Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Showing posts with label Avior. Show all posts
Showing posts with label Avior. Show all posts

Tuesday, February 26, 2019

February 26, 2019


International Trade

Food and cleaning products have arrived at Margarita island’s El Guamache port

Port officials have announced that the CFS PANAVERA has arrived at Margarita island’s El Guamache port from Jamaica, carrying 53 containers, including 12 with food and 4 with personal care and health products. Cooking oil, rice, wheat flour, coffee, chocolate, pasta, peas, tomatoes, cosmetics and cleaning products are part of the arriving cargo. More in Spanish; (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=43456)

 

Logistics & Transport

US flying more reconnaissance flights off Venezuela, military sources say

The US military has flown an increased number of reconnaissance flights in international airspace off the coast of Venezuela during the last several days to gather classified intelligence about the embattled regime of Nicolas Maduro, according to two US defense officials. The officials would not detail which US military aircraft are being used, but the Navy and Air Force maintain several large fixed-wing aircraft capable of intercepting communications and monitoring the status of weaponry. The officials noted that the effort is limited to whatever the aircraft can gather by staying in international airspace. Several US military officials continue to emphasize there are no military options actively being considered for the Venezuela crisis. For now, the US military would only contemplate a response if US assets, personnel or the embassy were attacked. The US Federal Aviation Administration has issued a warning to US pilots about flying into and out of Venezuela because of "continued political instability and increasing tensions." (CNN: https://edition.cnn.com/2019/02/25/americas/venezuela-developments/index.html)

 

AVIOR halts flights to Aruba, Curaçao and Bonaire

Venezuela’s AVIOR airline has indefinitely suspended all flights to and from the islands of Aruba, Curaçao and Bonaire, following an order from this country’s National Civil Aeronautics Institute barring all air traffic by order of the Maduro regime. More in Spanish; (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/economia/avior-suspendio-sus-vuelos-a-aruba-curazao-y-bonaire)

 

Oil & Energy

Venezuela has US$ 500 million of crude sitting in ships — but nobody wants to buy it

Venezuela is running out of space to store its sanction-stained crude that few dare to buy, forcing it to reduce output at a time when the world is thirsty for heavy, sulfurous oil. Tankers holding 8.36 million barrels of Venezuelan crude worth upwards of a half-billion dollars are floating off the country’s coast as the nation struggles to find buyers for its oil following new U.S. sanctions in January. An armada of 16 ships holds cargoes belonging to state oil company PDVSA, CHEVRON, VALERO, and ROSNEFT, according to shipping reports and ship-tracking data compiled by Bloomberg. Oil ventures owned by PDVSA with ROSNEFT, CHEVRON, TOTAL and EQUINOR, whose upgraders convert tar-like Venezuelan crude into oil that refineries can process, reduced rates this week because they ran out of space to store crude, according to people with knowledge of the situation. With few buyers willing to take PDVSA’s oil, the alternative was to put some of that oil onto tankers to clear space and continue to operate at lower rates. The backlog of ships and the growing difficulty in keeping its oil upgraders running underscore the impact U.S. sanctions are having on PDVSA. Shipments to America, once Venezuela’s largest customer, have dried up. Without access to the U.S. financial system, on which many refiners and trading houses rely on to finance purchases, PDVSA is having trouble finding buyers outside of countries such as India and China, to whom it owes oil in payment for past loans. The PDVSA-Rosneft joint-venture PETROMONAGAS upgrader isn’t processing oil after running out of space to store their production, a person with knowledge of the situation said. PDVSA-CHEVRON’s PETROPIAR venture has reduced output for the same reason, other people said. PETROCEDENO, a PDVSA-TOTAL-EQUINOR venture, is running out of oil to process as a ban on sales of heavy naphtha to PDVSA has made it difficult to ship the heavy oil through pipelines from inland fields to the upgrader, another person said. (FORTUNE: http://fortune.com/2019/02/26/venezuela-crude-sanctions-ships/)

 

Venezuela oil sanctions slash Brent crude premium

The U.S. sanctions on Venezuela from late last month cut off more heavy and sour crude oil supply to the global market, leading to the lowest premium of quality light sweet Brent over heavier and sour crude grades because of limited heavy oil supply worldwide. At times when supply of various crude grades is not distorted, Brent usually trades at a premium of US$ 3-$4 a barrel over Dubai, but since January, the premium of Brent over Dubai has been consistently below US$ 1 a barrel. To top off the sanctions on Iran and the OPEC cuts, the U.S. sanctions on Venezuela at the end of January further tightened the heavy crude market, and traders expect the market to tighten even more in the coming months. Despite initial expectations that the Venezuelan oil that would have gone to the U.S. could easily make way to Asia, the nature of the U.S. sanctions have effectively turned the U.S. import ban into financial sanctions applicable globally. In the middle of February, the April Brent premium to Dubai Exchange Futures for Swaps (EFS)—generally seen as the spot market sentiment of Brent-linked and Dubai-linked crude grades—fell to the lowest on record, since S&P Global Platts started publishing data about the spread in August 2011. (Oil Price: https://oilprice.com/Latest-Energy-News/World-News/Venezuela-Oil-Sanctions-Slash-Brent-Crude-Premium.html)

 

Commodities

Fishing halted on Venezuelan coast

In an unusual move, Venezuelan military are stopping fishermen from setting sail from docks in Vargas state near Caracas. More in Spanish: (El Universal, http://www.eluniversal.com/caracas/33938/refuerzan-muelles-pesqueros-de-vargas-tras-prohibicion-de-zarpe)

 

Economy & Finance

National Assembly asks CITIGROUP for 90-day extension on gold foreclosure

Venezuela’s opposition led National Assembly has asked CITIGROUP for a 90-day extension before it forecloses on Venezuelan gold reserves held with the Bank of England as collateral on a US$ 1.1 billion debt. The request was made by the Assembly’s standing Finance Committee, headed by congressman Angel Alvarado, who said CITIGROUP is “willing to cooperate”. More in Spanish: (El Universal, http://www.eluniversal.com/economia/33859/plazo-de-90-dias-pide-an-a-citigroup-para-cobrar-deuda-en-oro)

 

Evolving Venezuela sanctions pose problems for banks

Recently imposed sanctions on Venezuela have posed new compliance risks for U.S. and international financial institutions as they seek to untangle business ties between the two countries to meet evolving requirements. The Treasury Department has ramped up sanctions with more designations and guidance in recent weeks. Gradually increasing U.S. measures targeting the government of Venezuela, and the country’s state-owned oil giant have made banks more reluctant to touch accounts that might relate to Venezuela for fear of sanctions violations. The scenario is complex because of the economic and business connections between the two countries has a foundation in the oil-and-gas industry, which can affect automobile and heavy machinery manufacturing, as well as elements of insurance and finance. Intricacies stemming from the sanctions are particularly disruptive for the banking industry, said Daniel Gutierrez, who chairs the anti-money-laundering compliance committee at the Florida International Bankers Association. In the case of Venezuela, where the list of the Maduro government officials is broad and unclear, and where PDVSA has many subsidiaries and tends to outsource to third-party vendors, banks are finding they need to pull more resources to holistically analyze each instance on a case-by-case basis. If not carefully managed, banks could face penalties and reputational damage. (The Wall Street Journal: https://www.wsj.com/articles/evolving-venezuela-sanctions-pose-problems-for-banks-11551143320)

 

Politics and International Affairs

UN Security Council to meet on Venezuela after deadly clashes

The UN Security Council is due to meet today to discuss Venezuela, following weekend violence over a failed opposition bid to bring in humanitarian aid. The United States requested the meeting to be held in open session this evening. The request came as US Vice President Mike Pence travelled to Colombia to meet opposition leader Juan Guaidó in a show of support for his bid to replace President Nicolás Maduro. The Security Council is divided over Venezuela. The U.S. and many Western and Latin American nations back opposition leader Juan Guaidó as interim president, while Russia, China and other countries support President Nicolas Maduro and oppose any interference in Venezuela's internal affairs. (RTE: https://www.rte.ie/news/2019/0226/1032860-venezuela/; ABC News: https://abcnews.go.com/International/wireStory/latest-germany-urges-pressure-maduro-61299953

