March 22th, 2013

Economics & Finance

Business decries limited access to U$D

Despite the creation of an ancillary Foreign Currency Administration System (SICAD), many companies will not be able access U$D through this device, according to FEDECÁMARAS First Vice President Jorge Roig, who points out the in order to use SICAD companies must have been previously enrolled in the Register of FOREX Users (RUSAD), which excludes most commercial operations, mid size and small business, and individuals. The new system seems a minefield due to the large number of obstacles along the process -hurdles that may lead to higher inflation. Economist Ángel García Banchs says the new system will bring few benefits to importers and corruption will undermine controls, and adds: "There is no better business in Venezuela than to get dollars at VEB 6.30 and sell them above this price".(El Universal, 03-21-2013; http://www.eluniversal.com/economia/130321/venezuelan-entrepreneurs-regret-limited-access-to-us-dollars) and http://www.eluniversal.com/economia/130321/obstacles-in-venezuelas-ancillary-forex-system-threaten-to-spur-shorta; and more in Spanish: Tal Cual; http://www.talcualdigital.com/index.html)

Maduro threatens U$D ‘speculators’ with jail time

Acting President Nicolas Maduro says the government is investigating cases of foreign exchange corruption and threatened “speculators” with jail time. “We’re investigating, and we’re going to pursue them,” Maduro said on state television. “We hope to have those responsible for dollar speculation soon. We want to see them in prison.” A shortage of dollars here has deepened since February, when 32% devaluation went into effect and the separate central bank- administered currency market was shut down. While the government sells dollars for priority imports at 6.3 bolivars, those who can’t access the system pay as much as 24 bolivars per dollar on the black market, according to Dolar Today, a website that tracks the exchange rate on the Venezuelan border with Colombia. (Bloomberg, 03-21-2013; http://www.bloomberg.com/news/2013-03-21/venezuela-threatens-dollar-speculators-with-jail-time.html)

Socialist economic model is said to be "exhausted"

The so-called 21st Century Socialism is an "experiment" with very bad results, says former Argentinean Economy Minister Ricardo López Murphy. "I have this feeling that it will be quite challenging to understand the reasons that, despite great favorable circumstances to Venezuela, led to a poor economic performance," López Murphy said. "Severe" foreign exchange restrictions despite high oil revenues; destruction of added value; erosion of net worth in key state-run industries; "collapse" in production, and rampant indebtedness are just some of the effects of the model promoted for several years by the late President Hugo Chávez, says López Murphy. (El Universal, 03-21-2013; http://www.eluniversal.com/economia/130321/socialist-economic-model-is-said-to-be-exhausted)

Commodities

Four new oil tankers arrive

Four new oil tankers for PDVSA's fleet arrived in Venezuela's eastern state of Anzoátegui on Wednesday. The tankers were received by acting president Nicolas Maduro, who inspected the vessels, along with Oil and Mining minister Rafael Ramirez , Anzoátegui governor Aristóbulo Isturiz, Chief of Staff minister Carmen Melendez. "The idea is to manage 40% of our production, of our exports with our own fleet," said Ramirez during the inspection. (AVN, 03-21-2013; http://www.avn.info.ve/contenido/four-new-oil-tankers-reinforce-sovereignty)

Pernambuco Refinery forges ahead with or without PDVSA

PETROBRAS Chief Gracia Foster said the Brazilian State oil company will conclude the Abreu e Lima Refinery in Pernambuco “with or without the promised support of Venezuela because it is vital for its management and business plan.” She says she has requested a meeting with PDVSA Chief Rafael Ramírez. (Veneconomy, 03-20-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=34090&idc=4)

RUSORO Mining files UD 3 billion claim against Venezuela

RUSORO Mining Ltd, backed by Russia's Agapov family, said on Thursday it had filed a statement of claim against the Venezuela state and is seeking U$D 3.03 billion in compensation over the nationalization of its gold assets in Venezuela. The claim was filed at the World Bank's International Center for Settlement of Investment Disputes, or ICSID, under the provisions of Canada-Venezuela bilateral investment treaty. (Reuters, 03-21-2013; http://www.reuters.com/article/2013/03/21/venezuela-canada-rusoro-idUSL1N0CDFSE20130321)

