May 18th, 2012

Economics & Finance

Venezuela´s economy grew 5.6% in the first quarter 2012, according to a joint announcement by Jorge Giordani, Minister for Planning and Finance, and Central Bank President Nelson Merentes. Giordani says this shows growth for six consecutive semesters and the highest level in the last 15 quarter and stressed that the growth estimate in this year's budget was 5%. Petroleum industry growth was pegged at 2.2%. More in Spanish: (AVN, 05-18-2012; http://www.avn.info.ve/contenido/economía-venezolana-creció-56-primer-trimestre-2012; http://www.avn.info.ve/contenido/crecimiento-económico-actividad-petrolera-se-ubicó-25; El Universal, http://www.eluniversal.com/economia/120518/economia-recupera-lo-perdido-en-la-recesion-y-crece-56; http://www.eluniversal.com/economia/120518/pib-petrolero-alcanzo-un-crecimiento-de-22-en-primer-trimestre)

Imports increased 48,5% during Q1 2012, according to a Central Bank report, up to U$D 13.190 billion from U$D 8.883 billion in Q1 2011. More in Spanish: (AVN, 05-18-2012; http://www.avn.info.ve/contenido/importaciones-se-incrementaron-485-al-cierre-del-primer-trimestre)

Private construction drops for nine quarters in a row

Construction in Venezuela grew by 29.6% in Q1 2012 but this was entirely due to public investment, as private activity continued to recede. Central Bank figures show private sector construction contracted by 10.6% and has been dropping for nine consecutive quarters. More in Spanish (El Universal, 05-18-2012; http://www.eluniversal.com/economia/120518/nueve-trimestres-de-caida-lleva-la-construccion-privada)

Nation's debts increased 22.5% in the first quarter of 2012

Venezuela's debts as a nation increased by 22.5% and closed Q1 2012 at U$D 93.3 billion. The increase is due to new loans from China, new bonds issued by the Government and PDVSA, renegotiations with expropriated companies and market variations. More in  Spanish: (El Nacional, 05-18-2012; http://www.el-nacional.com/)

International reserves at lowest point this year

International reserves reached their lowest point this year and closed at U$D 25.651 according to Central Bank official figures. The drop in reserves has increased by constant transfers to the National Development Fund (FONDEN). More in Spanish: (El Mundo, 05-18-2012, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/reservas-internacionales-cierran-en-su-nivel-mas-b.aspx)

VEB 5.30 per U$ dollar exchange rate gains ground

Financial authorities have set a new strategy: On the one hand, they will increase the amount of imports made with the VEB 5.30 per US dollar exchange rate used by the System for Foreign Currency Denominated Securities Transactions (SITME), a mechanism created by the Central Bank for companies that do not receive US dollars through the Foreign Exchange Board (CADIVI). On the other hand, they have cut more highly subsidized imports channeled through CADIVI at an exchange rate of VEB 4.30 per US dollar.  As transactions through SITME gain ground there is a gradual devaluation of the Venezuelan currency. Official data show that CADIVI authorized U$D 4.9 billion for imports, the lowest amount in the last six years and a 9% decline compared to the same period in 2011. (El Universal, 05-16-2012; http://www.eluniversal.com/economia/120516/veb-530-per-us-dollar-gains-ground-in-the-economy)

Over-budget loan appropriations soar 103.5% in a year

The government estimated FY2012 at VEB 297.8 billion (U$D 69.25 billion), but this amount has not been enough to meet the financial requirements of government agencies and state-run companies, thus leading the government to request additional loans. The National Assembly has approved extraordinary appropriations amounting to U$D 6.63 billion - at the official exchange rate of VEB 4.30 per US dollar - to date this year. This exceeds by 103.5% appropriations authorized for the same period in 2011, which were U$D 3.25 billion. (El Universal, 05-16-2012; http://www.eluniversal.com/economia/120516/extra-budget-loans-soar-1035-in-a-year)

Small and medium business endangered

The impact of new regulations imposed by the Government on Small and Medium Enterprises (SMEs) could result in closure or disinvestment of these enterprises, according to an alert issued by the National Council of Trade and Services (CONSECOMERCIO). The new Labor Law (LOT), along with recent minimum wage increase and prices regulated by the SUNDECOP seriously compromise the future of SMEs operating in trade and services throughout the country. More in Spanish: (Tal Cual, 05-16-2012; http://www.talcualdigital.com/index.html)

