July 09, 2019

Oil & Energy

Squeezed by sanctions, Venezuela sells oil to tiny Turkish firm

With U.S. sanctions blocking Venezuela from selling oil to the United States, state-owned energy firm PDVSA has turned to several little-known buyers that include a tiny Turkish company with no refineries but ties to Nicolas Maduro’s regime. U.S. sanctions have driven away many customers. PDVSA’s exports have slumped by more than a fifth since sanctions were imposed. Its biggest buyers today are Chinese and Indian companies. Directors at a March 14 meeting of Maduro’s PDVSA board temporarily waived some requirements for new customers or suppliers, including that of having at least two years’ experience in the oil industry. In the wake of the changes, a Turkish company called Grupo IVEEX INSAAT started buying Venezuelan oil in April. Istanbul Chamber of Commerce records show that IVEEX INSAAT was formed less than a year ago with capital of just US$ 1,775 and listed “residential construction” as its main activity. It was one of only five firms that loaded tankers to take Venezuela’s upgraded crude - among its most valuable oil - from April through June, the documents showed. IVEEX loaded four cargoes of Venezuelan crude and products in April - equivalent to just under 8% of Venezuela’s oil exports - and nothing in May or June, according to PDVSA documents. Turkish corporate records show IVEEX INSAAT is owned by Miguel Silva, a Venezuelan businessman who heads the Caracas-based Venezuelan Exporters’ Chamber and served as a housing ministry commissioner in Maduro’s administration. Silva registered IVEEX INSAAT with a Turkish partner named Erhan Kap, an Istanbul tour guide, on Sept. 27, 2018, just a week after Maduro visited Istanbul. IVEEX reportedly has agreed to deliver refined products to Venezuela in exchange for receiving crude. With its refinery network crippled by maintenance issues, the OPEC nation has struggled with severe fuel shortages in recent months. The two other companies that only began chartering tankers to take PDVSA’s oil after sanctions hit are Panama-registered MELAJ Offshore Corp and Sahara Energy, a unit of Nigeria-based Sahara Group. The two loaded PDVSA oil cargoes shortly after the sanctions were announced. (REUTERS: https://www.reuters.com/article/us-venezuela-oil-turkey/squeezed-by-sanctions-venezuela-sells-oil-to-tiny-turkish-firm-idUSKCN1U324M)

 

OPEC wants quick resolution to tensions between US and Iran, Venezuela

OPEC has asked on Monday for a timely settlement to the tensions that have flared up between the United States and Iran and Venezuela. Iran and Venezuela, both founding members of OPEC, are both exempt once again from the production cut extensions that the cartel announced last week and will remain exempt for as long as they remain under sanction. Both Iran’s and Venezuela’s production woes have contributed significantly to the cartel’s over compliance to the group’s production cut quota, with Iran’s crude production falling from an average of 3.813 million barrels per day in 2017 to 2.370 million barrels per day in May 2019, and Venezuela’s crude production falling from 1.911 million bpd on average in 2017, to an abysmal 741,000 bpd in May 2019. But while the two countries combined seemingly did OPEC a favor by taking more than 2.6 million barrels of crude oil per day out of the market within that time frame, the tensions in the Persian Gulf and the dire situation in Venezuela are creating a market that OPEC is finding it difficult to both predict and manage. (Oil Price: https://oilprice.com/Latest-Energy-News/World-News/OPEC-Wants-Quick-Resolution-To-Tensions-Between-US-And-Iran-Venezuela.html)

 

Amuay and Cardon refineries halted by blackout

Venezuela’s Amuay and Cardon refineries are halted following a blackout in the early morning hours, two oil industry sources with knowledge of the issue said on Sunday. The twin refineries together form the 955,000 barrel-per-day (bpd) Paraguana Refining Center, which has been operating well below capacity for years because of chronic operational problems that have been aggravated by Venezuela’s economic crisis. “Blackout in both refineries,” one employee who works in the complex wrote in a text message. “It’s going to be difficult to get the system back up.” (Reuters, https://www.reuters.com/article/refinery-operations-pdvsa-amuay/update-1-venezuelas-amuay-and-cardon-refineries-halted-by-blackout-sources-idUSL2N24802S)

 

CHEVRON is playing a long game in Venezuela’s oil fields

Donald Trump may have slammed Venezuela with sanctions in an effort to change the regime of President Nicolás Maduro, but the country’s energy industry has an unlikely ally: CHEVRON Corp. Despite the U.S. administration’s push to disrupt the financial resources available to Venezuela’s leadership, the second-biggest U.S. oil company is working to bolster one of the Maduro government’s chief economic pillars—its ability to produce crude oil. CHEVRON is helping tap four fields in the country while testing new injection technologies to maximize production in one. CHEVRON is also helping pay for supplies, expenses, and even health care for workers at state-owned oil producer PDVSA to keep the crude flowing. CHEVRON’s actions are an attempt to play the long game in economically ravaged Venezuela. If Maduro retains power, CHEVRON will keep its tenuous—but still profitable—foothold in Venezuela. If he’s forced out and U.S. sanctions end, the company could be first in line to gain from the country’s vast geologic riches. The gamble puts CHEVRON in the same group as state-controlled producers from Russia and China that have been supportive of the Maduro regime—and potentially at odds with its home country. The company is working under a Department of the Treasury waiver of U.S. sanctions against Venezuela that expires on July 27. A decision by the U.S. government not to renew the waiver could cripple the production of more than 200,000 barrels a day at the four projects Chevron is keeping afloat, even though most of that production goes to PDVSA. And it could lead Maduro to hand CHEVRON’s stakes in these fields to other explorers.  Positioning itself to outlast Maduro won’t be easy. Last year two Chevron employees were arrested and held for seven weeks for reasons neither the government nor the company disclosed. Still, the oil producer continues to work with the government to keep its operation intact. That could mean braving Trump administration pressure and weathering the worsening humanitarian crisis, but the payoff might be worth the risks. “Whatever government that is coming in will be dealing with very diverse issues and doing it with very little cash in the bank, and that presents a unique opportunity,” says Schreiner Parker, vice president for Latin America at consulting firm RYSTAD Energy. “In the medium to long term with regime change, we believe Venezuela will become very investor-friendly, out of necessity more than anything.” (Bloomberg: https://www.bloomberg.com/news/articles/2019-07-09/chevron-is-playing-a-long-game-in-venezuela-s-oil-fields)

 

Economy & Finance

JP Morgan to cut Venezuela weight to zero in key indexes over five months

JP Morgan will reduce the weight of Venezuela's sovereign and PDVSA bonds to zero in its widely tracked indexes, the bank said on Tuesday, phasing them out over five months starting on July 31. Venezuela's weight was 0.5%, 0.9% and 1.2% in the EMBI Global Diversified, EMBI Global and EMBI+ indices, respectively, it added. As a result of dialing down the weighting, JP Morgan said the headline EMBIGD yield and spread were estimated to compress by about 45 basis points. JP Morgan said it could open another index watch process in "the event of any favorable official guidance around easing of trading restrictions or consistent, observable improvements in liquidity and replicability of Venezuela bonds." (NASDAQ: https://www.nasdaq.com/article/jp-morgan-to-cut-venezuela-weight-to-zero-in-key-indexes-over-five-months-20190709-00584)

 

Maduro regime says U.S. sanctions hit debt refinancing, oil sales

Nicolas Maduro’s Vice foreign minister William Castillo also Venezuela charged on Friday that U.S.-led sanctions had stopped foreign debt refinancing, blocked vital food and medicine imports, and cost billions of dollars in lost oil assets. Maduro’s government says Venezuela is the victim of a U.S. plot to topple him, eradicate socialism and hand the world’s largest oil reserves to multinationals. (Reuters, https://www.reuters.com/article/us-venezuela-un/venezuela-says-u-s-sanctions-hit-debt-refinancing-oil-sales-idUSKCN1U014B)

 

