09 June , 2016

Logistics & Transport

Why airlines are abandoning Venezuela

In the 1970s Venezuela’s oil wealth attracted business travelers from all over the world. An Air France Concorde flew between Paris and Caracas once a week. But for airlines the supersonic boom has given way to a frustrating bust. On May 28th LUFTHANSA announced that it was suspending its thrice-weekly flights from Frankfurt to Caracas as of June 18th. Two days later LATAM, Latin America’s largest airline group, declared that it would cut all its services to the country after August 1st. In recent years AIR CANADA, AMERICAN AIRLINES, ALITALIA and GOL have all scaled back or suspended their Venezuelan operations. Why are so many airlines crossing the country off their schedules? Desperate to avert a sovereign default, which would cut off credit to the ailing oil industry, the government has tightened currency controls introduced by Chávez in 2003. The restrictions make it almost impossible for companies to convert local Bolívares into dollars. This has made it difficult for international airlines, who typically charge customers in local currencies, to repatriate their profits. LUFTHANSA has written off the more than US$ 100 million it says it is owed; LATAM says it is due US$ 3 million. The International Air Transport Association (IATA), the airlines’ trade body, estimates that Venezuela’s government is withholding US$ 3.8 billion of airline revenues.  Demand for flights to Venezuela has, in any case, fallen in recent years as fewer business travelers visit the country. LATAM says that flights to Caracas make up less than 1% of its business. Caracas’s airport is often deserted. But the carriers’ departures are a symbolic blow to the government and exacerbate Venezuela’s isolation from the rest of the world. Just a handful of foreign airlines remain. AIR FRANCE, UNITED AIRLINES and IBERIA have all said they will maintain their flights for the time being. But it might not be long before they, too, fly away. (The Economist: http://www.economist.com/blogs/economist-explains/2016/06/economist-explains-1)

 

 

Oil & Energy

PETROPAR willing to repay PDVSA debt at 50% discount

Eddie Jara, Director of Paraguay’s state oil company PETROPAR, says this company is willing to pay off a debt now being claimed by Venezuela’s PDVSA this very year, but at a 50% discount. PDVSA had previously said it will sue if the US$ 287 million debts are not paid off within 10 days. PETROPAR is basing its offer on the deal PDVSA made with Uruguay and the Dominican Republic. PDVSA suddenly made its demand right after Paraguay sided with OAS Secretary General Luis Almagro in his call for applying the Hemispheric Democratic Charter in the case of Venezuela. More in Spanish: (Fox News Latino: http://latino.foxnews.com/latino/espanol/2016/06/08/petropar-quiere-pagar-deuda-venezuela-este-ano-pero-si-le-condonan-el-50/)

 

Del Pino: OPEC to assess production bands

Petroleum and Mining Minister Eulogio Del Pino says that a new system of production bands proposed by Venezuela will be evaluated by the Organization of Petroleum Exporting Countries (OPEC) in November this year. He reports that during the meeting held on June 2 in Vienna, Austria, a number of countries such as Saudi Arabia and Iran took “extreme positions” on control of the oil market and that for that reason he proposed a country-specific production band and also one for OPEC in general “so that we have a range and certain amount of flexibility.” (El Universal, http://www.eluniversal.com/noticias/daily-news/del-pino-opec-assess-production-bands_314012)

 

 

Commodities

Regime confirms CLAP food distribution system is “political”          

Protests over food distribution have increased after the government here established a new system for distributing food at controlled prices through the so-called Local Committees for Supply and Production (CLAP). Opposition representatives immediately charged that distribution was discriminatory, directed only to regime loyalists; and the charge was promptly confirmed by Executive Vice President Aristobulo Istúriz who says “the CLAP is a political defense instrument for the people who battle against the bourgeoisie and an oligarchy that wants to defeat the revolution”. He said the system intends to control around 70% of all food distribution. His words were echoed by Erika Farías, who coordinates the local CLAP system, who said it is a political instrument “for revolutionaries” and that the committees “must be made up by Bolivarian and chavista men and women” who not only deliver food but also talk to families on current events. Nutrition Minister General Rodolfo Marco Torres said food items will now be distributed in bags every 20 days to families that comply with CLAP requisites within their neighborhood. Members of the CLAP recently rallied at Miraflores presidential palace to defend “nutrition sovereignty” and protest international interference. CLAP system czar Freddy Bernal says the system does not intend to replace the private system and means to ensure that price-controlled food goes to the really needy. The opposition controlled National Assembly has rejected the CLAP system because it promotes further discrimination and makes the food crisis worse. Caracas city council member Gladys Castillo has charged that in taking a census for food distribution the CLAP system “asks people if they are for or against the revolution, and those who are not for the revolution do not eat…in lower income neighborhoods houses are marked with a “0” if they say they are opposition and they sell them nothing.” More in Spanish: (Correo del Caroní: http://www.correodelcaroni.com/index.php/nacional-2/item/45979-gobierno-remarca-que-los-clap-son-un-instrumento-politico-de-la-revolucion-y-manejados-por-chavistas; Notitarde; http://www.notitarde.com/Economia/Freddy-Bernal-Clap-distribuiran-50-de-los-productos/2016/06/08/991154/; El Universal, http://www.eluniversal.com/noticias/economia/red-publica-privada-establecen-alianza-para-expendio-alimentos_313998; http://www.eluniversal.com/noticias/politica/diputados-vecinos-exigieron-defensor-investigar-los-clap_313968)

 