 

Lima Group asks International Criminal Court to provide assessment of Venezuela situation

The Lima Group on Monday asked the International Criminal Court (ICC) to make an assessment of the situation in crisis-torn Venezuela, proposing that Venezuela's partners help organize "free elections" in the country. "We have decided to turn to the International Criminal Court with a request to take into account the grave humanitarian situation in Venezuela, the criminal violence of Nicolas Maduro's regime against civilians and the denial of access to international aid, which is a crime against humanity", the statement said. The Lima Group of 14 countries was created in 2017 and currently seeks to end the political crisis in Venezuela. The group includes Argentina, Brazil, Canada, Colombia, Costa Rica, Chile, Guyana, Guatemala, Honduras, Mexico, Panama, Paraguay, Peru and Saint Lucia. The majority of the organization's member states are backing Guaidó. (SPUTNIK: https://sputniknews.com/latam/201902261072735401-lima-group-venezuela-intl-court-situation/)

 

Guaidó and Pence agree to tighten noose on Maduro, as Guaidó says he will return to Venezuela

US Vice President Mike Pence announced fresh US sanctions against allies of Nicolas Maduro on Monday, after meeting with Latin American leaders including Venezuela's interim president Juan Guaidó in Colombia. "The tragic events of this past weekend have only steeled the resolve of the United States of America to stand with you, to stand with freedom-loving people in Venezuela," Pence told Guaidó at the Lima group meeting in Colombia's capital Bogota. Pence also urged other Latin American countries to freeze the assets of PDVSA, Venezuela's state-owned oil company, and to restrict visas for officials close to Maduro. "Effective today, the United States will impose additional sanctions on regime officials, including three border state governors implicated in last weekend's violence and a member of Maduro's inner circle," he said, adding that the US stands with Guaidó "100 percent". Guaidó, who is recognized by most Western nations as Venezuela's legitimate leader, called on all foreign powers "to consider all options in ousting Maduro". "Just days ago, as the world watched, the tyrant in Caracas danced as his henchmen burned truckloads of food and medicine, and murdered civilians," Pence said, and added that the U.S. will stand by Guaidó until freedom is restored and promised tougher measures against this nation soon. "In the days ahead ... the United States will announce even stronger sanctions on the regime's corrupt financial networks," Pence said. "We will work with all of you to find every last dollar that they stole and work to return it to Venezuela." Pence also said the U.S. is sending another US$ 56 million to Venezuela's neighbors to help them cope with the influx of migrants from Venezuela. If Maduro remains in charge of Venezuela, Pence said he expects it will result in two million more refugees. The European Union on Sunday condemned the government's use of violence and armed civilians to block the aid entry, while UN Secretary-General Antonio Guterres said he was "shocked and saddened" by the civilian deaths. During Monday's meeting, Guaidó, who was sitting next to Pence, asked for a moment of silence for those who were killed over the weekend. Guaidó warned that "indulging" Maduro "would be a threat to all of America," while Colombia President Ivan Duque called for "more powerful and effective" pressure on the socialist leader.  Pence reiterated that "all options are on the table" — a phrase that has been repeated by Trump administration officials since the U.S. recognized Guaidó as the legitimate leader of Venezuela in January. Guaidó has adopted similar language and urged the Lima Group to consider "all options" in ousting Maduro. But both Guaidó and Trump administration officials have stopped of calling for U.S. troops on the ground. In a statement following Monday's meeting, the Lima Group demanded that the Maduro leave his post immediately and make way for a democratic transition that included free elections. Guaidó accused Maduro's government of turning the country into "the sanctuary of terrorists." Having defied a government travel ban to got to Colombia on Friday, Guaidó said he would return home "this week," with the Lima Group warning he faced "serious and credible threats" from the regime. Maduro has told ABC News that Guaidó must “face justice” if he decides to return because he had a Supreme Court order against leaving the country. (NPR: https://www.npr.org/2019/02/25/697638242/pence-on-venezuela-we-will-keep-standing-until-your-libertad-is-restored; Al Jazeera: https://www.aljazeera.com/news/2019/02/ramps-pressure-venezuela-maduro-sanctions-190225173549450.html; Reuters, https://www.reuters.com/article/us-venezuela-politics/venezuelas-Guaidó-says-all-options-open-after-maduro-blocks-aid-idUSKCN1QC091;


 

US sanctions pro-Maduro governors who blocked international aid

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated four officials aligned with the illegitimate regime of former President Nicolas Maduro. This action, taken pursuant to Executive Order (E.O.) 13692, targets the Governors of four Venezuelan states involved in endemic corruption and in blocking the delivery of critical humanitarian aid, thereby exacerbating the ongoing humanitarian crisis caused by the illegitimate Maduro regime. “The illegitimate Maduro regime’s attempts to blockade international aid intended for the Venezuelan people are shameful. Treasury is targeting four state governors aligned with former President Maduro for standing in the way of severely needed humanitarian assistance and prolonging the suffering of the Venezuelan people,” said Treasury Secretary Steven T. Mnuchin. “The United States fully supports the efforts of Interim President Juan Guaidó to address the endemic corruption, human rights abuses, and violent repression that has become the hallmark of the illegitimate Maduro regime, and looks forward to the restoration of a democratically elected government for the people of Venezuela.” As a result of today’s action, all property and interests in property of these individuals, and of any entities that are owned, directly or indirectly, 50 percent or more by these individuals, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2475341&CategoryId=10717)

 

Maduro extends deadline for US Embassy closure

On Saturday, Nicolás Maduro for a second time extended the deadline for shutting down the US Embassy in Caracas. US authorities say this extensión is now for 30 more days.  Maduro’s Foreign Minister Jorge Arreaza claimed on Twitter that both countries had agreed to establish interest section offices in Caracas and Washington for migratory and bilateral affairs. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/politica/gobierno-nacional-extiende-el-plazo-para-el-cierre-de-la-embajada-de-eeuu-en-caracas)

 

Maduro responsible for safety of Colombian embassy staff: minister

Nicolas Maduro is responsible for the safety of Colombian diplomats in Venezuela, Colombia’s foreign minister said on Saturday, after Maduro formally broke off relations with Bogota. “Colombia holds the usurper Maduro responsible for any aggression or violation of the rights of Colombian officials in Venezuela,” Foreign Minister Carlos Holmes Trujillo said. Luis Almagro, secretary general of the Organization of American States, said in the same statement that Maduro, socialist, could not break relations with Colombia because he is not Venezuela’s legitimate president. (Reuters, https://www.reuters.com/article/us-venezuela-politics-colombia-maduro/maduro-responsible-for-safety-of-colombian-embassy-staff-minister-idUSKCN1QC0UL)

 

In Colombia, Pence lets Guaidó down easy on use of military force against Maduro

Vice President Mike Pence flew into Colombia on Monday as an anxious hemisphere waited to hear if the leader from America would back the Venezuelan opposition’s call to use “force” to bring humanitarian aid into the country. Opposition leader Juan Guaidó, who was barred from leaving Venezuela, had secretly crossed the border amid violent clashes between demonstrators and security forces for a special meeting Monday with Pence and regional leaders. What Pence ended up telling the young Venezuelan leader was not necessarily what he traveled so far to hear: Pence told Guaidó the Trump administration still believes in a peaceful resolution. “We got a long way to go,” Pence said he told him. “I made it clear to President Guaidó that we’re going to continue to call on allies to join with us. We’re going to continue to isolate Maduro economically and diplomatically until democracy is restored.” Many in the region breathed a sigh of relief after fearing that Pence was going to support the call for military action. Diplomats acknowledge that the strongest steps have already been taken and fear is growing that momentum against the government of Nicolas Maduro may be stalling. But governments that oppose using force say there are diplomatic options yet to be considered. One diplomat whose government opposes any kind of military option said there have been conversations with U.S. officials about forcing Venezuelan diplomats loyal to Maduro to choose between remaining in their countries or returning home. Pence said ultimately it would be up to Trump, in consultation with allies, to decide under what conditions a military option would be appropriate. Pence said Guaidó wanted to make sure that all options remained on the table. “I assured him that they were, but we hope for better,” Pence said. “We hope for a peaceful transition.” Using military force would be a drastic escalation, but José Cárdenas, who served in the National Security Council under George W. Bush and regularly speaks with Trump administration officials, said it needs to be discussed. “We can’t just walk away,” Cárdenas said. “In order to sustain the pressure, you have to keep one-upping what the government does.” (The Miami Herald: https://www.miamiherald.com/news/nation-world/world/americas/venezuela/article226784504.html)

