May 09, 2017

Logistics & Transport

CONVIASA flights reportedly have been suspended

Journalist Elyangelica Gonzalez has reported that Venezuelan airline CONVIASA has suspended national and international flights due to “a matter involving the payment of aircraft insurance”. More in Spanish: (NOTIMINUTO: http://www.notiminuto.com/noticia/reportan-suspension-de-vuelos-de-conviasa/)

 

Oil & Energy

Venezuela braces for double whammy if U.S. imposes oil sanctions

Venezuela would be hit from two directions if the U.S. were ever to impose oil-related sanctions against this nation where at least 30 have died in anti-government protests in the past month. American drivers may pay more at the pump as well. Speculation about possible new U.S. sanctions has increased because of President Nicolas Maduro’s announced plan to rewrite the constitution. America is the biggest buyer of Venezuelan crude, and CITGO Petroleum Corp., the U.S.-based refiner controlled by Petroleos de Venezuela SA, takes the largest share of those imports, according to analysis of U.S. government data compiled by Bloomberg. If CITGO can’t buy from its parent company because of sanctions, it would be forced to pay more on the spot market, said Mara Roberts, a New York-based analyst for BMI Research. “PDVSA’s reliance on the U.S. market has put it in an extraordinarily difficult position,” Roberts said. “An embargo would cripple its revenues to an even greater extent, which would be terrible news in the run-up to another large debt payment in the fourth quarter.” (Bloomberg, https://www.bloomberg.com/news/articles/2017-05-08/venezuela-braces-for-double-whammy-if-u-s-imposes-oil-sanctions)

 

Venezuela oil price falls for 2nd consecutive week
The price Venezuela receives for its mix of medium and heavy oil fell as U.S. production continued increasing among supply builds in the U.S. 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 May 5 fell to US$ 41.27, down US$ 1.19 from the previous week's US$ 42.46. According to Venezuelan government figures, the average price in 2017 for Venezuela's mix of heavy and medium crude has fallen to US$ 44.46.(Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2435931&CategoryId=10717)

 

Economy & Finance

Hidden numbers reveal scale of Venezuela’s economic crisis

Most statistics tracking Venezuela’s economy are either unreliable or have been discontinued, after national account data were suspended in 2015. Even the IMF has only partial information, as its latest interaction with Venezuela’s authorities dates back to 2004. But figures relating to Venezuela’s relations with the rest of the world offer clear insights into the scale of its problems. Venezuelans are leaving the country, heading mostly for Spain and the US. Foreign investment has dried up. es. US data show that in 2016 US net foreign direct investment in Venezuela turned negative for the first time since the series began in the early 1990s. Last year, Venezuela was the only country with which the US had negative net income flow among the 58 countries for which data are available. Overall foreign investment and acquisitions have stalled, and there have been no deals to date this year. Venezuela’s oil exports — which account for about 90% of its total exports in value terms — have collapsed, not just because of the drop in prices but also in volume terms as production has folded. The country is running out of cash to fund bond repayments Venezuela has been raiding its foreign reserves, which have dropped to about US$ 10billion, from US$ 30 billion before Maduro was elected in 2013. Economic contraction is coupled with hyperinflation. Venezuelans are seeing the value of their money shrink at the fastest pace in the world. The IMF estimates an inflation rate of 720% for this year, skyrocketing even further in the coming years. “Price controls, limitations on access to foreign currency and the collapse of the private sector in the provision of basic goods, have cumulatively led to one of the world’s highest inflation rates,” the World Bank wrote in a recent report. This means that Venezuelans see the value of their money and the ability to buy goods and services massively shrink day by day. According to IMF data, Venezuela’s GDP will contract by 7.4% in 2017, meaning the economy will have shrunk about 30% since 2013 — one of the largest peacetime economic contractions since the second world war. (Financial Times: https://www.ft.com/content/a6f7bdae-2f46-11e7-9555-23ef563ecf9a)

 

Politics and International Affairs

Venezuela opposition boycotts meeting on Maduro assembly, as civilians subjected to military courts

