International Trade
Mexico prosecutors
find fraud in Venezuela food aid program
Mexican Prosecutors say that people linked to
the Venezuelan government and Mexican companies conspired to overcharge
Venezuela for basic food aid packages. Known as "CLAP" packages, the
food is supposedly subsidized by Venezuela's socialist administration to
provide a bare level of subsistence to many families facing hunger amid the
country's hyperinflation and economic breakdown. But Mexican prosecutors said
an investigation found that the Venezuelan officials and Mexican businessmen
bought poor quality items in bulk and exported them to Venezuela at more than
double their real price. Mexico's top organized crime prosecutor, Israel Lira,
said the suspects have agreed to pay US$ 3 million in reparations to the U.N.
refugee agency, to be used for its Latin America operations. The agency is
focused overwhelmingly now on helping Colombia resettle hundreds of thousands
of Venezuelans fleeing the humanitarian crisis. Lira said prosecutors located
1,300 shipping containers with 1.8 million packages but allowed them to
continue to Venezuela to avoid affecting recipients. U.S. Treasury Department
officials previously compiled a list of suspected shell companies that they
believe senior Venezuelan officials have used around the globe to siphon off
millions of dollars from food import contracts. Financial forensic
investigators from the U.S. and three Latin American allies — Mexico, Panama
and Colombia — traced transactions by companies believed to be controlled by a
government-connected businessman. Much of the food comes from Mexico, and there
have been complaints about its quality. On May 17, three days before Maduro was
re-elected, Colombia announced the seizure of 15 shipping containers filled
with more than 25,000 CLAP boxes containing beetle-infested rice and other
spoiled food. A story published by The Associated Press in 2016 revealed how
senior Venezuelan officials and members of the military were enriching
themselves by diverting money from food contracts. Alex Saab, from the
Colombian city of Barranquilla, has been identified by U.S. officials as a
major focus of the investigation. Saab gained some prominence in 2011 after
signing an agreement to build social housing for the Venezuelan government on
behalf of a Colombia-based construction company. Investigators have said Saab
entered the food business through a Hong Kong-based company, Group Grand Ltd.,
which they said bears the hallmarks of a shell company, including no known
track record in the food business, a rudimentary website that is now
inaccessible and an address in Caracas shared with Saab's construction company.
Group Grand has been awarded contracts to provide at least 11.5 million CLAP
boxes, according to a Venezuelan Food Ministry spreadsheet. Among the
transactions that have raised red flags is a September 2017 invoice presented
to Venezuela's food ministry by Group Grand for US$ 41 million worth of
powdered milk at a price of US$ 6,950 per metric ton, or more than double the
market price at the time. A copy of the invoice was provided to the AP. (The
Miami Herald: https://www.miamiherald.com/news/business/article220266500.html)
Oil & Energy
Caracas to divert oil
shipments away from Beijing
Venezuelan state-run oil company Petroleos de
Venezuela (PDVSA) may begin cutting shipments to China that are used to pay for
previous loans in favor of prioritizing shipments to the United States or
India, which pay in cash. PDVSA will not receive any further Chinese loans to
raise production from joint ventures if the company defaults further on
Beijing's loans. Redirecting oil shipments would be a short-term strategy to
free up more cash for pressing necessities such as debt and arbitration
payments. (Stratfor: https://worldview.stratfor.com/situation-report/china-venezuela-caracas-divert-oil-shipments-away-beijing)
Blackouts force
Venezuelans to live and work — even perform surgery — in darkness
Blackouts in Zulia state, an area of
northwestern Venezuela that includes the country’s second-largest city of
Maracaibo, have become commonplace in the last year. Food and medicine were
already increasingly scarce in Venezuela, but the power cuts that come without
warning — sometimes more than once a day — are a new form of misery. And though
some widespread outages have reached the capital of Caracas, Zulia — the heart
of Venezuela’s energy industry — has turned out to be particularly vulnerable