Maduro creates mining ministry

President Nicolas Maduro has announced the creation of a ministry devoted just to mining, as this nation pushes to develop untapped mineral resources to diversify away from the oil industry, which provides nearly all its foreign exchange. Maduro's government is seeking international partnerships with foreign investors to boost gold production. This year, Venezuela inked an agreement with Canadian mining company Gold Reserve to develop the Las Brisas and Las Cristinas mines as a way of resolving a long-running arbitration dispute. Maduro appointed Roberto Mirabal to the lead the ministry. (Reuters, http://www.reuters.com/article/us-venezuela-mining-idUSKCN0YU070)

 

 

Economy & Finance

Inflation here will reach 3560% by 2019 if Maduro remains in office

The International Monetary Fund projects that inflation here will reach 3560% by 2019 if President Nicolas Maduro reaches the end of his term of office. Economist Asdrubal Oliveros explains that the number is based on the premise that current economic policies will continue. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Inflacion-continuar-Maduro-poder_0_862714078.html)

 

World Bank sees plunge in Venezuela

The World Bank is forecasting that Venezuela’s economy is shrinking 10.1% this year, more than double the multilateral’s prior estimate and the worst performer among all countries tracked by the World Bank. Lower international commodity prices have torpedoed Venezuela’s economy, weighing on Latin America’s prospects in general. Venezuela’s Nicolas Maduro is clinging to power amid growing street protests and economic meltdown. (Bloomberg, http://www.bloomberg.com/news/articles/2016-06-07/world-bank-sees-three-year-brazil-decline-plunge-in-venezuela)

 

Venezuela crisis is opportunity for foreign bond investors

As Venezuela's economy teeters on the edge of collapse and some people go hungry, a growing number of foreign investors are reaping outsized returns betting on this nation's depressed debt. Venezuela's bonds have sunk so low amid a deep crisis that even if it defaults on its debt, bondholders reckon there will still be rewards when the country eventually recovers, helped by its huge reserves of crude. Venezuelan dollar bonds on average have returned an impressive 14.1% so far this year, according to DATASTREAM figures. That means investors have reaped around US$ 3.5 billion in returns from the bonds already in 2016, according to a calculation by London-based brokerage EXOTIX Partners. The figure is nearly three times the US$ 1.2 billion Venezuela plans to spend on imports of pharmaceuticals this year as dire shortages of medicines from anti-itch skin cream to chemotherapy drugs hit home. (Reuters, http://www.reuters.com/article/us-venezuela-bonds-analysis-idUSKCN0YU0EN)

 

Can Venezuela recover from current economic meltdown?

Inflation is expected to reach 720% this year in Venezuela. Many are unable to pay the current high food prices, with looting and smuggling creating more problems. When and how can this oil rich company get back on track? Donald Kingsbury, lecturer in Political Science and Latin American Studies at the University of Toronto, joins Bloomberg TV Canada’s Rudyard Griffiths to share his thoughts. (Bloomberg, http://www.bloomberg.com/news/videos/2016-06-07/can-venezuela-recover-from-current-economic-meltdown)

 

 

Politics and International Affairs

Elections Board again fails to announce dates for recall signature validation

Despite an announcement by opposition coalition MUD Secretary General Jesús Torrealba, the National Elections Board has again failed to announce specific dates for validating signatures calling for a recall referendum or how many signatures are preliminarily approved. Torrealba had made his announcement after meeting with the only independent member of the Elections Board, Luis Emilio Rondon, and had said validation of approximately 1.3 million signatures could take place sometime between 15 and 22 June. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/EFE-Venezuela-paso-respuesta-revocatorio_0_862714135.html)

 

…and pro-government gangs attack legislators seeking recall decision from Elections Board

A group of members of the National Assembly who tried to visit the National Elections Board this morning has been attacked with explosive devices by pro-government gangs and beaten with metal pipes, motorcycle helmets, and stones. Julio Borges, head of the Democratic Unity caucus at the National Assembly received facial wounds and charged General Favio Zavarce with allowing the attacks to take place after ordering the National Guard to eject the lawmakers from the Board premises. Borges said “we went there on behalf of over two million people who signed the petition to revoke, and on orders from General Zavarce we were barred from entering and attacked…the general issued the order for us to be pushed towards the attacking group…we said we were there in peace, bearing the Constitution, simply to be listened to. But the pro-regime Board members refused to see us; they believe they are above the Constitution, above the people.” More in Spanish: (El Impulso: http://www.elimpulso.com/noticias/nacionales/fue-lo-dijo-julio-borges-luego-agredido-colectivos; El Nacional: http://www.el-nacional.com/politica/Julio-Borges-Zavarce-empujaran-colectivos_0_863313734.html)

 

Opposition will not attend future meetings with mediating group without an agenda

The Democratic Unity coalition (MUD) says it will not meet again with former presidents José Luis Rodríguez Zapatero (Spain), Martín Torrijos (Panama) and Leonel Fernandez (Dominican Republic) until a specific agenda for talks with the Maduro regime is set. Coalition sources say the recall referendum against President Maduro has not been included and is not negotiable. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/MUD-reunira-mediadores-agenda-concreta_0_862714084.html)

 

Zapatero reportedly admits he failed to get the opposition to back off on recall referendum

