International
Trade
Two new Metro trains have arrived
Two new
trains for the Metro Los Teques route communicating Caracas and Miranda state
capital Los Teques have arrived from France at La Guaira port, according to
Land Transport and Public Works Minister Luis Sauce. More in Spanish: (Agencia
Venezolana de Noticias; http://www.avn.info.ve/contenido/dos-nuevos-trenes-para-metro-teques-llegaron-este-lunes-al-pa%C3%ADs; El Universal, http://www.eluniversal.com/noticias/caracas/metro-los-teques-recibio-dos-trenes-metropolis-provenientes-francia_308955)
Oil & Energy
Say goodbye to OPEC, powerful Putin pal predicts
Internal
differences are killing OPEC and its ability to influence the markets has all
but evaporated, top Russian oil executive Igor Sechin told Reuters in some of
his harshest remarks ever about the oil cartel. Russia, which has been hit hard
by the oil price collapse, was flirting with the idea of cooperating with OPEC
in recent months until tensions between OPEC members Saudi Arabia and Iran
ruined a global deal to freeze output. Sechin - one of the closest allies of
President Vladimir Putin - was the only Russian official to consistently oppose
the deal with OPEC even after the Kremlin effectively endorsed the plan. Now
that his gloomy predictions about talking to OPEC have come to pass, Sechin
feels vindicated and wants to help Russia avoid similar embarrassment in future.
"At the moment a number of objective
factors exclude the possibility for any cartels to dictate their will to the
market. ... As for OPEC, it has practically stopped existing as a united
organization." Sechin's comments about the end of the era when OPEC
could influence prices chime with those of Saudi Arabia's newly appointed
energy minister Khaled al-Falih. Falih,
who took over on Saturday from long-serving Ali al-Naimi, has been very vocal
in the past year about his views that the oil market needs to rebalance through
low prices and that the Saudis have the resources to wait. Falih's ultimate boss, Deputy Crown Prince
Mohammed bin Salman, who oversees Saudi oil policies, has also signaled that
the world is moving to a new era where supply and demand rather than OPEC will
determine prices. (Reuters: http://www.reuters.com/article/us-russia-opec-sechin-idUSKCN0Y1104)
Venezuela oil price up for 4th week
The
price Venezuela receives for its mix of medium and heavy oil rose for a fourth
consecutive week as oil prices around the world remained choppy. According to
figures released by the Ministry of Petroleum and Mining, the average price of
Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week
ending May 6 was US$ 34.79, up 36 cents from the previous week's US$ 34.43.
According to Venezuelan government figures, the average price in 2016 for
Venezuela's mix of heavy and medium crude is now US$ 27.84 for the year to
date. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2411673&CategoryId=10717)
El Palito refinery halts operations for 2 months for
repairs
Robert
González, Executive Secretary of Venezuela’s United Federation of Petroleum
Workers, reports the El Palito refinery in Central Venezuela will paralyze
operation for 45-60 days, for repairs. (El
Carabobeño: http://www.el-carabobeno.com/noticias/articulo/126622/Refinera-de-El-Palito-paralizada-entre-45-y-60-das-por-mantenimiento#sthash.KlyYqezY.dpuf)
Low water level in Venezuela’s biggest hydroelectric
reservoir raises concern
Electric
Energy Minister General Luis Motta says the water level “remains very critical” at the El Guri reservoir, Venezuela’s main
source of hydroelectric power, due to the severe drought caused by El Niño that
has already forced the government to ration electricity and drinking water. The
minister posted a series of photos of the dam, located in southeastern
Venezuela, and compared them with others taken a month ago in which the drastic
fall in the water level can be seen quite clearly. (Latin American Herald
Tribune, http://www.laht.com/article.asp?ArticleId=2411733&CategoryId=10718;
El Universal, http://www.eluniversal.com/noticias/daily-news/water-level-venezuelan-guri-dam-remains-critical_308861)
Resource-rich Venezuela struggles to keep lights, taps
on
Residents
of Venezuela's southern city of Puerto Ordaz enjoy pleasant views of the
Orinoco and Caroni rivers and are a half hour's drive from one of the world's
biggest hydroelectric dams. Yet most days they suffer water and power cuts. The
irony is not lost on Marelis Gonzalez, who runs the "Las Chinas" food store. She is fed up with constant outages
that halt her fridges, making drinks lukewarm and spoiling meat. "We should be the last ones without power or
water," Gonzalez tuts at the counter on an oppressively hot morning
without services in the middle-class, hilltop Villa Brasil district. "If it's like this for us, imagine those far
away!" Across the road, 82-year-old Arcelia Leandro is waiting
patiently in her kitchen for power and water to cook lunch for her
grandchildren. "It's been like this
for three months, cuts every day. We've never had a situation like this.