ALCASA and BAUXILUM fell short of 2012 production goals

State owned aluminum companies ALCASA and BAUXILUM fell short of their production goals for 2012. ALCASA processed 55,585 metric tons, which is 86% of their planned 64,653 MT. At the same time, BAUXILUM met only 49% of its plan that is 807,324 tons out of 1,650,000 tons planned. More in Spanish. (El Universal, 03-22-2012; http://www.eluniversal.com/economia/130322/alcasa-y-bauxilum-incumplieron-metas-de-produccion)

International Trade

Brazil's AMBEV says exit from Venezuela limited to plant closure

Cia de Bebidas das Americas SA, Latin America's largest brewer, plans to limit its exit from the Venezuelan market to closing a plant and will market its products here through a local partner. The company, known as AMBEV, plans to sell some of its brands through Cerveceria Regional, with which it announced a strategic alliance in 2010, according to an emailed statement on Thursday. AMBEV is part of Anheuser-Busch InBev SA, the world's biggest brewer. (Reuters, 03-21-2013; http://www.reuters.com/article/2013/03/21/ambev-venezuela-exit-idUSL1N0CDI6R20130321)

Brazilian firms root for Chavez's man in Venezuela vote

If Brazil's business leaders could vote in Venezuela's election next month, they would cast their ballots for Hugo Chavez's political heir, acting president Nicolas Maduro. They never supported the anti-capitalist bluster of Chavez, who died of cancer last month, but they hope to hold on to lucrative contracts for food exports and construction projects that he signed with Brazil's former leftist leader Luiz Inacio Lula da Silva and his successor, Dilma Rousseff. "In the near term, a Maduro win would be best," said Jose Augusto de Castro, head of Brazil's Foreign Trade Association. (Reuters, 03-21-2013; http://www.reuters.com/article/2013/03/21/us-venezuela-brazil-business-idUSBRE92K0ZY20130321)

Sino-Venezuelan company plans to export vehicles into MERCOSUR

ZGT Automotive Corporation in Aragua state, a joint venture by China's ZGT and the Venezuelan government, expects to increase production of CHERY X1 and TIGGO vehicles and export them to MERCOSUR. ZGT Operations Vice President Harold Maison says they have produced 13,980 vehicles in 18 months and plan to export their vehicles to Latin America. More in Spanish: (AVN; http://www.avn.info.ve/contenido/empresa-mixta-chino-venezolana-prev%C3%A9-exportar-veh%C3%ADculos-al-mercosur)

Logistics & Transport

Three additional airlines to service Barcelona airport in Anzoátegui state

The terminal's coordinator, José García, has announced three additional airlines will service Barcelona airport in the Eastern state of Anzoátegui, starting within the upcoming months. The airlines are RUTACA, ESTELAR and LASER. Service to the terminal is currently provided by CONVIASA, ASERCA and AVIOR. More in Spanish: (AVN, 03-22-2013; http://www.avn.info.ve/contenido/tres-nuevas-aerol%C3%ADneas-entrar%C3%A1n-operaci%C3%B3n-aeropuerto-barcelona)

Politics

Venezuela plot claims are ‘outlandish allegations,’ U.S. says

The U.S. State Department said today claims by Venezuelan officials of U.S.-based plots to destabilize the country are “unsubstantiated and outlandish.” Venezuela’s government has stepped up its anti-U.S. rhetoric after former President Hugo Chavez’s death from cancer March 5 triggered snap elections scheduled for April 14. His handpicked successor, acting President Nicolas Maduro, said he has evidence that former U.S. officials are plotting to assassinate opposition candidate Henrique Capriles Radonski as a way of inciting a coup. Foreign Minister Elias Jaua yesterday suspended talks with U.S. Assistant Secretary of State for Western Hemisphere Affairs Roberta Jacobson after U.S. officials were expelled from Venezuela. Maduro accused them of seeking to destabilize Venezuela by meeting with military officials. (Reuters, 03-21-2013; http://www.bloomberg.com/news/2013-03-21/venezuela-plot-claims-are-outlandish-allegations-u-s-says.html; El Universal, 03-21-2013; http://www.eluniversal.com/nacional-y-politica/130321/washington-disappointed-at-venezuela-hopes-for-productive-relation; The Washington Post, http://www.washingtonpost.com/world/the_americas/us-denounces-outlandish-allegations-from-venezuela-after-suspension-of-communication-line/2013/03/21/2ddf5224-9251-11e2-9173-7f87cda73b49_story.html)