to the rolling blackouts. The government has blamed the outages on a variety of
things — including pesky animals. In an Oct. 20 tweet, Energy Minister Luis
Motta Dominguez named “rats, mice,
snakes, cats, squirrels” as possible culprits in shorting out lines. He
added: “In the list of animals mentioned
above, of course iguanas are included.” Critics, however, say insufficient
investment by the government is the cause, following the 2007 nationalization
of the electricity sector. Zulia has experienced 11,131 power failures between
January and September this year, according to a civil association called the
Blackouts Committee, which receives daily reports of power cuts from citizens. Public
transportation, already diminished by the economic crisis, becomes even more
dysfunctional when the power flickers and goes out. Communications work
erratically. People’s routines are on hold. Lines of cars are two blocks long
at gas stations. Commerce and education are paralyzed. Omar Prieto, Zulia’s
governor and a support of President Nicolás Maduro, declared in early October
that the electric crisis in Zulia was over. But then a massive power failure in
a substation in Carabobo left 11 Venezuelan states, Zulia included, without
electricity for 12 to 18 hours on Oct. 15. José Aguilar, a Venezuelan power
generation and risk consultant, says the power system has been in trouble since
2009, prompting the late President Hugo Chávez to announce new investment and
more emphasis on the power system. He said that more than 80% of power
generation in Zulia isn’t working due to lack of maintenance and corruption. “The government is overloading power lines,
old equipment, and generation and distribution substations,” he said. And
he thinks the crisis is far from over in Zulia and especially Maracaibo, once
known for being the third Latin American city to have regular electricity in
its streets. He thinks Zulia will experience more blackouts between January and
February next year, when the general power demand traditionally grows. One of
the most affected districts in Zulia is Guajira, a town next to the Colombian
border whose population is mostly indigenous. Recently, the residents have been
living without electricity for two or three days at a time until the service
comes back up, usually for only four uninterrupted hours. (The Miami Herald: https://www.miamiherald.com/latest-news/article220464510.html)
Commodities
RUSORO Mining has
received a settlement proposal from Venezuela
RUSORO Mining Ltd. announces that it has agreed
on the terms of a settlement proposal with Venezuela by which Venezuela agrees
to pay RUSORO over US$ 1.28 billion to acquire the Company's mining data and
for full release of the arbitral award issued in favor of the Company in August
2016 by a tribunal constituted pursuant to the Additional Facility of the
International Centre for Settlement of Investment Disputes. In addition, it is
contemplated that the parties will constitute a Mixed Commission to assess the
status of RUSORO's Choco 10 and San Rafael - El Placer former projects and based
on such assessments may by the end of January 2019 partner to exploit those
projects. RUSORO expects to sign the formal settlement agreement shortly after
completion of the schedules to the Settlement Agreement. (RUSORO: www.rusoro.com)
Economy & Finance
FEMSA to lay off 2,000 Venezuela workers amid
crisis: union
COCA COLA FEMSA is preparing to lay off 2,000
of the 4,800 total workers at its Venezuela soft drink operations due to
falling demand in the crisis-stricken country, a union leader said, while the
company acknowledged it was “revising”
output. The move makes FEMSA, one of the largest soft drink bottlers in the
world, the latest multinational to downsize in this country. “The company has said that it needs to reduce
headcount and suspend some benefits,” said Daniel Montilla, secretary of
the union representing workers at the FEMSA plant in the industrial city of
Valencia, where Femsa plans to lay off 300 workers. (Reuters, https://www.reuters.com/article/us-venezuela-femsa/femsa-to-lay-off-2000-venezuela-workers-amid-crisis-union-idUSKCN1MW2G9)
Out of cardboard, another COLGATE plant shuts
down in Venezuela
A COLGATE-PALMOLIVE plant in Valencia, Venezuela,
stopped operating this week due to a shortage of cardboard needed for
packaging, said Carlos Rodriguez, an employee union leader. The plant, which
produced liquid detergent, fabric softener and dishwasher soap, required
cardboard to transport company products to stores, supermarkets and pharmacies.