Horrible." Venezuela's energy and water problems have escalated in the
last few weeks: yet another headache for the nation's 30 million people already
reeling from recession, the world's highest inflation rate, and scarcities of
basic goods. (Reuters, http://www.reuters.com/article/us-venezuela-services-widerimage-idUSKCN0XX14O)
Commodities
Warning of sugar shortage for soft drinks
The
National Soft Drink Association has warned of a critical situation arising from
the shortage of refined sugar and says it is impacting production and product
supply nationwide. More in Spanish. (Notitarde; http://www.notitarde.com/Economia/Anber-alerto-fallas-en-el-suministro-de-azucar-2672036/2016/05/09/965585/;
El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/anber-reporta--fallas--en-inventarios-de-azucar-re.aspx)
Opposition legislator slams “neocolonialist” mining by multinationals
Opposition
lawmaker Americo De Grazia says the government of President Nicolas Maduro is
promoting “neocolonialism” in mining
to attract capital from multinational corporations, and whose conditions will
include the eviction of indigenous communities from their native lands. “We’re going head-on against the corruption,
against the gold mafia and against the mining neocolonialism with which the
government seeks to entice big capital by handing over our riches to 150
multinationals” dealing in gold and other minerals, the legislator said. De
Grazia is a lawmaker representing the southeastern area of Venezuela where the
so-called Orinoco Mining Arc is located, lands rich in gold, coltan, diamonds,
bauxite and other minerals the government says will be the object of industrial
exploitation this year. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2411693&CategoryId=10717)
Economy & Finance
“The game is
gridlocked.”
Juan
Pablo Olalquiaga, President of Venezuela’s National Council of Industries
(CONINDUSTRIA) says they government is besieging and suffocating local
manufacturers by not allocating FOREX to import supplies or pay off suppliers.
He says that industries are using up what is left of supplies to extend
operations as much as possible, but the situation has worsened after President
Nicolas Maduro threatened to take over any paralyzed plants; and adds that
manufacturers were using their own funds to acquire small parts of minor
supplies they will not stop investing due to lack of justice after Maduro’s
recent speech. “The game is gridlocked”,
he says. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/juego-tranco-pagan-importan-insumos_0_842916028.html)
Fluctuating bolivar rate devaluates 93% in two months
Two
months after a new dual currency control system was announced, including a
protected fixed rate and a supplementary fluctuating rate, the latter has
devaluated by 93%. On March 9th, the fluctuating rate was VEB
206-92/US$ 1; and it is now close to VEB 400/US$ 1. Analysts say this rate does
not match the real market. “It is
depreciating, but everything indicates there are no significant allocations at
that rate. All this does is impact prices”, warns National Economy Council
President Efrain Velasquez. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/bolivar-devaluo-meses_0_842916026.html)
Central Bank of Venezuela drains liquidity
The
Central Bank of Venezuela (BCV) has lately been very active with regard to its
monetary policy in an attempt at collecting excess liquidity in people’s hands
and mitigating the inflationary effects in the country. It has placed 100% of a
special absorption operation for US$ 1.1 billion. On May 6, the BCV called auction
sale 110 for additional US$ 100 million, to be held on Wednesday, May 11, for a
total of USD$ 1.3 billion. (El
Universal, http://www.eluniversal.com/noticias/daily-news/central-bank-venezuela-drains-liquidity_308852)
BRENNTAG profit drops 27% on Venezuela currency losses
Germany's
BRENNTAG, the world's largest chemicals distributor, has reported a 27% drop in
first-quarter net profit, far below forecasts, due to a large devaluation of
the Venezuelan bolivar and a challenging business environment in North America.
BRENNTAG said its Venezuelan business was no longer generating meaningful core
profit as a result of the devaluation of the bolivar by more than 90% in
February. It made foreign exchange losses of 27 million euros in the quarter. (Reuters, http://www.reuters.com/article/brenntag-results-idUSL5N1860J1;
Bloomberg, http://www.bloomberg.com/news/articles/2016-05-09/brenntag-profit-misses-estimates-on-oil-slump-and-venezuela)
Politics and International Affairs
Opposition calls for demonstrations at Elections
Council tomorrow if recall process is delayed
Venezuela’s
opposition leaders have announced that the National Elections Council (CNE) has
finished counting 1.786 million signatures requesting the start of a recall
referendum process against President Nicolas Maduro and is required to announce
the second phase for the start of a five-day public validation process.
Henrique Capriles has called for demonstrations at all CNE offices nationwide
tomorrow “to demand it to meet the
regulatory terms and respect our constitutional right, which is the activation
of the recall vote”, if the Council gives in to government pressure seeking
to create a delay for what pro-government PSUV party calls an additional
seven-day “complaint period”, which
is not provided for in standing rules.
