezuela-sanctions-china-idUSKCN1B811D)

 

Russia: US setting stage for Venezuela invasion
Russia accused President Trump's team of trying to set the stage for an invasion of Venezuela, in a condemnation of the latest U.S. sanctions on the Maduro dictatorship. "We are strongly against unilateral sanctions against sovereign states," Russian Foreign Ministry spokesperson Maria Zakharova said Monday. "We will carefully analyze the implications of the sanctions imposed by the United States, and their possible effect on the interests of Russia and Russian businesses. We can already say that they will not affect our willingness to expand and strengthen cooperation with the friendly nation of Venezuela and its people." That was just one salvo in an extended rebuke of U.S. policy, after Trump issued an executive order imposing new sanctions designed to cripple dictator Nicolas Maduro's regime. The Russians suggested that Trump is trying to destabilize Venezuela to provide a pretext for a U.S. invasion of the struggling country. "In these circumstances, the announced sectoral sanctions against Venezuela's financial and oil sectors are clearly aimed at further unbalancing the situation in the country, and exacerbating its economic problems," Zakharova said. Russia has now joined Cuba in defending Maduro and arguing that international powers should allow the new assembly to rewrite the constitution. (The Washington Examiner: http://www.washingtonexaminer.com/russia-us-setting-stage-for-venezuela-invasion/article/2632759#!)

 

Congressman reports the government spent US$ 22 billion on pending ODEBRECHT contracts
Congressman Juan Guaidó, Chairman of the National Assembly’s Comptroller Committee, reports that the Venezuelan government has expended around US$ 22 billion on unfinished ODEBRECHT projects that are 11 years overdue. He says that these contracts point to extensive corruption with officials who cannot account for the funds. Guaidó adds that the Committee, along with the exiled Attorney General, are promoting investigations and legal action in Brazil. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/economia/guaido-asegura-que-el-gobierno-gasto-22-mil-millones-de-dolares-en-contratos-de-odebrecht; El Nacional, http://www.el-nacional.com/noticias/politica/gobierno-malgasto-millardos-dolares-contratos-sobornos_200443)

 

Ortega’s revelations could implicate Spain’s Zapatero in Venezuelan shipbuilding surcharge
One of the files that Venezuela’s exiled Attorney General Luisa Ortega has delivered to the CIA and INTERPOL, refers to a case of possible corruption in surcharges on a sale conducted in 2005 by Spain’s former Defense Minister José Bono to Venezuela’s Navy. The operation took place under the administration of former Spanish President José Luis Rodríguez Zapatero, who is now leading mediation efforts between the Maduro regime and the democratic opposition. The sale involved the construction of 4 coastguard vessels and 4 ocean patrols, for a total documented cost of 1.207 billion Euros. The Chavez regime in fact paid 1.246 billion euros, a 38.6 million overprice to an intermediary named RABAZVEN HOLDING, which took 3,5% of the total money paid. The shipping company commissioned was NAVANTIA, an 100% publicly owned company and it was Bono who directly conducted the negotiations, as a result of a deal struck by Zapatero and Venezuela’s deceased President Chávez. More in Spanish: (ES Diario: http://www.esdiario.com/amp/702199265/Un-documento-airea-un-posible-caso-de-corrupcion-de-Zapatero-y-Bono-en-Venezuela.html)

 

Almagro says Ortega and exiled Supreme Court justices will investigate corruption
OAS Secretary General Luis Almagro reports that exiled Venezuelan Supreme Court justices will assist Attorney General Luisa Ortega Díaz, in investigating corruption charges made against President Nicolas Maduro and members of his regime. In 2004, the late President Chavez established an information sharing agreement with the United States designed to share “all cases and information in either country related to drug trafficking, money laundering, corruption, organized crime, illegal immigration, and all that which is inimical to the governments of both nations”, The flow of information was active up through 2007, when Luisa Ortega became Attorney General and no one advised her of the agreement. When she learned of it last year, information was gathered on government figures and business deals starting in 2004 and this is how the Attorney General’s office acquired all the information on ODEBRECHT, through the District Attorney and Federal Court in Brooklyn, N.Y. Information provided included accounts, front men, artificial schemes and cash deliveries for campaigns in each country. She was provided additional information in Brazil, and thus has ample information on Maduro’s imprisoned nephews and hundreds of other cases, including accounts with HSBC, and PDVSA and CITGO contractors. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/almagro-ortega-diaz-magistrados-venezolanos-investigaran-corrupcion_667244; http://www.eluniversal.com/noticias/politica/runrunes_667772)

 

Venezuelan army, civil militias hold exercises after Trump threat

Venezuela held nationwide armed forces exercises on Saturday, calling on civilians to join reserve units to defend against a possible attack after U.S. President Donald Trump warned that a “military option” was on the table for the crisis-hit country. “Against the belligerent threats of the United States, all Venezuelans between the ages of 18 and 60 are required to contribute to the integral defense of the nation,” said an announcement broadcast early on Saturday on state television. Maduro used Trump’s threat to try to energize his political base, broadcasting images of rifle-carrying civilians negotiating obstacle courses and learning hand-to-hand combat. The government created the hashtag #EsHoraDeDefenderLaPatria, which translates as “It’s Time To Defend The Homeland,” to promote the exercises. (Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKCN1B60KA)