Overall business climate index for Latin America recovers, except for Venezuela

According to the quarterly study by Brazil's Getulio Vargas Foundation and the University of Munich, which consulted 149 experts from 18 countries, the Latin American Economic Climate Index was up to 5.2 points in April, its best level since July 2011. Venezuela went from 4.5 to 3.4 points. (Veneconomy, 05-16-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30528&idc=2; El Universal, 05-16-2012; http://www.eluniversal.com/economia/120516/brazilian-foundation-venezuelas-business-climate-deteriorates)

Commodities

Iron, steel and aluminum production falling

Mining has dropped 3.2% in Q1 2012, within an apparently growing and expanding economy, as compared to last year. In his report on the economy, Planning and Finance Minister Jorge Giordani admitted a drop in production in iron, steel and aluminum industries concentrated in the Guayana region. More in Spanish: (El Universal, 05-18-2012; http://www.eluniversal.com/economia/120518/se-contrae-la-produccion-de-hierro-acero-y-aluminio)

Aluminum industry paralyzed

For the first time in over three decades, almost all of the domestic industry in Guyana aluminum processing is paralyzed, with some companies in "technical closure" having sent their workers home and others trying to "stretch" inventory - and all because of the almost total lack of aluminum due to the crisis VENALUM and ALCASA. More in Spanish: (Tal Cual; 05-16-2012; http://www.talcualdigital.com/index.html)

Stalled mining in Guyana

Canadian, Russian, Iranian and Chinese have landed in the southern state of Bolivar interested in gold mining, metal largest southern municipalities of the entity and of which live 90% of the population.

Two months after the expiry of the extension of the Order of Strength, and Value Range number 8413, which restricts the production and sale of gold to the State, the industry remains stagnant with no prospect of recovery. Rusoro Mining companies such as Promotora Minera de Guayana, are administered by the state after the expiration Minerven extension to form joint ventures. More in Spanish: (El Nacional, 05-16-2012; http://www.el-nacional.com/)

International Trade

Trade with Colombia rises by 18%

The exchange of goods and services between Colombia and Venezuela grew 18% in the first quarter, compared with the same period in 2011. Luis Alberto Russián, chief executive of the Chamber of Venezuelan-Colombian Integration, said that bilateral trade closed the first 3 months at U$D 564 million: U$D 449 million in Colombian imports and U$D 115 million in Venezuelan exports, mostly fuel from the El Vigía plant in Mérida state. The trade balance for the country shows a deficit of U$D 334 million. More in Spanish: (El Nacional, 05-17-2012; http://www.el-nacional.com/) and Ultimas Noticias, 05-17-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/colombia-recibio-14,6-millones-de-litros-de-combus.aspx)

Politics

In Venezuela, top diplomat steps into the void while cancer forces lower profile for Chavez

After nearly a year of cancer treatment that has forced President Hugo Chavez to step back from the spotlight, a burly former bus driver with a dark mustache and affable smile is emerging more than ever as the president’s stand-in. In recent weeks, Foreign Minister Nicolas Maduro has led news conferences, touted a new labor law and criticized the U.S. government with gusto. He even rallied a crowd of supporters while wearing a track suit emblazoned with the yellow, blue and red of Venezuela’s flag, just like one Chavez sometimes wears. (The Washington Post, 05-16-2012; http://www.washingtonpost.com/world/the_americas/in-venezuela-top-diplomat-steps-into-the-void-while-cancer-forces-lower-profile-for-chavez/2012/05/16/gIQAU7YBUU_story.html)

Brazil is following Chavez illness closely, according to a statement by Brazilian Foreign Minister Brasil Antonio Patriota, who wished the Venezuelan President a rapid recovery. More in Spanish: (Tal Cual, 05-18-2012; http://www.talcualdigital.com/index.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.

