November 22, 2018

International Trade

Customs Brokers Chamber reports Christmas season imports are down 98% from 2012 due to exchange restrictions and red tape. It adds that high impact imports are carried out by the government. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/economia/camara-de-aduaneros-asegura-que-importaciones-navidenas-cayeron-98)

 

Oil & Energy

PDVSA resumes work at Jose oil port's dock

Venezuela’s state-run PDVSA has reopened a dock at the country’s main oil terminal of Jose that had been closed for almost three months due to a tanker collision, a PDVSA source and a shipper said on Tuesday. Dozens of tankers waiting to load Venezuelan oil were diverted to other PDVSA’s terminals since Jose port’s South dock was shut in late August, causing delays in deliveries to customers and cutting export revenue. (Reuters, https://www.reuters.com/article/us-venezuela-oil-ports/venezuelas-pdvsa-resumes-work-at-jose-oil-ports-dock-sources-idUSKCN1NP24K)

 

Maduro claims US$ 100 is the “fair price” for a barrel of oil

He made his statement at a funeral ceremony honoring for former Oil Minister, PDVSA President and OPEC Secretary General Alí Rodríguez Araque. Year-to-date 218, Venezuela’s oil basket price has averaged US$ 61.74. More in Spanish: (El Universal, http://www.eluniversal.com/el-universal/26375/maduro-estima-que-100-dolares-es-el-precio-justo-para-el-barril-de-petroleo)

 

Commodities

Zulia state governor declares emergency due to drinking water scarcity

Zulia state governor Omar Prieto has declared a state of emergency in the statewide distribution of drinking water and will set “a sales price cap on water casks". More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/nacional/gobernador-del-zulia-declaro-emergencia-por-escasez-de-agua-potable)

 

Economy & Finance

Chavez’s ex-treasurer will give up houses, horses and watches

A former national treasurer of Venezuela who admitted taking bribes from a billionaire television mogul will give up the trappings of his fabulous life in south Florida, including real estate, show horses, luxury watches and foreign bank accounts. Alejandro Andrade Cedeno, the treasurer from 2007 to 2010 under late socialist leader Hugo Chavez, pleaded guilty to a US$ 1 billion money-laundering plot in which wealthy Venezuelans converted bolivars to dollars through a rigged exchange system. They then moved money out of the country, which is suffering a crippling economic crisis. The Justice Department detailed the extent of Andrade’s corrupt wealth in unsealing his case Tuesday and revealing his cooperation with prosecutors. They also announced the indictment of Raul Gorrin Belisario, the billionaire who owns the GLOBOVISION television network and has been charged with paying bribes to Andrade and others as well as helping to launder the payments; and the guilty plea of Gabriel Arturo Jimenez Aray, a Venezuelan who owned BANCO PERAVIA in the Dominican Republic. Andrade, once a bodyguard to the late President Hugo Chavez, admitted he took bribes as treasurer to steer contracts to brokerage houses that conducted bolivar exchanges. Andrade chose which brokerages would sell bonds from the treasurer’s portfolio that were denominated in U.S. dollars. His conspirators could then “obtain substantial profits on the exchange transactions,” according to court documents. Even after Andrade moved in 2012 to Wellington, Florida, the bribes continued until last November, he said in pleading guilty. His plea deal requires him to forfeit the Palm Beach County real estate empire and horses. Andrade will give up a six-acre estate in a gated community and 17 horses with names like Tinker Bell, Bonjovi and Anastasia Du Park. He’ll give over his 2017 Mercedes Benz GLS 550 and nine other cars, as well as three dozen watches from makers like Rolex, Hublot and Franck Muller. He’s forfeiting Swiss accounts at BSI Bank and EFG Bank, and at three large U.S. banks. Andrade, 54, was a close ally of Chavez and helped him in a 1992 coup d’etat. Andrade faces as long as 10 years in prison when he’s sentenced on Nov. 27, but he’s likely to get less time as a cooperator. Prosecutors also relied on Jimenez, 50, who spent three years cooperating in “an international criminal investigation against highly dangerous individuals” that “put him in a dangerous position,” prosecutors said in an Oct. 1 filing unsealed Tuesday. “The government of Venezuela’s complicity in this conspiracy renders victim status inappropriate,” prosecutors said in a July 27 court filing. Gorrin, who also owns insurance firm Seguros La Vitalicia, was charged in an indictment unsealed on Monday with violating U.S. anti-corruption laws in efforts to win contracts to carry out currency exchange operations for the government. Between 2008 and 2017, Gorrin facilitated more than US$ 150 million in bribe payments to officials in Venezuela’s treasury for access to currency deals, with funds wired from Swiss bank accounts to accounts in Florida, U.S. prosecutors said. Gorrin allegedly also bought jets, yachts, “champion horses” and luxury watches in Florida and Texas for a government official as a bribe, according to the indictment. GLOBOVISION, once a virulently anti-government station, overhauled coverage and softened criticism of Chavez's successor, Nicolas Maduro, after Gorrin purchased the channel in 2013, reporters said at the time. (BLOOMBERG: https://www.bloomberg.com/news/articles/2018-11-21/venezuela-s-ex-treasurer-will-give-up-houses-horses-and-watches; https://www.bloomberg.com/news/articles/2018-11-20/venezuelan-tv-mogul-charged-in-u-s-bribery-laundering-case; REUTERS: https://www.reuters.com/article/us-venezuela-corruption/venezuelas-former-treasurer-took-1-billion-in-bribes-u-s-prosecutors-idUSKCN1NP1K1; https://www.reuters.com/article/venezuela-corruption/u-s-prosecutors-accuse-venezuela-media-mogul-of-bribery-money-laundering-idUSL2N1XV05P; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2469926&CategoryId=10717; Bloomberg, https://www.bloomberg.com/news/articles/2018-11-21/venezuela-s-ex-treasurer-will-give-up-houses-horses-and-watches)

 

Politics and International Affairs

Maduro’s poll ratings dropped six points this month.

