October 12, 2017

International Trade

3,411 tons of food and medical supplies have arrived at Guanta port in 142 containers aboard the SAN ANTONIO from Panama. The shipment includes wheat flour, sunflower oil, surgical masks, syringes. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=37703; El Universal, http://www.eluniversal.com/noticias/economia/llegan-puerto-guanta-mil-toneladas-mercancia_673416)

 

Logistics & Transport

Venezuela reels under ongoing transport crisis

Catching a bus in the Venezuelan capital today and making it to the desired destination on time can be quite an ordeal for commuters, as the country’s transport infrastructure is in shambles due to high maintenance costs, decreased tax revenue, rampant inflation and a system that is chronically understaffed. Venezuela’s spiraling transport crisis, trade union representatives say, is owing to government apathy and withdrawal of subsidies and a lack of investment in the sector. The president of a local union of transporters of Caracas, Hugo Ocando, told EFE that while salaries of drivers are fixed, maintenance costs are unpredictable as the country’s economy, in many areas, runs on the black market price of foreign exchange. According to Ocando, 70% of the country’s transport system has been paralyzed and in the Greater Caracas area alone, on-road vehicles have reduced from 18,000 to 6,000. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2444551&CategoryId=10717; EFE: https://www.efe.com/efe/english/life/venezuela-reels-under-ongoing-transport-crisis/50000263-3405419)

 

Oil & Energy

Big buyer of Venezuelan crude oil halts purchases from national oil company

The fifth largest U.S. buyer of Venezuelan crude, PBF Energy, has halted direct purchases from state-run oil company PDVSA, according to four sources, deepening a rift amid sanctions on this country. PBF is the second buyer in as many months to go elsewhere for its oil and further disagreements could spell new hardships for PDVSA, which owes bondholders US$ 1.2 billion in debt payments due this month. Venezuela relies on oil for over 90% percent of export revenue and U.S. refiners are among its largest cash-paying customers. PBF notified PDVSA last month it "is not going to take any more Venezuelan crude cargoes" from the state-run firm, said a PDVSA source who could not be identified because the information was not public. That notification came after a more than 40-day standoff over a previous shipment. In July, a Venezuelan heavy oil cargo intended for PBF sat off Louisiana awaiting a letter of credit to complete the sale. The tanker discharged in August. PBF has not directly purchased oil from PDVSA since early September, according to Thomson Reuters trade flows data. PDVSA's insistence that PBF prepay for cargoes hamstrung negotiations, the PDVSA source and one of the traders said, while the refiner suggested an open credit mechanism that would allow it to pay at least 30 days after delivery. In September, PDVSA also lost a supply contract for naphtha and natural gasoline to Brazilian petrochemical firm BRASKEM SA. Falling output and oil-quality issues have contributed to PDVSA's struggles to retain customers, and the situation worsened once its name appeared in a U.S. sanctions list. Venezuela in September sent less than 500,000 bpd of crude to the United States, its main destination for oil exports. The volume marked a 38% decline compared with the same month in 2016. Disruptions in imports from Venezuela also have affected Phillips 66, the firm said in August. PDVSA's supply to the U.S. refiner's Sweeny facility in Texas has dropped by more than two thirds this year in part due to oil quality issues forcing the firm to cancel cargoes and request price discounts. (CNBC: https://www.cnbc.com/2017/10/11/big-buyer-of-venezuelan-crude-oil-halts-purchases-from-national-oil-company.html; Reuters, http://www.reuters.com/article/us-pdvsa-pbf-energy-contract-exclusive/exclusive-pbfs-split-with-pdvsa-grows-as-u-s-refiner-halts-direct-deals-idUSKBN1CG24N)

 

Florida businessman admits to bribery scheme at Venezuela's PDVSA
The part owner of several Florida-based energy companies on Wednesday became the latest person to plead guilty as part of an ongoing U.S. investigation into bribery at Venezuela’s state oil company PDVSA. Fernando Ardila Rueda, 49, pleaded guilty in federal court in Houston to two counts, including that he violated the U.S. Foreign Corrupt Practices Act in connection with a scheme to pay bribes to PDVSA employees, the U.S. Justice Department said. He became the 10th person to plead guilty as part of a larger investigation by the Justice Department into bribery at Petroleos de Venezuela SA (PDVSA) that became public with the arrest of two Venezuelan businessmen in December 2015. The two men were Roberto Rincon, who was president of Tradequip Services & Marine, and Abraham Jose Shiera Bastidas, the manager of Vertix Instrumentos. Both pleaded guilty last year to conspiring to pay bribes to secure energy contracts. (Reuters: https://www.reuters.com/article/us-venezuela-usa-corruption/florida-businessman-admits-to-bribery-scheme-at-venezuelas-pdvsa-idUSKBN1CG2Z8)

 

Economy & Finance

Maduro came back empty handed from his recent trip to Moscow, with no announcement of any new money. Discussions were instead focused on solving existing issues. It is possible that Russia might prefer to see proof of Maduro’s strength before adding exposure, but in any case, Russia does not have the capacity to satisfy Venezuela’s financing needs. China’s potential support remains a more critical factor. While uncertainty is likely to remain elevated, overcoming the Q4 17 obstacles that both the opposition and the government face could be supportive of a possible negotiated solution to the crisis in 2018, which would be critical to avoiding default next year and/or in determining the conditions for a potential debt restructuring. (SEE ATTACHED BARCLAY’S REPORT)