Spain’s former President José Luis Rodríguez Zapatero reportedly has admitted that his attempt to bring about talks between Venezuela’s opposition and the Maduro regime is about to fail after opposition leaders refused to participate. Opposition sources say “he told us that if there is no progress over the next few days he will have to announce his withdrawal”. Zapatero appears to have proposed that the Democratic Unity (MUD) coalition back off from demanding a recall referendum against President Nicolas Maduro during 2016 in exchange for improved treatment of political prisoners. Jailed opposition leader Leopoldo Lopez rejected the offer personally delivered by Zapatero during an unprecedented prison visit and this seems to have doomed the attempt at mediation by the Spanish politician and former Presidents Martin Torrijos (Panama) and Leonel Fernandez (Dominican Republic). The fact that the Venezuelan government allowed Zapatero to visit Lopez, something it has not let any other international mission accomplish, is seen as proof that the regime is urgently trying to stop the OAS from calling in the Democratic Charter. Opposition leaders say the “dialogue” proposed serves only for the Maduro regime to gain time and avoid a recall referendum, and the distrust Zapatero whom they see as someone supporting that strategy. Maduro subsequently called Lopez an “ungrateful brute” for not accepting Zapatero’s offer. More in Spanish: (El Nacional: http://www.el-nacional.com/mundo/Zapatero-admite-fracaso-oposicion-Maduro_0_862114172.html; http://www.el-nacional.com/politica/Rodriguez-Zapatero-MUD-olvidar-revocatorio_0_862114158.html; http://www.el-nacional.com/politica/Maduro-Leopoldo-Lopez-bruto-malagradecido_0_862114185.html)

 

National Assembly majority expects to appoint new Supreme Tribunal justices before August 15th

Legislator Carlos Berrizbeitia, who heads the National Assembly’s special committee for rescuing the Supreme Tribunal, says that they hope to partially rebuild the Supreme Tribunal before August 15^th, which is the end of the Assembly’s first term. He explains the procedure will take place in 4 phases: submit arguments for revoking the decision that appointed 13 principal justices and 21 deputies; appointing a new committee for appointing the judiciary; summon and evaluate new candidates; and appointing the 34 magistrates. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/MUD-aspira-nombrar-magistrados-agosto_0_862714099.html)

 

Maduro calls on Prosecutor general and judiciary to jail Miranda Governor Henrique Capriles

President Nicolas Maduro said recent protests by the opposition, headed by Miranda state governor Henrique Capriles, are madness, and called upon the judiciary, the Prosecutor general, and police to jail all those who – according to him – promote violence. He says that any talks should focus on installing a “truth commission”, respecting institutions and rejecting violence. He also criticized the opposition for not attending talks being promoted by Spain’s Zapatero, Panama´s Torrijos and the Dominican Republic’s former president Leonel Fernandez. More in Spanish: (Venevision: http://www.noticierovenevision.net/politica/2016/junio/7/159075=presidente-maduro-exhorto-a-las-autoridades-a-encarcelar-a-los-factores-que-promuevan-violencia; El Universal, http://www.eluniversal.com/noticias/politica/maduro-propone-tres-puntos-para-agenda-dialogo_313902)

 

Police used tear gas to break up student protest

Police used tear gas on Tuesday to break up an student march toward the seat of Venezuela’s CNE electoral council to demand the activation of the recall referendum against President Nicolas Maduro. The demonstration was blocked by police cordons installed on different streets of east Caracas, which forced the protesters to make a detour. After the marchers reassembled at another point along the way, the cops scattered them with tear gas bombs. “What we’re seeing is an example of the dialogue practiced by this government: bringing out the security forces to repress a demonstration,” opposition leader Henrique Capriles said in a statement. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2413869&CategoryId=10717)

 

An average 19 daily protests recorded in Venezuela due to food shortages

An average of 19 daily protests and looting incidents are being reported throughout Venezuela as nationals tried to find food staples that have disappeared from shelves amid scarcity hitting the country. On Tuesday these incidents took place in the states of Monagas (east Venezuela); Lara, Trujillo and Táchira (west); Guárico (center); Anzoátegui (northeast); and Nueva Esparta (north), according to local media. Some reports indicate people in some cases asked for sale of foodstuffs; others forcibly took food products carried by trucks. (El Universal, http://www.eluniversal.com/noticias/daily-news/protests-recorded-venezuela-due-food-shortage_313952; and more in Spanish: (Notitarde; http://www.notitarde.com/Economia/Aumentan-las-protestas-por-escasez-de-alimentos/2016/06/09/991288/; El Universal, http://www.eluniversal.com/noticias/caracas/gnb-pnb-dispersan-protesta-por-comida-california_314010)

 

Spain asks Venezuelan government, opposition to perform humanitarian aid plan

Spanish Foreign Minister José Manuel García-Margallo has urged the Venezuelan government and the opposition to jointly manage a humanitarian aid plan Spain will propose at the European Union. The initiative will be presented by García-Margallo next June 20 during a meeting of the EU Foreign Affairs Council in Brussels, Belgium. In words of the Spanish official, the objective is for the plan to be “implemented jointly” by the government here and the opposition-controlled Congress. (El Universal, http://www.eluniversal.com/noticias/daily-news/spain-asks-venezuelan-govt-opposition-perform-humanitarian-aid-plan_313960

 

Paraguay says that Venezuela needs stability to lead MERCOSUR

Venezuela “needs to have peace and stability” if it is to assume the rotating presidency of the MERCOSUR bloc, Paraguayan Foreign Minister Eladio Loizaga said on Tuesday. He said that next month’s scheduled transfer of the chairmanship from Uruguay to Venezuela will have “to take very much into account” the decision of the Organization of American States to invoke the Democratic Charter over the political situation in Caracas.
Loizaga spoke days after OAS Secretary-General Luis Almagro invoked the Charter, citing what he called “the alteration of the constitutional order” in Venezuela. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2413871&CategoryId=10717; El Universal, http://www.eluniversal.com/noticias/daily-news/paraguay-venezuela-unlikely-take-over-mercosur-presidency_313949)

 