Bitcoin trading activity goes ballistic in Venezuela as rule of law erodes

The worse the political, social, and economic conditions in Venezuela get, the more that residents suffering under the Maduro regime pile into Bitcoin. According to Coin Dance, more than 47 billion Venezuela bolivars were traded against Bitcoin in the first week of July. This broke a previous record that had been set in mid-June. While the rising amounts of bolivars being spent on buying Bitcoin could be attributed to the fact that the Venezuelan currency is perpetually weakening, it also coincides with the price of the flagship cryptocurrency appreciating considerably in the last couple of weeks. As of April, the inflation rate in Venezuela was estimated to have hit 1,300,000%. Mid last month, the country announced a 50,000-bolivar bill designed to ease business transactions. Maduro will have released new banknotes for the second time in less than a year. Still, Venezuela ranks among the top 30 countries whose national currencies are the most traded for Bitcoin, according to Coinhills. While BTC/VES volumes have been on a steady increase since the beginning of 2018, Venezuela now has a national cryptocurrency, the Petro, which is competing for attention with Bitcoin. With Venezuelans already witnesses to how government-issued money can quickly lose its purchasing power in the face of hyperinflation, this move will only be beneficial to Bitcoin: The Maduro regime may be force-feeding the Petro on the people, but that will likely just serve as a gateway drug to Bitcoin. (CCN: https://www.ccn.com/crypto/bitcoin-trading-volume-venezuela/2019/07/08/)

 

Politics and International Affairs

Guaido announces fresh talks with Maduro regime

Venezuelan opposition leader Juan Guaido on Sunday announced fresh talks with the government of President Nicolas Maduro. Guaido, who became acting president earlier this year, said the Norway-brokered talks aim "to establish a negotiation on the end of the dictatorship," referring to Maduro's regime. "The Venezuelan people, our allies and the world's democracies recognize the need for a truly free and transparent electoral process that will allow us to surpass the crisis and build a productive future," he said. Guaido is hoping the negotiations eventually lead to Maduro stepping down and "free elections with international observers." In May, delegations representing both parties met in Oslo under Norwegian mediation. However, the talks have yet to provide a path forward for the political impasse here. But Venezuela's opposition is wary of talks with Maduro's regime. Previous attempts to end the country's political crisis have failed, with critics saying they have only served to further solidify his rule. Norway which hosted the preliminary talks and is mediating the protracted process says the aim of the upcoming round of discussions in Barbados, is to move further forward towards a constitutional settlement. The opposition led by Juan Guaido wants a transitional government to replace the regime of Nicolas Maduro, and then free elections monitored by international observers. Guaido insists he`s the legitimate Interim President, recognized by more than fifty nations all around the world.  While Maduro states he`s the democratically elected President. (DW: https://www.dw.com/en/venezuelas-guaido-announces-fresh-talks-with-maduro-regime/a-49507748; Vatican News: https://www.vaticannews.va/en/world/news/2019-07/venezuela-cardinal-government-opposition-dialogue.html; Reuters, https://www.reuters.com/article/us-venezuela-politics/venezuela-opposition-says-it-will-meet-maduro-envoys-in-norway-mediated-talks-idUSKCN1U20TF; https://www.reuters.com/article/us-venezuela-politics-norway/venezuela-talks-to-resume-this-week-norway-idUSKCN1U30GU)

 

Barbados welcomes being the site for talks as CARICOM leverages ties with Caracas

Barbados Prime Minister Mia Amor Mottley Monday welcomed plans by both sides to hold talks in Barbados. “Since January, the government of Barbados along with other CARICOM governments has made it clear that the time for dialogue is never over. As a zone of peace, we will want to see a very peaceful resolution to the problems in Venezuela,” Mottley told reporters. Caribbean Community (CARICOM) leaders who have in the past adopted a position of non-interference and non-intervention in the affairs of this country, last week re-affirmed that position during their annual summit held in St. Lucia. Mottley made it clear that apart from hosting the meeting, Barbados will be playing no major role in the discussions. “This is a matter that requires the utmost patience, so it is not something that you should be asking me or anybody about on a daily basis, let the people talk. When you have deep divisions, it takes time and I have every confidence in the government of Norway being able to do what CARICOM has wanted done since January,” she said. Caribbean nations that used to rely on cheap Venezuelan oil are now hoping to leverage their ties with Caracas to help broker a negotiated settlement to the political crisis there. "This issue is one for the Venezuelans to work out," Trinidad´s prime minister Keith Rowley said. Norway's prime minister Erna Solberg was a guest at the CARICOM summit, and the group is playing the role of an honest broker in the Venezuelan crisis, St. Kitts-Nevis prime minister Timothy Harris said. (Caribbean Broadasting Corporation: http://www.cbc.bb/wordpress/2019/07/09/pm-pleased-with-plans-for-negotiations-to-end-venezuela-crisis/; Argus Media: https://www.argusmedia.com/en/news/1935802-caribbean-sets-stage-for-thorny-venezuela-talks)

 

Maduro 'optimistic' as crisis talks resume

Nicolás Maduro said he was "optimistic" as talks between his regime and the opposition to resolve the country's political crisis resumed on Monday. Preliminary talks held in May in Oslo petered out without an agreement. Maduro said a six-point agenda was being discussed at the meeting which is being hosted by Barbados. He did not give further details. The Norwegian foreign ministry is again acting as a mediator, as it did at the previous meeting in Oslo, but has so far only commented to confirm the meeting was taking place. Maduro revealed that Monday's meeting lasted five hours. He also said he thought "a path to peace" could be found. Just a week ago Guaidó ruled out a return to negotiations, citing as a reason the death in custody of an army captain whose body showed signs of torture. Guaidó has not said why his stance has changed. Some in the opposition say the talks are a ruse by the government to buy itself more time in power. On Friday Maduro said he doesn’t think it necessary to hold presidential elections in the country right now. "What does the people of Venezuela need today? Elections? I don’t think so," he told journalists. "The people of Venezuela needs economic revival, peace and constitutional stability. And it is necessary to reelect the National Assembly for that," he said. "The opposition wants no elections," he said. "If we say elections will be held in 30 days, they will begin inventing reasons to dodge them." (BBC: https://www.bbc.com/news/world-latin-america-48904193; TASS: https://tass.com/world/1043923)

 

Venezuela's rule of law has crumbled under Maduro, international legal group reports

The rule of law has crumbled in Venezuela under the regime of Nicolas Maduro which has usurped the powers of the legislative and judicial branches, an international legal watchdog said on Monday. The International Commission of Jurists (ICJ) called on Venezuelan authorities to reinstate democratic institutions as part of a solution to the political, economic and humanitarian crisis engulfing the OPEC member. The government and a compliant Supreme Court effectively stripped the National Assembly of most powers after the opposition won a majority in 2015 elections. Lawmakers loyal to Maduro generally do not attend the sessions but go to meetings of the Constituent Assembly, a legislative body that meets in the same building. The Constituent Assembly, created in a 2017 election boycotted by the opposition, is controlled by the ruling Socialist Party and its powers supersede the National Assembly. Sam Zarifi, ICJ secretary-general, presented its latest report on Venezuela: “No Room for Debate”. “The focus of this report is on the usurpation of the authority of the legislative by the government in Venezuela. This comes after the judiciary was taken over,” he told a news briefing. The Constituent Assembly was “formed improperly and illegitimately” and has gone far beyond its stated role, Zarifi said, adding: “In fact it seemed to do everything but really discuss a new Constitution”.  “Addressing the problem of the National Constituent Assembly is a crucial step in any political solution to the crisis that has gripped Venezuela,” ICJ’s Zarifi said, urging the government to engage with the opposition-led legislature. (NBC News: https://www.nbcnews.com/storyline/venezuela-crisis/venezuela-s-rule-law-has-crumbled-under-maduro-international-legal-n1027406)

 