May 20th, 2011

Economics & Finance

Venezuela’s recovery from Latin America’s longest slump gaining momentum

Venezuela’s gross domestic product expanded at the quickest pace in almost three years in the first quarter as government spending backed by higher oil prices helped the economy emerge from Latin America’s longest recession faster than expected. The country’s GDP rose 4.5% in the first three months of the year from the same period in 2010, the central bank said today in an e-mailed statement. Growth was more than twice as fast as the 1.7% median estimate of eight economists surveyed by Bloomberg. The rise in the price of oil to the highest level since 2008 has increased Venezuela’s revenue even as its oil sector contracted. First-quarter growth was the fastest since the 7.2% expansion posted in the second quarter of 2008 and should bolster President Hugo Chavez’s popularity ahead of next year’s elections, said Finance Minister Jorge Giordani. “Venezuela is turning the page and is in recovery,” Giordani said today during a press conference in Caracas. “Growth will contribute to President Chavez’s leadership in the 2012 elections.” Venezuela will grow more slowly this year than any other major economy in Latin America, according to the International Monetary Fund. Venezuela’s economy will expand 1.8% in 2011 compared with an average of 4.8% in South America, the IMF said in its World Economic Output report. (Bloomberg, 05-17-2011; http://www.bloomberg.com/news/2011-05-17/venezuela-s-recovery-from-latin-america-s-longest-slump-gaining-momentum.html)

Domestic demand rises; oil falls and construction plunges

Imports rose 22% in the first three months of the year, boosting internal demand as more foreign currency was made available to businesses through the Foreign Exchange Board, known as Cadivi, and the central bank administered currency market, known as Sitme, according to a central bank report released today.

Leading the first-quarter jump in growth, commerce expanded 10.4% in the January-through-March period from a year earlier while manufacturing rose 7.6%. However, the construction sector shank 7.7% even as Chavez launched a campaign to eradicate Venezuela’s housing deficit of 2 million homes. Oil, the main driver of Venezuela’s economy, declined 1.8%. Venezuela posted a current account surplus of U$D7.5 billion in the first quarter, the central bank said. The capital account posted a deficit of U$D10.5 billion in the first three months of the year, according to the central bank. (Bloomberg, 05-17-2011; http://www.bloomberg.com/news/2011-05-17/venezuela-s-recovery-from-latin-america-s-longest-slump-gaining-momentum.html)

The government now controls 32% of imports

Direct public sector imports increased 24% to settle at U$D 3.045 billion in order to meet a 3.7% rise in consumption in the first quarter. The State has also increased its control over foreign purchases. Government share of total imports has grown to 32% all imports, from 19% during the first quarter of 2007. Central Bank President has said: "It is important to underline the gradual changes in the composition of Venezuelan imports toward the public sector, as they have increased for each of five consecutive years". More information in Spanish. More information in Spanish. (El Universal, 05-20-2011; http://www.eluniversal.com/2011/05/20/el-gobierno-pasa-a-controlar-32-de-las-importaciones.shtml)

Public spending loses ability to boost Venezuelan economy

Determined to promote economic growth, the Venezuelan government has used windfall oil prices to boost spending. While successfully implemented in the recent past, this formula no longer yields the same results.

In the first quarter, Venezuela's public spending -after inflation- rose 10.4% and hit the highest level for any first quarter since 1998. However, the Venezuelan economy grew only 4.5%, far below the substantial growth rates of 8% and 9% recorded in 2005-2007. Alejandro Grisanti, an analyst at Barclays Capital, a British investment firm, said that "clearly, as the private sector has been cornered, public spending is generating less economic growth." (El Universal, 05-19-2011; http://english.eluniversal.com/2011/05/19/public-spending-loses-ability-to-boost-venezuelan-economy.shtml)

Venezuela offers the worst business climate in Latin America

Business climate in Latin America fell 5.6% in April 2011, the same level as April 2010, according to the index prepared by the Brazilian Center for Economic Studies Getulio Vargas Foundation (FGV). The so-called Economic Climate Index (ECI) in Latin America -which in July 2010 reached 6.0, its highest level ever- had declined to 5.8 in January 2011 and maintained a downward trend in April, according to a study prepared by the FGV and the Institute for Economic Studies (IFO) of the University of Munich (Germany). The deterioration of the business climate in Latin America in April is due to lower economic expectations for the next few months. Chile leads the ranking, followed by Ecuador, Bolivia and Venezuela as the countries with the worst economic climate in Latin America. (El Universal, 05-19-2011; http://english.eluniversal.com/2011/05/19/venezuela-with-the-worst-business-climate-in-latin-america.shtml)

INE: Venezuela's unemployment remains at 8.1% in April

Venezuela's unemployment rate in April 2011 (8.1%) remained virtually the same as the same period last year (8.2%), according to the National Statistics Institute (INE). The number of people unsuccessfully looking for a job in Venezuela was 1,070,128 in April. The joblessness rate remains much higher among young people. In the age group of 15-24, the unemployment rate stands at 16.8%. People employed in the formal sector of the economy have increased, according to the official data disclosed by INE. (El Universal, 05-18-2011; http://english.eluniversal.com/2011/05/18/ine-venezuelas-unemployment-remains-at-81-percent-in-april.shtml)

