November 17, 2015

Oil & Energy

 

Venezuela oil price tumbles to within dollar of 2015 low

Venezuela's weekly oil basket tumbled further below US$ 40 as oil prices around the world declined rapidly after the International Energy Administration revealed historically large amounts of oil in storage. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending November 13 was US$ 37.23, down US$ 2.67 from the previous week's US$ 39.90. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2400021&CategoryId=10717; El Universal, http://www.eluniversal.com/economia/151113/venezuelan-oil-hits-usd-3723-per-barrel)

 

Maduro says he will meet Putin on oil prices next November 23

President Nicolás Maduro says he will meet with his Russian counterpart, Vladimir Putin, next November 23rd, to continue promoting higher oil prices. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/maduro-se-reunira-con-putin-el-proximo-23-de-novie.aspx#ixzz3reFQ4Onk)

 

US$ 1.31 billion invested to date in Guri hydroelectric plant

Representatives of Venezuela's state-run National Electric Corporation (CORPOELEC) and the Inter-American Development Bank (IDB) are reviewing electricity projects and civil engineering works aimed at streamlining the Simón Bolívar Hydroelectric Plant (Guri dam), located in Guri, southern Bolívar state, which would generate additional 705 megawatts (MW) for the National Grid (SEN). Heberto Montiel, of CORPOELEC, says this project has been in process since last year. The Inter-American Development Bank (IDB) allocated US$ 700 million, the Andean Development Corporation (CAF) provided US$ 380 million, and the Venezuelan government disbursed some US$ 230 million for the project, for a total US$ 1.31 billion. (El Universal, http://www.eluniversal.com/economia/151114/usd-131-billion-invested-in-guri-hydroelectric-plant)

 

 

Commodities

 

Venezuela hopes to collect US$ 413.2 million from gold mining

The Venezuelan government estimates that USD 542.6 million VEF would be collected from mining and basic industries in 2016, accounting for 0.2% of recurrent income and 0.2% of the planned national budget. These resources would be US$ 90.6 million from the iron industry; US$ 31.1 million from the exploitation of other minerals; US$ 420.1 million from gold exploitation-related operations and US$ 794.8 million from mining special sales, as per the 2016 currently under legislative discussion. (El Universal, http://www.eluniversal.com/economia/151114/venezuela-hopes-to-collect-usd-4132-million-from-gold-mining)

 

Agriculture is now less than 5% of GDP

Economist Jesús Casique, director of Capital Market Finance, says agriculture has been shrinking within Venezuela's GDP and is now less than 5%, as a result of exchange and price controls, expropriations and lack of legal and personal security. The Central Bank used to publish the size of agriculture within the GDP, but now includes it into other areas, which makes it difficult to determine its real size. More in Spanish:  (Ultima Hora Digital; http://ultimahoradigital.com/jesus-casique-sector-agricola-no-representa-ni-el-5-del-producto-interno-bruto/)

 

 

Economy & Finance

 

Oil Minister says debt restructuring "seems sensible"

Eulogio del Pino, Venezuela's Oil Minister and President of state oil company PDVSA says restructuring the company's debt "seems sensible in the light of the nation's FOREX cash flow limitations". The Síntesis Financiera analysis group says there will the margin for maneuvering around the foreign payment deficit will by narrower in 2016: "Collected oil exports will be around US$ 40 billion for a second year in a row, and restrictions undertaken in 2014 and 2015 to face the drop in exports have been very strong". PDVSA must pay US$ 8.1 billion in 2016-2017 for bond maturities. More in Spanish: (El Nacional; http://www.el-nacional.com/economia/Aseguran-canje-deuda-luce-sensato_0_739726158.html)

 

Central Bank data blackout deepens country risk perception

Since January last year, Venezuela's Central Bank has failed to make official information available on GDP, balance of payments, inflation, oil production, human development, poverty, pay scales, or scarcity - as it is legally bound to do. As a consequence, the nation's country risk is now similar to Ukraine's and worse than Greece and Argentina. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Ausencia-estadisticas-oficiales-BCV-aumenta_0_737926350.html)

 

Venezuela accuses entrepreneurs of promoting food shortages

The government here has again said that local officials are not the only ones who violate human rights, and told the United Nations that Venezuelan entrepreneurs are promoting the so-called economic war in the country. The accusation was made by Larry Devoe, Executive Secretary of the Venezuelan Human Rights Security Council during the Fourth Annual Forum on Business and Human Rights held in Geneva, Switzerland. Devoe said "(local) enterprises have deliberately hit the distribution and availability of food and personal use products, making people's access to basic goods difficult." (El Universal, http://www.eluniversal.com/nacional-y-politica/151116/venezuela-accuses-entrepreneurs-of-promoting-food-shortage)

 