Venezuela's opposition boycotted a meeting on Monday to discuss President Nicolas Maduro's plan for a new popular assembly, preferring to protest in the streets where they were again blocked by security forces firing tear gas. Opposition Governor Henrique Capriles said that Maduro’s constitutional assembly goes against the Venezuela’s charter, which requires approval of the nation’s voters to alter the constitution. Capriles said that if the government “continues with this madness,” Venezuela will be ungovernable, he said. In familiar scenes from five weeks of unrest, youths with gas masks and makeshift shields faced off with police and National Guard troops in Caracas, after hundreds of demonstrators were stopped from reaching government offices. Venezuela's opposition is demanding elections to resolve the country's grave political crisis. The 54-year-old successor to Hugo Chavez is setting up a "constituent assembly" super body with power to rewrite the constitution and shake up public powers. But no representatives of the opposition Democratic Unity coalition went to the Miraflores presidential palace on Monday despite an invitation from Education Minister Elias Jaua who is leading the constituent assembly process.  "It's a trick to keep themselves in power," said Julio Borges, leader of the National Assembly legislature where the opposition won a majority in 2015. "The only way to resolve this crisis is with a free vote." The unrest has killed at least 37 people since early April, including protesters, government sympathizers, bystanders, and security forces. Hundreds have also been hurt and arrested.  Local rights group Penal Forum said 1,845 people had been detained since April 1 over the protests, with 591 still behind bars. Opposition leaders said 200 of those were being processed by military tribunals in Carabobo state. Perhaps to justify the use of those military tribunals, officials say they are now facing an "armed insurrection". Red-shirted Maduro supporters also rallied in Caracas on Monday. (Reuters: http://www.reuters.com/article/us-venezuela-politics-idUSKBN18424I; Bloomberg, https://www.bloomberg.com/politics/articles/2017-05-07/venezuela-opposition-boycotts-maduro-s-constitution-rewrite; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2435923&CategoryId=10717; (NBC News: http://www.nbcnews.com/slideshow/venezuela-upheaval-shows-no-signs-slowing-down-n755606

 

Hundreds evacuated in Maracaibo as tear gas seeps into homes

Hundreds of people were evacuated from buildings in Maracaibo, the nation’s second largest city, after security forces fired tear gas during a clash with protesters and the gas spilled into homes, schools and a hospital. The protest turned violent when demonstrators were blocked by national guardsmen while trying to deliver a letter expressing their disdain for socialist President Nicolas Maduro's push to rewrite the nation's constitution. Protesters tried to get around the officers by finding another route but were pushed back by heavy clouds of tear gas in a raucous exchange that continued for more than an hour, witnesses said. Juan Diego Amado, an anti-government activist, said he entered one building housing a foundation housing about 300 children and elderly residents and found many coughing and in tears after inhaling the fumes. Volunteers rushed children still in diapers, others in strollers and the elderly in wheelchairs out of the building to hospitals for treatment. Continued protests in Venezuela's capital Monday resulted in 60 people being injured, said Ramon Muchacho, a Caracas-area mayor. (ABC News: http://abcnews.go.com/International/wireStory/hundreds-evacuated-venezuela-tear-gas-seeps-homes-47286900)

 