A slight gain in President Nicolás Maduro’s popularity registered in October, when he announced some economic initiatives, dropped again in November. The DATANÁLISIS Omnibus poll shows both the government and Maduro himself have again lost popularity. One out of four Venezuelans had rated Maduro favorably in October, probably due to the alleged murder attempt and new economic policy announcements. However, in November only one out of five registered a positive attitude toward the President. He lost 7 percentage points over the past 30 days due to continued hyperinflation and the murder of city councilor Fernando Alban. Overall, 78% of Venezuelans rate Maduro negatively now, although he retains 73.4% support among so-called “chavistas”. The feeling that his economic policy has failed seems to have taken root within the population. More in Spanish: (VENEPRESS: https://venepress.com/article/Evaluacion-del-presidente-Maduro-bajo-siete-puntos1542810004750)

 

U.S. weighs sanctions on Cuban officials over role in Venezuela crackdown

The Trump administration is considering imposing sanctions on Cuban military and intelligence officials who it says are helping Venezuela’s socialist government crackdown on dissent, according to a source with knowledge of the deliberations. Such sanctions would be the first time Washington has targeted a bloc of foreign officials allied with Venezuelan President Nicolas Maduro. The potential human rights-related sanctions would target Cuban officials, possibly including generals, who Washington accuses of advising Venezuela’s government on how to monitor opponents and put down street protests, the source said. The number and identities of the potential targets was unclear. Asked about possible sanctions on Cuban officials, a senior U.S. government official told Reuters in early November: “We are looking at all the potential avenues to deter those who are really helping the Maduro regime stay afloat and giving them the tools they need for repression.” Trump’s national security adviser John Bolton said earlier this month Washington would take a tougher line against Cuba, Venezuela and Nicaragua, calling them a “Troika of Tyranny.” (Reuters, https://www.reuters.com/article/us-venezuela-usa-cuba-exclusive/exclusive-u-s-weighs-sanctions-on-cuban-officials-over-role-in-venezuela-crackdown-idUSKCN1NQ2CV; NBC News: https://www.nbcnews.com/news/latino/u-s-considering-sanctioning-cuban-officials-over-their-role-venezuela-n939111)

 

Police, students clash at protest in Venezuela

Hundreds of anti-riot police in Venezuela have clashed with students staging a protest calling for better conditions at universities as the nation’s economic crisis continues to worsen. Students held a rally at the Central University of Venezuela in Caracas on Wednesday before trying to march off campus. They were stopped by officers and members of the national guard who launched tear gas at them. A dozen students required medical treatment after exposure to the fumes. The anti-government movement has lost steam in recent months, and the march had drawn an unusually large crowd. The demonstrators were trying to leave the university, but the PNB officials blocked the exits of the institution with police fences. (National Post: https://nationalpost.com/pmn/news-pmn/police-students-clash-at-protest-in-venezuela; EFE: https://www.efe.com/efe/english/world/university-students-show-umpteenth-proof-of-polarization-in-venezuela/50000262-3820573)

 

NGO has registered over 10,000 protests this year in Venezuela

Human rights activist Marco Antonio Ponce, coordinator of the Social Conflict Observatory (OVCS), reports there is an average of 47 protests daily protests nationwide in Venezuela. He adds that there have been 10,773 protests here year to date in 2018, which he calls a record year.  More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/nacional/ong-asegura-que-se-han-organizado-mas-de-10-mil-protestas-en-2018)

 

Rodriguez calls on Colombia to comply with agreements with FARC guerrilla

Venezuela’s Communications and Information Minister Jorge Rodríguez has calle don the Colombian government to comply with peace agreements reached by that nation’s government and the FARC guerrilla forces. Rodríguez said he spoke on behalf of President Nicolas Maduro given Venezuela’s role as “guarantor” of such agreements. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/politica/venezuela-exhorta-a-colombia-cumplir-con-acuerdos-de-paz-con-las-farc; El Universal, http://www.eluniversal.com/politica/26334/rodriguez-el-gobierno-no-seguira-tolerando-las-mentiras-y-falsos-positivos-de-colombia; AVN, http://www.avn.info.ve/contenido/colombia-remiti%C3%B3-36-solicitudes-venezuela-para-respaldar-di%C3%A1logos-paz)

 

Ali Rodriguez, Venezuela’s ambassador to Cuba and former OPEC official, dies

Venezuelan Ambassador to Cuba Ali Rodriguez Araque, who also served as secretary-general of OPEC and the Union of South American Nations (UNASUR), died in Havana, President Nicolas Maduro said. He was 81. Cuban President Miguel Diaz-Canel said in a statement on Tuesday that Rodriguez Araque was a politician “inseparable from Cuba.” (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2469903&CategoryId=10717)

 

Legislature rejects unconstitutional appointment of ambassadors abroad

Venezuela’s opposition-controlled National Assembly has rejected the appointment of ambassadors abroad by the Maduro regime, and calls them “null” and “unconstitutional”. Francisco Sucre, head of the Foreign Affairs Committee, says that the Constitution requires legislative approval for naming ambassadors, and that such appointments usurp legislative authority “and nullify treaties signed illegally”. More in Spanish: (El Universal, http://www.eluniversal.com/politica/26294/an-rechaza-nombramiento-de-embajadores-en-el-exterior)

 