Venezuela’s International Reserves drop around $702 million a month, according to official figures from the Venezuelan Central Bank (BCV). Financial firm ODH estimates Venezuelan International Reserves will close 2015 at $13.6 billion. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=46188&idc=1)

 

 

Politics and International Affairs

 

Venezuela’s regime is in a scared and ugly mood

President Nicolás Maduro admits that a parliamentary election on December 6th “could be the most difficult” test the government has faced since Hugo Chávez came to power following an election in 1998. He repeats that the “revolution” will win "como sea"—“by hook or by crook”:

• The government has gerrymandered voting districts to give more seats to rural areas where the PSUV is strong: six urban states with 52% of the electorate will elect just 64 deputies; the remaining 18 will elect 100.
• Maduro has declared a “state of exception” along the border with Colombia. In those areas, which will elect 19 legislators, campaigning is restricted, which hurts the opposition.
• Seven opposition leaders are banned from being candidates.
• The electoral authority has placed next to the opposition coalition on the electronic ballot a pro-regime splinter party with a similar name and logo. In one state, a candidate from that party has the same name as an opposition leader.
• The government has crippled the opposition media, for example by not renewing broadcasting licenses.
• The government has refused to allow election observers from the Organization of American States (OAS) or the European Union. In an unprecedented 18-page letter to Venezuela’s electoral authority, Luis Almagro, the OAS’s secretary-general, paints a devastating picture of the tilted field on which the opposition must play. Almagro, formerly a politician of Uruguay’s left-wing Broad Front, warns that the opposition lacks “equitable” conditions and that the ruling party abuses the resources of the state.

As the opposition surges in the polls, some analysts in Caracas think that it could win the three-fifths majority in the legislative assembly required to claw back powers from Maduro. The government tacitly recognizes the possibility of defeat: it recently pressured 13 supreme court justices to retire early, so that they can be replaced before the new assembly convenes in January. Maduro talks darkly of “governing with the people” if he loses. This suggests that he would seek to throttle and bypass the assembly. But everything indicates that “the people” are no longer with him. If he blocks peaceful change, he may ensure that frustration leads to violence. (The Economist, http://www.economist.com/news/americas/21678241-venezuelas-regime-scared-and-ugly-mood-hook-or-crook?frsc=dg%7Ca)

 

Former Dominican president to head UNASUR electoral mission in Venezuela

Former Dominican President Leonel Fernández will head the electoral mission of the Union of South American Nations (UNASUR) for the legislative elections to be held on December 6 in Venezuela. A source within the UNASUR General Secretariat said Fernández has been appointed as "special representative" of UNASUR. UNASUR's pro-tempore presidency, held by Uruguay, and Venezuela's National Electoral Council (CNE) signed an agreement to monitor the upcoming parliament election in Venezuela. (El Universal, http://www.eluniversal.com/nacional-y-politica/151116/former-dominican-president-to-head-unasur-electoral-mission-in-venezue)

 

Military controls key states in upcoming elections

National Bolivarian Armed Forces Operational Strategic Command, which carries out "Republic Plan" (supervising and guarding election procedures), will deploy 30,000 troops in areas where a "state of exception" has been decreed by President Nicolás Maduro. It is not known how many of these are members of the militia, according to Rocío San Miguel, director of the Control Ciudadano NGO. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/GNB-control-clave-electoralmente_0_739126189.html)

 

Cabello claims Venezuelan pair held by U.S. for drugs were "kidnapped"
Two relatives of President Nicolas Maduro held in the United States on cocaine smuggling charges were "kidnapped," a senior member of the ruling Socialist Party said on Monday. In the first direct comment on the case from a high-ranking Venezuelan official, National Assembly president and party No. 2 Captain Diosdado Cabello also said it was an attempt by Washington to discredit the country's government right before a vote. "The aim was to hurt the Bolivarian revolution in the midst of an election," he said. (Reuters, http://www.reuters.com/article/2015/11/16/venezuela-usa-crime-idUSL1N13B1TD20151116#yq7mjD6axb5Fc8mS.97)

 

...and the opposition asks the National Assembly and Prosecutor General to investigate

Representatives of the opposition Democratic Unity (MUD) are asking the National Assembly and the Prosecutor General to open an investigation to find our "whether it is or is not true that Efraín Campo Flores and Franqui Francisco Flores De Freitas, "are related to the circle of power, why did they have diplomatic passports, who owns the airplane and who owns the yatch that the DEA has reported are part of a crime ring". Jesús Torrealba, Secretary General of Democratic Unity called it a "matter of national sovereignty" and said it "is a problem that goes beyond elections and could reveal the link between crime and power circles". More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/151117/mud-solicitara-a-la-an-y-fiscalia-que-abran-investigacion)

 