Hugo Chávez statue torn down as death toll rises in Venezuela protests

The demonstration began with a group of schoolboys, who gathered – still dressed in their school uniforms – in the palm-lined square outside the town hall of the prairie town of Villa del Rosario in western Venezuela. Before long, some kind of flammable liquid was thrown at a life-sized statue of the late president Hugo Chávez and set alight. And then, to cheers from onlookers, the figurine itself – which appeared to be made of fiberglass or plastic – was pulled down and dragged into the street. In terms of historical significance, the incident is unlikely to rank alongside the toppling of Saddam Hussein’s 12-meter statue in Baghdad, shortly after the 2003 invasion of Iraq. But the destruction of the statue last Friday did not go unnoticed in a country where many public buildings are still adorned with images of Chávez, four years after his death. Over the weekend, cellphone pictures and footage of the incident went viral in Venezuela, where amid widespread discontent with president Nicolás Maduro, Chávez’s handpicked successor, has erupted into near-daily protests. Since then, the gesture has been repeated elsewhere: in Ureña, a town in western Venezuela, a bust of Chávez disappeared from a public square, and in the late leader’s home state of Barinas, a mural with the leader’s face reproduced in the style of Warhol was defaced. Some argue that such incidents demonstrate that after years of economic chaos, food shortages and government repression, Venezuelans have finally reached the breaking point.  But others warn that, as Maduro moves forward with plans to rewrite the country’s constitution despite six weeks of anti-government protests – talk of a tipping point still seems premature. According to Luís Vicente Leon, a leading pollster, the collapse of authoritarian regimes is more often caused by internal splits than outside pressure.  Although pressure on Maduro may be mounting, it is still not coming from two key areas, Leon said. “The electoral authorities validated the constituent assembly, and perhaps most important, we haven’t seen the military express dissent,” he said. For now, the war of attrition between government and opposition looks set to continue, and the death toll seems certain to rise. Monica Pérez, who lives close to the square where the Chávez monument once stood said that the toppling of the statue had galvanized the opposition in the town. “It was the first time I saw this happen here,” she said. “We all feel the moment is now, and we must continue in the streets until the end”. (The Guardian: https://www.theguardian.com/world/2017/may/09/hugo-chavez-statue-toppled-venezuela-breaking-point)

 

Roses in hand, Venezuelan women protesters face security forces

Dressed in white and chanting "Liberty!", tens of thousands of women opposed to Venezuela's socialist President Nicolas Maduro marched on Saturday, proffering roses to security forces who blocked their way. The women's marches took place in most major cities around the nation. In Caracas, marchers sang the national anthem and shouted: "We want elections!" They were halted at various points by lines of policewomen and National Guard troops with armored cars. (Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKBN1820NM; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2435899&CategoryId=10718)

 

Press union reports over 200 acts of aggression against journalists

Marco Ruiz, Secretary General of the National Press Workers Union, has asked the Attorney General’s office to investigate over 200 acts of aggression against journalists and media workers to date this year. He reports “most” of the attacks were by government security forces, and victims say their equipment was either stolen or destroyed. He said there are 18 arrests registered. More in Spanish: (Notiminuto: http://www.notiminuto.com/noticia/sindicato-de-la-prensa-denuncia-200-agresiones-a-trabajadores/)

 

Venezuela crisis: What is behind the turmoil?

Venezuela is split into Chavistas, the name given to the followers of the socialist policies of the late President Hugo Chavez, and those who cannot wait to see an end to the 18 years in power of his United Socialist Party (PSUV). After the socialist leader died in 2013, Maduro has not been able to inspire Chavistas in the same way his predecessor did. His government has furthermore been hampered by falling oil prices. The lack of oil revenue has forced the government to curtail its social programs, leading to an erosion of support among its core backers. A series of events has further heightened tensions between the government and the opposition and led to renewed street protests. Key was the surprise announcement by the Supreme Court on 29 March that it was taking over the powers of the opposition-controlled National Assembly. The opposition said that the ruling undermined the country's separation of powers and took Venezuela a step closer to one-man rule under Nicolas Maduro. The court argued that the National Assembly had disregarded previous Supreme Court rulings and was therefore in contempt. While the Supreme Court reversed its ruling just three days later, distrust of the court did not subside. Anti-government protesters have been calling for fresh general elections. They have four key demands: Removal from office of the Supreme Court justices who issued the 29 March ruling; general elections in 2017; creation of a "humanitarian channel" to allow medication to be imported to counter the severe shortages in Venezuela; release of all the "political prisoners". Faced with almost daily protests, Maduro probably felt he needed to make a move. Not willing to give in to the opposition's demand for early presidential elections, he chose to announce the creation of a constituent assembly. Opposition leaders have denounced the move as an attempt by President Maduro to maximize his power and cling on to it for longer. They argue that the process of setting up a constituent assembly and drawing up a new constitution would almost certainly mean that regional elections due to be held this year and presidential polls scheduled for December 2018 would be delayed. (BBC News: http://www.bbc.com/news/world-latin-america-36319877)