US-Venezuela diplomatic communication suspended

Communication channels established to improve relations with the United States have been temporarily suspended after "attacks" by Roberta Jacobson, Assistant Secretary of State for Western Hemisphere Affairs, on Venezuela's election system, says Foreign Affairs minister Elias Jaua. "I hope there will be a correction and US meddling ceases," added the Minister, recalling that the commissioner to keep the communication channel with Mrs. Jacobson was Venezuela's ambassador to the Organization of American States (OAS), Roy Chaderton Matos. (AVN, 03-20-2013; http://www.avn.info.ve/contenido/suspended-venezuela-us-communication-channels; El Universal, http://www.eluniversal.com/nacional-y-politica/130320/venezuela-hangs-up-contacts-with-the-us; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=717949&CategoryId=10717; Fox News, http://www.foxnews.com/us/2013/03/20/venezuela-halts-all-diplomatic-communication-with-us-after-diplomats-expelled/)

Pro government gangs attacked student march en route to Elections Council

Student demonstrations marching to the National Elections Council in order to present demands for transparency and equity in upcoming Presidential elections on April 14t, were blocked by pro government gangs who attacked the march with sticks and stones, and wounded 7 students. More in Spanish: (El Nacional, 03-22-2013; http://www.el-nacional.com/)

Southern Command: Caracas may have to restate foreign policy if Maduro wins

The US Southern Command believes Nicolás Maduro can become the new Venezuelan president and that the Chavista line will continue at least in the near future. However, the Venezuelan government might reconsider the practice of "buying friends" with oil, according to John Kelly, Chief of the US Southern Command. "Expectations are that the Vice-President (Maduro) will win the election of April 14 and things will be business as usual, at least for the time being. Who knows within five years," the military chief answered a question as to his estimate of Venezuela's future after the demise of President Hugo Chávez during a hearing held on Wednesday in Washington, says DPA. (El Universal, 03-20-2013; http://www.eluniversal.com/nacional-y-politica/130320/southern-command-caracas-may-have-to-restate-foreign-policy-if-maduro-)

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

July 03rd, 2012

Economics & Finance

Central Bank seeks BANDES, FONDEN backing as reserves drop

BANDES (Bank for Social and Economic Development) and FONDEN (National Development Fund) have been transferring US dollars to the Central Bank (BCV) in order to compensate for the drastic reduction of international reserves as a result of falling oil prices. Under an agreement made last week after operating cash reserves dropped to U$D 1.2 billion, less than enough for a month's imports, BANDES and FONDEN agreed to each sell U$D 1 billion to the Central Bank. In addition, BCV exchanged around U$D 1.7 billion in notes that cannot be traded for foreign currency by FONDEN. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Workers in turmoil as Guayana "socialist" industries fail to meet payrolls

Over 5000 workers are going without wages in Guayana as "socialist" state industries BAUXILUM, CARBONORCA and TAVSA fail to meet payroll obligations, and have sent workers home at reduced pay. The companies also deduct social security, insurance and housing benefits and do not transfer funds to service providers. Private aluminum processing firms such as SURAL, WESTALCA and PIANMECA have also reached agreements with their workers to stay home at reduced pay due to lack of aluminum to process. ALCASA President Ángel Marcano failed to show at a scheduled meeting with CARBONORCA workers, and a meeting has been scheduled today with Guayana Corporation President Gil Barrios, whose attendance has not been confirmed. Antonio Rivas, a PSUV government party labor leader, says the main reason for failure are debts by ALCASA and VENALUM, while opposition leaders point to a contract with GLENCORE which commits a significant percentage of alumina, without payment to BAUXILUM, the largest of the companies involved. Workers say the government has stopped payments as a “retaliation” for protests. More in Spanish: (Tal Cual, 07-02-2012; http://www.talcualdigital.com/index.html)

