International Trade
Panama Canal authorities refute Maduro regime
claim over food ship detention
Logistics & Transport
TRANSCARGA’s A300B4 freighter idled with
stoppage of US-Venezuela ops
On 1 August, the US
Department of Transportation denied Venezuelan carrier TRANSCARGA’s request for
an exemption to engage in charter cargo transportation between the United
States and Venezuela. The DOT cited the Department of Homeland Security’s
concerns over security in Venezuela as the reason for the denial. TRANSCARGA
requested an exemption from the DOT to engage in charter cargo operations on 5
June, stating in that filing it planned to use its leased A300B4 freighters to
operate between Venezuela and the US via intermediate points. For now,
TRANSCARGA continues to operate one of two leased A300B4 freighters in its fleet.
The aircraft (261) operates in regional service on routes between its main hub
in Caracas (CCS) and other destinations in Colombia and Venezuela such as
Bogota, Puerto Cabello and Valencia. TRANSCARGA’s second freighter (274),
meanwhile, has been idled since mid-May, when flights between Venezuela and the
U.S. ceased. Although TRANSCARGA proposed additional screening via intermediate
points between the US and Venezuela, DOT said the concerns expressed by DHS “make
clear that the conditions in Venezuela that led to the service suspension go
well beyond that sole issue.” In its denial, DOT confirmed that it would
not allow petitions for reconsideration of its decision. (Cargo Facts: https://cargofacts.com/transcargas-a300b4-freighter-idled-with-stoppage-of-us-venezuela-ops/)
Oil & Energy
What impact will new US sanctions have on
Venezuela's August crude exports?
New US sanctions against Venezuela will likely
impact the country's planned crude exports in August, but by how much depends
on the US government's willingness to sanction Russian and Chinese companies.
PDVSA plans to export 680,000 b/d of crude in August, of which just 43,000 b/d
is going to a company with a waiver from the US government, Sweden's NYNAS,
according to a PDVSA document seen by S&P Global Platts. That leaves
637,000 b/d of crude exports that could be impacted if buyers are deterred by
the US sanctions. "If US sanctions were extended, they could impact 95%
of the crude exports planned for August," said the PDVSA official who
spoke on condition of anonymity. "PDVSA will have to grant great
discounts and even sell at a loss to export." Roughly 293,000 b/d of
crude is scheduled to be exported to China in August, which will go to repaying
debts, the PDVSA document showed. The PDVSA source said the company was hoping
to export at least 3.9 million barrels in August, or roughly 125,800 b/d, to
ROSNEFT, also to repay debts. Crude exported to pay off debts so far seems to
have fallen outside of the scope of US sanctions. ROSNEFT said in May it had
come to an agreement with US authorities for delivery of Venezuelan crude to
Rosneft's Indian refinery, as the supplies were carried out under prepayment
contracts. The US has yet to officially acknowledge any such agreements, and it
is thought that Monday's executive order signed by President Donald Trump was
intended to address that loophole. In the event of secondary sanctions,
Maduro's allies can find ways to evade consequences, using certain banks with
limited exposure to the dollar payments system or already under sanctions.