Venezuela: free political prisoners and respect constitution, urge European MEPs

Venezuela’s government should release all political prisoners immediately and respect the constitution, including the procedures that may lead to the impeachment of the country´s President, urged the European Parliament on Wednesday. In a resolution passed by 501 votes, to 94 against with 73 abstentions, MEPs backed mediation efforts by the Union of South American Nations (UNASUR) to launch a national dialogue between Venezuela’s government and opposition.  MEPSs stress that about 2,000 people Venezuela are in prison, under home arrest or on probation for political reasons, including political leaders such as Leopoldo Lopez and Antonio Ledezma and Daniel Ceballos and that the rule of law and separation of powers are not duly respected in the country. They express “grave concern” at serious deteriorations in democracy, human rights, the economy and society. The text underlines that Venezuela faces a “serious humanitarian crisis” due to shortages of food and medicine, and that the government is preventing the entry of humanitarian aid into the country, and boycotting various international initiatives to assist civil society. It also points to the economic crisis, which it attributes to inefficient governance, and to high crime rates due to complete impunity. Finally, MEPs stress their wish to send a European Parliament delegation to Venezuela to hold a dialogue with all sectors involved in the conflict as soon as possible. (European Union: http://www.europarl.europa.eu/news/en/news-room/20160603IPR30212/Venezuela-free-political-prisoners-and-respect-constitution-urge-MEPs)

 

Venezuela is at a breaking point

Venezuela, home to the world’s biggest oil reserves, is in the throes of economic crisis. With inflation projected at nearly 300 percent this year, how do Venezuelans live amid six-hour lines for groceries, crumbling hospitals and growing violence? Nathan Crooks, Bloomberg’s Caracas bureau chief, walks Aki and guest co-host Catarina Saraiva through his daily life, how things got so bad and what’s next for the troubled country. (Bloomberg, http://www.bloomberg.com/news/audio/2016-06-08/41-venezuela-is-at-a-breaking-point)

 

 

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.

January 28, 2016

International Trade

 

Money to pay debt to Uruguayan dairy producers is in China, according to Uruguayan Deputy Jaime Trobo. He explained the agreement signed between the two nations established Banco de Desarrollo, BANDES-Uruguay, was to open a trust to pay for food products sold to Venezuela, but Uruguay did not inform producers BANDES could give the money the use it would see fit. (Venecomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=46767&idc=2)

 

 

Oil & Energy

 

World Bank predicts oil prices will drop further in 2016, and remain low

The World Bank predicts the average price of a barrel of crude oil may drop further to US$ 37 during 2016 due to weak emerging economies and increased supply as Iran comes back into international markets. Barely 3 months after its previous projection, which had oil price averaging US$ 51 per barrel, the Bank has sharply cut back its estimates to a US$ 37 average, and warns this trend will hold “for some time.” More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Banco-Mundial-Crudo-internacional-profundizara_0_782321809.html)

 

Venezuela oil group seeks incentives to lure more foreign money

Venezuela’s main hydrocarbon association has proposed measures aimed at attracting more investment from international oil companies as prices drop to the lowest in more than a decade. Incentives would include reducing royalties and extraction taxes to 20% from 30-35%, applying a single exchange rate for the oil industry and granting more decision-making powers to joint venture partners. The measures, presented yesterday to the President’s National Council for Productive Economy, are needed to support oil-sector investments, according to a document outlining the proposals. “There have to be changes in the oil sector, and not just a more competitive exchange rate for the sector,” Asdrubal Oliveros, director of consulting firm ECOANALITICA, said during a meeting yesterday with foreign press at Bloomberg’s office in Caracas. “Until we have a collapse and change in this model, we will not see more oil sector investments.” (Bloomberg, http://www.bloomberg.com/news/articles/2016-01-26/venezuela-oil-group-seeks-incentives-to-lure-more-foreign-money)

 

Oil minister to visit OPEC, non-OPEC countries

Venezuela's oil minister will tour OPEC and non-OPEC countries in a bid to drum up support for joint action to stem the tumble in crude prices, President Nicolas Maduro announced on Tuesday night. "I've given the order to minister Eulogio del Pino for him to immediately start a tour of OPEC and non-OPEC countries," the leftist leader said in a televised broadcast. The Organization of the Petroleum Exporting Countries is considering a request from cash-strapped Venezuela to hold an emergency meeting to discuss steps to prop up prices, and Venezuela has called for a meeting of OPEC and non-OPEC nations in February. "We must stop this madness," a solemn-faced Maduro said about oil prices, urging "clear, consequential and coordinated" action. (Reuters, http://www.reuters.com/article/us-opec-venezuela-idUSKCN0V5035)

 

Former Chavez Finance Minister calls for revising credits to PETROCARIBE and other nations

Rodrigo Cabezas, who served as Finance Minister under the late President Chávez, says that in view of the current fiscal situation the country must review each one of its agreements, “soft” credit and subsidies to other nations in the region and with multilateral arrangements such as PETROCARIBE. He called such actions “absolutely pertinent” within fiscal restrictions. Cabezas also said a “default” scenario is “undesireable”. More in Spanish: (El Universal, http://www.eluniversal.com/economia/160127/plantean-revisar-creditos-en-petrocaribe-y-otros-paises)

 

 

Commodities

 

Sugar production has dropped 44% over the past year, according to the President of the National Federation of Cane Growers, José Ricardo Álvarez, who says the situation has never been as grave over the past 60 years. “It is now better for growers to leave sugar cane fallow in the fields than harvest it, because one loses less”, he says – and reports sugar growers produced 83,797.64 tons in January 2015 and only 46,177 tons so far this year due to price controls. More in Spanish: (El Nacional; http://www.el-nacional.com/economia/Produccion-azucar-cayo-ano_0_782921977.html)

