February 02, 2017

International Trade

Cargo that has arrived at Puerto Cabello:

148 containers bearing food staples and chemicals for agribusiness, consigned to state agency CASA, including 13 containers of beef, 38 of whole milk; 5 of Sulphur; 15 of Diuron herbicide; 8 of etaxilated grease; and 7 with reax85 chemicals. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34959; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/arriban-al-pais-148-contenedores-con-alimentos-e-i.aspx)

 

Oil & Energy

PDVSA braces for oil production drop as default looms large

The recent bump in oil prices isn’t enough to help Petroleos de Venezuela SA as it faces its fourth consecutive year of declining production. The company’s crude output is expected to fall this year as it failed to raise cash for investments and after Venezuela agreed to cut 95,000 barrels a day for six months as part of a deal struck by the Organization of Petroleum Exporting Countries and other non-members to lift oil prices, analysts say. Even the recent increase in oil prices, following the cuts, aren’t enough to ease the company’s financial burden, Lucas Aristizabal, a senior director at Fitch Ratings, said. “Giving the tight liquidity, prices need to be significantly higher to revive output,” Aristizabal said in a phone interview from New York. “At least more than US$ 100 to start with,” he said. Fitch reiterates that a default of PDVSA’s debt is "probable" amid lower production associated with a moderate oil price increase and weak liquidity. (Bloomberg, https://www.bloomberg.com/news/articles/2017-02-01/pdvsa-braces-for-oil-production-drop-as-default-looms-large)

 

Venezuela's Paraguana refineries at 42% capacity

The Paraguana refining complex was operating at about 42% capacity, a union official said late on Monday, citing an internal report that came amid chronic unit stoppages in the country's refining system. The 645,000-barrel-per-day Amuay refinery was operating at about 300,000 bpd, while the adjacent 310,000-bpd Cardon refinery was at around 100,000 bpd, according to Ivan Freites, a union leader and fierce critic of state oil company PDVSA. Cardon's fluid catalytic cracking unit was halted on Jan. 23 due to a problem with a compressor, Freites said, adding it was likely to be down around two weeks. Amuay's flexicoker is still down too, according to Freites.

A worker at the complex, who requested anonymity because he is not authorized to speak with media, confirmed the stoppages. (Reuters, http://www.reuters.com/article/venezuela-refinery-idUSL1N1FL0RR)

 

Economy & Finance

 

FEDECAMARAS charges there is “complete opacity” in government FOREX management

Francisco Martinez, President of FEDECAMARAS, Venezuela’s main business federation, has charged that government allocation of FOREX at preferential rates is not transparent. “We only know that certain areas of the pharmaceutical sector receive them, other than that area, there is complete opacity. Preferential dollars are a black box, no one here knows who gets them, and how much they get”. Since early 2015 the government has implemented two official and controlled exchange rates: One is the “protected dollar” (DIPRO) at 10 VEN/US$1 and the other is the “supplementary dollar” (DICOM or SIMADI), currently at 689 VEB/US1. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/economia/2017/febrero/1/183981=fedecamaras-sostiene-que-

 

Venezuela’s default risk drops below 50%

Traders reduced their bets on a default of Venezuela’s dollar debt over the next year amid a thin repayment schedule in the first quarter. The implied probability of nonpayment over the next 12 months plunged to 44% in January from 59% at the end of December, as per credit-default swaps data compiled by Bloomberg. That’s the first time the risk of default has been below 50% since September. The longer-term outlook is still a little murky, with the odds of a credit event over the next five years at 89%. January proved to be a volatile month in Venezuelan politics as President Nicolas Maduro reshuffled his cabinet, named and delegated wide-ranging powers to a new vice president, replaced the head of the central bank and appointed a new board at state oil company Petroleos de Venezuela SA. That happened as officials continue to face declining oil production, accelerating inflation and a currency still weakening on the black market. The real wild card for Venezuela’s finances continues to be the price of crude, which stagnated in January even as OPEC cuts started to kick in. With large payments totaling nearly US$ 3 billion coming due in April, nerves may start to fray again if a sustained increase in oil prices is not seen soon. (Bloomberg, https://www.bloomberg.com/news/articles/2017-02-01/venezuelan-credit-dashboard-default-risk-falls-below-50-percent).

 Debt sustainability

Venezuela’s debt is obviously not sustainable right now, but if things changed, could it be? It’s hard to say given the uncertainties. For one, the government’s spending is a black box. Over half of the public sector’s budget is cash transfers to unconsolidated entities. PDVSA is another black box. Nobody knows exactly how much oil it exports and how much cash it gets for those exports. Venezuela’s GDP in dollars is also unknown and arguably unknowable in the context of byzantine exchange controls. Debt sustainability is not just about being able to pay your debts in theory. It’s about having enough margin for error to pay them in practice. With basically no savings, Venezuela’s margin is significantly reduced. Stabilizing the debt at 83% of GDP requires that bond markets lend to Venezuela at 8% for the forecast period. But inflation is picking up and interest rates in dollars are poised to rise under Trump. That means issuing debt in dollars will be more expensive for all emerging market economies. Secondly, modern Venezuela is a semi-failed state run by largely inept politicians. The last time markets were willing bankroll Venezuela for 8% a year was a decade ago, in 2007, when oil was booming and Chavez lived. Folks on Wall Street often say that “Venezuela doesn’t need to default.” Strictly speaking, they are right. It is possible for Venezuela to get its act together, rationalize policy, attract massive investment, regain investor confidence, not default etc. But to confuse possible scenarios with probable scenarios is dangerous and misleading. Sooner or later, Venezuela will likely have to restructure its debt. It’s high time to begin planning for that scenario, rather than crossing our fingers and looking the other way. (Caracas Chronicles: https://www.caracaschronicles.com/2017/01/31/debt-sustainability-30000-feet/)