 

US increasingly isolated as allies warn against use of military force

US vice-president Mike Pence has repeated a veiled threat of military intervention in Venezuela, but Washington appeared increasingly isolated in its willingness to contemplate using force to oust Nicolás Maduro. Both European powers and some of Donald Trump’s key Latin American allies – all of whom have recognized opposition leader Juan Guaidó as Venezuela’s legitimate leader – warned that they would oppose sending troops into the country. Guaidó had for weeks insisted his movement was focused on peaceful, democratic change. But after the opposition failed in a weekend bid to defy Caracas and bring aid into the country, he called on the international community to “keep all options open”. Speaking at an emergency summit of regional leaders in the Colombian capital Bogotá, Pence renewed the threat of intervention, describing Maduro as “a usurper”, and calling for a global push to oust him. “To leaders around the world: it’s time. There can be no bystanders in Venezuela’s struggle for freedom,” he said. “We hope for a peaceful transition to democracy, but as President Trump has made clear, all options are on the table.” But beyond the US, few appear willing embrace the prospect of violence.  Brazil’s vice-president, retired general Hamilton Mourão, said on Monday that under no circumstances would his country allow the United States to intervene militarily from Brazilian territory, even though the country’s rightwing president Jair Bolsonaro has previously vowed to do “everything for democracy to be re-established” in Venezuela. Colombian president Iván Duque has also now ruled out intervention, according to sources in his administration. Chile and Peru were also among other regional powers opposing military action on Monday. 'Let's hope that the pressure of the international community, dialogue and prudence will prevail,' said Panamanian President Juan Carlos Varela, who likened the crisis in Venezuela to what his country faced in the run up to the 1989 U.S. invasion to remove dictator Manuel Noriega. 'Although the circumstances are similar, we must have the capacity to find a solution different than the one used back then.' There was similar concern across the Atlantic, where European nations including Spain and Germany made clear they considered the deployment of troops a line that should not be crossed. Spain would 'roundly condemn' use of force in Venezuela: “Not every option is on the table,” the country’s foreign minister, Josep Borrell, said in a blunt rebuke to supporters of intervention. The European Union’s foreign policy chief, Federica Mogherini, insisted there could be no military solution to a political crisis. The Lima group also said credible threats have been made against the life of Venezuelan opposition leader Guaidó and his family, adding that Nicolas Maduro was responsible for Guaidó’s safety. “We want to hold the usurper Maduro responsible for any violent action against Guaidó, against his wife and against their relatives,” said Colombian Foreign Minister Carlos Holmes Trujillo, speaking on behalf of the group. (The Guardian: https://www.theguardian.com/world/2019/feb/25/venezuela-mike-pence-maduro-Guaidó; Daily Mail: https://www.dailymail.co.uk/news/article-6743013/Venezuelas-second-command-flies-two-children-China-using-wifes-surname.html; Bloomberg, https://www.bloomberg.com/news/articles/2019-02-25/venezuela-neighbors-push-back-against-military-answer-to-crisis)

 

Russia accuses U.S. of preparing military intervention in Venezuela

A top Russian security official on Tuesday accused the United States of deploying forces in Puerto Rico and Colombia in preparation for a military intervention in Venezuela to topple Moscow’s ally, President Nicolas Maduro.  “...The United States is preparing a military invasion of an independent state,” Nikolai Patrushev, secretary of the Russian Security Council, was quoted as saying in an interview. “The transfer of American special operations forces to Puerto Rico, the landing of U.S. forces in Colombia and other facts indicate the Pentagon is reinforcing its troops in the region in order to use them in an operation to remove ... Maduro from power.” Patrushev said in the interview that Washington had asked Moscow for consultations on Venezuela and that Russia had agreed, but that U.S. officials had repeatedly postponed them under false pretexts. U.S. officials have previously dismissed Russian allegations about U.S. plans for Venezuela as baseless “propaganda.” (Reuters: https://www.reuters.com/article/us-venezuela-politics-russia/russia-accuses-us-of-preparing-military-intervention-in-venezuela-idUSKCN1QF14K)

 

China says hopes world provides 'constructive' help to Venezuela

China hopes that the international community can provide “constructive” help to Venezuela based on respect for the country’s sovereignty, the foreign ministry said on Monday, after Venezuelan troops repelled foreign aid convoys. China hopes Venezuela can remain peaceful and calm, the Foreign Ministry said, and reiterated Beijing’s opposition to foreign interference in Venezuela’s internal affairs or the use of “so-called ‘humanitarian aid’ for political aims”. (Reuters, https://www.reuters.com/article/us-venezuela-politics-china/china-says-hopes-world-provides-constructive-help-to-venezuela-idUSKCN1QE0YW)

 

Mexico President says committed to non-intervention on Venezuela

Mexico's president on Tuesday said he remained committed to a policy of non-intervention on Venezuela a day after U.S. Vice President Mike Pence urged Mexico to recognize opposition leader Juan Guaidó as Venezuela's rightful president. President Andres Manuel Lopez Obrador at his regular morning news conference urged all sides in Venezuela to seek a peaceful solution to the crisis and said the United Nations should be used to help resolve a dispute over humanitarian aid. (The New York Times: https://www.nytimes.com/reuters/2019/02/26/world/americas/26reuters-venezuela-politics-mexico.html)

 

Sanders warns against intervention in Venezuela, stops short of calling Maduro a 'dictator'

Sen. Bernie Sanders on Monday night steered clear of calling Venezuelan leader Nicolas Maduro a "dictator", despite criticizing Maduro's government for failing to hold democratic elections. "It's fair to say the last election was undemocratic, but there are still democratic operations taking place in that country," Sanders said after being asked by CNN's Wolf Blitzer why he wouldn't use the term to describe Maduro. "What I am calling for right now is internationally supervised free elections."  Sanders was asked about his opposition to U.S. intervention in Venezuela. He responded by saying he believed there should be an “international humanitarian effort” to improve the lives of Venezuelans and expressed that their last election was “not free and fair.” (CNN: https://edition.cnn.com/2019/02/25/politics/bernie-sanders-venezuela-maduro/index.html; FOX: https://www.foxnews.com/politics/bernie-sanders-refuses-to-call-venezuelas-maduro-dictator-says-democratic-operations-taking-place)

 

UN’s Michelle Bachelet condemned violence at Venezuela’s borders

Michelle Bachelet, the UN High Commissioner for Human Rights, has condemned what she called the excessive use of force by Venezuelan security forces and pro-regime groups on the borders with Colombia and Brazil, causing at least 4 dead and over 300 wounded. She pointed to “deplorable scenes” and asked the Maduro regime to “stop using excessive force against unarmed protesters and ordinary citizens”. She asked the regime to stop pro-government groups involved in violent actions. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/internacional/michelle-bachelet-condeno-la-violencia-en-las-fronteras-de-venezuela)

 

European Union condemns Maduro regime’s use of “armed groups” to “intimidate civilians

The European Union has condemned violence in Venezuela and the Maduro regime’s use of “armed groups” to block the entrance of humanitarian aid. “We reject the use of irregular armed groups to intimidate civilians and legislators who seek to distribute aid”. More in Spanish: (El Universal, http://www.eluniversal.com/politica/33966/union-europea-condena-que-gobierno-recurra-a-grupos-armados-para-intimidar-civiles)