Venezuelan government guarantees supply of basic food items

Iván Gil, the Vice-Minister of Agro-productive and Agrifood Circuits, Ministry of Agriculture and Lands, said that the Venezuelan government’s supply of basic food items is enough to meet domestic demand. "We can assure the country that production and supply indexes show that we are able to meet (Venezuelan) people's food demand," he said. (El Universal, 05-17-2011; http://english.eluniversal.com/2011/05/17/venezuelan-govnt-guarantees-supply-of-basic-food-items.shtml)

Venezuela checks Cargill warehouse amid shortages

Venezuelan officials and soldiers inspected a warehouse of U.S. agribusiness giant Cargill Inc on Wednesday as part of a crackdown on alleged hoarding and price-gouging with foodstuffs. During his 12 years in power, President Hugo Chavez's socialist government has had fractious ties with private business, nationalizing swathes of the economy and in the last two years increasingly eyeing the food and agriculture sectors. With Venezuelans complaining of oil, flour, meat and other shortages in recent days, Chavez over the weekend urged ministers to hunt speculators and said he would have no hesitation in expropriating any companies found guilty. (Reuters, 05-18-2011; http://www.reuters.com/article/2011/05/18/venezuela-cargill-idUSN1827990720110518)

Commodities

MINERVEN sinks

Gold production at Venezuela’s state-owned CVG-MINERVEN dropped to 1.7 tons in 2010, from 4 tons estimated, due to financing difficulties in repowering its plants; according to the company president. The gold producing company, and other basic industries, have been hit by a series of labor disputes and problems with technological adaptation. MINERVEN president Luis Herrera, said that in the short term Bs 300 million (U$D 70 million) are required to again reach production levels of 4 tons of gold. "We are in talks with the Central Bank of Venezuela to activate operations because it has been difficult to get financing from private and public banks ", said Herrera. More information in Spanish. (Ultimas Noticias; http://www.ultimasnoticias.com.ve/Noticias/Actualidad/Reuters--Minerven-se-hunde.aspx)

 Politics

Government penalty policies fail to curb rising prices

As inflation in Venezuela continues to gain ground, authorities blame higher prices on speculation and have resorted to laws and penalties to deal with skyrocketing prices. However, this strategy has failed to curb inflation.

Venezuelan authorities optimistically estimated this year’s inflation in 2011 at 23%, the highest in Latin America.

Last weekend, President Hugo Chávez threatened major private food distribution channels involved in speculation and hoarding with a partial takeover by workers and community councils. (El Universal, 05-17-2011; http://english.eluniversal.com/2011/05/17/governments-policy-of-penalties-and-laws-fails-to-curb-rising-prices.shtml)

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

February 22th, 2011

Economics & Finance

Chavez and Kadhafi had announced a joint billion U$ dollar development fund

“There is the money to begin this project: producing milk, rice and ecologic tourism”, said the Venezuelan President last October 25^th, upon announcing a billion dollar development fund together with Libya’s Muammar Khadafi. This fund was part of 69 agreements signed by Chávez during his recent visit to the Libyan president – most of which were simply memorandums of understanding, the first step toward negotiations. Their purpose was to finance joint industrial and agricultural ventures in Venezuela, aimed at increasing exports from the North African nation. More information in Spanish. (El Nacional; 02-22-2011; http://www.entornointeligente.com/articulo/1092760/Chavez-esperaba-crear-fondo-de-$-1-millardo-con-Gadafi)

Economic study shows Venezuela is reaching a point of no economic return

That Latin America faces the possibility of staging a great story of economic success in the coming years is already widely shared analysis. But among large countries Venezuela is in serious danger of losing the train. In the Caribbean Giant, "the deterioration of the productive and external debt dependence and reduce growth potential and increase the likelihood of new crises," according to a new economic study on the Latin American region by the advice Madrid Solchaga Recio & Associates It specializes in the latest report confirmed the view that 12 years of Chavez are about to put Venezuela on a point of no economic return. (El País, 02-19-2011;

http://www.elpais.com/articulo/internacional/Venezuela/descuelga/exito/latinoamericano/elpepuint/20110219elpepuint_2/Tes)