OAS member state delegation visits Colombia – Venezuela border to assess crisis

On November 19-20, 2018, seventeen OAS member states participated in a field visit to assess the humanitarian crisis along the Colombia - Venezuela border: Maicao, in the Rioacha province, and Cucuta in the Norte de Santander province. The visit was organized by the Colombian government and included representation from the governments of Argentina, Belize, Chile, Costa Rica, Colombia, Ecuador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Panamá, Paraguay, Perú, Saint Lucia, Uruguay and the United States represented by Ambassador Carlos Trujillo. The OAS Working Group on Venezuela migration also participated with representation from three experts on the situation. The purpose of the visit was to raise member state awareness of the extent of the humanitarian crisis, in anticipation of continued action in the Inter-American system regarding Venezuela and address the root causes of the crisis under the Maduro regime. The OAS Inter-American Council for Integral Development (CIDI) is scheduled to meet November 26 to discuss food security and migration impacts and Pan American Health Organization (PAHO) will convene a health ministerial meeting on Venezuela November 29. (US Mission to the OAS: https://usoas.usmission.gov/member-state-delegation-visits-colombia-venezuela-border-to-assess-crisis/)

 

Hunger grows in Venezuela

The United Nations Food and Agriculture Organization (FAO); the Pan-American Health Organization (PAHO); the World Food Program (WFP); and the United Nations International Children’s Emergency Fund (UNICEF) – joined forces to create a report on the undernourishment problem affecting Latin America and the Caribbean. This report – recently made public – shows that the number of undernourished people in Venezuela has increased in both absolute and relative terms: the rate of undernourished people in the country reached 9.8% over the three-year period from 2014 to 2016, while the rate increased to 11.7% over the next three-year period from 2015 to 2017. The first percentage corresponds to an absolute amount of 3.1 million undernourished people, while the second percentage corresponds to an amount of 3.7 million people. This represents an increase of 600,000 new Venezuelans within only a year. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2469996&CategoryId=10717)

 

WHO reports Venezuela registers greatest malaria increase worldwide

The World Health Organization’s yearly report on malaria shows Venezuela as the nation with the greatest increase in malaria worldwide and fears the disease will expand to neighboring countries. The report shows 773,500 confirmed cases in Latin America during 2017, a 72% increase over 2015, and 53% of those cases were registered in Venezuela, which is among 10 countries where malaria cases were over 300,000 in 2017. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/salud/oms-venezuela-registra-el-mayor-incremento-de-malaria-en-el-mundo)

 

Voluntad Popular calls for removal of UNDP representative in Venezuela

The Voluntad Popular opposition party led by imprisoned leader Leopoldo López has asked the United Nations to remove Peter Grohmann, UNDP representative in Venezuela, for “silencing” the serious situation here. The party says: “it is unacceptable that, having a budget and technical personnel, that they have not at least prepared a report on what is going on”.  A party spokesperson, legislator Manuela Bolivar, says the case will be taken to the National Assembly. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/politica/voluntad-popular-pide-a-onu-cambiar-al-representante-del-pnud-en-venezuela)

 

OP-ED: What Options Are Left in Venezuela? by Félix Seijas Rodríguez

Nicolás Maduro is set to start a new term as Venezuela’s president on Jan. 10, and the country’s political, social and economic crisis is only becoming more profound. Far from correcting course, Maduro has taken steps to maintain control despite an imploding economy. His opposition is dispersed and lacking a coherent strategy. A solution through dialogue seems farfetched. How might things change for Venezuela? Here are three possibilities, and a look at the likelihood of any of them coming to fruition. Foreign military intervention: For some time now there has been talk of possible military intervention to depose Maduro’s regime. But there are several reasons why intervention is very unlikely. First, there is no consensus among the largest countries in the region on the need to take an active hand in changing Venezuela’s reality. Mexico, especially under Andrés Manuel López Obrador, would oppose such action. The U.S. could decide to act on its own, but a decision to invade Venezuela would need to be approved by the U.S. Congress and the UN Security Council. At the UN, both China and Russia, countries with important economic interests in Venezuela, would most certainly veto any resolution to intervene. But perhaps even more relevant is the precarious situation of the opposition forces in Venezuela. The political leadership in opposition to Maduro is weak and enjoys little support from civil society. Without an internal structure that can take the reins of the country if Maduro is deposed, the consequences of an intervention would be highly uncertain. Public support for Maduro’s regime is still around 20 percent, while the revolution proposed by his late predecessor Hugo Chávez has 35 percent approval. Military action in this circumstance is not a sensible idea. Recent reports that Trump may add Venezuela to the state sponsors of terrorism list shows that the administration still sees the possibility of adding pressure on Maduro without intervening militarily. Chavismo collapses: For Maduro’s political movement to collapse, external pressure would have to be such as to cause a fracture within its power structure. This could come through an explosion of public protest that exceeds the regime’s containment capacity and is big enough to compromise the loyalty of security forces tasked with putting it down. Another possibility is that international pressure asphyxiates the regime, rendering it incapable of maintaining the web of corruption and complicity it has had for the last 20 years. These two possibilities are not mutually exclusive, but a social explosion of the magnitude needed to cause a revolt in the security services is not likely. If popular pressure again starts building on the streets, there is no political leadership or organization with both the know-how and the credibility to use that energy effectively against the regime.  Once again, the weakness of the Venezuelan opposition is an obstacle to any solution to the crisis. Transition within Chavismo: As mentioned, international pressure could cause the power structures to flounder and there might not be a democratic alternative to take control of the situation. That could already be happening, and the international community should be concerned about where that might lead. If the absence of any possibility of a democratic transition, an intermediate alternative comes into view: a transition that leaves Chavismo in place but gets rid of Maduro and his inner circle. It’s possible that the early stages of such a transition are underway. But it would be a difficult path to follow. If successfully navigated by both the international community and domestic opposition, such a transition might eventually pave the way to a democratic opening. But the risks of further entrenchment are apparent. It would be a risky bet. (Americas Quarterly: https://www.americasquarterly.org/content/whats-left-venezuela)

 

OP-ED: More than 40 countries may cut diplomatic ties with Venezuela. Fine, but would it do any good? by Andres Oppenheimer