FM travels to Paris to support Venezuelans hit by attacks

Foreign Minister Delcy Rodríguez has traveled to Paris to assist and express the local government's solidarity to the victims and relatives of the Venezuelans hit by the attacks occurred in the French capital city. Rodríguez says she was informed about the health situation of Félix Salazar, who was treated at the Pitié Salpetriere Hospital in Paris, and she provided support to the relatives of Sven Silva, who is still missing. (El Universal, http://www.eluniversal.com/nacional-y-politica/151116/venezuelan-fm-travels-to-paris-to-support-venezuelans-hit-by-attacks)

 

 

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 27, 2015

International Trade

 

Cargo that has arrived at Puerto Cabello:

• 60.000 tons of yellow corn, 30,000 tons of bulk soy, 30,000 tons of wheat, and 9,999 tons of raw soy oil for state agency Corporación de Servicios y Abastecimientos Agrícolas (CASA)
• 387 trucks and 353 containers bearing auto parts for the government's transportation program.

More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Merchants have paralyzed pending imports due to an announcement by President Madura that they cannot use the parallel FOREX rate to establish costs and prices. Caracas Chamber of Commerce Executive Director Victor Maldonado reports that "due to the severe restriction in official FOREX, almost all trade turned to the parallel rate in order to keep afloat, but now no one will import something at a price that cannot be used in establishing cost". More in Spanish: (El Nacional; http://www.el-nacional.com/economia/Comerciantes-pararon-importaciones-proceso_0_727127490.html)

 

Venezuela-Colombia bilateral trade is now down 48% in Q3 2015

The Venezuelan-Colombian Economic Integration Chamber (CAVECOL) reports that trade between Venezuela and Colombia totaled US$ 281 million in the third quarter, versus US$ 544 million in the same period of 2014, for a 48% contraction in trade due to the shutdown of the Venezuela-Colombia border and the state of emergency decree issued by the Venezuelan government on August 19. (El Universal, http://www.eluniversal.com/economia/151026/venezuela-colombia-trade-down-48-in-third-quarter)

 

 

Logistics & Transport

 

Regime is evicting private import service companies from Maiquetía International airport

Officials at the Maiquetía International Airport have delivered an eviction notice to  private companies, such as  PG, SWISSPORT and PPG, which have operated customs and storage facilities there for over 10 years, and could leave over 800 workers without jobs. It is reported the move will begin with PG and continue on to over 10 companies operating on government premises. The National Guard has been called in to dislodge PG workers protesting the decision. More in Spanish: (El Nacional; http://www.el-nacional.com/economia/Gobierno-desaloja-empresas-Guaira_0_725327722.html; http://www.el-nacional.com/economia/Intentaron-desalojar-trabajadores-PG_0_727127472.html)

 

 

Oil & Energy

 

U.S. graft inquiries turn to Venezuelan oil industry

A top finance manager for Venezuela’s government-run oil company is suspected of taking millions of dollars in bribes to invest company pension money in an American hedge fund, according to court papers in one case. High-ranking Venezuelan government officials, including some at the oil giant, used shell companies, fake contracts and import scams to camouflage the illicit movement of more than US$ 4 billion through a European bank accused of being a money-laundering haven, according to a Treasury Department investigation. These cases and others like them show how American investigators are increasingly focusing on Venezuelan officials suspected of corruption, including officials at the government-owned oil company PDVSA. The cases have come together as American officials are stepping up investigations into narcotics trafficking that frequently involve government corruption as well. The inquiries have opened a window into what is believed to be widespread corruption at the oil company and elsewhere in Venezuela. Federal officials have not announced any indictments, but the possibility that American prosecutors might file charges against high-level Venezuelan oil officials is causing alarm among American oil companies that do business with the government-run corporation. Francisco J. Monaldi, a fellow in Latin American energy policy at the Baker Institute for Public Policy at Rice University in Houston, says oil executives had been encouraged by the signs that PDVSA was seeking to work more closely with American companies, but he added, “They’re worried that it will totally collapse, by the rumors they hear that a lot of the investigations that are happening around Venezuela have PDVSA in the middle of it.” (The New York Times, http://www.nytimes.com/2015/10/23/world/americas/us-graft-inquiries-turn-to-venezuelan-oil-industry.html)

 

PDVSA's US$8 billion U.S. assets at risk in probe

A U.S. investigation of Venezuela’s national oil producer could jeopardize about US$ 8 billion in crude refineries, storage terminals and pipeline networks. Three U.S. oil refineries owned by Petroleos de Venezuela SA’s CITGO subsidiary have a combined capacity to process 749,000 barrels of oil a day. The company’s largest asset is its 425,000-barrel-a-day refinery in Lake Charles, Louisiana, which includes shipping docks and storage terminals. CITGO probably would be valued around US$ 8 billion, said Gurpal Dosanjh, an analyst at Bloomberg Intelligence. Most of that value -- about US$ 6 billion -- rests in the company’s pipeline and storage network, and the remaining US$ 2 billion represents the trio of refineries, he said. Citgo valued its assets at US$ 8.1 billion in a July 2014 bond offering. (Bloomberg, http://www.bloomberg.com/news/articles/2015-10-22/venezuela-s-pdvsa-has-8-billion-of-u-s-assets-at-risk-in-probe)

