March 13, 2018

International Trade

Port and airport activity at a low

Reduced port and airport activities are difficult to show in statistics since authorities dealing in this area or managing ports and airports are withholding all information. However, whoever lives in a city where there are ports or airports can testify to lowered traffic, as exposed by regional correspondents in different states around Venezuela, in El Universal daily. More in Spanish: (El Universal; http://www.eluniversal.com/politica/2384/mantienen-baja-actividades-aeroportuarias)

 

Oil & Energy

Venezuela's meltdown comes at convenient time for OPEC

The pending collapse of Venezuela poses serious short- and long-term challenges for oil markets, but it also contains a silver lining for the OPEC cartel. Venezuelan oil production has been in decline for the past decade, but output has plunged rapidly in recent months as the OPEC member’s political and economic crisis intensifies bringing state oil company PDVSA to its knees. Venezuela production hit a three-decade low of 1.6 million barrels a day in January, down 20% from the same month a year earlier and off a whopping 600,000 barrels a day from its 2016 average of nearly 2.2 million barrels a day. The country’s situation will only get worse. Venezuela’s woes have been flagged by the International Energy Agency as a major wild card in oil markets this year that have contributed to the recent firming of crude oil prices, which are sitting at comfortable US$ 65 a barrel on the international benchmark. Venezuela’s meltdown comes at a convenient time for OPEC and provides a convenient hole for U.S. shale growth and keep it from crashing the market again. Because of this spare capacity, OPEC and shale could potentially co-exist profitably in a world of US$ 60-to-US$ 70 a barrel. The total collapse of Venezuela could bring about a different set of issues. The ensuing chaos and confusion could see Venezuelan exports drop to zero while buyers try to assess who to trust in Caracas. The bottom line is that there is no quick fix for PDVSA’s state of disrepair. Reviving the country’s oil sector will be a major endeavor, requiring not only massive investment but a bottom-up approach to rebuilding the state oil giant. PDVSA’s US$ 65 billion debt makes Maduro’s promise of recovering 70% of lost oil production volumes in the first half of 2018 simply impossible. It will take substantial time for Venezuela to rebuild trust with international oil companies and service contractors, who are owed substantial sums by PDVSA. Still, under the right fiscal conditions, the oil industry insists that Venezuela’s reserves can be extracted profitably. For that to happen, though, a credible and creditworthy government must emerge in Caracas. (FORBES: https://www.forbes.com/sites/daneberhart/2018/03/12/venezuelas-meltdown-is-helping-opec/#5cc909735a97; Bloomberg, https://www.bloomberg.com/gadfly/articles/2018-03-11/opec-sacrificed-venezuela-angola-for-greater-good)

 

Venezuela wants India to buy its oil using rupee, not US dollar

Venezuela wants to trade with India using Indian rupee, its Foreign Minister Jorge Arreaza said on Monday. Arreaza said Venezuela wants India to buy its oil using Indian rupee, which the country in turn can use for trading Indian food products and medicines. The arrangement to trade in Indian rupee currently exists between Iran and Bhutan and Venezuela wants a similar arrangement with India. Arreaza said his country has a similar arrangement with Turkey, China and Russia. He said a proposal in this regard was discussed with the finance and the petroleum ministries of India. The reason cited behind the move was the sanctions imposed by the US. India through its oil Public Sector Undertaking has invested substantially in the oil sector of that country. Venezuela is the second largest oil supplier to India. (News18: https://www.news18.com/news/business/venezuela-wants-to-trade-with-india-using-indian-currency-not-us-dollar-1687067.html)

 

Trump Jr. partnered with GOP donor who pushed for curbing sanctions in Venezuela

Donald Trump Jr. has a previously undisclosed business relationship with a longtime hunting buddy who helped raise millions of dollars for his father's 2016 presidential campaign and has had special access to top government officials since the election. The president's eldest son and Texas hedge fund manager Gentry Beach have been involved in business deals together dating back to the mid-2000s and recently formed a company — Future Venture LLC — despite past claims by both men that they were just friends. Beach last year met with top National Security Council officials to push a plan that would curb U.S. sanctions in Venezuela and open up business for U.S. companies here. Career foreign policy experts were instructed to take the meetings, first reported last April by the website Mic.com, at the direction of the West Wing because Beach and the businessman were friends of Trump Jr., the official said. The official said that inside the NSC lawyers raised red flags about the appropriateness of the meeting. (CNBC: https://www.cnbc.com/2018/03/12/trump-jr-partner-pushed-for-curbing-sanctions-in-venezuela.html)

 

Oil trading giants GLENCORE, VITOL targeted in PDVSA bribe suit

Oil trading giants including GLENCORE Ltd. and VITOL SA paid millions of dollars to a former PDVSA trader to get the inside track on Venezuelan oil deals, according to a lawsuit filed by a trust for Petróleos de Venezuela, S.A.

The alleged conspiracy, which includes more than two dozen companies and individuals, even has a name worthy of a Robert Ludlum thriller: The Helsinge Enterprise. PDVSA alleges firms including Lukoil Pan Americas LLC, Vitol, Glencore and Trafigura AG of funneling bribes through several shell companies that were set up by a pair of Venezuelan nationals including Francisco Morillo. Among the officials accused of coordinating the scheme from within PDVSA is company Vice President Ysmel Serrano, a close friend of Venezuelan Vice President Tareck El Aissami dating back to their college days. (Bloomberg, https://www.bloomberg.com/news/articles/2018-03-10/oil-trading-giants-glencore-vitol-targeted-in-pdvsa-bribe-suit)

 

Swiss arrest 2 in alleged oil corruption case

Prosecutors in Switzerland have made two arrests after opening a criminal investigation into a Geneva-based consulting firm that allegedly served as a conduit for bribes between Venezuela's state oil company and some of its biggest clients. A person familiar with the case said Monday that the Helsinge Inc. executives were arrested in recent days following allegations contained in a complaint filed by PDVSA, the Venezuelan state oil company. The person spoke on condition of anonymity because he was not authorized to discuss the matter publicly. The Geneva public prosecutor's office confirmed the probe against unspecified Helsinge executives on suspicion of corruption of foreign officials and money-laundering but declined to comment further. According to the civil lawsuit filed last week in a Miami federal court by a trust linked to PDVSA, the scheme to fix prices, rig bids and eliminate competition, as well as steal highly confidential information by cloning the company's computer servers, cheated the socialist-run company of billions in lost revenue since 2004. Those alleged co-conspirators named as defendants in the case include Russia's LUKOIL and Switzerland-based GLENCORE. It alleges they knew of and sanctioned actions by their oil traders and cites alleged communications between the traders and Helsinge discussing wire transfers and ways to alter the terms of future tenders before they were released to the general market. (The Chicago Tribune: http://www.chicagotribune.com/news/nationworld/sns-bc-eu--switzerland-venezuela-oil-corruption-20180312-story.html)

 

