May 10, 2019

International Trade

Something is happening with Venezuela’s agriculture

Venezuela’s agricultural exports rose to US$ 322.3 million in 2017 from US$ 47. 4 million in 2013. They increased again in 2018 to US$ 337.1 million. In 2013 that modest level of agricultural exports accounted for 2.32% of exports different from oil and gold. In 2017 that percentage had increased to 12.34%. Over the past year – given the low export levels of commodities different from oil and gold, and an increase in agricultural exports – the latter accounted for 15.26% of total exports. The increase of agricultural exports has taken place despite a national productive collapse with many adverse conditions, the vast majority of which relate to the lack of favorable economic policies, such as a myriad of tighter controls and permits, the lack of inputs, lack of physical infrastructure and disrespect for the agrarian property. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2478291&CategoryId=10717)

 

Oil & Energy

PDVSA ad-hoc board to finance bond payment with uncollected oil revenue

Venezuelan state oil company PDVSA will use uncollected oil revenue to make a bond payment due this month, the board of directors named by interim president leader Juan Guaidó said on Thursday. The opposition-controlled National Assembly on Tuesday approved the US$ 71 million payment on PDVSA’s 2020 bond, as it seeks to avoid losing control of PDVSA’s U.S. refining subsidiary CITGO. The Maduro regime had remained current on that bond even as it defaulted on billions of dollars in other bonds, because the PDVSA 2020 is backed by shares in Citgo, the country’s crown jewel overseas. In a statement, the board said the funds to pay the bond would come from “PDVSA’s overseas accounts receivable,” referring to invoices to customers that had not yet been paid. The board did not specify the value of PDVSA’s accounts receivable abroad but said it would make the payment within the 30-day grace period that began on April 27. If the payment is not made, bondholders could move to seize half the shares in Citgo, which PDVSA posted in collateral for the bond. Guaidó has sought to protect Venezuelan assets abroad from possible seizure by creditors since invoking the country’s constitution to assume an interim presidency in January. He has been recognized as the country’s rightful leader by dozens of countries, including the United States. Maduro retains control of PDVSA within Venezuela, as well as state functions. Any effort by a Maduro-linked entity to make the payment would have been complicated by sanctions the United States placed on PDVSA in January in a bid to squeeze Maduro’s government financially. (Reuters: https://www.reuters.com/article/us-venezuela-politics-bonds/venezuelas-pdvsa-ad-hoc-board-to-finance-bond-payment-with-uncollected-oil-revenue-idUSKCN1SF2KE: Bloomberg, https://www.bloomberg.com/news/articles/2019-05-08/venezuela-money-at-new-york-fed-may-be-key-to-pdvsa-bond-payment)

 

Firms flock to power auction for troubled Brazil state near Venezuela

Developers have presented more than 150 proposals for power plants ahead of an auction this month to supply electricity to the Brazilian state of Roraima, which has struggled with a rash of blackouts due to reliance on the shaky Venezuelan power grid. Roraima, which is not connected to Brazil’s national grid, has begun depending on expensive emergency fuel-burning plants in the absence of reliable power from its northern neighbor, which has sunk into a profound economic and political crisis. Brazil’s federal government set an auction for May 31 to close long-term contracts with new suppliers using any available source, from oil to wind or solar. Canadian Solar Inc and Brazilian companies Casados Ventos, Eneva SA and Equatorial Energia SA are among the potential bidders, according to industry sources.(Reuters, https://www.reuters.com/article/us-brazil-power-venezuela/firms-flock-to-power-auction-for-troubled-brazil-state-near-venezuela-idUSKCN1SF2MA)

 

Economy & Finance

Meet Venezuela's jilted creditors

Since December a handful of lawsuits have been brought against Venezuela and its state-owned oil company, PDVSA, over unpaid debts. One of the most recent comes from Siemens-owned DRESSER RAND. The oil-and-gas-equipment manufacturer is seeking US$ 132 million from PDVSA to cover missed interest payments and other fees. That suit followed another by Connecticut-based hedge fund CONTRARIAN Capital Management for US$ 182 million in unpaid promissory notes from PDVSA. Its subsidiary, Red Tree Investments, snapped the securities up from GE Capital at the start of the year. Given the ongoing power struggle at the highest echelons of the Venezuelan state, one firm has been told to wait for now, while the other is likely to face a similar fate. Earlier this week, US District Judge Alison Nathan granted the opposition government led by Juan Guaidó its request for a stay in the ongoing case with Red Tree. The stay is set to last 120 days, meaning no legal proceedings will take place during that time. Other firms have also filed lawsuits, including London-based hedge fund PHARO Management and another hedge fund registered in Panama City, BROKWEL Management. Given the opposition government's recent success in the courts, however, the more litigious of the creditors might want to rethink their strategy. (FT Alphaville: https://ftalphaville.ft.com/2019/05/10/1557486677000/Meet-Venezuela-s-jilted-creditors/)

 

Politics and International Affairs

Arrest of key legislator draws condemnation as Maduro tightens pressure on opposition