(S&P Global Platt’s: https://www.spglobal.com/platts/en/market-insights/latest-news/oil/080719-what-impact-will-new-us-sanctions-have-on-venezuelas-august-crude-exports)
China comes to the rescue of Venezuela’s
run-down oil refineries
CHEVRON says future Venezuela events may have
significant impact
The last major U.S. oil producer in Venezuela
is warning that developments in this nation could hurt its earnings. “Future
events related to the company’s activities in Venezuela may result in
significant impacts on the company’s results of operation in future periods,” CHEVRON Corp. said Wednesday in its latest
10-Q filing with the U.S. Securities and Exchange Commission. The language has
evolved from the company’s previous quarterly filing, when it said developments
in the country could lead to “increased business disruption and volatility
in the associated financial results.” CHEVRON puts the carrying value of
its investments in the country at about US$ 2.7 billion. It recognized US$ 21
million in losses from its share of net income from Venezuelan equity
affiliates in the first half of the year. (Bloomberg, https://www.bloomberg.com/news/articles/2019-08-07/chevron-says-future-venezuela-events-may-have-significant-impact)
Russia’s ROSNEFT last major petrol supplier to
Venezuela
Russia’s state-owned oil company ROSNEFT has
become the last major supplier of petrol to Venezuela, propping up Nicolás
Maduro’s regime as the US intensifies economic pressure on Caracas. The
lifeline has given Moscow unprecedented leverage over the crisis-hit nation,
frustrating efforts by Washington and the EU to push the socialist president
out and make way for opposition leader Juan Guaidó. Data seen by the Financial
Times show that ROSNEFT supplied Venezuela’s entire imports of petrol in June,
as other suppliers fell away. Eight cargos of petrol totaling 1.7m barrels
arranged by ROSNEFT Trading, the company’s Geneva-based trading arm, were loaded
in ship-to-ship transfers carried out offshore near Malta, Gibraltar and Aruba,
the documents show. The tankers then headed for Venezuelan ports, where the
petrol was delivered to PDVSA, Venezuela’s state oil company. Publicly
available satellite shipping signals, collated by oil analytics company
VORTEXA, confirmed that the deliveries had taken place. It is unclear whether
the companies supplying ROSNEFT with the cargoes, some of which originated in
ports in the Netherlands as well as Greece and Turkey before being transferred
at sea, were aware they were destined for Venezuela. “Venezuela’s gasoline
supplies depend on Russia,” said a person familiar with the supply deal. “The
day Russia stops supplying gasoline, Venezuela grinds to a halt.” Another
person with knowledge of the shipments said they were “a purely commercial
operation” based on “previously agreed contracts”. The supply
arrangement makes ROSNEFT, and the Kremlin, one of the single biggest hurdles
to US plans to spur regime change in Caracas. Venezuela used to refine its own
petrol but years of neglect and under-investment, as well as plunging domestic
crude production, have made the country dependent on imports. There are now
supply shortages and long queues at fuel stations in most parts of the country.
The 1.7m barrels supplied by Rosneft Trading in June correspond to a supply of
about 56,000 barrels per day, or about a quarter of Venezuela’s petrol
consumption two years ago. A senior US government official told the Financial
Times that ROSNEFT’s continued trading with PDVSA had seen the Russian company
discussed as a potential target for sanctions “on multiple occasions”,
but the Trump administration had refrained from hitting the company so far for
fear of broader ramifications. The Moscow-headquartered company produces almost
5m barrels a day of crude and other liquids or approximately 5% of global
supply, so any disruption to its output could lead to a sharp rise in the oil
price. (Financial Times: https://www.ft.com/content/d0645804-b7a3-11e9-96bd-8e884d3ea203)
Commodities
Amid rising hunger, Venezuela plantain crops
threatened by fungus
Venezuela's banana and plantain crops face
potential infestation of a fungus already effecting neighboring Colombia, an
agronomist association said on Wednesday, potentially devastating one of
Venezuela's main foods amid rising hunger. A hyperinflationary economic
collapse has left millions unable to obtain enough calories and has pushed
diets toward starchy staples that grow readily in its tropical climate.
Venezuela's banana and plantain crops are concentrated in the state of Zulia on
the border with Colombia, where 150 hectares (371 acres) of bananas were
quarantined in July on suspicion they were infested by the Fusarium R4T fungus.