Economy & Finance

Venezuela cut to C by Moody's

Moody's Investors Service has today downgraded the Government of Venezuela's foreign currency and local currency issuer ratings, foreign and local currency senior unsecured ratings, and foreign currency senior secured rating to C from Caa3. Concurrently, the foreign currency senior unsecured medium term note program has also been downgraded to (P)C from (P)Caa3. The outlook has been changed to stable from negative. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2452462&CategoryId=10717; Reuters, https://www.reuters.com/article/moodys-venezuela/moodys-downgrades-venezuela-rating-by-two-notches-idUSL4N1QR5NO; Bloomberg, https://www.bloomberg.com/news/articles/2018-03-09/venezuela-credit-rating-bottoms-out-with-1-7-billion-overdue)

 

Venezuela annual inflation tops 6000% in February

Prices in Venezuela rose 6,147% in the 12 months to the end of February, according to estimates by the country’s opposition-led National Assembly released on Monday, broadly in line with independent economists’ figures. Inflation during the month of February alone was 80%, opposition lawmakers said, amid an economic crisis in which millions of Venezuelans are unable to find or afford basic food and medicine. “If this exponential velocity of price growth continues, prepare for an inflation of 131,985% in 2018,” tweeted opposition lawmaker and economist Angel Alvarado. (Reuters, https://www.reuters.com/article/us-venezuela-economy/venezuela-annual-inflation-exceeds-6000-percent-in-feb-national-assembly-idUSKCN1GO2GS)

 

Venezuela's Petro will harm 'legitimate' cryptocurrencies, says Brookings

Venezuela's petro is more likely to imperil "legitimate" cryptocurrencies than to save this nation's troubled economy, according to analysts at the Brookings Institute. In an article published on its website last Friday, the century-old think tank cautioned that "there exists a very real danger that the petro will not only fail to cure Venezuela's economic woes but will also weaken the integrity of cryptocurrencies writ-large." Brookings' reasoning is that if the petro proves to be as worthless as the think tank's analysts expect, "such realization and its aftermath may, unfortunately, contribute to the idea that cryptocurrencies facilitate fraud." Just as concerning, in Brookings' view, is that if the petro turns out to be an effective way to thwart international sanctions, other countries may feel emboldened to use the technology to get around such blockades. Last week, Venezuelan President Nicolas Maduro claimed that the petro had garnered more than US$ 5 billion in an ongoing pre-sale. He also declared that there were more than 186,000 offers to purchase the nominally oil-backed cryptocurrency. While Maduro said the petro pre-sale buyers are entrepreneurs and other individuals from 127 countries, the Brookings Institute posits that the petro will provide "no real service for its international holders," and is merely a "form of national illicit debt relief." Of course, Petro’s facts and figures aren’t particularly convincing, given that the announcement was made by Maduro to members of the United Socialist Part of Venezuela — during which time the controversial figure also claimed that all revenue from the sale of the cryptocurrency would go to the service of “everything out country needs.” (Coindesk: https://www.coindesk.com/venezuelas-petro-will-harm-legitimate-cryptocurrencies-says-brookings/; Bitcoinist: http://bitcoinist.com/venezuela-president-5-billion-petro/)

 

FOREX prices drop for the first time in the government DICOM exchange system

The price of the US dollar and the Euro dropped on Monday for the first time within the tightly controlled DICOM foreign exchange system run by Venezuela’s Central Bank. The bank reports that in the latest auction the price of the Euro dropped from VEB 49656 to VEB 45112. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/economia/precios-de-divisas-en-el-pais-bajaron-por-primera-vez-en-sistema-oficial-de-subastas-dicom; AVN; http://www.avn.info.ve/contenido/cambio-quinta-subasta-dicom-se-ubic%C3%B3-45112485-bs-%C2%80)

 

Central Bank to purchase diamonds as part of Venezuelan reserves

Central Bank director José Khan, who heads the Kimberley Process Office, has announced that Venezuela’s Central Bank will start buying diamonds and incorporate them as assets within the country’s international reserve system. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/bcv-comprar%C3%A1-diamantes-como-activos-reservas-internacionales)

 

Politics and International Affairs

Venezuela opposition asks U.N. not to send observers to May vote

Venezuela's opposition alliance called on the United Nations on Monday not to send observers to the presidential election on May 20 to avoid legitimizing a poll it says is rigged in favor of Socialist President Nicolas Maduro. Maduro, who is seeking re-election amid an economic collapse that has sent a tide of migrants to neighboring countries, has asked the United Nations to send observers to the vote. The main opposition coalition is boycotting the election on the grounds that the elections council has historically favored the ruling Socialist Party, and because the best-known candidates have been jailed or barred from holding office. A U.N. spokesman contacted via email said the government's request for a mission had been received. "But our position on all such matters is that the sending of electoral observers requires a mandate from one of the UN's Member State bodies" such as the Security Council or General Assembly, wrote spokesman Farhan Aziz Haq. "If the (General Assembly) or the Security Council were to provide a mandate, we would respond accordingly. But neither has done so up until now." Opposition leaders are planning a protest on Saturday to demand better conditions for the upcoming vote. (US News: https://www.usnews.com/news/world/articles/2018-03-12/venezuela-opposition-asks-un-not-to-send-observers-to-may-vote)

 

Maduro calls U.N. rights chief a U.S.-backed 'tumor'

President Nicolas Maduro said on Friday the United Nations human rights chief was a puppet of the United States who had implanted himself like a “tumor” and had no right to criticize Maduro’s handling of the crisis-stricken nation. U.N. High Commissioner for Human Rights Zeid Ra’ad Al Hussein said on Wednesday that crimes against humanity may have been committed by state forces in Venezuela and voiced alarm at “the erosion of democratic institutions” in the country. Maduro, who says there is a right-wing plot to sabotage his government, deflected the criticism during brief comments to journalists broadcast on state television. (Reuters, https://www.reuters.com/article/us-venezuela-politics-un/venezuelas-maduro-calls-u-n-rights-chief-a-u-s-backed-tumor-idUSKCN1GM00N)

 

For poor Venezuelans, a box of food may sway vote for Maduro

A bag of rice on a hungry family’s kitchen table could be the key to Nicolas Maduro retaining the support of poor Venezuelans in May’s presidential election. For millions of Venezuelans suffering an unprecedented economic crisis, a monthly handout of a box of heavily-subsidized basic food supplies by Maduro’s unpopular government has offered a tenuous lifeline in their once-prosperous nation. The 55-year-old successor to Hugo Chavez introduced the so-called CLAP boxes in 2016 in a signature policy of his rule, continuing the socialist government’s strategy of seeking public support with cash bonuses and other giveaways. Now, running for re-election on May 20, Maduro says the CLAPs are his “most powerful weapon” to combat an “economic war” being waged by Washington, which brands him a “dictator” and has imposed sanctions. (Reuters, https://www.reuters.com/article/us-venezuela-politics-food/for-poor-venezuelans-a-box-of-food-may-sway-vote-for-maduro-idUSKCN1GO173)