 

Algeria backs Venezuela on OPEC, Non-OPEC Summit to boost prices

Algeria supports Venezuela’s call for a summit among heads of state from OPEC and other oil-exporting nations in a bid to lift crude prices, Algerian Foreign Minister Ramtane Lamamra said: “We would only convene a summit if its success is guaranteed; meetings at the level of ministers and experts will therefore precede such an event.” Venezuela has proposed that heads of state from the Organization of Petroleum Exporting Countries and other oil producers meet in November to discuss the price needed to sustain investments in future supplies, the country’s Oil Minister Eulogio del Pino said on Oct. 21. Speaking in Vienna during a meeting of experts from OPEC and from outside the group, del Pino said Venezuela seeks to set an “equilibrium price” of about US$ 88 a barrel. (Bloomberg, http://www.bloomberg.com/news/articles/2015-10-26/algeria-backs-venezuela-on-opec-non-opec-summit-to-boost-prices)

 

 

Commodities

 

Maduro regime devises new controls for distribution of goods

The stage of setting the maximum price of public sales of goods in addition to exerting strict control of some services, such as health care, has arrived. After the recent measures intended to reform the Law on Fair Prices, the government has been working on control of distribution. Executive Vice-President Jorge Arreaza has made a presentation on the severity of sanctions, further control of the estimation of fair prices, ban on including costs arising from the so-called parallel dollar, and some other variables subject to analysis. (El Universal, http://www.eluniversal.com/economia/151026/venezuelan-govt-devises-control-for-distribution-of-goods)

 

Oliveros: New measures may worsen inflation and shortages

Venezuelan economist Luis Oliveros says the government "is not carrying out necessary adjustments to solve shortages of goods; therefore, there will be no goods available (...) and it will be impossible to make them available in stores." Oliveros says the announcement by President Nicolás Maduro establishing two pricing categories: maximum retail price and fair price, "is an invention that not even the government understands." "More inflation and more shortages await us...President Nicolás Maduro did not announce economic measures, he decreed further radicalization of price controls," which will result in "higher shortages of products in December this year and early in 2016." (El Universal, http://www.eluniversal.com/economia/151024/oliveros-economic-measures-may-worsen-inflation-and-shortages)

 

 

Economy & Finance

 

Venezuela sues black market currency website in United States

Venezuela's Central Bank has filed a lawsuit with allegations of "cyber-terrorism" against a U.S.-based website that tracks the OPEC member's currency black market. The DolarToday site has enraged President Nicolas Maduro's government by publishing a rate in Venezuelan bolivars for the greenback far higher than the three official levels under Venezuela's 12-year-long currency controls. The rate has become an unofficial marker in the crisis-ridden economy, with some Venezuelans using it in private transactions or to fix prices of imported goods. The lawsuit, in the U.S. District Court for the District of Delaware, named three Venezuelans in the United States as being behind the site: Gustavo Diaz, Ivan Lozada and Jose Altuve. (Reuters, http://www.reuters.com/article/2015/10/23/us-venezuela-currency-idUSKCN0SH2LC20151023; Bloomberg, http://www.bloomberg.com/news/articles/2015-10-23/venezuelan-central-bank-sues-to-block-exchange-rate-website)

 

Economists warn inflation may hit 300%

There have been no official inflation numbers in Venezuela for the past nine months, but Tamara Herrera, the director of SÍNTESIS FINANCIERA says October inflation was easily above 200% and will be close to 300%  if problems are not faced at their roots. She says we will enter the club of nations with a government that is more scared of the truth being known than of the truth itself, and this is why they are trying to hide it and not solve it. She foresees devaluation in 2016 and continued use of multiple rates and FORE rationing, to the point where parallel rate devaluation will be uncontrolled. More in Spanish: (Notitarde; http://www.notitarde.com/Economia/Economistas-alertan-que-la-inflacion-sera-de-300-2535617/2015/10/24/675870; El Nacional, http://www.el-nacional.com/economia/Economistas-advierten-inflacion-errara-cerca_0_725927421.html)

 