 

IMF says Venezuela inflation may rise beyond 2,300%

Venezuela’s triple-digit annual inflation rate is set to jump to more than 2,300% in 2018, the highest estimate for any country tracked by the International Monetary Fund. An intensifying political crisis that’s spiraled since 2014 has weighed heavily on economic activity. Gross domestic product is expected to contract 6% next year, after shrinking an estimated 12% in 2017, the IMF said in its latest World Economic Outlook report published Tuesday. While Venezuela’s central bank stopped publishing inflation data in December 2015, the IMF argues the country’s consumer prices are estimated to leap 2,349.3% in 2018, the highest in their estimates, followed by the Democratic Republic of the Congo’s 44%. As oil production declines and uncertainty increases, unemployment is forecast to increase to about 30% in 2018, also the highest and followed by South Africa’s 28% and Greece’s 21%. The Bolivarian Republic is not current with most of its key economic statistics, leaving economists scant data to crunch. Venezuela’s debt is growing, and it is increasingly unable to make interest payments. Printing money is no longer an option which it has already done. (Financial Tribune: https://financialtribune.com/articles/world-economy/74038/venezuela-inflation-may-rise-beyond-2300; https://www.bloomberg.com/news/articles/2017-10-10/imf-sees-venezuelan-inflation-rate-rising-beyond-2-300-in-2018)

 

Cash shortages here are expected to worsen
Cash shortages are expected to worsen here, despite efforts by Venezuela’s Banking Association and the Bank Superintendent’s office. Currency exports, obsolete ATM’s and the absence of decisions by monetary authorities are causing the crisis. The Central Bank issued 289.3 million new VEB 500 and VEB 1000 bills, and data shows the amount distributed was VEB 393.322 billion, which is only 60% of cash required in July. There seems to be no end in sight for the shortages, which are expected to worsen. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/economia/proyectan-agudizacion-falta-efectivo-pais_673446)

 

Fears of a big Venezuela default subside
Investors are gaining confidence that Venezuela will make its next big bond payments. Notes from the state oil company that mature in November climbed to 94.5 cents on the dollar Wednesday, a three-year high, while amortizing bonds due in 2020 rose to their highest price since they were issued last year. There’s a US$ 985 million payment due Oct. 27 for the 2020 bonds, and US$ 1.2 billion due Nov. 2 on the securities maturing next month. While investors assign a 99% probability to Petroleos de Venezuela SA defaulting sometime in the next five years, according to credit-default swaps trading, optimism on the near term has been growing as the government assures investors it will pay. (Bloomberg: https://www.bloomberg.com/news/articles/2017-10-11/venezuela-default-fears-subside-as-shortest-pdvsa-bonds-climb)

 

Buchheit calls for post-Maduro Venezuelan debt standstill

Any incoming regime in Venezuela replacing President Nicolas Maduro will have to consider how to gain temporary relief from paying its creditors without giving them legal grounds to accelerate their outstanding debts, according to legal experts. One solution will be to create “some form of temporary standstill on creditor actions”, according to Lee Buchheit, partner at law firm Cleary Gottlieb, and Mitu Gulati, law professor at Duke University. Venezuela is struggling to service debts with a combined face value of US$ 63 billion after a collapse in oil prices left it with dwindling revenues and a huge fiscal shortfall. Talks are already being carried out bilaterally between Venezuela and its sovereign creditors, China and Russia, which are owed US $37.2 billion between them, but policy-makers in the country still face complex challenges to find a long-term solution. (Reuters, http://www.reuters.com/article/buchheit-calls-for-post-maduro-venezuela/buchheit-calls-for-post-maduro-venezuelan-debt-standstill-idUSL8N1ML2ZL)

 

Politics and International Affairs

US hopes Maduro regime will allow Venezuela to “speak up and decide” in regional elections

US Under Secretary of State for Political Affairs Thomas Shannon says the Maduro regime must allow the people to “speak up and decide” in Venezuela’s upcoming regional elections next Sunday. He also said the United States and Spain have joined in a “special association” in favor of the people of Venezuela, and that both governments have clearly “condemned repression that feeds the Venezuelan political crisis”. He said both the U.S. and Spain are promoting dialogue as a way out of the ongoing crisis here, within the European Union and the Organization of American States, “pressing on behalf of the Venezuelan people’s right to self-determination and not for the government’s own perpetuation”. He called on the European Union “to do more” in sanctioning the Maduro regime for “violating democratic rules”, More in Spanish: (El Nacional: http://www.el-nacional.com/noticias/mundo/confia-que-venezuela-hable-decida-las-regionales_207184)

 