The fungus causes a malady popularly known as Panama disease and can remain in
the soil for up to 30 years by attacking the roots of plants. "The
devastation of the crops would be very fast" if the fungus reached
Venezuela, Saul Lopez, president of Venezuela's Association of Agricultural
Engineers, said at a news conference. Venezuela has a combined total of around
70,000 hectares (173,000 acres) of bananas and plantains under plantation,
Lopez said, adding that the economic crisis has left the country without
personnel to address the problem. The flow of people and food between Venezuela
and Colombia creates a significant possibility that the fungus could reach
Venezuela, said Edison Arciniega of food-security focused non-profit
Citizenship in Action. (Reuters: http://news.trust.org//item/20190807183401-dwhs2/)
Economy & Finance
Opposition says new Venezuela sanctions protect
CITGO, encourage debt talks -opposition
Politics and International Affairs
Maduro halts talks with opposition after US
sanctions
Nicolas Maduro has ordered his regime's
representatives not to travel to Barbados for scheduled talks with the
political opposition starting on Thursday, blaming the US sanctions for the
impasse. Maduro "has decided to not send the Venezuelan delegation"
for talks on Thursday and Friday with representatives of interim president Juan
Guaidó "due to the grave and brutal aggression" being "continuously
... carried out by the Trump administration against Venezuela," a
government statement said late on Wednesday. "Venezuelans have noted
how the leader of the opposition delegation, Juan Guaidó, has celebrated and
promoted these actions that are harmful to national sovereignty," the
information ministry said in a statement. Maduro's Vice President Delcy
Rodriguez had called the latest US sanctions a "global threat"
and an attack on private property. Guaidó said on Wednesday that Maduro could
help the country by abandoning the presidential palace, Miraflores, "that
way the sanctions will be lifted tomorrow". Guaidó said the sanctions
are "penalties for those who steal and profit from misery".
(Al Jazeera: https://www.aljazeera.com/news/2019/08/venezuela-maduro-halts-talks-opposition-sanctions-190808010151876.html; The Wall Street Journal: https://www.wsj.com/articles/venezuela-withdraws-from-planned-talks-with-opposition-11565228327
Bolton warns foreigners that violate Venezuela
asset freeze
U.S. National Security Adviser John Bolton
pressed his case Tuesday for sweeping action against Nicolás Maduro, warning
foreign governments and companies that they could face retaliation in the U.S.
if they continue to do business with his socialist administration. Bolton’s
comments came after the White House froze all Venezuelan government assets in
the U.S. late Monday, putting the country on a short list of U.S. adversaries,
including Cuba, North Korea and Iran that have been targeted by such aggressive
financial measures. “The Maduro regime now joins that exclusive club of
rogue states,” Bolton said at a one-day conference in Peru of more than 50
governments aligned against Maduro. The broad ban is the first of its kind in
the Western Hemisphere since an asset freeze against Gen. Manuel Noriega’s
government in Panama and a trade embargo on the Sandinista leadership in
Nicaragua in the 1980s. “We are sending a signal to third parties that want
to do business with the Maduro regime: Proceed with extreme caution,”
Bolton said. “There is no need to risk your business interests with the
United States for the purposes of profiting from a corrupt and dying regime.”
While the order falls short of an outright trade embargo it exposes foreign
entities doing business with the Maduro government to so-called secondary
sanctions in the U.S. — a fact not lost on Maduro’s government as it tries to
rally support at home and abroad. A senior Trump administration official said
the timing of the sanctions reflects the U.S. assessment that those talks,
which started in May and are being sponsored by Norway, are going nowhere and
being used by the Maduro government to buy time. But even some U.S. allies
could be affected by the move, which Bolton acknowledged has been used only
sparingly in the past half-century. Several European countries, from Spanish
oil company REPSOL to AIR FRANCE, continue to operate in Venezuela and could
see their U.S. assets seized unless they cut ties with the government. India
and China are major buyers of crude from state-run oil giant PDVSA. All these
companies rely on the U.S. to process financial payments. “The truth is that
no financial institution wants to run afoul of the Treasury Department,”
said Geoff Ramsey, a researcher at the Washington Office on Latin America. (AP:
https://www.apnews.com/7314263d68924c2990e52f1ff1ea99d8; Reuters, https://www.reuters.com/article/us-venezuela-politics-usa/u-s-ready-to-target-other-countries-for-supporting-venezuelas-maduro-idUSKCN1UW1MP;
https://www.reuters.com/article/us-venezuela-politics-usa-bolton/new-u-s-action-forces-choice-between-doing-business-with-caracas-or-washington-bolton-idUSKCN1UW1Q1)
Countries supporting Guaidó pledge to maintain
pressure on Venezuela ad US hardline dominates talks
An international conference on Venezuela on
Tuesday agreed to maintain diplomatic pressure on President Nicolas Maduro’s
government, while many participants stressed the urgent need for fresh
elections in the country. “We shall maintain the international pressure,”
news reports quoted Peruvian Foreign Minister Nestor Popolizio as saying at the
end of the conference in the capital, Lima. The meeting brought together
representatives of more than 50 countries. Maduro allies China, Russia, Cuba
and Turkey did not attend. Neither did Mexico and Uruguay, which have tried to
remain neutral in the power struggle between Maduro and opposition leader Juan Guaidó.