European and Latin American countries have condemned the arrest of a top lawmaker who backed calls for a military uprising against Nicolás Maduro. Edgar Zambrano, vice president of the opposition-controlled National Assembly in Venezuela, was leaving his Democratic Action party’s headquarters on Wednesday when he was detained by members of Maduro’s intelligence agency who surrounded his car. Zambrano was arrested by the regime's intelligence services on Wednesday. The SEBIN intelligence police towed Zambrano's car with the 64-year-old lawmaker inside it after he refused to step out outside the headquarters of his Democratic Action Party.  After a half-hour standoff, the SEBIN simply towed his car away while he remained in it. People who witnessed the incident shouted “assassins!” at the armed intelligence agents, who are loyal to the Maduro government. Zambrano tweeted, “Democrats will keep fighting!” as he was being whisked away to prison. The detention of Zambrano – who was among those who joined Guaidó’s fruitless attempt to spark a pre-dawn uprising against Maduro on 30 April – sparked a wave of domestic and international condemnation. “Maduro’s arrest of … Zambrano breaches parliamentary immunity and is a clear violation of the constitution,” tweeted the British foreign secretary, Jeremy Hunt. “Feels like the act of a desperate man on borrowed time.” The US state department slammed Zambrano’s “illegal and inexcusable” detention and warned: “If he is not released immediately, there will be consequences.” US President Donald Trump himself spoke out against the arrest on Twitter and signaled his support to Guaidó. He wrote: “I am returning to Washington, D.C. with Senator Rick Scott and Senator Marco Rubio, discussing the terrible abuses by Maduro. America stands with the GREAT PEOPLE of Venezuela for however long it takes!” The Lima Group, which includes a dozen Latin American countries and Canada, said his arrest was unconstitutional because his parliamentary immunity was illegally lifted. The European Union condemned the arrest of Zambrano, saying it formed part of Maduro's strategy to subjugate the opposition-held legislature. "Zambrano's arrest is a politically motivated action aimed at silencing the National Assembly," said an EU spokesperson. "The EU will continue to react, through its different policy instruments, to further erosion of democratic institutions, the rule of law and human rights." Legislators Américo de Grazia and Mariela Magallanes are both in the Italian embassy, while their colleague Richard Blanco has gone to the Argentine embassy. They are among 10 lawmakers stripped of immunity after a pro-Maduro tribunal said they should be investigated for conspiracy, rebellion and treason. Seven other National Assembly lawmakers remain at risk of being arrested. Maduro has not tried to arrest National Assembly President Juan Guaidó, who invoked the constitution to assume the position of interim president, arguing that Maduro's re-election last year is considered illegitimate. The arrest of Zambrano appears to be part of a carefully calibrated crackdown on the opposition. Diosdado Cabello, a leading political ally of Maduro, suggested that the government is taking a methodical approach in its struggle with the opposition. “We're not in a rush,” Cabello said. On Thursday, General Miguel Rodríguez Torres, a former spy chief who became a government critic, was also transferred by military police to a maximum-security cell at a Caracas military base, his political movement said. Rodríguez Torres was arrested a year ago. In a televised address on Wednesday night, Maduro claimed “victory” over the 30 April plotters and promised to dedicate himself to rescuing Venezuela’s collapsed economy. But other top Chavistas are more cautious and warn there may be further attempts to topple their embattled leader in the days ahead – a view shared by many political observers in Caracas. “There could be a repeat – today, in two hours, in a week, in a fortnight,” Freddy Bernal, a senior Socialist party figure, told state television on Tuesday. Maduro’s regime has so far avoided arresting Guaidó, which would likely provoke a stronger international backlash. But the recent measures suggest the ruling Socialist Party is seeking to isolate him by pursuing key political allies. (PBS: https://www.pbs.org/newshour/world/arrest-of-venezuelan-opposition-figure-draws-condemnation; BBC News: https://www.bbc.com/news/world-latin-america-48224790; VOA: https://www.voanews.com/a/venezuela-maduro-tightens-pressure-on-opposition/4910662.html; Reuters: https://www.reuters.com/article/us-venezuela-politics/venezuelan-lawmakers-seek-refuge-in-embassies-after-crackdown-on-Guaidó-allies-idUSKCN1SF1YK; Local 10: https://www.local10.com/news/venezuela/venezuela-s-maduro-defies-trump-s-warnings-on-Guaidó; VOX: https://www.vox.com/2019/5/9/18540091/venezuela-Guaidó-maduro-zambrano-arrest; Express: https://www.express.co.uk/news/world/1124978/venezuela-news-nicolas-maduro-juan-Guaidó-arrest-donald-trump)

 

Venezuela's opposition vow to defy Maduro after key figure detained

Opposition politicians battling to bring down Venezuela’s strongman leader, Nicolás Maduro, have vowed to continue their struggle after the detention of one of their movement’s key figures signaled the start of a major crackdown. Interim president Juan Guaidó on Thursday called for nationwide rallies to protest the arrest of Edgar Zambrano, an opposition figure and vice president of the democratically elected National Assembly. "This Saturday, we return to streets across the country to defend every Venezuelan represented in the National Assembly," Guaidó said, referring to the opposition-held legislature. "It is up to us to remain united and mobilized until we achieve freedom." “We take it as a given that the regime is going to keep escalating its repression,” Guaidó said at a news conference, referring to Zambrano’s arrest. Guaidó accused Maduro’s regime of “kidnapping” Zambrano, who was taken to El Helicoide, a notorious political prison in Venezuela’s capital, Caracas. He portrayed the arrest and targeting of members of the assembly as acts of desperation by a government whose leaders don’t know who to trust. He also called for Venezuelans to take to the streets on Saturday for fresh protests against Maduro on Saturday. “They won’t get us out of the streets,” said Guaidó, whose public appearance in Caracas reflected his belief that Maduro does not have the confidence to arrest him. Juan Andrés Mejía, one of the targeted deputies, told the Guardian the group would not be cowed by Maduro’s “absolutely illegal and unconstitutional” counterattack. “This is not going to work … You are not going to solve Venezuela’s problems by persecuting and imprisoning people. There are just too many of us who want change,” said Mejía, a close Guaidó ally and member of his party, Voluntad Popular (Popular Will).(DW: https://www.dw.com/en/venezuelas-juan-Guaidó-calls-for-return-to-streets/a-48681844; The Guardian: https://www.theguardian.com/world/2019/may/09/venezuela-maduro-Guaidó-crackdown-edgar-zambrano=