Poll shows 64,6% of Venezuelans would vote in any new presidential election

A recent poll by the Catholic University’s Center for Political Studies and Government, along with DELPHOS, shows that 64.6% of Venezuelans are willing to vote if new presidential elections are called; and the number goes up to 70.2% if Nocolás Maduro resigns and stays out of the process, the National Elections Council is changed and there are international observers. An opposition candidate would get 67% of all votes (12.9 million) and a regime candidate would receive 33% (6.3 million). Another 15.1% of those polled indicated they might vote. More in Spanish: (El Universal, http://www.eluniversal.com/politica/44895/646-de-los-venezolanos-votarian-en-elecciones-presidenciales)

 

Venezuelans deserve better life, free from fear, UN Human Rights Chief says

The United Nations High Commissioner for Human Rights said on Friday that Venezuelans deserve a better life that is free from fear and whereby they have access to food, water and health services during the presentation of her report on Venezuela before the Human Rights Council. “The fate of more than 30 million Venezuelans rests on the leadership’s willingness and ability to put the human rights of the people ahead of any personal, ideological or political ambitions,” Michelle Bachelet said during presentation of her report in Geneva. The report accuses the Nicolas Maduro regime of grave human rights violations and documents, among other serious incidents, more than 6,800 extra-judicial killings by the Venezuelan armed forces between January 2018 and May 2019. These killings, “should be fully investigated, with accountability of perpetrators, and guarantees of non-recurrence,” added Bachelet. The UN High Commissioner for Human Rights also denounced a pattern of torture reports during arbitrary detentions and mentioned the recent death of Rafael Acosta, a retired navy captain, who died in custody. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2480704&CategoryId=10717)

 

Maduro slams UN human rights report, says it's full of lies

Nicolás Maduro on Monday said he had demanded the rectification of what he described as lies included in the latest United Nations report on human rights in this country. He also said that the United Nations High Commissioner for Human Rights and former president of Chile, Michelle Bachelet, had "made a wrong call" with the report's outcome. (EFE: https://www.efe.com/efe/english/world/venezuela-s-maduro-slams-un-human-rights-report-says-it-full-of-lies/50000262-4018799)

 

Venezuelan bishops condemn death of naval captain while in custody, other atrocities

The Venezuelan bishops' justice and peace commission have condemned the death in custody of Rafael Acosta Arévalo, a naval captain who was arrested over an alleged assassination plot against president Nicolas Maduro. Acosta's lawyer alleges the officer had been tortured while in custody. Two members of Venezuela's military counterintelligence agency have been charged in relation to Acosta's death. The bishops also protested that police had allegedly disfigured and left blind Rufo Chacón Parada, a youth, as he was demonstrating about the lack supplies in the country. “The Venezuelan state is responsible. We will not consent to the manipulation, dissimulation and downplaying of these grave incidents,” the bishops' justice and peace commission stated July 4. The bishops said that “the forced disappearance, torture, cruel, inhuman or degrading treatment, excesses committed by the police … against Venezuelans are practices that have taken hold in the military and police corps, and are occurring on an ongoing basis, like a secret that cries out in our consciences.” “Silence is not an option in face of so much outrage,” the bishops said. The bishops noted that the men charged in relation to Acosta's death, Lt Ascanio Tarascio and Sgt Esteban Zarate, are 22 and 23, and asked: “This is the generation the armed forces are passing the baton to? Who taught these young men how to do so much harm to their brothers? What are the responsibilities of their superiors in the chain of command in these institutions?” They emphasized that “these young perpetrators are also victims of a system that has allowed this moral and spiritual degradation in our country.” In addition, a Venezuelan Cardinal is accusing the Maduro regime of intimidation and has reiterated his appeal to Nicolas Maduro to engage in dialogue. In an interview with the Pontifical Foundation ‘Aid to the Church in Need’, Archbishop Baltasar Porras of Merida, apostolic administrator of Caracas and President of Caritas Venezuela, shone the light on the limitations and intimidation perpetrated by the government against Church officials and organizations. He decried the fact that those who are bringing aid to the impoverished population and even parishes are continuously under pressure to stop their work.  (Catholic News Agency: https://www.catholicnewsagency.com/news/venezuelan-bishops-condemn-death-of-naval-captain-while-in-custody-74364; Vatican News: https://www.vaticannews.va/en/world/news/2019-07/venezuela-cardinal-government-opposition-dialogue.html)

 

Venezuelan journalist Braulio Jatar conditionally released, barred from leaving country

Venezuelan online and radio journalist Braulio Jatar was formally released from house arrest today after receiving official notification from a criminal court in his home state of Nueva Esparta. As mandated by the court, Jatar - who was charged but not tried for money laundering -- is barred from leaving Nueva Esparta and is required to present himself before that court every 15 days, according to his statement. Jatar's release was first announced by U.N. High Commissioner for Human Rights Michelle Bachelet on July 5, according to press reports. According to the reports, Bachelet had requested the release of Jatar and other high-profile prisoners during her June visit to Venezuela. The news came after the U.N. Human Rights Council held a debate on Bachelet’s report of a visit to Venezuela in June. The report accused Venezuelan security forces of sending death squads to murder young men but a vice minister rejected that in a speech to the Geneva forum on Friday. “The welcome releases of 62 detainees then (in June), with a further 22 – including journalist Braulio Jatar and judge (Maria) Lourdes Afiuni – set free yesterday and the authorities’ acceptance of two human rights officers in the country, signify the beginning of positive engagement on the country’s many human rights issues,” Bachelet said. (Committee to Protect Journalists: https://cpj.org/2019/07/venezuelan-journalist-braulio-jatar-conditionally-.php; Reuters, https://www.reuters.com/article/us-venezuela-un-prisoners/venezuela-releasing-judge-journalist-20-students-u-n-idUSKCN1U016V)

 

US expresses concerns for wrongfully detained U.S. persons (CITGO 6) in Venezuela

The United States demands that the former Maduro regime release the wrongfully detained “CITGO 6” in Venezuela. These men are suffering serious health conditions and must be released immediately. Maduro loyalists continue to prevent the families and attorneys of American prisoners from assisting with basic access to food and medicine, without regard for mental health and general well-being of those detained. These affronts to basic dignity will not be ignored.  The Department of State continues to press Maduro’s representatives for their assurance of the safety and welfare of Americans wrongfully detained in Venezuela. (US Department of State: https://www.state.gov/concerns-for-wrongfully-detained-u-s-persons-citgo-6-in-venezuela/)

 

UN agencies welcome regional road map to help integrate ‘continuing exodus of Venezuelans’

A new road map adopted by Latin American and Caribbean countries, to help better integrate refugees and migrants from crisis-hit Venezuela into new host societies, drew a warm welcome from two UN agencies on Monday. UN refugee agency UNHCR, and the International Organization for Migration (IOM) lauded the joint declaration that agrees to reinforce cooperation, communication and coordination between the countries of transit and destination; strengthen measures against people-smuggling and trafficking; and protect the most vulnerable by combatting discrimination, xenophobia and sexual and gender-based violence. The road map was adopted late last week during the International Technical Meeting of the Quito Process, in the Argentine capital, Buenos Aires, with the participation of 14 Latin American and Caribbean governments, UN agencies, regional organizations, development banks and civil society The meeting highlighted the actions and efforts of the regional countries, not only in terms of reception, documentation and humanitarian assistance, but also in promoting access to health, education, employment, and housing on behalf of Venezuelan refugees and migrants. The Road Map of the Buenos Aires Chapter sets out specific actions on human trafficking, healthcare and for recognizing academic qualifications of Venezuelan professionals, as well as establishing information and reception centers. A so-called Information Card for Regional Mobility is a priority commitment, to complement and strengthen the documentation and registration processes at national levels where it exists or is being developed. According to data from national immigration authorities and other sources, the number of refugees and migrants from Venezuela around the world has now exceeded four million. (UN News: https://news.un.org/en/story/2019/07/1042041)

 

On Venezuelan Independence Day Maduro called for “dialogue” as Guaido slammed 'dictatorship'