 

 

Economy & Finance

 

IMF sees inflation explosion here, 18% contraction

According to the IMF: “In Venezuela, longstanding policy distortions and fiscal imbalances were already having a deleterious effect on the economy before the collapse in oil prices. These problems worsened as falling oil prices triggered an economic crisis, with an expected fall in output of almost 18% over 2015 and 2016 (the third sharpest decline in the world). A lack of hard currency has led to scarcity of intermediate goods and to widespread shortages of essential goods—including food—exacting a tragic toll. Prices continue to spiral out of control, and we expect inflation to rise to 720% this year, from a world-high inflation of about 275% in 2015.” (IMF: http://blog-imfdirect.imf.org/2016/01/22/latin-america-and-the-caribbean-in-2016-adjusting-to-a-harsher-reality/)

 

NOMURA says economic transition in Venezuela is “irreversible”

The latest report from Japan’s NOMURA firm says “economic transition is irreversible” in Venezuela, and explains the drop in commodity prices is aggravating imbalances. It warns economic distortions cannot be solved by reducing imports or a default on foreign debt, either of which can only “aggravate stagflation”.  It says cash flow is shrinking daily “amid a slow political and economic transition”. The firm says the next moves are up to the opposition in their bid for leadership, but the risk remains that the Maduro regime could “make them draw back”.  More in Spanish: (El Nacional: http://www.el-nacional.com/economia/Nomura-transicion-economica-irreversible_0_782921984.html)

 

Venezuela plans to transition away from oil-dependent economy

Venezuela’s Economic Council has presented measures to transition away from an oil-dependent economic model, Vice President Aristobulo Isturiz said Tuesday.  The council, which was created in January, presented its first proposals to the government, which recently announced an emergency decree to battle the economic situation here.  Isturiz said the council’s working groups have been supported by local businessmen.  He said that the state guarantees the production of raw materials, credit and other facilities to domestic producers.  The vice president stressed that the government's priority is to fund social benefits in education, health, food, housing, among others, as well as revitalize the economic and productive engine of the country. He said the council’s roundtables began discussing three of the 11 strategic economic areas—telecommunications, tourism and petrochemicals—began Monday.  Other key areas tapped to reinvigorate the productive economy include food processing, mining, information technology, construction, export, forestry and industry. (TELESUR: http://www.telesurtv.net/english/news/Venezuela-Plans-to-Transition-Away-from-Oil-Dependent-Economy-20160126-0011.html)

 

Government creates centralized procurement system

President Nicolas Maduro has signed a decree under which Centralized and Standardized System of Government Procurement is established for all the bodies of public administration, effective from Monday, February 1. The president noted that he had received from the National Council of Productive Economy all the proposals brought forward at the work sessions of the nine economic engines. Maduro said he would study all the proposals during the IV Summit of the Community of Latin American and Caribbean States (CELAC). (El Universal, http://www.eluniversal.com/economia/160127/venezuelan-govt-creates-procurement-centralized-system)

 

Venezuela’s economic, social indicators speak for themselves

The country is starting to show cracks everywhere and is reaching boiling point. Several economic indicators more than tell about that situation. Among issues affecting the nation’s economic sphere: Venezuela has the highest inflation rate in the world. Venezuela’s inflation hovered near 300% in 2015, and may reach 720% in 2016, according to the International Monetary Fund. Shortages of food items, medicines and capital goods exceed 80%. The income of citizens slips through their fingers as their purchasing power has been reduced to nothing. Besides becoming desperate and helpless for not finding the essential foodstuff and/or medicines for them or any member of their family. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2404207&CategoryId=10717)

 

Inflation of the food basket goes up 1% daily since December 2015, according to the Venezuelan Teachers’ Federation’s Social Documentation and Analysis Center (CENDAS-FVM). It is the first time such a high is recorded. At the end of December, the food basket was VEB 139,273.68, up 361.5% from December 2014 when it was VEB109,096.86. (Venecomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=46770&idc=2; http://www.veneconomy.com/site/index.asp?ids=44&idt=46768&idc=2)

 

6.2 minimum wages are now needed to buy the basic food basket

In average, 4.77 minimum wages were needed to cover the basic food basket between 1999 and 2014. However, this changed at the end of 2014 when 6.2 minimum wages were required to cover it until it reached the 14.4 minimum wages at the end of December 2015, according to the CENDAS-FVM. According to CENDES, not even the basic salary of a Major General is sufficient to acquire the basic food basket, A sargeant can only purchase 9.8% of the same basket. (Venecomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=46769&idc=2; and more in Spanish: (El Nacional, http://www.el-nacional.com/economia/salario-basico-general-canasta-basica_0_782321994.html)

 

 

Politics and International Affairs

 

National Assembly President says economic crisis will sink Maduro

National Assembly President Henry Ramos Allup doubts President Nicolas Maduro will serve out his six-year term in view of the acute economic crisis here. He adds that his exit could even take place this year. “In this situation I don’t believe he will serve out his term…..he is being swallowed up by the crisis”. Ramos adds that for the nation to be rid of the highest inflation in the world, economic recession and scarcities, Maduro and his cabinet must step aside. “If they insist – as they are doing – on continuing applying a model that his failed in every sense, the reply is obvious: those who are so insisting in this crisis must leave, otherwise we will not overcome it”. And he adds: “We have insisted that the way out of this crisis must be democratic, constitutional, peaceful and elective. None other.” The opposition coalition has signed an agreement to seek a way out of this situation within six months, and Ramos says they are already working at it because “to wait for the crisis to become worse is an irresponsible political gambit”. More in Spanish: (Infolatam: http://www.infolatam.com/2016/01/26/crisis-economica-de-venezuela-hundira-a-maduro-segun-el-presidente-de-la-asamblea/)