Central Bank has drained liquidity for US$ 42.6 billion

As part of its monetary policy, the Central Bank of Venezuela (BCV) has placed securities in a combined manner in the market for USD 42.6 billion in order to drain the excess of liquidity. The information was posted on the BCV website. The astringent monetary policy implemented by the BCV is intended to curb the excess of liquidity which, if not absorbed by the system, may exert undesirable pressure. In the last 12 months, monetary liquidity in public hands has doubled, accounting for a variation of 100.31%. Thus far this year, means of payment have risen by 57.01%. This implies that liquidity has gone beyond the capacity of the economy to use these funds in productive activities. Therefore, the BCV must take steps to counteract the excess of liquidity in the system. (El Universal, http://www.eluniversal.com/economia/151024/central-bank-has-drained-liquidity-for-usd-426-billion)

 

 

Politics and International Affairs

 

BOFA: Venezuela: Winner takes all

A recent report from Bank of America-Merrill Lynch indicates that a simple majority of Venezuela’s legislative branch has "the capacity to approve laws, decree amnesties, ratify treaties, and override presidential vetoes. Yet these powers pale in comparison to those of larger supermajorities. A three-fifths majority of the National Assembly can revoke presidential decree powers and remove government ministers. Most importantly, a two thirds majority can call elections for a constituent assembly, which has the power to dissolve other branches of government – including the executive – and replace them with temporary appointees. Venezuela’s electoral system also disproportionately benefits the winner of the national popular vote. This is because 72% of deputies are elected through district level majority voting. We have estimated that the opposition would need to win the popular vote by a margin of at least 18.1% to capture a two-thirds supermajority. Most current polls put the opposition’s lead well above that threshold. Were the opposition to eventually reach power, one could visualize a new administration taking advantage of exiting winner-takes-all institutions to push through market reforms. This ability would offset the residual power of current appointees to the judiciary and accountability branches and thus reduce the risks of economic reforms being sidetracked. We think such a scenario would likely be well received by markets." (BOA full report: Attached.)

 

Colombia's Santos wants Jobim as the chief of Unasur electoral observation mission

Colombian President Juan Manuel Santos has asked the Venezuelan government to promptly approve Brazilian Nelson Jobim as the chief of the UNASUR mission for the parliament vote in Venezuela next December 6. Santos asked "respectfully the Venezuelan government to authorize as soon as possible the suggested chief of mission. The Supreme Tribunal of Justice (TSE) of Brazil had announced that it would not take part in the mission because of Venezuela's unresponsiveness on the assurances for "an objective and impartial observation" and due to a presumed veto on the Brazilian jurist. UNASUR later refuted statements by Brazil's Tribunal, using Twitter messages denying that Jobim had been vetoed. It also said elections "will allow Venezuelans to resolve differences without violence from polarization or media insults". (El Universal, http://www.eluniversal.com/nacional-y-politica/151026/santos-wants-jobim-as-the-chief-of-unasur-electoral-observation-missio; and more in Spanish: INFOLATAM, http://www.infolatam.com/2015/10/25/unasur-dice-no-hubo-veto-al-brasileno-nelson-jobim-para-mision-en-venezuela/)

 

New demands for the National Elections Board to reform observer rules

Brazil's refusal to join the group of UNASUR "escorts" at the upcoming legislative elections has revived the debate here. The Catholic University's Political Studies Center has issued a statement saying the procedure used by the National Elections Board (CNE) for election observers is inadequate and asks for it to rectify. Center Director Benigno Alarcon says: "Unfortunately, less than two months prior to the election, the CNE has chosen to disregard international standards for election observers and is using the term "escorts" as a political devise to legitimize its actions, and this damages transparency and credibility in elections proceedings". More in Spanish: (El Nacional; http://www.el-nacional.com/)

 

Regime invites Uruguayan allied party as viewer of D-6 vote

Venezuela´s former Minister of Foreign Affairs Elías Jaua has asked the Uruguayan political FRENTE AMPLIO party to join UNASUR as a viewer of the parliament vote next December 6. Jaua is reported to have traveled as an "emissary" of President Nicolás Maduro, and met with former President José "Pepe" Mujica and the Executive Secretary of FRENTE AMPLIO. Jaua is said to have promised that the ballots "will be held in compliance with legal and constitutional rules." (El Universal, http://www.eluniversal.com/nacional-y-politica/151026/venezuelan-govt-invites-uruguayan-party-as-viewer-of-d-6-vote)

 

Venezuelan prosecutor says falsehoods used to convict Leopoldo Lopez

Franklin Nieves, one of the Venezuelan prosecutors in the trial that sent Leopoldo Lopez to jail says he fled the country because the Venezuelan government had pressured him into bringing “false” accusations against the opposition leader.
“I decided to leave Venezuela with my family because of the pressure applied by the executive branch and my hierarchical superiors to make me continue defending the false evidence used to convict Leopoldo Lopez,” the prosecutor said. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2398738&CategoryId=10717)

