July 11, 2019

Oil & Energy

CHEVRON's Venezuela oil assets threatened as Trump weighs extending joint venture waiver

The Trump administration faces an important decision later this month, one that could either maintain the status quo, or one that could escalate the “maximum pressure” campaign on Caracas. In January, the U.S. government tightened sanctions on Venezuela, but issued a series of waivers to oil companies operating in joint ventures with PDVSA in Venezuela. The waivers expire later this month, and the U.S. government is considering letting them expire to force some of the companies out in order to further tighten the fiscal noose around the Venezuelan government. That could affect operations for CHEVRON, HALLIBURTON, SCHLUMBERGER, BAKER HUGHES and WEATHERFORD International, according to S&P Global Platts. If the Trump administration followed through, the companies would have 60 to 90 days to wind down their operations, S&P reported. CHEVRON plays a crucial role in keeping Venezuela’s oil sector running, such as it is. The American oil major is active in four joint ventures with PDVSA, and its share of production accounts for 42,000 b/d, although total output from the four sites exceeds 200,000 b/d. The exit of Chevron and other international companies would be especially painful for Maduro’s regime because the joint ventures have proven to be much more resilient than PDVSA’s sole operations. Foreign companies bring capital and technical expertise, and when the industry really began to deteriorate in 2017 and 2018, output from the joint ventures held up better than production from projects run only by PDVSA. The upshot is that if the U.S. lets the waivers expire in late July, Venezuela’s oil production could resume its downward slide, ending a several-month hiatus that saw output stabilize. “The service companies leaving will have some additional effect since they are involved in the operation of at least a third of the rigs in activity. However, the U.S. government is also wary of allowing oil companies from China and Russia to step into the void. The prospect of greater influence for Moscow and Beijing in Venezuela might be enough for the Trump administration to extend the waivers to CHEVRON. The tradeoff is hardly theoretical. Venezuela's government threatens to nationalize CHEVRON's oil assets if the Trump administration does not extend a sanctions waiver that expires July 27. In perhaps an attempt to clarify what is at stake, an unnamed official in the Venezuelan presidential palace told Argus Media that if the Trump administration lets the waivers expire, Maduro’s government would seize Chevron’s assets and “offer Russian, Chinese and other non-US oil companies an ‘opportunity to acquire’ them,” Argus reported. In fact, the official said that “discreet discussions” have already started with ROSNEFT and CNPC. It’s unclear how the Trump administration will approach what appear to be competing geostrategic goals, but Venezuela’s oil sector hangs in the balance. White House advisor Larry Kudlow said yesterday the administration was considering a possible waiver extension. “It is under discussion,” Kudlow said. “I don’t know about the license. That will be determined in the future. It’s under discussion right now,” he said. (Reuters, https://www.reuters.com/article/us-venezuela-politics-usa-chevron/white-house-discussing-renewing-license-for-chevron-to-operate-in-venezuela-idUSKCN1U42NG; Bloomberg, https://www.bloomberg.com/news/articles/2019-07-09/venezuela-license-for-chevron-under-discussion-kudlow-says; The Fuse: http://energyfuse.org/venezuela-faces-more-outages-as-trump-admin-mulls-escalation/; Seeking Alpha: https://seekingalpha.com/news/3476997-chevrons-venezuela-oil-assets-threatened-seizure)

 

Vessels change names or go dark to ship Venezuelan crude to Cuba

Stopping the flow of Venezuelan oil to its ally Cuba might prove harder than the U.S. expected. Tankers are being renamed and vessels are switching off their transponders to sail under the radar of the U.S. government. The vessel Ocean Elegance, an oil tanker that has been delivering Venezuelan crude to Cuba for the past three years, was renamed Oceano after being sanctioned in May. The ship S-Trotter, another one that’s on the sanctions list, is now known as Tropic Sea, according to data compiled by Bloomberg. (Bloomberg, https://www.bloomberg.com/news/articles/2019-07-08/vessels-change-names-go-dark-to-ship-venezuelan-crude-to-cuba)  

 

Economy & Finance

Venezuela creditors push back on Guaidó's debt restructuring plan

Creditors holding Venezuelan debt on Tuesday pushed back on debt restructuring plans backed by opposition leader Juan Guaidó, urging a “fair and effective” framework for talks and improved communications with investors holding defaulted bonds. The main committee of Venezuela creditors said it opposed requests for a U.S. executive order that would prevent asset seizures by investors and disagreed with a proposal to give different treatment to debts owed to Russia and China. But the statement added that restructuring would not begin until the end of a “humanitarian crisis,” in reference to the hyperinflationary collapse overseen by President Nicolas Maduro that has fueled malnutrition and disease. “A new government should work with creditor parties, such as the Committee, to agree on the design of the restructuring process and to negotiate the financial and other terms of the restructuring,” the statement said. (Reuters, Venezuela creditors push back on Guaidó's debt restructuring plan)

 

Politics and International Affairs

Maduro regime and opposition talks conclude in Barbados, no deal announced; Putin remains hopeful

Talks between Venezuela's government and the opposition about how to address the country's political crisis concluded on Wednesday (Jul 11) with no announcement of a deal. "This round of talks for dialogue and peace in Barbados has concluded," Information Minister Jorge Rodriguez, who led the government's delegation, wrote on Twitter late on Wednesday, describing it as "a successful exchange promoted by the government of Norway." Rodriguez tweeted that the discussions in Barbados had ended and served as a space for the "settlement of disputes through constitutional and peaceful channels." A Venezuelan opposition source who asked not to be identified said the two sides could meet again on Monday in Barbados. The press team for opposition leader Juan Guaidó, who has been recognized by more than 50 countries as Venezuela's legitimate leader, said the opposition would make a statement about the talks in the coming hours. Rumors have been circulating in recent days that the opposition was seeking a presidential election within nine months and that Maduro would not be in power during the vote. Socialist Party Vice President Diosdado Cabello, who is influential in Maduro's regime, on Wednesday night dismissed the idea that any presidential election was in the works. "Here there are no presidential elections; here the president is named Nicolas Maduro," Cabello said during a televised broadcast. Russian President Vladimir Putin said on Thursday he hoped Norway-brokered talks between Venezuela's government and the opposition would normalize the situation in country and bring an end to political turmoil. In referring to the talks, interim president Juan Guaidó had previously asked one and all “not to commit the mistake of seeing a single mechanism as the solution,” and for that reason insisted on maintaining both internal and foreign pressure on the party in power. (Channel News Asia: https://www.channelnewsasia.com/news/world/venezuela-talks-with-opposition-conclude-in-barbados--no-deal-announced-11712606; EFE: https://www.efe.com/efe/english/world/venezuelan-government-says-talks-with-opposition-concluded-successfully/50000262-4020424; The Jerusalem Post: https://www.jpost.com/Breaking-News/Putin-I-hope-Venezuela-talks-will-normalize-situation-595359; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2480869&CategoryId=10717)

 

U.S. military plans to battle Russia, China and Iran's 'most disturbing' influence in Venezuela