The shortage worsened after the government took over control of paper and packaging
manufacturer SMURFIT KAPPA’s Venezuelan operations there earlier this year.
This is the second out of five production plants to close in the country,
Rodriguez said. (Bloomberg, https://www.bloomberg.com/news/articles/2018-10-18/out-of-cardboard-another-colgate-plant-shuts-down-in-venezuela)
Politics and International Affairs
Pompeo: Venezuela's Maduro has to go
Secretary of State
Mike Pompeo says Socialist Venezuelan President Nicolas Maduro must go and is
urging the people of Venezuela to "restore democracy to the country"
during an interview with Greta Van Susteren. "We are searching for a solution which will deliver democracy to
Venezuela. It's the Maduro regime that has inflicted this set of horrible
living conditions on the people of Venezuela and it will ultimately be on the
people of Venezuela to fix it," Pompeo said. On whether the U.S. would
issue additional sanctions, Pompeo said he was "confident we can find other places where we think we can exert pressure
in a way that will convince Maduro that this isn’t going to work, he’s not
going to be able to retain power forever." (Newsmax: https://www.newsmax.com/newsfront/mikepompeo-maduro-venezuela/2018/10/21/id/887293/)
Mike Pence: Honduran President told me
Venezuela funding migrant caravan
Vice President Mike
Pence on Tuesday said Honduran President Juan Orlando Hernández told him that
the migrant caravan marching toward the U.S.-Mexico border is “financed by Venezuela.” Pence made the
allegation while defending President Donald Trump’s assertion that Middle
Easterners make up a part of the 7,000-strong. The Vice President then revealed
that Hernández told him that “leftist
groups” from the Central American country organized the caravan, “financed by Venezuela” to “challenge our sovereignty, challenge our
border.” (Breitbart: https://www.breitbart.com/politics/2018/10/23/mike-pence-honduran-president-told-me-venezuela-funding-migrant-caravan/)
Venezuela declares its military ‘fully prepared’ for war with U.S.
Venezuelan soldiers
march during a military ceremony to honor President Nicolas Maduro on May
Senior Venezuelan
socialist official Diosdado Cabello has claimed his country is “fully prepared” for a war with the
United States. Cabello, the leader of the regime’s illegal lawmaking body and a
close ally of dictator Nicolás Maduro, claimed that the country’s Bolivarian
National Armed Forces would remain loyal to Hugo Chávez’s socialist revolution
should the U.S. or any other power try to topple the regime. There is little
evidence to support Cabello’s claims. Instead, countless reports detail the
growing disaffection and dropout rates among troops, many whose salaries fail
to cover basic living resources such as food and medicine. Some soldiers have
tried to launch low-level coups and rebellions, although such efforts have so
far proved unsuccessful. Cabello’s comments come amid growing international
pressure for more action to be taken against the Maduro regime, currently
presiding over the worst economic crisis in the country’s history. Cabello’s
warning is unlikely to instill fear among leaders in Washington. Trump
previously mocked the Venezuelan military for their seemingly cowardly response
to a failed assassination attempt on Maduro. (Breitbart: https://www.breitbart.com/latin-america/2018/10/22/venezuela-declares-military-fully-prepared-war-u-s/)
Ecuador breaks diplomatic relations with
Venezuela
Ecuador has broken
formal relations with Venezuela after that country’s communication minister
called President Lenin Moreno a “liar.”
On Thursday, Ecuador expelled Venezuela’s ambassador. The action followed
comments by Jorge Rodríguez, Venezuela’s communication minister, who said that
Moreno’s claim that 6,000 Venezuelans a day were entering Ecuador was false.
Moreno Tweeted the number in August, at the height of the influx of Venezuelan
refugees into Ecuador. In its official statement on the break in relations,
Ecuador’s foreign affairs ministry said, “The
Republic of Ecuador will not tolerate such disrespect for its authorities.”