 

Uncertainty at Colombia-Venezuela border bridge after clashes over aid

Dawn broke on Sunday at the Simon Bolivar bridge, the main border crossing point between Colombia and Venezuela, amid a tense and uncertain calm after a clash between Venezuelans – many of them shouting and calling for their country’s “freedom” – who were trying to bring humanitarian aid into their country and authorities taking orders from Caracas. There were sporadic clashes between hooded protesters and police, supported by armed civilian "colectivos" on Sunday on the Venezuelan side of the border. On the order of Colombian President Ivan Duque, the bridge linking the Colombian city of Cucuta with Venezuela’s San Antonio del Tachira was closed for two days while the damage resulting from the failed aid delivery attempt is evaluated. The area near the bridge was cordoned off and is being guarded by Colombian soldiers, police and some members of the ESMAD anti-riot squadron. In addition, the bridge is being blocked on the Venezuelan side by a tanker truck, with a number of masked men deployed in the area along the Tachira River on the Colombian side. Scores of Venezuelans who managed to slip across the border to get aid were trapped there as Venezuelan authorities closed it. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2475334&CategoryId=10717; http://www.laht.com/article.asp?ArticleId=2475324&CategoryId=10717)

 

In Venezuela, bows and arrows against tanks, four people reported slain on Venezuela-Brazil border

Nicolas Maduro’s forces in Venezuela armed with tanks and live fire attacked an indigenous tribe armed only with bows and arrows when they tried to stop a convoy of humanitarian aid from Brazil. One woman from the Pemon tribe was killed and 15 were wounded, but the tribe took several soldiers, including three lieutenants and a sergeant captive. The battle took place in the remote Gran Sabana region near the Brazilian border. The Pemon were successful at stopping the anti-riot troops in their effort to block food and supplies from entering the country through Brazil near the village of Kumarakapay, about 50 miles north of the border. The soldiers tried to breach barricades set up by residents about 6 a.m., said Jorge Perez, mayor of the Gran Sabana municipality. Marcel Perez, a 30-year-old Pemon, said in an interview in Pacaraima, Brazil, that he and others had gathered at dawn for a peaceful protest to prevent the military from reaching the border. “We made a blockade, without any weapon but our traditional bows and arrows,” he said. “They had tanks, buses and a lot of soldiers. And, so they decided to shoot at us with live bullets.” Five armored vehicles passed by, spewing tear gas that set fire to a small shack, the mayor said. Those wounded more seriously were allowed to cross on ambulances into Brazil so they could be treated in the regional center of Boa Vista. Perez said he was beaten with sticks a few hours later by members of a pro-Maduro gang while taking other wounded people to a hospital in Santa Elena de Uairen, on the Venezuelan side. Police said Zoraida Rodriguez, 45, was killed and 15 people were wounded. A Venezuelan general was negotiating with the tribe for the return of three lieutenants and a sergeant captured by the indigenous forces. The Venezuelan Congress with its opposition majority reported on Saturday that by 4:00 pm, four people had been slain while more than 20 suffered bullet wounds on Venezuela’s border with Brazil. (WND: https://www.wnd.com/2019/02/in-venezuela-bows-and-arrows-against-tanks/#06mCVSLVHotB8Xep.99; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2475312&CategoryId=10718; Reuters, https://www.reuters.com/article/us-venezuela-politics-aid-brazil/two-people-killed-in-venezuelan-town-near-brazil-in-clashes-over-aid-idUSKCN1QC0U5)

 

Attacked and powerless, Venezuela soldiers choose desertion

A high-stakes plan by the Venezuelan opposition to bring humanitarian aid into the country floundered Saturday when troops loyal to Maduro refused to let the trucks carrying food and medical supplies cross, but it did set off a wave of military defections unlike any seen yet amid the country's mounting crisis. Over 270 mostly low-ranking soldiers fled in a span of three days, Colombian immigration officials said Monday. In interviews with The Associated Press, nine National Guard soldiers described the day that they were ordered by commanders to stop the humanitarian aid from entering Venezuela. Fearful of being jailed, many complied with orders and admitted to launching tear gas at protesters. Two said they were part of a failed plot to get the aid in. All fled after making unplanned, split-second decisions with only the uniform on their backs. While interim president Juan Guaidó has proposed amnesty to military officers who back him, the low-ranking soldiers who have defected say breaking ranks with Maduro is all but impossible. Anyone who shows the slightest hint of disapproval risks arrest, they said, and jail has become increasingly synonymous with torture. Even those who wanted to see the aid brought in, followed orders to repress citizens. As Saturday grew increasingly tense, protesters threw rocks and gasoline bombs at him. One said he responded by throwing tear gas at them to protect himself. Others at the home also had evidence of the resistance they faced that day: Torres still had blood caked beneath the skin on his nose from protesters kicking him on the ground after he surrendered to Colombian authorities. A young woman had a scratch across her cheek that she said came from a rock thrown by protesters. During the clashes, armed pro-Maduro groups known as "colectivos" fired indiscriminately, and several of the soldiers said they feared being shot themselves. National Guard troops are equipped with crowd-control devices like rubber bullets and tear gas but do not carry any regular firearms. Many said they worry their wives and children will face repercussions and they are concerned about how they will make ends meet. Nearly all the defectors would support a foreign intervention in Venezuela and join in the fight. Floating ideas among each other, several of the defectors said they believe the best way forward is for more troops to desert and help form a resistance from abroad. Some envisioned an intervention led solely by Venezuelans, while others are convinced it can only be done with the help of an international coalition. All said they don't see themselves as traitors, but rather as troops intent on restoring Venezuela's democracy. (Fox News: https://www.foxnews.com/world/attacked-and-powerless-venezuela-soldiers-choose-desertion)

 

Venezuela ex-spy chief reveals Maduro’s ties to Hezbollah, drugs

Former head of Venezuela’s intelligence services General Hugo Carvajal revealed powerful ties between the administration of Nicolás Maduro and the Hezbollah terrorist group, as well as wide-spread corruption and drug activity, the New York Times reported on Thursday. The nefarious activities were directed by Maduro himself as well as Interior Minister Néstor Reverol and former vice-president Tareck El Aissami. Allegedly, those who were meant to combat drugs were engaged in trafficking them, Carvajal said. El Aissami was not only a drug kingpin, said Carvajal, but also had connections to Hezbollah, and attempted to arrange Hezbollah terrorists to work with the Revolutionary Armed Forces of Colombia [FARC] through Venezuela. In a meeting that took place in 2009 Hezbollah terrorists met El Aissami and Carvajal in Syria and gave the two Venezuelan state representatives three assault rifles as gifts. The meeting involved Venezuelan diplomat Ghazi Nasr al-Din, who was stationed in Syria at the time.  Labeled “a Hezbollah supporter” by the department of Treasury, Nasr al-Din is wanted by the FBI. (The Jerusalem Post: https://www.jpost.com/OMG/Venezuela-ex-spy-chief-reveals-Maduros-ties-to-Hezbollah-drugs-581615)

 

UNIVISION journalists freed after being detained at Venezuelan presidential palace