Chavez says June inflation dips to 1.4%, annualized inflation running at 21.3%

Consumer prices rose 1.4% in June, less than the 1.6% increase in May, says President Hugo Chavez. The nation had the highest annual inflation in the Americas last year at 27.6%, and economists had predicted it would be higher in 2012 due to a pre-election spending bonanza by President Chavez's government. Yet officials have had some success combating rises with new price controls in some basic areas, including food and health, from the end of last year. Chavez claimed year-to-date inflation for 2012 was 7.5%, while the annualized rate for the last 12 months was 21.3%. Economists have questioned whether the government's latest price controls will be a sustainable solution for rising prices, or could just be artificially suppressing a major inflation spike later in the year. There are also fears of shortages of products as some businesses opt not to sell rather than adhere to the price controls. (AVN, 07-02-2012; http://www.avn.info.ve/contenido/year-year-inflation-records-lowest-rates-2008; El Universal, 07-02-2012; http://www.eluniversal.com/economia/120702/venezuelan-govt-places-84-of-the-2012-debt; Reuters, 06-29-2012; http://www.reuters.com/article/2012/06/29/venezuela-inflation-idUSL2E8HTIR820120629)

Commodities

Oil exports to US down 12.5% in Q1 2012

The US continues to lose ground within the list of PDVSA clients. The volume of oil exports from Venezuela to the US has continued to slide downward. US Energy Department reports indicate that from January to April 2012, Venezuela sold the US an average 892,000 BPD in oil and related products, a reduction of 12.5% from the previous year. More in Spanish: (El Universal, 07-03-2012; http://www.eluniversal.com/economia/120703/venta-de-petroleo-a-eeuu-cayo-125-en-el-primer-cuatrimestre)

Venezuela Oil Falls to U$D 86.17

Venezuela's weekly oil basket fell U$D 3.92 to U$D 86.17 as oil prices continued to fall in international markets on fears of economic problems across Europe, continued high production by OPEC, mainly Saudi Arabia, and the increasing flows out of the US as the Seagate Pipeline was reversed, causing the price of Brent to fall back toward its eventual average below West Texas Intermediate (WTI). (Veneconomy, 06-29-2012; http://www.laht.com/article.asp?ArticleId=528831&CategoryId=10717)

New labor conditions to increase PDVSA operating cost by 60%

Collective bargaining discussions have entered their final phase, and emerging labor cost could rise by 60% over the next two years if PDVSA accepts union demands. New labor legislation requires that operating costs within PDVSA must rise 35% above last year. PDVSA operating costs, which include wages and labor benefits, closed last year at VEB 50.4 billion, with a variation of VEB 13.2 billion. Revised estimates accept that PDVSA and related companies will be required to increase payroll expenses in order to meet new Labor Law requirements, on average around 20%, including the reduction of working hours and eliminating outsourcing within three years. More in Spanish: (El Nacional, 07-03-2012; http://www.el-nacional.com/)

Government banks have loaned PDVSA U$D 2.4  billion in 5 months

Despite oil prices, PDVSA has continued to demand financial assistance from the official banking system. From November 2011 to April 2012 it has sought direct loans from Banco de Venezuela and Banco del Tesoro for U$D 2.4 billion. More in Spanish: (El Universal, 07-03-2012; http://www.eluniversal.com/economia/120703/banca-publica-presto-a-pdvsa-24-millardos-en-cinco-meses)

Venezuela, China agree to enlarge electricity grid

The National Electrical Corporation (CORPOELEC) and its Chinese counterpart have entered into an agreement to expand the 400-KW electricity grid which will link Tocoma hydroelectric power station in Bolívar state, south Venezuela, with the Uribante-Caparo Development in Andean Táchira state. "This is an overarching project that counts on an up-front investment of U$D 302 million, expected to be completed in 30-month term," says Corpoelec president Argenis Chávez. (El Universal, 07-02-2012; http://www.eluniversal.com/economia/120702/venezuela-china-agree-to-enlarge-electricity-grid)

GDP rise has not been reflected on local production

The Venezuelan economy, which historically has depended on revenues from raw materials, has intensified its monogamous relation to oil over the last decade, to such an extent that 96% of foreign exchange entering the country corresponds to Venezuelan crude oil and by-product exports. This has happened in a period in which oil prices have reached more than USD 115 per barrel, thereby increasing revenues entering the Republic.

Even though oil boom has made it possible to increase public spending so as to reactivate the Venezuelan economy, indicators reveal severe distortions in the local economic apparatus.