The statement continued: “Faithful to its
democratic and humanitarian principles, Ecuador will continue to provide
assistance to Venezuelan citizens entering the country, assisting through
economic and social efforts to protect their human rights.” Ecuador secretary of communication was more direct in his
response to Rodriguez. “His statements
show that this corrupt socialism, murderer and liar of the 21st century, still
lives in Venezuela.” In response to the expulsion of its ambassador,
Venezuela ordered Ecuador’s chargé d’affaires to leave Caracas. (St. Lucia
Times: https://stluciatimes.com/2018/10/22/ecuador-breaks-diplomatic-relations-with-venezuela/)
OAS chief urges ICC to open formal probe into
Venezuela crimes
Luis Almagro,
Secretary General of the Organization of American States, spoke to FRANCE 24
about the current issues facing the Americas, from the caravan of Central
American migrants heading to the US to the crisis in Venezuela and the
situation in Nicaragua. Almagro called for the ICC to open a formal investigation
into alleged crimes against humanity committed in Venezuela. (France24: https://www.france24.com/en/20181023-interview-luis-almagro-oas-americas-migrants-caravan-us-venezuela-icc-probe-nicaragua)
How Venezuela complicates peace talks in
Colombia
After 52 years of
conflict, Colombia’s government and the leftist guerrillas of the Revolutionary
Armed Forces of Colombia (FARC) signed a peace deal in 2016. But not all the
country’s guerrilla groups demobilized. The National Liberation Army (ELN)
remains a formidable presence. It began peace talks with the government of Juan
Manuel Santos in 2017 but failed to reach a deal before Iván Duque, a
conservative, became president in 2018. President Duque, who had criticized the
agreement with the FARC as too lenient, is adopting a tougher stance towards
the ELN. He refuses to renew negotiations until the ELN has freed all hostages.
And he has also raised an objection to Venezuela’s role as one of five
guarantors of the talks, claiming it is a “protector
of armed groups”. The ELN’s links with Venezuela date from the 1980s. Its
standing in Venezuela improved in the late 1990s with the rise to power of Hugo
Chávez, who regarded it as an ideological ally. Venezuela has been a haven ever
since, a place where the ELN gathers to plan attacks on Colombia, and where in
recent times it has started recruiting new members. Its activity within Venezuela
often seems to be ignored—even endorsed—by the authorities. As Nicolás Maduro,
Chávez’s successor, turns Venezuela into a mafia state in which
drug-traffickers run rife, the ELN is rumored to be colluding with the Cartel
of the Suns, a drugs gang, in establishing trafficking routes through the
country. If the ELN should demobilize, its role in cross-border
drug-trafficking is likely to weaken. In such circumstances, it is not
surprising that Colombia should call into question Venezuela’s role as an honest
arbiter of the peace talks. For the ELN, the price of a peace deal with
President Duque’s government is likely to be the severing of its ties to the
Venezuelan dictatorship. It has not yet shown itself to be willing to break
that link. (The Economist: https://www.economist.com/the-economist-explains/2018/10/22/how-venezuela-complicates-peace-talks-in-colombia)
U.N. special envoy Jolie voices support for
Venezuelan refugees
U.N. refugee agency
special envoy Angelina Jolie voiced support on Tuesday for Venezuelans forced
to leave their crisis-stricken homeland and thanked the South American
countries hosting them. Hollywood actress Jolie met with Venezuelan refugees in
Lima, Peru this week to draw attention to their plight. “After having spoken to so many people it’s clear to me, very clear,
that this is not a movement by choice,” Jolie told reporters in a
presentation with Peru’s foreign minister. “I
heard stories of people dying because of a lack of medical care and medicine...