The UNIVISION network said six of its staffers, including veteran anchorman Jorge Ramos, were briefly detained at the presidential palace in Caracas, Venezuela, on Monday. Ramos and the crew members were released a little less than three hours after the episode began. Daniel Coronell, UNIVISION's president of news, tweeted that "Jorge Ramos and his team have been released and are on route to their hotel." In Caracas, the Venezuelan National Union of the Press Workers also confirmed that "the UNIVISION team has been freed." The network said Ramos was in Caracas to interview Nicolas Maduro. UNIVISION spokesman Jose Zamora said Maduro objected to Ramos' questions. "Very shortly into the interview, Maduro didn't like the line of questioning, and they stopped the interview," Zamora said. He said government aides confiscated the network's equipment. UNIVISION's news executives were able to find out what happened, he said, because "Jorge managed to call us." But "in the middle of the call, they took his phone away. UNIVISION is the leading Spanish-language television network in the United States, with millions of loyal viewers. The network immediately contacted the US State Department. Kimberly Breier, the Assistant Secretary of State for Western Hemisphere Affairs, tweeted out, "We insist on their immediate release; the world is watching." After the team was released, UNIVISION broke into programming for a special report — with Ramos joining by phone. He said Maduro "got up from the interview after I showed him the videos of some young people eating out of a garbage truck." "They interrogated us. They put us in a security room. They turned off the lights," he said. Ramos called the episode a "violation." He said Maduro's aides still had the tapes. "They have stolen our work and are trying to keep what is happening from airing," he said. Pedro Ultreras, a member of the UNIVISION team in Venezuela, tweeted late Monday that immigration officials told the journalists that they will be expelled from Venezuela and must leave Tuesday morning. "The hotel we are staying in is surrounded by Venezuelan authorities, we cannot go outside," he said. Ramos, a veteran anchor born in Mexico, said he asked Maduro about the lack of democracy in Venezuela, the torture of political prisoners and the country’s humanitarian crisis. Mexico’s Foreign Minister Marcelo Ebrard also tweeted his government’s protest at the events. (CNN: https://edition.cnn.com/2019/02/25/media/univision-venezuela-jorge-ramos/index.html; Reuters: https://www.reuters.com/article/us-venezuela-politics-univision/venezuela-to-deport-univision-team-after-maduro-shown-garbage-eating-video-idUSKCN1QF05F

 

Maduro's right-hand man sends his two youngest children to China

Venezuela's second-most powerful man has sent his children to China amid the possibility Nicolás Maduro's government will crumble.  Diosdado Cabello, known to be the second most-powerful man in Venezuela behind President Nicolás Maduro, sent two of his three children to China. Airline boarding passes showed different names for Cabello's daughter, Daniella Cabello, and his youngest son, Tito Cabello, raising suspicions because his wife's surname - Contreras - was on the boarding passes. Both children boarded the Havana to Beijing flight as Desiree Contreras and Tito Contreras, apparently using their mother's surname to hide their identities. The siblings left Havana on Friday and made it to Moscow on Saturday before connecting to a Beijing-bound flight that touched down Sunday- Daniella Cabello, 22, boarded the plane with a US-issued passport as Desiree (her middle name) Contreras while his son Tito Cabello, 17, used a Ugandan passport and used the name Tito Contreras.  The reservation system indicates they're both scheduled to return to Havana on a one-stop flight March 12. In recent days, it has been reported that several Maduro loyalists successfully arranged to have their immediate family members flee what once was considered one of the most economically powerful countries in South America. (Daily Mail: https://www.dailymail.co.uk/news/article-6743013/Venezuelas-second-command-flies-two-children-China-using-wifes-surname.html)

 

OP-ED: Dictator Maduro survived a tough week, but his problems are about to get worse

The conventional wisdom in some quarters is that Venezuelan dictator Nicolás Maduro has proved in recent days that he’s in firm control of his military goons and that he will be able to stay in power indefinitely. The conventional wisdom may be wrong. Maduro’s problems will get worse. With or without a military intervention, his illegitimate regime is cornered, isolated and increasingly unsustainable. Maduro danced in public on Feb. 23, but that image is going to haunt him. First, Maduro’s international isolation will continue to grow. Interim president Juan Guaidó is reportedly planning to return to Venezuela. If he’s arrested by the Maduro regime, we may see even stiffer international sanctions. Second, the Maduro regime’s foreign income will dwindle in coming months, as U.S. and international sanctions kick in. Third, Maduro does not have a superpower that will be willing to support him an at any cost.  Fourth, it’s unclear for how much longer Venezuela’s armed forces will stand behind Maduro. Most of the uniformed Venezuelan soldiers who blocked humanitarian aid and fired on unarmed opposition volunteers at the Colombian-Venezuelan border on Feb. 23 were not members of the army or National Guard. They were part of Maduro’s paramilitary forces. Fifth, while no U.S. or international military intervention is likely anytime soon, there might be growing pressure for a United Nations intervention if Venezuela’s humanitarian crisis continues to deteriorate. Virtually all Latin American and European countries that support Guaidó — including Colombia and Brazil — said Monday that they won’t back a U.S. or international military intervention. But if Venezuela’s humanitarian crisis continues to worsen, that could change. Barring a miracle Maduro’s political future doesn’t look good. He will be under growing domestic and foreign pressure to agree to a political solution that will most likely include his departure. By Andres Oppenheimer (The Miami Herald: https://www.miamiherald.com/news/local/news-columns-blogs/andres-oppenheimer/article226777084.html)

 

OP-ED: What’s next for Venezuela?

Scenes of destruction and despair were on full display worldwide over the weekend as the Maduro regime used force to deny entry into Venezuela of desperately needed humanitarian assistance, leading to increasing speculation about what comes next. Or, rather, will the United States invade Venezuela to topple the despotic regime that has ruined Latin America’s once-wealthiest economy and created Latin America’s worst humanitarian crisis in many years. The threat of invasion has increasingly been implied, with senior U.S. administration officials suggesting routinely that “all options are on the table.” Indeed, they are, as they always are in the conduct of foreign affairs. But the implication is clearly that if Maduro and his inner circle refuse to depart, then the use of force may be employed. However, as bad as the situation continues to get in Venezuela an armed response is unlikely. First, there is no casus belli that would justify a U.S.-led invasion. Nor is there a mandate from the United Nations or OAS. The doctrine of Responsibility to Protect is not sufficiently developed or accepted at this point, and circumstances do not yet justify its application to Venezuela in any event. Latin American nations, including those that support strong actions against Maduro, have publicly indicated little support for armed intervention, and, despite the rhetoric, there does not appear to be much enthusiasm in Washington for such a step. What can be anticipated is that there will be further intensified pressure on the regime. In addition to efforts to entice regime officials, including the military, to shift their loyalty from Maduro to Guaidó, the United States, in coordination with other nations, looks to amplify asset seizure and forfeiture. Collectively, they aim to deny new and cancel existing visas for regime officials and their families and increase humanitarian assistance. All these activities will further the goal of turning Maduro into an international pariah, and, it is hoped, create conditions that will ultimately see him turfed from office. The key is to keep the Maduro regime on the defensive. There are no guarantees, and nobody can say when the dam will ultimately break—or if it will break. Meanwhile, Venezuelans face an unpleasant choice between protesting and exposing themselves to the excesses of the regime, hunkering down, or joining the millions of Venezuelans who have already left their nation behind. It is a tragedy lain squarely at the feet of Chavismo. By Eric Farnsworth. (The National Interest: https://nationalinterest.org/feature/what%E2%80%99s-next-venezuela-45577)