Is Venezuela a dictatorship? A key election will offer clues.
Venezuelans go to the polls this Sunday in state elections seen as a test of President Nicolás Maduro’s willingness to share power. But with polls showing the ruling socialists at risk of landslide losses, the authoritarian government appears to be falling back on a trifecta of tactics.  Two and half months after the creation of a super congress that gave the government nearly absolute power, Maduro has called the vote for state governors clear evidence that democracy remains alive here. Nevertheless, opposition leaders are decrying a dirty campaign by the Venezuelan government, which President Trump has denounced as a “socialist dictatorship.” State media is airing almost round-the-clock supportive coverage of pro-government candidates, while portraying their challengers as hypocritical and inept. All candidates, meanwhile, are being limited to four minutes of political ads per day on independent networks that now survive by self-censoring. Food baskets are being doled out to hungry voters at pro-government rallies. In a move seen as purposely misleading, the ballots for Sunday’s election will include a host of candidates who lost in the primaries and are not supposed to be running. This week, the government abruptly announced it would relocate a number of voting centers for “security reasons.” Opposition leaders said the move involved 205 locations in heavily anti-government districts in 16 states. That, critics say, amounts to manipulation and confusion. In Vargas, a coastal state just north of Caracas, for instance, the brother of opposition candidate Jose Manuel Olivares was detained last week by intelligence police for allegedly stealing a car — a charge his family denies. While stumping for votes, the candidate is often shadowed, he said, by state agents. Winning candidates from the opposition will likely find their powers restrained. Maduro has said that all governors will come under the authority of the Constituent Assembly, a government-controlled super congress created in a July vote marred by allegations of massive fraud. That body is likely to make life tough for any governor who is not in line with Maduro. Yet the vote is still seen as a key test. If turnout is high, polls suggest the opposition could capture governorships in up to 19 of Venezuela’s 23 states. Analysts are watching to see whether the government faces allegations of vote rigging, similar to those that emerged during the July election. Despite the polls, Maduro last weekend said his party is “expecting a historic success.” Given their strategy of subordinating governors to the government-controlled assembly, authorities might risk little by allowing a clean vote — while gaining much from the optics. The government may be calculating that such an event could defuse international pressure and appease its domestic opponents. Maduro is deeply unpopular, in part due to a severe economic crisis brought on by declining oil prices and what many view as government mismanagement. Recent polls show the president's approval rating at 23%. But opposition leaders have also lost support due to infighting and alleged disorganization. Some critics have pilloried them for even participating in the state elections, arguing the move is validating the government and playing into Maduro’s hands. Still, the election is an important bellwether for the opposition, which has largely failed to sustain the large-scale street protests that rocked the nation earlier this year. The activists’ concern now is that government tactics — and a general sense of helplessness among voters — may depress turnout on Sunday. (The Washington Post: https://www.washingtonpost.com/world/the_americas/is-venezuela-a-dictatorship-a-key-election-will-offer-clues/2017/10/11/d4301382-ad01-11e7-9b93-b97043e57a22_story.html)

 

Mexico confirms it will join talks between Maduro regime and pro-democracy coalition

Mexican Foreign Minister Luis Videgaray has showed the Mexican Senate a letter from Venezuela’s Foreign Minister Jorge Arreaza inviting Mexico to be a part of the group of countries that will accompany possible talks between the Maduro regime and the pro-democracy MUD coalition. Jorge Rodríguez, who heads the regime’s team in proposed talks, claims that a cohabitation agreement will emerge after Sunday’s regional elections. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/politica/rodriguez-asegura-que-luego-de-elecciones-el-gobierno-y-oposicion-concretaran-acuerdo; http://www.noticierovenevision.net/noticias/internacional/mexico-confirma-acompanara-negociacion-entre-gobierno-y-oposicion-venezolana)

 

Opposition denies Maduro’s claim of progress in dialogue

The negotiator for the Venezuelan opposition in the process of developing a dialogue with the government of President Nicolas Maduro said on Tuesday that the president’s claim that negotiations have progressed 95% is totally false – the fact is they are losing ground. “Once again we must contradict the government. Political negotiations have not moved forward – they are losing ground every day,” opposition lawmaker and negotiator Luis Florido told the press in a statement. Florido said that Maduro’s remarks and those of the Venezuelan ambassador to the Dominican Republic, Jesus Uzcategui, are untrue, and since the government has not complied with the conditions required by the opposition, the dialogue is going nowhere. “From the MUD (opposition coalition) we repeat that... rather than the exploratory process being completed, it has gone backwards, because they took away our electoral guarantees by not allowing us to substitute candidates and they’re trying to get away with electoral fraud,” he said. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2444509&CategoryId=10717)

 

DATANALISIS director says democratic movement could gain 13-16 gubernatorial seats

José Antonio Gil Yepes, director of the DATANALISIS polling firm says that the pro-democracy movement could gain 13-16 governorships in Sunday’s upcoming elections, in addition to the 3 it currently controls out of a total of 23 states. He said some United Socialist Party candidates “will emerge ahead of the regime”, because he said: “The regime could lose with a margin of 84-16 which is President Nicolas Maduro’s approval rating over the past 4 months”.  He said abstention by disappointed opponents would not significantly lower the traditional rate of 40-50%. Gil added that 78% of the population distrusts the National Elections Council, and called the current voting system “obsolete”. (2001: http://www.2001.com.ve/en-la-agenda/172122/oposicion-podria-ganar-13-o-16-gobernaciones--segun-director-de-datanalisis.html)

 