 

Maduro to ask CELAC aid in economic emergency

Upon his arrival in Quito, Ecuador to attend the IV Summit of Heads of State and Government of the Community of Latin American and Caribbean States (CELAC), President Nicolás Maduro said that he would propose some ideas to tackle the economic emergency in Venezuela with the help of Latin American countries. The president said he would meet with his CELAC counterparts to address the economic crisis in his country and "foster fair trade, complementarity, and solidarity. Venezuela comes with a proposal, as always, to find our own solutions and our own path by ourselves." (El Universal, http://www.eluniversal.com/nacional-y-politica/160127/venezuelas-maduro-to-ask-celac-aid-in-economic-emergency)

 

Chavez's dream of unity stumbles ahead of Latin American summit

Before he died, Venezuela’s late president, Hugo Chavez, had a dream to unite Latin America and the Caribbean against the dark forces of the U.S. empire. It’s not working out like he planned. As presidents and prime ministers from the regional group CELAC meet Wednesday in an attempt to knit closer ties, President Nicolas Maduro, Chavez’s hand-picked successor, finds himself fending off attacks from the nation’s former ally, Argentina. “Why does a country have to put up with the whole onslaught of right-wing governments,” Maduro said Saturday after Argentina’s newly-elected president, Mauricio Macri, criticized his government’s human-rights record. “I’m going to the summit of Latin America and the Caribbean nations in Quito with everything. No one is going to shut me up.” (Bloomberg, http://www.bloomberg.com/news/articles/2016-01-27/chavez-s-dream-of-unity-stumbles-ahead-of-latin-american-summit)

 

Garrulous Maduro has addressed Venezuela for 500 hours

President Nicolas Maduro has spent more than 500 hours addressing Venezuela since gaining power nearly three years ago, demonstrating a loquacity reminiscent of his late predecessor Hugo Chavez, according to a watchdog. The tally, from the local Citizens' Monitor group which is critical of the government, was based on Maduro's so-called "chain" speeches, when all local broadcasters are required to transmit his words live. Counting other speeches, carried only by state TV, the 53-year-old former bus driver and foreign minister has in fact spent far more time giving public addresses.

"In the first few weeks of this year, he surpassed 500 hours," the group said this week in a blog. "Every time the presidency holds a 'chain', they are denying Venezuelans their control over freedom of information and entertainment." (Reuters, http://www.reuters.com/article/us-venezuela-maduro-idUSKCN0V42A8)

 

Electoral body issues reply on Amazonas contested deputies

The National Electoral Council (CNE), headed by Tibisay Lucena, has issued an "administrative response" to the Supreme Tribunal of Justice (TSJ) regarding the contested election of three deputies for Amazonas state and one indigenous representative. The information was aired by the First Vice-President of the National Assembly, Simón Calzadilla, who heads the parliament committee that studies the case. Deputy Calzadilla said that Lucena refused to reveal the content of the documents that were sent to the TSJ. (El Universal, http://www.eluniversal.com/nacional-y-politica/160127/electoral-body-issues-reply-on-amazonas-contested-deputies)

 

Freedom House: Democracy faces challenges in Venezuela

Freedom in the world declined in 2015. Even though Latin America as a whole showed some improvement, democracy in Central America and Venezuela faces serious challenges, according to the annual report released by Freedom House on Wednesday. The organization that advocates freedom and democracy highlighted that democracy and freedom are at risk in El Salvador, Guatemala, Honduras, and Venezuela. In the latter, Freedom House reported "persecution" against the opposition. The Latin American country with the worst score in freedom and democracy is Venezuela, considered "partially free" with a score of 35 out of 100, followed by Haiti (41) and Honduras (45). (El Universal, http://www.eluniversal.com/nacional-y-politica/160127/freedom-house-democracy-faces-challenges-in-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.

 

July 17, 2015

International Trade

 

Cargo that has arrived at Puerto Cabello:

• 30,000 tons of white corn from Mexico
• 30,000 tons of white corn from Argentina, both for state agency CASA.
• 1022 tons of whole powdered milk from Argentina for CASA   
• 1022 tons of whole powdered milk from Argentina for CASA   
• Over 477 tons of auto parts in 45 containers from Jacksonville from Ford and Kuehne Nagel for their local affiliates.
• 110 containers bearing milk, beef, oil and beans from Costa Rica, for CASA
• Over 995 tons of personal care products, such as shampoo and diapers from Unilever and Procter & Gamble for their local affiliates.
• Over 264 tons of milk from Nestlé México for their local affiliate.
• Over 247 tons in 33 containers of auto parts from Brazil and Colombia for Ford.
• Over 14,000 tons of sodium sulfate from Spain

11 ships are currently offloading at the Port. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Llegaron-mas-de-60-mil-toneladas-de-maiz-al-puerto-de-la-ciudad-2463306/2015/07/16/559521; http://www.notitarde.com/La-Costa/Llegaron-al-puerto-de-Puerto-Cabello-mas-de-dos-mil-toneladas-de-alimentos-2461590/2015/07/15/558336; http://www.notitarde.com/La-Costa/Arribaron-mas-de-mil-toneladas-de-leche-2460408/2015/07/14/555143)

 

Brazil beef exports down

Brazil's Beef Exporters Association says exports dropped 18% and 14% in volume to mostly to "the drop in exports to three important markets: Hong Kong, Russia and Venezuela. (El Nacional; http://www.el-nacional.com/)

 

 

Logistics & Transport

 