The head of the Pentagon's Southern Command warned that Russia, China and Iran were expanding their influence in Latin America, particularly in Venezuela, where they support a government the United States seeks to depose. In his testimony to the Senate Armed Services Committee, Southern Command chief Air Force Admiral Craig Faller identified Moscow, Beijing and Tehran as the primary international obstacles to Washington's interests as the trio backed Nicolás Maduro in the face of a challenge posed by interim leader Juan Guaidó. The National Assembly head declared him acting president in January and was almost immediately recognized by the U.S., which cut ties with Maduro and has attempted to isolate him globally. "Russia, in their own words, is protecting their 'loyal friend,' to quote, by propping up the corrupt, illegitimate Maduro regime with loans and technical and military support," Faller said. "China, as Venezuela's largest single-state creditor, saddled the Venezuelan people with more than $60 billion in debt and is exporting surveillance technology used to monitor and repress the Venezuelan people. Iran has restarted direct flights from Tehran to Caracas and reinvigorated diplomatic ties." "Along with Cuba, these actors engage in activities that are profoundly unhealthy to democracy and regional stability and counter to U.S. interests," he added, calling for the "right, focused and consistent military presence" to counter these countries' "most disturbing" growing influence in the region. "These geopolitical tensions are inimical to stability across the world and we look forward to world leaders to continue to do their best to ensure that conflicts on trade and military are avoided”, he added. (NEWSWEEK: https://www.newsweek.com/venezuela-us-battle-russia-china-iran-influence-most-disturbing-1448545)

 

Russian equipment to be part of military drills in Venezuela

Russia on Thursday said its military equipment will be part of military drills in Venezuela scheduled for July 24. "Weapons and military equipment that are currently present in Venezuela and that the National Bolivarian Armed Forces use is mostly Russia-made. So, it just cannot be otherwise. I don't know if they have purchased any kinds of equipment in other countries, but the army is equipped with our weapons to a significant extent, so it will be used as well," Sputnik quoted Russian Deputy Foreign Minister Sergei Ryabkov as saying. Ryabkov also noted that there are almost no Russian military experts in Venezuela right now. "A rotation has taken place. As I see it, the presence of our personnel there is close to zero. However, this does not mean that it will not appear there when the need may arise to maintain the equipment", he said. "We are concerned about a continuous melody from Washington, where there is a tendency to talk about all options being on the table and nothing can be excluded. That deliberately creates a sense of uncertainty, of what is possible and what is not in terms of U.S. participation," Ryabkov told Spanish newspaper El Pais on Wednesday. (Business Standard: https://www.business-standard.com/article/news-ani/russian-equipment-to-be-part-of-military-drills-in-venezuela-119071100712_1.html; NEWSWEEK: https://www.newsweek.com/venezuela-us-battle-russia-china-iran-influence-most-disturbing-1448545)

 

Against family wishes, Venezuela government buries navy captain who died in captivity

The Maduro regime on Wednesday buried the remains of a navy captain who died in military custody last month, despite the opposition of family members who say he was tortured to death and want an independent autopsy.  Rafael Acosta was detained in June 21 for alleged participation in a coup plot but died following a week in custody of military intelligence agency DGCIM. Lawyers said he showed signs of severe beatings.  “What can be interpreted is that government authorities are (saying) ‘I killed him, I bury him,’” said Alonso Medina, a lawyer representing Acosta’s family. Acosta’s wife, Waleswka Perez, had demanded that the government hand over his body and called for an U.N. investigation into his death, which was condemned by the United States as well as the Lima Group of Latin American nations. An official autopsy showed that Acosta died of “polytrauma with a blunt object,” Medina said. (Reuters: https://www.reuters.com/article/us-venezuela-politics-captain/against-family-wishes-venezuela-government-buries-navy-captain-who-died-in-captivity-idUSKCN1U52M0)

 

U.S. sanctions Venezuela's counter-intelligence agency after death of navy captain

The United States on Thursday imposed sanctions against Venezuela's military counter-intelligence agency following the death in custody of a Venezuelan navy captain amid allegations of torture. The U.S. Treasury said on its website that it had sanctioned the General Directorate of Military Counterintelligence. U.S. Treasury Secretary Steven Mnuchin said the "politically motivated arrest and tragic death" of Rafael Acosta was "unwarranted and unacceptable." The Maduro regime confirmed the death on June 29 of Acosta, who was arrested eight days earlier for alleged participation in a coup plot. Human rights organizations and political leaders have accused Maduro's government of torturing Acosta to death and refusing to clarify the circumstances. (CBC: https://www.cbc.ca/news/world/us-sanctions-venezuela-counterintelligence-navy-death-1.5208073)

 

Ex-Venezuela spy chief says Maduro ordered illegal arrests

As Nicolás Maduro began to lean on the brawny 55-year-old General Manuel Cristopher Figuera to do his dirty work — ordering him to jail opponents and victims of torture — the Cuban and Belarusian-trained intelligence officer gradually lost faith. In a show of nerve, he betrayed the leader he met with almost daily and secretly plotted to launch a military uprising that he said came close to ousting Maduro. Now one of the most prominent defectors in two decades of socialist rule in Venezuela has come to Washington seeking revenge against his former boss. It’s unclear whether Cristopher Figuera still has influence inside the government and can collect evidence against his former comrades. But he’s talking a big game. Cristopher Figuera for the first time provided details of what he said was Maduro’s personal commissioning of abuses, including arbitrary detentions and the planting of evidence against opponents. As the deputy head of military counterintelligence and then director of the feared SEBIN intelligence police, Cristopher Figuera stood alongside Maduro as Venezuela was coming apart. During the freefall, he said, he witnessed and played a role in abuses, including not speaking out when confronted with evidence of torture by others and the arbitrary detention of a prominent journalist. But he said Maduro’s most-brazen order — and one of Cristopher Figuera’s biggest regrets — was his role trying to break opposition leader Juan Guaidó’s resolve by going after his inner circle. Initially, he said, Maduro wanted to arrest Guaidó’s mother. When Cristopher Figuera pointed out that she was undergoing cancer treatment, the focus shifted to Roberto Marrero, Guaidó’s chief of staff, who has been held since March on accusations of running a “terrorist cell” bent on carrying out assassinations. Cristopher Figuera said he then told Maduro that he did not have legal cause. “How can I jail him?” Cristopher Figuera recalled asking Maduro in a tense meeting with top officials at Fort Tiuna in Caracas less than 72 hours before a violent raid on Marrero’s house. “He told me, ‘That’s not my problem. Plant some weapons on him. Do what you have to do.'” Cristopher Figuera expects one day to be called as a witness by the International Criminal Court, which is carrying out a preliminary investigation into the Maduro government at the request of several Latin American nations, France and Canada. Still, he acknowledges that he obediently carried out orders to spy on 40 or so of Maduro’s top opponents, using wiretaps as well as electronic and on-the-streets surveillance, and reporting to his boss every two hours any noteworthy movements. He claims to have tried to persuade Maduro to change course, sending him a two-page letter in early April that urged him to appoint a new electoral council and call early elections. He thought the move would have been a strategic retrenchment to regain the upper hand amid mounting international pressure.  He said he’s in constant contact with high-level officials — generals, deputy ministers and heads of government institutions — all of whom despise Maduro and want to see him leave but are afraid to act. (AP: https://www.columbian.com/news/2019/jul/04/ex-venezuela-spy-chief-says-maduro-ordered-illegal-arrests/)