In the first quarter of 2012, the Venezuelan economy grew 5.6%, for the highest increase over the past fifteen quarters, and a sign that recession had been overcome. (El Universal, 06-30-2012; http://www.eluniversal.com/economia/120630/gdp-rise-has-not-been-reflected-on-local-production)

International Trade

Venezuelan entry raises storm within MERCOSUR, formal entry delayed to July 31st

Uruguayan Foreign Minister Luis Almagro says his country opposed the manner in which Venezuela is entering MERCOSUR. "It was not the time and should not be carried out under these conditions, and we have legal, political and ethical grounds on the matter... I was against it on those terms". Diego Canepa, Uruguay's Under Secretary of the Presidency explained that his nation's acceptance of Venezuela's incorporation came after a "negotiation" in which it demanded no economic sanctions should be imposed on Paraguay; and accepted due to "political circumstances". Argentina has said Venezuela´s entry complies with standing treaties, and Brazil says the decision was unanimous, agreed to by the presidents of these three nations, meeting alone, without any ministers or staff. At Uruguay's request, Venezuela's formal incorporation was delayed until July 31st. More in Spanish: (El Nacional; http://www.el-nacional.com/; El Universal, 07-03-2012; http://www.eluniversal.com/nacional-y-politica/120703/uruguay-sigue-pendiente-el-ingreso-de-venezuela-al-mercosur; El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/argentina-dice-que-ingreso-de-venezuela-a-mercosur.aspx; http://www.elmundo.com.ve/noticias/economia/internacional/brasil-dice-que-la-decision-de-incorporar-a-venezu.aspx; http://www.elmundo.com.ve/noticias/economia/internacional/uruguay-acepto-a-venezuela-en-mercosur-a-cambio-de.aspx)

Trade deficit with MERCOSUR rose 1300% since 2001

Venezuelan imports from Argentina, Brazil, Paraguay and Uruguay rose to U$D 6.7 billion in 2011, more than triple Venezuela's exports which came to U$D 1.9 billion, according to official figures reported to the Latin American Integration Association. As imports multiplied 23 times over exports, the deficit has risen to1300% since 2001, when it was U$D 341.4 million. During these years imports rose 583%, and exports rose only 25%. The last time Venezuela had a positive trade balance with MERCOSUR nations was 2000. More in Spanish: (El Nacional, 07-03-2012; http://www.el-nacional.com/)

Politics

Chavez and rival Capriles rally supporters as presidential campaign starts in Venezuela

Venezuela’s presidential campaign officially began Sunday with President Hugo Chavez and opposition leader Henrique Capriles rallying their supporters for what promises to be a hard-fought contest leading up to the October vote. Chavez wore his red beret, waving and blowing kisses as he greeted crowds of supporters from atop a truck that rolled from north-central Carabobo state to the nearby city of Maracay, where he spoke from a stage. (The Washington Post, 07-01-2012; http://www.washingtonpost.com/world/the_americas/chavez-and-rival-capriles-rally-supporters-as-presidential-campaign-starts-in-venezuela/2012/07/01/gJQAEWSbGW_story.html; Fox News, http://www.foxnews.com/world/2012/07/01/chavez-capriles-begin-venezuela-campaigns/)

May 08, 2012

Economics & Finance

Chavez cancer fight ignites PDVSA bond rally

Debt traders are pushing up the bonds of state-owned Petróleos de Venezuela, S.A. as they envision a nation without President Hugo Chavez that may free the oil producer from a tax rate as high as 95%. The company’s U$D 26.5 billion of debentures gained 2.1% last week through May 3, the most among the 50 biggest emerging-markets issuers of dollar-denominated debt, building on April returns of 2%, Bank of America Merrill Lynch index data show. The extra yield investors demand to buy debt from the owner of U.S. refiner and marketer Citgo Petroleum Corp. compared with the average for speculative-grade U.S. energy companies has dropped by more than half this year. (Bloomberg, 05-06-2012; http://www.bloomberg.com/news/2012-05-07/chavez-cancer-fight-ignites-pdvsa-bond-rally.html)

Purchasing power in Venezuela is now what it was in 1966

A look into the past reveals that from 1950 to 1978 Venezuela was in a stellar phase in which most families reached unimaginable living standards, but then it all came crushing down, and prolonged decadence began. Statistics compiled by Asdrúbal Baptista and data provided by the Central Bank of Venezuela show that the purchasing power of the average salary of 2011 is the same as in 1966. The 45 years of stagnation are the result of atrophied productivity. (El Universal, 05-05-2012; http://www.eluniversal.com/economia/120505/purchasing-power-in-venezuela-is-the-same-as-back-in-1966)