The International Contact Group on Venezuela (ICG), which includes European and
Latin American countries, warned that “the rapidly deteriorating crisis is
seriously impacting the region, particularly because of massive migration flows
to neighboring countries.” It called for “a negotiated transition that
gives the voice back to the Venezuelan people, through free and credible
presidential elections.” Popolizio urged the international community to
increase humanitarian aid to Venezuelans and support to countries receiving
Venezuelan migrants. “It is time to take decisions,” he said, calling
for “an adequate international atmosphere to favor a peaceful solution,”
including elections. The hardline stance of the Donald Trump administration on
Venezuela, as presented at a Lima conference on Tuesday by US National Security
Adviser John Bolton, dominated the international gathering called to discuss
bringing democracy back to this country. The International Conference for
Democracy in Venezuela, originally convened to hear from countries with
different views on the crisis in Venezuela, was transformed by Bolton into a
platform where he reaffirmed the unilateral US position and explained the
measures taken by Washington to remove embattled incumbent Nicolas Maduro and
install Juan Guaidó in his place. (Havana Times: https://havanatimes.org/features/countries-supporting-Guaidó-pledge-to-maintain-pressure-on-venezuela/; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2481911&CategoryId=10717)
U.S. and Colombian military are working on
plans to aid Venezuela after Maduro
The U.S. is working with Colombia, Brazil and
other regional partners on how to assist Venezuela if the embargo-like
sanctions announced by the White House this week ultimately force President
Nicolás Maduro to step down, the head of the U.S. Southern Command said. Navy
Adm. Craig Faller, the Miami-based head of U.S. forces in South America, said
the nations are working on “planning and discussing what we could do, and
will do for the ‘day after Maduro,’ when there’s a legitimate government, when
we can go in and really assist the people of Venezuela.” Faller said that,
to him, the “‘day after Maduro’ meant a point in time where a legitimate
government, not a Maduro government, has asked the United States and others to
come into Venezuela to help.” At present, “our partners are conducting
their independent planning,” Faller said. “At some point, it will be
very useful to work together, share plans,” he said, noting that any
coordinated plan would have to be approved by each country. “And so, there’s
a willingness from key partners in the region to do that.” From a U.S.
military side, “our focus would be … alleviating human suffering,” Faller
said. “The United States is very good at heavy lift - we are very good at
supporting delivery.” Colombia’s head of military forces, Gen. Luis Navarro
said: “It turns into a security issue for Colombia,” Navarro said. “We
are facing a ... humanitarian crisis in the region. For Colombia it’s a large
problem. We are talking about more than a million displaced citizens from
Venezuela because of the difficult conditions. We have done all we can to host
them in the best conditions, but available resources now are not enough.”
When asked if Colombia needs more resources from the U.S., Navarro said more
support was needed from the international community. “But the biggest help
is to fix the current problem in Venezuela,” he added. The drug trade is
one of many illicit lines of funding that Faller said Maduro is relying upon as
other sources of revenue are frozen by the sanctions, and Colombia’s forces
have increased their eradication efforts in recent months, which Faller said
would help add economic pressure as mainstream trade is cut off. On Tuesday,
the Maduro government called the U.S. sanctions “economic terrorism,”
which Faller called “a pack of lies.” “What does anyone think about
anything Maduro says? It’s generally a pack of lies,” Faller said. “The
additional measures announced by the U.S. are part of that continued pressure
that is designed exactly to influence Maduro and those who make up his mafia.”