people starving, and tragic accounts of violence and persecution,” she
said. Jolie’s visit comes amid a backlash against Venezuelans in some South
American countries where they have settled. Jolie met with Peruvian President
Martin Vizcarra and said they discussed ways the international community can
help host countries like Peru accommodate Venezuelans. “As in nearly every displacement crisis, the countries that have fewer
resources are being asked to do the most,” Jolie said, thanking Peru and
other “very generous” countries like
Ecuador and Colombia for hosting displaced Venezuelans. (Reuters: https://www.reuters.com/article/us-venezuela-migration-peru-jolie/u-n-special-envoy-jolie-voices-support-for-venezuelan-refugees-idUSKCN1MX2LP)
Violent deaths of Venezuelans in Colombia more
than triple in 2018
Violent deaths of
Venezuelans in Colombia rose more than threefold in the first nine months of
the year compared with the same period in 2017, as more desperate migrants
flooded across the border to escape an economic crisis back home, a report
released on Monday showed. Between January and September there were 310 violent
deaths of Venezuelans in Colombia, 244.4% more than the 90 in the last year,
the National Institute of Forensic Sciences said in a report. Of the total, 254
were men and 56 were women and 56% were murdered. Most of the violent deaths
occurred in border regions such as the departments of Norte de Santander and La
Guajira. Some died in car crashes or other accidents, and others committed suicide.
Annual violent deaths in Colombia total about 25,000, according to the
government. (Reuters, https://www.reuters.com/article/us-venezuela-migration-colombia/violent-deaths-of-venezuelans-in-colombia-more-than-triple-in-2018-idUSKCN1MW28H)
Two Venezuelans die attempting to reach Aruba
by boat
Two Venezuelans
attempting to reach the Caribbean island of Aruba died, authorities said over
the weekend, highlighting the increasingly perilous routes migrants take to
escape this nation's economic meltdown. Venezuelans routinely travel to the
more prosperous Aruba in search of work or staple products that have become
unavailable under the socialist government of President Nicolas Maduro. Those
who are not allowed to enter Aruba often travel in rickety boats under the
cover of darkness. Aruba's government said the pair were undocumented and that
three Venezuelans had been detained in relation to the case. In a similar
incident in January, four Venezuelans attempting to reach the Dutch Antilles
island of Curacao died when their boat broke apart. (The New York Times: https://www.nytimes.com/reuters/2018/10/21/world/americas/21reuters-venezuela-migration-aruba.html)
Venezuela is the second most corrupt country,
according to the World Economic Forum's index
Venezuela is the
second most corrupt country in the world, overtaken only by Yemen, a nation in
civil war that, according to the United Nations, can suffer the most lethal
famine of the last 100 years. The World Economic Forum (WEF) released its
annual index of global corruption, as part of its report on international
competitiveness, which ranks Venezuela 127th out of 140 countries surveyed.
Venezuela appears in the group of the most conflictual countries of the planet,
without its population being subjected to a war or a natural disaster, which
makes of this country a particularly important case, because its situation is
attributable its institutional situation and political conditions. Venezuela
ranks last – 140 – in terms of institutional quality and macroeconomic
stability. The country ranks below the top 100 Index countries as markets for
quality goods and services (137); business dynamism (139); labor market
situation (131); and quality of infrastructure (131). Venezuela ranks after the
top 50 countries on issues such as capacity for innovation (95); health system
(59); size of the market (56); ICT adoption capacity (97) and quality of the
financial system (91). When the indicators presented by the World Economic
Forum on Venezuela are examined in more detail, the country ranks last in the
world in specific areas. like the quality of police services, the efficiency of
the judicial system in the enforcement of regulations, property rights, the
effectiveness of dispute resolution systems and the protection of property
rights intellectual. Under aspects such as innovation and the application of
technology, the country has significantly regressed. Consider an indicator as
an example of a button: the assessment of mobile penetration has dropped 64
points in one year and a market representing more than 100% of the penetration
of the service is 123rd in the world. Controls, skewed subsidies, the tax
burden, and other factors make Venezuela's economy a complex case, but the
worst of all is the poor quality of institutions, because it is a key element
to correct other imbalances. (NAAJU: https://naaju.com/chile/venezuela-is-the-second-most-corrupt-country-according-to-the-world-economic-forums-index/)
Russians detained over 'Gucci' cocaine shipment
from Venezuela
Three Russian
citizens have been charged in Venezuela over a cocaine smuggling plot aboard a
tanker headed to Belgium, local media reported, citing prosecutors. Venezuela’s
National Guard reportedly seized 147 kilograms of cocaine in a raid on the Jose
Progress tanker earlier this month. Twenty people were detained in connection
to the plot, including Russian, Ukrainian, Filipino and Venezuelan nationals,
according to media reports. Russian nationals were implicated in a
cocaine-smuggling plot earlier this year after over 350 kilograms of cocaine
were discovered on the grounds of the Russian Embassy in Argentina. Venezuela’s
Justice Minister General Nestor Reverol posted a picture on his Twitter account
earlier this month which appears to show that the seized cocaine had been
hidden in bags labeled with famous fashion brands, including Gucci and Chanel.