Venezuela: a country with no rules

In Venezuela, the time needed to register a company, or obtain the document that establishes a person as a property owner may take up to four months, but only if one is lucky. In more complex operations one can wait up to six months, and go through myriad steps, plus the discretionary power of any official. This is not only an issue of efficiency, but has become a system that paralyzes Venezuela's economy and encourages many entrepreneurs to take the route of the informal economy in order to avoid complications. (El Universal, 05-05-2012; http://www.eluniversal.com/nacional-y-politica/120505/venezuela-a-country-with-no-rules)

Venezuela is among the 12 countries included in the priority watch list for Intellectual Property Right (IPR) violations, according to a report of the United States Department of Commerce. The study -which is known as 301 Report- placed Venezuela on the "black list" for one more year. (El Universal, 05-07-2012; http://www.eluniversal.com/economia/120507/venezuela-among-countries-with-high-piracy-levels)

Food shortages at 22%

The general food supply shortage index compiled by DATANALISIS continued at 22% at the close of April. More in Spanish: (Últimas Noticias, 05-07-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/escasez-de-alimentos-se-mantiene-en-22-.aspx)

Commodities

BAUXILUM operating at critical level

CVG BAUXILUM which produces bauxite and alumina has reached an extremely critical operating and financial stage which jeopardizes primary aluminum production and its transformation. The company operates a single phase at 50% of installed capacity. In April it produced 65,000 tons of alumina, out of an average 120,000. That is vital to producing aluminum. Director Wilfredo Flores says "if this situation continues... we are endangering national aluminum production and thousands of jobs". He called upon the Government to review these companies that "are about to shut down". More in Spanish: (El Universal, 05-08-2012; http://www.eluniversal.com/economia/120508/bauxilum-se-encuentra-operando-en-niveles-criticos)

CVG VENALUM has a new president amid operating crisis

Vice President Elias Jaua announced that Francisco Diaz will be the new president in charge of the state company CVG VENALUM aluminum. Díaz will take over a severe operating crisis as the company is operating at 24.4% capacity. More in Spanish: (Tal Cual, 05-07-2012; http://www.talcualdigital.com/index.html; El Universal, 05-08-2012; http://www.eluniversal.com/economia/120508/crisis-operativa-actual-recibe-a-presidente-de-venalum)

International Trade

Colombia-Venezuela cross-border trade faces difficulties

Although the governments of Venezuela and Colombia have signed several agreements, bilateral trade "has failed to take a turn leading to improve the situation that deteriorated after the severance of commercial relations in 2009." In its 2011-2012 report, the Venezuelan-Colombian Chamber for Economic Integration (CAVECOL) says that "except for some cases, difficulties grow day by day" on the border. (El Universal, 05-07-2012; http://www.eluniversal.com/economia/120507/colombia-venezuela-cross-border-trade-faces-difficulties)

Politics

Chavez phones to say he will soon return to campaign,  and "build more socialism" in 2013-2019

He made the statement in a telephone call from Havana to a government radio show in Caracas, adding that he has been working constantly and will use the 2013-2019 to continue "building socialism" and further "empower the Venezuelan people." More in Spanish: (El Universal, 05-08-2012; http://www.eluniversal.com/nacional-y-politica/120508/presidente-dice-que-regresara-pronto-para-incorporarse-a-la-campana; AVN; http://www.avn.info.ve/contenido/chávez-destaca-que-construcción-del-socialismo-se-afinará-periodo-gobierno-2013-2019)

Venezuela insists Chavez still leading as silence reigns

Allies of Venezuela's ailing President Hugo Chavez had insisted he was still leading the nation despite a week of silence from the usually loquacious leader whose battle with cancer has overshadowed his reelection bid. Chavez's normally ubiquitous media presence has slowed to a trickle of Tweets. He had not made any live contact with state media in the week since a public appearance last Monday before leaving for Cuba to receive treatment. (Reuters, 05-07-2012; http://www.reuters.com/article/2012/05/07/us-venezuela-chavez-idUSBRE8460N020120507)

Chavez congratulated France's president-elect Hollande

President Hugo Chavez congratulated François Hollande, who was elected President of France after a second round of the electoral process Sunday. (AVN, 05-07-2012; http://www.avn.info.ve/contenido/chavez-congratulates-france039s-president-elect-hollande)

Venezuela experiences its first mass migration

Information from the World Bank shows that an estimated 521,620 Venezuelans have left the country, and a researcher at Catholic University, Anitza Freites, says migration has increased since 2000. The nation was traditionally a receiver nation. The main destination of Venezuelan migrants is the United States, followed by Spain. More in Spanish: (Ultimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/el-pais-vive-su-primera-migracion-masiva.aspx)