 

...and Prosecutor General sacks prosecutor after trial criticism

Prosecutor General Luisa Ortega says she has sacked the prosecutor who criticized the conviction and imprisonment of opposition leader Leopoldo Lopez. She said Franklin Nieves, who fled the country, had abandoned his post, and also denied that officials had been pressured to provide false evidence at Lopez's trial. "At the state prosecutors' office we don't pressure anyone," she said, adding that Nieves had given in to "pressures from foreign and domestic elements", but was not specific. Prosecutor Ortega also rejected that the allegations by Nieves were grounds for overturning the verdict in Lopez's trial. Lopez's wife, Lilian Tintori, repeated her call for his release on Monday. "It is clear that the case was manipulated, a complete farce," she says. (BBC News, http://www.bbc.com/news/world-latin-america-34644434; Reuters, http://www.reuters.com/article/2015/10/26/us-venezuela-opposition-idUSKCN0SK2E520151026; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45923&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/151026/attorney-general-dismisses-prosecutor-in-lopezs-trial)

 

Venezuela has the highest number of political prisoners in the continent, surpassing even Cuba, claimed NGO Foro Penal Venezolano’s CEO Alfredo Romero. He said "Regretfully, Venezuela is world leader in political persecution and justice manipulation. This stands out even more clearly with statements such as those of prosecutor Nieves in Leopoldo López’ case.” (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=45935&idc=5)

 

Venezuela to run for re-election to the United Nations HR Council

Foreign Affairs Minister Delcy Rodríguez has confirmed that Venezuela will be a candidate to serve another term on the United Nations (UN) Human Rights Council for the 2016-2018 terms. It will compete against Ecuador, Panama, and Bahamas for one of the three seats in representation of Latin America and the Caribbean at the UN Human Rights Council for three years. (El Universal, http://www.eluniversal.com/nacional-y-politica/151026/venezuela-to-run-for-re-election-to-the-united-nations-hr-council)

 

FM meets with UN representative to address Essequibo dispute

Foreign Affairs Minister Delcy Rodríguez met last week in New York with Susana Malcorra, the Chef de Cabinet to the United Nations Secretary General Ban Ki-moon, to revise the work conducted by the UN Technical Committee on the Essequibo border controversy. Malcorra, who heads the UN committee, had initially met with Guyanese President David Granger and then with Venezuelan President Nicolás Maduro on October 14. (El Universal, http://www.eluniversal.com/nacional-y-politica/151026/venezuelan-fm-meets-with-un-representative-to-address-essequibo-disput)

 

 

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.

February 17, 2015

International Trade

 

Venezuelan trade with countries of the Persian Gulf has not taken off

Nations of the Persian Gulf and Member States of the Organization of Petroleum Exporting Countries (OPEC) have approached Venezuela as a natural ally because of their energy relationship. But so far the agenda has remained a letter of intent and the signing of agreements while trade of goods plummets and the balance of trade continues favoring those nations. Most members of the Gulf Cooperation Council (GCC) set up diplomatic relations with Venezuela in the seventies. Over the past six years, Caracas has boasted a "unique partnership" with Saudi Arabia, UAE, Kuwait, Iraq, Qatar and Iran, as OPEC Member States in lobbying for oil fair prices and against "imperialism."
In fact, trade with these oil producing countries has been diving since 2008. While Venezuelan imports are 82% over exports, Venezuela has failed to attract the crown jewel of some of those petro-monarchies: their billionaire investment sovereign funds, which have been cashed in on by Ecuador and Brazil by means of key projects. (El Universal, http://www.eluniversal.com/economia/150214/venezuelan-trade-with-countries-of-the-persian-gulf-has-not-taken-off)

 

 

Oil & Energy

 

Venezuela oil price rises significantly for 2nd week

Venezuela's Ministry of Energy and Petroleum reports that the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending February 13 rose significantly for the second straight week. Venezuela's weekly oil basket jumped again for the second straight week, bouncing off of its lowest level since 2009.
According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending February 13 was US$ 47.05, up US$ 2.41 from the previous week's US$ 44.64. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2374190&CategoryId=10717; El Universal, http://www.eluniversal.com/economia/150213/venezuelan-oil-ends-at-usd-4705-per-barrel)

 

 

Commodities

 

SIDOR’s Class B shareholders called for a meeting at Las Banderas Square in Alta Vista next Tuesday, February 24, to pressure the CVG, as they have received no response on resuming the payment process of shares. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42783&idc=3)

 

 

Economy & Finance

 

Finance Minister says new gasoline prices coming; Central Bank President adds "conditions are ripe" for increase