 

'We need to know why': Lawmakers wary as Trump aides weigh military options for Venezuela

Talk of possible U.S. military action in Venezuela is prompting bipartisan concern in Congress, where Democrats and Republicans alike cautioned against a rush toward intervention amid escalating rhetoric from Secretary of State Mike Pompeo and National Security Adviser John Bolton. U.S. intervention would be highly controversial and could spark a political backlash, in the United States and across the hemisphere. "What would our military’s mission be in Venezuela?” said Sen. Todd Young, an Indiana Republican, who sits on the Foreign Relations Committee. “Would the administration push for our military to conduct regime change?” The Marine Corps veteran has called for immediate congressional hearings on the issue and said he wants several “threshold questions” answered by President Donald Trump's top advisers. On Thursday, Trump denied a Washington Post report he is frustrated with Bolton's hardline position on Venezuela and that Bolton was pushing him into a war he didn't want. “John’s very good. He has strong views on things which is okay," Trump told reporters on Thursday. "I’m the one who tempers him ... I have John Bolton and I have people who are a little more dovish than him.” Any move by the Trump administration to send American forces to Venezuela would require congressional authorization, Young and other lawmakers said. That, in turn, would require Pompeo and others to make a compelling case to Congress and the American public that such a move is warranted. And there seems to be little political appetite among lawmakers for approval of such a move. Even some hawkish Republicans who have championed a U.S. military role in Venezuela seemed to shy away from a direct U.S. confrontation with Maduro’s military forces when pressed on the matter. “It’s too early,” Sen. Lindsey Graham, a South Carolina Republican, said Tuesday. Military options should be “on the table,” he said on Tuesday, but “we should really be putting a lot of pressure on Cuba right now.”  Other Republicans said U.S. military involvement in Venezuela, despite a strong desire to see Maduro step down, would only play into Maduro's hands.  “The first step…is calling on the administration to explain their thinking for threatening military action in the press,” said Young, who sits on the Senate Foreign Relations Committee. “If hostilities are imminent, then we need to know why.” Young said the committee's GOP chairman, Sen. James Risch of Idaho, shares his concerns and has promised to work on his request for hearings, although those might be closed-door sessions. (USA Today: https://www.usatoday.com/story/news/world/2019/05/09/lawmakers-not-comfortable-us-troops-venezuela-back-Guaidó-maduro/1137011001/)

 

Pence warns Venezuela’s Maduro harboring Iran-backed terrorists

 “The Iranian regime has been working with Venezuela’s corrupt dictatorship to establish a safe haven for its terrorist proxies,” U.S. Vice President Mike Pence said in a May 7 address to the Council of the Americas. “Hezbollah is working to extend its dangerous network throughout Venezuela, and from there, throughout our hemisphere,” Pence said.  “Venezuela is a failed state,” Pence said. “And as history teaches, failed states know no boundaries. Drug traffickers, criminal gangs, terrorist groups seeking to destabilize the region and profit from the misery of the Venezuelan people every day.” Pence pointed to an Iranian connection in Venezuela by citing last month’s “very public launch of direct air service between Caracas and Teheran by Mahan Air, a blacklisted airline controlled by Iran’s Revolutionary Guards Corps, which President Trump recently designated as a terrorist organization.” The vice president also denounced Maduro confidant and cabinet member Tareck El Aissami, who has been sanctioned by the United States as a drug kingpin and the European Union as a human rights violator. Pence described him as “a drug runner and a money launderer who partners with terrorist networks to bring Iran-backed terrorists into the country.”  “The struggle in Venezuela is the struggle between dictatorship and democracy,” Pence said Tuesday. “Nicolas Maduro is a dictator with no legitimate claim to power, and Nicolas Maduro must go.” (World Tribune: https://www.worldtribune.com/pence-warns-venezuelas-maduro-harboring-iran-backed-terrorists/)

 

Sen. Marco Rubio: China ‘controlling defense cyber operations’ in Venezuela

The Chinese government has actively helped Venezuelan dictator Nicolás Maduro control, censor, and shut down the Internet in his quest to keep the legitimate president of the country, Juan Guaidó, from governing, Sen. Marco Rubio (R-FL) told Breitbart News in an interview Monday. Rubio suggested that Beijing may be distancing itself from Maduro because the tide has shifted so definitively against him in Latin America that the rest of the region may sour on investments with China if it interferes to help him. That does not mean China is not helping Maduro, merely that it cannot afford the bad press, Rubio stated. “The Chinese are very involved. First, they are owed a bunch of money, so they want to get paid,” he explained. “Number two is they are single-handedly helping conduct the Internet control operation. They have basically taken a commercial version of their great Internet firewall and given it to Maduro, and it is a service they are providing him, so they are the ones that are shutting down the Internet and access to social media.” Maduro’s regime regularly cuts nationwide access to the Internet to prevent Guaidó and other opposition leaders from being able to communicate with the masses or organize rallies against him. Guaidó, according to Rubio, has “no access to the media. Any time he tries to speak or communicate on social media, they shut down the Internet. … Literally, every time he holds a rally, they shut down the Internet.” As the Chinese are “single-handedly controlling the defensive cyber operations shutting down the Internet,” they are responsible for silencing Guaidó. Yet being more open about their role could jeopardize investments in other parts of the continent. “The Chinese play a tricky game because on the one hand, they are trying to grow in influence and presence throughout Latin America, so they are seeing all of these countries supporting Guaidó, and they don’t want to … antagonize these countries by being cheerleaders for the Maduro regime,” Rubio noted. (Breitbart: https://www.breitbart.com/latin-america/2019/05/09/marco-rubio-china-controlling-defense-cyber-operations-venezuela/)

 

Is Trump failing in Venezuela?

