July 18, 2019

Logistics & Transport

U.S. Department of Transportation suspends air service to and from Venezuela

The U.S. Department of Transportation Office issued a notice this week announcing the suspension of air service to and from Venezuela. Venezuela imports fresh crab meat that is flown into the U.S., and the suspension of air service could potentially impact the market. Most of this product is used on the East Coast of the U.S. With the summer season quickly approaching, this suspension is coming at a time that is the highest demand period of the year. (Seafood News: https://www.seafoodnews.com/Story/1141620/US-Department-of-Transportation-Suspends-Air-Service-to-and-from-Venezuela)

 

Oil & Energy

Opposition-controlled CITGO plans to borrow US$ 1.9 billion as 2020 bond payment nears

CITGO Holding Inc., the refining company whose operations are largely under the control of Venezuela’s political opposition, plans to issue new debt to pay back US$ 1.9 billion of bonds that mature in February. The refinancing would include US$ 1.4 billion of senior secured notes due in 2024 and a US$ 500 million senior secured term loan B facility that matures in four years, the Houston-based company said in a statement. It didn’t say who is advising on the proposed deal. That offering’s success may depend upon a Delaware court’s ruling about the legitimacy of two rival corporate boards at state-owned oil giant Petroleos de Venezuela SA, the parent of CITGO. One board was appointed by Nicolas Maduro; the other one by the National Assembly leader Juan Guaidó. Oral arguments are set to be held Thursday. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2481128&CategoryId=10717)

 

Fitch raises Venezuela's opposition-controlled Citgo rating on new bond

Fitch Ratings has upgraded the long-term IDR of CITGO Holding, Inc. (Holdco) to 'CCC+' from 'CCC', upgraded the ratings of all senior secured debt at Holdco to 'B+'/'RR1' from 'B'/'RR1', and assigned a 'B+'/'RR1(EXP)' rating to the new Holdco secured notes and term loan. Proceeds from the new secured notes and term loan will be used to pay off the company's existing 10.75% 2020 Holdco notes. Fitch has also affirmed the long-term IDR of CITGO Petroleum Corp. (Opco) at 'B and affirmed the 'BB'/'RR1' ratings for Opco's secured notes, term loan and IRBs. The Outlook at Opco remains Stable. The main drivers for today's actions are the company's successful expected refinancing of its US$ 1.875 billion 2020 Holdco maturity, which addresses near-term refinancing issues at HOLDCO and helps reduce contagion risk for CITGO through favorable revisions to change in control indenture language. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2481121&CategoryId=10717)

 

Moody's rates new CITGO US$ 1.9 billion debt issue Caa1

Moody's Investors Service (Moody's) assigned a Caa1, LGD4 rating to CITGO Holding, Inc.'s proposed up to US$ 1.37 billion in senior secured notes due 2024 and up to US $500 million in proposed senior secured term loan B due 2023. Proceeds from the transactions will be used to refinance US$ 1.87 billion in senior secured notes due 2020. The outlook is stable. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2481133&CategoryId=10717)

 

S&P rates new US$ 1.9 billion CITGO Debt at B

S&P Global Ratings today assigned its 'B' issue-level rating and '2' recovery rating to CITGO Holding Inc.'s US$ 500 million senior secured term loan B due 2023 and US$ 1.37 billion senior secured notes due 2024 and put the issue-level ratings on CreditWatch with developing implications, where we placed all of our ratings on the company on Dec. 7, 2017. The '2' recovery rating indicates our expectation for substantial (70%-90%; rounded estimate: 80%) recovery in the event of a default. The company intends to use the net proceeds from the senior notes to refinance its existing outstanding $1.87 billion 10.75% notes. Therefore, we view this transaction as leverage neutral. Our issuer credit ratings on CITGO Holding Inc. and subsidiary CITGO Petroleum and the issue ratings on their debt are unchanged and remain on CreditWatch with developing implications, where they were placed Dec. 7, 2017. CITGO Holding Inc. is the direct parent of CITGO Petroleum Corp., a U.S. refinery and petroleum product marketer and distributor. The company is owned by Petroleos de Venezuela S.A. (PDVSA), Venezuela's state-owned oil company. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2481132&CategoryId=10717)

 

Economy & Finance

Venezuela's debts to China, Russia would be restructured through Paris Club

Loans to Venezuela from Maduro allies Russia and China would be renegotiated though the Paris Club if Maduro leaves power, an advisor to the opposition said on Wednesday, responding to concerns about favorable treatment for the two countries. Ricardo Hausmann, who represents opposition leader Juan Guaidó at the Inter-American Development Bank (IADB), said Guaidó's team has not determined how loans might be restructured under its governance because bilateral debt talks typically take place under the auspices of the Paris Club creditor group. "It is not as if the chapter on bilateral debt says we are going to treat it differently. It is treated differently in international practice through the Paris Club," said Hausmann, a Harvard economics professor and former planning minister, at the IADB's annual meeting in Guayaquil, Ecuador. "We have not come out with any specific guidelines on the treatment of bilateral debt for that reason." Earlier this month, Guaidó's advisers published a plan pledging equal treatment for creditors during an eventual restructuring process of Venezuela's $200 billion in debt if Maduro leaves power. The document carved out some exceptions, including for the billions of dollars in loans from Russia and China, which drew criticism from a group of bondholders known as the Venezuela Creditors Committee, who said the "burden" should be shared equally between public and private creditors. (The New York Times: https://www.nytimes.com/reuters/2019/07/17/world/americas/17reuters-latam-economy-iadb-venezuela.html; Reuters: https://www.reuters.com/article/us-latam-economy-iadb-venezuela/venezuelas-debts-to-china-russia-would-be-restructured-through-paris-club-Guaidó-advisor-idUSKCN1UC2JI