 

Politics and International Affairs

 

Regime attacks on Catholic church intensify

Attacks against the Catholic Church in Venezuela are growing in number and intensity, the church said Monday.
During Sunday mass in Caracas, a Chavista biker gang interrupted the service, sequestered the flock and forced them to listen to a pro-government tirade, days after Vatican-brokered talks between the embattled government of Nicolas Maduro and the opposition broke down. Monsignor Diego Padron, president of the Venezuelan Bishops Conference, said that the attacks were not isolated incidents but events “staged to intimidate”. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2430176&CategoryId=10717)

 

Venezuelan legislators vow to continue denunciations despite “aggressions”

Venezuela’s opposition controlled National Assembly passed a resolution on the “violation of the rights” of legislators, and vowed to continue making denunciations despite what they consider “aggressions” by the government and the judiciary.  Opposition legislator Luis Florido, who heads the Foreign Affairs Committee, said his passport had been cancelled at the airport upon his return from the Dominican Republic last Friday. He was told he had a “migratory embargo” and has not been able to get a new passport despite his parliamentary immunity. Legislator Delsa Solorzano, who heads the Internal Affairs Committee, challenged a sentence by the Supreme Tribunal’s Constitutional Chamber that she said violates the legislature’s rules of procedure. Former National Assembly President Henry Ramos Allup denounced “regime ruses” and the Supreme Tribunal’s “contempt” ruling concocted to stop the duly elected representatives from carrying out their duties. During the same session, the legislature ordered the Comptroller Committee to being an investigation into bribes allegedly paid by Brazilian construction firm ODEBRECHT. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/politica/2017/enero/31/183944=diputados-venezolanos-dicen-que-seguiran-con-denuncias-pese-a-

 

Freedom House lists Venezuela as "not free"

Venezuela is listed as “not free” in the annual Freedom House report released on Tuesday. “Venezuelan president Nicolás Maduro’s combination of strong-arm rule and dire economic mismanagement pushed his country to a status of Not Free for the first time in 2016,” says the report. “Venezuela had served as a model for populist regimes in the region, but today it epitomizes the suffering that can ensue when citizens are unable to hold their leaders to account,” the paper states. In 2016, “Maduro, relying in part on the regime’s control of the courts, responded to an opposition victory in recent legislative elections by stripping the legislature of meaningful power and blocking a presidential recall referendum, effectively cutting off the only route to an orderly change of leadership.” (El Universal, http://www.eluniversal.com/noticias/daily-news/freedom-house-lists-venezuela-not-free_637602)

 

Economic crisis is no reason to put off regional elections in Venezuela

There is no "constitutional or legal" reason, as well as no argument to justify not holding elections for governors this year, says Venezuelan constitutional lawyer Hermánn Escarrá. He specifically rejected the need to focus attention on the economic crisis, as has been argued by the Venezuelan government, to set aside regional elections this year. "That would not be the best of arguments. We have an electoral power and it is up to them to always specify within the framework of the Constitution the period of the consultation,” says Escarrá. (El Universal, http://www.eluniversal.com/noticias/daily-news/expert-economic-crisis-does-not-prevent-regional-elections-venezuela_637654)

 

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 18, 2016

International Trade

Trade remains paralyzed after border reopened with Colombia

Two months after the border between Venezuela and Colombia was partly opened to pedestrians, shopkeepers and industry on both sides are still waiting for trade to pick up, On the Venezuelan side there is little to offer, and in the Colombian border city of Cucuta the value of Venezuelan currency dropped 40% since the Colombian market is stuffed with bolivars. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/economia/2016/octubre/16/172412=comercio-sin-reactivarse-tras-apertura-de-frontera-con-colombia-)

 

30,000 tons of wheat for state agency CASA have arrived at Puerto Cabello. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34651; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/arriban-a-puerto-cabello-30-mil-toneladas-de-trigo.aspx)

 

Oil & Energy

PDVSA extends us$ 7 billion swap for 4th time

Petroleos de Venezuela, S.A. (PDVSA) has announced again the extension of the Deadline of the offers to exchange (the “Exchange Offers”) of up to U.S. US$ 5,325 million aggregate principal amount of PDVSA’s outstanding 5.250% Senior Notes due 2017 (the “April 2017 Notes”) and 8.50% Senior Notes due 2017 (the “November 2017 Notes,” and together with the April 2017 Notes, the “Existing Notes”) for new 8.50% Senior Secured Notes due 2020 (the “New Notes”).  The state oil company warns "If the Exchange Offers are not successful, it could be difficult for the Company to make scheduled payments on its existing debt, including the Existing Notes, which would result in the Company evaluating all alternative options." The Company has extended each of the Early Tender Deadline and the Expiration Date to 5:00 P.M. New York City time on October 21, 2016, unless further extended by PDVSA in its sole and absolute discretion. The Early Tender Deadline was previously scheduled to expire at 5:00 P.M. New York City time on October 17, 2016, and the Expiration Date was previously scheduled to expire at 5:00 P.M. New York City time on October 17, 2016. All other terms and conditions to the Exchange Offers remain the same. The consummation of the Exchange Offers is conditioned upon, among other things, the valid tender of at least 50% of the aggregate principal amount of the Existing Notes. Last week, oil giant ConocoPhillips filed a lawsuit against PDVSA and CITGO trying to block the use of CITGO as collateral, calling it a "fraudulent transfer" to avoid their creditors. CRYSTALLEX -- owed US$ 1.4 billion -- has also alleged the same fraud in its suits against Venezuela, PDVSA and CITGO. Venezuela and PDVSA must pay $1.8 billion this month and $3 billion next month in debt interest and maturities. Half of the US$ 4 billion in PDVSA 8.5% of November 2, 2017, must be paid this November 2 unless the swap is successful in reducing that number. (Latin American Herald Tribune: http://laht.com/article.asp?CategoryId=10717&ArticleId=2423302; Reuters, http://www.reuters.com/article/venezuela-pdvsa-bond-idUSC2N13F00C)