 

In Venezuela’s chaos, elites play a high-stakes game for survival

Even as Venezuela sinks into chaos, with clashes between protesters and the police escalating, why have its powerful political and military elites stuck by President Nicolás Maduro? The country would seem to be a prime candidate for something scholars call an “elite fracture,” in which enough powerful officials break away to force a change in leadership. Still, splits are beginning to emerge, as a few figures in major institutions signal opposition to Maduro, hinting at growing dissatisfaction and the government’s inability to silence it. Recent actions by both elites and the government suggest they take the possibility of fracture seriously — maneuvering in a high-stakes contest that is potentially decisive but whose outcome remains uncertain. Elite fracture operates as a kind of game in which each player tries to figure out what the others are about to do. Stay loyal to a failing government too long and you risk going down with it. But if you break with the government and others don’t, you’ll pay a high price for disloyalty. Members of the elite, in this game, try to test one another over where they stand, as well as the government’s strength, to decide whether to remain loyal. If enough believe they have achieved critical mass to force a leadership change, they will all push at once. Luisa Ortega, the attorney general, conducted such a test, whether she intended to or not, in late March. When the pro-Maduro Supreme Court moved to seize many of the legislature’s powers, Ortega condemned the ruling as a “rupture of the constitutional order.” The government faced a dilemma. Tolerating Ortega’s dissent would signal that elites could more freely break with Maduro, making action against him easier. But punishing her would risk backlash from any elites who shared her view. Ortega went unpunished, and the ruling was reversed. Rapid policy changes can open such fissures by forcing elites to decide whether to go along. This is why periods of crisis can heighten risks of elite fracture, as governments make rapid changes to keep up. The deciding vote in these situations is often cast by the military, which has the power to break a deadlock among elites and, often, the popular legitimacy to lead a transition. In Venezuela, some are already calling on the military to step in. By conferring pre-emptive legitimacy, they signal to potential coup leaders that they would enjoy at least some elite support. Even a loyal military, when forced to resolve a political crisis, might decide against the leader who called it in. The impossibility of fully predicting how the military might decide in another crisis, along with growing unrest that could again test it, has left the government nervous. Loyalty was once purchased with oil revenue, but as the economy worsens, elites compete over a smaller pie. Venezuela is also growing internationally isolated, forcing elites to fear they could face foreign sanctions or even criminal charges if they remain loyal and the government falls. This is part of what makes the lack of widespread defection, amid Venezuela’s economic collapse, so unusual. Chavez’s hyper-charged populism succeeded in so dividing society that crossing over remains, for many, unthinkable. And so ideological dedication remains widespread, including among elites. That same fervor could create an opportunity for dissidents, however. Venezuela’s few defecting elites have tended to portray themselves as the true guardians of Chávez’s cause and Maduro as the traitor. And younger, second-tier Chávistas may worry about Maduro’s damage to the cause and its longevity. This is why coups are often led by colonels or civilians of equivalent rank, who also enjoy fewer fruits of patronage and so face less downside in defecting. But movement can come only when elites, junior or senior, are sure they have the numbers to win. And any contest over ideological loyalty will tilt toward the status quo. The rules of the game still favor Maduro, even if the state of play does not. (The New York Times: https://www.nytimes.com/2017/05/06/world/americas/venezuela-unrest-protests.html?smprod=nytcore-iphone&smid=nytcore-iphone-share)

 