 

Unattended health rights crisis is forcing thousands to flee

Severe violations of the right to health, as well as difficulties accessing food and other basic services, are putting thousands of people’s lives at risk in Venezuela and fueling a regional forced migration crisis, Amnesty International said today on the launch of its digital platform Emergency Exit. “People in Venezuela are fleeing an agonizing situation that has transformed treatable health conditions into matters of life and death. Basic health services have collapsed and finding essential medicine is a constant struggle, leaving thousands with no choice but to seek health care abroad,” said Erika Guevara-Rosas, director of Amnesty International in the Americas. Local human rights organizations have said that Venezuela is suffering from an 80% to 90% shortage in medicine supplies; half of the nation’s hospitals are not functioning; and there has been a 50% drop in the number of medical staff at the public centers that provide 90% of health services. The Venezuelan government has denied the existence of food and health crises and rejected offers of aid and cooperation from the international community. Amnesty International calls on the Venezuelan State to work with the international community to ensure that financial and technical resources are available to guarantee timely access to necessary and quality health care for all. Colombian health services provided urgent treatment for more than 24,000 Venezuelans in 2017, according to Colombia’s Ministry of Health. Hospitals in the border cities of Maicao and Cúcuta treated two to three times as many patients from Venezuela in 2017 as they did the previous year. (Amnesty International: https://www.amnesty.org/en/latest/news/2018/03/venezuela-unattended-health-rights-crisis-is-forcing-thousands-to-flee/)

 

As Venezuelans flee collapsing country, UN asks other nations to treat them as refugees

Amid the growing exodus of Venezuelans, the United Nations for the first time is asking the region to treat the population as “refugees” who are unable to go home — rather than mere economic migrants. In a three-page report, the United Nations Refugee Agency, UNHCR, also recommends that countries that have received Venezuelans not deport, expel or forcibly return them “in view of the current situation in Venezuela.” In the document+t, titled “Guidance Note on the Outflow of Venezuelans,” the agency asks countries to guarantee Venezuelans residency and the right to work, even if they entered the country illegally or don’t have the proper identification papers. The guidelines would seem to be a rebuke to neighboring Colombia, which has increasingly been deporting Venezuelans and restricting their entry. (The Miami Herald: http://www.miamiherald.com/news/nation-world/world/americas/venezuela/article204753119.html)

 

UN official warns of humanitarian “catastrophe” in Venezuela

Colombia urgently needs international help as it struggles with a humanitarian “catastrophe” along its border caused by a flood of Venezuelan migrants driven from their homes by hunger, a senior U.N. official said Monday. David Beasley, director of the World Food Program, said the harrowing reports he heard from Venezuelan migrants makes raising awareness of the crisis an urgent priority. “This could turn into an absolute disaster in unprecedented proportions for the Western Hemisphere,” Beasley said in an interview following a two-day visit to talk with migrants in the Colombian border city of Cucuta. “I asked, ‘Why are you here?’, and the answer people gave me was, ‘We don’t have any food.’ And they said, ‘Even if we had money, there’s no food,’” Beasley recounted. “I don’t think people around the world realize how bad the situation is and how much worse it could very well be.” Beasley, who discussed the crisis with Colombian President Juan Manuel Santos, said the ideal approach would have the United Nations and international agencies attack the problem by working inside Venezuela. But that is not an option for now, because Venezuelan President Nicolas Maduro has repeatedly rejected offers of humanitarian aid as a veiled attempt by the U.S. and others to destabilize his socialist government amid calls by the opposition to oust him. Instead, Beasley is urging the U.S. and other nations to provide financial assistance to Colombia, where the bulk of the Venezuelan migrants are arriving. He said Colombia’s government enjoys the confidence of the global community while Maduro’s does not. (The Washington Post: https://www.washingtonpost.com/world/the_americas/un-official-warns-of-humanitarian-catastrophe-in-venezuela/2018/03/12/de4fc13c-265a-11e8-a227-fd2b009466bc_story.html)

 

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

01 December , 2016

International Trade

One day before suspension, Venezuela offers to adhere to MERCOSUR Economic Complementation Agreement

Foreign Minister Delcy Rodríguez says Venezuela is ready to adhere to the MERCOSUR (Common Market of the South) Economic Complementation Agreement #18, which aims at creating conditions for a common market by coordinating macroeconomic policies, tariff reductions and eliminating non-tariff barriers to trade, among others. Her announcement comes one day before a deadline for compliance by Venezuela set by MERCOSUR founding members: Argentina, Brazil, Paraguay and Uruguay. The founding members set December 1^st as a deadline for Venezuela to comply with all MERCOSUR standards or have its voting rights suspended indefinitely. In a joint statement, MERCOSUR demanded that Venezuela adopt “close to 300 rules” to comply with its obligations as a full member of the organization. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela-se-adhiere-al-acuerdo-de-complementacion.aspx#ixzz4RUDDRYfP; Infolatam: http://www.infolatam.com/2016/11/29/venezuela-comunica-resto-socios-se-adecuara-normativa-mercosur)

 

89 metric tons of optic fibers have arrived at La Guaira port from Curacao for the National Telephone Company (CANTV), to be used in repairing and maintaining company cables. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34802)

 