 

PDVSA accuses newspaper of defamation, harming bond swap

State oil company PDVSA has filed a lawsuit against local newspaper El Nuevo Pais, accusing it of defamation and damaging efforts to persuade investors to take up a US$ 5.3 billion bond swap offer. Petroleos de Venezuela President Eulogio Del Pino personally lodged the accusations against the anti-government Caracas-based newspaper for saying in an article last week that the company was in financial trouble. "They are trying to harm, in whatever way they can, an operation that we have offered transparently," Del Pino said of El Nuevo Pais outside the Caracas courthouse after filing the lawsuit. "The socialist government is privatizing PDVSA," El Nuevo Pais said in its article, referring to the use of PDVSA's U.S. subsidiary CITGO Holding Inc as collateral to back the new debt. (Reuters: http://www.reuters.com/article/us-venezuela-pdvsa-idUSKBN12E20P)

 

Venezuela oil price gaps up for 3rd week

The price Venezuela receives for its mix of medium and heavy continued rising for the third consecutive week on prospects for an agreement for an oil output cut. 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 October 14 was US$ 43.09, up US$ 1.51 from the previous week's US$ 41.58. According to Venezuelan government figures, the average price in 2016 for Venezuela's mix of heavy and medium crude is now US$ 33.77 for the year to date. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423253&CategoryId=10717; El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-oil-basket-climbs-usd-4309-per-barrel_622715)

 

Economy & Finance

Maduro ignores Venezuelan Congress and sends budget to Courts

President Nicolas Maduro has presented the 2017 budget to Venezuela’s top court, sidestepping the opposition-controlled National Assembly. The move caps almost a year of clashes between the executive and the newly elected congress, which has seen its powers whittled away by the courts as it looks to oust Maduro. The Supreme Court, stacked with pro-government judges, paved the way for the decree earlier this week, removing Congress’s budgetary authority. “No one can go against the ruling of the Supreme Court; it’s binding,” Maduro said while signing the decree in front a crowd of cheering supporters. (Bloomberg, http://www.bloomberg.com/news/articles/2016-10-14/maduro-ignores-venezuelan-congress-and-sends-budget-to-courts; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423185&CategoryId=10718)

 

Opposition serves notice that public credit operations under 2017 budget can be disowned

Jesus Torrealba, Secretary General of the Democratic Unity (MUD) opposition coalition says Venezuela can repudiate public debt to other nations due to the irregular approval of the 2017 Budget by the Supreme Tribunal. “Any nation or individual who may take part in a public credit operation with the Bolivarian Republic of Venezuela, must know that since the government is in contempt of the Constitution by illegally approving the budget, any such debt can be repudiated by a sovereign Venezuela. You are warned”, he said. Francisco Rodriguez, of Torino Capital, agrees that the 2017 Public Debt Law could come under question if it is not approved by the parliament. “We believe there is a strong legal case for a future administration to declare that debt contracted during 2017 is not valid without an Annual Debt Law that is approved by the National Assembly. This argument could potentially damage not only new bonds issued by Venezuela, but also any other local or international financial debt, including commercial, bilateral and multilateral bonds, as well as internal debt issued in bolivars.” Rodríguez says debt by PDVSA, the Central Bank and state owned banks are exempt from legislative approval, but Legislator José Guerra, who chairs the Budget Subcommittee at the National Assembly, reported that at least one multilateral organization has decided to withhold a US$ 400 million loan for housing due to the lack of legislative approval. He added that sovereign debt and bonds cannot be issued without support by the Legislature, and said “a large part of the failure in the recent bond swap is because investors are cautious that the operation is illegal”. Guerra also says “since CITGO is placed as a guarantee it is in the national interest and must be approved by the National Assembly”.  Guerra adds that multilateral organizations such as the Inter-American Development Bank and the Andean Development Corporation could avoid new funding to Venezuela. He concludes by saying: “The government is taking the worst route. I do not believe any investment bank will dare make the mistake of putting together a foreign financing package without the Assembly’s backing. There will be no outside financing and this will impact the economy, which will sink further in 2017”. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/14/172294=mud-afirma-que-el-pais-no-podra-reconocer-deudas-de-credito-publico-ante-ilegalidad-de-presupuesto-2017; and Factor MM: http://factormm.com/organismos-multilaterales-comienzan-a-exigir-aval-de-la-an-para-dar-financiamiento-al-regimen/)

 

Venezuelan domestic budget FY2017 above 447% last year

Venezuela’s domestic budget FY2017, submitted to the Supreme Tribunal of Justice (TSJ), exceeds by 447% the budget for 2016 enacted last year. While the current budget was drawn up as based on crude oil prices at US$ 40 per barrel the financial plan for 2017 was estimated at US$ 30 per barrel, a “conservative figure” in words of President Nicolas Maduro. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-domestic-budget-fy2017-above-447-last-years_622925)

 