We finally may have found a peak Donald Trump headline: “A frustrated Trump questions his administration’s Venezuela strategy.” The Washington Post story that goes with it is a classic. It seems that Trump hired John Bolton to be his national security adviser, cleared the path for him to be the main policy maker on foreign affairs, and … is now shocked that Bolton is something of a warmonger and that his schemes don’t produce perfect and painless results overnight. Trump and his aides also aren’t eager to disguise that the president is something of an outsider to his own administration’s policy-making process. Remember: It’s not uncommon for presidents to fight with executive-branch departments and agencies for control over policy. Those bodies have multiple masters. But splits between the president and his own staffers in the White House are far rarer, since such people work directly for, and answer only to, the president himself. Trump has said in recent days that Bolton wants to get him “into a war” — a comment he has made in jest in the past but that now belies his more serious concerns, one senior administration official said. Despite Trump’s grumbling that Bolton had gotten him out on a limb on Venezuela, Bolton’s job is safe, two senior administration officials said, and Trump has told his national security adviser to keep focusing on Venezuela. Trump also spoke approvingly of Russian actions in Venezuela following a lengthy phone call with Russian President Vladimir Putin on Friday, saying that Putin “is not looking at all to get involved in Venezuela other than he’d like to see something positive happen for Venezuela. And I feel the same way. We want to get some humanitarian aid.” U.S. officials think time is on their side and that Maduro will fall of his own weight. Sen. Marco Rubio (R-Fla.), who has been influential in shaping the administration’s Venezuela response, said Trump and Bolton are on the same page. Rubio, who said he spoke to Trump about Venezuela on Tuesday evening, backs the policy of waiting out Maduro. Rubio said some of the harshest U.S. sanctions are only now having full effect, including sowing dissension among Maduro aides. (Bloomberg, https://www.bloomberg.com/opinion/articles/2019-05-09/why-donald-trump-is-failing-in-venezuela; The Washington Post: https://www.washingtonpost.com/politics/a-frustrated-trump-questions-his-administrations-venezuela-strategy/2019/05/08/ad51561a-71a7-11e9-9f06-5fc2ee80027a_story.html)

 

US Secretary of State Pompeo to meet Russian President Putin, FM Lavrov on May 14

Mike Pompeo is to meet Russian President Vladimir Putin and Foreign Minister Sergey Lavrov when he travels to Russia next week, the US State Department said in a statement. The visit comes as the relations between Moscow and Washington are at a new low over accusations of Russian meddling and disagreements over approaches to Venezuela and Iran’s nuclear program. The State Department says they will discuss “the full range of bilateral and multilateral challenges” during a meeting in the southern city of Sochi on May 14. (RT: https://www.rt.com/news/458985-pompeo-travel-russia-date/)

 

Russian FM Lavrov speaks on prospects for US-Russia deal on Venezuela

Russian Foreign Minister Sergei Lavrov has announced that there won’t be any “deals” on Venezuela between Moscow and Washington. "Trump is the one who usually prepares deals", Lavrov remarked. The foreign minister delivered this statement ahead of the upcoming meeting between him and US Secretary of State Mike Pompeo, which is scheduled to take place on 14 May in Sochi. Earlier this week, Lavrov also dismissed speculations about the possibility of a military intervention in Venezuela, stating that Russia opposes “hostilities anywhere in violation of international law”, and that “the use of force may only be authorized by the UN Security Council, or force may be used in response to aggression against a sovereign state”. (Sputnik News: https://sputniknews.com/world/201905091074854135-russia-us-venezuela-deal/)

 

Russia not planning to send more military specialists to Venezuela

Moscow does not plan to send more Russian military specialists to Venezuela, RIA news agency quoted Russian Deputy Prime Minister Yuri Borisov as saying on Thursday. The Kremlin said in March that Russian military specialists are in Venezuela to service pre-existing contracts for the supply of Russian arms. (Journal Pioneer: https://www.journalpioneer.com/news/world/russia-not-planning-to-send-more-military-specialists-to-venezuela-ria-309646/)

 

Ex-Venezuelan spy chief says Venezuelans should 'build a new state'

The ex-head of Venezuela’s SEBIN intelligence service, who was replaced last week after an attempted military uprising against Nicolas Maduro, urged Venezuelans on Thursday to build a new state and combat corruption.

