International Trade
Up to a week can go by without ships any ships docking
at the La Guaira port
Eduardo
Vargas, President of the Vargas State Chamber of Commerce, reports the drop in
imports is now at 85% and says that a week can go by without any ship arriving
at La Guaira port. He said the government is buying the scarce amount of
merchandise arriving “to make it seem that
they are importing enough to supply local markets”. He says the government
is importing with no planning and according to the most acute scarcity, because
they have neither the operational or financial ability to meet demand. More in
Spanish: (El Nacional; http://www.el-nacional.com/economia/Pasa-semana-ingrese-buque-Guaira_0_868713212.html)
Logistics & Transport
LUFTHANSA suspends service to Venezuela
German
airline LUFTHANSA has suspended all flights to Venezuela due to the economic
situation and its inability to exchange local currency into dollars. More in
Spanish: (Notitarde; http://www.notitarde.com/Lufthansa-suspendera-vuelos-a-Venezuela/Economia/2016/06/16/997298/)
Oil & Energy
Oil tanker diverted from Venezuela to Aruba under
investigation
A ship
carrying 260,000 fuel barrels from state-run oil company Petróleos de Venezuela
(PDVSA) illegally diverted from its route to reach Aruba. The ship had set off
from the Amuay refinery at the Paraguaná Refining Center (CRP) (north-western
Falcón state) to the Carenero port (north-central Miranda state). The
information was confirmed by Vice-Admiral José Goncalves, a captain at Las
Piedras port in Paraguaná. He explained that the vessel failed to comply with
an order of departure signed by the Paraguaná Harbormaster’s Office, a document
under which the journey was to leave directly for Carenero. According to
unofficial information, the PDVSA-chartered ship identified as “Port Said” departed from Paraguaná on
June 15 and had to arrive in Carenero the next day. However, the vessel reached
this port on June 17, that is to say, one day later because it went to the
island. (El
Universal, http://www.eluniversal.com/noticias/daily-news/oil-tanker-diverted-from-venezuela-aruba-under-investigation_315744)
Venezuelan pleads guilty in U.S. over PDVSA
bribery scheme
A
Venezuelan businessman pleaded guilty on Thursday to charges stemming from what
the U.S. Justice Department called a large, ongoing investigation into bribery
at Venezuela's state oil company. Roberto Rincon, 55, pleaded guilty in federal
court in Houston to two counts including conspiracy to violate the Foreign
Corrupt Practices Act over his role in a scheme involving officials at
Petroleos de Venezuela S.A. (PDVSA). Rincon, who was president of Texas-based
TRADEQUIP Services & Marine, was arrested in December along with another
Venezuelan businessman, Abraham Jose Shiera Bastidas, for conspiring to pay
bribes to PDVSA officials to secure energy contracts. The guilty plea, ahead of
a trial set for next week, was the sixth in what the Justice Department said
was an ongoing probe involving PDVSA, the exclusive operator of oilfields in
the economically struggling OPEC country. An indictment filed against Rincon in
December alleged that five PDVSA officials received hundreds of thousands of
dollars in bribes made through wire transfers, mortgage payments, airline
tickets and, in one case, whiskey. From 2009-14, more than US$1 billion was
traced to the conspiracy, with US$ 750 million to Rincon, a Venezuelan citizen
who lives in Texas, according to court documents. In pleading guilty, Rincon
admitted that he and Shiera agreed to the pay bribes to ensure their companies
were placed on PDVSA bidding panels, enabling them to secure lucrative energy
contracts, prosecutors said. (Reuters: http://www.reuters.com/article/us-venezuela-usa-corruption-idUSKCN0Z2297)
Commodities
Maduro says he is willing to support POLAR’s
productivity
President
Nicolas Maduro has indicated he is willing to support the POLAR’s groups
efforts to increase productivity.