 

Colombia protests what it says was Venezuelan military incursion over border

Colombia has sent a letter of protest to Venezuela after it said security forces from the socialist country crossed the border into the Colombian province of La Guajira over the weekend. Sources told Reuters the Colombian Foreign Ministry had given the letter to Venezuela’s embassy in Bogota, although the government of Venezuelan President Nicolas Maduro denied on Sunday that the crossing into Paraguachon, La Guajira, took place. The governor of La Guajira criticized the crossing on Twitter over the weekend, saying the security forces came over the border on Saturday night and stole money and cellphones from residents. (Reuters: https://www.reuters.com/article/us-venezuela-colombia-idUSKCN1B82HZ)
 

Colombia sets up refugee camps due to the arrival of thousands of Venezuelans

Juan Carlos Restrepo, President Juan Manuel Santos’ National Security Advisor, has been put in charge of organizing refugee camps for thousands of Venezuelans fleeing the crisis here, and is seeking assistance from the government of Turkey, due to their experience with Syrian refugees. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/gobierno-colombiano-levanta-campos-refugiados-para-venezolanos_667687)

French President Macron says he is worried by Venezuela 'dictatorship'

French President Emmanuel Macron said on Tuesday he was worried by events in Venezuela where he said that a “dictatorship” was trying to survive. He said he was ready to work with regional actors to prevent further escalations, including across the region. (Reuters: http://www.reuters.com/article/us-france-diplomacy-venezuela-idUSKCN1B915F?il=0)

 

OP-ED: A military option in Venezuela is not really an option for the U.S. military
Let’s leave aside the near unanimous repudiation from U.S. allies in the region and the near-consensus view among analysts that Trump’s unfortunate suggestion of a military option was not only reckless but counterproductive. Instead, let’s focus on whether it makes sense for an over-extended military to use its finite resources to resolve Venezuela’s political turmoil. First, the Pentagon does not consider the Western Hemisphere a theater for planning and conducting conventional military operations.  There are simply no military threats or competitors to the U.S. in a region considered to be a “zone of peace.” The 2017 Southern Command (SOUTHCOM) engagement statement highlights as part of its main efforts the need to counter threat networks, prepare for and respond to disasters and crises, build relationships to meet global challenges, and conduct detention operations—none of those involve or foresee direct military intervention in the region.  Although it can certainly plan for one, SOUTHCOM is not in the business of planning military interventions or occupations in the hemisphere. There are only two goals for which the military instrument of power could be used: regime change or forcing a change in the behavior or policies of the Maduro government.  If the goal is regime change, and assuming U.S. forces will not encounter much resistance, the Pentagon will have to plan for at least a force of 150,000 that can quickly overwhelm any conventional and irregular resistance during the intervention and subsequent occupation. The Maduro government is very likely to collapse almost immediately, leaving no government in place to assume the responsibilities of law and order.  As a result, U.S. forces will have to remain until at least stability and a legitimate government is restored.  Significant naval, air and ground forces and capabilities will have to be transferred from active theaters that are real threats to U.S. and global security, such as Syria, Iraq, North Korea and Afghanistan. If the political objective is to change the Venezuelan dictatorship’s behavior such that it will allow for elections and the restoration of the rule of law, it will at a minimum require a show of force that still requires the transfer of forces and equipment from much more vital conflict zones. Of course, when you go down this path, one must be ready to use force if the regime doesn’t change its behavior.  Surgical air strikes are sure to create chaos, violence among competing political actors and a collapsed state, leaving the U.S. with no other option than to intervene. In short, from a strictly military standpoint, the last thing the U.S. armed forces want, already over-stretched and on high levels of alert in key conflict zones, is to have to plan and execute a military intervention and likely occupation of a country that does not represent a grave threat to U.S. security and that is likely to lead to strong anti-U.S. sentiment across a region where the US military has done much to build goodwill in the last decade or so. The last thing this administration needs is another empty threat. (By Frank O. Mora: The Global Americans: http://theglobalamericans.org/2017/08/military-option-venezuela-not-really-option-u-s-military/)

 

OP-ED: Who’s Saving Venezuela? The U.S.? The UN? The Pope? No. But They Could. Here's How. The list of international players that have wrung their hands about Maduro’s tyranny, but failed to take effective action, is long and shameful. The U.S. policy of incrementalism, gradually turning the screws on the dictatorship with ever-broader unilateral sanctions is not enough. The EU needs to get on board with the U.S. and Latin America, backing up its words with actions. Few doubt the Maduro regime is heavily involved in drug trafficking, supporting terrorism, and looting the country’s economy. The international community must treat the regime as an active criminal enterprise, using criminal investigations to pierce the veil of banking secrecy in places such as Andorra, Switzerland, and the Cayman Islands to access the ill-gotten gains hidden there by Venezuelans made wealthy by their corrupt dealings. Publicize who they are and how they live in luxury abroad. Revoke their visas, freeze their assets and make it clear that a comfortable exile will not be an option if democracy does not return soon to Venezuela. That will drive a wedge among members of the regime in a way that will hurt them, not the Venezuelan people. (By Antonio Mora. The Daily Beast: http://www.thedailybeast.com/whos-saving-venezuela-the-us-the-un-the-pope-no-but-they-could-heres-how)

 

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.