Chavez Currency Market Takeover could spur further devaluation

The U.S. dollar is becoming scarce in Venezuela nine months after President Hugo Chavez took over the currency market to slow capital flight and fight inflation. Companies including Kellogg Co. and Pernod Ricard, S.A. have reduced imports since the Central Bank imposed currency trading system that limits purchases to $50,000 a day. Rationing may lead Chavez to further devalue the bolivar, according to Alberto Ramos, a senior Latin America economist at Goldman Sachs Group Inc. in New York. Chavez devalued the currency twice in the past 13 months, pushing inflation to a five-month high of 28.5 percent in January. (Bloomberg, 02-21-2011;  http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aKAbqPKpwacI)

FEDECAMARAS considers a general wage increase untenable and would generate exponential growth of inflation, said the head of Fedecámaras Noel Álvarez in a communiqué. He said it is necessary to increase workers’ minimum wage but urged the government to do so by meeting with the workers and the private employers. The Tripartite Commission (State, private employers and workers) has not been summoned in over a decade. (Veneconomy, 02-18-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24955&idc=3)

Pricing 2022 PDVSA bonds may get monetary and financial authorities in trouble, according to América Economía. Public banking institutions that bought this new foreign currency convertible bond will have to thoroughly assess what strategy to use when they sell such securities withiin the Foreign Currency Securities Transactions Integrated System (SITME) so as not to have financial losses. (Veneconomy, 02-18-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=24954&idc=3)

Total Imports from Brazil declined 12.6% during January

Brazilian exports to Venezuela fell 12.6% in January respect to the same month of 2010, which dragged down the trade between the two nations by 1.8% during the first month of the year. The report of the Secretariat of Foreign Trade (SECEX), Ministry of Development, Industry and Foreign Trade of Brazil, said last January that goods sent to Venezuela for a total of over 208.3 million dollars FOB , were $ 30 million less when compared to the total of a year ago, when this indicator stood at 238.4 million dollars. Brazil is the main market where Venezuela acquires agricultural inputs and livestock, especially beef (live and frozen) and sugar, chicken and coffee, among other items. (El Mundo, 02-21-2011; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=17&Id_Noticia=47595)

Venezuela-based Alimentos Polar has found an alternative to its home market: Colombia, where it registers $100 million in annual sales, Portafolio reports. More information in Spanish. (Portafolio, 02-17-2011; http://www.portafolio.com.co/noticias/empresas/polar-entra-al-mercado-canino-en-colombia

Commodities

It’s official: Venezuela oil company profits down

Venezuela's energy minister concedes profits from the South American country's state-run oil company fell last year. Rafael Ramirez says profits at Petróleos de Venezuela SA fell 28.8 percent in 2010 compared to 2009, despite an increase in international oil prices. Ramirez told the National Assembly on Thursday that profits reached $3.1 billion last year compared to $4.3 billion in 2009. (AP, 02-18-2011; http://finance.yahoo.com/news/Official-Venezuela-oil-apf-2088167079.html?x=0&.v=1)

Venezuela Oil Price Falls to $85.02

Venezuela's weekly oil basket fell slightly from the previous week, with the price of oil in international markets slipping on the easing of tensions in Egypt. According to figures released by the Venezuela Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petróleos de Venezuela S.A. (PDVSA) during the week ending February 18 fell to $85.02 from the previous week's $85.64. According to the Ministry, the average price so far in 2011 for Venezuela's mix of heavy and medium crude is $85.67, higher than 2010's $72.43, and much higher than 2009’s average price of $57.01 -- but still below the high set by 2008's average of $86.49. (Latin American Herald Tribune, 02-18-2011; http://www.laht.com/article.asp?ArticleId=387368&CategoryId=10717)

Venezuela's Amuay refinery to halt FCC unit for repairs in late 2011

Venezuela's Amuay oil refinery will shut its fuel catalytic cracking (FCC) unit for maintenance works in late 2011, the head of Venezuela's Paraguaná refining complex, Jesus Luongo, said yesterday. Amuay, which has a processing capacity of 645,000 barrels per day (bpd), is part of the Paraguaná complex and its 104,000-bpd FCC unit is key for the fuel production. Venezuela is also planning maintenance works in its Cardón refinery, namely in the lubricants unit and in a hydro treatment unit, both scheduled for 2011, Luongo said. (ADP News, 02-22-2011; http://adpnews.info/?nid=cd26b3a5f0a7badc)