Addressing the group’s CEO Lorenzo Mendoza, he said: “if you want to talk and produce, I am ready
for you to produce whatever you need to produce”. More in Spanish: (El
Mundo, http://www.elmundo.com.ve/noticias/economia/industrias/maduro-mostro-disposicion-a-apoyar-produccion-de-e.aspx#ixzz4BpkmTeCd)
Economy & Finance
China seeks to renegotiate Venezuela loans
China
is renegotiating billions of dollars of loans to Venezuela and has met with the
country’s political opposition, marking a shift in its approach to a nation it
once viewed as a US counterweight in the Americas. Venezuela is facing one of
the worst crises of its 200-year history, with a collapsing economy and
political deadlock stoked by the oil price slump. China, which is Caracas’s
biggest creditor and has loaned the country US$ 65 billion since 2005, has
already extended the repayment schedules for debts backed by oil sales. Beijing
has also sent unofficial envoys to hold talks with Venezuela’s opposition, in
the hope that if President Nicolas Maduro falls his successors will honor
Chinese debts, sources on both sides of the negotiations told the Financial
Times. Its recognition of Maduro’s fragile position and the rising clout of the
opposition, led by Henrique Capriles, is another sign that the diplomatic noose
is tightening around Caracas’s socialist government. “One fact we shouldn’t overlook is that Venezuela really doesn’t have
the money,” said Guo Jie, a Latin America expert at Peking University. “I think there will be a rational solution
for both parties, be it loan repayment extension or a loan restructuring.” José Guerra, an opposition member of the
legislature’s finance commission, confirmed the talks. "It is true that some [opposition] lawmakers
and consultants have met with the Chinese…Both sides want a close-up,"
he said. One aim of the talks was to “maintain
a relationship [looking] probably at a post-Maduro era," he added. BancTrust,
a Latin American investment bank, said a Chinese debt restructuring could free
up cash equivalent to about 650,000 barrels of oil per day, thereby “alleviating [national] cash flow needs… [which]
might help the government to improve staple goods supply.” One Chinese oil industry insider, who
believes it is in the country’s long-term interests to accept “looser” conditions, said: “Certainly the terms of the [Sino-Venezuelan]
debt will have to be renegotiated. But there’s no way it could be totally
overturned.” (Financial Times: http://www.ft.com/cms/s/0/18169fbe-33da-11e6-bda0-04585c31b153.html#axzz4CCErX64v)
Venezuela 2016 default likely, PDVSA may go first, Moody’s
says
Venezuela
is “highly unlikely” to have enough
hard currency to fully make its debt payments this year, although a default
isn’t inevitable, according to a report from Moody’s Investors Service. State-owned
oil company Petroleos de Venezuela SA, which has large payments due this year,
is likely to default before the sovereign, the credit ratings company said.
That, in turn, could imperil government finances to the point it won’t be able
to make payments either, according to the report. Moody’s said there is a
non-negligible probability that a credit event for both could be avoided,
although a default is more likely than not. Venezuela’s debt is the most
expensive in the world to insure against non-payment using credit-default
swaps, after the tumble of the price in oil, which makes up about 95% of the
country’s export revenue, eroded its hard currency reserves. The International
Monetary Fund predicts its economy will shrink 8% in 2016, while inflation rate
will reach about 480%. (Bloomberg, http://www.bloomberg.com/news/articles/2016-06-20/venezuela-2016-default-likely-pdvsa-may-go-first-moody-s-says)
Venezuela says oil at US$ 50 enough to avoid PDVSA
default
Crude
prices around US$ 50 a barrel are enough for Venezuela’s state oil producer to
avoid a default on its debt, says company president and national oil minister
Eulogio Del Pino. The company’s average production cost is around US$ 12 a
barrel, he said. Petroleos de Venezuela SA will be able to make payments on its
dollar bonds due later this year, Del Pino said. PDVSA, as the Caracas-based