Venezuela's ex-spy chief promotes possible presidential bid

Nationwide protests are spreading beyond President Nicolás Maduro’s control and risk morphing into civil war, said the retired Venezuelan general in charge of suppressing the last wave of unrest three years ago. “We’re seeing much larger masses protesting across all major cities, including the working-class neighborhoods” once firmly supporting the government, said Major Gen. (Ret.) Miguel Rodríguez Torres, who adds that the government is losing control amid growing protests nationwide and should move now to call elections. A former spy chief under the late Hugo Chavez, Rodríguez Torres is emerging as a political player in turbulent Venezuela, mistrusted by the opposition and despised by the government as he travels the country in a possible bid for the presidency. He is a longshot who hopes to offer a third way for Venezuelans weary of the country's violence and economic woes. Reviled among President Nicolas Maduro's opponents for leading a crackdown on anti-government protesters in 2014, Rodriguez Torres has also alienated government loyalists with his sharp criticism of the socialist administration. But he nevertheless is finding an audience among Venezuelans who have abandoned support for a government that has failed to resolve the economic crisis but still distrust the opposition. In a recent interview, the 53-year-old Rodriguez Torres blamed Maduro for destroying Venezuela's oil-rich economy, failing to rein in violence from pro-government militias and silencing critics. He said he is wary of the street protests launched by the president's foes and instead preaches a message of reconciliation grounded in his evangelical Christian faith. Pollsters haven't included Rodriguez Torres in their surveys yet, but his criticism of Maduro hasn't gone unnoticed. High-ranking officials in recent weeks have accused him of treason or playing into the opposition's hands. His aides say Venezuelan media are under pressure not to interview him and social media is filled with speculation he could be jailed for speaking out like other once loyal military bigwigs. Others trying to occupy Venezuela's almost invisible middle ground include another Chavez army acolyte, Lara state Gov. Henri Falcon, and chief prosecutor Luisa Ortega, who shocked the nation by saying constitutional order had been violated when the Supreme Court briefly gutted the opposition-controlled congress of its powers a few weeks ago. Rodriguez Torres' close ties to Chavismo's military wing are what distinguish him from a growing cadre of administration critics on the left. While outwardly loyal to Maduro, many in the armed forces are believed to be unhappy with the government but fearful that if the opposition takes power they'll lose privileges and influence accumulated during 17 years of socialist rule. Rodriguez Torres' proposals seem taken straight from the opposition's playbook. He sees Venezuela's economic problems rooted in decade-old foreign currency controls and says he would go to the International Monetary Fund, which Chavez railed against, for help it if put food on Venezuelans' table. He said he'd also like to patch up relations with Chavez's old nemesis, the United States. (The Times Colonist: http://www.timescolonist.com/venezuela-s-ex-spy-chief-promotes-possible-presidential-bid-1.18890700#sthash.IWk3L2IB.dpuf; The Wall Street Journal: https://www.wsj.com/articles/former-minister-warns-of-civil-war-in-venezuela-1494263279)

 

Defense Minister says no armed groups outside the military are acceptable

Defense Minister General Vladimir Padrino López has said the term “colectivos” (pro government paramilitary) has been misused. “Any armed group, that are not the Armed Forces, police organizations, security organizations, that are operating out there, whatever they call themselves, are outside the law and must be treated as such. We accept no armed group outside the Armed Forces, the only armed institution here are the Armed Forces”. He added: “The Venezuelan people are being told that we are training civilians, that we support ‘colectivos’, and there is something we reject whatever name they take: guerrilla, paramilitary, criminal bands, whatever they call themselves, outside the law, they will receive a Constitutional response”. He denied there were any military officers under detention for “discontent” – a charge made by opposition leader Henrique Capriles; but added that 3 officers that deserted and sought asylum in Colombia are under investigation. In another statement the following day, Padrino said that out of 37 dead in demonstrations, 22 were murdered with firearms, which he says that current protests “are in line with subversion and armed insurrection”. He defended actions by the Bolivarian National Guard (GNB) during the demonstrations, and claimed they have “contained” violence, adding that this new wave of protests is “far more violent” than those held 3 years ago, and blamed opposition leaders based on what he called “very serious” investigations. Padrino concluded by saying the Armed Forces unconditionally support a Constitutional assembly process through “universal, direct, secret and free” voting; and added that it is “premature” to talk of the way representatives would be selected. Padrino called the recent Supreme Tribunal ruling against the Legislature an “excess” that “cannot be termed a coup d’etat”. He says the Armed Forces will conduct “a great internal debate, at all levels”, to determine the military institution they envision for the next years. He referred to the so-called Bolivarian Militia, which became the center of attention after Maduro increased their number 50 500,000 and allocated resources to provide them with rifles. He said the militia is currently around 400,000 and should not be viewed simply as armed civilians because “they are trained in all senses, not just combat”. He added that although there are weapons available for all, all weapons are controlled by the Armed Forces and are only given to them when the task assigned requires. More in Spanish: (Notiminuto: http://www.notiminuto.com/noticia/padrino-lopez-no-admitimos-ningun-grupo-armado-distinto-a-la-fanb/; http://www.notiminuto.com/noticia/vladimir-padrino-asumo-la-responsabilidad-del-bienestar-de-lopez/)