 

Venezuela may switch from SWIFT to Russian payment system to skirt US sanctions

Venezuela is considering using the Russian alternative to the traditional SWIFT international payment system, as the country braces for new US sanctions that could further weaken its financial sector. Venezuela’s central bank has sent a request on the matter to the Central Bank of Russia (CBR) as the regulator’s approval is necessary if Caracas wants to use the payment platform, the report said, citing sources. However, neither of the sides involved, nor the world’s largest payment system, SWIFT, has commented on the report. The Russian alternative payment system already includes nearly 400 users, including the country’s major banks. Last month, the Central Bank of Russia (CBR) said that foreign banks had shown interest in joining the platform and are already testing it. (RT: https://www.rt.com/business/464389-venezuela-russia-swift-alternative/)

 

Venezuela's opposition congress names ad-hoc central bank board

Venezuela’s opposition-controlled National Assembly on Tuesday appointed an ad-hoc board for the country’s central bank with the aim of “protecting its international reserves” from Nicolas Maduro’s regime. The assembly head, Juan Guaidó, named five people to the ad-hoc board. Guaidó did not explain how the ad-hoc board would function, but the opposition has previously sought to prevent Maduro’s government from accessing central bank gold kept at the Bank of England. (Reuters, https://www.reuters.com/article/us-venezuela-politics/venezuelas-opposition-congress-names-ad-hoc-central-bank-board-idUSKCN1UB2HP)

 

Politics and International Affairs

Colombian president says Maduro regime harbors, funds leftist guerrillas

Colombian President Ivan Duque said in an interview with EFE that the National Liberation Army (ELN) guerrilla group is recruiting minors in Venezuela and has the backing of that neighboring country's leftist president, Nicolas Maduro. Duque said Maduro supports not only the ELN but also dissident elements of a former rebel army - the Revolutionary Armed Forces of Colombia (FARC) - that signed a peace deal three years ago with Colombia's previous government and has transformed itself into a leftist political party. “The ELN has a situation and that's that in Venezuela, Nicolas Maduro, the dictator of Venezuela, is protecting them. He's giving them money and sponsoring their efforts to recruit children to work in illegal mining in parts of Venezuela. And on top of that, the ELN's leaders are in Venezuela and protected by Maduro. Alias "Pablito" is there. Another leader, "Antonio Garcia," is there. They also have groups of recruiters there, and many of the criminal attacks they're planning in border areas are planned in Venezuela”, he said; and added: “That dictator in Venezuela is protecting not only the ELN leaders, but also those dissident leaders of the FARC. It's no secret to anyone that that's happening, and that "Ivan Marquez" is in Venezuela and "El Paisa" is in Venezuela and "Romaña" is in Venezuela. And it'd be no surprise if "Santrich" were there. All indications are that he's there under the protection of the Venezuelan dictatorship. That shows that they're looking to sponsor a sort of union of criminal clans to perpetrate violent actions in Colombia.” (EFE: https://www.efe.com/efe/english/portada/colombian-president-venezuela-harbors-funds-leftist-guerrillas/50000260-4024978)

 

EU readies sanctions on Venezuelan security officials

The European Union is preparing new sanctions against Venezuelan security forces involved in human rights violations, the bloc’s foreign policy chief said on Tuesday, following the death in custody of a navy captain amid allegations of torture. Federica Mogherini said the death of Rafael Acosta while in custody for alleged participation in a coup plot was a “stark example” of the deteriorating situation in the country, amid a crackdown by the government of President Nicolas Maduro. “The EU is ready to start work toward applying targeted measures for those members of the security forces involved in torture and other serious violations of human rights,” Mogherini said in a statement. (Reuters, https://www.reuters.com/article/us-venezuela-politics-eu/eu-readies-sanctions-on-venezuelan-security-officials-idUSKCN1UB1L9)

 

MERCOSUR bloc calls for Venezuela elections

South American trade bloc MERCOSUR called for "free, fair and transparent presidential elections, as soon as possible" in Venezuela, at its summit in Argentina on Wednesday. The political and economic crisis in Venezuela was the center of the political debate among the heads of state that, this Wednesday, met in Santa Fe, Argentina in the MERCOSUR semi-annual summit, a block from which this country is currently suspended. The host of the regional meeting, the Argentine president, Mauricio Macri, affirmed that he recognizes the National Assembly as the legitimate State organ of the country, and expressed his solidarity with Venezuela and the humanitarian crisis that he blames the regime of Nicolás Maduro. Also, he called on him to “stop obstructing the democratic transition and stop with the violations of human rights of Venezuelans.” The president of Brazil, Jair Bolsonaro, maintained that the social, political and economic crisis that Venezuela is experiencing was born “from the populism and the irresponsibility of a project of a country that had no limits.” “We do not want what happens unfortunately with Venezuela. We ask God to give us strength and intelligence and that the destiny of Venezuela is the same as we have, that is, democracy, freedom, and prosperity,” said Bolsonaro. For his part, the Paraguayan president, Mario Abdo Benítez, reminded everyone present that “one of the fundamental pillars of Mercosur is the political agreement, which must be translated into mechanisms that guarantee the full validity of the Rule of Law and Democracy.” Three of Mercosur's members -- Brazil, Argentina and Paraguay -- have backed Guaidó, while only Uruguay, under a socialist government, has not done so. (France24: https://www.france24.com/en/20190717-south-american-bloc-calls-venezuela-elections; MERCOSUR Press: https://en.mercopress.com/2019/07/18/what-did-the-mercosur-s-leaders-say-about-venezuela-in-santa-fe)