Oil & Energy

The OPEC deal is done. Here's what to expect from oil markets next

The Organization of the Petroleum Exporting Countries has committed its fractious members to their first oil production limits in eight years. The impact on the energy world was immediate: benchmark oil prices gained as much as 10% in New York and the share prices of energy companies around the globe jumped alongside the currencies of large exporters. Now comes the hard part. OPEC has agreed to cut production by about 1.2 million barrels per day, or about 4.5% of current production, to 32.5 million barrels per day. Top oil exporter Saudi Arabia faces the unenviable tasks of policing cartel members and keeping crude prices within a range that will relieve pressure on oil-producing countries' economies, but which will dissuade non-OPEC producers from increasing output. Analysts broadly expect an agreement to boost oil prices above US$ 50 a barrel and keep them there. Prices have wavered between about US$ 40 and US$ 54 since the spring Commodity watchers also believe the deal will set up a long-awaited balance between oil supply and demand in the first half of next year. But OPEC now has a difficult needle to thread. Oil rigs began popping up in U.S. oil fields when prices approached US$ 50 a barrel, and analysts believe high-cost producers outside OPEC will further ramp up production if crude prices rise above US$ 55 a barrel.  That includes U.S. shale drillers, which have built a backlog of partially completed wells in anticipation of a price recovery. Once prices rise, they could switch on that production-in-waiting. Goldman Sachs believes the deal will cause crude prices to spike in the first half of 2017, and then moderate in the second half as both OPEC and U.S. shale producers capitalize on the rally. But JPMorgan sees prices rising slowly but steadily quarter after quarter. The bank cautioned that the deal is essentially aimed at preventing an even larger buildup of oil stockpiles. Skeptics have long warned that OPEC members are notorious cheaters and may not stick to quotas agreed to in Vienna. But RBC Capital Markets said adherence may not matter so much this time for a simple reason: OPEC members are near full-tilt, and they don't have much more capacity to pump.  Beyond OPEC, other countries aren't helping out those who hope for higher prices, the International Energy Agency said in its latest oil market report. Demand for oil around the world is expected to increase by 1.2 million barrels a day in 2017, a rate of growth that would match this year. The IEA also projects Russia, the world's largest oil producer, to increase its crude output by 230,000 barrels a day this year. The agency says Russia could boost production by another 200,000 barrels a day next year. OPEC said it is seeking to secure 600,000 barrels per day of cuts from non-OPEC producers, and that Russia has committed to temporarily cut production by about 300,000 barrels per day, “conditional on its technical abilities,” Energy Minister Alexander Novak said in Moscow. But implementing the cuts will be difficult for Russia. The Russian government, which owns a majority share in that country's big oil companies, would face a revolt from minority shareholders if it sought to limit production, he said. From a technical perspective, Russia can't turn off the taps, because much of the production comes from areas with freezing temperatures where drillers must keep oil flowing, he added. Prior to OPEC's announcement, the IEA said it also expects Brazil, Canada and Kazakhstan to pump more in 2017. That would push total non-OPEC output growth to 500,000 barrels a day next year, compared with a projected decline of 900,000 barrels a day this year. "This means that 2017 could be another year of relentless global supply growth similar to that seen in 2016," IEA said. OPEC will meet again on May 25 next year, at which point it intends to extend the cuts by another six months, Qatari Energy Minister Mohammed Al Sada told reporters in Vienna. (CNBC: http://www.cnbc.com/2016/11/30/the-opec-deal-is-done-heres-what-to-expect-from-oil-markets-next.html; Bloomberg: https://www.bloomberg.com/news/articles/2016-11-30/opec-said-to-agree-oil-production-cuts-as-saudis-soften-on-iran; The Wall Street Journal: http://www.wsj.com/articles/opec-deal-to-curb-production-in-doubt-oil-prices-rebound-1480481281)

 

Venezuela to cut 95,000 BPD, but will haunt oil long after Vienna

President Nicolas Maduro has welcomed the OPEC consensus on cutting 1.2 million barrels per day (bpd) in the joint oil production. "I congratulate and thank our OPEC partners for the important agreement we have reached today to stabilize the market," he said in his Twitter account. Oil Minister Eulogio Del Pino said this country will cut 95.000 barrels per day, a 4.6% reduction from 2.06 million BPD to 1.97 million BPD, starting January 1^st; and Venezuela, Kuwait and Algeria will be part of a Ministerial Monetary Committee, established today by OPEC to monitor the development of the oil market.  But Venezuela's officials can't be so sanguine. Venezuela's real GDP per capita has gone from its highest in 3 decades to almost its lowest in the space of about 5 years. So even if Saudi Arabia OPEC does agree to cut production to support prices, Venezuela's problems won't disappear. Which means its status as a wildcard in global oil supply won't, either. PDVSA’s problems are structural, rather than cyclical. The company has never fully recovered from the general strike and subsequent purging under late president Hugo Chavez in 2002 and 2003, with production drifting down even during the boom in oil prices for much of the decade after 2004. Part of the problem is that, as is often the case with state-owned oil companies, PDVSA was a piggy bank for the government. Social expenditure outpaced investment in exploration and production consistently over the past decade. The decline is worse because PDVSA's production has been shifting toward heavier grades of crude oil from the so-called Orinoco oil belt. Heavy oil from the Orinoco belt has risen from 38% of Venezuela's falling output to almost half. This oil is harder to process, and gets priced at a discount. So along with simply producing fewer barrels, Venezuela gets less for each one. Meanwhile, as its lighter oil production declines, it has fewer of those barrels to blend in with the heavier crude to make it palatable to refiners. The consequent need to import more light oil effectively raises the cost of each barrel and drains the country of precious dollar reserves. The traditional discount on Venezuela's basket crude oil price versus Brent has widened out even more in the past couple of years. At this point, PDVSA is straining to keep going. It just got an extension on some debt coming due after weeks of brinkmanship with bondholders. Contractors such as Schlumberger Ltd. -- crucial to holding the line against further declines in oil production -- have reduced activity in Venezuela until unpaid bills are settled. And a large proportion of PDVSA's output is effectively mortgaged to creditors, such as China, or earmarked for subsidized customers, such as Cuba. For all its tribulations, PDVSA will do everything it can to avoid defaulting on its debts, for fear of what would happen if the bond market were closed to it. If oil prices do increase from here, perhaps as result of an OPEC freeze/cut, then that would provide more breathing room for both the national oil champion and the government. Venezuela's structural problems mean it needs more than just temporary breathing room, though. In an extreme scenario, food shortages, rampant inflation and an unpopular government's effective blockage of a recall referendum could lead to widespread civil unrest and possibly a collapse in both oil production and consumption, taking perhaps 1.5 million barrels a day of exports off the global market. That would be the scale of cut OPEC has talked about -- only a de facto one coming out of Caracas rather than Vienna. If prices plunge again in the absence of a credible OPEC cut, then this potential reality comes a bit more into focus. Yet, even if Venezuela avoids such chaos, its existing problems will haunt the oil market for years to come anyway. Remember, even when prices were high, PDVSA's output was declining and turning heavier. Having dropped by about 300,000 barrels a day this year, it could easily drop by the same amount next year -- which would equate to one quarter of the expected increase in global oil demand. That would, in turn, support prices -- but mainly to the benefit of rivals such as U.S. shale drillers and OPEC's more stable members, rather than Venezuela itself. (Bloomberg: https://www.bloomberg.com/gadfly/articles/2016-11-30/opec-meeting-venezuela-will-haunt-oil-long-after-vienna; and more in Spanish: El Economista: http://www.eleconomista.net/2016/11/30/ecuador-reducira-su-bombeo-en-26000-barriles-diarios-y-venezuela-en-95000; El Universal: http://www.eluniversal.com/noticias/economia/opep-acordo-recortar-produccion-petroleo_629328)

 

Economy & Finance

Venezuela's currency is in 'free fall'

It's the latest sign of Venezuela's extreme economic, political and humanitarian crisis. Sky high food prices -- or massive shortages of basic food and medicine -- have plagued Venezuelans for years and have gotten worse this year. Inflation in Venezuela is expected to rise 1,660% next year, according to the IMF. The country has been in recession for three years now.  One dollar fetched 1,567 bolivars on November 1. On November 28, a dollar was worth 3,480 bolivars on the widely-used unofficial exchange rate monitored by Dolartoday.com. "It's a currency that's going down the toilet," says Russ Dallen, managing partner at Caracas Capital Markets, an investing firm in Miami. "No one wants to hold on to something that's going to be worth 50% less in a month."  A few factors are behind the bolivar's most recent plunge. The government has been forced to pump cash into its system because the money in circulation isn't enough to pay for goods that cost a lot more. But with the value of the bolivar falling so dramatically, Venezuelans are desperately trying to exchange their bolivars for dollars, which are seen as a more a more valuable and stable currency. That's led to a scarcity of dollars. That's boosted the dollar's value versus the bolivar even more. 