 

Maduro to convene a military constitutional assembly

President Nicolas Maduro now says he will call for a military constitutional assembly to strengthen all branches of Venezuela’s armed forces. He also called on the business community to select representatives. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/politica/presidente-maduro-activara-una-constituyente-militar)

 

Jaua says no vote can be called to call for a Constitutional Assembly

Educations Minister Elías Jaua, who heads the Constitutional Presidential Committee, has told opposition leaders within the Democratic Unity coalition that there is no part of the Constitution that requires a vote to call for a Constitutional Assembly. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/politica/jaua-asegura-que-no-se-puede-realizar-un-referendo-consultivo-para-convocar-la-constituyente; El Universal, http://www.eluniversal.com/noticias/politica/carta-mud-jaua-constituyente-ilegitima-inconstitucional_651719)

 

Wife says Venezuela's jailed Lopez is well, urges more protests

Jailed opposition Venezuelan politician Leopoldo Lopez is well and is urging street demonstrators to keep up massive anti-government protests, his wife said on Sunday after her first visit with the former presidential hopeful in over a month, putting to rest rumors of his ill health. With tension already high after over a month of street action, many Venezuelans were shocked on Wednesday when a journalist tweeted that Lopez had been taken to hospital without vital signs. The government accused the Lopez clan of whipping up a media frenzy to gain attention. Lopez is indeed alive and well, Tintori told reporters after a visit at the Ramo Verde military prison with Lopez's mother and two children. (Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKBN184009; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2435937&CategoryId=10717)

 

Almagro says Venezuela needs a new leader, blasts use of military courts for civilians

OAS Secretary General Luis Almagro says Venezuelan President Nicolas Maduro has gone too far to bring the country back from the brink, and that the crisis-ridden nation needs elections and a peaceful transition of power -- not the new constitution that Maduro has promised. “Venezuela is drowning in an economic, financial, social and humanitarian crisis of gigantic proportions,” he said, adding that: “There is a dictatorship in Venezuela, and Venezuela needs elections. The only institutional exit for the country is a general election.” (Bloomberg, https://www.bloomberg.com/news/articles/2017-05-08/venezuela-needs-a-new-leader-not-new-constitution-almagro-says)

 

Pope urges Venezuelans to "build bridges"

The Venezuelan Bishops’ Conference (CEV) has released a letter to them from Pope Francis, expressing “awareness of the challenges you face” and thanking bishops for their “continued appeal to prevent any form of violence, observe citizens’ rights and foster human dignity and fundamental rights and liberties”. Pope Francis encouraged Venezuelan bishops to work on the building of bridges between the government and the opposition to resolve the domestic predicament. He said he was following “with concern the situation of the Venezuelan people in view of the serious problems they suffer,” and expressed “deep sorrow for clashes and violence these days,” in the middle of a wave of protests resulting so far in at least 37 killings and over 700 injured people. (El Universal, http://www.eluniversal.com/noticias/daily-news/pope-emboldens-venezuelans-build-bridges_651650)

 

U.S. National Security head McMaster meets with Venezuela opposition leader Borges

National Security Advisor McMaster met with Venezuela's National Assembly President Julio Borges at the White House. They discussed the ongoing crisis in Venezuela and the need for the government to adhere to the Venezuelan Constitution, release political prisoners, respect the National Assembly, and hold free and democratic elections.  They agreed that there is a strong need to bring the crisis to a quick and peaceful conclusion. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2435935&CategoryId=10717)

 

…and Borges met with OAS Secretary General Almagro, who condemns use of military tribunals against civilians.