Venezuela’s dictator Nicolás Maduro may soon face bad news on the diplomatic front: More than 40 countries are considering cutting diplomatic relations or reducing their ties with Venezuela starting Jan. 10, when he is scheduled to start a new six-year term in office. Venezuelan opposition sources tell me that they expect at least 46 countries — including most members of the Group of Lima and the 28-member European Union — to downgrade or sever diplomatic ties with Venezuela. The big question is whether there will be any practical consequences of a formal decision by these countries to cut ties with Venezuela. Some Venezuelan exile leaders are lobbying the Trump administration and those of other countries to simultaneously cut diplomatic ties with Maduro and recognize a caretaker opposition-led government. Their plan would go like this: Since Maduro and his vice president, Delcy Rodríguez, would no longer be considered legitimate leaders once their current terms expire, there would be a power vacuum. The next in line of succession would be the head of the opposition-controlled National Assembly. Venezuela’s National Assembly was democratically elected in 2015 and is the last remaining democratic institution in Venezuela. Maduro stripped the Assembly of most of its powers and created a new Congress to rubber-stamp his decisions. But the international community could recognize the National Assembly’s president as Venezuela’s legitimate leader while new elections are convened, supporters of that plan say. But many countries would be reluctant to go that route for fear of opening a diplomatic can of worms. In addition, some diplomats note that, unlike last year, when more than 150 people died in Venezuela’s street protests, — there is no sense of urgency in the diplomatic community today that would justify taking such extreme measures. For now, the likely decision by many countries to stop recognizing Maduro as a legitimate president will be a mostly symbolic announcement. But if the opposition takes to the streets in January — as some anti-government parties are planning — to protest Maduro’s inauguration and the country’s humanitarian crisis, things could change. There would be a legal base for the next step — international recognition of a provisional opposition government. (The Miami Herald: https://www.miamiherald.com/news/local/news-columns-blogs/andres-oppenheimer/article222012125.html)

 

April 08, 2014

International Trade

Inbound cargo at Puerto Cabello, mainly construction material and foodstuff

• 18.951 tons of bagged cement from Aveiro, Portugal for PDVSA Industrial.
• 15.999 tons of US wheat for MOLINOS CARABOBO
• Two batches with over 15.000 tons of sémola durum for Molinos Carabobo.
• 13.000 tons of yellow corn and 6.000 tons of bulk soybean meal from Argentina, for several importers.
• 12.000 tons of yellow corn from CARGILL for AGRIBRAND PURINA and AVÍCOLA MAYUPAN
• 11.999 tons of American soy flour, in 2 batches
• 11.999 tons 859 kg of American soy flour from United States for IND Pollo Premium and Alimentos del Centro Alceca
• Over 6,000 tons of Argentine soy bulk of Industrias Oleaginosas, in 2 batches for Seravian and Agribrand Purina.
• 6.000 tons of soda ash from Solvay Chemicals for Venezolana del Vidrio
• Over 2.000 tons of sulfate and 6.000 tons of phosphate from US Mosaic Corporation for PEQUIVEN
• Over 1,847 tons of frozen chicken in 48 containers, from Jamaica for the government's CASA Corporation.
• 1. 422 tons of cattle standing from Brazil's SCT Artigas
• 895 tons of Portuguese cement for PDVSA Industrial.
• Over 880 tons of roofing in 166 containers, from Italpanelli Ibérica for PDVSA, along with several tons of construction kits and other building material. 
• Over 851 tons of semola durum spaghetti in 33 containers, from Jamaica for CASA.
• Over 665 tons of beef in 24 vans, from Jamaica for CASA.
• 572 tons of paper towels
• 563 tons of toilet paper for different consignees
• Over 524 tons of bottled soy oil in 23 containers, from Bunge in Jamaica, for CASA
• 330 tons of frozen chicken for CASA
• Over 177 tons of concentrated milk in 7 containers, from Jamaica, for Industrias Maru. 
• Over 109 tons of tissue napkins in 9 vans from Trinidad, for Papeles Venezolanos. 

From the port of Pertigalete came a lot more than five thousand tons of cement type 1 for PDVSA Industrial. More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/98327/-alimentos-y-materiales-de-construccin-llegaron-al-puerto; http://www.el-carabobeno.com/impreso/articulo/98384/-alimentos-y-materiales-de-construccin-encabezan-importaciones; Notitarde; http://www.notitarde.com/La-Costa/Llego-al-puerto-trigo-maiz-amarillo-y-harina-de-soya-2136450/2014/04/03/319000; http://www.notitarde.com/La-Costa/Llegaron-carne-de-bovino-pollo-aceite-y-pasta-para-Casa-2138884/2014/04/07/319720#!prettyPhoto)

Government food imports rose 51%

Government food distribution networks were supplied by imports during 2013, according to a report by the Ministry for Nutrition. The report indicates the government's Agricultural Supplies Corporation (CASA) bought 4,911,099 tons of foodstuff during the year, of which 87.52% was purchased on international markets (about 4,298,196 tons) and only 12.48% (612,993 tons) came from local producers. CASA imports rose 51% in 2013: Including, 4.298.196 tons of foodstuff; 624,600 tons of white and paddy rice, chicken, sugar, black beans, meat, milk, crude palm oil and refined soybean oil and soybean arrived in agreements with Argentina, Belarus, Brazil, Bolivia, Guyana, Nicaragua and Uruguay. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/importaciones-de-alimentos-del-estado-subieron-51.aspx#ixzz2yCGMyN3g)