Regime backs away from price controls as citizens go hungry

President Nicolas Maduro’s government has begun dismantling price controls, a major policy shift that aims to ease widespread unrest by letting shops sell food at market prices but is worsening Venezuela’s already punishing inflation. What began as a limited experiment in March in western Zulia state, which borders Colombia, has since been rolled out to six other border states, according to ruling-party governors and interviews with supermarket owners and shoppers across the country. The scheme allows state governments and private retailers with access to dollars to import everything from ketchup to rice from neighboring Brazil, Colombia and tiny Trinidad and Tobago. Officials who pushed for the changes in the provinces said they did so because people were desperate. The downside for Venezuelans is a tremendous rise in prices—sometimes as much as 20 times the regulated price. That is further fueling inflation that the International Monetary Fund already predicts will rise by 500% this year, the highest rate in the world. The phasing out of the price controls is already hitting black-market dealers who have been reselling shoppers marked-up products they obtained at government-set prices. Private distributors are importing the food using savings exchanged for dollars on the black market, which is illegal but being condoned by officials, said Asdrubal Oliveros, who closely tracks government policies as director of Caracas-based research firm ECOANALÍTICA.  (The Wall Street Journal: http://www.wsj.com/articles/venezuela-backs-away-from-price-controls-as-citizens-go-hungry-1476475368)

 

Politics and International Affairs

National Assembly approves motion to rescue democracy and the Constitution

Venezuela’s National Assembly has passed a historic resolution declaring that “Nicolas Maduro’s government is attempting to ignore the Venezuelan electorate’s will for change, rejecting and creating obstacles to the legitimate right to vote”; and that Venezuelan democracy is facing “its most serious crisis since the Executive and the Supreme Tribunal do not recognize the authority of the National Assembly”, which implies the “nullification of the will of voters that elected it on December 6^th, 2015, rejecting popular sovereignty, as well as the life of democracy and the rule of law”. It further declared that in ruling that the national budget should be submitted to the Constitutional Chamber, that Chamber has committed “an atrocious usurpation of this parliament’s duties” and “totally exceeded” its jurisdiction. Further that “the Supreme Tribunal of Justice has betrayed its reason to exist, abandoned its role as guarantor of basic rights and the Constitution’s supremacy, because its rulings show lack of independence and objectivity”; and that “the justices in the Electoral Chamber and the Constitutional Chamber of the Supreme Tribunal do not represent justice and authority, or the Constitution”; that they “usurp authority for justice due to the vices in their appointments” particularly those made “following legislative elections on December 6^th, 2015.” Further, that with the “crude violation of basic rights, principles and values upheld in the Constitution”, the Citizen and Electoral powers are acting in a manner “servile to the interests of the government”. As a consequence of all this, the National Assembly will reject the authority or validity of Executive acts and Supreme Tribunal sentences that run “counter to democratic values, principles and guarantees, and injure basic rights”. It also demanded that the National Elections Council act as an independent power to “set a definite timetable for a recall vote” against President Maduro, and the “election of state governors, all within calendar 2016.” The National Assembly further calls upon the National Armed Forces to “demand that the President and the National Elections Council guarantee the political rights of Venezuelans and respect the will of voters”, as well as contribute to restoring the rule of law, basic rights and democratic principles. It also calls on the Supreme Tribunal’s Electoral Chamber to once and for all incorporate legislators elected from Amazonas state on December 6^th 2015 or else call for new elections in that state. The Assembly also voted to replace Supreme Tribunal justices unconstitutionally appointed on December 23^rd 2015, and create a special committee to analyze illegal procedures in the appointment of National Elections Council members by the Supreme Tribunal on December 26^th 2014. The Assembly called on international organizations, through the UN High Commissioner for Human Rights, the Secretary General and Permanent Council of the Organization of American States (OAS) to act on behalf of democracy and human rights in Venezuela; and on international organizations and Latin American legislatures, the authorities of the Common Market of the South (MERCOSUR) and the Union of South American Nations (UNASUR) to remain watchful and help restore democratic institutions in Venezuela. More in Spanish: (El Universal: http://www.eluniversal.com/noticias/politica/aprobo-acuerdo-para-rescate-democracia-respeto-constitucion_622480)

 

Supreme Tribunal deals blow to bid to unseat Maduro

Venezuela's government-stacked courts have dealt another blow to the opposition's attempts to unseat President Nicolas Maduro. In a decision Monday, the Supreme Court ruled that opponents must collect signatures from 20% of registered voters in each of Venezuela's 24 states in order to force a recall referendum. The opposition had argued it needed to garner only 20% nationally to trigger the vote. The ruling will make it harder for opponents to mobilize support, especially in rural states dominated by the government, when it attempts next week to collect and electronically verify 4 million signatures over three days allotted for the petition drive. The court said on Monday: "The failure to collect that percentage in any of the states or the capital district would nullify the validity of a presidential recall referendum." Polls show Venezuelans overwhelmingly want to cut short Maduro's term. But the embattled socialist still has control over key institutions including courts and the electoral council. Opposition leader Henrique Capriles Radonski, Governor of Miranda state, says the Supreme Tribunal is following orders from the government and its rulings are increasingly violating democratic procedures. He warns that the government is trying to cling to power at any cost and that if the referendum is denied people must prepare to take over Venezuela to defend the Constitution. (BBC News: http://www.bbc.com/news/world-latin-america-37688901?utm_source=Sailthru&utm_medium=email&utm_campaign=New%20Campaign&utm_term=%2AMorning%20Brief; ABC News: http://abcnews.go.com/International/wireStory/venezuelas-high-court-deals-blow-bid-unseat-maduro-42871166; and more in Spanish: Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/16/172407=henrique-capriles-expreso-que-el-tsj-solo-sigue-ordenes-del-ejecutivo; AVN; http://www.avn.info.ve/contenido/tsj-ratifica-que-20-firmas-para-solicitar-referendum-se-haga-estado; El Universal, http://www.eluniversal.com/noticias/politica/sala-electoral-decide-que-recoleccion-del-debe-ser-por-estados_623048)