BARCLAY’S: Venezuela: Obstacle course

Doubts over the competitiveness of elections in Venezuela are keeping the country’s outlook uncertain. The October 15 regional elections are therefore an important test in this regard. The most recent DATANALISIS poll shows the opposition has a strong lead, with more than twice the number of voting intentions than the government. There are 14 states in which polls suggest the opposition has an unassailable lead, which could make manipulating the outcome hard. Conditions favor the government in just three states. The remaining six states have a bias towards the opposition, but the outcome will depend on turnout and the ability of the opposition to overcome the obstacles imposed by the government. In any case, the opposition could obtain sizeable gains. More important than the number of states will be which states each side wins and the distribution of the national vote, which would be an indicator for a potential presidential election in 2018. (SEE ATTACHED BARCLAY’S REPORT)

 

Maduro again says elected governors must pledge allegiance to his ANC

President Nicolas Maduro has again said all governors elected next Sunday must be subordinate and pledge allegiance to his sham “National Constitutional Assembly” (ANC). He said those who do not will not be able to exercise their authority. He claimed all those who vote will be validating the ANC, “because it called up these elections”. The MUD pro-democracy coalition immediately called a press conference to reply to Maduro’s claim, saying: “People do not vote to endorse the ANC, they vote because it is their Constitutional right to do so”.(2001: http://www.2001.com.ve/en-la-agenda/172128/maduro-ratifico-que-gobernador-electo-debera-subordinarse-y-juramentarse-ante-la-anc---video-.html; http://www.2001.com.ve/en-la-agenda/172151/mud--la-gente-no-vota-para-avalar-la-anc--vota-porque-es-su-derecho-constitucional.html)

 

Exiled Attorney General says rule of law no longer exists in Venezuela

Venezuela’s Attorney General Luisa Ortega – deposed by the sham National Assembly - said on Tuesday in Bogota that the rule of law and democracy no longer exist in her country. “I want you to know that in Venezuela there exists neither rule of law nor democracy nor any freedom … In Venezuela there is a breakdown in the constitutional order,” Ortega added during a conference on human rights in Colombia, organized by the Political Science, Government and International Relations Faculty of Rosario University. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2444521&CategoryId=10717)

 

Opposition magistrates holed up in Chile residence flee Venezuela: source

Five magistrates named by the opposition-run congress who had been holed up in the Chilean ambassador’s residence to avoid arrest fled in the early hours of Monday and escaped over the border to Colombia, a source said on Tuesday. The Chilean Foreign Ministry said in a statement that Elenis Rodriguez, Luis Marcano, Jose Nunez, Beatriz Ruiz, and Zuleima Del Valle had left the premises on Monday, but did not offer further details. “Relatives came to get them at 5 a.m. yesterday. They escaped via (the Colombian border city of) Cucuta,” said the source close to the five, who have been granted asylum by the Chilean government. (Reuters, http://www.reuters.com/article/us-venezuela-politics/opposition-magistrates-holed-up-in-chile-residence-flee-venezuela-source-idUSKBN1CF2XB)

 

Venezuelans are told their expired passports will be valid for another two years

Venezuelans have been told expired passports are valid for another two years because they have run out of paper and ink to print new ones. President Maduro has signed an emergency decree to extend their validity because of chronic shortages at the national passport agency. At least a million Venezuelans have been waiting months for new documents and cannot travel in the interim. Demand for travel documents is at a record high as Venezuelans seek to escape from political crisis and deep recession. (The Daily Mail: http://www.dailymail.co.uk/news/article-4972088/Venezuela-runs-paper-ink-print-new-passports.html#ixzz4vIrZvYCP)

 

Thousands are fleeing Venezuela by two-lane border bridge
For weeks, Venezuelans have been flocking by the busload to San Antonio del Táchira, a border town of some 62,000 residents, fleeing as President Nicolas Maduro consolidates autocratic power. The Simon Bolivar International Bridge is the avenue for an outpouring unprecedented in the history of this oil-rich nation. Crowds stream toward the bridge, attended by street hawkers selling juice, fried pastries and bus tickets and men who ferry their meager possessions to a new life. According to Colombia’s migration authority, the number of foreigners entering Cucuta, the first major city across the bridge, more than doubled this summer. Over 50,000 came in August, up from 22,700 in June. The numbers don’t reflect dual nationals returning to their homeland, or thousands simply crossing into Colombia without passing official checkpoints. Named after the South American hero who freed both nations from Spanish rule, the Simon Bolivar International Bridge was a once major commercial artery. Now, lanes once filled with trucks bearing potatoes, onions and lettuce are reserved for pedestrians trundling handcarts, laden with shopping bags and even walking their dogs along with them. As almost a dozen airlines have pulled out of the country, the bridge has become a concrete bottleneck for the masses fleeing this crisis-torn land. Most Venezuelans stay in Cucuta only long enough to have their passport stamped and catch a ride. Those who arrive late have taken to sleeping in parks or bus stations. Church groups have been doling out food to weary travelers or those who simply cross for the promise of a free meal. Border security has been reinforced, temporary visas are being issued, but the growing exodus has the Colombian government contemplating “refugee camps” if Venezuela’s crisis spirals completely out of control. Few predict an end to Venezuela’s exodus soon. The United Nations has urged governments across Latin America to issue temporary protections to Venezuelans, yet many who are leaving seem unconcerned about permission. (Bloomberg: https://www.bloomberg.com/news/features/2017-10-12/thousands-are-fleeing-venezuela-by-two-lane-border-bridge)