In his first public appearance since Maduro replaced him on April 30, Manuel Christopher said Venezuelans “deserve a better country,” according to a video of Christopher posted on Twitter by Venezuelan TV outlet NTN24. (Reuters, https://www.reuters.com/article/us-venezuela-politics-intelligence/ex-venezuelan-spy-chief-says-venezuelans-should-build-a-new-state-idUSKCN1SF2PO)

 

Venezuelan Embassy’s power cut off in tense Washington standoff

A chaotic political standoff with international diplomatic implications began unfolding quietly weeks ago on a leafy side street in the upscale Georgetown neighborhood of Washington, as a group of American activists moved into the five-story Venezuelan Embassy and made themselves at home. With some 100 Venezuelan diplomats still working inside during the day, the activists from Code Pink and other antiwar groups brought their things to spend the night, sleeping on couches to keep the building occupied around the clock. They said they were guests, invited by the regime of Nicolás Maduro, and their mission was to oppose any American military intervention in the troubled nation. The antiwar activists have been alone in the embassy building since late April, when the American visas for the shoestring embassy staff expired, forcing the diplomats to go home. Appointees of Juan Guaidó, the opposition leader recognized by the United States and some 50 other countries as Venezuela’s interim president, had pledged to take over the embassy, a move those now occupying the facility fear could lead to a reciprocal siege of the American Embassy in Venezuela, and an armed conflict. Late last month, local Venezuelans who support Mr. Guaidó learned of the occupation and descended on the building, demanding that the activists, whom they view as unlawful trespassers, get out. In the ensuing days, tense clashes between the occupiers and the Venezuelans, who are camped in tents surrounding the building, have escalated, prompting nine arrests by the Secret Service. Late on Wednesday, the power company shut off electricity to the embassy, thrusting its occupants into darkness. The protesters outside cheered. The extraordinary stalemate has challenged local authorities and the Trump administration, turning the inoperative embassy into a stand-in for the much larger crisis vexing Venezuela, as Mr. Maduro’s supporters maintain control despite of efforts by the opposition and the United States. The State Department has said it considers their presence to be “unauthorized.” Washington police and the Secret Service have set up a barrier separating the pro-Guaidó camp from Maduro sympathizers and other activists across the street. Late on Wednesday, the power company shut off electricity to the embassy, leaving the activists inside in darkness. Only about 15 people remain in the building,  (The New York Times: https://www.nytimes.com/2019/05/09/us/venezuela-embassy-protests.html)

 

OP-ED: Can the U.S. help Venezuela militarily without use of force? by Sarah Lee

Lawmakers are debating whether the U.S. should proceed with military action in Venezuela to help end the socialist Maduro regime even as debate about whether the U.S. has a responsibility to protect Venezuela — and if there are ways the military can be utilized without use of force. Luis Almagro, Secretary General of the OAS, detailed the reasons he believes the U.S. and other nations would be justified in entering Venezuela and using force if necessary, under UN guidelines covering the “responsibility to protect” policy, or R2P.  While the Trump administration continues conversations with nations such as Russia and Iran, as Secretary of State Mike Pompeo did this week, some are noting that military intervention doesn’t necessarily have to mean use of force. How would it work? U.S. special forces, next door in Colombia to assist that country’s armed forces, would train the Venezuelan opposition in best practices of nonviolent resistance. This includes teaching tactics of dispersal, evading tear gas, erecting barricades, and maintaining command and control in the face of government repression. But can nonviolent resistance work? A new report by the Joint Special Operations University on Support to Resistance (STR) operations suggests it can. With the Maduro regime arresting interim president Juan Guaidó’s ally, National Assembly Vice President Edgar Zambrano, Wednesday, the U.S. may need to decide quickly on just how to help its neighbor to the south. (Town Hall: https://townhall.com/tipsheet/sarahlee/2019/05/09/can-the-us-help-venezuela-militarily-without-use-of-force-n2546111)

 

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

 

April 28, 2016

International Trade

Container handlers announce 50% increase in freight charges

The Puerto Cabello Association of Small Business and Carriers of Containers has announced a 50% increase in freight charges starting May 1^st, despite a lack of response from authorities, due to rising expenditures for supplies and maintenance. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Asotracontainer-anuncio-aumento-del-50-en-el-costo-de-los-fletes-2664631/2016/04/27/954534/)

 

Oil & Energy

Regime imposes two-day work week to deal with energy crisis

Venezuela's government has imposed a two-day working week for public sector workers as a temporary measure to help it overcome a serious energy crisis. Vice-President Aristobulo Isturiz announced that civil servants should turn up for work only on Mondays and Tuesdays until the crisis was over. The measures announced on national television by Isturiz affect two million public sector workers. President Nicolas Maduro says Venezuela has been badly hit by the El Nino weather phenomenon and will return to normal when it starts raining again. "We are requesting international help, technical and financial aid to help revert the situation," he said. "We are managing the situation in the best possible way while we wait for the rains to return." But the opposition has accused the government of mismanaging the crisis. (BBC News: http://www.bbc.com/news/world-latin-america-36145184; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2410910&CategoryId=10717; Reuters, http://www.reuters.com/article/us-venezuela-workers-idUSKCN0XN2YZ; Bloomberg, http://www.bloomberg.com/news/articles/2016-04-27/venezuela-declares-two-day-work-week-in-bid-to-save-electricity)

 

Venezuela oil refineries face operating woes, PDVSA launches tenders

Venezuela's key Paraguana oil refining complex was this week operating around half capacity, prompting state-run oil company PDVSA to launch purchase tenders for products as it tries to offset power outages and equipment failures. While Amuay's fluid catalytic cracker (FCC) restarted on Monday, the 645,000 barrel-per-day refinery was operating at only around 360,000 bpd as its flexicoker remained down, union boss and fierce government critic Ivan Freites said on Tuesday. The adjacent 310,000 bpd Cardon facility was processing around 110,000 bpd, added Freites, citing Monday's internal report of Venezuela's top refineries in the wind-swept Paraguana peninsula.