 

Eight countries call for Inter-American Commission on Human Rights to enter Venezuela

A group of 8 countries submitted a draft resolution condemning human right violations in Venezuela to the Permanent Council of the Organization of American States (OAS), demanding an investigation and requesting access by the Inter-American Commission on Human Rights into the country. The draft resolution seeks to “firmly condemn the grave and systematic violations” of the rights in Venezuela. the project also seeks to “demand immediate, complete and unimpeded access” to Venezuela by the IACHR. (2NYZ: https://2nyz.com/2019/07/17/eight-countries-call-for-inter-american-commission-on-human-rights-to-enter-venezuela/)

 

In a United Nations report, a Socialist details Venezuela’s horrors

Twenty years after Hugo Chávez gained power in Venezuela, promising a workers’ paradise, the United Nations has finally acknowledged that his regime and that of his successor, Nicolás Maduro, is a brutal dictatorship guilty of widespread human-rights abuses and of policies that have led to economic deprivation. The acknowledgment comes in the form of a scathing report, coincidentally released on July 4, that officially confirms the Venezuelan inferno that has been obvious for a long time. That the report was issued by Michelle Bachelet, U.N. high commissioner for human rights, should have special meaning. Bachelet, a former president of Chile (2006–10), is a socialist whose father died in prison after being tortured by the military dictatorship of Augusto Pinochet. She had long resisted efforts to condemn the Venezuelan tyranny, preferring to warn against outside intervention and to call for a new “dialogue” every time negotiations between the regime and the opposition reached a stalemate. (News Yahoo, https://news.yahoo.com/united-nations-report-socialist-details-103013098.html;_ylt=AwrC1DFLly9dC2oAYiHQtDMD;_ylu=X3oDMTBydDI5cXVuBGNvbG8DYmYxBHBvcwM2BHZ0aWQDBHNlYwNzcg--)

 

Opposition calls for mass rally on Tuesday

Venezuela's opposition leader announced a mass street rally set for Tuesday to move forward the “next stage” of their US-backed attempt to gain power in the oil-rich country. "We call on all of Venezuela to mobilize. Together, with the citizen power and the work of the National Assembly, we will advance to a next stage in our struggle. Everyone to Caracas!”  Hampered by opposition from the Venezuelan army and popular challenges to his legitimacy, Guaidó's delegation agreed to take part in Oslo and Barbados initiatives for negotiation talks with the government. Both the EU and MERCOSUR made a fresh call to Venezuela to hold elections. Addressing the migratory, humanitarian and political crisis, the MERCOSUR called Venezuela to hold free, fair and transparent presidential elections "in the shortest time possible", following Tuesday's EU Council statement. On Tuesday, the EU Council reaffirmed that crisis in Venezuela requires an "urgent" political solution, which can only be achieved through "a peaceful, democratic and Venezuelan-owned" process leading to "free and fair presidential elections". (AA: https://www.aa.com.tr/en/americas/venezuela-opposition-calls-for-mass-rally-on-tuesday/1535081)

 

US to redirect Central America aid to Venezuela's Juan Guaidó

The US is planning to divert nearly US$ 42 million from development funding for Guatemala and Honduras to Venezuela's opposition. The move comes just months after the Trump administration announced it would be ending aid to Guatemala, Honduras and El Salvador, the three countries at the center of the current migration wave to the US. In the memo, USAID, the government's international development agency, said the "deviation” of the money was "necessary due to unforeseen events and exceptional circumstances.” USAID stressed in the memo that Venezuela's political crisis was "a significant, exigent event in the US national interest" that required the diverted funds. A portion of the money would finance Guaidó directly. The memo said the funds could cover the "interim government staff salaries or stipends, work-related travel and other costs necessary to ensure full deployment of a transparent financial management system and other activities necessary for a democratic transition." Some US$ 2 million will go to support diplomatic efforts by Guaidó's supporters as they negotiate with the Maduro regime, and US$ 7.5 million will be dispensed to support independent media with the goal of providing Venezuelans with "unbiased and unfiltered sources of news and information," the memo said. Other funds will go address other aspects, including strengthening human rights groups, election monitoring and civil society. (DW: https://www.dw.com/en/us-to-redirect-central-america-aid-to-venezuelas-juan-Guaidó/a-49626538; France24: https://www.france24.com/en/20190717-us-diverts-central-america-aid-boost-venezuelas-Guaidó)

 