1. Food prices have skyrocketed this fall as the government stopped enforcing some price controls following a food scarcity. Many vendors had stopped selling food because the price controls was forcing them to sell at a loss. Now, with the price controls gone, there's food available on supermarket shelves, but at such exorbitant prices that few Venezuelans can afford. 
2. The government recently increased the minimum wage by 40%.
3. Venezuela fully reopened its border with Colombia earlier this summer, allowing Venezuelans to go and exchange money to buy basic food and medicine. That drove up demand for dollars and more bolivars disappeared from circulation.
4. Finally, the government cut the cash requirements at banks in Venezuela, which also helped juice the number of bolivars in circulation.

Central Bank data shows liquidity grew 201% - 1.61 trillion bolivars – between September 30th and November 18th, from 3.6 trillion in November 2015 to 8.29 trillion now, an increase of 130.2%, which has caused devaluation and soaring inflation. Against this backdrop, there's no end in sight for Venezuela's cash crisis. "It's absolutely a worthless currency," says Siobhan Morden, head of Latin America fixed income strategy at NOMURA HOLDINGS. "1,000 to 2,000 to 3,000 -- it's just crazy. It's in free fall." (CNN Money: http://money.cnn.com/2016/11/29/investing/venezuela-worthless-currency/; and more in Spanish: (El Nacional, http://www.el-nacional.com/economia/gobierno-Bs-billones-economia-inflacion_0_967703387.html)

 

Venezuela will release even bigger bills to help shrink wallets

After years of soaring prices reduced the value of the largest 100-bolivar bill to just a few U.S. cents, Venezuelan authorities are finally preparing to issue larger-denomination bank notes, much to the relief of shoppers.  The notes -- 500 and 5,000 bolivars -- will be released toward the middle of next month, said a senior government official who isn’t authorized to talk about the plans publicly. Additional bills of 1,000, 2,000, 10,000 and 20,000 bolivars will enter circulation in the first half, the official said. The refusal of the authorities to issue bigger bills had forced Venezuelans to ditch wallets in favor of bags of cash for everyday transactions. Things have got so bad that some shopkeepers weigh wads of bank notes instead of counting them to save time. Venezuela’s money supply has risen 130% over the past year, according to the latest data available from the Central Bank in Caracas. On the black market, where a dollar costs more than six times as much as the weakest legal rate of 662 bolivars per dollar, the currency has slumped 65% this month alone. (Bloomberg: https://www.bloomberg.com/news/articles/2016-11-30/venezuelan-inflation-hits-currency-with-arrival-of-bigger-bills)

 

Venezuelan gold reserves to increase with artisanal ingots

President Nicolás Maduro has announced that the first artisanal gold ingots manufactured in the Orinoco Mining Arc, south Venezuela, would be sent to the vaults of the Central Bank of Venezuela (BCV), with a view to strengthening the country’s international gold reserves. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-gold-reserves-grow-with-artisanal-ingots_629200)

 

Politics and International Affairs

Oppositions will pull out of talks if the government does not honor commitments

The Democratic Unity (MUD) opposition coalition has formally told Vatican and UNASUR mediators that they will not attend a second meeting on December 6^th, if the Maduro regime does not honor the commitments it made at their first meeting. It says: “Any form of dialogue, meeting or negotiation is useless if there is no guarantee that both sides will honor the agreements that are reached.” Mayor Carlos Ocariz, of the Primero Justicia party, said “we have complied with all that we formally agreed to on 11-12 November, and the government has complied with nothing”. He explained that the government has disregarded the agreement to call of the Supreme Tribunal’s ruling that the National Assembly is in contempt, to replace two members of the National Elections Council (CNE), free the political prisoners, and open a route for humanitarian aid. He said the opposition had suspended the political trial of President Maduro, called off demonstrations and withdrawn 3 contested legislators from Amazonas state. It said it will not return to the negotiating table if the government doesn’t urge the Supreme Tribunal to nullify its ruling of contempt along with sentences that have restricted the National Assembly’s powers; name two new members of the National Elections Council by December 4^th, when the term of Socorro Hernández and Tania D’Amelio expires; free political prisoners and set up a bilateral Truth Commission; open a humanitarian relief channel to import food, and medical supplies; call for new elections in Amazonas state at a mutually agreed upon date, through a Supreme Tribunal sentence. If the government has not complied by December 6^th, the MUD will announce its final decision and call for constitutional, electoral, democratic and peaceful action to overcome the political, institutional, social and economic crisis Venezuela is undergoing. It adds that “the obstinate refusal of the government to comply with its part of the agreements clearly points to internal divisions that prevent them from compliance and therefore sits down to talks to gain time and fool the people….the Democratic Unity coalition wants a dialogue that has results that allow this country to constitutionally and democratically elect a national unity government that is able to stop the economic crisis, recover political governability, rebuild social coexistence, and fully respect human rights.”  More in Spanish: (El Universal: http://www.eluniversal.com/noticias/politica/mud-amenazo-con-abandonar-dialogo-gobierno-cumple-acuerdos_629415)

 

Church authorities toughen stance on regime’s non-compliance with dialogue agreements

Roman Catholic Church authorities are witnessing the lack of commitment by the Maduro regime in complying with what it has offered at talks with the opposition sponsored by the Vatican and UNASUR. Monsignor Diego Padrón, Chairman of the Roman Catholic Bishops Conference, says “the government must comply with two things: freeing political prisoners and opening up a humanitarian channel to aid citizens needy of food and medicine…The Conference is not happy with the dialogue process and most of the people aren’t happy either….The people feel the government wants to control the dialogue, and the manner in which the government presents the dialogue to media transmits that negative impression”. At the same time, Jesuit father José Virtuoso, Rector of the Catholic University said “democracy in Venezuela is in a parenthesis because the government has managed elections arbitrarily. If there are no elections, dialogue must be abandoned.” More in Spanish: (El Universal: http://www.eluniversal.com/noticias/politica/runrunes_629257)

 

AI urges Venezuelan authorities to stop police raids.