Venezuela’s bitterly divided political factions held competing commemorations of the country’s independence day on Friday, with President Nicolas Maduro calling for dialogue and opposition leader Juan Guaido decrying alleged human rights violations by Maduro’s “dictatorship.” Speaking to a gathering of top military officials, Maduro reiterated his support for a negotiation process mediated by Norway between his socialist government and Guaido, the leader of the opposition-held National Assembly who argues Maduro’s 2018 re-election was a fraud. (Reuters, https://www.reuters.com/article/us-venezuela-politics/on-venezuelan-independence-day-maduro-calls-for-dialogue-as-guaido-slams-dictatorship-idUSKCN1U022E)

 

Maduro ratified General Padrino as Defense Minister

Nicolas Maduro on Sunday announced he will maintain Defense Minister General Vladimir Padrino in his post, following months of rumors that top military brass would be replaced after a failed uprising in April. The Trump administration identified Padrino among the top officials involved in negotiations with opposition leader Juan Guaido to create a transition government on April 30, in response to the country’s economic meltdown. Since then, General Padrino has publicly professed loyalty to Maduro along with the majority of the armed forces, which are seen as the main reason why Maduro held on to power despite a hyperinflationary collapse. (Reuters, https://www.reuters.com/article/us-venezuela-politics-military/venezuelas-maduro-ratifies-padrino-as-defense-minister-idUSKCN1U305G)

 

OP-ED: Will more talks that do not include the military resolve Venezuela’s crisis?

Representatives from Venezuelan President Nicolás Maduro’s government and the opposition are expected to meet this week in Barbados for another round of talks mediated by Norway. Previous discussions to end the country’s ongoing political crisis have ended in deadlock. The talks so far have involved two parties: Maduro’s government, which still controls state institutions largely due to military backing; and the opposition led by Juan Guaidó, who is recognized as Venezuela’s acting president by more than 50 countries. Guaidó, like many in the opposition, is skeptical of dialogue. Maduro’s critics see it as a stalling tactic. What to expect: Guaidó has demanded a solution this time, but the talks could again be limited by the two-party approach, said Moises Rendon, the associate director of the Americas program at the Center for Strategic and International Studies. “The new round of negotiations has a flaw that hasn’t been addressed in the last rounds: who is representing Maduro’s government and who is representing Guaidó’s government,” Rendon said. “I don’t think it’s going anywhere, because you don’t have the full representation of all the forces within the Maduro regime”—including the military.” Last week, the United Nations released a report alleging thousands of extrajudicial killings carried out by Venezuelan special forces over the past 18 months. “That will help on the leverage of the Guaidó side,” Rendon said. But it could have limited impact on this week’s negotiations. “The [U.N.] report did not go that far in terms of connecting the human rights violations they described to the Maduro government,” he added. “It’s not shedding light on who’s responsible.” (Foreign Affairs: https://foreignpolicy.com/2019/07/09/another-round-of-talks-for-venezuela-maduro-guaido-iran-europe-trump-uk-darroch/)

 

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.

 

December 27, 2018

Oil & Energy

EXXON continues drilling offshore Guyana as Venezuela lodges complaint

EXXON MOBIL Corp said on Wednesday its oil drilling and development activities offshore Guyana were unaffected by a weekend incident in which Venezuela’s navy stopped two exploration vessels the company had hired. Its 10 oil finds are at least 110 km (68 miles) away from the northwest part of the Stabroek block where the incident took place, the company said. The company has a permit from Guyana to explore the Stabroek block. “Exploration and development drilling is continuing in the southeast area of the Stabroek Block,” the company said in a statement. An EXXON spokeswoman declined to say whether the two vessels, owned by Norway’s Petroleum Geo-Services, planned to continue their survey. A notice of the survey published on Guyana’s Maritime Administration Department’s website was dated Dec. 7, and said the work was scheduled for a six-month period. Critics say socialist President Nicolas Maduro is using the dispute over the Essequibo, a sparsely populated jungle region making up two-thirds of Guyana’s land which Venezuela also claims, to distract from hyperinflation and shortages of basic goods that have prompted millions of Venezuelans to emigrate. (Reuters: https://www.reuters.com/article/us-guyana-venezuela-oil/exxon-continues-drilling-offshore-guyana-despite-venezuela-incident-idUSKCN1OP0UB)

 

HESS market cap plunges US$ 1.5 billion as major project halted

HESS Corp. tumbled the most in almost three years, wiping out US$ 1.5 billion in market valuation, after work at the oil explorer’s most promising international investment was halted by a Venezuelan blockade. The intervention threatened to derail development of a 5 billion-barrel discovery off Guyana’s coastline that is so important to HESS’s future growth plans that it receives top billing in the New York-based driller’s investor presentations. Although significant for partners EXXON MOBIL Corp. and CNOOC Ltd., HESS is particularly dependent on the Guyanese project to generate production growth and cash flow into the next decade. Venezuela, which has long disputed neighboring Guyana’s offshore claims, “aggressively” interrupted the EXXON-led effort to map the sea floor on Dec. 22, U.S. State Department Deputy Spokesman Robert Palladino said on Sunday. By early Monday, the Venezuelan vessels had withdrawn, according to Bard Stenberg, a spokesman for vessel owner Petroleum Geo-Services ASA. (Bloomberg, https://www.bloomberg.com/news/articles/2018-12-24/exxon-stymied-by-venezuelan-intervention-at-major-offshore-field)

 

Venezuela oil price falls to lowest since 2017

The price Venezuela receives for its mix of medium and heavy oil continued falling to its lowest since October of 2017. According to figures released by the Ministry of Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending December 21 fell to US$ 51.45, down US$ 2.91 from the previous week's US$ 54.36. According to Venezuelan government figures, the average price in 2018 for Venezuela's mix of heavy and medium crude for 2018 which Caracas now prices in Chinese Yuan (423.91) is now US$ 61.49. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2472108&CategoryId=10717)

 

SPECIAL REPORT: Oil output goes AWOL in Venezuela as soldiers run PDVSA

President Nicolas Maduro turned heads in November 2017 when he named a National Guard general with no oil experience to lead PDVSA. Major General Manuel Quevedo’s actions since have raised even more doubts that he and the other military brass now running the company have a viable plan to rescue it from crushing debt, an exodus of workers and withering production now at its lowest in almost seven decades. Quevedo in recent months has enacted a series of controversial measures that oil industry experts, PDVSA employees and contractors, and even everyday citizens say are pushing the once-profitable and respected company towards ruin. Workers who make mistakes operating increasingly dilapidated PDVSA equipment now face the risk of arrest and charges of sabotage or corruption. Military chieftains, moonlighting in the private sector, are elbowing past other contractors for lucrative service and supply business with PDVSA. The lack of expertise among military managers is leading PDVSA to hire outsiders to keep afloat even basic operations, like drilling and pumping oil. To the dismay of many familiar with Venezuela’s oil industry, some of the contracts are going to small, little-known firms with no experience in the sector. Critics of the arrangements, and government opponents, say the transactions aren’t transparent. By keeping details from the public, they argue, the company faces little scrutiny over whom it chooses to do business with. The steps leave Venezuela’s most important company - which accounts for over 90% of export revenue - with even fewer means to rebuild the nation’s coffers, pay its many creditors and regain self-sufficiency as an oil producer. Military officials atop PDVSA have put aside any pretense of running it like a proper business, doing little to stem the fall in production or improve the company’s financial, operational and staffing problems. Operational problems under Quevedo have caused production to drop 20% to 1.46 million barrels per day, according to the latest figures Caracas reported to OPEC, the oil cartel, of which it is a member. The gross value of PDVSA’s oil exports is expected to fall to US$ 20.9 billion this year compared with US$ 24.9 billion last year. Exports a decade ago were over four times as much, reaching $89 billion, according to PDVSA’s accounts for 2008. PDVSA didn’t publish a 2017 report and hasn’t released financial results in 2018. Over the past year Quevedo has failed to reverse the slide in production. One of his first challenges was to stanch the flow of workers, many of whom deserted the company and Venezuela altogether. PDVSA hasn’t disclosed recent employment figures. But estimates by IPD Latin America, an oil and gas consultancy, indicate PDVSA has about 106,000 workers – 27% fewer than in 2016. PDVSA salaries have crumbled to the equivalent of a handful of dollars a month for most workers. With no money, and little real work to do at idle and faulty facilities, some employees only show up to eat at the few company cafeterias that remain open. Shippers told Reuters that PDVSA workers at times board vessels to ask for food. To boost manpower, Quevedo has been staffing some jobs, including posts that once required technical knowledge, with National Guard recruits. The changes are disturbing buyers here. Some tanker captains complain that young soldiers are woefully unprepared to verify technical details, like whether crude density, a crucial attribute of quality, complies with contract specifications. Crews fret a stray bullet from the soldiers’ rifles could spark fires and complain that some of the crime afflicting the country is making its way on board. Although Quevedo has tasked the soldiers to help spot graft, some of the low-paid recruits ask for bribes themselves, shippers said, for signing off on paperwork or completing inspections. Even with soldiers as substitutes, PDVSA can’t find the workers it needs to man many posts. From the processing of crude at refineries to contract negotiations with buyers, the shortage of skilled staffers is hobbling the company. (Reuters: https://www.reuters.com/article/us-venezuela-pdvsa-military-specialrepor/special-report-oil-output-goes-awol-in-venezuela-as-soldiers-run-pdvsa-idUSKCN1OP0RZ)