… but drags its feet on TPS for Venezuelans

The Trump administration also signaled on Wednesday that it would not grant protection to Venezuelans seeking refuge in the US. In a response to a request by Democratic Senator Dick Durbin, the US Citizens and Immigration Services said it was not planning on adding Venezuela to the list of countries eligible for its Temporary Protected Status (TPS) program, which would allow citizens from that country stay in the US until the situation at home improves. In a letter to U.S. Senators made public on July 16, acting director of U.S. Citizenship and Immigration Services (USCIS) Ken Cuccinelli signaled an unwillingness on the part of the Trump administration to extend Temporary Protected Status (TPS) to Venezuelans. According to U.S. Sens. Dick Durbin and Bob Menendez, the administration will not grant Venezuelans Temporary Protected Status, or TPS. "President Trump cannot do both. He cannot warn Americans that Venezuela is such a dangerous place that they should not travel there, and then tell the Venezuelans in the United States that they are forced to return," said Senators and Menendez said in a written statement. In January, Miami U.S. Reps. Mario Diaz-Balart and Donna Shalala proposed TPS for Venezuelans. That same month, Rep. Darren Soto, an Orlando Democrat, filed the Venezuela TPS Act of 2019. It would allow Venezuelans who came to the United States after early 2013 and who don’t have legal status to temporarily — and legally — stay in this country, shielded from deportation. They would be able to secure work permits. In March, Florida’s Sen. Marco Rubio, along with Sens. Patrick Leahy and Cory Booker — plus Menendez and Durbin — introduced the Venezuela Temporary Protected Status Act of 2019. In addition, Rubio was one of 24 senators, and the only Republican, to sign a letter dated March 7 that was sent to the president on this issue. It said, in part: “In light of the ongoing violence, deteriorating security situation, and humanitarian crisis in Venezuela caused by the illegitimate regime of Nicolás Maduro, we respectfully request that your administration promptly designate Venezuela for Temporary Protected Status (TPS) to ensure that Venezuelan nationals currently present in the United States are not forced to return to Venezuela at this time. Returning non-violent individuals back to Venezuela during this critical time of transition is not in the best long-term interests of the United States or our partners in the region.” In a letter dated July 11, Kenneth Cuccinelli II, acting director of U.S. Citizenship and Immigration Services responded, in part: “The U.S. government continues to monitor the situation in Venezuela. In addition, there may be other relief measures available to Venezuelan nationals affected by current condition in Venezuela.” The Washington Office on Latin America (WOLA), a leading research and advocacy organization that advocates a regional response to broaden access to formal protection status and essential services for Venezuelan migrants and refugees, is alarmed by the Trump administration’s inaction. “Inaction on TPS sends the absolute wrong message: The United States is only concerned about Venezuelans right up until they are forced to flee their country,” said WOLA Assistant Director for Venezuela Geoff Ramsey. (The Miami Herald: https://www.miamiherald.com/opinion/editorials/article232813137.html; WOLA: https://www.wola.org/2019/07/venezuela-letter-tps-regional-response/)

 

Venezuelan teen blinded after 52 rubber pellets to the face

16-year old Rufo Chacon lost both of his eyes just two weeks ago, during a July 2 protest in the Andean city of San Cristobal, Venezuela, which turned bloody when police began firing rubber bullets into the crowd. The doctors who tried to save his eyes said that 52 rubber buckshot pellets hit his face, 16 of them flying directly into his eyes. A police report investigating the accident said state security forces forcefully repressed the crowd without warning. Two other underage protesters also received head injuries the report says. One of them was Chacon's younger brother, Adrian, 14, who received a blow to his skull from a police baton. Both were there with their mother, Adriana Parada, to protest shortages of cooking gas in the region. After the protest, Venezuelan authorities announced that two officers had been charged for "attempted murder, improper use of weapon and cruel treatment" in dealing with the protesters. They are currently awaiting trial. The announcement came hours after the Office of the UN High Commissioner for Human Rights, Michelle Bachelet published a report that denounced "patterns of violations of all human rights" at the hands of the Venezuelan state—a report which the regime of Nicolas Maduro has refuted as biased. Doctors at San Cristobal Central Hospital say they could only remove what was left of Chacon's eyes. He is still at risk of infection, doctors say as pieces of the rubber pellets remain embedded in his face and head, too deep for the surgeon to reach. After being shot, Chacon's plight swiftly became known in the Spanish-speaking world. On the same night of the protest, Puerto Rican music star Don Omar published a picture of the injured and bloodied Rufo on his Instagram account, blaming the soldiers for allegedly firing too low. Offers to pay for treatment have come in from around the world, including Mexico, Spain and the US. One clinic in Colombia has offered to perform an eyelid transplant on Chacon for free. His mother, Adriana, has also opened an Instagram account to crowdsource financial help for the family. But due to currency controls on the country, Venezuela's economy is effectively sealed off from the outside world, and they can only receive donations from inside the impoverished country. (ABC News: https://www.cnn.com/2019/07/17/americas/venezuela-rufo-chacon-blind-teenager-protest-intl/index.html)

 

Regime frees musician jailed after blasting Maduro online

Karen Palacios who plays the clarinet and was cut from the National Philharmonic for criticizing the government, and who was detained for 6 weeks, was released today. Karen Palacios' Yamaha clarinet still rests where she left it atop sheet music of a Mozart concerto that she practiced diligently the night before two strangers dressed in black lured her away in a luxury SUV. The 25-year-old musician's captors duped her into believing she was needed for an interview with a victims' unit at the presidential palace. Instead, they drove her to Venezuela's most-notorious military prison, locking her up alongside the socialist regime's top opponents for violating Venezuela's highly subjective hate law. Her crime: posting a message on social media venting frustration at President Nicolás Maduro's government over having been cut from the state-funded National Philharmonic, where she had recently debuted as first clarinetist. On Tuesday, the family's nightmare ended. After 45 days in jail alongside some of Venezuela's most-hardened female criminals — and a full month after a judge ordered her immediate release — Palacios walked through a giant metal gate at a penitentiary outside Caracas. She remains on probation and is banned from speaking to the media. But the scars from her confinement will take time to heal. Meanwhile, her plight has drawn attention to what the United Nations in a report this month signaled as the government's growing use of arbitrary detentions to intimidate opponents — real or imagined — and stifle free expression.