Borges also met with OAS Secretary General Luis Almagro and consigned with him a letter to the organization’s Permanent Council designed to halt Venezuela’s withdrawal from the OAS, which requires legislative approval. He also sent a video deploring actions by military prosecutors against civilians. He compared the Maduro regime to past Latin American military dictatorships. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/politica/julio-borges-entrego-documento-a-la-oea-para-frenar-salida-de-venezuela; El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/julio-borges-entrego-documento-a-la-oea-para-evita.aspx; (El Universal, http://www.eluniversal.com/noticias/politica/almagro-condena-que-civiles-venezolanos-sean-condenados-tribunal-militar_651759)

 

US Congressmen ask Trump to take Venezuela’s case to the UN

A group of 15 US Congressmen have asked President Trump to take the case of Venezuela to the UN Security Council, seeking support in providing humanitarian aid to Venezuela. They also asked the President to sanction Venezuelan officials and paramilitary that are responsible for violating human rights during ongoing protests. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/congresistas-eeuu-piden-trump-llevar-crisis-venezuela-ante-onu_651226)

8 nations deplore “worsened” violence here.

Eight Latin American nations have issued a statement deploring “worsening violence” in Venezuela. Argentina, Brazil, Colombia, Costa Rica, Guatemala, Honduras, Mexico and Paraguay signed the declaration saying: “We condemn the excessive use of force by Venezuelan authorities against civilians marching to protest government actions that hurt democratic stability, polarize Venezuelan society even further, and lead to the loss of lives, most of them young”. (El Universal, http://www.eluniversal.com/noticias/politica/ocho-paises-deploran-recrudecimiento-violencia-pais_651227)

 

Colombia’s Santos calls for release of political prisoners, slams Constitutional Assembly

Colombian President Juan Manuel Santos says a Constitutional Assembly is not an “adequate way out” for Venezuela. He says: “what is necessary first is an elections timetable, respect for the National Assembly, return its power to it, comply with the Constitution, and within that spirit to start releasing political prisoners”.  More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/internacional/santos-afirma-que-una-constituyente-no-es-la-salida-adecuada-para-venezuela)

 

Samper: Casualties are all Venezuelans

Ernesto Samper, former Secretary General of the Union of South American Nations (UNASUR) Ernesto Samper has advised the political shareholders in Venezuela to resume talks. In his opinion, it is the only way to solve the current state of affairs in Venezuela. “Violence leads nowhere,” he warned.  “Dead people are neither from the opposition nor from the government, they are simply Venezuelans, victims of violence; it is time to stop,” added the mediator in the government-opposition talks commenced last year in an effort to settle the standoff in Venezuela. (El Universal, http://www.eluniversal.com/noticias/daily-news/samper-casualties-are-just-venezuelans_651654)

 

Costa Rica seeks political dialogue and democratic solution to Venezuelan crisis

Costa Rica’s President Luis Guillermo Solís says “the only way out that one should expect is political”, and a “self-coup would be a tragedy” and could be the “prelude to a civil war”. Costa Rica recently called back its Ambassador to Venezuela for consultations. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/internacional/costa-rica-pide-un-dialogo-politico-y-una-salida-democratica-ante-la-crisis-de-venezuela; El Universal, http://www.eluniversal.com/noticias/politica/costa-rica-pide-dialogo-venezuela-salida-democratica-crisis_651656; http://www.eluniversal.com/noticias/politica/costa-rica-llama-consultas-representante-diplomatica-venezuela_651228)

 

CARICOM urged to send fact finding mission to Venezuela

Caribbean Community (CARICOM) leaders have been urged to send a fact-finding mission to Venezuela to make an informed analysis of the situation in that country. Saint Lucia’s External Affairs Minister, Sarah Flood-Beaubrun, said last month that there is legitimate concern about the situation in Venezuela both in terms of loss of life, human rights and the hardships that the people there endure. (Saint Lucia Times: https://stluciatimes.com/2017/05/08/caricom-urged-send-fact-finding-mission-venezuela)