Enrique Marquez, president of the UNT opposition party, says the only
way for the demonstrations to be called off is for the CNE to immediately
announce the next steps as required by standing rules. “We will not accept any additional ‘complaint period’. The PSUV has no
right to put a single finger into those signatures. Rules do not mention this
step. We will be vigilant that timing is met so that the recall can take place
in September-November.” He warned the CNE should not “play any tricks” to delay procedures. “The government will try to avoid a vote, because it has already lost
the recall. Ms. Tibisay Lucena (CNE President) and CNE directors, peace in
Venezuela is in your hands”, he said. (El Universal, http://www.eluniversal.com/noticias/daily-news/capriles-will-ask-cne-observe-the-constitution_308893;
http://www.eluniversal.com/noticias/daily-news/mayor-ocariz-cne-completed-signature-verification-phase-for-recall-vote_308937;
and more in Spanish: (El Nacional: http://www.el-nacional.com/politica/MUD-moviliza-CNE-comienza-validacion_0_844715767.html;
Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/oposicion-marchara-este-miercoles-hasta-el-cne.aspx#ixzz48FVNFKjW)
National Assembly may incorporate Amazonas state
legislators suspended by Supreme Tribunal
119
days after the people of Amazonas state and indigenous people to the South were
deprived of representation within the National Assembly, due to a challenge of
election results by the pro-government PSUV party, the legislature may now
incorporate the 4 suspended congressmen – 3 from the opposition and 1
pro-government representative. The National Assembly is now considering a
request my Amazonas state governor Liborio Guarulla for the 4 legislators to be
sworn in, in the face of delays by the Supreme Court and the National Elections
Council in deciding how to solve the matter, whether by swearing in the elected
legislators or calling for a new election. The Supreme Court has said it has
called on the Public Prosecutor to “request
information on legislative elections in Amazonas state”. More in Spanish:
(El Nacional: http://www.el-nacional.com/politica/Parlamento-evalua-incorporar-diputados-Amazonas_0_844715770.html)
Ramos Allup says the Supreme Court plans to charge
opposition legislators of “treason”
Henry
Ramos Allup, President of the National Assembly, has issued a warning that the
nation’s Supreme Tribunal is preparing to charge four opposition legislators
with “treason” for meeting with OAS
Secretary General Luis Almagro, in order to strip them of office without
seeking the legislature’s requisite vote of approval. Opposition legislators Luis
Florido, Delsa Solórzano, William Dávila and Timoteo Zambrano met with Almagro
last week, to request the application of the Hemisphere’s Democratic Charter in
Venezuela. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/Ramos-Allup-TSJ-diputados-MUD_0_844115637.html)
Cabello seeks to fire all public employees who signed
recall petition
Former
National Assembly President Captain Diosdado Cabello, considered to be the
second most important leader of the regime, says that any public employee who
is discovered to have signed the petition to hold a recall referendum against
President Nicolas Maduro, must be fired. He said this is something they will be
attentive to as they review signatures one by one. Opposition leaders have
announced they delivered 1.85 million signatures to the National Elections
Council. When a similar recall was called against the late President Hugo
Chávez in 2004, the government was accused of listing opponents for
retaliation. More in Spanish: (Infolatam; http://www.infolatam.com/2016/05/05/diosdado-cabello-pide-despedir-a-funcionarios-que-firmen-el-revocatorio-contra-maduro/)
High Vatican representative to visit Venezuela
The
Vatican’s Secretary for Relations with States Archbishop Paul Richard Gallagher
will travel to Venezuela in the upcoming days to hold a series of meetings with
the country’s religious and civil authorities. Venezuela’s affairs have caught
the interest of the Vatican, and Pope Francis has sent a letter to President
Nicolas Maduro, yet its content has not been revealed. On several occasions,
the Pontiff has voiced concern over the country’s current situation. In his
traditional Easter message, he urged the government and opposition to seek
talks to overcome “hard times.” (El Universal, http://www.eluniversal.com/noticias/daily-news/high-vatican-representative-visit-venezuela_308900)
Argentina’s Macri calls for Venezuela to begin talks
for a “transition”
Argentine
President Mauricio Macri has called on the government of his Venezuelan
counterpart Nicolas Maduro to open “the
door to talks for a transition process”. He said “what I seek… is the start of some sort of talks so that all this stops,
because I feel the Venezuelan people are having a bad, a very bad time”.