Meanwhile, her imprisonment has reopened debate on Venezuela's hate law, which was passed by the rubber-stamping, pro-Maduro constitutional assembly in 2017 and carries prison sentences of between 10 and 20 years for anyone found guilty of publicly instigating violence against people based on their race, ethnicity or political views. Free speech advocates say the law is selectively enforced and consider it a tool of repression and censorship. Last year, 24 people were detained for expressing criticism of the government online, according to local NGO Espacio Publico. (ABC News: https://abcnews.go.com/International/wireStory/venezuela-frees-musician-jailed-blasting-maduro-online-64383127)

 

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.

March 13, 2018

International Trade

Port and airport activity at a low

Reduced port and airport activities are difficult to show in statistics since authorities dealing in this area or managing ports and airports are withholding all information. However, whoever lives in a city where there are ports or airports can testify to lowered traffic, as exposed by regional correspondents in different states around Venezuela, in El Universal daily. More in Spanish: (El Universal; http://www.eluniversal.com/politica/2384/mantienen-baja-actividades-aeroportuarias)

 

Oil & Energy

Venezuela's meltdown comes at convenient time for OPEC

The pending collapse of Venezuela poses serious short- and long-term challenges for oil markets, but it also contains a silver lining for the OPEC cartel. Venezuelan oil production has been in decline for the past decade, but output has plunged rapidly in recent months as the OPEC member’s political and economic crisis intensifies bringing state oil company PDVSA to its knees. Venezuela production hit a three-decade low of 1.6 million barrels a day in January, down 20% from the same month a year earlier and off a whopping 600,000 barrels a day from its 2016 average of nearly 2.2 million barrels a day. The country’s situation will only get worse. Venezuela’s woes have been flagged by the International Energy Agency as a major wild card in oil markets this year that have contributed to the recent firming of crude oil prices, which are sitting at comfortable US$ 65 a barrel on the international benchmark. Venezuela’s meltdown comes at a convenient time for OPEC and provides a convenient hole for U.S. shale growth and keep it from crashing the market again. Because of this spare capacity, OPEC and shale could potentially co-exist profitably in a world of US$ 60-to-US$ 70 a barrel. The total collapse of Venezuela could bring about a different set of issues. The ensuing chaos and confusion could see Venezuelan exports drop to zero while buyers try to assess who to trust in Caracas. The bottom line is that there is no quick fix for PDVSA’s state of disrepair. Reviving the country’s oil sector will be a major endeavor, requiring not only massive investment but a bottom-up approach to rebuilding the state oil giant. PDVSA’s US$ 65 billion debt makes Maduro’s promise of recovering 70% of lost oil production volumes in the first half of 2018 simply impossible. It will take substantial time for Venezuela to rebuild trust with international oil companies and service contractors, who are owed substantial sums by PDVSA. Still, under the right fiscal conditions, the oil industry insists that Venezuela’s reserves can be extracted profitably. For that to happen, though, a credible and creditworthy government must emerge in Caracas. (FORBES: https://www.forbes.com/sites/daneberhart/2018/03/12/venezuelas-meltdown-is-helping-opec/#5cc909735a97; Bloomberg, https://www.bloomberg.com/gadfly/articles/2018-03-11/opec-sacrificed-venezuela-angola-for-greater-good)

 

Venezuela wants India to buy its oil using rupee, not US dollar

Venezuela wants to trade with India using Indian rupee, its Foreign Minister Jorge Arreaza said on Monday. Arreaza said Venezuela wants India to buy its oil using Indian rupee, which the country in turn can use for trading Indian food products and medicines. The arrangement to trade in Indian rupee currently exists between Iran and Bhutan and Venezuela wants a similar arrangement with India. Arreaza said his country has a similar arrangement with Turkey, China and Russia. He said a proposal in this regard was discussed with the finance and the petroleum ministries of India. The reason cited behind the move was the sanctions imposed by the US. India through its oil Public Sector Undertaking has invested substantially in the oil sector of that country. Venezuela is the second largest oil supplier to India. (News18: https://www.news18.com/news/business/venezuela-wants-to-trade-with-india-using-indian-currency-not-us-dollar-1687067.html)

 

Trump Jr. partnered with GOP donor who pushed for curbing sanctions in Venezuela

Donald Trump Jr. has a previously undisclosed business relationship with a longtime hunting buddy who helped raise millions of dollars for his father's 2016 presidential campaign and has had special access to top government officials since the election. The president's eldest son and Texas hedge fund manager Gentry Beach have been involved in business deals together dating back to the mid-2000s and recently formed a company — Future Venture LLC — despite past claims by both men that they were just friends. Beach last year met with top National Security Council officials to push a plan that would curb U.S. sanctions in Venezuela and open up business for U.S. companies here. Career foreign policy experts were instructed to take the meetings, first reported last April by the website Mic.com, at the direction of the West Wing because Beach and the businessman were friends of Trump Jr., the official said. The official said that inside the NSC lawyers raised red flags about the appropriateness of the meeting. (CNBC: https://www.cnbc.com/2018/03/12/trump-jr-partner-pushed-for-curbing-sanctions-in-venezuela.html)

 

Oil trading giants GLENCORE, VITOL targeted in PDVSA bribe suit

Oil trading giants including GLENCORE Ltd. and VITOL SA paid millions of dollars to a former PDVSA trader to get the inside track on Venezuelan oil deals, according to a lawsuit filed by a trust for Petróleos de Venezuela, S.A.