 

With tenacity and torture, Venezuela’s awful regime is hanging on

Almost six months since Juan Guaidó began his attempt to remove Venezuela’s leftist dictatorship, the strain is showing. The 35-year-old’s jet-black hair is peppered with grey. His eyes seem weary. He has dropped his snappy slogan, “vamos bien” (“we are doing well”). Now his demoralized supporters utter it sarcastically. But the need to end the rule of Nicolás Maduro is as strong as ever. His mismanagement, plus sanctions imposed in January on Venezuela’s oil industry by the United States, will cause the economy to shrink by more than 25% this year. In dollar terms, the drop in output since Maduro became president in 2013 will be around 70%. Francisco Rodríguez, an economist in New York who has advised the moderate opposition, warns of famine. On July 5th the un High Commissioner for Human Rights published evidence that security forces loyal to the government, such as the FAES, had murdered at least 6,800 people from January 2018 to May 2019. It documented cases of torture, including the use of electric shocks and waterboarding. Days before it was published, Rafael Acosta, a reserve naval captain accused of plotting to overthrow Maduro, appeared in court in Caracas, bruised and unable to say anything but “help me” to his lawyer. He died hours later. Mr. Guaidó, the head of the opposition-controlled legislature, had hoped to lead a velvet revolution. That plan has suffered one reversal after another. Although Maduro claims to “sleep like a child” he has cause for insomnia. The April uprising revealed splits in the regime.  The state-owned oil giant PDVSA, the main foreign-exchange earner, is trying to shift exports from the United States to Asia. Corruption, mismanagement by executives chosen for their loyalty to the regime and now sanctions has caused output to plunge. Although Venezuela has the world’s largest proven oil reserves, much of the country is suffering from shortages of petrol. “The regime’s entire focus now is survival,” says a Caracas-based diplomat. “The rulebook has been thrown away.” Maduro has quietly abandoned elements of the socialism brought in by his predecessor. The dollar has become accepted almost everywhere. Inflation has plummeted, to a still stratospheric 445,482%. But these moves towards saner economic policies have so far done little to ease hardship for most people. The main hope for a political transition. It is hard to imagine a resolution to Venezuela’s agony that does not include Maduro’s departure and a plan to hold elections with international monitoring. If that is to happen, the president will have to sleep less and worry more. (The Economist: https://www.economist.com/the-americas/2019/07/13/with-tenacity-and-torture-venezuelas-awful-regime-is-hanging-on)

 

John Bolton uses Twitter to try to flip Venezuela's defense minister

It looks like the White House national security adviser is trying to get Venezuela's defense secretary and military chief to flip. Four out of six John Bolton tweets since Monday evening have targeted Venezuelan defense minister Vladimir Padrino. Bolton's focus has been warning Padrino that he serves an illegitimate leader and that he will be held accountable for deaths that the Venezuelan military inflict under Nicolás Maduro's orders. In the first of what would be a three-day series of tweets addressed to the Maduro regime’s Defense Minister General Vladimir Padrino, Bolton argued that Maduro "deprived your soldiers, relied on illegal armed groups & 'colectivos' to violate the rights of Venezuela's people & has systematically executed political opponents." "Why do you support a tyrant whose inability to govern is visible for all to see?" Bolton asked. Shortly after Guaidó tried and failed to overthrow Maduro in late April, Bolton alleged that Padrino was among the socialist leader's top officials who agreed to switch sides, but ultimately failed to do so. Padrino has denied the claim and Monday was neither the first nor last time Bolton went off against Maduro and his administration on Twitter. "Do you want to be held to account for the arrest, torture and extrajudicial killings of your fellow Venezuelans, including members of the FANB? The atrocities are being documented for the world to see," Bolton tweeted Tuesday, using an acronym for Venezuela's National Bolivarian Armed Forces. "Are you proud to serve Maduro, a despot who has ordered the killing of thousands of your fellow Venezuelans in the last 18 months?" On Wednesday, Padrino responded, tweeting that Bolton "insists on an unhealthy attitude against me, like an obsessive-compulsive disorder, through recurrent, persistent and intrusive statements, characteristic of the insidious political blindness to which they resort to failing to divide the FANB." Padrino linked Bolton's "obsessive doubt" to the "clumsy and failed strategy he sold to Trump" and said that his continued position as defense minister "represents a mental torture for Bolton." Bolton hit back about 15 minutes later, arguing that the "Venezuelan Constitution does not call for the death of over 9,000 of your fellow Venezuelans because they voice disagreement with Maduro." He continued: "Remember your responsibilities to defend the constitution and the Venezuelan people."  It's not at all clear that Bolton's latest effort here will have any more success than the last time around. For one, Maduro has just reappointed Padrino as defense minister. While that might be a case of friends close and enemies closer, it's equally likely to reflect Maduro's increased confidence. (NEWSWEEK: https://www.newsweek.com/us-twitter-iran-venezuela-bolton-1448591; The Washington Examiner: https://www.washingtonexaminer.com/opinion/john-bolton-uses-twitter-to-try-to-flip-venezuelas-defense-minister)

 

Maduro regime’s war on children at a 'breaking point' over lack of medical care

The cries of millions of children still languishing inside Venezuela all too often go unanswered as the deteriorating conditions and the iron-grip of the Maduro regime has set the stage for once eradicated diseases to run rampant, trauma medicine to vanish, infant mortality to drastically spike, and for simple health skirmishes to morph into life-threatening plagues. “The current health situation is at a very delicate breaking point,” Ephraim Mattos, executive director of Stronghold Rescue & Relief, told Fox News. “We will never know the exact numbers of people who have died due to the corruption of the Maduro government, but what is happening in Venezuela – especially to the children – is nothing short of genocide.”  “One of the biggest health crises facing children fleeing Venezuela is simple dysentery caused by the contaminated food and water they are forced to eat and drink just to survive in Venezuela.  The dysentery causes the children to become even more malnourished and dehydrated which only compounds the issue further,” Mattos, who endeavors to reach some of the most famished and dangerous pockets of Venezuela with vital assistance, said. “Children who should be able to not only survive but also thrive, are needlessly dying every single day.” Paloma Escudero, the Global Director of Communication for UNICEF, concurred to Fox News that the UN children’s agency is concerned that Venezuela has reduced children’s access to essential services and increased their vulnerability. “Under-5 mortality increased by more than half between 2014 and 2017. Venezuela went from being a model for malaria eradication in the Americas, with its northern region declared malaria-free by the WHO in 1961, to becoming the largest contributor to the malaria burden in the region,” she said. “Between 2016 and 2017, reported malaria cases increased by over 70 percent. The number of people who died from malaria increased from 54 in 2010 to 456 in 2017.” In addition, UNICEF has recorded 190 suspected cases of diphtheria since the beginning of 2019, leading to 13 deaths. Escudero continued, noted that families are being forced to wake at the crack of dawn to trek their children across the border to the ravished Colombian city of Cucuta, to get them immunized or treated for common childhood illnesses. (Fox News: https://www.foxnews.com/health/venezuelas-war-children-medical-care-lacking)

 

Trinidad criticized for lack of action as Venezuelan migrants flee to the island nation