Dynamic Airways is now servicing Caracas-Fort Lauderdale

North Carolina based DYNAMIC International Airways will run its inaugural Caracas-Fort Lauderdale, to operate in Mondays, Wednesdays, Fridays and Sundays. Sales will be made in bolivars. (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/dynamic-airways-levanta-vuelo-desde-caracas.aspx#ixzz3g8o64WIU; El Universal, http://www.eluniversal.com/economia/150717/parte-vuelo-inaugural-de-primera-linea-low-cost)

 

 

Commodities

 

Venezuela orders Polar beer workers to lift strike

Venezuela's Labor Ministry has ordered workers to lift a strike at beer maker Polar that had halted two of its breweries and restricted supplies of beer here. Unions close to the government of President Nicolas Maduro in early July shut down the two plants as well as 16 distribution centers as part of demands for better salaries. "The conflict and strike are declared over," said the Labor Ministry's inspectorate in a published official decision. The resolution urges the two sides to enter a process of arbitration that is to begin within the next 48 hours. (Reuters, http://www.reuters.com/article/2015/07/15/venezuela-beer-idUSL2N0ZV2RZ20150715)

 

Ten everyday items that now cost more than the monthly minimum wage in Venezuela

As Venezuela's bolivar loses its value at an unprecedented rate, the purchasing power of ordinary citizens is going down with it. While President Nicolas Maduro decreed a 30% increase to the minimum wage in May, the currency has plunged even more -- losing 88% over the past year in the black market where people and businesses go to avoid strict controls on dollar purchases. It now takes 630 bolivars to buy US$ 1 in illegal street markets. That means that Venezuela’s largest bank note of 100 bolivars now fetches less than 16 cents, and that the monthly minimum wage of 7,422 bolivars is worth a little over $11. (Bloomberg, http://www.bloomberg.com/news/articles/2015-07-15/10-everyday-items-that-now-cost-more-than-the-monthly-minimum-wage-in-venezuela)

 

54% of state run MERCAL stores have closed as did 1,705 food distributors, according to Venezuela’s Nutrition Ministry’s annual report for last year. Mercal has now only 6,725 active stores out of 14,657. Also, prices have experienced sharp increases in this past year. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44719&idc=3)

 

Kraft union announces paralyzed mayonnaise and cream cheese production for lack of supplies. The union says they have stopped activity for the past two months. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/sindicato-de-kraft-anuncia-paro-en-produccion-de-m.aspx#ixzz3g2zZ7wjC; El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/sindicato-de-kraft-anuncia-paro-en-produccion-de-m.aspx)

 

 

Economy & Finance

 

IMF now estimates Venezuela 2015 inflation will be above 100%

The International Monetary Fund is now estimating that Venezuela will have inflation above 100% this year and that recession will deepen by 7% under economic policies it holds "unsustainable". More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/fmi-inflacion-venezolana-en-mas-de-100.aspx#ixzz3g30dxRCK; El Nacional; http://www.el-nacional.com/)

 

Bank of America estimates inflation in Venezuela in June was 7% and annualized inflation is 113.2%. Its forecast for inflation at the end of 2015 is 202.5%. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44721&idc=2

 

Venezuela’s inflation nightmare signals default may come sooner

Venezuela is about to earn another ignominious distinction. Long home to the world’s highest inflation rate, the country now is set to become the site of the 57th hyperinflation event in modern recorded history, says Steve Hanke, professor of applied economics at Johns Hopkins University. While the feat may be little more than a formality in a country where Hanke calculates annual cost-of-living increases already run at 772%, it’s the latest sign a debt default may be closer than traders previously thought. With Venezuela’s currency losing 32% of its value in the past month in the black market, according to dolartoday.com, and falling oil prices throttling the cash-starved nation’s biggest revenue source, the government may run out of money to pay its debts by year-end, according to Societe Generale SA. Derivatives traders have ratcheted up the probability of a default within one year to 63%, compared with 33% just two months ago. (Bloomberg, http://www.bloomberg.com/news/articles/2015-07-15/venezuela-s-772-inflation-means-default-may-come-a-lot-sooner)

 

Analysts believe there could be a default under the Maduro regime

A Bank of America Merrill Lynch poll of 54 economic analysts specialized on Venezuela on what administration here might be more likely to default shows 52% of respondents believe it is the Maduro regime. Another 11% believes in would be another chavista leader, and 16% believe this of a military regime. Only 2% believe an opposition government would take this course. More in Spanish: Spanish: (El Nacional; http://www.el-nacional.com/)

 

Capriles proposes an emergency economic plan

On behalf of the united opposition, Miranda Governor and former Presidential candidate Henrique Capriles has proposed an emergency economic plan "to see things through until December", based on enhancing income by restructuring expenses, including the refinancing of US$ 6.4 billion in debt due in October, in order to pay internal debt with key sectors, such as food, health, education and transportation, and revive the economy. The proposal includes a 50% salary increase, returning expropriated companies and review all international giveawasys. More in Spanish:  (El Universal; http://www.eluniversal.com/nacional-y-politica/150715/oposicion-presento-plan-de-emergencia-con-canje-de-deuda; El Nacional; http://www.el-nacional.com/; Infolatam, http://www.infolatam.com/2015/07/15/capriles-propone-ajustar-salarios-negociar-deuda-y-devolver-empresas/)

 