 

Maduro meets Zapatero, Samper: MUD rejects dialogue without the recall referendum

President Nicolas Maduro has again met with Spain’s former President José Luis Rodríguez Zapatero and UNASUR Secretary General Ernesto Samper, allegedly to discuss promoting talks with the Venezuelan opposition. However, the Democratic Unity (MUD) opposition coalition says their key objective is collecting 20% of registered voter signatures and that there will be no dialogue without a recall referendum, despite claims by the regime and President Maduro’s meetings. National Assembly President Henry Ramos Allup says “Any possibility of talks is contingent on the recall”. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/MUD-reitera-dialogo-revocatorio_0_941306130.html; Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/16/172377=maduro-se-reunio-con-el-expresidente-espanol-jose-luis-rodriguez-zapatero)

 

Colonel Ameliach to file lawsuit to block recall referendum procedures by MUD

Colonel Francisco Ameliach, Governor of Carabobo State and Vice-President of ruling United Socialist Party of Venezuela (PSUV), says he will ask the Supreme Tribunal to issue a legal stay to prevent the Democratic Unity (MUD) opposition alliance from moving on to the next phase in recall procedures against President Nicolas Maduro, including collecting 20% of signatures of registered voters. Tomas Guanipa, Secretary General of the opposition Primero Justicia party, called Colonel Ameliach’s announcement “shameless” and charged that the Carabobo state Governor is among those who are pushing for the nomination of Lieutenant Diosdado Cabello to replace Maduro. (El Universal, http://www.eluniversal.com/noticias/daily-news/psuv-file-lawsuit-against-opposition-alliance-for-alleged-offense_622968; and more in Spanish: Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/16/172382=francisco-ameliach-aseguro-que-solicitara-medida-cautelar-para-que-rr-no-avance-; El Universal, http://www.eluniversal.com/noticias/politica/tomas-guanipa-psuv-oficialismo-busca-sustituto-maduro_622862)

 

Venezuela’s legal institutions and bar associations denounce Supreme Tribunal rulings

In an unprecedented move in Venezuela’s history, the National Lawyers Federation, the Lawyers’ Social Security Institute (INPREABOGADO) and the bar associations in 21 states, along with several NGO’s related to the legal profession have condemned recent decisions by the Supreme Tribunal of Justice (TSJ). Several NGO’s will take their case to the Organization of American States, the United Nations, and the Iber-American Union of Legal Guilds and Associations, to denounce “unconstitutional and partisan” actions by the Supreme Tribunal here. They accused the Tribunal of usurping legislative functions, and creating a “carte blanche for government corruption”.  (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-lawyers-meet-protest-top-courts-decisions_622955; and more in Spanish: Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/15/172354=denunciaran-actuacion-del-tsj-ante-la-onu-y-la-oea-)

 

Dissident “chavistas” call for signatures against Maduro

A group of dissident “chavistas” and former Chavez cabinet members and military officers has called for signatures against President Nicolas Maduro, in defense of the Constitution. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/disidentes-del-chavismo-llaman-firmar-contra-maduro_623050)

 

Wives of political prisoners accuse Cabello of torture

Lilian Tintori, wife of imprisoned Voluntad Popular leader Leopoldo Lopez, along with the wife of jailed San Cristobal Mayor Daniel Ceballos, and former legislator Maria Corina Machado, has denounced a leader Lieutenant Diosdado Cabello, of the pro-regime PSUV party, for being the mastermind behind the illegal imprisonment of her husband, and filed an accusation with the Prosecutor General’s office accusing him of violating human rights, torture, and aggression. She says he is behind the mistreatment of the Lopez family when they visit the jailed leader and having them followed, having them filmed and then broadcasting the contents on his television show; and added that he “orders judges and jailers to break the law”. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/nacionales/2016/octubre/15/172348=denuncian-a-diosdado-cabello-ante-la-fiscalia-general

 

"Increased crime mirrors security failure in Venezuela"

The head of the Venezuelan Violence Watch (OVV), Roberto Briceño León, blamed the country's increased crime on failed security plans implemented by the government in recent years. “Efficiency of a public policy is apparent in its results. Murders, theft, kidnappings and violence in prisons have skyrocketed, so we can say that the 22 plans implemented have failed,” he added. According to a research based on official data, Briceño León estimated 118 arrests in every 100 killings in 1998 in Venezuela, and from 2006 onwards, there have been as few as eight or nine arrests. In other words, no arrests in almost 91% of the murders. (El Universal, http://www.eluniversal.com/noticias/daily-news/increased-crime-mirrors-security-failure-venezuela_622540)

 

Infant mortality soars in Venezuela

Infant mortality is rising fast here, at a time when it is falling in almost every other part of the world, in one of the most alarming signals that Venezuela’s social and state structures are unraveling. Venezuela’s overall infant mortality rate—defined as deaths within the first year of life—is currently 18.6 per 1,000 live births, according to the most recent government statistics. That is well beyond the upper range of 15.4 UNICEF estimates for war-torn Syria. Statistics on infant mortality in Venezuela are difficult to come by because the government no longer reports them regularly. Doctors at state hospitals, which most babies are born, are often sanctioned or threatened with job loss for making data public. The dire state of health care—once a pillar of the socialist government’s so-called people’s revolution—has become a state secret here, with armed security guarding health-care facilities and throwing out journalists who manage to enter. In September, Venezuelans were outraged by leaked photos of newborns in cardboard boxes in the maternity ward of the state-run hospital Domingo Guzmán Lander in the eastern state Anzoátegui. The governor of the poor coastal state said the boxes were substitutes for incubators, adding volunteers could decorate them. Hospitals sometimes lack running water and disinfectants and often face shortages of antibiotics and baby formula. The situation poses danger for mothers as well. Childbirth-related maternal deaths in state hospitals are five times what they were in 2012, according to Venezuelan government statistics, bucking the global trend of a fall in maternal mortality by 44% percent since 1990, according to the United Nations. (The Wall Street Journal: http://www.wsj.com/articles/infant-mortality-soars-in-venezuela-1476716417)