While large numbers of desperate Venezuelans have flocked to their Spanish-speaking neighbors in South America, more than 98,500 have fled to the Caribbean, according to a 2018 report from the United Nations. There are an estimated 40,000 Venezuelans residing in Trinidad and Tobago, just 10 miles off the coast of Venezuela. With unrest at their shores, Trinidad and Tobago’s government continues to avoid formal asylum legislation. The island nation remains the only country to take in large numbers of Venezuelan migrants without having an official asylum policy in place. It has also not taken political sides on the unraveling situation in Venezuela, instead choosing to remain officially neutral. As a result, the islands’ government is receiving condemnation from world leaders, the country’s own opposition, and asylum-seekers who say the country needs to do more. This leaves desperate families to choose between remaining in their divided homeland or moving to islands where they are unsure if they are safe and welcome. The side effects have led to reports of unlawful detention by the police and the deportation of 82 refugees, actions which the U.N. condemned as illegal. The uncertainty has Venezuelans there living in fear and seeking financial assistance on the black market, where reports of human trafficking are rampant. (NBC News: https://www.nbcnews.com/news/nbcblk/trinidad-criticized-lack-action-venezuelan-migrants-flee-island-nation-n1028246)

 

Spain arrests suspect sought by Venezuela for deadly arson

A Spanish National Court spokesman says that a man sought by Venezuela for allegedly burning a 22-year-old man during anti-government protests two years ago has been jailed in Madrid. Enzo Franchini Oliveros’ arrest was first announced on Wednesday by Venezuela’s top prosecutor, Tarek William Saab. Saab tweeted that Oliveros was sought for public disorder, intentional homicide and terrorism charges related to the burning of Orlando Figuera during a demonstration in May 2017. A Spanish National Police spokeswoman said Oliveros was arrested on Monday in a town near Madrid. A National Court spokesman says the man told Judge Santiago Pedraz during questioning Thursday that he didn’t want to be extradited. A hearing needs to be scheduled for magistrates to decide. (CBS: https://www.cbs42.com/news/international/spain-arrests-suspect-sought-by-venezuela-for-deadly-arson/)

 

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.

June 30, 2016

Oil & Energy

PDVSA production down 30% in 6 years, oilfields decline, needs US$ 70-80 price for investments

Venezuela’s crude oil production has shrunk around 30% over the past 6 years according to official data from state oil company PDVSA and the Organization of Petroleum Exporting Countries (OPEC). Production fell from 3.12 million barrels per day to an all-time low of 2.18 MBD, some 900,000 barrels, around 30%. In May, PDVSA denied a drop in production this year but did not provide details on pumping. Last week, at a public ceremony, President Nicolas Maduro himself urged Oil Minister Eulogio Del Pino “to start raising the nation’s oil production during next semester”. Eudis Girot, Executive Director of the United Oil Workers Federation, reported the industry is producing only 2.4 MPD, one million barrels less than in 2008. He says “the company has been abandoned, our drills are in broken down deposits, our own fleet is destroyed”. Oil expert Victor Maldonado says “if there are no resources there is no investment, which is key to developing the industry”. ECOANALITICA Director Alejandro Grisanti says “Venezuela is not getting US$ 500 million every month, or US$ 6 billion per year”, due to the drop in production. At a recent meeting Oil Minister Del Pino admitted investments to meet global oil demand require prices between US$ 70-80 per barrel. He says half of the investments scheduled for 2016 were deferred due to low prices, adding “that will obviously impact production”.  He also admitted there is a 20-25% “natural decline” in oilfields which forces them to “replace 600,000 BPD, simply to maintain (current) production”. More in Spanish: (Panorama: http://www.panorama.com.ve/politicayeconomia/En-6-anos-cayo-30-de-produccion-de-crudo-en-Venezuela-20160628-0118.html; http://www.panorama.com.ve/politicayeconomia/Ministro-Eulogio-Del-Pino-Industria-petrolera-requiere-un-barril-de-al-menos-70-dolares-20160629-0074.html)

 

Venezuela’s oil output decline accelerates as drillers go unpaid

Venezuela’s oil output, already the lowest since 2009, is set to slide further this year as contractors scale back drilling after the cash-strapped country fell more than US$1 billion behind in payments. This nation’s oil production, which generates 95% of export revenue, will decline by about 11% to 2.1 million barrels a day by the end of the year, BARCLAYS estimates. Output is falling largely because oil-services companies aren’t being paid, according to the International Energy Agency. (Bloomberg, http://www.bloomberg.com/news/articles/2016-06-27/venezuela-s-oil-output-decline-accelerates-as-drillers-go-unpaid)

 

PDVSA says it has made financing deals with WEATHERFORD, HALLIBURTON

State oil company PDVSA says it has signed financing agreements with services firms HALLIBURTON and WEATHERFORD, PDVSA's president said on Wednesday, following chronic payment difficulties for companies working here. PDVSA has more than US$ 20 billion in outstanding bills to providers, which has led some companies to slow work. The company's access to hard currency has tumbled along with the price of oil, and Venezuela is struggling with triple-digit inflation, a severe recession and heavy bond payments this year and next. "This morning WEATHERFORD signed a financing agreement with us, HALLIBURTON signed yesterday," Eulogio Del Pino, who is also the country's oil minister, said in a speech broadcast on state television. (Reuters, http://www.reuters.com/article/us-venezuela-pdvsa-idUSKCN0ZF2V6)

 

US Supreme Court to hear Venezuela oil rig dispute

The U.S. Supreme Court on Tuesday agreed to weigh Venezuela's bid to block a lawsuit filed by an American oil drilling company that claims this country unlawfully seized 11 drilling rigs six years ago. The high court will review a May 2015 ruling by the U.S. Court of Appeals for the District of Columbia Circuit that allowed one of the claims made by Oklahoma-based HELMERICH & PAYNE International Drilling Company to move forward. The company sued both the Venezuelan government and state-owned oil companies under a U.S. law called the Foreign Sovereign Immunities Act, saying among other things that the property seizure violated international law. (Reuters, http://www.reuters.com/article/us-usa-court-venezuela-idUSKCN0ZE1MV; El Universal, http://www.eluniversal.com/noticias/daily-news/receives-venezuelas-bid-block-helmerichs-lawsuit_317055)

 

 

Commodities

Venezuela seeks additional partnering with South Korea’s POSCO

Foreign Trade and Investment Minister Jesús Faría is in South Korea seeking to expand relations with POSCO, that nation’s largest steelmaker and attract investments to Venezuela. POSCO made an US$ 245 million investment in the Puerto La Cruz (Anzoátegui state) refinery’s deep conversion process. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/venezuela-busca-ampliar-relaciones-empresa-sider%C3%BArgica-surcoreana)

 

 

Economy & Finance

Central Bank seeks US$ 1 billion from Latin American Reserve Fund

According to sources at the Latin American Reserve Fund (FLAR), Venezuela’s Central Bank (BCV) requested a US$ 1 billion loan, but received only US$ 400 million, drawn against the BCV’s own reserve with the institution. The same source reports that in order to get a billion-dollar loan the agreement would require approval by Venezuela’s National Assembly, in order to comply with FLAR rules which requires clear guarantees. This is not the first time the BCV seeks financial aid from international institutions. For over a year it has been drawing from the International Monetary Fund (IMF), as well as engaging in gold swaps through foreign banks. BCV authorities are concerned about the drop in international reserves, which are now at an all-time low of around US$ 12 billion. More in Spanish: (El Nacional: http://www.el-nacional.com/economia/BCV-millardo-Fondo-Latinoamericana-Reservas_0_875312763.html