Output has dropped at the crisis-hit OPEC country's refineries in recent months, with critics blaming shortages of spare parts, lack of maintenance, and a shaky electrical grid. (Reuters, http://www.reuters.com/article/us-refinery-operations-pdvsa-idUSKCN0XN2RS)

 

Venezuela proposes non-OPEC oil producers attend Vienna meeting

Venezuela has proposed that non-OPEC oil producers attend the group's June meeting in Vienna to continue "dialogue and coordination," according to a letter from the country's oil minister to the Qatari energy minister, who is also the current OPEC president. A deal to freeze oil output by OPEC and non-OPEC producers fell apart in Doha this month. Price hawk Venezuela had been pushing for a deal to boost prices and is now trying to revive negotiations. In a letter to Qatar's Mohammed al-Sada dated April 21, Del Pino floats the idea that major oil producers who attended the Doha conference attend the Vienna OPEC Ministerial Conference as observers.  (Reuters, http://www.reuters.com/article/us-opec-venezuela-idUSKCN0XN2B0)

 

Commodities

POLAR Breweries are entering a “critical financial stage”, according to company director Marisa Guinand, who announced their fourth brewery is suspending operations for lack of barley and other supplies. "The situation is critical since malt barley stock, which is the basic ingredient for beer and malt, has run out”, she said. Guinand recalled that the Beer Manufacturers Chambers had issued a warning in February that stocks were running out and that FOREX had not been allocated for requisite imports. She said the plants will be having no income, and this will hurt profits. Stockholders will provide their own capital to honor the company’s labor commitments and social benefits. Without referring directly to POLAR, President Nicolas Maduro is threatening to have security forces and workers take up any plants that come to a halt, calling it a “a serious crime against the nation amid an emergency”. Foreign Trade and Investment Minister Jesús Faría has added that POLAR CEO Lorenzo Mendoza will not be “so inept” as to “close down his plant”, in which case “workers will do what they have to do, they have a right to work”. He termed Mendoza’s demands for FOREX “cynical … when one can see an extreme FOREX scarcity because oil prices dropped.” More in Spanish:  (El Nacional, http://www.el-nacional.com/economia/Cerveceria-Polar-momento-financiero-critico_0_837516527.html; http://www.el-nacional.com/economia/Presidente-Maduro-amenazo-Polar-detienen_0_836916602.html, http://www.el-nacional.com/economia/Polar-cerrado-plantas-cerveza-cebada_0_836916588.html; Notitarde: http://www.notitarde.com/Economia/Farias-Bajo-ningun-concepto-el-Gobierno-cerraria-Polar-Videos/2016/04/27/954478/)

 

Economy & Finance

Venezuela doesn't have enough money to pay for its money

Venezuela is scrambling to print new bills fast enough to keep up with the torrid pace of price increases. The first signs of the currency shortage date back to 2014 when the government began increasing shipments of bank notes as wads of cash were already needed for simple transactions. Most of the cash, like nearly everything else here, is imported; so ahead of the 2015 congressional elections, the central bank tapped the U.K.’s DE LA RUE, France’s OBERTHUR FIDUCIAIRE and Germany’s GIESECKE & DEVRIENT to bring in more than 10 billion bank notes, surpassing the 7.6 billion the U.S. Federal Reserve requested this year. But currency companies were experiencing delays in past payments, so when the tender was offered, the government only received about 3.3 billion in bids. The cash arrived in dozens of 747 jets and chartered planes. Under cover of security forces and snipers, it was transferred to armored caravans where it was spirited to the central bank in dead of night. The currency makers complied, only to find payments not fully forthcoming. Last month, DE LA RUE, the world’s largest currency maker, sent a letter to the central bank complaining that it was owed US$ 71 million and would inform its shareholders if the money were not forthcoming. Now companies are backing away. With its traditional partners now unenthusiastic about taking on new business, the central bank is in negotiations with others, including Russia’s GOZNACK, and has a contract with Boston-based CRANE Currency. “It’s an unprecedented case in history that a country with such high inflation cannot get new bills,” said Jose Guerra, an opposition law maker. Venezuela, in other words, is now so broke that it may not have enough money to pay for its money. (Bloomberg: http://www.bloomberg.com/news/articles/2016-04-27/venezuela-faces-its-strangest-shortage-yet-as-inflation-explodes)

 

IMF terms Venezuelan mid-term outlook unsustainable

Alejandro Werner, IMF director for the Western Hemisphere, says Venezuela faces a situation that is “not sustainable in the mid-term” as a result of macro- and micro-economic factors, such as drop in oil prices of about 20% of this country’s GDP, the loss of productivity and inflation risk. "Given the deteriorating productive capacity, the deterioration of microeconomic policy and macroeconomic imbalances in Venezuela, which have deteriorated further amidst the current oil shock, clearly the situation is not sustainable in the middle term," he says. According to forecasts presented this month by the IMF, the country's economy will shrink by 8% this year, following a decline of 5.7% in 2015, although in 2017 recession will fall to 4.5%. The Venezuelan economy "had already showed signs of deterioration in productive capacity" even when oil prices were high, he added. (El Universal, http://www.eluniversal.com/noticias/daily-news/imf-terms-venezuelan-situation-unsustainable-the-middle-term_306968; and more in Spanish: El Nacional, http://www.el-nacional.com/economia/FMI-Situacion-Venezuela-sostenible_0_837516522.html)

 

…and minister admits “difficult” situation

Foreign Trade and Investment Minister Jesús Faría has admitted Venezuela is going through a difficult macro-economic scenario, and blames it on dropping oil process, which the government cannot control. More in Spanish: (Notitarde; http://www.notitarde.com/Economia/-El-pais-afronta-un-cuadro-macroeconomico-dificil-2664261/2016/04/28/954548/;; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/faria--falta-de-diversificacion-e-inestabilidad-po.aspx; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/farias-el-estado-no-contempla-el-cierre-de-empresa.aspx)

 

Venezuela economic crisis means fewer meals, more starch

Recession and a dysfunctional state-run economy are forcing many here to reduce consumption and eat less-balanced meals. Soaring prices and chronic shortages have left 65-year-old homemaker Alida Gonzalez struggling to put meals on the table. She and her four family members in the Caracas slum of Petare now routinely skip one meal per day and increasingly rely on starches to make up for proteins that are too expensive or simply unavailable.