 

No visas, bad jobs: Venezuelan emigrants reluctantly return home

Early last year, Leandro Colmenares sold his car and his apartment and fled Venezuela’s profound economic crisis, joining a wave of emigration to other Latin American countries. Colmenares, a medical equipment repairman, first set up in Panama with US$ 7,000 in hand. When he could not get a visa and struggled to find work, he ended up with odd jobs like painting houses and doing electrical wiring for US$ 25 a day. He then tried his luck in Colombia, where he again took odd jobs, mostly cooking. He opened a small cafe with other Venezuelans but it failed.And once again, he could not get a visa. Crushed and having run out of money, Colmenares decided in February he had no choice but return to Venezuela empty-handed and by bus - one of an apparently growing number of Venezuelan emigrants forced to go home after failing to start a new life elsewhere in Latin America. (Reuters, http://www.reuters.com/article/us-venezuela-migration/no-visas-bad-jobs-venezuelan-emigrants-reluctantly-return-home-idUSKBN1CH1XA)

 

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 31, 2016

International Trade

 

Cargo that has arrived at Puerto Cabello:

• 30.000 tons of raw sugar
• 60.000 tons of paddy rice
• 60.000 tons of baker wheat
• 10.000 tons of crude soybean oil
• 30.000 tons of cake of soy

More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34185; Notitarde, http://www.notitarde.com/La-Costa/Mas-de-mil-millones-de-toneladas-de-alimentos-a-granel-han-ingresado-al-pais-/2016/05/29/983574/; Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/distribuyen-190-mil-toneladas-materia-prima-para-producci%C3%B3n-alimentos; El Universal, http://www.eluniversal.com/noticias/economia/60000-trigo-panadero-forman-parte-las-190000-toneladas-insumo_312407; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/arribaron-al-pais-190-000-toneladas-de-materia-pri.aspx)

 

Trade with Colombia down another 20%

Data from the Colombia’s National Statistics Department (DANE) indicate trade between Colombia and Venezuela during Q1 2016 was only US$ 311 million, down 20% from US$ 389 million last year. (El Universal, http://www.eluniversal.com/noticias/economia/intercambio-comercial-entre-colombia-venezuela-contrajo_312602)

 

 

Logistics & Transport

 

Airlines suspend more flights to Venezuela as economic crisis worsens

Venezuela has for years seen airlines reduce capacity to this country as they struggled to repatriate revenue. Now, two more airlines are calling it quits altogether. LATAM Airlines Group SA, Latin America’s largest carrier, said Monday that it would cut all flights to Caracas by August. LATAM also highlighted economic conditions, saying it wouldn’t resume flights when things improved. A day earlier, Deutsche LUFTHANSA AG had said it would suspend its three weekly flights to Venezuela next month “until further notice.” The German airline’s spokesman, Andreas Bartels, pointed to the challenge of repatriating revenue from Venezuela and a sharp drop in ticket demand -- especially among business travelers -- with the nation mired in its third year of a deep recession. Venezuela owes Lufthansa over US$ 100 million in ticket revenue. Carriers have struggled for years to transfer back profits from Venezuela, leaving billions of dollars trapped in bolivars -- the local currency. The International Air Transport Association (IATA) has been pushing Caracas to free trapped airline revenue. (Bloomberg, http://www.bloomberg.com/news/articles/2016-05-29/lufthansa-to-suspend-flights-to-venezuela-starting-next-month; Reuters, http://www.reuters.com/article/us-latam-airlines-venezuela-idUSKCN0YL1SZ; El Universal, http://www.eluniversal.com/noticias/daily-news/latam-airline-begins-gradual-suspension-flights-venezuela_312593; Reuters, http://www.reuters.com/article/venezuela-airlines-lufthansa-idUSL8N18R2PM; El Universal, http://www.eluniversal.com/noticias/daily-news/venezuela-owes-lufthansa-usd-100-million-spokesperson-says_312579)

 

 

Economy & Finance

 

Venezuela’s oil income drops to under US$ 100 million per month

The drop in oil prices, the weight of foreign debt service cost, and lower production levels have drastically closed the stream of oil dollars that used to flow into Venezuela’s state coffers, lowering real income contributions to mere drops. Experts report that PDVSA contributions to Central Bank accounts are now below US$ 100 per month, after costs and debt service. This is in contrast to US$ 2-3 billion the company used to contribute two years ago. Russ Dallen, managing partner at Caracas Capital Markets, explains that “the numbers do not work”, leading the Maduro regime to sell off its few remaining foreign assets and spend reserves on importing around US$ 1 billion in food each month. Maduro himself has acknowledged the gravity of the situation, and said: “If we look to January 2010, income was US$ 1.790 billion; it was US$ 2.463 billion in January 2011; it was US$ 3 billion in January 2014; US$ 815 million in January 2015; and in January 2016 we only have US$ 77 million”.  More in Spanish: (El Nuevo Herald: http://www.elnuevoherald.com/noticias/mundo/america-latina/venezuela-es/article80184117.html#storylink=cpy)