Finance Minister General Rodolfo Marco says Venezuela will announce a change of policy soon on gasoline, signaling the government is moving ahead with a long-awaited hike in the world's cheapest fuel.  "Soon there will be important announcements on the issue of gasoline," Marco said in an interview...."A piece of candy cannot cost more than a liter of gasoline." At the same time, Nelson Merentes, President of the Central Bank of Venezuela (BCV) says that "the conditions are ripe" to increase the price of gasoline, without providing further details. He added that for over 100 years, Venezuela has adopted a rent-seeking economic model based on oil exports. From his point of view, considering the current slump in oil prices "is a good time to meet with productive sectors with a view to improving the production capacity and move toward an exports model." (Reuters, http://www.reuters.com/article/2015/02/14/us-venezuela-economy-fuel-idUSKBN0LI04N20150214; El Universal, http://www.eluniversal.com/economia/150216/president-of-central-bank-the-conditions-are-ripe-for-gasoline-increas)

 

Central Bank reports 2014 inflation was 68.5%

Venezuela's inflation rate rose to 68.5% in 2014, with consumer prices rising 5.3% in the month of December, says the Central Bank. The largest increases in December were in food and non-alcoholic beverages with an increase of 7.5%, followed by restaurant and hotel service with a rise of 7.4%. (Reuters, http://www.reuters.com/article/2015/02/14/venezuela-inflation-idUSL1N0VN2H720150214; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2374202&CategoryId=10718)

 

Currency devaluation further hurting multinational company profits

A massive effective devaluation of Venezuela's bolivar currency will likely badly dent 2015 earnings at a swath of major U.S. companies. The decision, announced late on Thursday, would almost wipe out the US$ 7.1 billion of Venezuelan monetary assets currently held on the books of 10 large American companies. At the new exchange rate of about 170 bolivars to the dollar, the value of those assets would drop by 93% to just $421 million, according to a Reuters analysis of regulatory filings. Currently those assets are valued based on the main official rate of 6.3 bolivars to the dollar, or a second rate at 12 bolivars. The Venezuelan authorities only allow a limited amount of business to be done at those rates as the country suffers from a shortage of available dollars, and some companies had recently taken big charges after valuing their assets at a third exchange rate of about 50 bolivars to the dollar, rather than the 6 or 12. However, that part of the system has now been replaced with the new free-floating rate, which was last quoted on Friday at 174 (even weaker than 170 on Thursday). That puts even the companies who had started to use 50 in a position where they may have to take another hit. The move represents an effective devaluation of more than 70%. (Reuters, http://www.reuters.com/article/2015/02/14/us-venezuela-economy-currency-analysis-idUSKBN0LI00W20150214)

 

Telefonica cuts Venezuela asset value by US$ 3.2 billion on bolivar

Telefonica SA, the biggest European phone carrier in Latin America, reduced the value of its Venezuelan assets by 2.8 billion euros (US$ 3.2 billion) by switching to a lower exchange rate for last year. Telefonica will calculate its Venezuelan figures at 50 bolivars to the dollar when reporting earnings for 2014, the Madrid-based operator said Monday in a regulatory statement. That’s 76% lower than the 12 bolivars per dollar used in accounts earlier last year. (Bloomberg, http://www.bloomberg.com/news/articles/2015-02-16/telefonica-cuts-venezuela-asset-value-by-3-17-billion-for-2014)

 

ECLAC: Venezuela going in the "right direction" with new FOREX system

The Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, said the implementation of the new Foreign Exchange Marginal System (SIMADI) in Venezuela, which implies a partial devaluation of the local currency "goes in the right direction. Now we are going to see its implementation, the challenges it will bring," said Bárcena. However, the ECLAC Executive Secretary said that having three different foreign exchange rates was "complex," and she feels it is not the ideal situation. (El Universal, http://www.eluniversal.com/economia/150216/eclac-venezuela-goes-in-the-right-direction-with-new-forex-system)

 

Venezuelan government is not ready to face the crisis because of its ideological stand, says US Chargé d’affaires in Caracas Lee McClenny: "Repression, wider controls and more government involvement in (economic) processes is not going to help Venezuela”. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42789&idc=1)

 

German FM: "Venezuela needs deep reforms to overcome the crisis"

Venezuela needs "deep reforms to overcome the crisis," according to German Foreign Minister, Frank-Walter Steinmeier. "I see the situation in Venezuela with great concern. The economic situation is extremely difficult and requires quick and courageous action by the government," Steinmeier said in an interview with Colombian newspaper El Tiempo, of Bogotá. (El Universal, http://www.eluniversal.com/nacional-y-politica/150216/german-fm-venezuela-needs-deep-reforms-to-overcome-the-crisis)

 