The alleged conspiracy, which includes more than two dozen companies and individuals, even has a name worthy of a Robert Ludlum thriller: The Helsinge Enterprise. PDVSA alleges firms including Lukoil Pan Americas LLC, Vitol, Glencore and Trafigura AG of funneling bribes through several shell companies that were set up by a pair of Venezuelan nationals including Francisco Morillo. Among the officials accused of coordinating the scheme from within PDVSA is company Vice President Ysmel Serrano, a close friend of Venezuelan Vice President Tareck El Aissami dating back to their college days. (Bloomberg, https://www.bloomberg.com/news/articles/2018-03-10/oil-trading-giants-glencore-vitol-targeted-in-pdvsa-bribe-suit)

 

Swiss arrest 2 in alleged oil corruption case

Prosecutors in Switzerland have made two arrests after opening a criminal investigation into a Geneva-based consulting firm that allegedly served as a conduit for bribes between Venezuela's state oil company and some of its biggest clients. A person familiar with the case said Monday that the Helsinge Inc. executives were arrested in recent days following allegations contained in a complaint filed by PDVSA, the Venezuelan state oil company. The person spoke on condition of anonymity because he was not authorized to discuss the matter publicly. The Geneva public prosecutor's office confirmed the probe against unspecified Helsinge executives on suspicion of corruption of foreign officials and money-laundering but declined to comment further. According to the civil lawsuit filed last week in a Miami federal court by a trust linked to PDVSA, the scheme to fix prices, rig bids and eliminate competition, as well as steal highly confidential information by cloning the company's computer servers, cheated the socialist-run company of billions in lost revenue since 2004. Those alleged co-conspirators named as defendants in the case include Russia's LUKOIL and Switzerland-based GLENCORE. It alleges they knew of and sanctioned actions by their oil traders and cites alleged communications between the traders and Helsinge discussing wire transfers and ways to alter the terms of future tenders before they were released to the general market. (The Chicago Tribune: http://www.chicagotribune.com/news/nationworld/sns-bc-eu--switzerland-venezuela-oil-corruption-20180312-story.html)

 

Economy & Finance

Venezuela cut to C by Moody's

Moody's Investors Service has today downgraded the Government of Venezuela's foreign currency and local currency issuer ratings, foreign and local currency senior unsecured ratings, and foreign currency senior secured rating to C from Caa3. Concurrently, the foreign currency senior unsecured medium term note program has also been downgraded to (P)C from (P)Caa3. The outlook has been changed to stable from negative. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2452462&CategoryId=10717; Reuters, https://www.reuters.com/article/moodys-venezuela/moodys-downgrades-venezuela-rating-by-two-notches-idUSL4N1QR5NO; Bloomberg, https://www.bloomberg.com/news/articles/2018-03-09/venezuela-credit-rating-bottoms-out-with-1-7-billion-overdue)

 

Venezuela annual inflation tops 6000% in February

Prices in Venezuela rose 6,147% in the 12 months to the end of February, according to estimates by the country’s opposition-led National Assembly released on Monday, broadly in line with independent economists’ figures. Inflation during the month of February alone was 80%, opposition lawmakers said, amid an economic crisis in which millions of Venezuelans are unable to find or afford basic food and medicine. “If this exponential velocity of price growth continues, prepare for an inflation of 131,985% in 2018,” tweeted opposition lawmaker and economist Angel Alvarado. (Reuters, https://www.reuters.com/article/us-venezuela-economy/venezuela-annual-inflation-exceeds-6000-percent-in-feb-national-assembly-idUSKCN1GO2GS)

 

Venezuela's Petro will harm 'legitimate' cryptocurrencies, says Brookings

Venezuela's petro is more likely to imperil "legitimate" cryptocurrencies than to save this nation's troubled economy, according to analysts at the Brookings Institute. In an article published on its website last Friday, the century-old think tank cautioned that "there exists a very real danger that the petro will not only fail to cure Venezuela's economic woes but will also weaken the integrity of cryptocurrencies writ-large." Brookings' reasoning is that if the petro proves to be as worthless as the think tank's analysts expect, "such realization and its aftermath may, unfortunately, contribute to the idea that cryptocurrencies facilitate fraud." Just as concerning, in Brookings' view, is that if the petro turns out to be an effective way to thwart international sanctions, other countries may feel emboldened to use the technology to get around such blockades. Last week, Venezuelan President Nicolas Maduro claimed that the petro had garnered more than US$ 5 billion in an ongoing pre-sale. He also declared that there were more than 186,000 offers to purchase the nominally oil-backed cryptocurrency. While Maduro said the petro pre-sale buyers are entrepreneurs and other individuals from 127 countries, the Brookings Institute posits that the petro will provide "no real service for its international holders," and is merely a "form of national illicit debt relief." Of course, Petro’s facts and figures aren’t particularly convincing, given that the announcement was made by Maduro to members of the United Socialist Part of Venezuela — during which time the controversial figure also claimed that all revenue from the sale of the cryptocurrency would go to the service of “everything out country needs.” (Coindesk: https://www.coindesk.com/venezuelas-petro-will-harm-legitimate-cryptocurrencies-says-brookings/; Bitcoinist: http://bitcoinist.com/venezuela-president-5-billion-petro/)

 

FOREX prices drop for the first time in the government DICOM exchange system

The price of the US dollar and the Euro dropped on Monday for the first time within the tightly controlled DICOM foreign exchange system run by Venezuela’s Central Bank. The bank reports that in the latest auction the price of the Euro dropped from VEB 49656 to VEB 45112. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/economia/precios-de-divisas-en-el-pais-bajaron-por-primera-vez-en-sistema-oficial-de-subastas-dicom; AVN; http://www.avn.info.ve/contenido/cambio-quinta-subasta-dicom-se-ubic%C3%B3-45112485-bs-%C2%80)

 