 

Companies have reduced operations by 80% due to lack of FOREX

FEDECAMARAS President Francisco Martinez, head of the nation’s largest business federation, reports that scarce foreign exchange has led 90% of all Venezuelan companies to reduce operations by almost 80%, since it is impossible to acquire “raw materials, intermediate goods, machinery and spare parts”. He says political confrontation is hindering economic progress and called for inclusive talks between the government and the private sector, “with measurable, tangible” results for the population. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Empresas-reducido-operaciones-falta-divisas_0_874712788.html)

 

Venezuela received only US$ 1.591 billion foreign investments out of US$ 167.5 to Latin America

According to the 2015 World Report by the United Nations Conference on Trade and Development (UNCTAD), Venezuela received only US$ 1.591 billion in direct foreign investment during 2015, out of US$ 167.5 billion that was directed to Latin America. Most of the amount reported for Venezuela are funds held back from repatriation due to currency controls. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/economia/venezuela-capto-inversiones-por-1591-millones-dolares-2015_316966; El Nacional, http://www.el-nacional.com/economia/Venezuela-capto-inversiones-America-Latina_0_874712814.html)

 

 

Politics and International Affairs

Obama urges Venezuela to respect democratic process, pursue recall, release prisoners

U.S. President Barack Obama on Wednesday urged the Venezuelan government to respect the democratic process and the rule of law, including allowing the release of political prisoners. "Given the very serious situation in Venezuela and the worsening plight of the Venezuelan people, together we're calling on the government and opposition to engage in meaningful dialogue and urge the Venezuelan government to respect the rule of law and the authority of the national assembly," Obama said at a news conference with the leaders of Canada and Mexico.  "Political prisoners should be released, the democratic process should be respected and that includes legitimate efforts to pursue a recall referendum consistent with Venezuelan law." (Reuters, http://www.reuters.com/article/us-venezuela-usa-obama-idUSKCN0ZF2KV)

 

China invites opposition parliamentary leader Julio Borges to talk

Julio Borges, head of the opposition majority coalition in Venezuela’s National Assembly is in China to talk about the economic crisis and challenges of change in Venezuela. The five-day visit will allow him to brief Chinese experts on the country’s current situation. He is a guest of the Chinese Association for International Understanding (CAFIU), an organization attached to the Chinese ruling party. He arrived in China on Monday, to share his vision over the economic crisis and take part in high-level meetings over, among other things, the future in Venezuela. Members of opposition umbrella group Unified Democratic Panel (MUD) backed the visit and regarded it as an open path and a clear signal of the world’s expectations around the country’s situation. Borges is a leader within the Primero Justicia party, along with former Presidential candidate Henrique Capriles Radonski. (El Universal, http://www.eluniversal.com/noticias/daily-news/julio-borges-global-community-must-know-venezuelas-visions_317078)

 

Pro-government forces threaten to abolish Parliament, Cardinal calls idea “desperate”, and a “coup d’etat”

Didalco Bolivar, a former governor of Aragua state, announced that a coalition of all pro government parties called “Great Patriotic Pole”, is considering a motion requesting that the Supreme Tribunal “abolish this National Assembly….and call for new parliamentary elections”. He claimed the legislature is violating the Constitution, betraying the Fatherland, usurping duties, and abusing its authority in foreign policy. Previously, President Nicolas Maduro had also accused Parliament of usurping duties and treason. Bolivar also said the recall referendum could not be called this year, claiming it has been called ahead of time, and accused the opposition of fraud. Venezuela’s Cardinal Jorge Urosa called the move “desperate”, and said “I think this has no head or tail, it would be a coup d’etat against the will of the people expressed on December 6, when an overwhelming majority of the Venezuelan people voted in the direction the National Assembly is now taking. More in Spanish: (Infolatam: http://www.infolatam.com/2016/06/28/chavismo-estudia-como-abolir-el-parlamento-venezolano/; El Universal, http://www.eluniversal.com/noticias/politica/iglesia-catolica-rechaza-idea-abolir-parlamento_317185)

 

….and regime then appears to backtrack

Ombudsman Tarek William Saab, a member of the pro-government PSUV party, then said “isolated voices, such as those calling for the abolition of public powers, will not have any kind of support nationally, because they are individuals----what Venezuela now needs is cooperation between public powers”. He added that “radical and extremist voices will have no success in Venezuela at this time…success will come to consensus proposals that lead to an effective solution”. The leader of the pro-government faction within the National Assembly, Hector Rodríguez, said they are not shirking the possibility of a recall referendum since it is a part of the Constitution and said the opposition has the right to use all means possible. He added that the population is more concerned with scarcity and inflation than it is with the proposed referendum. Speaking later, President Maduro called on his supporters to make it a priority to “defeat” and “denounce” the National Assembly during the second semester this year, and called the legislature “a hindrance to development, and we must all take it on as such”. He made reference to the proposal for abolition. More in Spanish: (Infolatam: http://www.infolatam.com/2016/06/29/ombudsman-venezolano-afirma-propuesta-de-abolir-parlamento-no-tendra-apoyo/; http://www.infolatam.com/2016/06/30/maduro-pide-que-derrotar-al-parlamento-sea-la-linea-del-proximo-semestre/; Noticiero Venevision: http://www.noticierovenevision.net/nacionales/2016/junio/28/161036=hector-rodriguez-aclaro-que-no-se-estan-negando-a-la-posibilidad-de-la-realizacion-del-rr-)

 

Ramos Allup slams regime for clinging to High Command, announces review of TSJ justices

National Assembly President Henry Ramos Allup says it is “worrisome” that the Maduro regime should depend on the military High Command and the Supreme Tribunal’s Constitutional Chamber to cling on to power. He rejected military coups and repeated that the democratic system has been altered here. He said the Maduro regime had been “given notice” that he is being fired; and added: “They know they’re in their final days, and they’re going to pay, whether they’re civilians or soldiers,” he said, adding that “when this comes about, which will be soon, they are going to have to answer to the courts for their evil deeds”. He also announced that the legislature will revoke the decision – which he termed unconstitutional – through which current justices of the Supreme Tribunal were appointed. He said that if this happens they will call for a new nomination process. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2415166&CategoryId=10717; and more in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/junio/28/161055=ramos-allup-critica-que-el-gobierno-se-aferre-al-alto-mando-militar-para-permanecer-en-el-poder)

 

PSUV says managers who do not fire employees who petitioned for Maduro’s recall must be fired

Lieutenant Diosdado Cabello, vice president of the pro-government PSUV party has announced that his party will demand that all those who hold management positions within government and do not fire employees who have signed a petition for a recall referendum against President Nicolas Maduro, must also be fired. He also said the opposition must be forced to collect 4 million signatures in one day and with 20% of all polling machines. “We are not going to make it easy for them. No. I swear we won’t. And we will do whatever we have to do”. More in Spanish:

 (El Nacional, http://www.el-nacional.com/politica/PSUV-destitucion-despidan-firmaron-revocatorio_0_875312804.html; http://www.el-nacional.com/politica/Solicitaran-CNE-firmas-recoja-maquinas_0_875312787.html)

 

Workers fired, students deprived of scholarships, for signing recall petition

200 employees of the SENIAT tax authority reported to the National Assembly that they were fired for having signed the petition for a recall referendum against President Nicolas Maduro. The pro-government Zulia state has suspended scholarship benefits of 200 students, according to reports confirmed by authorities at four public and private universities there. (El Nacional, http://www.el-nacional.com/politica/Despiden-trabajadores-quitan-estudiantes-firmar_0_875312785.html; El Universal, http://www.eluniversal.com/noticias/venezuela/fundalossada-niega-que-retiro-becas-sea-represalia-por-revocatorio_317162)

 

Maduro’s nationality discussed at the National Assembly

Pro government legislator Victor Clark claims the Colombian government has reported “no information was found relating to a birth certificate or identification card” that could indicate that President Nicolas Maduro is a Colombian national. Clark read out a response by Colombian Foreign Minister María Angela Holguin to a request by National Assembly President Henry Ramos Allup. Ramos Allup retorted that Clark had read an incomplete response since that first notice was followed by another document sent to the Colombian National Registry requesting information on the nationality of Maduro’s parents, which would raise the issue of dual citizenship. (El Universal, http://www.eluniversal.com/noticias/daily-news/colombian-govt-speaks-about-nationality-venezuelas-maduro_317073; http://www.eluniversal.com/noticias/daily-news/colombian-govt-support-requested-clarify-maduros-nationality_317050)

 

Foreign Minister Rodriguez and Ernesto Samper visited Surinam’s Bouterse

UNASUR’s pro tem president, Foreign Minister Delcy Rodríguez, and Ernesto Samper, Secretary General of the Union of South American Nations, have travelled to Surinam to meet with that nation’s President Dési Bouterse, and said they would call a meeting of the organization to discuss the situation there within the next few days. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/junio/28/161040=canciller-rodriguez-y-ernesto-samper-visitaron-surinam-para-reunirse-con-el-primer-mandatario-desi-bouterse)

 

Paraguay regrets MERCOSUR the union’s chair may go to Venezuela

Paraguay’s Foreign Minister Eladio Loizaga has said his nation regrets that the Foreign Ministers of Argentina and Uruguay announced that the pro tem chair of MERCOSUR would go to Venezuela, as scheduled, without consulting Paraguay or Brazil. “I deeply regret this information has been put out unilaterally by two fellow foreign ministers”, he said. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/Paraguay-presidencia-Mercosur-Venezuela-consultar_0_875312757.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.

 

April 26, 2016

International Trade

Venezuela runs up US$1 billion debt for late shipping containers

Venezuelan state agencies have run up close to US$1 billion in debts with shipping firms due to delays in returning containers, potentially boosting the cost of importing staple goods as the country struggles with product shortages and an economic crisis. The agencies have held containers for months or simply never returned them, at times leaving the truck-sized steel boxes for years in oil industry facilities or on provincial farms even though this costs US$ 100 per day per container, according to industry sources. The debts have piled up over the last six years, coinciding with a steady rise in the role of state agencies in importing goods to Venezuela, particularly food. The country is served by industry giants such as MAERSK of Denmark and HAMBURG SUD of Germany. The container debts put shipping lines on a long list of industries ranging from international airlines to telecommunications giants that have complained of being unable to collect on billions of dollars in unpaid Venezuelan bills. (Reuters, http://www.reuters.com/article/us-venezuela-shipping-idUSKCN0XJ1HK)

 

Three ships have arrived bearing wheat for bakeries, according to Tomas Ramos, President of Venezuela’s Bakery Industry Federation. More in Spanish: (Notitarde; http://www.notitarde.com/Economia/Tres-buques-han-arribado-al-pais-con-trigo-panadero/2016/04/25/951979/)

 

Arreaza reports medical supplies and medication are arriving at ports

Social Affairs Vice President Jorge Arreaza says medication and medical supplies are arriving here for the National Health Service and private services. “We are starting to receive medications”, he claims. More in Spanish:  (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/gobierno-anuncia-el-arribo-de-medicamentos-y-equip.aspx#ixzz46vZmnEE8;El Nacional, http://www.el-nacional.com/politica/Arreaza-medicamentos-material-quirurgico-llegaron_0_836316648.html)

 

 

Oil & Energy

HALLIBURTON curtailing business activity in Venezuela

U.S. oil services firm Halliburton Co has decided to begin curtailing activity in Venezuela, the company said on Friday, less than two weeks after SCHLUMBERGER Ltd announced a similar decision as a result of payment difficulties. Venezuelan state oil company PDVSA has struggled to settle unpaid bills to service firms as a result of low oil prices and heavy bond payments that the company must make this year. "During the quarter we made the decision to begin curtailing activity in Venezuela," HALLIBURTON said in an earnings release. (Reuters, http://www.reuters.com/article/us-halliburton-venezuela-idUSKCN0XJ2RC)

 

Blackouts in parts of Caracas Excluded from Electricity Rationing

Vast areas of the Venezuelan capital report electricity blackouts, even though Caracas was excluded from the 4-hour-a-day ration ordered by the government and which is being imposed on the rest of the country for at least 40 days. With no official reports on the power cuts made public, the media were quick to notice that the blackouts chiefly affect the capital’s densely populated east side. The daily El Nacional said that the cuts began shortly after sunrise. The power cuts announced last week by the government exclude Caracas, the neighboring state of Vargas and a northeastern region of Venezuela that includes the touristic island of Margarita, as well as urban areas where hospitals, airports and security forces’ headquarters are located. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2410730&CategoryId=10717; Bloomberg, http://www.bloomberg.com/news/articles/2016-04-21/venezuela-calls-for-patriotism-as-it-plans-to-ration-electricity); Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2410595&CategoryId=10717; http://www.laht.com/article.asp?ArticleId=2410568&CategoryId=10717)

 

FEDECAMARAS says electricity crisis is due to poor planning, mismanagement of US$ 95 billion

Francisco Martínez, President of the nation’s largest business federation (FEDECÁMARAS) has charged the government with poor planning on electricity here. “The electricity problem is a consequence of poor management, poor planning”, he said. He also said this problem involves corruption: “Venezuelans need to know what they have done with US$ 95 billion invested into the electricity system in order to have the disaster we have in Venezuela” More in Spanish: (El Universal, http://www.eluniversal.com/noticias/economia/fedecemaras-tema-electrico-producto-una-mala-planificacion_306578)

 

Venezuela oil price rises for 2nd week

The price Venezuela receives for its mix of medium and heavy oil rose slightly as oil prices around the world also rose on a strike in Kuwait. According to figures released by the Ministry of Petroleum and Mining, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending April 22 was US$ 32.39, up 29 cents from the previous week's US$ 32.10. According to Venezuelan government figures, the average price in 2016 for Venezuela's mix of heavy and medium crude is now US$ 27.03 for the year to date. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2410639&CategoryId=10717)