January 07, 2016

International Trade

 

3,500 tons of food arrived at Maracaibo’s port, for state agency CASA. The shipment was transferred from Puerto Cabello, and started by offloading 143 containers of cooking oil, rice, beef, liquid and powdered milk. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34013)

 

 

Oil & Energy

 

Saudi-Iran split hampers chance of OPEC agreement to cut oil output

The possibility of reaching an agreement within the Organization of Petroleum Exporting Countries (OPEC) on oil production cuts to increase price is now dismissed as Saudi Arabia and Iran cut diplomatic ties.
Several OPEC delegates told Reuters they now saw no chance of any improvement in relations between OPEC members, which have been already very low over the past months. (El Universal, http://www.eluniversal.com/economia/160106/saudi-iran-split-hampers-chance-of-opec-agreement-to-cut-oil-output)

 

 

Commodities

 

Government declares all petrochemical sector assets of public interest

The government has now included all assets involved in petrochemical projects as public domain, particularly those involved in transforming basic products such as methane, ethanol, propane, butane, and others, into such basic products as ammonia, methanol, ethylene, propylene, and others.  More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/declaran-de-utilidad-publica-bienes-del-sector-pet.aspx#ixzz3wSbmoo5t)

 

 

Economy & Finance

 

US$ 1.5 billion debt payment due in February

Venezuela faces an important debt payment early this year. According to the 2016 payment Schedule, the nation must pay up US$ 1.5 billion when the Sovereign 2016 bond comes due next month. Total debt payments for this year add up to US$ 9.930 billion in capital and interest, More in Spanish: (Notitarde; http://www.notitarde.com/Economia/Venezuela-debera-cancelar-US-1500-millones-en-deuda/2016/01/06/790600/; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela-debera-cancelar-en-febrero--1-500-millon.aspx; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-debera-cancelar-en-febrero-1-500-millone.aspx)

 

Investment Banks fear Central Bank will increase government financing

Several investment banks are reporting that recent decrees by President Maduro will lead to increased Central Bank financing of government expenditures by printing more money. The new decrees strip the National Assembly of all power over the Central Bank, particularly the obligation to provide macroeconomic data and naming and approving members of the institution’s board of directors. BARCLAYS Capital says it is probable the regime will continue feeding inflation. Bank of America emphasizes that the new decrees allow the Central Bank to continue financing the government déficit, which is banned by the Constitution. (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/bancos-de-inversion-temen-que-aumente--el-financia.aspx#ixzz3wYN6ebYq; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/bancos-de-inversion-temen-que-aumente-el-financiam.aspx; El Nacional, http://www.el-nacional.com/economia/Mercados-internacionales-confian-mejoras-economicas_0_770323036.html)

 

New Parliament to focus on economic matters

The newly-sworn in National Assembly, with the opposition holding the supermajority, will launch a debate on whether the way the economy has been managed since the beginning of the government of late president Hugo Chávez in February 1999 should or should not be turned around. The two latest moves by the President, including a set of economic laws enacted via the enabling law and an announced Decree on Economic Constitutional Emergency, are counter to the legislative agenda suggested by the opposition. Regime opponents have rejected recently enacted laws and other economic legislation currently in force. (El Universal, http://www.eluniversal.com/nacional-y-politica/160106/new-parliament-to-focus-on-economic-matters)

 

Latin America to stagnate due to Venezuela, Brazil, World Bank says

Latin America’s economy will stagnate in 2016 as commodity-dependent countries such as Brazil and Venezuela drag down the entire region, offsetting a positive performance in Mexico, the World Bank forecast. Output in Latin America and the Caribbean will be flat this year, down from a 2.1% growth forecast last June, according to the World Bank’s Global Economic Prospects report released Wednesday. That’s due to a weaker outlook for South America, particularly Brazil and Venezuela. South America is forecast to contract 1.1% in 2016, versus the 1.7% growth the World Bank expected in mid-2015. (Bloomberg, http://www.bloomberg.com/news/articles/2016-01-06/latin-america-to-stagnate-on-venezuela-brazil-world-bank-says)

 

 

Politics and International Affairs

 

Maduro reshuffles Cabinet as Venezuela showdown intensifies

President Nicolas Maduro has named two university academics to major economic posts in a Cabinet reshuffle that was announced as a showdown intensified between his government and a new opposition-led legislature. In a lengthy speech to the nation, the socialist leader named Rodolfo Medina – whom he described as “the Evo Morales of economics” - as finance minister and Luis Salas to head a new ministry for economic productivity. He also ratified Eulogio Del Pino as head of state oil company PDVSA and oil minister. "I have decided to create this team so right now they start a new dynamic of work with the people, of permanent actions to confront the grave situation Venezuelans face," Maduro said. He also replaced Jorge Arreaza, son-in-law of his predecessor, Hugo Chavez, as executive vice president with state governor and Socialist Party stalwart Aristobulo Isturiz. Arreaza was made minister for universities, science and technology, plus a vice-president for social matters. Foreign Minister Delcy Rodriguez was ratified in her post. Miguel Perez Abad was appointed commerce minister, while Jesus Faria was named head of the new foreign trade and investment ministry. Maduro also created ministries for food production and lands, fishing and urban agriculture. (Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKBN0UK2IS20160107; Bloomberg, http://www.bloomberg.com/news/articles/2016-01-07/venezuela-s-maduro-replaces-economic-team-in-cabinet-reshuffle; More in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/160106/maduro-designo-a-aristobulo-isturiz-como-nuevo-vicepresidente)