 

Economic czar hints at FOREX release

Economic Affairs Vice President Miguel Pérez Abad has seemed to hint that FOREX operations will soon be liberated. He told media “we will soon release, set in motion, the FOREX system, particularly that which is of highest interest to the domestic economy, the supplementary exchange system”. He added that the “exchange rate relies on the market behavior and it acknowledges other stockholders, not only the government, because it is twofold: capture foreign currency, manage foreign currency to accomplish two fundamental goals, such as import substitution and promote exports.” However, expert economist Henkel García, of ECONOMÉTRICA, clarified that Pérez Abad did not promise to fully liberate the exchange rate, “what he meant was that DICOM would soon be implemented, something which has not yet happened…what he is talking about is that the new system would really be one of free access”. (El Universal, http://www.eluniversal.com/noticias/daily-news/forex-venezuela-could-set-free-soon_312476; and more in Spanish: El Nacional, http://www.el-nacional.com/economia/refirio-ministro-Perez-Abad-liberacion_0_857314592.html)

 

 

Politics and International Affairs

 

OAS head Almagro seeks emergency meeting on Venezuela

The head of the Organization of American States (OAS) has called for an urgent meeting to see if crisis-hit Venezuela's socialist government had breached democratic rules, which could lead to a process of suspension. Luis Almagro, a former Uruguayan foreign minister, has called Venezuelan President Nicolas Maduro a "petty dictator," accusing him of disrupting democracy by blocking the opposition-controlled congress and putting loyalists in the Supreme Court. A statement from the Washington-based OAS said Almagro was invoking the body's Inter-American Democratic Charter and had requested a meeting of the permanent council between June 10-20 to analyze the situation in Venezuela. Venezuela views the OAS as a pawn of hostile U.S. policy, and Maduro has dismissed Almagro as a turncoat working for its ideological adversaries in Washington. A two-thirds vote in the 34-nation OAS' General Assembly would still be needed to suspend Venezuela. Caracas has lost the support of diplomatic heavyweights Brazil and Argentina following their recent shifts to the right. But it still enjoys strong support from small Caribbean and Central American nations, including those who benefit from preferential oil and fuel sales, which could ensure it a numerical advantage in any vote. (Reuters: http://news.trust.org/item/20160531152906-1ybqo/?source=hpbreaking)

 

National Assembly President to ask for the floor at OAS meeting

Henry Ramos Allup, President of the National Assembly, says he will request the floor at the Permanent Council of the Organization of American States (OAS) to raise the issue of the current crisis here. Ramos says initiatives by OAS Secretary General Luis Almagro are “invaluable”. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-congress-speaker-ask-the-floor-oas_312498)

 

UNASUR sponsored efforts toward a dialogue here appear to be failing

The Union of South American Nations (UNASUR) has been promoting talks between the Venezuelan regime and its opponents, using the good offices of former Presidents José Luis Rodríguez Zapatero (Spain); Leonel Fernandez (Dominican Republic) and Panama (Martín Torrijos). A statement by UNASUR Secretary General Ernesto Samper says the talks are designed to strengthen the economy, preserve the rule of law, democracy and national sovereignty. Exploratory talks were held with both sides – separately - in the Dominican Republic last week, but Venezuela’s Foreign Minister Delcy Rodríguez went on media to falsely report both sides had met, which drew a wave of criticism. Opposition representatives called Rodríguez a liar and said that past UNASUR efforts have failed. They stressed that they did meet with UNASUR representatives to emphasize their four key conditions for entering into talks: Immediate freedom for political prisoners, a democratic solution this very year, respect for the National Assembly, and official recognition of the domestic humanitarian crisis. The Democratic Unity coalition (MUD) further said that any effort towards a dialogue is not viable if these demands are not accepted. For its part, the government priority is to block or delay a recall referendum against President Nicolas Maduro. Given the high level of polarization and confrontation for more than 15 years there are no bridges between the government and the opposition here. Civil war talk prevails on both sides, with “chavistas” accusing the opposition of coup-mongering and being the allies of imperialism; and the opposition refusing to recognize any legitimacy in the regime. UNASUR Secretary General Ernesto Samper reported the separate meetings and said they would continue.  (Bloomberg, http://www.bloomberg.com/news/articles/2016-05-28/venezuela-government-opposition-exploring-talks-to-end-crisis; El Universal, http://www.eluniversal.com/noticias/daily-news/unasurs-samper-believes-possible-talks-venezuela_312540; and more in Spanish: (Infolatam: http://www.infolatam.com/2016/05/30/venezuela-un-dialogo-con-escaso-futuro/Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/pj-no-hubo-ni-hay-dialogo-con-el-gobierno.aspx#ixzz4AEBn9pWv; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/unasur-confirmo-voluntad-de-dialogo.aspx; America Nuestra: http://americanuestra.com/ultimahora-los-4-puntos-de-la-mud-la-verdad-sobre-la-reunion-de-santo-domingo/; El Universal, http://www.eluniversal.com/noticias/politica/unasur-haran-nuevos-contactos-para-dialogo-fechas-proximas_312354)

 