Tuesday, August 9, 2016

August 09, 2016


International Trade

MERCOSUR crisis continues as Venezuela holds onto chair, suspension or exclusion possible. MERCOSUR’s key founding members (Argentina, Brazil and Paraguay) are compiling a list of Venezuela’s compliance and non-compliance with requirements for qualifying an “associate member state”, and will review it later this week. Paraguay’s Foreign Minister Eladio Loizaga says there will be a new meeting of country coordinators on this matter with Uruguay on August 23rd; and added that Venezuela will have until then “to gain full membership into MERCOSUR”. He says Venezuela has failed to sign onto the MERCOSUR Protocol on Human Rights and comply with other economic requirements; and reported that the agenda for the next steps was set during a meeting of the Presidents of Argentina (Macri), Brazil (Temer) and Paraguay (Cartes) during the Rio Olympics. After that, Uruguay’s President Tabaré Vásquez said that Venezuela remains a member “as long as the democratic clause is not applied”, He added that his government will continue to bolster dialogue as "the best tool to find solutions” to the problems facing the Common Market of the South (MERCOSUR). At the same time, Paraguay has recalled its ambassador to Caracas after President Nicolas Maduro made disparaging remarks about Paraguay. Previously, Venezuelan Foreign Minister Delcy Rodriguez had unilaterally raised the MERCOSUR flag in Caracas and said her country will not allow Argentina, Brazil and Paraguay, the so-called “the triple alliance,” to “take by assault” the pro tempore presidency, which she claims is now to be fully exercised by Caracas. She quoted a statement by the chair of the Committee on Economic Affairs of the Brazilian Senate, a supporter of deposed President Dilma Rousseff, who rejected the decision by that country’s interim government. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2418177&CategoryId=10717; Reuters, http://www.reuters.com/article/us-paraguay-venezuela-idUSKCN10G1W9; (El Universal, http://www.eluniversal.com/noticias/daily-news/uruguay-advocates-dialogue-overcome-mercosur-crisis_430850; http://www.eluniversal.com/noticias/daily-news/brazilian-senates-economic-committee-backs-venezuelas-mercosur-presidency_430786; and more in Spanish: El Universal, http://www.eluniversal.com/noticias/politica/sin-acuerdo-entre-coordinadores-mercosur-sobre-traspaso-venezuela_430333; Infolatam; http://www.infolatam.com/2016/08/09/crisis-de-mercosur-a-espera-de-cumplimientos-e-incumplimientos-de-venezuela/; El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/uruguay--venezuela-estara-en-mercosur-mientras-no.aspx#ixzz4GpY6hGq1)

 

Venezuela-Colombia continue discussing reopening binational border. Venezuela’s Foreign Minister Delcy Rodríguez and her Colombian counterpart María Ángela Holguín met in Caracas and announced that the Presidents of both countries may announce a date for reopening of the binational border. Rodríguez explained “We have agreed upon some preliminary actions that can help create the atmosphere for a gradual and progressive reopening of the border”. She said that Colombia has suggested creating a border ID document so that citizens on both sides can transit through the border between 5 AM and 8 PM, which was accepted by Venezuela. Táchira state governor, Lieutenant José Vielma Mora added that Venezuela has proposed a “special customs system” for the border to deal with a basic group of products. The Defense Ministers from both nations are scheduled to meet over the next couple of months. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Cancilleres-Colombia-Venezuela-proponen-frontera_0_896910602.html; Noticiero Venevisión: http://www.noticierovenevision.net/politica/2016/agosto/4/164938=cancilleres-de-venezuela-y-colombia-se-reunieron-para-analizar-la-reapertura-de-la-frontera;; El Universal, http://www.eluniversal.com/noticias/economia/venezuela-propone-regimen-especial-aduanas-frontera-con-colombia_430882)

 

30,000 tons of sugar from Guatemala arrived at Puerto Cabello, according to local Port authority chief General Rafael Aguana. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Arribaron-toneladas-guatemalteca-Puerto-Cabello_0_898110303.html)

 

1.632 tons of tuna arrive into Cumaná’s port, according to Fisheries and Aquaculture Minister. More in Spanish: (Notitarde, http://www.notitarde.com/Llegaron-1632-toneladas-de-atun-a-Cumana/Economia/2016/08/08/1014882/)

 

Logistics & Transport

CONVIASA cuts daily flights from 20 to 16 due to a pilot shortage after over 80% reportedly have resigned. Sources within the airline report that there are only 6 pilot and co-pilot crews left. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Conviasa-reducido-vuelos-diarios_0_898710195.html)

 

AVIOR Airlines adds third direct route to Panama, operating from Maracaibo in Western Venezuela. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/avior-airlines-abrio-tercera-ruta-directa-a-panama.aspx#ixzz4GS3IIVVA)

 

Oil & Energy

Venezuela oil price falls back to April lows. The price Venezuela receives for its mix of medium and heavy oil fell for a sixth consecutive week as world oil stocks remained high and U.S. oil and gasoline stocks continued be in surplus. According to figures released by the Ministry of Petroleum and Mining, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending August 5 was US$ 33.36, down US$ 1.64 from the previous week's US$ 35.00. 

According to Venezuelan government figures, the average price in 2016 for Venezuela's mix of heavy and medium crude is now US$ 32.09 for the year to date. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2418266&CategoryId=10717)

 

OPEC plans informal talks next month, sees oil dip temporary. The Organization of Petroleum Exporting Countries will hold informal talks at a conference in Algiers next month and considers the recent decline in oil prices temporary, the group’s president said. “Expectation of higher crude oil demand in the third and fourth quarters of 2016, coupled with decrease in availability, is leading the analysts to conclude that the current bear market is only temporary” and prices will increase later this year, Mohammed Al Sada, Qatar’s energy minister and holder of OPEC’s rotating presidency, said in a statement on the group’s website. Members constantly discuss ways to stabilize the market, he said. West Texas Intermediate crude rose to the highest level in almost two weeks, gaining as much as 2.8% to US$ 42.97 a barrel as of 10:26 a.m. on the New York Mercantile Exchange. OPEC ministers, who rejected a proposal to adopt a new output ceiling when they last met in June, had always planned to continue discussions at the International Energy Forum Ministerial Meeting in Algeria next month, two delegates from the group said Friday.  OPEC Secretary-General Mohammad Barkindo met with Venezuela’s Oil Minister Eulogio del Pino about holding a meeting with non-member countries, but Russia sees no need for renewing discussion of an oil-output freeze at current crude prices, while leaving open the possibility for the future, Iran will probably raise production to pre-sanctions levels by the end of the year, while Saudi Arabia will also be selling more crude as domestic use of fuel during the country’s summer months slows. (Bloomberg: http://washpost.bloomberg.com/Story?docId=1376-OBKZ146JTSES01-7PC3UU145ETJ1SELR8MJ57V5JA; Reuters: http://www.reuters.com/article/venezuela-oil-idUSL1N1AL1QT)

 

Venezuela's crude sales to the United States up 25% in July. Venezuelan crude sales to the United States increased to 817,806 barrels per day (bdp) in July, the highest level since November, due to larger exports of grades produced in the vast Orinoco Belt. This country’s July shipments to the United States were 25% higher than in June and 12% more than in the same month in 2015. Falling output and delays at Venezuela's main oil port had kept exports low in recent months. The United States received 50 crude cargoes from state-run oil firm PDVSA and its joint ventures in July, versus 39 the previous month. Valero Energy was the largest recipient, followed by PDVSA refining unit CITGO Petroleum, PHILLIPS 66 and CHEVRON Corp. Occasional buyers of Venezuelan oil including LUKOIL Panamericas and MARATHON Petroleum also received shipments in July, according to the data, which is based on preliminary figures. (Reuters, http://www.reuters.com/article/venezuela-usa-exports-idUSL1N1AL275)

 

China’s Development Bank grants US$ 5 billion to Venezuela, earmarked for joint ventures, says Oil Minister and PDVSA President Eulogio del Pino. He adds that Venezuela is sending China 600,000 BPD of crude oil and the plan calls for the amount increasing to 1 million BPD over the next few days. More in Spanish: (Noticiero Venevisión: http://www.noticierovenevision.net/economia/2016/agosto/8/165269=venezuela-recibira-5-mil-millones-de-dolares-mediante-credito-acordado-con-banco-de-desarrollo-chino)

 

PDVSA’s Del Pino backtracks on statements about errors, private sector participation. A few days ago Venezuela’s Vice President for Energy Affairs and PDVSA President Eulogio Del Pino, an engineer graduated at Stanford University, said publicly that “we must move toward a new model with a private sector majority, and this means admitting mistakes”. The response from regime hardliners was immediate. Former PDVSA President, Rafael Ramírez, currently Venezuela’s UN Ambassador tweeted “Commander Chavez’s oil policy is correct. Nationalization brought oil back to the people. It is his legacy”. Then Lieutenant Diosdado Cabello, Vice President of the ruling PSUV party said “they will not privatize PDVSA because the revolution will rule there until oil runs out”. And former Vice President Elías Jaua wrote: “Has he forgotten there is a Plan for the Fatherland that was approved in popular voting and is now the law of the land?”. Days later, Del Pino backtracked at a rally where he was flanked by Cabello and Jaua: “They have taken some statements in a squalid media, and have set it up trying to indicate that we are trying to privatize the (oil) industry. How can they go to such extremes?”, he said. Analysts wonder why didn’t President Maduro ask for Del Pino’s resignation along with that of Trade and Industry Minister Miguel Pérez Abad? The answer seems to be that PDVSA is preparing a bond swap and financing outstanding debts with suppliers, all of who trust only Del Pino, who may be replaced after such transactions take place. (Analítica: http://www.analitica.com/economia/de-como-el-estatus-quo-puso-de-rodillas-al-presidente-de-pdvsa-por-blanca-vera-azaf/)