 

Commodities

Russian companies get green light to mine gold in Venezuela

Venezuelan authorities have offered Russian companies to take part in gold exploration and gold mining in the country, according to Russian Ambassador to Venezuela Vladimir Zaemsky. The official added that Caracas is deeply interested in cooperating with Russia in the sector of exploration of the country’s solid extractable resources, including gold, diamonds and coltan, which is used for the extraction of elements such as niobium and tantalum. According to Zaemsky, the parties are also discussing possibility of cooperating on Russia’s Global Navigation Satellite System (GLONASS), which is run by the Russian Aerospace Defense Forces and is currently the second alternative navigational system in operation. (RT: https://www.rt.com/business/447438-venezuela-russia-gold-exploration/)

 

Venezuela cocoa growers fear new pest: the government

Venezuela cocoa trader Freddy Galindo has battled highway robberies, kidnappings of family members and declining quality in his 19 years exporting the nation’s legendary beans. This year’s harvest brought a new worry: meddling by the socialist government. He said trucks filled with beans leaving his warehouse in central Venezuela were stopped by soldiers at checkpoints and held for days; drivers were forced to unload some cargos at government warehouses. Galindo claims that some 87 tons of his cocoa, worth about US$ 130,000, were missing when the trucks were finally released. Other traders here in Miranda state, Venezuela’s No. 2 producing region, have reported similar delays and confiscations in recent months. Government officials say the checkpoints are meant to nab cocoa thieves, and that some beans have been seized by the state to settle owners’ delinquent tax bills. But the confrontations have unnerved growers and traders who fear their industry is being targeted for a government takeover. The private sector still controls most of the cocoa trade. But with crude output collapsing amid an economic crisis, the government has increased its emphasis on alternative export industries such as cocoa and gold. Delays in export permits have stalled shipments, forcing buyers to go elsewhere. Quality has suffered too. Venezuela’s strict currency controls have prevented many farmers from getting imported chemicals they need to fight disease. (Reuters: https://www.reuters.com/article/us-venezuela-cocoa/venezuela-cocoa-growers-fear-new-pest-the-government-idUSKCN1OQ09G)

 

Venezuela regime seizes control of starving country's meat

Twenty-one public and private slaughterhouses are under a “temporary occupation,” announced Tareck El Aissami, Venezuela’s Vice President for the Economic Area. The seizure — which is for “180 days renewable” — will guarantee the “correct distribution of meat products,” according to El Aissami. Aissami claimed “irregular activities" by “mafias” prevented “access to meat at fair prices." The Public Prosecutor's Office will investigate the owners of the “intervened slaughterhouses,” he said. The move follows President Nicolas Maduro’s call for a complete seizure of Venezuela’s meat industry. “The government has to assume 100% of the production, distribution and marketing of meat,” Maduro declared early in November. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2472039&CategoryId=10717)

 

Economy & Finance

Venezuela bondholders are gearing up for battle after futile year

For the better part of the past year, Venezuela’s debt market has been dead. The bonds are in default and there are no restructuring talks, almost no trading and little action from creditors beyond grumbling in private. But that appears about to change. In the past few weeks, one group of investors banded together to demand immediate payment on the notes they hold, another cohort hired a law firm to review their options and a separate creditor sued in U.S. federal court. Their impetus to act seems to stem from both fleeting patience and the realization that if they don’t move now, they may fall behind other creditors in the line to lay claim to Venezuelan assets. Venezuelan debt has been hovering around 25 cents on the dollar since President Nicolas Maduro announced in November 2017 that he was suspending payments and seeking talks with creditors. Those discussions never took place, due to U.S. sanctions that make doing business with the country difficult, and for the most part not much else was happening as the arrears piled up. Now the urgency to act has increased after Houston-based CONOCO PHILLIPS and Canadian gold miner CRYSTALLEX International Corp. managed to wring payments worth a total of US$ 1 billion out of Venezuela to partially satisfy claims over appropriated assets. If those entities were able to get paid, bondholders’ thinking goes, then debt investors should be able to get a piece. The prize that creditors have their eyes on is the country’s largest U.S. asset, the refining company CITGO Holding Inc., which has been valued at US$ 11 billion. Unsecured bondholders are likely to find themselves fighting with a long line of claimants. In addition to having to compete with businesses armed with international arbitration awards, state oil company bonds due in 2020 are explicitly backed by a stake in the refiner, giving those holders a strong claim on the asset. In the meantime, bonds are barely moving. Aggressive legal actions from bondholders could also hinder PDVSA’s operations. Maduro has said that he’s holding talks with bondholders and predicted this month that a deal will be struck next year. There are zero signs of any such discussions. And analysts say there’s likely to be a lot more drama before anything is resolved. (Bloomberg: https://www.bloomberg.com/news/articles/2018-12-26/venezuela-bondholders-gearing-up-for-battle-after-futile-year)

 

In Venezuela, Russia pockets key energy assets in exchange for cash bailouts

As allies go, Venezuela is a relatively cheap one for Russia. But the potential returns on Moscow’s investment there could be priceless. In exchange for modest loans and bailouts over the past decade, Russia now owns significant parts of at least five oil fields in Venezuela, which holds the world’s largest reserves, along with 30 years’ worth of future output from two Caribbean natural-gas fields. Venezuela also has signed over 49.9% of CITGO; it’s wholly owned company in the United States — including three Gulf Coast refineries and a countrywide web of pipelines — as collateral to Russia’s state-owned ROSNEFT oil behemoth for a reported US$ 1.5 billion in desperately needed cash. Russian advisers are inside the Venezuelan government, helping direct the course of President Nicolás Maduro’s attempts to bring his failing government back from bankruptcy. They helped orchestrate this year’s introduction of a new digital currency, the “Petro,” to keep oil payments flowing while avoiding U.S. sanctions on the country’s dollar transactions. Venezuela’s still-formidable defense force, once an exclusively U.S. client, is now equipped with Russian guns, tanks and planes, financed with prepaid oil deliveries to Russian clients. Maduro scoffed last year at President Trump’s public threat to use the U.S. military to bring him down, saying Venezuela, with Russian help, had turned itself into a defensive “fortress.” For Russia, the establishment of a political outpost in the Western Hemisphere is “a strategic win,” said Eric Farnsworth, vice president of the Council of the Americas and the Americas Society. “I don’t think Russia cares two bits about the survival of the Maduro regime,” Farnsworth said. “He is a means to an end. The end is to project power, bust out of sanctions the West has imposed and cause difficulties for the United States. If at the end of the day, they’ve got an unreliable partner, if they lose a few billion dollars, maybe that’s okay.” China has shown little interest in accumulating Venezuelan assets or strengthening political ties with Maduro’s failing regime. For the most part, it has concentrated on trying to get its loans repaid. Russia, in contrast, has repeatedly restructured, refinanced or taken in-kind payments from Venezuela. Maduro claims Russia has agreed to invest an additional US$ 5 billion to improve Venezuelan oil production — much of which goes to Russia’s export customers — and US$ 1 billion in gold mining. During his recent trip to Moscow, separate contracts were signed to supply Venezuela with 600,000 tons of Russian wheat and to modernize and maintain its Russian-made weaponry. Venezuela may well turn out to be a money-loser for Russia. Should the Maduro government fall, debt owed to Moscow, and Russian claims of Venezuelan oil and gas ownership, could end up in years of litigation as other creditors line up for repayment. Many are already in court, including claims demanding the sale of CITGO. But for now, Moscow clearly believes Venezuela is well worth the effort. (The Washington Post: https://www.washingtonpost.com/world/national-security/in-venezuela-russia-pockets-key-energy-assets-in-exchange-for-cash-bailouts/2018/12/20/da458db6-f403-11e8-80d0-f7e1948d55f4_story.html?noredirect=on&utm_term=.7a8fe4869463)