company is known, has interest and principal payments totaling US$ 1.4 billion
in October and US$ 2.8 billion in November, according to data compiled by
Bloomberg. "We are working to pay
that," Del Pino said, noting that "we have been paying all of our debts" during what he called
"the longest cycle of low prices
that we have had." Crude’s rally from a 12-year low at the start of
the year to near US$ 50 a barrel is helping boost Venezuela’s ability to repay
debt. Still, prices are well short of the US$ 121.06 a barrel the country needs
to balance its budget, according to RBC Capital Markets. Venezuela, which
depends on oil for 95% of its export revenue, remains the country most at risk
of failing to pay its debt in the world, according to credit-default swaps. The
company is currently sending about 300,000 barrels a day to China, Del Pino
said, confirming that there had been talks with the Asian country about
renegotiating some of its debt. “We are
in that process to talk with our friends, the Chinese,” he said “We’re talking all the time. We’re monitoring
the price, the conditions to bring the oil to China. That’s something that is
all the time under discussion.” (Bloomberg:
http://www.bloomberg.com/news/articles/2016-06-16/venezuela-says-oil-at-50-will-be-enough-to-avoid-default)
The bolivar has devaluated 67% year to date
A few
days ago the SIMADI FOREX system went above VEB 600/US$ 1, up to VEB
603.32/US$1, which amounts to a devaluation of 67% year to date, according to
published Central Bank data. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/devaluado-bolivar-va-ano_0_868113579.html)
Politics and International Affairs
Venezuelans face long lines to validate recall vote
signatures, almost one third collected despite obstacles
Supporters
of Venezuela’s opposition who are petitioning for a recall referendum on the
rule of President Nicolas Maduro faced long lines in the capital, Caracas,
Monday as they began a process that required them to appear in person to validate their
signatures. Thousands of petition signers from central Miranda state began
lining up in the El Hatillo municipality of greater Caracas at one of the 125
centers set up nationwide by the National Electoral Council, or CNE. By 1:30
p.m. local time, only about 530 of the 4,000 people in line had been able to
validate their signatures, with many older and disabled people expressing
frustration at the slow pace of validation. “The process has been really complicated,” said Miguel Castejon, an
opposition member of the Primero Justicia political party who was helping
coordinate the process at the center, said in an interview. “We have only two machines for all these
people.” In the Capital District, for instance, 97,000 people are to
validate their signatures, yet there are only 23 fingerprint scanners provided
by the electoral authority. At the regional CNE headquarters located in Plaza
Venezuela, east Caracas, a great number of voters have been standing in lines,
for there are only 11 fingerprint scanners available. “The validation process was launched nationwide at 8:00 a.m., but we
have reports that at 6:00 a.m. people were already lining up to take part,”
said the former presidential candidate and current governor of Miranda state,
opposition leader Henrique Capriles. As chief promoter of the recall, Capriles
said he hopes the electoral authority will comply with the schedule established
for the validation process, which is from 8:00 a.m. to 4:00 p.m. every day from
this Monday until next Friday, June 24. Capriles reported that by the end of
the first day 71,557 signatures had been validated, almost one third of the
requisite 194,729 needed for launching a recall procedure which would then
require almost 4 million signatures in order to officially call for a recall
election. (Bloomberg, http://www.bloomberg.com/news/articles/2016-06-20/venezuelans-face-long-lines-to-validate-recall-vote-signatures;
Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKCN0Z61ZX;
El Universal, http://www.eluniversal.com/noticias/daily-news/great-influx-people-first-day-for-signatures-validation-venezuela_315759