 

This could be the last straw for Venezuela's oil sector. Oilfield union officials in Venezuela’s Lake Maracaibo region leaked news to Platts that all is not well in the drilling sector here. With sources saying that major international operator SCHLUMBERGER has halted the majority of its operations.  Union leaders said that SCHLUMBERGER has shut down four of six rigs it was operating for offshore oil production in Lake Maracaibo. The reason being — a lack of payment for drilling services from PDVSA. This shutdown looks to be somewhat of a “last straw” for PDVSA’s operations. After funding for drilling here appeared to come under stress earlier this year — when both SCHLUMBERGER and HALLIBURTON said they were reducing rigs in Venezuela due to non-payment. At the same time, fellow drillers SAN ANTONIO and PETREX suspended a total of 36 rigs across Venezuela. But PDVSA had appeared to be making headway — with SCHLUMBERGER saying in June it had reached an agreement with the oil major to keep six rigs operational in the Lake Maracaibo area.  The fact that most of those drills have now been idled suggests that PDVSA’s last-ditch contract efforts have failed. Possibly signaling a significant cliff ahead for drilling across Venezuela — which could foreshadow an accelerated decline in production. Such a downturn would have big implications for a) global oil supply, b) Latin American oil trade (including the U.S. Gulf Coast), and c) Venezuela projects, national finances, and politics. Watch to see if PDVSA can find a way to get the idled rigs restarted — and for news on further drilling shutdowns in the country. (Business Insider: http://www.businessinsider.com/this-could-be-the-last-straw-for-venezuelas-oil-sector-2016-7)

 

Commodities

Gold Reserve shares surge on US$ 770 million Venezuelan settlement. Gold Reserve Inc. will get about US$ 770 million as part of a settlement with Venezuela for the 2008 seizure of its Brisas gold and copper project in an arrangement that depends on the country securing financing. Shares surged. Payment is expected to be made in two installments: US$ 600 million by the end of October and the rest by year-end, the Spokane, Washington-based company said. Venezuela also agreed to buy the company’s mining data for US$ 240 million and enter into a jointly owned company with Gold Reserve for a 18,000-hectare claim including the Brisas Cristinas deposit. The statement didn’t say where Venezuela, whose oil-dependent economy has been pummeled by slumping energy prices, would obtain the funding. “Venezuela will use the proceeds from any financing it closes after the execution of this agreement to pay Gold Reserve the amounts owed under this agreement in preference to any other creditor,” Gold Reserve said. (Bloomberg, http://www.bloomberg.com/news/articles/2016-08-08/gold-reserve-shares-surge-on-770-million-venezuelan-settlement)

 

TOYOTA is restarting operations, will produce 150 vehicles per month. TOYOTA has restarted operations at their plant in Cumaná (Sucre state), and expect to produce 150 vehicles per month, for a total 750 assembled units by the end of this year. Their record production was 33,240 units ten years ago. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Toyota-reanudo-produccion-ofrecera-vehiculos_0_896910604.html)

 

Telefonica opens rate talks in Venezuela after Maduro’s threat. Telefonica SA is holding talks with the Venezuelan government to adjust phone-service rates after President Nicolas Maduro blocked an attempt to increase prices and said the state was open to taking over carriers if necessary. The company is in “talks with the authorities to define new prices," according to a statement on its Venezuelan website Friday. The Madrid-based company also plans to reimburse customers who already paid bills after a July price increase, which was later overturned by the government. As Venezuela struggles with the world’s fastest inflation, Telefonica and rivals had raised prices to stay afloat and be able to pay interconnection fees for international data and call traffic. Nobody can “set prices just like that," Maduro said Aug. 1 on national television, and warned that he was open to taking control of phone carriers if they can’t manage their businesses amid the country’s worst economic recession in decades. (Bloomberg, http://www.bloomberg.com/news/articles/2016-08-08/telefonica-opens-rate-talks-in-venezuela-after-maduro-s-threat)

 

Economy & Finance

Maduro looks to a Marxist Spaniard for an economic miracle. President Nicolás Maduro, hoping for an economic miracle to salvage his country, has placed his trust in an obscure Marxist professor from Spain who holds so much sway the president calls him “the Jesus Christ of economics.” Alfredo Serrano—a 40-year-old economist whose long hair and beard have also elicited the president’s comparison to Jesus—has become the central economic adviser to Maduro, according to a number of officials in the ruling United Socialist Party and other government consultants. His rise has come at the expense of advisers who, though also leftist, have urged the president to undertake more conventional steps to address Venezuela’s dysfunctional economy, such as liberalizing the country’s tightly controlled currency, these people say. Instead, Serrano’s calls for even more state controls on manufacturing and food supply have largely shaped the president’s response to the country’s economic crisis. Such moves risk prolonging the deepest recession in the nation’s history—as well as the hyperinflation and severe food shortages that have accompanied it. “All the attempts to reform, to coordinate with the private sector, have been blocked by him,” a senior ruling-party lawmaker said. Serrano arrived in Latin America in the mid-2000s with a group of anti-capitalist Spanish intellectuals who would later go on to form Spain’s leftist PODEMOS party. Among his more unorthodox ideas are that inflation is caused by class struggle and that government bureaucracy should be replaced by revolutionary communes that would handle everything from health care to food production. “The communes must be at the center of gravity of the new state,” Serrano said in a July speech in Caracas. (The Wall Street Journal: http://www.wsj.com/articles/venezuelas-nicolas-maduro-looks-to-a-marxist-spaniard-for-an-economic-miracle-1470678805)

 

Venezuela: Trench cabinet. The latest cabinet changes announced by President Maduro are a negative signal, as they reduce the presence of moderate factions within the government while Maduro surrounds himself of loyalists and radicals in what has the appearance of a preamble to radicalization. With the exit of Vice President of Economics Miguel Perez Abad from the cabinet, Eulogio Del Pino, President of PDVSA, is left practically alone in an uncomfortable position on the pragmatic side of the government. In terms of economic policies, the more immediate implication is drifting further away from exchange rate market unification. A possible widening of economic distortions and radicalization of the government also make a successful PDVSA debt swap more difficult. In the current situation, a debt swap of short-maturity bonds that PDVSA has said it is considering would be mainly encouraged by political reasons. PDVSA had not done this swap before because of its high cost, and these conditions have not improved. The government could be changing its mind and be willing to have a transaction, even if it is at the expense of a significant increase in the debt stock and/or the debt service, as long as it increases its margins to maneuver the political situation. A successful debt swap could have a bigger political than economic effect. While cash flows would likely remain tight, it could significantly reduce the probability of a political transition: US$ 6 billion less in debt payments over the next 16 months could be used by the government to increase imports almost 30%, helping it to calm the political situation. Although PDVSA is supposed to be able to issue debt without approval of the National Assembly, the conditions in which this transaction could take place are likely to generate political noise and could give any new administration arguments to question the legitimacy of this debt. A successful swap could have mixed implications for Venezuelan/ PDVSA debt. While it would support the view of the investor base that has maintained a strong confidence in the short-term willingness and capacity to pay of the country, it could weaken the arguments of those who have been expecting a political transition to lead to a more market-friendly government. Perhaps unintentionally, with a successful swap, the market could end up helping the government to prevent the scenario that would be better for the market itself. (Barclay’s: Full Report Attached).