 

Maduro’s keeps 8 military officers in his Cabinet, names orthodox communists in economic area and creates six additional ministries

Vicepresidents:

Executive Vice President, Aristóbulo Istúriz, former Anzoategui state governor

Vice President for Political Sovereignty, Delcy Rodríguez, who remains as Popular Power Minister of Foreign Affairs

Vice President for Economic Matters, Luis Salas, also Popular Power Minister of Productive Economy, newly created

Vice President for Planning and Knowledge, Ricardo Ménendez, remains as Popular Power Minister of Planning

Vice President for Social Development and Revolution in Missions, Jorge Arreaza, former Executive Vice President, also Popular Power Minister of Higher Education, Science and Technology

Vice President for the Development of Territorial Socialism, Isis Ochoa.

Ministries:

Popular Power Ministry of Agricultural Production and Land (newly created), former Tourism Minister, former Captain Wilmar Castro Soteldo.

Popular Power Minister of Fishing and Aquaculture (newly created), Admiral Ángel Belisario.

Popular Power Minister of Urban Agriculture (newly created), Emma Ortega.

Popular Power Minister of Nutrition, General Rodolfo Marco Torres, formerly Finance Minister.

Popular Power Minister of Communes and Social Movements, Isis Ochoa, remains unchanged

Popular Power Minister of Communication and Information, Luis José Marcano.

Popular Power Minister of Culture, Freddy Ñáñez.

Popular Power Minister of Defense, Chief General Vladimir Padrino López, remains unchanged

Popular Power Minister of Education, Rodulfo Pérez.

Popular Power Minister of Electric Energy and President of CORPOELEC, General Luis Motta Domínguez, remains unchanged

Popular Power Minister of Banking and Finance, Rodolfo Medina

Popular Power Minister of Industry, Miguel Pérez Abad.

Popular Power Minister of Foreign Trade and Investment, Jesús Farías.

Popular Power Minister of Youth and Sports, Melvin Maldonado.

Popular Power Minister of Women and Gender Equality, Gladys Requena, remains unchanged

Popular Power Minister of Oil and Mining and President of PDVSA, Eulogio del Pino, remains unchanged

Popular Power Minister of Indigenous People, Clara Vidal, remains unchanged

Popular Power Minister of the Social Process of Labor, Oswaldo Vera.

Popular Power Minister of Internal Affairs, Justice and Peace, Major General Gustavo González López, remains unchanged

Popular Power Minister of Health, Luisana Melo.

Popular Power Minister of the Penitentiary Service, Iris Varela, remains unchanged

Popular Power Minister of Tourism, Marleny Contreras, remains unchanged

Popular Power Minister of Transport and Public Works (newly created), Luis Sauce.

Popular Power Minister of Housing and Habitat, General Manuel Quevedo, remains unchanged.

Popular Power Minister of Ecosocialism and Water, Ernesto Paiva.

Popular Power Minister of Frontiers, Gerardo Izquierdo Torres, remains unchanged

Popular Power Minister for the Presidential Office, Jesús Salazar

Head of the Capital Government District, Daniel Aponte.

 More in Spanish: (AV; http://www.avn.info.ve/node/337791; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/estos-son-los-ministros-ratificados.aspx; El País, http://www.elmundo.es/internacional/2016/01/07/568db0ede2704e503a8b45b8.html)

 

National Assembly swears in 3 disputed opposition legislators

The newly inaugurated National Assembly swore in three opposition deputies who had been disqualified by the country’s Supreme Court after elections last month, setting up a confrontation with the socialist government of President Nicolas Maduro. As opposition lawmakers chanted “We’re 112!” in reference to their elected two-thirds legislative majority, pro-government deputies protested the installation and said any laws approved with the votes of the disputed lawmakers would be unconstitutional. “The government won’t recognize or enact any law that this assembly approves,” former National Assembly president and pro-government deputy Diosdado Cabello said in a press conference. “This parliament has become illegal,” he said, adding that the National Assembly would be cut off from all funding. (Bloomberg, http://www.bloomberg.com/news/articles/2016-01-06/venezuela-congress-swears-in-3-disputed-opposition-deputies-ij3d4mvp)

 

New Venezuelan Parliament looks to put an early end to Maduro mandate

The new Venezuelan Parliament, or the National Assembly with opposition majority, plans to put an end to the mandate of President Nicolas Maduro before 2019, said Assembly president Henry Ramos-Allup during the first parliamentary session Tuesday. In an inflamed and noisy session, which opened at a time of complicated political cohabitation in the country, Ramos-Allup swore himself in as the new National Assembly president before stating that in six months the new assembly will decide on the "constitutional, democratic, pacific and electoral way out" of the current government. The options include the official announcement of a presidential recall referendum, which can be brought into effect in July when Maduro completes half his term, constitutional amendment, voluntary resignation of the government and the establishment of a new Constituent Assembly. At the same time, Ramos-Allup called upon the Maduro regime to dialogue “to solve the needs of Venezuelans”, adding that “Venezuelans want dialogue”. He said that “civilized societies either dialogue or kill each other”.  (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2402979&CategoryId=10717); and more in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/160106/henry-ramos-allup-llama-al-dialogo)