Caricom supports Guyana to Venezuela

The countries of the Caribbean Community described as unfortunate the objection raised by Venezuela to Guyana's request to extend the outer limits of its shelf beyond 200 nautical miles within the UN Commission on the Limits of the Continental Shelf. A meeting of CARICOM foreign ministers held in Suriname on 3 and 4 May reiterated its historical support for Guyana, declaring that there is no territorial dispute between the two countries since boundaries were set in an 1899 Arbitral Award. Caracas has objected to this premise for decades on the grounds that the arbitration decision is null and void. More in Spanish: (El Nacional, 05-07-2012; http://www.el-nacional.com/)




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.

October 04th, 2011

Economics & Finance

Food shortages estimated at 30%, government forced to approve price increases

Luis Vicente León, President of the DATANÁLISIS polling firm, said food shortages exceed 30% in several areas, especially for oil, flour, sugars, etc. Despite efforts to blame the private sector, the Government has had to accept the real cost of producing for milk, corn oil and sunflower oil, and it is now expected price adjustments will be forthcoming. More in Spanish. (Descifrado, 10-03-2011; http://www.descifrado.com/index.php?id=7&no_cache=1&showUid=56493 and Tal Cual, 10-04-2011; http://www.talcualdigital.com/index.html)

Venezuela’s five key trading partners

Imports into Venezuela have increased significantly over the past few years, primarily by the Government. Currently, the five countries sending most supplies to Venezuela are: 1) US. Despite frozen relations, Venezuela bought U$D 4.711 billion from the US during the first semester 2011, according to official numbers. 2) China. Took second place after the political crisis between Venezuela and Colombia; with U$D 1.961 billion, which is 28% more than 2010. 3) Brazil, for U$D 1.406 billion, a figure similar to last year. 4) Spain. Rose by six places on the list, for U$D 1.076 billion, which triples the amount for last year. 5) México, for U$D 723 million, a 10% increase over last year. More in Spanish: (El Mundo, 10-04-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/los-cinco-paises-que-mas-mercancias-le-venden-a-ve.aspx)

Food Minister Carlos Osorio denies a drop in agricultural production, and claims sustainable development policies have increased product distribution capacity nationwide by over 60%. (Veneconomy, 10-03-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=27874&idc=3)

Commodities

Venezuela to invest U$D 45 billion to build, maintain refineries

State-owned Petroleos de Venezuela SA says it will invest U$D 45 billion this decade to maintain its domestic refinery network in the country and build other crude-processing facilities. The director of PDVSA’s Paraguana complex, Jesus Luongo, made the announcement, saying the plan will also require the construction of adjacent “social infrastructure” to avoid creating “areas of poverty surrounding the oil installations.” In planning projects of this magnitude, “thought is given not only to oil infrastructure but also to the most important thing: people.” (Latin American Herald Tribune, 09-30-2011; http://www.laht.com/article.asp?ArticleId=429004&CategoryId=10717)

Venezuela oil falls below U$D100

Venezuela’s oil for export basket dropped U$D 3.67 a barrel this week, the second such weekly decline in a row and one the Energy and Oil ministry is now blaming on the “euro crisis”. The Venezuelan oil and products export basket fell to U$D 98.79 a barrel in the week of September 26-30, from $102.46 barrel the previous week. In a statement accompanying price information, the oil ministry said: “Concerns surrounding the debt crisis in the euro zone and the performance of the United States economy became the main factors weakening oil prices during this week.” (Latin American Herald Tribune, 09-30-2011; http://www.laht.com/article.asp?ArticleId=428859&CategoryId=10717)

Fuel prices to be stabilized in Dominican Republic due to PETROCARIBE contributions

Francisco Méndez, president of the Dominican Oil Refinery (REFIDOMSA), has proposed that benefits stemming from an additional 20,000 oil barrels per day provided by Venezuela, should be used  to create a fund to stabilize fuel prices. (AVN, 10-03-2011; http://www.avn.info.ve/node/80281)

Bauxite transportation system severely damaged for lack of maintenance

BAUXILUM mining operations at Los Pijiguaos have taken a heavy blow when the motors for the giant conveyor belt that carries extracted bauxite to the El Jobal dock on the Orinoco river collapsed after working intensely without maintenance or spare parts. More in Spanish: (Tal Cual, 10-04-2011; http://www.talcualdigital.com/index.html)