Venezuela’s black-market bolivar tumbles to 1% of official rate

Venezuela’s currency has fallen so much so quickly that a dollar now buys 100 times as many bolivars in the black market as it does at the government-controlled rate. The bolivar fell to a record 630.21 per dollar Tuesday in the illegal street markets where Venezuelans go to skirt limits on foreign-exchange purchases, compared with the official rate of 6.3 per dollar, data compiled by dolartoday.com show. The local currency has plunged 88% in the unofficial market over the past year and 34 percent in just the past month. Inflation is the fastest in the world as President Nicolas Maduro’s administration prints more currency to pay budget expenses. Because of tumbling oil prices, the government gets fewer dollars from its exports and there’s a shortage of greenbacks, pushing Venezuelans to the black market when they can’t obtain government approval to access the legal rates. Venezuela has maintained strict currency controls since 2003. (Bloomberg, http://www.bloomberg.com/news/articles/2015-07-14/venezuela-s-black-market-bolivar-tumbles-to-1-of-official-rate)

 

FEDECÁMARAS questioned the Venezuelan Central Bank’s (BCV) performance, as well as that of web pages that publish dollar rates without any clear economic bases and whose consequences are “unhealthy to the economy.” Its Chief Jorge Roig accused the absence of official figures from the BCV, as well as its non-transparent allotment of foreign currency of the emergence of pages such as DolarToday. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44720&idc=2; El Universal, http://www.eluniversal.com/economia/150716/fedecamaras-condemns-speculative-practices-with-foreign-exchange)

 

 

Politics and International Affairs

 

Venezuela bans Machado and Scarano from running for parliament

Venezuela has banned a second opposition member, former mayor Vicencio Scarano, from holding public office for a year, meaning he will not be able to run in December's parliamentary election. The measure against Scarano, jailed last year for failing to clear street barricades in his San Diego town during protests against President Nicolas Maduro, followed a similar move this week against another opposition leader, Maria Corina Machado. But Machado has vowed she would run for parliament despite a one-year ban on her holding public office, which she said was a ploy by the government to avoid defeat in December's vote. The comptroller's office has barred Machado, a candidate in the central Miranda state who is a high-profile adversary of the administration of President Nicolas Maduro, on grounds she failed to disclose certain social benefits in her wealth declaration. The socialist government says hard line activists are paying the price for criminal activities, including stoking violence and coup plots. Scoffing at the accusations, Machado accused Maduro and a "complicit" comptroller of sidelining her ahead of the Dec. 6 vote, which polls show the ruling socialists are poised to lose with an economic crisis weighing heavily on the electorate. (Reuters, http://www.reuters.com/article/2015/07/17/us-venezuela-politics-idUSKCN0PR00V20150717; http://www.reuters.com/article/2015/07/15/us-venezuela-politics-idUSKCN0PP2JI20150715; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44716&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/150716/cabello-a-disqualified-person-cannot-run-for-congress)

 

OAS, Brazilian Senators support María Corina Machado

Both the Organization of American States and the Brazilian Senate came out against the attempt by the Maduro regime to politically disqualify María Corina Machado as candidate for Venezuela's legislature. OAS Secretary General Luis Almagro said the people are the only ones who can disqualify politicians: "There is no political disqualification. A political disqualification or ban cannot be carried out administratively. It must have a different content. The only disqualifications are made by the people. All else is to exacerbate the political situation." Members of the Brazilian Senate also spoke out against the move and called upon the Brazilian government to participate in a dialogue committee that works through UNASUR to make the Venezuelan regime restore effective democracy in Venezuela. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/150716/senado-de-brasil-y-oea-respaldan-a-maria-corina-machado)

 

Prisoner release not on the table in U.S. talks: Venezuela

Talks to improve diplomatic relations between the United States and Venezuela's socialist government do not include discussion of releasing opposition demonstrators jailed as a result of protests in 2014, says Venezuela's foreign minister. After more than a decade of acrimonious relations, Caracas and Washington have opened a cautious rapprochement by trying to cooperate in areas of mutual interest such as peace negotiations in Colombia and elections in Haiti. But Foreign Minister Delcy Rodriguez said there is no discussion of releasing opposition activists who were arrested for violent and illegal behavior, insisting it would set a dangerous precedent of justifying for "terrorism." (Reuters, http://www.reuters.com/article/2015/07/15/us-venezuela-usa-idUSKCN0PP26E20150715; El Universal, http://www.eluniversal.com/nacional-y-politica/150716/fm-rodriguez-asks-us-for-respect-for-venezuelan-institutions)

 

Guyana to seek support in its territorial dispute with Venezuela at the MERCOSUR Summit that begins in Brasilia on Thursday. Guyana’s President David Granger, who is traveling to Brazil, accompanied by his FA Minister and other high officials, plans to present their arguments to win over that support. In the meantime, Venezuelan President Nicolás Maduro is insisting Guyana abide by the 1966 Geneva Accord which calls for the good offices of the United Nations. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=44722&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/150716/guyana-to-seek-mercosurs-support-in-border-dispute; http://www.eluniversal.com/nacional-y-politica/150717/venezuela-insiste-en-que-guyana-respete-acuerdo-de-ginebra)

 

US Federal Court has subpoenaed Cabello in weapons case

A US Federal Court in Miami has issues a subpoena to National Assembly President Captain Diosdado Cabello to appear on August 10th to testify on a weapons deal allegedly brokered by a Venezuelan businessman in Miami. Aragua State Governor Tareck El Aissami, National Guard Commander General Néstor Luis Reverol, and former Interior Minister General Miguel Rodríguez Torres have also been called to testify in a defamation brought by Gianfranco Rondón against the editor of Doral News and Doral News TV, over reports on alleged arms sales. More in Spanish: (Infolatam, http://www.infolatam.com/2015/07/14/corte-de-eeuu-cita-a-cabello-por-supuesta-compra-de-material-de-defensa/)

 

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.