;http://www.eluniversal.com/noticias/daily-news/opposition-expects-validate-600000-signatures-five-days-venezuela_315705;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2414699&CategoryId=10717;
and more in Spanish: El Universal, http://www.eluniversal.com/noticias/politica/oposicion-valido-71557-primer-dia-segun-capriles_315837;
El Nacional, http://www.el-nacional.com/politica/firmas-validadas-primer-dia-proceso_0_869913280.html)
Former presidents to report on mediation efforts in
Venezuela at OAS and UNASUR
The
three former presidents that are attempting to promote talks in Venezuela
between the Maduro regime and the opposition will report on their efforts to
the Organization of American States (OAS) and the Union of South American
Nations (UNASUR) this week. At the request of Venezuela, José Luis Rodríguez
Zapatero (Spain), Leonel Fernandez (Dominican Republic) and Martin Torrijos
(Panamá) will speak to the Organization two days before the body discusses
whether or not to invoke the Hemispheric Democratic Charter in the case of
Venezuela, as requested by OAS Secretary General Luis Almagro. Almagro welcomes
the report, saying: “it will be essential
to know which obstacles this initiative has encountered, why it has not
progressed and which will be the means to overcome the situation”. He has
proposed adding the OAS and other former heads of state to the efforts. “If you do not release the political prisoners,
if you do not put a date on the recall referendum (against President Maduro),
what are you going to talk about?”, he says. The Council of Foreign
Ministers of the Union of South American Nations (UNASUR) was also called
together by their Secretariat General to take part in a special meeting next
week in Quito, Ecuador, to tackle the Venezuelan crisis. The meeting has been scheduled
for June 23, and aims to “assess the
progress of the talks between the (country’s) government and the opposition, (a
move) promoted by the UNASUR’s Secretariat General”. Opposition leader Henrique
Capriles says he hopes the former presidents “will not lie” at the OAS meeting about a political dialogue “that has not taken place, because if they
do we will contradict them”. (El
Universal, http://www.eluniversal.com/noticias/daily-news/unasur-fms-ex-presidents-hold-quito-meeting-over-venezuela_315721;
and more in Spanish: Infolatam: http://www.infolatam.com/2016/06/19/los-tres-expresidentes-explicaran-su-mediacion-en-venezuela-ante-oea-y-unasur/;
El Nacional, http://www.el-nacional.com/politica/Capriles-presidentes-mientan-Venezuela-OEA_0_869913305.html)
Lopez says recall referendum is above any talks
Imprisoned
opposition leader Leopoldo López says there can be no dialogue above a recall
referendum to be held during 2016, as is established as a right in Venezuela’s
constitution, and asks the international community to support the referendum
process. Lopez made his statement through his Twitter account, which is managed
by his relatives. He added that talks should be held to discuss the problems of
the people, but that human and constitutional rights are “not negotiable”. (El Universal: http://www.eluniversal.com/noticias/daily-news/leopoldo-lopez-talks-should-above-the-recall-vote_315728;
and more in Spanish: Infolatam: http://www.infolatam.com/2016/06/20/opositor-lopez-dice-ningun-dialogo-puede-estar-por-encima-del-revocatorio/)
Court again suspends appeal hearing for Leopoldo Lopez
The
hearing for an appeal by opposition leader Leopoldo Lopez, who is sentenced to
almost 14 years in prison for violent actions that took place after a protest
march, was suspended Monday, his defense attorney said. Lopez’s hearing was
postponed after one of the designated judges said he was feeling too ill to
attend the session, A new date for the appeal was not announced. Suspension of
the hearing took place at the same time as a visit by Spain’s former Justice
Minister Alberto Ruiz Gallardon and Spanish lawyer Javier Cremades, who came to
Caracas on Sunday to counsel Lopez’s defense team. (Latin American Herald
Tribune, http://www.laht.com/article.asp?ArticleId=2414688&CategoryId=10717;
El Universal, http://www.eluniversal.com/noticias/daily-news/leopoldo-lopezs-appeal-hearing-adjourned_315741)
Kerry announces plans for immediate high-level talks
with Venezuela
U.S.