Rising international commodities prompt a review in oil and milk prices

The increase in international agricultural commodity prices has forced the government to review prices for foods such as corn oil, sunflower oil and milk powder. More in Spanish. (El Mundo, 10-03-2011; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/aumento-de-los-commodities-obliga-a-revisar-precio.aspx

PDVSA acquires stake in Argentine service stations

State-run oil company Petróleos de Venezuela (PDVSA) purchased the stake held by Uruguay’s state energy company ANCAP within Petrolera del Conosur (PDVSUR), which generates losses and owns a network of service stations in Argentina. The ANCAP stake was valued at U$D 11 million but the Uruguayan company will not receive that amount: It agreed instead that PDVSA alone will assume the financial debt of PDVSUR. (El Universal, 10-03-2011; http://www.eluniversal.com/economia/111003/pdvsa-buys-stake-in-argentine-service-stations)

Politics

Chavez will return to Cuba for medical exams

President Chavez announced he will travel to Cuba in late October for medical exams, hours after dismissing a newspaper report that his health had deteriorated. Speaking by telephone on a state TV late night talk show, he said his condition was improving and that the exams will serve to “analyze the close of this cycle” of treatment; he added that he would not disclose the type of cancer he had because doing so would feed “people’s morbid curiosity” about his health. (Bloomberg Businessweek, 09-30-2011; http://www.businessweek.com/news/2011-09-30/venezuela-s-chavez-will-return-to-cuba-for-medical-exams.html)

Belarus delegate in Caracas

Viktor Sheirman, Assistant to the president of Belarus Republic for Special Affairs, was welcomed at the Miraflores Presidential Palace President Hugo Chavez. His Sheiman’s visit aims at evaluating the bilateral agenda, which includes a project to construct 20 thousand homes in Venezuela, within the Grand Housing Mission Venezuela. It is also expected to create tractor factory and construction machinery. (AVN, 10-03-2011; http://www.avn.info.ve/node/80319)

Colombia, Venezuela Foreign Ministers to meet

Venezuela’s Foreign Minister Nicolás Maduro and his Colombian counterpart María Ángela Holguín are scheduled to meet in Bogotá 19- 20 October, ahead of a mid November meeting scheduled for Presidents Juan Manuel Santos and Hugo Chávez. More in Spanish: (AVN; http://www.avn.info.ve/node/80427)

Venezuela, Guyana agree to negotiate maritime border

Diplomatic envoys of Venezuela and Guyana have signed a joint declaration stating their intent to “negotiate the delimitation of maritime boundaries between the two States.” According to official sources, a joint statement “was signed on Friday in Port of Spain, Republic of Trinidad and Tobago, as the two ministers reviewed “several matters of mutual interest.” The document highlights say that “several issues of mutual interest, including Good Offices,” were reviewed. (El Universal, 10-01-2011; http://www.eluniversal.com/nacional-y-politica/111001/venezuela-guyana-reach-agreement-to-negotiate-maritime-border)

All that’s gold doesn’t glitter

What do Hugo Chavez and Glenn Beck have in common? The socialist/populist president of Venezuela and the right-wing talk show host often have strange ideas – just not the same ones. But it turns out, they are both gold bugs.

Now, many people have been investing in gold. But Hugo Chavez wants to horde it literally, physically. The Venezuelan government controls the world’s 15^th largest stockpile of gold: about 365 tons. But, like most gold investors, it doesn’t really have that gold. At least not physically. More than half of Venezuela’s reserves are held overseas in London, New York and Zurich. If you ever visit the New York federal reserve, you can even see it in the underground vaults, neatly labeled as Venezuela’s. (CNN, 10-03-2011; http://globalpublicsquare.blogs.cnn.com/2011/10/03/why-gold-might-be-a-bad-investment/?iref=allsearch)

BANESCO-USA starting operations in Puerto Rico

BANESCO USA, a Florida based company that is a part of the Venezuelan BANESCO group has begun commercial operations in Puerto Rico. Juan Carlos Escotet, head of the BANESCO Multinational Financial Group says “We are convinced that this is the best time to start operations here”. More in Spanish: (Tal Cual, 10-04-2011; http://www.talcualdigital.com/index.html)

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.