 

 

Commodities

Regime strangles POLAR in FOREX allocations, plants grinding to a halt

Omaira Sayago, executive director of the Beer Manufacturers Chamber, reports that the only manufacturer not receiving FOREX is POLAR, which has a US$ 200 million in debts with suppliers dating back to 2014 and has run out of inventories. The company had planned to migrate to the DICOM (controlled official FOREX rate) system rival manufacturers are using, but has received no reply from the government. Four of its plants will shut down this week, impacting 80% if the population. POLAR union leader Arquímedes Sequera has reported that the Labor Inspector’s Office has confirmed the lack of supplies to produce beer and malt at their San Joaquin plant, and 1,340 workers are at risk of being suspended if it closes. Marisa Guinand, POLAR’s Personnel Director, reports that the standstill of beer manufacturing plants will take place gradually, for not all facilities have the same storage capacity. She stressed the government has failed to give the company an equal treatment over foreign currency access compared to rival enterprises. (El Universal, http://www.eluniversal.com/noticias/daily-news/empresas-polar-asks-for-egalitarian-foreign-currency-allocation_306553); and more in Spanish; (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/este-viernes-se-paralizan-las-ultimas-plantas-de-c.aspx#ixzz46vaVneHU;El Nacional, http://www.el-nacional.com/economia/Polar-Maracaibo-San-Joaquin-viernes_0_836316423.html; http://www.el-nacional.com/economia/Inspectoria-trabajo-confirmo-Cerveceria-Polar_0_836316535.html; Notitarde; http://www.notitarde.com/Economia/Polar-es-la-unica-cerveceria-afectada-por-falta-de-divisas-2661776/2016/04/23/950725/)

 

 

Economy & Finance

 

IMF warns that Venezuela’s economy could collapse entirely in 2017

Robert Rennhack, Deputy Director in the Western Hemisphere Department of the International Monetary Fund, has issued a statement warning that Venezuela’s economy could collapse completely in one and a half years of government financial policies are not corrected. This could happen in 12 to 18 months. He also warns that inflation will reach 2,200% in 2017, and believes annual inflation could be up to 13,000%, which is what experts call full hyperinflation. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/FMI-advierte-economia-colapsar-completamente_0_833916878.html)

 

ICSID orders Venezuela to pay for VESTEY expropriation

The World Bank’s International Center for the Settlement of Investment Disputes (ICSID) has ordered Venezuela to pay almost US$ 100 million to Britain’s VESTEY cattle group for taking over a number of the company’s estates here. The late President Hugo Chavez ordered a takeover of VESTEY properties in 2005. ICSID has now ordered Venezuela to pay up US$ 98 million plus interest. More in Spanish: (Notitarde; http://www.notitarde.com/Economia/Ciadi-ordena-al-pais-pagar-por-expropiacion-a-Vestey/2016/04/22/948388/; El Universal, http://www.eluniversal.com/noticias/economia/ciadi-ordena-venezuela-pagar-ganadera-britanica-por-expropiacion_306056; El Nacional, http://www.el-nacional.com/economia/Banco-Mundial-Venezuela-Vestey-expropiaciones_0_833916839.html)

 

FEDECÁMARAS says President Maduro’s “productive motors” have had no results

FEDECÁMARAS President Francisco Martínez reports that the launching of “productive motors” announced by President Nicolas Maduro to reinvigorate the economy has been ineffective.  He said that a few independent businessmen have attended the established working groups in order to talk to Economic Vice President Miguel Perez Abad, but have received no answers about FOREX allocations to suppliers; “All we have seen is frustration because the business sector continues to be under government attack”. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Fedecamaras-Motores-productivos-resultados_0_836316465.html)

 

…and Isturiz tells business to break open their FOREX “piggy banks”

Venezuela’s Executive Vice President Aristobulo Isturiz says any Venezuelan businessman who has FOREX abroad should repatriate it to propel the nation’s economy. “At Venezuela’s current situation, all those who have dollars abroad should break open their “piggy bank”, He criticized Lorenzo Mendoza for saying POLAR cannot produce food and beverages for lack of FOREX: “It cannot be that one who has most dollars abroad says he does not produce because the government does not allocate dollars, when there are businessmen who have far less than he and are contributing in order to move forward”. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/isturiz--empresarios-deberian-romper-su--cochinito.aspx#ixzz46vXFEvDC; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/isturiz-empresarios-deberian-romper-su--cochinito-.aspx)

 

Cattlemen report that their productivity is down 50%

Carlos Albornoz, head of the National Cattlemen’s Federation, reports that agricultural production has dropped by more tan 50%, Last Thursday, Venezuelan rural producers demonstrated in the city of Valle de la Pascua to demand better working conditions from the government. “We are barely producing 31% of the beef we eat, a Little over 35% of milk, merely 32% of White corn and 22% of yellow corn, and 60% of rice…we have no machinery, security or profitability”. He reported a lot of cattle is perishing due to lack of food and supplies. More in Spanish: (Notitarde; http://www.notitarde.com/Economia/Fedenaga-Productividad-ha-bajado-50/2016/04/21/948371/)

 

70% of all industries report drops in their production levels, according to Juan Pablo Olalquiaga, President of the Venezuelan Confederation of Industries (CONINDUSTRIA). He reports that manufacturing is operating at 43.87% capacity “and the trend is for it to continue dropping if emergency measures are not taken.” More in Spanish: (Notitarde; http://www.notitarde.com/Economia/70-de-la-industria-reporta-caida-en-nivel-de-produccion-/2016/04/21/948368/; El Universal, http://www.eluniversal.com/noticias/economia/del-sector-industrial-reporto-caida-niveles-produccion_305994; El Mundo, http://www.elmundo.com.ve/noticias/economia/gremios/conindustria--empresas-trabajan-43-87--de-su-capac.aspx)

 

All you need to know about Venezuela's looming implosion

It now seems inevitable that Venezuela, for decades touted as a “socialist paradise”, will disintegrate by the end of the year. It’s the ultimate case of “Dutch disease”, a country now rotten from depending far too much on the export of a primary product and, as a result, facing a currency so bloated it can’t maintain productivity and competitiveness. Venezuela’s problem is the crashing price of oil, its major export commodity. About 95% of the country’s exports, in fact. Because of that, it’s considered to be burdened with the riskiest debt in the world. Revenue from oil exports is said to have plummeted from US$37.2 billion in 2014 to US$ 12.6 billion. Compounding the problem, it also has to import roughly half of the food its people consume. In the middle of Chavez’s reign, the government seized control of some 3 million hectares of agricultural land in an effort to control production and prices. Now it sits idle, because the overvalued currency means it’s cheaper to import food than grow and distribute it. While the Venezuelan government still denies it, for nearly two years now, people have been saying they must wait several days in lines to enter government grocery stores for basic essential items which may not even be on the shelf when they finally get through the door. The other edge of the sword is that when Venezuelans eventually get inside the stores, they’re leaving with much more than they need, because reselling it across the border into Colombia and Brazil is extremely lucrative. There’s huge pressure on the government to maintain the subsidies or face a political backlash from the country’s significant chunk of voters beset by poverty. In February, Venezuela topped the “Misery Index,” an annual list compiled by The Cato Institute. For the second year in a row, it was considered the most miserable country in the world based on data about a country’s inflation rate, interest rates, and unemployment.  Poverty levels are now approaching 90%. Now, the inevitable violence and chaos is starting to spill over. There’s been no official homicide data from Venezuela since 2006, but one local think tank puts the rate at 92 killings per 100,000 citizens. It’s almost five times the rate in the year before Hugo Chavez came to power. Now death, lynching, prison breakouts, deadly student protests and mafia executions dominate the pages of national newspapers. The latest note from Deutsche Bank says even a return to US$ 100 a barrel for oil won’t help Venezuela. It needs closer to US$ 200 just to balance its budget. Communications services are now being cut. The government owes some US$ 700 million to private telecoms and cable firms, one of which, the giant Telefonica, has suspended long distance calls to the US, Europe and crucial partners Colombia, Brazil and Panama. And now Venezuelans face the next stage in their seemingly inevitable decline – switching off the lights. Venezuelan society is well past the stage of being three square meals away from revolution.  Now, as the FT notes, “the economic crisis risks turning into a humanitarian one”. (Business Insider Australia: http://www.businessinsider.com.au/venezuela-implosion-2016-4)