 

Venezuela opposition supporters revel in new Congress

Cameras zoomed in on First Lady and lawmaker Cilia Flores as an opposition legislator accused Venezuela's government of handing out diplomatic passports to drug traffickers, an allusion to her two nephews on trial in the United States on cocaine smuggling charges. Another opposition legislator stood up and accused his ruling Socialist Party counterparts of stealing money destined for cancer medicines and food, both of which are running short in the crisis-hit country. For Venezuela's frustrated opposition supporters, the first session of the National Assembly on Tuesday was a delightful spectacle. The Democratic Unity coalition took control of Congress for the first time in 16 years on Tuesday in a rowdy session that included slogan-chanting and heckling. At one point, Socialist Party deputies walked out over the alleged violation of parliamentary rules. While the opposition-led Congress has few powers to overhaul President Nicolas Maduro's suffocating economic controls, it plans to use its new perch to pile pressure on the government. Tuesday's session, the first since Democratic Unity won two-thirds of seats in elections in December, was just a taster of much more significant challenges to come, the dominant bloc says. "Where did they spend Venezuela's money? We're going to question all the ministers. And if we have to dismiss them, we will!" said opposition lawmaker William Barrientos after the session. Venezuela's buzzing social media tracked the sometimes tense session. And for the first time in years, journalists were present. The Socialist Party had banned reporters from accessing the floor to interview lawmakers, a measure the new opposition leadership dropped. (Reuters: http://www.reuters.com/article/us-venezuela-politics-congress-idUSKBN0UK00320160106)

 

President Maduro challenges the new National Assembly to call a referendum to revoke his mandate. After pro-regime legislators walked out of the first session of the new, opposition controlled National Assembly, President Nicolas Maduro challenged the recently elected legislators to call a referendum to revoke his mandate and let Venezuelans decide. More in Spanish: (Infolatam: http://www.infolatam.com/2016/01/06/maduro-reta-al-nuevo-parlamento-a-convocar-un-referendum-para-revocarlo/)

 

Cabello says the National Assembly has become illegitimate by contempt of the Supreme Tribunal in swearing in 3 legislators from Amazonas state. Former National Assembly President Captain Diosdado Cabello said the group would denounce the current National Assembly for contempt and added that “no law they pass will be valid” He added: “We have here a working Supreme Tribunal, what may become paralyzed is the National Assembly because, I believe, they will not receive a penny from now on”.  More in Spanish: (Infolatam: http://www.infolatam.com/2016/01/06/chavismo-afirma-que-el-parlamento-se-ha-deslegitimado-al-desacatar-al-supremo/)

 

Borges set forth opposition legislative agenda

Lawmaker Julio Borges, who heads the opposition legislative caucus within the newly installed National Assembly, has officially set forth the group legislative priorities, as follows: 1.- Amnesty Law on behalf of political prisoners and exiles;

2.- Law to give ownership title to government housing plan beneficiaries; 3.- Law to provide food stamps and medicine for the elderly; 4.- Law to promote Domestic production. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/parlamento/borges-presento-la-agenda-parlamentaria-que-impuls.aspx#ixzz3wSa9qj7v)

 

Regime rejects alleged US meddling in legal action against election result

Minister of Foreign Affairs, Delcy Rodríguez, described a request by the United States to resolve an action admitted by the Venezuelan Judiciary contesting the election of four deputies in a "transparent" manner as "meddling". Following the opening of the new Venezuelan Parliament, John Kirby, spokesperson for the US Department of State, stated that Washington was concerned over the "controversy surrounding the inauguration of some elected representatives," and called for "a resolution of this dispute in a transparent manner that reflects the preferences of the Venezuelan voters." Kirby’s comments were in response to a letter sent by Sen. Robert Menendez to President Barack Obama Monday asking for measures to ensure the government of Nicolas Maduro respects the election results in Venezuela. (El Universal, http://www.eluniversal.com/nacional-y-politica/160106/venezuela-rejects-us-meddling-in-legal-action-against-election-result; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2402914&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/160106/us-asks-for-transparent-decision-on-venezuelan-contested-deputies)

 

Rubio: Maduro does not intend to accept parliament vote outcome

Republican presidential contender Senator Marco Rubio says "there is growing evidence" that Venezuelan President Nicolas Maduro "has no intention of accepting the results of the legislative vote" held last December 6 in Venezuela.
Rubio asked US President Barack Obama to punish those who try to "sabotage" the result of the parliament in Venezuela, which put an end to 17 years of chavezism hegemony in the National Assembly. (El Universal, http://www.eluniversal.com/nacional-y-politica/160106/rubio-maduro-does-not-intend-to-accept-parliament-vote-outcome)

 

European Union ready to strengthen relations with Venezuela

The European Union says the new National Assembly “will be the key for democracy in Venezuela”, and says it is “important” that the legislature “should be able to comply with all of its constitutional prerogatives, those which respect the vote of the people”. It says it believes the new situation here opens up opportunities for closer relations that can lead to agreements on key matters. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/160106/ue-esta-lista-para-reforzar-relaciones-con-venezuela)

 

Brazil calls for dialogue in Venezuela

Brazil’s Foreign Ministry has issued a statement saying it “trusts” that the voting will of the Venezuelan people is “respected” and that “the constitutional functions and prerogatives of the National Assembly are to be preserved and respected”. It also called for both sides to “maintain and perfect dialogue and harmony”. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/160106/brasil-llama-al-dialogo)

 

 

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.