 

Politics and International Affairs

Venezuela calls U.S. comments on Guyana dispute 'interventionist'; CARICOM backs Guyana

Venezuela’s foreign ministry on Tuesday described as “interventionist and disrespectful” U.S. comments on a weekend incident in which the country’s navy stopped two ships exploring for oil for Exxon Mobil off Guyana’s coast. Each of the neighboring countries says the incident on Saturday occurred within its territorial waters. In response to the event, the U.S. State Department said Venezuela had behaved “aggressively” and called on the country to “respect international law and the rights of its neighbors.” Two vessels owned by Norway’s Petroleum Geo-Services (PGS.OL) and under contract by Exxon Mobil were conducting seismic survey work in the area. The ships stopped their work and turned east after the Venezuelan navy told them Guyana did not have jurisdiction there. When asked on Monday if there were plans for the vessels to resume their activities, Guyana Foreign Affairs Minister Carl Greenidge said the government was “in discussion” with EXXON. Neither Exxon nor PGS immediately responded to requests for comment on Tuesday, and the U.S. On Monday, the CARICOM group of 15 Caribbean nations including Guyana - many of which have historically received subsidized oil from Venezuela under Caracas’ PETROCARIBE program - said it viewed the “interception” by Venezuela’s navy “with grave concern.” “Such acts violate the sovereign rights of Guyana under international law,” the group said in a statement. (Reuters: https://www.reuters.com/article/us-guyana-venezuela-oil/venezuela-calls-us-comments-on-guyana-dispute-interventionist-idUSKCN1OO0NM)

 

Colombia expels Venezuelan “non-diplomat”, and Venezuela expels Colombia official

On Thursday, Colombia expelled Venezuelan national Carlos Pino, a man who was working in Caracas’ embassy in Bogota even though he was not a diplomat. Pino was not formally charged with any offenses, but Colombia said it was acting in “protecting national sovereignty.” A blue-blazer clad Pino was forced to cross, on foot, the bridge between Colombia and Venezuela by Colombian migration authorities Thursday. Pino, who worked at the embassy but had no work permission nor diplomatic immunity, has also been barred from entering Colombia for the next 10 years and will in the future require a visa to do so. Colombian media has described Pino as a man close to FARC, a trusted advisor of President Nicolas Maduro in issues dealing with Colombia and as a man involved in spying on Venezuelan refugee camps inside Colombia.  Pino had deep roots in Colombia: he is married to Gloria Florez Schneider, a former Colombian congresswoman close to left-wing leader Gustavo Petro, and had been living in Colombia for the last 18 years, meaning shortly after Chavez first took over in 1999. Petro is a former guerrilla who favored normalizing the FARC, the oldest left-wing guerrilla group in Latin America, but one who always failed in attaining power, either by force of through elections. Hours after Pino's expulsion, Venezuela quickly sided with the man it termed "an official, member of the personnel" of Maduro's legation in Bogota, claimed the treatment given to Pino was "a kidnapping" and in turn expelled Juan Carlos Perez Villamizar. The Maduro Regime described Perez as "a consular, non-accredited official" in the Colombian consulate in Caracas. In a communique, Venezuela's foreign office gave Perez -- whom it said was carrying out consular functions without due accreditation -- 48 hours to leave Venezuelan soil. Venezuelan media identified Perez as the acting consul of Colombia in Venezuela. (Latin American Herald Tribune: http://www.laht.com/article.asp?ArticleId=2471876&CategoryId=10717)

 

Brazil's Bolsonaro says he will target Venezuela, Cuba

Brazil’s President-elect Jair Bolsonaro said on Tuesday that he would take all action “within the rule of law and democracy” to oppose the governments of Venezuela and Cuba. He frequently targets Venezuela and Cuba for verbal attacks, a drastic change from Brazil’s governments under the leftist Workers Party that ruled from 2003 to 2016 and had warm relations with those regimes. The United States is counting on Brazil under Bolsonaro to be a strategic ally. (Reuters: https://www.reuters.com/article/us-brazil-politics-bolsonaro/brazils-bolsonaro-says-he-will-target-venezuela-cuba-idUSKBN1OH2F8)

 

Countless youngsters now live on the streets of Caracas

The streets of Caracas are full of children and teenagers who run, laugh, bathe in dirty rivers, hunt for food in garbage cans and also take drugs - these abandoned youngsters are yet another aspect of the severe social and economic crisis gripping the oil-producing nation that is Venezuela. The children who, in their majority, live in public areas of eastern Caracas, where besides begging they have created an elaborate survival system. No institution, public or private, has figures or even an estimate of how many children and teens now live on the streets of Venezuela, but the situation is evident at first sight. There has been a dramatic increase in the abandonment of children in the country, above all by mothers, though many report a total absence of the father. The youngsters on the streets are happy when they are given food but their greatest joy is when they receive money, because then they run off to buy the drugs that give them a reprieve from this world. Barefoot and unprotected, many have injured hands and feet from nails and glass, while others have been hit by cars and lived to tell the tale. Children and teens are often seen sleeping so soundly on park benches or just on sidewalks that horns honking, dogs barking and passers-by talking don't wake them up. (News4Europe: http://www.news4europe.eu/6350_world/5863769_countless-youngsters-now-live-on-the-streets-of-caracas.html)

 

Magnitude 5.5 earthquake hits Venezuela

A magnitude 5.5 earthquake shook Venezuela on Thursday, according to the United States Geological Survey. The quake was recorded shortly before 5 a.m. about 2 miles northeast of San Diego, Venezuela, and had a depth of about 6 miles, according to the USGS. The agency first reported the magnitude of the quake as 5.6, but later adjusted the magnitude to 5.5. Another quake, of magnitude 5.0, was recorded about 25 minutes later in the same area, the USGS reported. There have so far been no reports or injuries or damages from the earthquakes. (Channel3000: https://www.channel3000.com/weather/magnitude-56-earthquake-hits-venezuela/953146175)

 

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

 

July 04, 2017

Oil & Energy

Venezuela oil price below US$ 40 for a 2nd week

The price Venezuela receives for its mix of medium and heavy oil bounced off its lowest point since the coordinated OPEC supply freezes were announced back in November. 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 June 30 rose to US$ 39.95, up 72 cents from the previous week's US$ 39.23. According to Venezuelan government figures, the average price in 2017 for Venezuela's mix of heavy and medium crude fell to US$ 43.63. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2439267&CategoryId=10717)

 

Economy & Finance

Miner CRYSTALLEX wins court order against NOMURA over Venezuela deal

Canadian miner CRYSTALLEX, seeking to recoup financial damages from an expropriation by Venezuela, won U.S. court approval on Friday to bar Japanese bank NOMURA from transferring securities owned by this nation. The court decision follows a Reuters report that Venezuela is seeking to sell some US$ 710 million in fixed-income securities back to NOMURA, which originally issued them in 2008, to raise cash amid an economic crisis. The United States District Court for the Southern District of New York granted the request, according to court papers. The company, which cited the Reuters report in its request, said Venezuela was seeking to draw down assets in the United States to prevent it from collecting on the award. The move is one of the most aggressive legal gambits to date by a company seeking compensation for a wave of nationalizations under the leadership of late Socialist leader Hugo Chavez. (Reuters, http://www.reuters.com/article/us-venezuela-crystallex-idUSKBN19L2WV)

 

Venezuela selling gold, Goldman selling Venezuela bonds?