"With the money we used to spend on breakfast, lunch and dinner, we can now buy only breakfast, and not a very good one," said Gonzalez in her home, which on a recent day contained just half a kilo of chicken (about a pound), four plantains, some cooking oil, a small packet of rice, and a mango. The family did not know when they would be able to buy more.  (Reuters, http://www.reuters.com/article/us-venezuela-food-widerimage-idUSKCN0XO1OZ)

 

Crisis compels Venezuelans to resell poor-quality goods

As unusual as selling a worn-out toilet bowl is the market of damaged objects, useless electrical appliances, shoes, and reused clothes that has emerged in Caracas. In the sellers’ view, this is a practice which originated in the city’s poorest areas and managed to install amid crisis in other places. For instance, the surroundings of the Attorney General’s Office, the National Assembly, other important institutions and, particularly, entrances of subway stations are some of the places where sellers offer their goods. Passers-by have denounced that few spaces are free from scrap merchants, many of whom lack a formal job and are extremely poor. (El Universal, http://www.eluniversal.com/noticias/daily-news/crisis-compels-venezuelans-resell-poor-quality-goods_306870)

 

Military register 69% product scarcity in 4 states

The Armed Forces’ Western Strategic Defense Region has detected a “low availability of items in stores” (a military euphemism for scarcity), in 4 states, according to its monthly report to the Strategic Operating Command, which monitors reports on product availability and the number of people in line to but them. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/FANB-reporta-escasez_0_837516530.html)

 

Politics and International Affairs

Opposition kicks off petition drive to oust President Maduro, Capriles aims for November vote

Parties comprising the MUD opposition coalition are collecting the signatures of some 198,000 people – 1% of the country’s 19.8 million registered voters – and later present about another 4 million for the CNE to set a date for a referendum to recall President Nicolas Maduro. Opposition leader and former presidential candidate Henrique Capriles redirected scheduled marches on the National Election Council (CNE) offices in all cities towards efforts to collect the necessary signatures in a drive conducted by the Democratic Unity all around the country. He estimates the recall vote could be held in November or December this year. If the opposition wins the recall vote this year, new elections must be held. But if it takes place in 2017, Maduro would be replaced by Vice President Aristobulo Istúriz until the term ends in 2019. Capriles says: “if the recall referendum is not held this year it will make no sense. We are not interested in the same regime. It is this year or not at all”. Capriles added that much more than the almost 200,000 necessary signatures will be collected within two days and hopes to deliver them to the CNE by next Monday, as hundreds lined up to sign nationwide. Maduro claims opposition efforts to shorten his term are “not viable” and terms them “coup attempts”. (The Wall Street Journal: http://www.wsj.com/articles/venezuela-opposition-kicks-off-petition-drive-to-oust-president-maduro-146178338; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2410848&CategoryId=10718; Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKCN0XO1XS; http://www.reuters.com/article/us-venezuela-politics-idUSKCN0XN2OZ; Bloomberg, http://www.bloomberg.com/news/articles/2016-04-26/venezuelan-opposition-cleared-to-collect-referendum-signatures; and more in Spanish: Infolatam: http://www.infolatam.com/2016/04/26/poder-electoral-venezolano-activa-el-proceso-para-el-referendo-revocatorio; http://www.infolatam.com/2016/04/28/opositores-en-venezuela-recogen-ya-firmas-para-revocar-mandato-de-maduro/; El Universal, http://www.eluniversal.com/noticias/politica/capriles-espera-entregar-las-firmas-proximo-lunes_306977; ABC: http://www.abc.es/internacional/abci-oposicion-venezolana-espera-referendum-revocatorio-noviembre-o-diciembre-201604271823_noticia.html)

 

Poll shows 60,3% support the recall of Nicolas Maduro

If the recall referendum were to be held next Sunday, 60.3% would vote to eject Nicolas Maduro from the Presidency, and only 28.3% would vote to keep him. The latest poll by VENEBARÓMETRO shows support for a recall has grown since February, when it was 59.5% More in Spanish: (El Nacional, http://www.el-nacional.com/politica/venezolanos-apoya-revocatorio-Nicolas-Maduro_0_837516506.html)

 

Protests in Venezuela over shortages and blackouts

Protesters and looters took to the streets of Venezuela on Wednesday as citizens suffered another day with prolonged shortages of water, power and food. Strong rioting has taken place in Venezuela’s second city, Maracaibo (Zulia state, where temperatures average 34 centigrade), protesting 20-hour blackouts there.  The National Guard reported over 121 people were arrested during protests and looting by hundreds at around 73 groceries, apparel and appliance stores. There were also protests reported in Maracay (Aragua state) and La Guaira (Vargas State) involving blocked streets and burning tires. Local media reports violence arises due to blackout, cuts in water supply and food scarcity. The local Social Conflict Observatory reports 170 lootings nationwide during the first quarter this year. While the government claims the El Niño drought has limited electricity generation capacity, the opposition has charged the regime with inefficiency and corruption in managing the system. President Nicolas Maduro condemned the protests and claims his political enemies are trying to create chaos and sabotage him. “They are trying to create a violent situation”, he claims. (The Wall Street Journal: http://www.wsj.com/video/protests-in-venezuela-over-shortages-and-blackouts/9B37C3F8-1CB3-4ED0-A708-52D85D18600C.html; and more in Spanish: El Universal, http://www.eluniversal.com/noticias/venezuela/protestas-maracaibo-por-apagon-mas-horas_306677)

 

The country is in gridlock, while the opposition attempts to oust the president.