Asked if the military was prepared to provide additional assistance if the
sanctions lead to more Venezuelan refugees joining the already estimated 1.3
million in Colombia, Faller said for now SOUTHCOM’s role would be to “continue
to share intel and look for indicators for the range of security threats that
emanate from Venezuela.” (McClatchy: https://www.mcclatchydc.com/news/nation-world/national/national-security/article233291967.html)
U.S. embargo on Venezuela raises stakes for
Russia and China
Behind the administration's recent move is the
untested wager that the renewed threat of extraterritorial sanctions against
Venezuela's trade partners China and Russia could erode their support for
Nicolás Maduro. While it may be rational for China and Russia to back down and
realize the economic benefits of the transition in Venezuela sought by the
U.S., national pride is also at stake. If Washington cannot convince China and
Russia through arguments around economic self-interest, gaining traction with
them becomes much harder. Maduro, always spoiling for a fight with the White
House, will likely use the embargo to further scapegoat the U.S. for
Venezuela's economic collapse. Trump could face a choice to escalate his
embargo to a full blockade if the new economic pressure does not tilt support
toward Guaidó. Reluctant to enter the fray, China and Russia may still be drawn
in should the U.S. turn to military might to enforce its embargo — and it is
unclear what lengths they would go to in defense of Maduro. (AXIOS: https://www.axios.com/us-embargo-venezuela-raises-stakes-russia-china-9e4c8fad-e30e-4512-8e27-21071cb087c0.html)
China slams US for 'bullying' other
countries over Venezuela
China on Wednesday hit back at remarks from a
top US official who warned Beijing and Moscow against supporting the Venezuelan
regime of Nicolas Maduro and called on Washington to stop "bullying"
other countries. On Tuesday, US National Security Advisor John Bolton urged
China and Russia to avoid doing business with the Maduro regime, after
President Donald Trump ordered a freeze on all Venezuelan government assets in
the US and barred transactions with its authorities. Bolton's comments are
"a wanton interference in Venezuela's internal affairs," said
Chinese foreign ministry spokeswoman Hua Chunying in an online statement.
"China urges the US to... let the Venezuelan people decide their own
future and immediately stop the bullying actions of suppressing other countries
at every turn," she said. On Tuesday, delegates from about 60
countries discussed ways of ending the crisis in Venezuela in a meeting called
by the Lima Group, which includes a dozen Latin American countries and Canada,
most of which support Guaidó. During the meeting, Bolton singled out Maduro
allies China and Russia, telling them their "support to the Maduro
regime is intolerable". He also urged Russia not to "double
down on a bad bet," and told China that "the quickest route to
getting repaid" for its loans to Venezuela was by supporting "a
new legitimate government." (AFP: https://news.yahoo.com/china-slams-us-bullying-venezuela-164347903.html)
Maduro regime calls latest
US sanctions “economic terrorism”
Washington’s imposition of a freeze on
Venezuelan regime assets and a ban on transactions with Nicolas Maduro’s
administration is “economic terrorism,” Caracas’ representative to the United
Nations said on Tuesday. With this move, the United States has dropped the
pretense of caring about democratic norms in favor of an open attempt to “sabotage”
the dialogue between Maduro and the opposition, Samuel Moncada told a press
conference at UN headquarters. The ambassador cited remarks earlier Tuesday in
US National Security Adviser John Bolton, who told attendees at what was billed
as the International Conference for Democracy in Venezuela: “The time for
dialogue is over. Now is the time for action.” “Mr. Bolton is not
Venezuelan. The dialogue is among Venezuelans. Who is Mr. Bolton to stick his
nose in?” Moncada asked rhetorically. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2481913&CategoryId=10717;
Reuters, https://www.reuters.com/article/us-venezuela-politics-sanctions/venezuela-says-new-trump-executive-order-formalizes-blockade-idUSKCN1UW1KU)
…and Russia claims US “economic terrorism”,
citing “popular support” for Maduro…
US warned that Venezuela sanctions could worsen
crisis
Donald Trump’s decision to broaden sanctions
against Venezuela is likely to exacerbate the country’s humanitarian crisis and