Human rights organization Amnesty International urged Venezuelan authorities to stop implementing anti-crime operations called Operation Liberation and Protection of the People (OLP) and to develop “plans for comprehensive citizen safety which respect human rights.” In a communiqué disclosed on Wednesday, the organization noted that security plans needed to include the broad and diverse participation of civil society and the guidance of the Inter-American Commission on Human Rights and the Office of the United Nations High Commissioner for Human Rights. “The so-called OLP has been reported by civil society organizations and individual cases of arbitrary detentions, torture and other cruel, inhuman and degrading treatment such as forced disappearances and executions carried out by officials who should be responsible for ensuring compliance with the law,” the communiqué reads, EFE reported. Last weekend, 12 bodies were found in two mass graves in the Barlovento area, northern Miranda state. They had been detained a month ago, in the context in one of the security operations in question and had no criminal record, according to Venezuelan Ombudsman Tarek William Saab. (El Universal: http://www.eluniversal.com/noticias/daily-news/urges-venezuelan-authorities-stop-police-raids_629426)  

 

Judge Afiuni's case to be presented at National Assembly

Following an Opinion from the United Nations Working Group on Arbitrary Detention, the National Assembly’s Domestic Policy Committee, headed by opposition lawmaker Delsa Solórzano, will review the case of judge María Lourdes Afiuni, who was accused of releasing businessman Eligio Cedeño. Afiuni spoke at a private hearing, and claimed her case “has revealed the horror that the country’s justice system has been turned into.” “Afiuni, who was released on parole in 2013, also said that: “Here (in Venezuela) the fear of judges prevents things from being clarified; they only follow instructions from the Executive Office. Thus, legal autonomy and independence are gone”. (El Universal, http://www.eluniversal.com/noticias/daily-news/judge-afiunis-case-presented-venezuelan-congress-meeting_629431)

 

As Venezuela talks stutter, detained Maduro foes languish

A hundred or so opponents of President Nicolas Maduro have been detained on accusations or formal charges of plotting to overthrow his socialist government. Their fate is high on the agenda of Vatican-brokered talks between the government and opposition, intended to halt unrest and prevent further bloodshed in a deeply divided country in the midst of a crippling recession. Though the month-long talks have been faltering, several of the detainees - whom the opposition call political prisoners but Maduro says are coup-plotters and criminals - were released as early goodwill gestures around Pope Francis' initiative. But the opposition is demanding freedom for all, raising families' hopes. "None of them should be there in the first place. They use the prisoners as hostages, bargaining chips," said Adriana Pichardo, a legislator and rights spokeswoman for the hardline Popular Will party whose members have taken the brunt of arrests. Local rights group Penal Forum lists 108 political prisoners currently, up from 11 when Maduro was elected president following Chavez's death from cancer in 2013. The opposition coalition puts the current number higher, at 135. In the last two years, there have been 6,811 politically-motivated detentions, though most of those were short-term and spiked during a wave of anti-Maduro protests in 2014, according to Penal Forum which tracks cases and offers free legal assistance. The accusations range from stashing arms and explosives, to inciting violence and hate via Twitter and political ads. Of 53 new detainees in 2016 on Penal Forum's list of political prisoners, 49 were taken after former government leaders from Spain, Panama and the Dominican Republic began promoting talks in May, the rights group said. "They free some, but they've already taken more, so where is the gain?" Penal Forum director Alfredo Romero said. "That's their game." (Reuters: http://www.reuters.com/article/us-venezuela-politics-prisoners-idUSKBN13P1YT)

 

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

October 26, 2016

International Trade

MERCOSUR to discuss enforcement of democratic clause against Venezuela

The Common Market of the South (MERCOSUR) will hold a meeting "in the upcoming days" to discuss whether the democratic clause should be enforced against Venezuela, informed Uruguayan President Tabaré Vázquez at a press conference, along with his Argentinian counterpart Mauricio Macri. "As for the democratic clause, MERCOSUR has to hold a meeting to discuss the matter, and Uruguay will attend that meeting and it is going to discuss it with the integrity and responsibility we seek to prosecute in our governance," said Vázquez, who specified neither date nor place of the meeting. For his part, President Macri noted that both Uruguay and Argentina were “very concerned about how things have worsened” in Venezuela. "Under these terms, Venezuela cannot be part of Mercosur,” and added that this country has to be "deplored by all American nations and the entire world" as "human rights are not being respected." (El Universal, http://www.eluniversal.com/noticias/daily-news/mercosur-discuss-enforcement-democratic-clause-against-venezuela_624077)

 

Oil & Energy

Venezuela winning bondholder relief as 39% accept PDVSA swap

Petroleos de Venezuela SA, maneuvering to repay a ballooning debt load, says that creditors holding US$ 2.8 billion of bonds have agreed to extend maturities after weeks of tense negotiations that included dire warnings from Caracas of a possible financial collapse. The deal, while far short of the US$ 5.325 billion that PDVSA had been seeking to exchange, was still seen as significant enough to win the state-run oil giant the relief it needs to continue servicing its debts for the time being. Notes from the company and Venezuela’s government surged after the announcement. The deal comes at a hefty cost. While the country’s oil minister touted it as a victory for the “fatherland,” Venezuela had to pawn one of its most attractive assets -- CITGO Petroleum Corp., the U.S. unit of PDVSA -- to persuade investors to accept the deal. Years of declining output and a crash in oil prices have left PDVSA and the government, which relies on crude for almost all its hard currency income, struggling to find enough cash to make payments and import basic necessities. (Bloomberg, http://www.bloomberg.com/news/articles/2016-10-24/venezuela-wins-relief-from-bondholders-as-39-accept-pdvsa-swap; El Universal, http://www.eluniversal.com/noticias/daily-news/bond-swap-5257-pdvsa-says_624128)

 

Commodities

Agriculture Ministry, NESTLÉ sign agreement to expand production

Venezuela’s Agriculture and NESTLÉ have signed an agreement to create 1500 direct and indirect jobs and substitute imports worth US$ 15 million through investments seeking to increasing production in 30 items, including milk, cocoa, rice, fruit and fruit pulp. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/economia/acuerdo-con-nestle-permitira-ahorro-millones-dolares_624125)

 

Economy & Finance

U.S. said to be closing in on PDVSA-linked seizures

U.S. Federal prosecutors are preparing to charge several individuals and confiscate their property over the alleged looting of Venezuela’s state oil company in what may amount to one of the biggest asset seizures in U.S. history. Three people familiar with the case say the government has been investigating at least a dozen Venezuelans and is expected to file charges in Houston against a few of them as soon as next month. Those on the list, including former executives of Petroleos de Venezuela SA, known as PDVSA, are suspected of having taken bribes from middlemen to award contracts at inflated prices, helping to siphon more than US$ 11 billion out of the country. All three people spoke on condition of anonymity because the investigation is ongoing and sensitive due to its impact on U.S. foreign policy. The government has set its sights on a number of U.S. assets, including about 20 residential properties, some in West Palm Beach and the Houston suburbs. Switzerland has seized US$ 118 million in assets from Swiss banks related to the matter and sent US$ 51 million to U.S. authorities, Bloomberg reported on Tuesday. Venezuela’s opposition-run congress is separately seeking to recover US$ 11.3 billion that went missing from PDVSA between 2004 and 2014 while Rafael Ramirez, currently Venezuela’s ambassador to the United Nations, was company president. It seeks to hold him politically responsible. Ramirez has rejected the congressional accusations as lies. Investigators are also looking at the dealings involving PDVSA and a number of companies, including Pratt & Whitney, General Electric and Rolls Royce Holdings, as well as ProEnergy Services, a Missouri-based firm. The prosecutors have been tracking money that flowed through Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co., they added. The people under investigation include current Venezuelan government officials, prominent businessmen and individuals suspected of involvement with cocaine trafficking, two of the people said. Homeland Security Investigations, the Drug Enforcement Administration and the FBI are all involved in the investigation, which has been under way for at least three years and looks at activity going back to 2005.  The investigation comes at a time when the cost of corruption is vividly apparent in Venezuela’s crumbling economy. A former finance minister, Jorge Giordani, has said that as much as US$ 300 billion was embezzled from Venezuela in the last decade through high-level corruption. The U.S. has a strong legal interest in the case because the allegedly ill-gotten money passed through its banks and was used to buy property here. The people under investigation have been linked to billions of dollars of gains, much of which was transferred to offshore accounts in Panama, the people said. (Bloomberg: http://www.bloomberg.com/news/articles/2016-10-25/u-s-said-to-be-closing-in-on-venezuelan-asset-seizures-charges)