The main political challenge for the country is the fight to remove the president from power. Despite several attempts by the opposition, nothing has worked so far and Venezuela has seen serious economic and social implications arise from this gridlock. The government and opposition each have their own strategic approach to gaining and maintaining power. Three potential paths have been seriously pursued by the opposition coalition, which does not control the other branches of government. First, the opposition sought to amend the constitution to shorten terms in office, but the Supreme Court ruled that any such amendment could not be applied to current terms. Impeachment by the National Assembly is the second legal option for ousting Maduro, but although the opposition achieved this threshold in election results, three opposition candidates from Amazonas have been prevented from assuming office, so the opposition does not have the necessary supermajority to impeach the president. The third option is to hold a national referendum calling for a new president. The opposition is under pressure to hold the referendum this year. If it is held next year, the government would remain in power, even if people vote with the opposition, and Maduro would simply be replaced by the vice president. This scenario makes it very difficult for the opposition to successfully remove Maduro from office by constitutional means. An emerging alternative option for the opposition involves the democratic clauses contained in Article 20 of the OAS Charter and Mercosur’s Ushuaia II protocol, but diplomatic measures often do not produce tangible results. Political unrest appears to once again be on the rise, but protesters need to be organized and use these social movements strategically. Otherwise, random acts will be much less effective against the government.  One advantage Maduro has over the opposition is that he abides by a more dictatorship-like model, while the opposition favors a democratic model – which provides Maduro with more maneuverability. The elephant in the room is Venezuela’s military and the possibility of a coup. Much of the top military brass subscribes to Chavismo, and those who entered the military in 1999 or later were indoctrinated with the Bolivarian revolution mentality. Political actors on both sides in Venezuela have proved they all possess high levels of resilience and resourcefulness. These are essential elements for success in Venezuelan politics despite their abstract nature. For this reason, it is difficult to pinpoint a rupture in the current gridlock, which at this point looks like it will most likely be broken when one player loses focus and makes a poor calculation or fumble. (Geopolitical Futures: https://geopoliticalfutures.com/venezuelas-political-crisis-unfolds/)

 

National Assembly to ask OAS to debate Venezuelan situation

An opposition delegation of National Assembly legislators, headed by Foreign Affairs Committee Chairman Luis Florido, is in Washington to formally present a request to OAS Secretary General Luis Almagro for “the OAS to urgently debate the situation in Venezuela, and move toward a resolution that points to the political crisis, political prisoners, and allows the Venezuelan people to vote for President Nicolas Maduro’s recall”. More in Spanish:

(El Universal, http://www.eluniversal.com/noticias/politica/oposicion-pedira-manana-oea-discutir-situacion-venezuela_306909)

 

Defense minister deplores "systematic" attacks against the Armed Forces

Defense Minister General Vladimir Padrino has condemned systematic attacks against the Bolivarian National Armed Forces (FANB) by what he calls a number of groups who have particular interests and are driven by their thirst for power. In a communiqué, he rejected some sectors’ attempts to tarnish “the honor and dignity of those who have promised to defend the country and its institutions to death if necessary.” (El Universal, http://www.eluniversal.com/noticias/daily-news/defense-minister-deplores-systematic-attacks-against-the-armed-forces_306772)

 

Senator Rubio calls for further sanctions on Venezuela

U.S. Senator Marco Rubio (R-FL) took to the Senate floor Wednesday to highlight the widespread corruption in the institutions of the government in Venezuela. He warned of the serious consequences of failed leadership, failed economic policies, a societal breakdown, human rights abuse, and a de facto political coup that is currently taking place in Venezuela. Rubio said: “The first thing we should do is we should be active at the Organization of American States (OAS) as it considers the situation in Venezuela and they should be asked that voting members recognize the humanitarian and political crisis in Venezuela … What’s happened in Venezuela is nothing short of a coup d’etat, a de facto coup”. In reference to sanctions, he said: “we have imposed sanctions on human rights violators, not sanctions on the people of Venezuela, not sanctions on the government, on human rights violators. Many of whom steal money from the Venezuelan people and invest it in the United States. … And that’s why we impose sanctions on them. There will be an effort here, I hope, in the next day or so, to extend those sanctions for another three years”. (Latin American Herald Tribune: http://www.laht.com/article.asp?ArticleId=2410950&CategoryId=10717)

 

FREEDOM HOUSE says the regime is the main source of pressure on media in Venezuela

According to the recently published FREEDOM HOUSE annual report, Venezuela is one of the countries in the Hemisphere were the government is the main source of pressure on independent media, and there is no free press here.  More in Spanish: (El Universal: http://www.eluniversal.com/noticias/politica/freedom-house-gobierno-principal-fuente-presion-para-los-medios_306851)

 

 

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.