 

Uruguayan legislators seek investigation of Mujica era deals with Venezuela

Two legislators from Uruguay’s National Party and an independent member of the nation’s congress, have brought criminal charges over irregular business transactions between Uruguay and Venezuela during the government of President Jose Mujica (2010-2015). They charge the use of private middlemen that were arbitrarily appointed to carry out business in several fields, through the National Development Fund. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/internacional/diputados-presentan-denuncia-penal-por-negocios-entre-uruguay-y-venezuela; El Universal, http://www.eluniversal.com/noticias/venezuela/denuncian-gobierno-jose-mujica-por-negocios-con-venezuela_651224)

 

Dudamel dedicates concert to a slain student in Venezuela

Gustavo Dudamel, the Venezuelan music director of the Los Angeles Philharmonic, walked on stage, looked at the orchestra for a moment and then turned to the audience. He mentioned the killing, two days earlier in an antigovernment protest, of a 17-year-old violist in Venezuela’s El Sistema music education program. Dudamel said the violence in Venezuela is unacceptable, and he dedicated the concert to the slain student and to all the victims of violence. “We play for all our children,” he concluded, “to build a better future for them with peace and love.” The audience rose to give him a standing ovation. A group in the orchestra benches behind the stage unfurled a large Venezuelan flag, and shouts of “viva Venezuela” came from the balcony. Dudamel then proceeded to conduct Schubert’s inconsequential first symphony — written when the composer was a 16-year-old student taking his cues (and stealing themes) from Beethoven — as though every measure mattered momentously. With ferocious attention to detail, and with plain ferocity, he revealed a teen’s potential for greatness. Dudamel’s rise to this occasion, at a time when he is being involuntarily drawn into Venezuela’s current turmoil, is a startling new chapter. After long being constrained by the Venezuelan government’s control of El Sistema, Dudamel has begun to speak out. Much of the violence he condemns is being perpetrated by pro-government forces. But many in Venezuela are not placated, calling Dudamel’s actions too little, too late. Some have gone so far as to accuse the conductor of being complicit in the violence, for not biting the autocratic hand that feeds the hundreds of thousands of El Sistema students for whom Dudamel feels responsibility. (The Los Angeles Times: http://www.latimes.com/entertainment/arts/la-et-cm-gustavo-dudamel-venezuela-schubert-20170507-story.html)

 

Maduro talks to cows during official ceremony

An official act meant to show how Venezuela is working to put an end to the severe food crisis in the country showed instead a side of President Nicolas Maduro that, while not new, doesn’t cease to amaze. In a video shot last week during a visit to an agricultural fair in Caracas, the 54-year-old former bus driver is seen talking to a group of cows … about politics. "I want representatives, leaders and producers of the farming sector to be members of the Constituent Assembly. Are you going to accompany me?" he asks, speaking directly to the animals. "Are you going to support me in the Constituent Assembly or do you want guarimba [a term used by the government to define opposition protests]?” "Do you want violence? Do you want death? Those of us who want peace and life go to the Constituent Assembly," he then says. The video has caused quite a stir in social media, where Maduro has been accused of not being right in the head. But Maduro's main aim may be to get people talking about something besides the five weeks of anti-government protests that have left 38 people dead, including protesters, government sympathizers, bystanders, and security forces. (Fox News: http://www.foxnews.com/world/2017/05/08/venezuelas-maduro-talks-to-cows-during-official-act-will-support-me.html)

 

Venezuela indigenous group flees crisis for Brazil

Around 400 indigenous Warao people from the Orinoco Delta in Venezuela have arrived in the Brazilian city of Manaus in the Amazon. The authorities have declared a social emergency to seek government funds to help with the influx. The Warao say they travelled around 2,000 km (1,250 miles) and are fleeing hunger and Venezuela's worsening economic and political crisis. (BBC News: http://www.bbc.com/news/world-latin-america-39852877)

 

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

August 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 23^rd; 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:

http://sumarium.com/oposicion-fijara-posicion-tras-el-pronunciamiento-del-cne/)

 

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.