Roman Catholic hierarchy says UNASUR is not adequate to promote talks here

Venezuela’s Roman Catholic hierarchy is willing to lend its good offices for talks needed to meet the national crisis, and believes the Union of South American Nations (UNASUR) is not adequate as a facilitator for contacts that began last week in the Dominican Republic. The bishops believe that “UNASUR can do little to promote talks, it lacks the strength to further a dialogue, and is not an adequate participant since the government had a lot to do with its formation. In addition, at other times UNASUR efforts came to nothing. A strong player is needed, or several international organizations, that are accepted as valid by both sides”.  More in Spanish: (El Nacional, http://www.el-nacional.com/politica/Conferencia-Episcopal-Unasur-adecuado-dialogo_0_857314617.html)

 

Elections Council calls off key meeting with opposition representatives

Miranda state governor and opposition leader Henrique Capriles reported that the National Elections Council (CNE) called off a scheduled meeting with opposition representatives to discuss the requested recall referendum. He called for new demonstrations to demand action by the CNE, which he accused of stalling. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/poder-electoral-suspende-encuentro-este-martes-con-oposicion_312614)

 

Kerry welcomes bid to spur talks between Venezuela, opposition

U.S. Secretary of State John Kerry spoke to former Spanish Prime Minister José Luis Rodríguez Zapatero on Thursday to welcome the efforts he is leading to facilitate dialogue between the government of Venezuela and members of the Venezuelan opposition. Kerry said the United States stands ready to help Zapatero, alongside former Dominican President Leonel Fernandez and former Panamanian President Martín Torrijos, in their efforts. (Reuters, http://www.reuters.com/article/us-venezuela-politics-usa-idUSKCN0YI2BY; El Universal, http://www.eluniversal.com/noticias/daily-news/senator-marco-rubio-adds-names-venezuelan-sanctionable-officials_312523)

 

Mexico calls for inclusive talks in Venezuela

The Mexican government welcomed “the first encounters for talks” between the Venezuelan government and the opposition and made an appeal for an “inclusive” dialogue. The Mexican Ministry of Foreign Affairs says it hopes the initiative will help “Venezuelans find a solution to the tough situation in their country.” (El Universal, http://www.eluniversal.com/noticias/daily-news/mexico-asks-for-inclusive-talks-venezuela_312481)

 

Argentina could seek MERCOSUR meeting on situation in Venezuela

Argentina’s Foreign Affairs Minister Susana Malcorra has announced that her government is calling for a meeting of foreign ministers of the Southern Common Market (MERCOSUR) to tackle the current situation in Venezuela. Malcorra said that the democratic clause of the economic bloc is likely to be enforced in Venezuela, but reiterated that “the only solution” to the situation here requires “talks” between the government and the opposition. (El Universal, http://www.eluniversal.com/noticias/daily-news/argentina-backs-mercosur-meeting-situation-venezuela_312518)

 

Argentina, Chile and Uruguay appeal for an urgent political dialogue in Venezuela

Argentina, Chile and Uruguay in a joint statement released on Friday issued “an urgent call for an effective political dialogue and a genuine civic understanding among all political and social actors called for political dialogue in Venezuela” and offered to help with a “national reunion” of the political and social forces of the country, The appeal was made extensive to the government, the National Assembly, under opposition control, and all political and social groups. (Mercopress: http://en.mercopress.com/2016/05/21/argentina-chile-and-uruguay-appeal-for-an-urgent-political-dialogue-in-venezuela)

 

Opposition lawmakers report on Venezuela’s crisis in Paraguay

Opposition legislators from Venezuela met with the head of the Paraguayan Chamber of Deputies, Hugo Velásquez, to report that Venezuela is facing “a humanitarian crisis” because the government “has destroyed the country’s productive apparatus.” The delegation told journalists that Venezuela “lacks basic products” and that nationals “are going through an inconceivable situation verging on atrocity,” Efe reported. (El Universal, http://www.eluniversal.com/noticias/daily-news/opposition-lawmakers-report-paraguay-venezuelas-crisis_312500)

 

Washington Post Editorial: The agony of Venezuela continues

Numerous governments, including the Obama administration, last week called for political negotiations in Venezuela to head off an incipient and potentially catastrophic breakdown of political and economic order. Former Spanish prime minister José Luis Rodríguez Zapatero traveled to Caracas with other statesmen to urge President Nicolas Maduro and opposition leaders to start talking. But Maduro was otherwise occupied. At the end of the week, he ordered tanks, aircraft and soldiers to patrol the country, claiming — not for the first time — that he was trying to head off a U.S. invasion. Thus does the delusional heir of Hugo Chávez drag a country of 30 million people, with the world’s largest oil reserves, over a cliff. By most measures, Venezuela is already a failed state: Amid crippling shortages of food, medicine, power and water, every societal ailment is soaring. Inflation is headed toward 700%, and the murder rate is probably the world’s second-highest, after El Salvador’s. According to the New York Times, deaths of infants under a month old in public hospitals are 100 times more common than three years ago, while a coalition of nongovernmental organizations says at least 200,000 people with chronic illnesses lack the medications for them. An April poll, reported by the Miami Herald, showed that 86% of Venezuelans said they bought “less” or “much less” food than they used to, while only 54% said they ate three times a day. No wonder there have been numerous reports of mobs sacking food warehouses, as well as dozens of instances of vigilante lynching of suspected thieves. Thanks to Maduro and the corrupt and incompetent coterie that surrounds him, this chaos is likely to grow steadily worse.  Calling for “political dialogue” is one way to respond to this unfolding crisis. Yet Maduro and other top regime officials, many of them implicated in drug trafficking or other major crimes, have repeatedly failed to respond seriously. It’s time for more pressure to be put on them, such as through sanctions by the Organization of American States under its democracy charter. (The Washington Post: https://www.washingtonpost.com/opinions/venezuelas-agony/2016/05/24/4db6c3e6-21d9-11e6-9e7f-57890b612299_story.html)