 

 

Politics and International Affairs

 

Venezuelan high court rules amendment to shorten term does not apply to current president term

Venezuela’s Supreme Tribunal of Justice (TSJ) has ruled that any amendment to the Constitution intended to make President Nicolas Maduro step down is not applicable in his presidential term. According to the high court, the amendment would apply in subsequent presidential terms. In the judgment, the TSJ Constitutional Chamber affirmed that, following a review of a petition for construction of Article 340 of the Constitution, any attempt to use of the amendment to cut the current presidential term would be fraud of the Constitution. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-high-court-amendment-does-not-apply-current-president-term_306606)

 

National Elections Council delays approval of official recall form

The National Elections Council (CNE) has continued to delay providing the opposition Democratic Unity coalition with the official form required to collect signatures calling for a recall referendum against President Nicolas Maduro. Opposition leader Henrique Capriles announced demonstrations at all CNE offices nationwide to demand action. “No CNE director has the right to block our recall. We are going to go for our form, it’s out right to do so”, he said. He complained that the CNE has not acted even after receiving four letters requesting an approved form. Last week seven opposition legislators chained themselves to CNE railings along with a group of demonstrators to demand the forms, and were violently removed by National Guard officers, who also manhandled newsmen covering the activity. The CNE subsequently threatened legal action against the legislators who “seek to destroy” the institution. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/Capriles-Vamos-buscar-planilla-derecho_0_836316619.html; http://www.el-nacional.com/politica/CNE-amenazo-diputados-quieren-destruirlo_0_835716482.html; El Universal, http://www.eluniversal.com/noticias/politica/gnb-desalojo-fuerza-diputados-encadenados-sede-del-cne_306033)

 

National Assembly to move on OAS Democratic Charter against Maduro regime

Venezuelan National Assembly President Henry Ramos Allup told CNN-E that the legislature may ask the Organization of American States (OAS) to apply the Hemispheric Democratic Charter against the Maduro regime “as a last step, because it is necessary to previously ensure the indispensable votes for the Charter to be applied, and this requires overcoming obstacles at the OAS since CARICOM nations are there that have permanently received aid from the Venezuelan government and have committed their votes”. He says the opposition has had the “receptivity, balance and responsability” of OAS Secretary General Luis Almagro, and we have gone to other legislatures in friendly nations. He says that although they will make a formal petition to the OAS they are trying to fine tune instruments in order “to avoid setbacks, we know anything we try and fail at will be used by the Venezuelan government as a victory”. A delegation of legislators, headed by Foreign Affairs Committee Chairman Luis Florido, is travelling to Washington to meet with OAS Secretary General Almagro, to analyze ways to proceed. Article 20 of the Democratic Charter, which was approved in 2001, authorizes Almagro or a member State to convene the Permanent Council “in the event of an unconstitutional alteration of the constitutional regime that seriously impairs the democratic order in a member State” (El Universal, http://www.eluniversal.com/noticias/daily-news/oas-almagro-may-apply-democratic-charter-venezuela_306531; and more in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/delegacion-reunira-con-secretario-general-oea_306560; Infolatam: http://www.infolatam.com/2016/04/25/oposicion-venezolana-evaluara-en-oea-la-activacion-de-la-carta-democratica/; Informe21: http://informe21.com/politica/allup-en-cnn-necesitamos-asegurar-votos-para-la-carta-democratica)

 

The National Assembly’s positive rating has dropped down from 64% to 55% since the start of the year, according to a study by the Catholic University’s Political Science Center, and has fallen behind the universities, students, Catholic church, business, and private media. Experts believe the change is due to overblown expectations after Parliamentary elections and the fact that legislative action has been blocked by the Supreme Court, the regime or the National Elections Council. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/Evaluacion-positiva-Asamblea-puntos-porcentuales_0_835716481.html)

 

Former Chavez VP slams Maduro for generating “loss of hope”.

Journalist Jose Vicente Rangel, a former Chavez Vice President and minister, has criticized economic policy and the hopeless message projected by President Nicolas Maduro and those responsible within the regime. He says: “The government’s key weakness is the economic crisis, mainly because of shortages and inflation; the lack of a hopeful discourse and a clearer economic outlook accentuates uncertainty, defenselessness, and sadness”.  He showed results of a poll by pro-government pollster HINTERENLACES, which reveals a drop in public confidence down to 24%. More in Spanish: (Infolatam: http://www.infolatam.com/2016/04/24/exvicepresidente-de-chavez-critica-el-discurso-gubernamental-desesperanzador/)

 

Joel Hirst: The Suicide of Venezuela

Venezuela is slowly, and very publically, dying; an act that has spanned more than fifteen years. National suicide is not product of any one moment. But instead one bad idea, upon another, upon another and another and another and another and the wheels that move the country began to grind slower and slower; rust covering their once shiny facades. Revolution – cold and angry. Hate, as a political strategy. Law, used to divide and conquer. Regulation used to punish. Elections used to cement dictatorship. Corruption bleeding out the lifeblood in drips. Good men and women stuck in a two-decade old debate from which there is no escape. Videos of nightly sacking of supermarkets that are fortuitous enough to have had a supply of something. Tonight there are no lights. They blame the weather – the government does – like the tribal shamans of old who made sacrifices to the gods in the hopes of an intervention. There is no food either; they tell the people to hold on, to raise chickens on the terraces of their apartments. There is no water – and they give lessons on state TV of how to wash with a cup of water. The money is worthless; people now pay with potatoes, if they can find them. Doctors operate using the light of their smart phones; when there is power enough to charge them. Without anesthesia, of course – or antibiotics, like the days before the advent of modern medicine. The phone service has been cut – soon the internet will go and an all-pervading darkness will fall over a feral land. The marathon of destruction is almost finished; the lifeblood of the nation is almost gone. No, there is nothing heroic or epic here; ruins in the making are sad affairs – bereft of the comforting mantle of time which lends intrigue and inevitability. (World Press: https://joelhirst.wordpress.com/2016/04/23/the-suicide-of-venezuela/)

 

 

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.