 

Central Bank orders higher denomination currency

It has been reported that Venezuela’s Central Bank has ordered a VEB 1000 coin and currency bills denominated at VEB 5,000; 10,000 and 20,000 for delivery toward the end of this year due to inflationary pressure here, which the International Monetary Fund expects will close at 700% by year end. More in Spanish: (El Universal:

http://www.eluniversal.com/noticias/economia/bcv-ordena-fabricar-billetes-alta-denominacion_624168)

 

Venezuelan foreign debt only payable in foreign currency, says Rodriguez of TORINO

“Converting foreign currency bonds to local currency would of course be an event of default under the terms of the bond indentures and would trigger Credit Default Swaps,” said Francisco Rodríguez, Chief Economist of TORINO Capital, in reference to a claim filed by company Corporation XT 46 with the Supreme Tribunal of Justice (TSJ). “The claim argues that Article 128 of the Law on the Central Bank (of Venezuela), which stipulates that payments in foreign currency must be made in a currency of legal tender at the place of payment, allows (state-run oil company Petróleos de Venezuela) PDVSA to pay in bolivars the coupons and amortizations of its foreign currency bonds,” according to Rodríguez’s report. “Coming as it did on the eve of Friday’s (since extended) deadline for PDVSA’s exchange offer for its two issuances due on 2017, and given that the claim explicitly referenced these issuances (as well as the Pdvsa 2016 bonds due October 28), the news generated concern that the government may have been looking for ways to avoid upcoming payments (…),” the economist noted. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-foreign-debt-only-payable-foreign-currency_624117)

 

Politics and International Affairs

Enraged Venezuela opposition escalates anti-Maduro protests

Venezuela's increasingly militant opposition stepped up its push to remove leftist leader Nicolas Maduro on Wednesday with rallies that drew hundreds of thousands of protesters and calls for a general strike and march on the presidential palace. Enraged by last week's suspension of their push for a referendum to remove Maduro and determined to end 17 years of socialism here, Venezuela's opposition has sharply ramped up its tactics in recent days.  Maduro, the unpopular 53-year-old successor to Hugo Chavez who has presided over an unprecedented economic crisis, accuses the opposition of seeking a coup with U.S. help. "They are desperate, they have received the order from the north to destroy the Venezuelan revolution," he told a counter-march of red-shirted government loyalists. After launching a political trial against Maduro on Tuesday in the National Assembly, the opposition coalition held nationwide marches dubbed "Takeover of Venezuela" on Wednesday. "This government is going to fall!" crowds chanted, many wearing white and waving national flags as they filled one of Caracas' main highways.  Protesters clashed with security forces in several cities across Venezuela, including the volatile western town of San Cristobal that was an epicenter of violence during 2014 anti-Maduro protests. Opposition leaders said there were dozens of injured, with two protesters reportedly struck by bullets in the Western city of Maracaibo near Colombia. Both were hospitalized and expected to recover.  Coalition leaders called for a national strike for Friday, and a Nov. 3 march to the Miraflores presidential palace in Caracas, unless the election board allows the referendum.  In apparent tactics to impede the opposition demonstrations, authorities set up roadblocks and closed some underground metro stations in Caracas. Reuters journalists in several cities reported big crowds at the opposition rallies, especially in the capital, collectively numbering hundreds of thousands. Wary of trouble, many businesses stayed shut and some parents kept children away from school. In the restive city of San Cristobal, masked protesters threw rocks and petrol bombs in clashes with security forces and attacked the local headquarters of the electoral council.  Maduro convened a special Committee for the Defense of the Nation at the presidential palace to analyze the National Assembly's actions against him and a tentatively scheduled dialogue with the opposition this weekend. National Assembly head Henry Ramos, a veteran politician who swaps insults with Maduro almost daily, declined an invitation to attend. "Here's his chair, empty again," said Maduro, urging participation in talks supported by the Vatican, regional bloc UNASUR and various ex-heads of state. Opposition leaders, however, said they would not attend talks until the government allowed the referendum process to continue. (Reuters: http://www.reuters.com/article/us-venezuela-politics-idUSKCN12Q0B6)

 

National Assembly votes to put President Nicolas Maduro on trial; military brass backs him

Venezuela’s opposition-led National Assembly voted on Tuesday to put President Nicolas Maduro on political trial, but the legislature’s dwindling power means the decision will likely have no practical effect. The vote was an attempt to put new pressure on Maduro a day before the opposition planned a show of force on the streets. The legislature charged Maduro with abandoning the presidency and carrying out a coup against the Constitution. “Let him respond for the actions that have destroyed, broken, denied the right to choose in a democracy,” said Julio Borges, the leader of the Assembly’s opposition bloc. In response to the vote, Edwin Rojas, a lawmaker from Maduro’s Socialist Party, said, “This is a cheap copy of impeachment.” Referring to the impeachment of former President Dilma Rousseff of Brazil, he added, “We are not Brazil.” Venezuela’s political turmoil has grown more intractable by the day, with the opposition reacting furiously to a decision by the Electoral Council last week that blocked a drive for a referendum to recall Maduro. The referendum has been seen as the most effective legal avenue to challenge Maduro’s increasingly autocratic rule, which many Venezuelans blame for the collapsing economy. Polls have shown that an overwhelming majority of Venezuelans would vote to remove him. Addressing a crowd outside the presidential palace on Tuesday, Maduro disregarded the Assembly vote. Instead, he blamed President Obama for Venezuela’s political standoff. “These attacks from the right are an attack by Obama because he is close to leaving,” Maduro said. He also invited the opposition president of the National Assembly, Henry Ramos Allup, to meet with him and other members of the government. As he spoke, the crowd chanted, “Dissolve the Assembly!” Maduro has just returned from a five-day trip overseas, where he met on Monday with Pope Francis and early Tuesday with the incoming secretary general of the United Nations, António Guterres. The Vatican has been attempting since May to mediate between Venezuela’s government and the opposition, and it appeared to have made a breakthrough on Monday, when the pope’s special envoy to Venezuela, Archbishop Emil Paul Tscherrig, said both sides would begin a dialogue on Sunday. But leading opposition figures said they would not take part in the session, suggesting instead that the government wanted to buy time by agreeing to discussions. “In a possible dialogue, the opposition has nothing to offer, only to demand,” Ramos Allup said. As the crisis mounted, the army came down squarely in support of Maduro. Defense Minister General Vladimir Padrino Lopez, in a rare televised address, accused congress of trying to promote instability and said the country’s armed forces would uphold the rule of law here. Congress’s “real intent is nothing less that to gravely affect the institutionality of the country through chaos and anarchy,” he said in a prepared statement. “They want to overthrow the lawfully established government of Nicolas Maduro Moros, who for us is not partial to politics but rather the constitutional president and commander in chief of the Bolivarian Armed Forces, with supreme authority and to whom we reiterate our unconditional loyalty and unwavering commitment.” (The Wall Street Journal: http://www.nytimes.com/2016/10/26/world/americas/venezuela-nicolas-maduro.html; Reuters, http://www.reuters.com/article/venezuela-politics-idUSL1N1CV102; Bloomberg, http://www.bloomberg.com/news/articles/2016-10-25/venezuela-s-military-backs-maduro-in-dispute-with-congress)