give Nicolás Maduro a new reason to blame Washington for his failures, Latin
American civil society groups have warned. While the White House says the
measures are necessary to bring Maduro to heel and force him to quit, the civil
society groups, which included some from Brazil, Colombia and Peru as well as
Venezuela, expressed their “deep concern” over the impact on ordinary
Venezuelans. (Financial Times: https://www.ft.com/content/3755c832-b938-11e9-8a88-aa6628ac896c)
Canada looking closely at U.S. freeze of
Venezuelan government assets
Foreign Minister Chrystia Freeland on Tuesday
said Canada was examining the United States’ move to freeze all Venezuelan
government assets but stopped short of saying whether Canada would take the
same path. “We are looking at them closely,” Freeland said when asked
about the new U.S. actions during a joint press conference with Britain’s new
Foreign Secretary Dominic Raab in Toronto. Canada has imposed sanctions on more
than 100 members of President Nicolas Maduro’s government, and is part of the
Lima Group - a bloc of mostly Latin American countries - that recognizes
Venezuelan opposition chief Juan Guaidó as the legitimate leader and is
demanding that Maduro resign. (Reuters, https://www.reuters.com/article/us-canada-venezuela/canada-looking-closely-at-u-s-freeze-of-venezuelan-government-assets-idUSKCN1UW1PK)
Switzerland updates list of sanctioned Maduro
regime officials
Switzerland has just updated a list of 18 Maduro
regime officials sanctioned for violating human rights and are barred from
entering that country or carrying out financial operations there. The list
includes Diosdado Cabello, Tareck el Aissami, Freddy Bernal, Maikel
Moreno, Tarek William Saab, Delcy Rodríguez, Elías Jaua, Jesús Suárez Chourio,
Iván Hernández Dala, Antonio José Benavides Torres and Néstor Reverol. Also, Gustavo Enrique
González López, Tibisay Lucena, Socorro Hernández, Katherine Harrington, Sergio
José Rivero Marcano, Sandra Oblitas and Xavier Moreno Reyes. More in
Spanish: (El Nacional; http://www.el-nacional.com/noticias/mundo/gobierno-suiza-actualizo-lista-oficialistas-sancionados_291381;
Noticiero Venevisión, http://www.noticierovenevision.net/noticias/internacional/suiza-anuncio-nuevas-sanciones-contra-11-altos-funcionarios-del-gobierno-venezolano)
WSJ Editorial: Squeezing Venezuela’s comrades
The people of Venezuela continue to suffer
under socialist dictator Nicolás Maduro, who is sustained by his patrons in
Cuba, Russia and China. So, it’s welcome news this week that the Trump
Administration has toughened sanctions against the regime and its abettors. The
Trump Administration has morality and regional politics on its side. As Mr.
Bolton said on Tuesday from Lima, Peru, the free people of the hemisphere can’t
ignore the humanitarian crisis created and maintained by Caracas. Most of the more than four million Venezuelan
refugees who have fled the once oil-rich nation have landed in neighboring
countries that lack the resources to easily absorb them. Without regime change
in Caracas, the refugee wave could double this year. Mr. Bolton also stressed
U.S. support for democratically elected Venezuelan interim President Juan
Guaidó. “We seek the peaceful transfer of power, but as President Trump has
said from the beginning: All options are on the table,” Mr. Bolton said. A
waiver for operating in Venezuela until October—granted to CHEVRON, HALLIBURTON
and other U.S. companies at the end of July—may not be renewed. That “will
give us an opportunity to land another blow in 80 days,” a senior
administration official told us on Tuesday.
Cuba is desperate to maintain control of Venezuela because it needs Mr.
Maduro’s oil to keep its economy afloat. But U.S. measures to deny ships access
to U.S. ports if they carry oil from Venezuela to Cuba have reduced the number
of available cargo vessels ready to do the job. Shipments to Cuba have been cut
by more than half, which means Cuba isn’t getting the same return on its
investment in secret police and regime enforcers it has sent to Venezuela. Cuba
will try to persuade Mr. Maduro that he can wait out the Trump Presidency,
despite shrinking oil revenues, hyperinflation and rising discontent in the
army. But at some point, Mr. Maduro will have to choose between saving himself
or risking his life for the Cuban elite that he finances. (The Wall Street
Journal: https://www.wsj.com/articles/squeezing-venezuelas-comrades-11565216039)
Venezuela's female refugees trafficked at
higher rate amid political crisis
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.