Central Bank to purchase diamonds as part of Venezuelan reserves

Central Bank director José Khan, who heads the Kimberley Process Office, has announced that Venezuela’s Central Bank will start buying diamonds and incorporate them as assets within the country’s international reserve system. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/bcv-comprar%C3%A1-diamantes-como-activos-reservas-internacionales)

 

Politics and International Affairs

Venezuela opposition asks U.N. not to send observers to May vote

Venezuela's opposition alliance called on the United Nations on Monday not to send observers to the presidential election on May 20 to avoid legitimizing a poll it says is rigged in favor of Socialist President Nicolas Maduro. Maduro, who is seeking re-election amid an economic collapse that has sent a tide of migrants to neighboring countries, has asked the United Nations to send observers to the vote. The main opposition coalition is boycotting the election on the grounds that the elections council has historically favored the ruling Socialist Party, and because the best-known candidates have been jailed or barred from holding office. A U.N. spokesman contacted via email said the government's request for a mission had been received. "But our position on all such matters is that the sending of electoral observers requires a mandate from one of the UN's Member State bodies" such as the Security Council or General Assembly, wrote spokesman Farhan Aziz Haq. "If the (General Assembly) or the Security Council were to provide a mandate, we would respond accordingly. But neither has done so up until now." Opposition leaders are planning a protest on Saturday to demand better conditions for the upcoming vote. (US News: https://www.usnews.com/news/world/articles/2018-03-12/venezuela-opposition-asks-un-not-to-send-observers-to-may-vote)

 

Maduro calls U.N. rights chief a U.S.-backed 'tumor'

President Nicolas Maduro said on Friday the United Nations human rights chief was a puppet of the United States who had implanted himself like a “tumor” and had no right to criticize Maduro’s handling of the crisis-stricken nation. U.N. High Commissioner for Human Rights Zeid Ra’ad Al Hussein said on Wednesday that crimes against humanity may have been committed by state forces in Venezuela and voiced alarm at “the erosion of democratic institutions” in the country. Maduro, who says there is a right-wing plot to sabotage his government, deflected the criticism during brief comments to journalists broadcast on state television. (Reuters, https://www.reuters.com/article/us-venezuela-politics-un/venezuelas-maduro-calls-u-n-rights-chief-a-u-s-backed-tumor-idUSKCN1GM00N)

 

For poor Venezuelans, a box of food may sway vote for Maduro

A bag of rice on a hungry family’s kitchen table could be the key to Nicolas Maduro retaining the support of poor Venezuelans in May’s presidential election. For millions of Venezuelans suffering an unprecedented economic crisis, a monthly handout of a box of heavily-subsidized basic food supplies by Maduro’s unpopular government has offered a tenuous lifeline in their once-prosperous nation. The 55-year-old successor to Hugo Chavez introduced the so-called CLAP boxes in 2016 in a signature policy of his rule, continuing the socialist government’s strategy of seeking public support with cash bonuses and other giveaways. Now, running for re-election on May 20, Maduro says the CLAPs are his “most powerful weapon” to combat an “economic war” being waged by Washington, which brands him a “dictator” and has imposed sanctions. (Reuters, https://www.reuters.com/article/us-venezuela-politics-food/for-poor-venezuelans-a-box-of-food-may-sway-vote-for-maduro-idUSKCN1GO173)

 

Unattended health rights crisis is forcing thousands to flee

Severe violations of the right to health, as well as difficulties accessing food and other basic services, are putting thousands of people’s lives at risk in Venezuela and fueling a regional forced migration crisis, Amnesty International said today on the launch of its digital platform Emergency Exit. “People in Venezuela are fleeing an agonizing situation that has transformed treatable health conditions into matters of life and death. Basic health services have collapsed and finding essential medicine is a constant struggle, leaving thousands with no choice but to seek health care abroad,” said Erika Guevara-Rosas, director of Amnesty International in the Americas. Local human rights organizations have said that Venezuela is suffering from an 80% to 90% shortage in medicine supplies; half of the nation’s hospitals are not functioning; and there has been a 50% drop in the number of medical staff at the public centers that provide 90% of health services. The Venezuelan government has denied the existence of food and health crises and rejected offers of aid and cooperation from the international community. Amnesty International calls on the Venezuelan State to work with the international community to ensure that financial and technical resources are available to guarantee timely access to necessary and quality health care for all. Colombian health services provided urgent treatment for more than 24,000 Venezuelans in 2017, according to Colombia’s Ministry of Health. Hospitals in the border cities of Maicao and Cúcuta treated two to three times as many patients from Venezuela in 2017 as they did the previous year. (Amnesty International: https://www.amnesty.org/en/latest/news/2018/03/venezuela-unattended-health-rights-crisis-is-forcing-thousands-to-flee/)

 

As Venezuelans flee collapsing country, UN asks other nations to treat them as refugees

Amid the growing exodus of Venezuelans, the United Nations for the first time is asking the region to treat the population as “refugees” who are unable to go home — rather than mere economic migrants. In a three-page report, the United Nations Refugee Agency, UNHCR, also recommends that countries that have received Venezuelans not deport, expel or forcibly return them “in view of the current situation in Venezuela.” In the document+t, titled “Guidance Note on the Outflow of Venezuelans,” the agency asks countries to guarantee Venezuelans residency and the right to work, even if they entered the country illegally or don’t have the proper identification papers. The guidelines would seem to be a rebuke to neighboring Colombia, which has increasingly been deporting Venezuelans and restricting their entry. (The Miami Herald: http://www.miamiherald.com/news/nation-world/world/americas/venezuela/article204753119.html)

 