Politics

Venezuela's allies tell OAS chief not to meddle

Allies of Venezuela in Latin America came to the defense of President Hugo Chavez's government on Saturday, telling the head of the Organization of American States not to meddle in Venezuela's domestic affairs. Nations belonging to a left-leaning bloc led by Venezuela and Cuba accused OAS chief Jose Miguel Insulza of being a pawn of the U.S. government, which has urged Chavez's administration to allow an international investigation into alleged human rights abuses. Dozens of Venezuelan students participating in a hunger strike are demanding that Insulza look into their allegations that the government improperly uses judges and prosecutors to persecute Chavez's political adversaries. (AP, 02-19-2011; http://news.yahoo.com/s/ap/20110220/ap_on_re_la_am_ca/lt_venezuela_hunger_strike_1)

Venezuela: US should mind own business on protests

Venezuela's top diplomat hit back at the United States on Friday over its suggestion that President Hugo Chavez's government should allow an international investigation into alleged human rights abuses. Foreign Minister Nicolas Maduro said the matter is a domestic affair and Washington has no business meddling. "We absolutely reject that the U.S. get involved in this issue," he said. "Our country does not accept tutelage from anybody." Maduro was responding to a statement Thursday from the U.S. State Department, which urged the South American nation to permit an investigation "as a means to promote dialogue and understanding." (AP, 02-18-2011;

http://news.yahoo.com/s/ap/20110219/ap_on_re_la_am_ca/lt_venezuela_hunger_strike_3)

Criminalizing dissent?

Biagio Pilieri, a former journalist and mayor, was until recently little known in Venezuela. But last September he was elected to the National Assembly. He has been unable to take his seat because, despite parliamentary immunity, he is under house arrest, awaiting trial for the third time on corruption charges of which he has already been cleared.

Mr. Pilieri is just one of more than two dozen Venezuelans that opponents of President Hugo Chávez say are political prisoners. They include two other elected representatives. Thousands of opposition supporters have been subjected to political persecution, ranging from loss of government jobs to pursuit through the courts. Some have fled abroad. (The Economist, 02-17-2011; http://www.economist.com/node/18184396?story_id=18184396)

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.

December 2nd

Economics, Trade & Business

Venezuela to Liquidate Banco Federal, Official Gazette Says

Venezuela ordered the liquidation of Banco Federal CA and three related companies, according to a resolution published in the Official Gazette today. The country’s banking regulator took over Federal in June, citing liquidity concerns, and has been paying the bank’s customers through government-run banks and the deposit guarantee fund. Venezuela will sell off assets to pay bank employees and repay the deposit fund, Finance Minister Jorge Giordani said Aug. 10. (Bloomberg, 12-02-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=awSl7cqXE8bI)

Morgan Stanley fears high import demand

The U.S. firm Morgan Stanley is very clear in its expectations for next year: the supply of local inputs will be limited by the negative impact of expropriations. Given this scenario, the bank believes that the Venezuelan authorities will focus directly on stimulating consumption by importing more goods. "We expect imports of goods to remain the most important component of the demand for dollars," says the report of the firm. (El Universal, 12-02-2010; http://www.eluniversal.com/2010/12/02/eco_art_morgan-stanley-teme_2124673.shtml)

Politics

U.S. views Chavez in "axis of mischief"

Cuban intelligence services directly advise Venezuelan President Hugo Chavez in what a U.S. diplomat called the "Axis of Mischief," according to a State Department cable released by the WikiLeaks website. Other releases by the group revealed U.S. anxiety at Chavez's "coziness" with Iran, and concerns by Venezuelan Jews over what they see as government prejudice against them. Worries over Cuba's role in Venezuela, a top U.S. oil supplier, were shown in a 2006 diplomatic message. "Cuban intelligence has much to offer to Venezuela's anti-U.S. intelligence services," said the cable posted on wikileaks.org on Wednesday. (Reuters, 12-01-2010; http://www.reuters.com/article/idUSN0115084120101202)

Key political risks to watch in Venezuela

President Hugo Chavez's latest nationalization drive, political tensions in parliament, moves against the oil industry and the long tail-end of a recession are all risks to watch in Venezuela in the coming months. Chavez has nationalized a lot of businesses in Venezuela and he will nationalize more before the next presidential election in 2012. After 12 years in office, the former soldier shows no signs of slowing his drive to recreate Venezuela as a socialist state. (Reuters, 12-01-2010; http://www.reuters.com/article/idUSRISKVE20101201)