A guest on Bloomberg Radio Friday morning suggested that Venezuela could be selling gold to pay for chemicals to dilute its domestic "heavy" oil for fuel. Meanwhile, GOLDMAN SACHS Asset Management reportedly sold Venezuela bonds with a face value of at least US$ 300 million to a small group of hedge funds in recent days, according to an anonymous source quoted by MarketWatch, which notes that the GOLDMAN bond purchase in May drew harsh criticism from Venezuelan opposition leaders and others who think investors should not finance the authoritarian regime of President Nicolás Maduro. Venezuela critic Russ Dallen, a publisher, lawyer and Venezuela bond investor through Caracas Capital, offers some background on the political stagnation under Maduro. In short, the escalating violence and civil strife in the country means an impending "inflection point," Dallen says: "the Maduro regime has been unable to raise significant foreign capital – aside from the loan from ROSNEFT against 49.9% of Petroleos de Venezuela's U.S. refining operation CITGO and the “morally repugnant” cash injection from GOLDMAN SACHS last month. The Maduro regime’s refusal to co-exist and/or negotiate with an opposition-dominated legislature has led Maduro to unleash his own weapon of mass destruction by calling a National Constituent Assembly (ANC). The government is using this wafer-thin veneer of constitutional legality for two reasons ... One is to bring along the military rank-and-file. The second reason for the legal lip-service is an attempt to give legal surety to potential investors (namely Russia, China & others interested in investing in oil, gold and mineral mining ventures) that were put off by the lack of National Assembly approval. Russia and other investors felt that ground was too shaky to invest billions of dollars, hence the regime’s National Constituent Assembly, designed to replace the obstinate National Assembly and pave that legal path for investment more solidly.” (Barron’s: http://www.barrons.com/articles/venezuela-goldman-selling-selling-gold-1498850055)

 

Maduro hikes minimum wage 50%, effectively down 17%

President Nicolas Maduro raised the country's minimum wage by half on Sunday to just over US$ 12.50 per month at the black-market exchange rate. But given the currency's fall, the new minimum monthly wage of 97,532 bolivars is effectively down 17% in dollar terms since the last increase in May. The currency's fall -- of 99.7% since Maduro was elected president in April 2013 -- has exacerbated a brutal economic crisis that has millions struggling to find or afford food. A thousand dollars bought in local currency when Maduro was elected would be worth just US$ 3 today. Maduro's leftist government blames speculators and the opposition for the problems. "Following the immoral campaign that fixes prices through a false dollar abroad ... we are going to put the handcuffs on ... the whole campaign of speculation," said Maduro on state television, adding that the rise would be effective retroactively from July 1. (Reuters, http://www.reuters.com/article/us-venezuela-economy-idUSKBN19N0X5)

 

Politics and International Affairs

Venezuela high court, top prosecutor in political showdown

A conflict between President Nicolas Maduro's government and the increasingly defiant chief prosecutor was coming to a head today as Luisa Ortega Diaz announced she was boycotting a Supreme Tribunal hearing on whether to lift her immunity from being tried for unspecified irregularities. Ortega Diaz argued the outcome of the hearing is a foregone conclusion decided by the government that violates her legal right to defense and due process. "I am not going to validate a circus that will stain our history with shame and pain," she said at a news conference as the hearing was getting under way. The case against her for alleged "serious errors" while in office was brought by a ruling-party lawmaker and could lead to her ouster. National Guard troops and riot police took up positions outside the court building in Caracas, where protests against Maduro's government have been raging almost daily for several months. On Monday, the government-stacked Supreme Tribunal acted to strip a key power from Ortega by acting itself to impose her deputy: a loyalist who was sanctioned by the United States in 2015 for her role prosecuting some of Maduro's most vocal opponents. The decision to name Katherine Harrington to the post effectively made her the nation's No. 2 law enforcement official even though the constitution says the semi-autonomous chief prosecutor has the power to name her own deputy, with confirmation by congress. Lawmakers on Monday had re-confirmed Ortega's own choice as deputy after he was removed by the high court last week. Almost daily assaults by the Maduro regime have only emboldened Ortega: First, she noticed people started following her family. Then, anonymous threats started to pour in. Her stepdaughter was briefly kidnapped. Then the nation’s Supreme Tribunal gutted most of her powers, froze her bank accounts and banned her from leaving the country. Vice President Tareck El Aissami accused the Attorney General of plotting to overthrow the administration of President Nicolas Maduro. His comments came hours after Ortega summoned Maduro’s intelligence chief and the recently dismissed commander of the national militarized police for questioning about alleged human rights violations over the course of more than three months of sometimes-violent protests accompanied by scores of deaths. On Monday, her office was raided by officials from the Comptroller General, an unprecedented happening even in the country’s amazing political history. The Comptroller General’s is the office tasked with detecting and pursuing financial misdeeds in the Venezuelan government. The raids took place as Attorney General Luisa Ortega was delivering a support speech at the opposition-controlled National Assembly. “We never imagined it would reach this magnitude,” said German Ferrer, her husband, who is a lawmaker for the ruling socialist party. As Venezuela's political crisis has deepened, Ortega has emerged as Maduro's most-feared critic. In April, the once-loyal leftist broke with the government over its decision to strip congress of its last powers, and she has made common cause with pro-democracy opponents in blasting Maduro's plans to rewrite Venezuela's 1999 constitution. The Supreme Tribunal has thrown out her order for the former head of the National Guard to testify about alleged human rights abuses during the crackdown on the protests, which have left at least 80 dead. Ortega was warmly applauded Monday during an address by opposition lawmakers who until a few months ago considered her Maduro's jailer. The Venezuelan opposition staged a demonstration on Saturday in Caracas against a Chavista request that the nation’s attorney general be submitted to a hearing, which could result in her being sent to trial. Ortega thanked the public and international organizations for standing with her. Harrington, a career prosecutor, was sanctioned by the Obama administration in 2015 for her role pursuing charges against members of the political opposition. That included the jailing of Caracas Mayor Antonio Ledezma on charges of plotting to overthrow Maduro and a case against former lawmaker Maria Corina Machado that was based on emails later shown to be fraudulent. (ABC News: http://abcnews.go.com/International/wireStory/venezuela-names-loyalist-sanctioned-us-key-legal-post-48434379; Bloomberg, https://www.bloomberg.com/news/articles/2017-06-30/maduro-s-most-dangerous-critic-confronts-legal-system-she-served; TIME: http://time.com/4840764/venezuela-chief-prosecutor-national-guard/;  Latin American Herald Tribune,http://www.laht.com/article.asp?ArticleId=2439265&CategoryId=10717; http://www.laht.com/article.asp?ArticleId=2439227&CategoryId=10718;  http://www.laht.com/article.asp?ArticleId=2439314&CategoryId=10717)

 

Attorney General’s attorneys recused 17 Supreme Tribunal justices

Private attorneys acting on behalf of the nation’s Attorney General, Luisa Ortega Díaz, have recused 17 of the Supreme Tribunal’s members due to irregularities in procedures underway against her. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/defensa-ortega-diaz-recuso-magistrados-sala-plena-del-tsj_659798)

 

…and asks the US for a report on Maduro’s conviceted relatives

Venezuela’s Attorney General has also formally asked the US to provide information on the case of Maduro’s nephews, Efraín Flores and Francisco Flores, who have been found guilty of drug trafficking by a US jury and are awaiting sentence. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/fiscalia-pide-eeuu-informe-familiares-pareja-presidencial_659797)