More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/macri-pide-venezuela-abrir-proceso-transicion_308575)
Venezuela's
military needs to get out of business
Venezuela
has more than 4,000 generals, compared with fewer than 50 in 1993. This kind of
runaway inflation is every bit as pernicious as the economic variety, which also afflicts Venezuela
-- in fact, they have to be addressed together. In February, Maduro put the
military in charge of a new state oil and mining services company -- one of
nearly a dozen military enterprises started under his administration. Active or
former officers head about one-third of Venezuela's ministries and govern
nearly half its 23 states. Service members have gotten big raises; preferential
access to housing, cars and food; and promotions. Officers have won lucrative
contracts, exploiting currency controls and subsidies -- selling cheap gasoline
to Venezuela's neighbors at enormous profit, for instance. One way to put the
military back in the box is to make clear that misdeeds will face consequences.
The U.S. is building cases against officers implicated in Venezuela's
burgeoning drug trade. It has also targeted a handful of officials with asset
freezes and visa bans for engaging in political violence and acts of public
corruption. Leading the charge would only validate Maduro's anti-Yanqui
narrative, so the U.S. should quietly make clear that there's plenty of room
left on the targeted sanctions list and that it will publicize credible
information of corruption, criminality and abuse. Venezuelans are right to hold
Maduro responsible for his economic mismanagement, which has resulted in
blackouts, two-day government workweeks and life-threatening shortages of
medicines. But kicking the president out of office will not by itself end
Venezuela's economic hardship and political dysfunction. That will also require
getting the military out of business and back into its barracks. (Bloomberg, http://www.bloomberg.com/view/articles/2016-05-06/venezuela-s-military-needs-to-get-out-of-business)
Venezuela first lady's nephews getting help to cover
defense costs: U.S.
Two
nephews of Venezuela's first lady facing U.S. charges that they conspired to
import cocaine into the United States are getting their defense costs paid for
by an unnamed third party, prosecutors said. In a letter filed on Friday in
Manhattan federal court, prosecutors asked a U.S. judge to pose questions to
Franqui Francisco Flores de Freitas and Efrain Antonio Campo Flores about their
legal fees at a hearing this Thursday. Both men are nephews of President
Nicolas Maduro's wife, Cilia Flores, and in the last two months brought on
large, prominent U.S. law firms to defend them against charges stemming from
their arrests in November. Prosecutors asked U.S. District Judge Paul Crotty to
inquire whether a potential conflict of interest exists due to a third party
paying their fees and ask Campo Flores and Flores de Freitas if they waive it.
(Reuters, http://www.reuters.com/article/us-venezuela-drugs-nephews-idUSKCN0Y024D)
Opposition leader fatally shot
German
Mavare, a leader of the opposition UNT party, died on Friday after being shot
in the head, an assassination that occurred in the western state of Lara, his
organization said. “The board of the UNT
expresses its deepest sorrow for the slaying of colleague German Mavare. We
demand justice and an end to violence,” was the message posted on the
Twitter account of the UNT party, headed by jailed ex-presidential candidate
and former governor of Zulia state, Manuel Rosales. (Latin American Herald
Tribune, http://www.laht.com/article.asp?ArticleId=2411638&CategoryId=10717)
Catastrophe
is the new normal for Venezuelans
Making
sense of the rolling political and economic disaster in Venezuela isn't easy. But
the bigger mystery may be why the whole country isn't
flooding into the streets to demand the end of the social revolution
that's left one of Latin America's most resource-rich nations in a shambles. Start
with the riddle of why the country with the world's largest crude oil reserves
has suffered constant power outages.
(Spoiler: instead of using oil to generate electricity, the government has
relied on hydropower while failing to plan for this year's punishing drought;
it neglected to build new power plants or invest in its crumbling
infrastructure.) (Bloomberg,
The Washington Post: Venezuela should be rich. Instead
it’s becoming a failed state.
It's
come to this: The country with the largest oil reserves in the world can't
afford to brew its own beer, stay in its own time zone, or even have its own
people show up to work more than two times a week. Venezuela, in other words,
is well past the point of worrying that its economy might collapse. It already
has. That's the only way to describe an economy that the International Monetary
Fund thinks is going to shrink 8% and have 720% inflation this year. And that's
not even the worst of it. No, that's the fact that the state itself is near
collapse. Venezuela already has the world's second-highest murder rate, and now
the Chavista regime seems to be threatening violence of its own if the
opposition succeeds in recalling President Nicolas Maduro. It's a grim race
between anarchy and civil war. It's a lot easier to come up with a list of
things that aren't failing. That's nothing. Venezuela's economy is collapsing,
its currency is too, its stores have nothing in them, and it can't keep the
lights on or its people safe. The only things the Chavistas are good at is
creating scapegoats, creating lines, and creating misery. Call it Maduro's law:
Everything that can go wrong, will go wrong when your government makes it. (The
Washington Post: https://www.washingtonpost.com/news/wonk/wp/2016/05/04/venezuela-is-becoming-a-failed-state/?wpmm=1&wpisrc=nl_most-draw5)
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.