Panama import debts under scrutiny by Venezuelan authorities

A report by CENCOEX (formerly CADIVI) indicates that 5,748 requests for FOREX to be applied to imports from Panama came from companies that were subsequently suspended or excluded from the system. This reflects a total of U$D 1.192 billion. The report includes a list of 412 companies that were under investigation. It also shows over 5,000 approvals for imports from 1006 exporters in Panama, which would mean the net debt owed by the Venezuelan government institution (CENCOEX) could be U$D 1.305 billion. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/investigacion/deudas-por-importaciones-desde-panama-estan-bajo-l.aspx#ixzz2yCEQ5DBI)

Oil & Energy

Venezuela: Producing oil amid political unrest

Concerns abound as to whether Venezuela's recent political unrest will eventually disrupt the flow of oil exports. But the biggest threat to Venezuelan oil production is not the protest movement but the continued degradation of the energy sector. PDVSA has never fully recovered from losing 40% of its experienced personnel after the 2002 strike, and it has since been made responsible for financing several social causes, which have drained its resources and reduced investment in exploration, production and maintenance. Combined with subsequent energy nationalizations, these factors have prevented PDVSA from producing at pre-2002 levels. Since foreign oil company holdings were nationalized in 2007, only a few countries -- mostly China and Russia -- have been willing to invest in Venezuela's energy sector. Some investors have become more willing lately, with companies striking U$D 10.4 billion worth of financial deals over the past year. These include CHEVRON, GAZPROM, China National Petroleum Corporation, Italy's ENI and Spain's REPSOL. These funds are being borrowed by Venezuela on the condition that it will then be reinvested in joint projects between those companies and PDVSA. The official goal of this round of financing has been to add more than 200,000 barrels per day over the next several years. But given the challenges facing the energy sector, not to mention declining output of older fields, added production may only compensate for declines elsewhere, assuming the goals are reached. Rising costs are also affecting companies that operate in Venezuela. This includes inflation, which reached 56% percent in 2013. The effect of inflation can be seen clearly in the recent agreement between the government and the Federation of Venezuelan Oil Workers on Feb. 5, when the government agreed to a 90% salary increase for the two-year contract. Also, the difference between the black market and official exchange rates also affects oil companies significantly. Though oil companies have been granted a more favorable exchange rate of VEB 11.3/U$D, the service providers they work with are frequently forced to use the black market rate. Meanwhile, shortages of other goods, including cement and steel, have hurt the energy sector by creating delays in production. Not only do the economic conditions discourage investment, but political unrest has raised doubts about the government's ability to manage the delicate domestic situation. With such low oil production and export rates, there are fewer dollars in Venezuela's domestic market to finance imports, which will only perpetuate ongoing shortages of basic goods and drive further unrest. The low price of gasoline has encouraged high consumption, which is compounded by all the fuel that is smuggled to Colombia. What fuel is consumed at home cannot be sold by PDVSA abroad, so foreign currency reserves will continue to dwindle -- they fell by nearly U$D 10 billion in 2013 alone. Right now, PDVSA has no choice but to absorb these costs until the government is ready to accept the political consequences of raising prices on consumers. (Stratfor, http://www.stratfor.com/sample/analysis/venezuela-producing-oil-amid-political-unrest)

Venezuela oil price slips

Venezuela's weekly oil basket stayed below the country's desired U$D 100 a barrel floor, slipping as Brent oil fell and WTI oil prices moved up toward each other. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending April 4 was U$D 95.27, down U$D 0.14 from the previous week's U$D 95.41. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=1909709&CategoryId=10717)

Commodities

Continuing shortages

According to DATANÁLISIS, the lack of basic foods on the store shelves has reached worrisome levels. During the first two months of this year the shortage of regulated products rose to 47.7%, which implies an unstoppable advance, compared with the behavior in recent years. According to the numbers reported by the consulting firm, in 2012 the shortage level was 15.9%, and rose to 37.2% a year later. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140407/escasez-continuada)

Economy & Finance

BARCLAY's is now estimating SICAD II will provide U$D 8.4 billion in FOREX

In a revised report on the new SICAD II FOREX allocation system, BARCLAY's Capital estimates it will provide U$D 8.4 billion, down from its original estimation of U$D 11.6 billion of 24 March. The report says "supply grew during the first week, but dropped considerably toward the end of the past week". More in Spanish: (El Universal, http://www.eluniversal.com/economia/140407/estiman-que-la-oferta-del-sicad-ii-estara-en-84-millardos-de-dolares)

Government allows exchange bureaus to bid within SICAD II, brokers return to the market

Exchange bureaus may now trade within the ancillary exchange market SICAD II. According to the latest provision their involvement will be regulated by the Central Bank. “Four bankers from ECONOINVEST served two years and seven months in jail without ever being tried or convicted when the law was changed after they were arrested and applied to them retroactively,” says Russ Dallen, head trader at Caracas Capital Markets. “In the sad comedy of errors that Venezuela’s economic management has become, the charges against the bankers were dropped when the law was changed again in January of this year.” (El Universal, http://www.eluniversal.com/economia/140407/venezuelan-govt-lets-exchange-bureaus-bid-at-sicad-2; and Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=1912990&CategoryId=10717)

Venezuela ranks below Cuba on private property rights

Venezuela's record on private ownership rights ranks among the worst in the world, as shown by the Social Progress Index, prepared by the US non-profit group Social Progress Imperative. In a list of 132 nations, Venezuela ranked 130, running last in Latin America, even after Cuba and other nations with stringent private property policies. The index, which also assesses public utilities, gave Venezuela the 113th position among 132 nations in electricity supply. (El Universal, http://www.eluniversal.com/economia/140407/venezuela-ranks-below-cuba-in-private-property-rights)

Land takeovers slowed down in 2013

A report from the Agriculture Ministry shows government land takeovers slowed down during 2013. 43,620 hectares were taken over last year, as opposed to 550,495 hectares grabbed by the regime in 2012, for a drop of 92%. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/en-2013-inti--freno-politica-de-intervencion-de-ti.aspx#ixzz2yIEKnXyu)