FORBES: God's letter to Maduro and what went wrong with the Venezuelan economy

After a worldwide trip to Russia, China, Iran and some Arab states seeking economic aid, Mr. Maduro simply announced to all: “God will provide.” The humorist Laureano Márquez (who belongs to the Venezuelan opposition) produced a widely read public letter purportedly from “God” in which He says: “I already provided you with fertile farmland, plains for the raising of cattle, forest tracts where you can grow cacao and coffee, major navigable rivers, beaches for tourism. … Underground I gave you the largest oil reserves in the planet and … gold, aluminum, bauxite, diamonds … 15 years of the greatest oil bonanza in the history of humanity … ”  Further, Mr. Márquez’s “God” cannot comprehend how the Chavistas have managed to ruin Venezuela’s economy. Such is the divine personage’s concern that He ends the letter with: “I’m sorry, my child. I have to tell you that your request for heavenly financing has also failed.” The crash in oil prices has devastated Venezuela’s troubled economy, which was already deeply undermined by a hugely corrupt and spendthrift administration. Caracas cannot continue liberally dispensing oil to Cuba and other Latin American countries favored by Chavismo. And Mr. Maduro lacks the charisma and political agility of his predecessor. But that’s not really true. The real problem is because they’re messing with markets. That there’s nothing wrong with the original stated goal, of making Venezuela a little less unequal, or of improving the living standards of the poor. Rather, it’s the way they tried to do this that was the mistake. Instead of just giving the poor more money to buy things in the market they decided to fix market prices. And that way disaster lies and it is this that has so screwed the Venezuelan economy. An attempt to have a non-market economy is always going to end in the most fearsome disaster, whatever else happens. All the oil price collapse has done is bring that near total breakdown forward a bit in time. The attempt to have a non-market economy was always going to end in these sorts of tears. (Forbes, http://www.forbes.com/sites/timworstall/2015/02/16/gods-letter-to-maduro-and-what-went-wrong-with-the-venezuelan-economy/)

 

 

Politics and International Affairs

 

Military pledge “unconditional” support for Maduro while US dismisses coup plot charges as "ridiculous"

Defense Minister General Vladimir Padrino says Venezuela’s armed forces remain squarely behind the government of President Nicolas Maduro, after authorities claimed to have thwarted a planned coup. The military “reiterates its unconditional support and absolute loyalty,” Padrino said on live television, flanked by the armed forces chiefs. He said his statement was intended to convey the armed forces’ “resounding rejection” of the conduct of several military officers arrested for their role in the purported plot to topple the leftist government. Maduro asked Venezuela's armed forces to be on guard with the US Embassy in Caracas, which he accused of contacting military officers to take part in a coup to overthrow him. State Department spokesperson Jen Psaki quickly retorted that "these latest accusations, just as all the latest of this kind, are ridiculous"; and added that “the Venezuelan government should stop trying to distract attention away from their nation's economic and political problems and focus on finding real solutions through democratic dialogue among Venezuelans...should respect human rights of its citizens and stop trying to intimidate its political opponents". (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2374158&CategoryId=10717; and more in Spanish: Infolatam, http://www.infolatam.com/2015/02/15/eeuu-ve-ridiculas-las-acusaciones-de-maduro-sobre-nexos-con-intento-de-golpe-2/; http://www.infolatam.com/2015/02/15/maduro-pide-fuerza-armada-estar-alerta-con-embajada-de-ee-uu-en-venezuela/)

 

López father reports son in isolation

The father of opposition leader Leopoldo López reports that his son - who bears his same name - is now "totally isolated" after being moved to a smaller cell by military officers who also destroyed all of this belongings. He said the move "took almost seven hours" without no presence by the Attorney General's office as required by law. He said they also broke Venezuelan laws by preventing his wife, children and mother from seeing him. More in Spanish: (Infolatam, http://www.infolatam.com/2015/02/16/padre-del-opositor-venezolano-lopez-dice-que-su-hijo-esta-aislado-en-prision/)

 

Spain plans to seek extradition of former member of ETA in Venezuela

The Spanish government is considering asking extradition from Venezuela of former ETA leader José Ignacio de Juana Chaos, under investigation for the crime of praising terrorism, after newspaper El Mundo published pictures of De Juana Chaos in Venezuela. "We will assess it. If appropriate and the judicial authority considers it appropriate, we would obviously request his extradition," Spain's Interior Minister Jorge Fernández Díaz told media. Fernández Díaz's remarks came after newspaper El Mundo published a report with photos showing the former leader of ETA in the town of Chichiriviche, northwestern Falcón state in Venezuela, where he allegedly manages a liquor store. (El Universal, http://www.eluniversal.com/nacional-y-politica/150216/spain-plans-to-seek-extradition-of-former-member-of-eta-in-venezuela; Fox News, http://www.foxnews.com/world/2015/02/16/spain-asks-interpol-to-check-if-wanted-armed-basque-group-member-is-living-in/)

 

 

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.