 

Venezuela drifts into new territory: hunger, blackouts and government shutdown

Step by step, Venezuela has been shutting down. This country has long been accustomed to painful shortages, even of basic foods. But Venezuela keeps drifting further into uncharted territory. In recent weeks, the government has taken what may be one of the most desperate measures ever by a country to save electricity: A shutdown of many of its offices for all but two half-days each week. But that is only the start of the country’s woes. Electricity and water are being rationed, and huge areas of the country have spent months with little of either. Many people cannot make international calls from their phones because of a dispute between the government and phone companies over currency regulations and rates. COCA-COLA FEMSA, the Mexican company that bottles COKE in the country, has even said it was halting production of sugary soft drinks because it was running out of sugar. There is often little traffic in Caracas simply because so few people, either for lack of money or work, are going out. Last week, protests turned violent in parts of the country where demonstrators demanded empty supermarkets be resupplied. And on Friday, the government said it would continue its truncated workweek for an additional 15 days. The growing economic crisis has turned into an intensely political one for President Nicolas Maduro, who looks increasingly encircled. American officials say the multiplying crises have led Maduro to fall out of favor with members of his own socialist party, who they believe may turn on him, leading to chaos in the streets. (The New York Times: http://www.nytimes.com/2016/05/28/world/americas/venezuela-economic-government-collapse.html?ribbon-ad-idx=2&rref=world/americas&_r=0)

 

Harrowing scenes of Venezuela on the brink of collapse – in photos

The lines outside Venezuelan supermarkets can stretch for hours, snaking down sidewalks and right-angling around corners. Each one is like a hissing fuse. Will they explode? Venezuela withers away a little more each week. Another food staple or medicine or industrial part goes missing, bringing the breaking point closer. The national guard troops policing the supermarket lines grip their riot shields and truncheons tighter, looking ever more jittery. It all is a waiting game. The government of President Nicolas Maduro is waiting for a rise in oil prices to save it from catastrophe. It is waiting for rainfall to rescue its hydroelectric plants and end the rotating blackouts that have cut the work week for state employees from five days to two. The government is holding on to hopes of another loan from China, or any other creditor willing to lend it a little breathing room. Venezuela’s political opposition is also watching the fuse, and sometimes trying to fan it, but its street protests look small beside the food lines. The opposition took control of parliament in December, but that didn’t matter. Maduro disregards their laws, their votes, their condemnations and warnings. They’re bystanders too, for the most part. For how much longer? The waiting game goes on. Venezuela’s neighbors are playing it, too, wondering if the crash can be softened and how far it may ripple. U.S. officials think the end is close. But all manner of experts and outsiders have been saying that about Venezuela for a while now, and the lines just get longer. The weariness looks like exhaustion in these images from Venezuelan photographer Alejandro Cegarra. His pictures show the Caracas park where he played as a kid, now in ruins, and a nearby McDonald’s, empty of customers because runaway inflation means a Happy Meal costs nearly a third of an average monthly wage. There is no shortage of street crime and violence in this dystopia. While Cegarra found plenty of battle-clad guardsman to keep the supermarket lines in formation, the cop in a nearby park was a cardboard cutout. Venezuela is running on an empty tank. The government can’t stop the slide, and the opposition can’t stop the government. All that’s left to do is wait until something gives. (The Washington Post: https://www.washingtonpost.com/news/in-sight/wp/2016/05/25/venezuela-is-running-on-empty/?hpid=hp_no-name_photo-story-c%3Ahomepage%2Fstory)

 

Spain to monitor situation of its nationals living in Venezuela

Spain will closely monitor the situation of the nearly 200,000 Spanish nationals living in Venezuela in view of the deteriorating conditions in the Andean nation, Deputy Prime Minister Soraya Saenz de Santamaria said Friday.
She cited the “very significant deterioration” of public safety in Caracas and other cities and said Spaniards living in Venezuela are suffering from the same shortages of basic necessities affecting the rest of the population. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2413134&CategoryId=10717)

 

Is the Venezuelan regime committing genocide by omission?

Oliver Sánchez, an 8-year-old child who participated in a demonstration because he was not receiving the chemotherapy procedure he required due to the lack of appropriate medicines, has passed away. Sánchez had Leukemia and, in his last days, he was rushed from one hospital to another because any of them ensured medical attention because of the lack of supplies. He died after 10 days of intensive care in a private clinic. At the same time, patients of Hospital Vargas in Caracas have to buy everything (even their own drinking water), while the company that used to provide food to that public health center stopped doing so simply because the Government does not pay. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2413251&CategoryId=10717)

 

 

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.