Politics

Maduro accepts proposal to meet with opposition

President Nicolas Maduro says he has accepted a proposal of the foreign ministers from the Union of South American Nations to meet with representatives of the opposition. “We had a rather broad conversation. They proposed to me to have a meeting with the opposition delegation and, well, I accepted, as I’ve been calling for political dialogue, for peace, for democracy for eight weeks,” said Maduro after meeting with the diplomats. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=1913323&CategoryId=10717; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=38791&idc=1; AVN, http://www.avn.info.ve/contenido/new-unasur-commission-caracas-peace-talks; El Universal, http://www.eluniversal.com/nacional-y-politica/140407/maduro-agrees-to-meet-with-dissenters-at-unasurs-request and http://www.eluniversal.com/nacional-y-politica/140407/opposition-unasur-hold-second-meeting-on-dialogue-in-venezuela; More in Spanish: CNN, http://cnnespanol.cnn.com/2014/04/07/cancilleres-de-unasur-regresan-a-venezuela-en-medio-de-la-conmocion-por-nuevos-casos-de-violencia/?iref=allsearch)

Opposition leadership sets conditions for talks with Maduro

In a letter to the UNASUR Foreign Ministers, the opposition's United Democratic Conference (MUD) has stated that it would talk to the government "on equal footing", and that the first meeting should be fully televised live nationwide. They also wrote that they expect to establish an agenda that establishes as its priorities an Amnesty law for all political prisoners, an independent Truth Commission to investigate crimes committed over the past weeks, a balanced renewal of powers such as the Elections Board and the Supreme Court, and disarming civilian paramilitary groups. The opposition's leadership says that - contrary to prior reports - UNASUR has not set up a committee of 3 foreign ministers to facilitate talks, and that the government has not formally invited the Vatican to take part, which they  the opposition - consider "essential" for talks. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140408/amnistia-y-desarme-civil-son-prioritarios-para-la-mud)

Opposition leader formally charged

Jailed opposition leader Leopoldo Lopez was formally charged Friday with inciting violence at an anti-government protest that has been followed by weeks of unrest across Venezuela. Chief prosecutor Luisa Ortega Diaz announced the charges a day before the legal deadline to make the case for keeping Lopez in custody. The Harvard-educated Lopez has become a cause celebre among opponents of President Nicolas Maduro during the month and a half he has spent in a military prison outside the capital. (The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelan-opposition-formally-charged/2014/04/04/119087bc-bc19-11e3-80de-2ff8801f27af_story.html; Fox News, http://www.foxnews.com/world/2014/04/04/venezuela-formally-accuses-opposition-leader-charges-could-lead-to-years-long/)

Latin American legislators have asked the International Criminal Court to prosecute Maduro

A group of Latin American legislators have asked the International Criminal Court at The Hague to formally prosecute President Nicolás Maduro for "systematic" human rights violations against opponents demonstrating in Venezuela's streets. Perú's Cecilia Chacón said: "There are already 40 dead, aside from crimes against humanity such as tortures and kidnappings." More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140408/solicitaron-a-la-corte-de-la-haya-que-procese-al-presidente)

Spain suspends exports of riot control material to Venezuela

Spain has indefinitely suspended the export of riot control equipment to Venezuela’s government following weeks of unrest there which have seen an increase in violence as police face sustained protests by the opposition. Foreign Minister Jose Manuel Garcia Margallo said “it is a fact” that Spain has suspended sales because “it is logical not to add fuel to the fire when there is a conflict.” The decision was made by a government panel March 6, but only now confirmed publicly. Garcia Margallo said Spain has a special interest in Venezuela because 200,000 Spaniards live there. (The Washington Post, http://www.washingtonpost.com/business/spain-suspends-riot-control-exports-to-venezuela/2014/04/05/984a797a-bcb9-11e3-9ee7-02c1e10a03f0_story.html; Fox News, http://www.foxnews.com/world/2014/04/05/spain-suspends-exports-riot-control-equipment-to-venezuela-socialist-government/)

Student leaders reports threats

Juan Requesens, president of the Federation of University Councils (FCU), reports that members of the Student Movement have been threatened via social networks by pro-government individuals. "My fellow students have been threatened via social networks; their telephone numbers have been shared. Paramilitary groups have been asked to look for them. Their (students') addresses and IDs have been posted; their capture has been ordered because they are fascist; pictures of their relatives have been leaked; they have been declared military targets. The government will not intimidate us. It will not frighten us; we will keep on demonstrating in the streets," Requesens said. (El Universal, http://www.eluniversal.com/nacional-y-politica/140407/student-movement-reports-threats-against-student-leaders)

TV journalist kidnapped by armed men

The father of a Venezuelan TV journalist says his daughter has been kidnapped by armed, masked men in the western section of the capital of Caracas. Luis Pinto reports that his daughter Nairobi Pinto was taken hostage Sunday afternoon at the entrance to the building where she lives. She is the chief of correspondents for the GLOBOVISION news channel and her whereabouts remain unknown. The elder Pinto called on the kidnappers to free his daughter during an interview with the local broadcaster Union Radio. Police officials have not commented on the case. (The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelan-tv-journalist-kidnapped-by-armed-men/2014/04/07/3616e5a0-be70-11e3-9ee7-02c1e10a03f0_story.html)