The ship, which is currently being held by local authorities, sailed under a
Panamanian flag and was headed for the Belgian port of Ghent. (The Moscow
Times: https://themoscowtimes.com/news/russians-detained-over-gucci-cocaine-shipment-from-venezuela-media-report-63260)
These Venezuelan musicians were struggling on
the streets. Then their talent saved them.
The young men hunched
over their violins, a piano and a traditional cuatro guitar in a quiet Peruvian
suburb never imagined their hard-won musical training might be the secret to
surviving so far from home. Brought up under Venezuela’s famed El Sistema
classical musical education program, they dreamed of scholarships at
conservatories, or being poached by international orchestras — like their
colleague Gustavo Dudamel, the kinetic and charismatic director of the Los
Angeles Philharmonic. Instead, they’ve joined the millions of Venezuelans fleeing
hunger and political chaos. It’s a journey that has stymied their musical
careers as they were entering their prime — but also reaffirmed how valuable
the determination they developed in the free musical program is to survive in
the hard-scrabble world of migrant life. (The Miami Herald: https://www.miamiherald.com/news/nation-world/world/americas/venezuela/article220293305.html)
OP-ED: Whitewashing the record of Hugo Chávez,
by Christian Alejandro Gonzalez
It is depressing but
not altogether surprising that Hugo Chávez still retains some support in
Western intellectual life. The ongoing destruction of Venezuelan society should
have been enough to discredit his apologists, but unfortunately it has not been
so. Did he have authoritarian tendencies? His military background left him with
a firm belief in hierarchy. The longer he remained in power, the more
entrenched he became, which is why term limits and checks and balances are
essential to a healthy democracy. Term limits are indeed important elements of
democratic societies — elements which in 2009 Chávez abolished. Dislodging
incumbents is difficult enough in advanced democracies; it is even more
difficult in countries with little institutional accountability, where the
government can fund massive clientelist programs to shore up support whenever
it needs to. As Chávez well knew, removing term limits would have allowed him
to become president for life. Only his premature death from cancer at age 58
prevented him from taking full advantage of this institutional change. It is hard to overstate the extent to which
Chávez obliterated checks on presidential power during his tenure. Shortly
after coming into office in 1998, Chávez began implementing steps to take
control of PDVSA, the national oil company, which was then autonomously run.
Apart from ruining PDVSA, these policies massively expanded the president’s
power by giving him an endless source of funds to use for narrow political
goals. Chávez expanded the political power of the presidency as well. He packed
the Venezuelan supreme court, took over the CNE (the body that is supposed to
oversee elections and ensure their fairness), undermined press freedom by
shutting down the opposition’s television stations, politicized the military by
promoting officers based on loyalty rather than competence, and through a long
sequence of constitutional changes transferred most decision-making power from
the legislature to the presidency. Nicolás Maduro’s autocracy, then, did not
merely come into existence ex nihilo. Chávez bequeathed him an obsequious
legislature, a loyal judiciary, and a personal oil company with which he
(Maduro) could exert dictatorial power. Indeed, Maduro’s transgressions against
liberal-democratic principles occur only under a specific institutional context
that Chávez largely created. (National Review: https://www.nationalreview.com/corner/venezuela-hugo-chavez-new-york-times-whitewashes-history/)