Secretary of State John Kerry has announced immediate high-level talks
involving himself, his Venezuelan counterpart Delcy Rodriguez and U.S. Undersecretary
of State for Political Affairs, Thomas Shannon, who will be the first to travel
to Caracas. Kerry and Rodriguez agreed on the talks during a bilateral meeting
on the sidelines of an Organization of American States’s General Assembly
meeting in the Dominican capital. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2414344&CategoryId=10718)
Spain urges Venezuelan government "to encourage" talks with
Legislature
Spanish
Foreign Minister José Manuel García-Margallo has told his Venezuelan
counterpart Delcy Rodríguez that it is necessary to pave the way for talks
between the Venezuelan government and the legislature. He made his remarks in a
telephone conversation with Rodríguez during her stopover on Sunday in Madrid. García-Margallo
voiced his government’s hope for this initiative may led to an “urgent, substantive, effective and
respectful” dialogue between representatives of the Executive and
Legislative powers, within the Venezuelan constitutional framework and in
accordance with mechanisms therein enshrined. The move includes “the possibility for a recall vote”
promoted by the opposition against the term in office of President Nicolas
Maduro. (El
Universal, http://www.eluniversal.com/noticias/daily-news/spain-urges-venezuelan-govt-encourage-talks-with-legislature_315714)
Armed man opens fire in Venezuelan Central Bank,
wounding two
An
armed man broke into Venezuela’s central bank Monday and exchanged gun fire
with security forces before being subdued by police. Central bank President
Nelson Merentes said a man opened fire, wounding two national guardsmen before
police were able to bring the situation under control. Merentes said there were
no fatalities in the attack. Local media earlier reported that an “irregular situation” was unfolding at
the bank situated in downtown Caracas, with employees barricading themselves in
their offices after an armed man entered the institution’s statistics
department. (Bloomberg, http://www.bloomberg.com/news/articles/2016-06-20/armed-man-opens-fire-in-venezuelan-central-bank-wounding-two;
Reuters, http://www.reuters.com/article/us-venezuela-cenbank-idUSKCN0Z628X;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2414709&CategoryId=10717)
No food, no teachers, violence in failing Venezuela
schools
The
soaring crime and economic chaos stalking Venezuela is also ripping apart a
once up-and-coming school system, robbing poor students} of a chance at a
better life. Officially, Venezuela has canceled 16 school days since December,
including Friday classes because of an energy crisis. In reality, Venezuelan
children have missed an average of 40% of class time, a parent group estimates,
as a third of teachers skip work on any given day to wait in food lines. Many
students have fainted from hunger and administrators tell parents to keep their
children home if they have no food. And while the school locks its gate each
morning, armed robbers, often teens themselves, still manage to break in and
stick up kids between classes. "This
country has abandoned its children. By the time we see the full consequences,
there will be no way to put it right," Movement of Organized Parents
spokeswoman Adelba Taffin said. The annual dropout rate has doubled, more than
a quarter of teenagers are not enrolled, and classrooms are understaffed as
professionals flee the country. As many as 40% of teachers skip class on any
given day to wait in food lines.
Classrooms with puddles are used as emergency toilets now that the
bathrooms have no running water. Students play dice on the cracked asphalt of
the yard, trading insults and piles of bills.
Venezuela now has the highest teen pregnancy rate in South America. The
favorite make-out spot for students is behind a pile of 30,000 unopened
textbooks that block the auditorium stage. The government delivered the books
at the start of the year, but teachers decided they were too full of
pro-socialist propaganda to use. The supplies they really want are not
available. In chemistry class, students can't perform experiments because they
have no materials. The new cafeteria never opened because there was no food or
cooking gas. (The New York Times: http://www.nytimes.com/aponline/2016/06/17/world/americas/ap-lt-venezuela-undone-empty-schools.html)
Peru prosecutor says Chavez, Brazil firms may have
funded Humala
A
Peruvian prosecutor said Thursday that late Venezuelan President Hugo Chavez
and two Brazilian construction companies may have bankrolled President Ollanta
Humala's campaigns before he took office in 2011. Prosecutor German Juarez has
been investigating first lady Nadine Heredia, the co-founder and current
president of Humala's party, for her possible involvement in undeclared
campaign contributions. He asked a judge to bar her from leaving Peru. Humala
has denied taking money from Chavez. Humala's office did not immediately
respond to requests for comment on Thursday. Heredia has said she has no
intention of leaving Peru and is cooperating with investigators, whom she
describes as under pressure from political foes. Another informant alleged that
construction companies ODEBRECHT SA and GRUPO OAS, both tangled in a vast
corruption scandal in neighboring Brazil, gave Humala and Heredia hundreds of
thousands of dollars and paid the salary of an adviser close to Brazil's
Workers Party to help with Humala's 2011 campaign, Juarez said. (http://www.reuters.com/article/us-peru-humala-inquiry-idUSKCN0Z302D)
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.