 

Venezuela opposition unites with dissident chavistas to challenge Maduro with unofficial referendum

President Nicolas Maduro's foes have announced plans for an unofficial referendum to let Venezuelans have their say on his plan to rewrite the constitution and the opposition's alternative push for an election to replace him. The opposition, starting a fourth month of street protests against the socialist government it decries as a dictatorship, will organize the symbolic vote for July 16, in a joint effort with dissident chavistas, as part of its strategy to delegitimize the unpopular Maduro. Venezuelans will also be asked their view on the military's responsibility for "recovering constitutional order" and the formation of a new "national unity" government, the Democratic Unity coalition announced. "Let the people decide!" said Julio Borges, the president of the opposition-led National Assembly. While the referendum would lack any real enforcement mechanism, it will occur just weeks before a July 30 vote for delegates for a constitutional convention that is opposed by two-thirds of voters. Critics fear Maduro will use the convention to consolidate power and take the country further toward Cuba-style authoritarianism. With the opposition saying it won’t participate in the vote, Venezuela is bracing for an uptick in violence that has left more than 80 dead since March. The opposition has announced a continuing schedule of demonstrations and blockades to continue protesting the Maduro dictatorship this week, (Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKBN19O1M0; Bloomberg, https://www.bloomberg.com/news/articles/2017-07-03/venezuela-opposition-said-to-plan-plebiscite-on-maduro-s-future); and more in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/politica/oposicion-convoca-al-trancazo-este-martes-4-de-julio; El Universal, http://www.eluniversal.com/noticias/politica/mud-convoca-nuevo-trancazo-este-martes_659799)

 

Venezuela’s poor rebel, roiling Maduro’s socialist strongholds

In Caracas, the rich and poor are suddenly less divided. For most of Venezuela’s two-decade socialist experiment, the city’s wealthier, whiter east has been the hotbed of anti-government sentiment. Now, noisy protests are erupting in poorer-but-calmer western neighborhoods that were strongholds for embattled President Nicolas Maduro as crime explodes and medicine and food are scarce and expensive. Residents in neighborhoods like La Candelaria, blocks from the presidential Miraflores Palace, erect barricades and yell slogans against Maduro’s government, banging pots and pans from inside their homes. They’re increasingly demanding a change in government, infuriated by mismanagement and Maduro’s proposed constituent assembly to rewrite the constitution -- and perhaps seize total control. (Bloomberg, https://www.bloomberg.com/news/articles/2017-07-03/venezuela-s-poor-rebel-roiling-maduro-s-socialist-strongholds)

 

General charged with human rights abuses promoted to command Venezuela’s Army

Hours after Venezuela’s Attorney General charged General Gustavo Gómez López with human rights abuses he was promoted by President Nicolás Maduro to Commander General of the Army here. Until now, González Lopez has headed up the National Bolivarian Intelligence Service (SEBIN), and is one of the officers sanctioned by the United States for being responsible or complicit in serious human rights violations. He also served briefly as Minister of the Interior under Maduro. Maduro also decorated colonel Bladimir Lugo Armas, who attacked Julio Borges, the president of the Parliament, and previously attacked Lilian Tintori and Antonieta Mendoza – wife and mother of opposition leader Leopoldo López, in addition to making several mobile phones of journalists "disappear." (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2439307&CategoryId=10717; and more in Spanish: (Notiminuto: http://www.notiminuto.com/noticia/conozca-al-nuev/)

 

Pope calls on Venezuela to find peaceful, democratic solution to unrest

Pope Francis used his public address on Sunday to call for a peaceful and democratic solution to the unrest in Venezuela, which for months has been gripped by political instability and violence. The Argentine pontiff asked worshippers gathered at the Vatican City’s St. Peter’s Square to pray for Venezuela and said his thoughts were with those families whose children have been killed in the street protests. “I call for an end to violence and for a peaceful and democratic solution to the crisis,” the Pope told the faithful congregated for the Angelus prayer.
“May Our Lady of Coromoto intercede in Venezuela,” Francis added, referring to Catholic Patroness of the South American nation. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2439277&CategoryId=10717)

 

CARICOM's division on Venezuela could cloud leaders' summit

Prime Minister Andrew Holness left Jamaica yesterday for the annual meeting of the Heads of Government of the Caribbean Community (CARICOM) in Grenada with ambiguity still clouding its position on Venezuela's political and economic crises. Holness said on Sunday that the issue would be on the meeting's agenda. However, CARICOM Secretary General Irwin LaRocque was reported yesterday as saying that the matter is “not on the agenda”. LaRocque added that, while the Venezuelan issue is not on the agenda, “there are some basic principles that the community has elaborated and this principle still holds.” CARICOM still appeared divided on the issue, with three of its 15 member states — St Vincent and the Grenadines, Antigua and Barbuda, and Dominica — urging the others not to interfere in the internal affairs of Venezuela.  There is also speculation that some of CARICOM states fear the effect of supporting the resolution on their concessionary facility with oil-rich Venezuela, known as PETROCARIBE. (Jamaica Observer: http://www.jamaicaobserver.com/news/caricom-8217-s-division-on-venezuela-could-cloud-leaders-8217-summit_103897)

 

Adiós to Venezuelan democracy

Constitutions, like diamonds, are supposed to last. But that is not the view of Nicolás Maduro, a former bus driver chosen by a dying Chávez to replace him as president in 2013. He has ordered a new constituent assembly, to be chosen on July 30th. Everything about the process is different from 1999. In violation of Chávez’s constitution, it has been called by presidential decree rather than by referendum. Maduro says its purpose is to defeat the opposition’s “fascism”. Yet it will be chosen under a system that might have been devised by Mussolini. Each of the 340 municipalities will elect one assembly member, regardless of size (only state capitals will get two), meaning the opposition-supporting cities are under-represented. A further 181 members will be chosen from communal and occupational groups controlled by the regime. Maduro wants the assembly because he can no longer stay in power democratically. Low oil prices and mismanagement have exacted a heavy toll. Food and medicines are scarce; diseases long curbed, such as diphtheria and malaria, are killing once more. The opposition won a big majority in a legislative election in 2015. Since then Maduro has ruled by decree and through the puppet supreme court. In almost daily opposition protests since April, 75 people have been killed, many shot by the National Guard or pro-regime armed gangs. Maduro’s lurch to dictatorship has opened cracks in his political base. Luisa Ortega, the attorney-general and long a chavista, has become an outspoken critic. The constituent assembly will “complete the definitive dismantling of democracy”, she told a Peruvian newspaper this week. Its apparent purpose is to turn Venezuela into a dictatorship along Cuban lines. The only potential obstacles to Maduro’s gambit are on his own side. Many chavistas oppose the constituent assembly. The armed forces, which sustain Maduro in power, have wavered but not bent—so far, at least. Tension is rising. On June 27^th, a police officer in a helicopter buzzed the supreme court and interior ministry. A pro-government mob attacked the parliament, and large-scale looting took place in Maracay, west of Caracas. Maduro and his circle lack the aura of heroism that originally surrounded Fidel Castro. “If chavista Venezuela was a caricature of the Cuban revolution, Maduro is a caricature of the caricature,” says the Latin American diplomat. There is no revolution in Venezuela, just squalid abuse of power. More blood may be spilled before this tragedy ends. (The Economist: https://www.economist.com/news/americas/21724388-nicol-s-maduro-prepares-caricature-caricature-cuba-adi-s-venezuelan-democracy)

 

The number of Venezuela’s who want to migrate has tripled in 3 years, according to a study conducted by the Catholic University in association with Vanderbilt University and DATANALISIS.  The desire to leave is seven times more than it was in 2012, and has tripled since 2014. According to the Venezuela chapter of the Americas Barometer, carried out in January 2017, one out of every three Venezuelans would like to live or work in another country. More in Spanish: (Notiminuto: http://www.notiminuto.com/noticia/se-triplico-la-intencion-de-emigrar-del-venezolano-desde-2012/)

 

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.