Oppenheimer: Danger of a coup in Venezuela

According to a study by the Netherlands based Global Partnership for the Prevention of Armed Conflict (GPPAC), the "most probable" scenario for Venezuela is anarchy, followed by "the possibility of intervention by the nationalist-institutional segment of the armed forces". Partnership co-chair Andres Serbin says those segments of the armed forces resent Cuban military advisors and the creation of paramilitary groups. In addition, they do not want to engage in repressing demonstrations by the opposition. Some local analysts are skeptical about the possibility of a military coup because of the degree of military control already in effect within the government. Others argue that Venezuela has already undergone a slow motion military coup with over 1600 officers in government positions. 25% of the Maduro cabinet, including the powerful Ministries of the Interior and Finance, and 52% of the governorships are in the hands of active or retired officers. In addition, Maduro has created a record number of officers: Venezuela has 1200 generals in a force of 120,000 soldiers. However, they say Chavez had a firm grip on the military whereas Maduro is a weaker president who is controlled by the military in many areas. Rocío San Miguel, who heads Control Ciudadano, a group that keeps close watch over the military says: "Under Chavez the military were under vertical control. Now military control is atomized, with the military holding parcels of power, with no control whatsoever." Serbin concludes that unless there are meaningful negotiations between the regime and the opposition, the alternative could be "a military coup, or a self-coup by the government itself, with an even greater cycle of violence that could end up in a civil war." More in Spanish: (Infolatam)

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.

May 28, 2013

Economics & Finance

Inflation downturn is expected

Finance Minister Nelson Merentes says inflation is expected to slow down in the coming quarters of this year:"We will deliver more products, more goods for consumers and surely, the Central Bank will have be a currency policy coordinated between the private sector and the Government so as to reduce this year's impact," Merentes said. In fact, he said: "I think we will finish better than the way we started the first quarter. I think there must be a downturn by the second quarter." (AVN, 05-27-2013; http://www.avn.info.ve/contenido/inflation-downturn-expected-upcoming-trimesters)

Bolivar devaluation continues to pressure U.S. companies

Venezuela’s currency devaluation dented first-quarter earnings per share (EPS) and net profits for U.S. companies with operations or doing business within this market and Fitch Ratings believes pressure on the bolivar fuerte (Bs.F.) and potential incremental charges could continue. In first-quarter 2013, Ford recorded a U$D 186 million re-measurement loss in Venezuela; the re-measurement impact at General Motors (GM) was U$D 162 million while the re-measurement impact at Goodyear was U$D 115 million. GM also noted that another devaluation of the Bs.F. to the dollar would result in a U$D 50 million charge based upon the company’s Bs.F.-denominated assets and liabilities as of March 31, 2013. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=785235&CategoryId=10717)

Commodities

Pdvsa lost U$D 7.79 billion in refining and supply in 2012

Oil refining brought negative financial results to state-run oil firm PDVSA in 2012. The oil company's management report shows that refining, trade and supply, both locally and abroad, suffered a total operating loss of U$D 7.79 billion. This implies an astronomical spike of 851% in losses compared to U$D 819 million in 2011. Segmented data reveals that losses in refining, trade and supply in Venezuela alone were U$D 8.44 billion, which explains billion dollar losses in PDVSA's global refining activities. (El Universal, http://www.eluniversal.com/economia/130525/pdvsa-loses-usd-779-billion-in-refining-and-supply-over-2012)

CHEVRON extends PDVSA a U$D 2 billion credit to raise production to 127,000 BPD in Zulia

PDVSA and CHEVRON have signed a U$D 2 billion credit line in order to raise production at their PETROBOSCAN joint venture in Zulia State. The new agreement seeks to raise production from 107,000 BPD to 127,000 BP. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/pdvsa-y-chevron-elevar%C3%A1n-producci%C3%B3n-127000-barriles-campo-zuliano; http://www.avn.info.ve/contenido/pdvsa-y-chevron-suscriben-este-lunes-acuerdo-para-aumentar-producci%C3%B3n-petrobosc%C3%A1n; El Universal, http://www.eluniversal.com/economia/130527/credito-de-chevron-a-pdvsa-se-desembolsara-por-tramos; http://www.eluniversal.com/economia/130528/petroboscan-preve-elevar-186-su-produccion; El Nacional; http://www.el-nacional.com/; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/pdvsa-recibe-2-mil-millones-en-credito-de-chevron.aspx; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa-apalanca-produccion-de-crudo-con-fondos-de-l.aspx; http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa-recibe--2-000-millones-de-credito-de-chevron.aspx)

Schlumberger extends PDVSA U$D1 billion credit line

PDVSA will receive a revolving credit line of at least U$D 1 billion from oil services giant Schlumberger, the oil minister said on Friday. The deal will provide some financial breathing room for PDVSA, which as of last year had built up U$D 16.5 billion in debts to service providers as it focused on social spending at the expense of paying off industry-related debts. "What we are signing today is an agreement for a revolving credit facility...that will allow us to receive more services from Schlumberger," said Oil Minister Rafael Ramirez after signing the agreement with Schlumberger Chief Executive Paal Kibsgaard. (Reuters, 05-24-2013; http://www.reuters.com/article/2013/05/24/venezuela-schlumberger-idUSL2N0E51MA20130524)

Consecrating wine running scarce at Catholic churches, according to Archbishop Roberto Luckert, President of Venezuela's Episcopal Conference, who reports that wine used in communion ceremonies is running out and their key supplier has reported that they may not make further deliveries due to lack of ingredients. Archbishop Luckert reports the Church has no alternate suppliers and cannot import wine used for religious purposes because there is no FOREX available. President Maduro has acknowledged an "acute scarcity" and promises additional massive imports and more expeditious FOREX allocation. More in Spanish: (INFOLATAM)

Caribbean should trade Venezuelan oil for homegrown sun

Still recovering from last year’s Hurricane Sandy and the 2008 financial crisis, many Caribbean countries now face another threat: the possible curtailment of PETROCARIBE, a Venezuelan program that has kept their economies afloat with deals on discounted oil. Consider the case of Jamaica, which this month had to go to the International Monetary Fund for a U$D 932 million loan after rescheduling U$D 9 billion worth of domestic debt. With exports of bauxite and sugar down, fewer tourist arrivals and Sandy’s lingering costs, its economy has been shrinking. Unemployment hovers at 14%. Last year, public-sector debt was up to 140% of gross domestic product. (Bloomberg, 05-26-2013; http://www.bloomberg.com/news/2013-05-26/caribbean-should-trade-venezuelan-oil-for-homegrown-sun.html)