 

Pope urges Maduro to alleviate people's suffering

President Nicolas Maduro made a surprise visit on Monday to Pope Francis, who urged the embattled leader to alleviate people's suffering and negotiate with the opposition to solve his country's crisis. The private, evening meeting took place in the framework of the "worrying" situation in Venezuela which was "weighing heavily on the entire population", a Vatican statement said. It said the pope had urged Maduro to "courageously take up the path of sincere and constructive dialogue to alleviate the suffering of the people, most of all the poor, and to promote a climate of renewed social cohesion, which will allow people to look to the future of the nation with hope".  (Reuters, http://www.reuters.com/article/us-pope-venezuela-maduro-idUSKCN12O2A9; http://www.reuters.com/article/pope-venezuela-maduro-idUSL8N1CU5PA; Bloomberg, http://www.bloomberg.com/news/articles/2016-10-24/venezuela-s-maduro-meets-pope-francis-as-vatican-joins-talks; El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelas-maduro-meets-with-pope-francis_624163)

 

Papal Representative announces start of a dialogue; opposition says no talks without recall referendum

The Pope’s Special Representative, Monsignor Emil Paul Tscherrig, announced that President Nicolas Maduro’s government and the opposition MUD alliance agreed to initiate a dialogue next week in pursuit of a solution to this nation’s political crisis. The agreement to begin talks emerged from a meeting of the parties under the auspices of the Union of South American Nations (UNASUR), through the former presidents of the Dominican Republic, Leonel Fernandez, and Panama, Martin Torrijos, and former Spanish President Jose Luis Rodriguez Zapatero, the papal representative said. But opposition leaders balked at the terms of the announcement. "No dialogue has begun in Venezuela," said two-time presidential candidate Henrique Capriles. "These devils want to use the good faith of Pope Francis to buy more time." The opposition Democratic Unity coalition's major parties mostly said they would not be engaging in the talks unless the recall referendum process is reinstated. They also demanded that any talks be held in Caracas, not Margarita Island as originally proposed. The secretary general of the opposition coalition, Jesus Torrealba, who met Monsignor Tscherrig, said that while talks are important and Papal mediation has been sought by them, "it can't continue to be a strategy for the government to gain time".  Capriles later emphasized that he is willing to discuss how to solve the nation’s problems, saying: “If I have to meet with the devil, I would do so, with witnesses, with the Vatican”; and emphasized that he distrusts government representatives and those from UNASUR, particularly Rodríguez Zapatero; and would ask for conditions such as incorporating other heads of state, such as Spain’s Felipe Gonzalez; clear rules and a clear agenda that includes restoring the Constitution, freeing political prisoners,  accepting humanitarian aid, access for media and calling up a recall vote. “The opposition has nothing to negotiate. The government calls for talks because it is drowning…Talks are not to save Maduro and his regime”. He said that through talks he could agree to new general elections, through a Constitutional amendment, “Signed, because one cannot believe anything from those people, and endorsed by the people.” (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423857&CategoryId=10717; El Universal, http://www.eluniversal.com/noticias/daily-news/vatican-envoy-announces-govt-opposition-talks-venezuela_624009; Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKCN12O27N; BBC News: http://www.bbc.com/news/world-latin-america-37758515; and more in Spanish: El Nacional, http://www.el-nacional.com/politica/Capriles-oposicion-negociar_0_946105681.html)

 

Head of Roman Catholic Bishops Conference says talks have not begun

Monsignor Diego Padrón, Chairman of Venezuela’s Roman Catholic Bishops Conference, says that talks between the government and its opposition have not yet begun. He said that on Sunday, October 30^th there may be a meeting to set an agenda. He added that the Vatican continues to explore what disposition there is on both sides towards talks, and emphasized that talks cannot replace the people’s right to revoke President Maduro. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/25/173405=monsenor-diego-padron-aclaro-que-dialogo-entre-gobierno-y-oposicion-aun-no-ha-comenzado)

 

UNASUR praises talks in Venezuela, calls for more democracy

The Union of South American Nations (UNASUR) on Monday embraced the decision made by the Venezuelan government and the opposition to engage in talks, adding that political crisis may be solved only with more democracy. In a communiqué, Colombian ex-President and UNASUR’s Secretary General Ernesto Samper said that “today more than ever, it makes sense to call on all Venezuelans to find, through dialogue, the solution to differences that have them confronted with each other”. Likewise, Samper pointed out that the decision made by the National Electoral Council (CNE) to halt the collection of signatures for a recall vote against the term in office of President Nicolás Maduro could have intensified the differences. (El Universal, http://www.eluniversal.com/noticias/daily-news/unasur-praises-talks-venezuela-calls-for-more-democracy_624148)

 

HRW calls for international pressure in Venezuela’s humanitarian crisis

Human Rights Watch is urging “strong international pressure,” in particular from the countries of the Americas, to get the Nicolas Maduro government to take “immediate measures” to deal with the “profound humanitarian crisis” in Venezuela, according to a lengthy report released Monday. “The Venezuelan government has seemed more vigorous in denying the existence of a humanitarian crisis than in working to resolve it,” said HRW Americas director Jose Miguel Vivanco. “Its failures have contributed to the suffering of many Venezuelans who now struggle every day to obtain access to basic health care and adequate nutrition,” he added. In preparing the report, in which HRW denounces the “severe shortages” of medicines and food in Venezuela, as well as the “inadequate and repressive” government response, the human rights organization last June interviewed more than 100 people in Caracas and six Venezuelan states and visited several public hospitals. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423839&CategoryId=10717; El Universal, http://www.eluniversal.com/noticias/daily-news/hrw-calls-for-intl-pressure-over-maduro-tackle-crisis-venezuela_623999)

 

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.