 

July inflation pegged at 23.2% according to sources within Venezuela’s Central Bank; and year to date inflation is now 240%. Inflation for the past full year was 565.2%, only in products under price controls. Central Bank experts say these levels of inflation are unprecedented in Venezuela. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Inflacion-julio-cerro_0_896910608.html)

 

Lorenzo Mendoza willing to meet with Venezuelan government. Lorenzo Mendoza, the head of Venezuela’s major food producer Empresas Polar, says he is willing to meet with President Nicolas Maduro. “Should President Maduro call me to meet, I will go, just the way I did the other times when I was called,” Mendoza said in an interview. About dialogue, the businessman termed it necessary, but he discouraged dividing dialogue into political or economic. “In today’s civilization and world, communication and dialogue are a coexistence rule. I think sectorizing things (…) removes a natural structure from dialogue. Let’s talk about the relevant topics,” Mendoza added. (El Universal, http://www.eluniversal.com/noticias/daily-news/lorenzo-mendoza-willing-meet-with-venezuelan-govt_430793)

 

Politics and International Affairs

Presidential recall unlikely this year amid new tentative timeline. President Nicolas Maduro is highly unlikely to face recall this year, as authorities provided a detailed electoral calendar suggesting a vote might not happen until early 2017.  If the recall were to happen before Jan. 10, 2017, it would trigger new elections. However, If Maduro were to lose a recall vote after that date, his hand-picked vice president would finish out his term through 2019. The opposition has been accusing the electoral body of dragging its feet on the process to protect the unpopular Maduro. And opposition leaders are planning a massive Sept. 1 march on Caracas to demand the vote. National Electoral Council President Tibisay Lucena said the opposition was “wasting its time.” “This electoral power does not accept pressure from anyone,” she told an audience of administration officials. According to her timeline, the opposition might be asked to collect 3.9 million signatures — or 20% of voter rolls — at the end of October. The body would then have 28 or 29 days to review those signatures and call a referendum. But the CNE can schedule that vote anytime during the next 90 days, making a January or February vote a possibility. (The Miami Herald: http://www.miamiherald.com/news/nation-world/world/americas/venezuela/article94596437.html; Summarium:


 

Independent CNE member refutes Lucena’s presentation. Luis Emilio Rondon, the sole independent member of the 5 member National Elections Council (CNE) says he did not attend Tibisay Lucena’s press conference today because he disagrees with the decision to delay the 20% signature collection to late October. He said an earlier date could be set if technical and logistic preparations begin during the second half of August. He condemned his colleagues for delaying timetables for executing the recall process, which was established in September 2007, and charges that the 5 days needed to check signatures in the first stage were turned into over 30 days. Rondón adds that “there is no legal, technical or logistic obstacle to carry out recall request procedures once requirements are complied with” and says the absence of a timetable since the time the request was accepted “has damaged the principle of impartiality that the institution must maintain” He says the national crisis should lead the CNE to respect the timetables that were established, and must comply with the requisite of “speed in complying with its constitutional duty.” (Prodavinci: http://prodavinci.com/2016/08/09/actualidad/esta-fue-la-respuesta-del-rector-luis-emilio-rondon-al-anuncio-de-tibisay-lucena-sobre-el-revocatorio/)

 

Opposition coalition calls for massive demonstration on September 1st to demand recall timetable. Opposition leader Henrique Capriles Radonski, a former presidential candidate and current governor of Miranda states, if there the National Elections Council (CNE) does not provide a timetable for a recall process against President Nicolas Maduro, the Democratic Unity opposition coalition call for a massive nationwide mobilization to occupy the entire city of Caracas. In reference to today’s statements by CNE Chair Tibisay Lucena, Capriles said “the nation does not accept (the word) “could”(Lucena referred to all possible recall dates in tentative terms) … “it is our constitutional right and we will make it stick” He called Lucena’s press conference was “an exercise in cynicism and lies”, and said Lucena “believes we Venezuelans are fools”. He added that Lucena’s statements aimed at demoralizing voters. (Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/agosto/6/165093=mud-convoca-gran-movilizacion-el-1°-de-septiembre-si-el-cne-no-da-fecha-del-20)

 

National Assembly moves to replace National Elections Council board members. Congressman Julio Borges, who heads the opposition majority in the National Assembly, has announced that the Legislature will appoint members of the Nominating Committee that will elect new members of the National Elections Council as is required this very same year - when their terms expire. He said they would also call upon the CNE to honor the rights of Venezuelans to a recall referendum and regional elections. “This is a right that cannot be negotiated, changed, or manipulated by the government as it tries to remain in power.” More in Spanish: (Ultimas Noticias: http://www.ultimasnoticias.com.ve/noticias/politica/borges-anuncia-creacion-del-comite-elegir-nuevos-rectores-del-cne/; Analítica: http://www.analitica.com/actualidad/actualidad-nacional/julio-borges-vamos-a-constituir-los-comites-de-postulaciones-para-sustituir-al-cne/)

 

Gubernatorial elections remain on hold. The last regional elections to elect state governors and state legislators were held in Venezuela on December 16 2012. The result was a victory for the ruling United Socialist Party (PSUV), which won the governorships of 20 of the 23 states. The term of incumbent governors expires in December of this year. According to Constitution, governors are elected for four-year terms. The National Electoral Council (CNE) has yet to release a decision or a date for these elections, (El Universal, http://www.eluniversal.com/noticias/daily-news/would-be-candidates-for-governors-await-decision-from-the-mud-and-the-gpp_430433)

 

Slow motion coup in Venezuela? In recent weeks Nicolás Maduro appears to have taken a back seat to Venezuela’s top general, defense minister Vladimir Padrino López, who also – unusually – holds the post of operational commander of the armed forces. The prominence of the military in determining Venezuela’s political future was illustrated once again last week by the appointment of Néstor Reverol as interior minister. Unlike Padrino, who rose through the army, Reverol hails from the National Guard. His alleged criminal connections suggest that different factions in the military may now be jostling for shares of influence in the state. The gradual expansion of military powers in response to the regime´s loss of legitimacy is starting to resemble a slow-motion coup. What is in doubt is the army’s ability to improve the situation. General Padrino has said that he does not want to “militarize” the administration but to “restore order” in the face of a “lack of governance” – a strange choice of words, given that any such lack must be attributed to his commander-in-chief. With so much power concentrated in the hands of the military, understanding what their goals are is paramount. Rather than merely shoring up an increasingly unpopular president, the aim of the generals may be to control the transition in a way that protects their own interests. The defense minister’s new role means “the dialogue [over] transition will be with the military”, as one defense expert put it. But if the army cannot halt the slide into economic and social chaos, the crisis could take the generals with it too. So far, there is no sign of a workable plan in that regard. (The Crisis Group: https://www.crisisgroup.org/latin-america-caribbean/andes/venezuela/slow-motion-coup-venezuela)

 

Venturing Into Caracas' Chavismo bastion.

Traditionally, colectivos are known to be radical, left-wing armed groups that support Venezuela's ruling party in exchange for patronage. But they are also individual clans, each seeking to serve as a counterbalance to the others as they vie for resources, territory and power.  According to one source: "There are more than 60 colectivos, some of them have their own personal objectives, like education, where others are inherently linked with government officials, and others, yet the smallest and newest self-label themselves as colectivos, just to inspire fear, but in reality they are criminal bands." Colectivos gained what power they have by aligning with Chavez and still have reason to serve the government to keep its patronage flowing. But they are angry and are frustrated with Maduro's economic policies. Even if his administration sticks to Chavez's model of supporting the groups with money and government aid, there is no guarantee that it will be enough to stop them from protesting his measures. Should the president's plummeting popularity give the Venezuelan opposition room to unseat the ruling party, the next government could seek to rein in the colectivos by reducing their power and autonomy. Such an outcome would provoke heavy resistance, whether through violence or protests. (Stratfor: https://www.stratfor.com/analysis/venturing-caracas-chavismo-bastion).

 

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.