International Trade

Reserves available for imports estimated to cover only 21 days supplies

The SÍNTESIS FINANCIERA report says liquid reserves at the close of April stood at U$D 2.6 billion, which is the amount needed for 21 days worth of imports. The report adds that "the state of liquid reserves is critical in speeding up CADIVI FOREX allocations, as promised by the Government". More in  Spanish: (EL Universal; http://www.eluniversal.com/economia/130528/calculan-que-reservas-equivalen-a-21-dias-de-importaciones )

29.1% less FOREX will be allocated for imports in 2013

Central Bank President Edmée Betancourt says between 3-3.5 billion U$D per month for imports are enough to sustain a stable 3% growth rate. This implies dollar supplies will decrease 29.1% from last year, when $ 59.3 billion were supplied. More in Spanish: (El Nacional; http://www.el-nacional.com/economia/entregaran-divisas-importaciones_0_197980423.html )

Colombia offers to support Venezuela in meeting shortages

President Maduro expects trade between Venezuela and Colombia will increase over the next few months. He says a group of Venezuelan ministers are in now in Bogotá to seek agreements in this area. More in Spanish: (El Universal; http://www.eluniversal.com/economia/130528/colombia-ofrecio-apoyo-a-venezuela-para-superar-escasez; Últimas Noticias; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/negocian-con-colombia-reimpulso-comercial-para-pal.aspx)

Logistics & Transport

VEB 330 million were invested in Guanta Port modernization

Major General Hebert Josué García Plaza says some VEB 300 million were invested in modernizing Guanta Port in Anzoátegui State. More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/61893/330-millones-de-bolvares-invertirn--en-modernizacin-del-puerto-de-guanta)

Lack of shipping controls increases tax evasion

Hugo Mijares, President of the National Association of Customs Agents says that in recent years there has been no shipside checking, with cargo manifests must be relayed to tax authorities before a ship docks. More in Spanish: (El Nacional; http://www.el-nacional.com/economia/Falta-control-navieras-propicia-impuestos_0_197980371.html)

Politics

President Maduro says Venezuela to create new workers militia to defend homeland

Maduro has ordered the creation of a new workers’ militia to defend the country’s “Bolivarian revolution” at a time when the government faces economic problems and political turmoil. President Nicolas Maduro gave few details about the militia, including how many members it would consist of, but said it would be part of the Bolivarian Militia created by late President Hugo Chavez, which consists of roughly 120,000 volunteers. Analysts have said only about one-fourth of that force is combat ready. (The Washington Post, 05-24-2013; http://www.washingtonpost.com/world/the_americas/president-maduro-says-venezuela-to-create-new-workers-militia-to-defend-homeland/2013/05/24/7d47a676-c493-11e2-9642-a56177f1cdf7_story.html)

Supreme Court rejects recusations in Presidential election challenge

The Elections Chamber of the Supreme Court here has rejected two recusations presented by former candidate Henrique Capriles and the Democratic Unity Conference, against two magistrates who must decide the case. More in Spanish: (El Universal; http://www.eluniversal.com/nacional-y-politica/130528/tsj-rechaza-recusaciones-en-la-impugnacion-del-14a)

IAPA concerned about freedom of expression in Venezuela

The Inter American Press Association has been reviewing conditions on freedom of expression in Venezuela due to recent events at GLOBOVISION, the suspension on of ATEL's licenses, and meetings by President Nicolás Maduro with the heads of VENEVISION, TELEVEN and GLOBOVISION. More in Spanish: (El Nacional; http://www.el-nacional.com/politica/SIP-preocupada-libertad-expresion-Venezuela_0_197980441.html)

Capriles charges new GLOBOVISION owners with vetoing his speeches, calling them "plugged in", a term he uses to identify those who benefit from Government largesse. He also says the Maduro regime wants to control "all media". The new Board of GLOBOVISION met recently with President Maduro and pledged the station will henceforth be "very sensible" in conveying information. According to Capriles, their agreement includes vetoing his live broadcasts. More in Spanish: (INFOLATAM)

López: Attorney General should target mafias feeding on the country's blood

In response to a subpoena served by the Attorney General Office on Friday, former Chacao mayor Leopoldo López lamented the decision of Attorney General Luisa Ortega Díaz to press charges against him over his past administration. "Attorney General, I can see the check behind this new accusation. You should take care of the mafias and cartels that are bleeding the nation dry," López twitted. (El Universal, 05-24-2013; http://www.eluniversal.com/nacional-y-politica/130524/lopez-attorney-general-should-target-mafias-feeding-on-the-countrys-bl)

2 US Embassy Officials Injured in Venezuela

A Venezuelan police official says a military attaché at the U.S. Embassy has been injured in a shooting outside a night club. The State Department said two U.S. officials were injured in an "incident" early Tuesday but gave few details. The police official said that Roberto Ezequiel Rosas was shot in the right leg during an argument outside a night club in the Chacao district of Caracas. She said he was taken to a local hospital. His condition was not immediately clear. The official spoke Tuesday on condition of anonymity because she was not authorized to release the information publicly. In Washington, State Department spokesman William Ostick confirmed that "two members of the U.S. Embassy in Caracas were injured during an incident early this morning." "Medical staff inform us that their injuries do not appear to be life-threatening," Ostick said. Crime is a serious problem for Venezuela, which has one of the world's highest murder rates. (The Miami Herald, http://www.miamiherald.com/2013/05/28/3420663/us-embassy-employee-shot-in-venezuela.html)

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