Diplomacy a la Chávez

Always a master of diplomacy, Venezuelan President Hugo Chávez has given some advice to the U.S. Secretary of State: "Hillary Clinton should resign, it's the least she can do with all of this spying and delinquency in the State Department." Using WikiLeaks' publication of 250,000 diplomatic cables as a springboard to attack the U.S. Secretary personally, Chávez said that "Mrs. Clinton thinks she is superior to Obama. Since she is white, she thinks she is superior to the black guy." In a classic act of Freudian displacement, Chávez called the United States a 'failed, illegal state, which threw respect for its allies overboard in order to further pursue its domination and abuses." Other State leaders and diplomats don't interpret the leaks to be quite as damning. Some world leaders have stated they understand the comments are part of the reality in conducting foreign relations. One of Secretary Clinton's counterparts even joked that Mrs. Clinton need not worry, saying: "You should see what we say about you." (What´s Next Venezuela, 12-01-2010; http://en.whatsnextvenezuela.com/)

Business organizations from Latin America, Spain and Portugal asked the Venezuelan government to stop its “attacks” on the private sector, which they claim is destroying the productive system and causing thousands of jobs to disappear. They also expressed their concern over the “verbal and physical violence in this country against the business institutions and their leaders.” (Veneconomy, 12-02-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=24135&idc=3)

The Latinobarómetro poll

Support for democracy in Latin America continues to edge up, as does backing for private enterprise. Two related things stand out in the results of this year’s poll, taken in September and early October. The first is Latin America’s fairly sunny mood. The second is the increasing stability of attitudes towards democracy and its core institutions. Support for democracy has risen noticeably in several countries on the Pacific rim of South America. (The Economist, 12-02-2010; http://www.economist.com/node/17627929?story_id=17627929)

Transport & Logistics

Continued restriction of sailings in Puerto Cabello

The departure of vessels of less than 150 units of gross tonnage (UAB) is still suspended in Puerto Cabello. Oscar Benito Ramírez Petit, head of the Port Authority, said the sea conditions have not improved. The decision to prolong restrictions was given on Wednesday afternoon, following a reappraisal of weather conditions. (Notitarde, 12-02-2010; http://www.notitarde.com/notitarde/plantillas/nota.aspx?idart=1194548&idcat=9849&tipo=2)

Petroleum & Energy

Venezuelan crude oil and byproduct exports to the US decline 12 percent

Venezuelan oil exports continue to drop in 2010 compared to last year. According to data provided by the US Energy Information Administration (EIA), the statistical arm of the Department of Energy, sales of Venezuelan crude oil and byproducts to the United States amounted to 1,008,000 barrels per day in September 2010. The figure represents a 12 percent fall in Venezuelan oil exports to the United States compared to the amount of oil and byproducts exported in September 2009, when they averaged 1,146,000 bpd. (El Universal, 12-02-2010; http://english.eluniversal.com/2010/12/02/en_eco_art_venezuelan-crude-oil_02A4805811.shtml)

Eni, Repsol in gas pricing talks with Venezuela

Eni and Repsol are negotiating a price with Venezuela's PDVSA for natural gas they plan to extract starting in 2013; a document seen by Reuters shows, in a sign the country is closer to producing offshore gas. Venezuela has vast reserves of natural gas in the Caribbean but development of the fields has been slow -- in part because of concerns among foreign firms about what they see as unfavorable prices offered by PDVSA for the gas extracted. (Reuters, 12-01-2010; http://www.reuters.com/article/idUSN0114283320101201)

China's Sinopec to have a stake in Orinoco Oil Belt

China's Sinopec will partner with the state-run oil company Petróleos de Venezuela (Pdvsa) to develop the Junín 1 and Junín 8 oil blocks at the Orinoco Oil Belt. The joint venture is aimed at producing 200,000 bpd in each block, Venezuela's Energy and Petroleum Minister Rafael Ramirez said. Pdvsa also signed a joint venture agreement to develop the 400,000 bpd Junín 4 block together with state-owned China National Petroleum Corporation (CNPC), Pdvsa said in a press release. (El Universal, 12-02-2010; http://english.eluniversal.com/2010/12/02/en_eco_esp_chinas-sinopec-to-h_02A4806455.shtml)