UN official warns of humanitarian “catastrophe” in Venezuela

Colombia urgently needs international help as it struggles with a humanitarian “catastrophe” along its border caused by a flood of Venezuelan migrants driven from their homes by hunger, a senior U.N. official said Monday. David Beasley, director of the World Food Program, said the harrowing reports he heard from Venezuelan migrants makes raising awareness of the crisis an urgent priority. “This could turn into an absolute disaster in unprecedented proportions for the Western Hemisphere,” Beasley said in an interview following a two-day visit to talk with migrants in the Colombian border city of Cucuta. “I asked, ‘Why are you here?’, and the answer people gave me was, ‘We don’t have any food.’ And they said, ‘Even if we had money, there’s no food,’” Beasley recounted. “I don’t think people around the world realize how bad the situation is and how much worse it could very well be.” Beasley, who discussed the crisis with Colombian President Juan Manuel Santos, said the ideal approach would have the United Nations and international agencies attack the problem by working inside Venezuela. But that is not an option for now, because Venezuelan President Nicolas Maduro has repeatedly rejected offers of humanitarian aid as a veiled attempt by the U.S. and others to destabilize his socialist government amid calls by the opposition to oust him. Instead, Beasley is urging the U.S. and other nations to provide financial assistance to Colombia, where the bulk of the Venezuelan migrants are arriving. He said Colombia’s government enjoys the confidence of the global community while Maduro’s does not. (The Washington Post: https://www.washingtonpost.com/world/the_americas/un-official-warns-of-humanitarian-catastrophe-in-venezuela/2018/03/12/de4fc13c-265a-11e8-a227-fd2b009466bc_story.html)

 

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

November 03, 2015

International Trade

 

Trade is down 70% after border closure

Alejandro García, mayor of Ureña, on the border with Colombia in Táchira state, says that trade has dropped 70% and the border closure is "negative...I am blinded and disappointed...all is negative, the only good thing is an improvement on security, and even that is relative...irregular activity continues with food being extracted as some military continue to charge in Colombian pesos for people to pass food and fuel through". More in Spanish: (Noticiero Digital, http://www.noticierodigital.com/2015/11/alejandro-garcia-aseguro-que-el-comercio-ha-disminuido-en-un-70-tras-el-cierre-de-la-frontera/)

 

 

Economy & Finance

 

Pro regime legislator says "the country is running out of money"

Pro-government legislator Saúl Ortega, who also heads the MERCOSUR Parliament (PARLASUR) says the government must take steps in the face of constantly dropping oil prices, and says "we still do not produce what we need to consume". Ortega said "it is no secret that Venezuela lives on imports", and warns that if the opposition wins upcoming legislative elections it would "lead the country to chaos". More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/151104/saul-ortega-el-pais-se-esta-quedando-sin-dinero)

 

Moody's: Political challenges in Venezuela to increase as opposition is poised to make gains

The political outlook in Venezuela (Caa3 stable) will likely face increased challenges should opposition parties make significant gains in the country's upcoming congressional elections, says Moody's Investors Service. The elections are scheduled for December 6 and should Venezuela's opposition United Venezuela win a simple majority in the assembly, as suggested by recent polls, it could try and force President Nicolas Maduro from office through a recall referendum. While the opposition has benefited from that situation, it has not presented any detailed proposals of its own to tackle the country's economic problems. "The opposition appears to be waiting for the economic malaise to erode government support," said Jamie Reusche, a Moody's Vice President - Senior Analyst. "It hasn't laid out a clear economic strategy of its own to confront the substantial challenges the country faces because that could carry a political cost." As a result, Moody's believes that politics will become more contentious following the elections and little will be done to address Venezuela's economic imbalances. (Moody's, https://www.moodys.com/research/Moodys-Political-challenges-in-Venezuela-to-increase-as-opposition-is--PR_337952)

 

 

Politics and International Affairs

 

Opposition shows 5 polls reveling it has a 26-30 point advantage going into legislative elections

The leaders of the United Venezuela opposition movement have presented a consolidated report on 5 major polls that show an "irreversible" vote intention advantage in favor of coalition candidates ranging 26-30 points above the regime candidates in upcoming December 6th parliamentary elections. Henry Ramos-Allup, of AD, the official link between the united campaign command and the National Elections Board (CNE) explained that the loss of popular support explains the "government's anguish" and advised President Nicolás Maduro to "drop the arrogance". He provided copies of United Venezuela appeals for the CNE to put a stop to government unfair advantages, and said they have had no response. The five major polls that were shown are DATANALISIS, HINTERLACES, CONSULTORES 21, MORECONSULTING Y VENEBARÓMETRO, and also reflect a 32-37 point loss in popularity by Maduro to date this year. Ramos said "it is the people, not Nicolás Maduro who will decide what is the agenda for a dialogue, and when." More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/151104/mud-afirma-que-cinco-encuestadoras-le-dan-ventaja-de-entre-26-y-30-pun)

 

UNASUR observer mission remains on hold, Uruguay may pull out and CNE bars other observers

The assembling of a UNASUR (Union of South American Nations) observer mission to attend the upcoming legislative elections on December 6th continues frozen and there is not yet any signed agreement between the member nation foreign ministries. Uruguay's Elections Court (CEU) has said the entire mission is "at risk" due to a lack of response by Venezuela's National Elections Board (CNE). CNE chairperson Tibisay Lucena says there is still time for the UNASUR to participate, and added that the mission "has to be approved by Venezuela's Foreign Ministry". She also rejected the presence of 500 independent international observers that have been invited by the opposition. "Do not get any false hopes on international visits, the only people that will be able to enter voting centers are those approved by the CNE". More in Spanish: (El Nacional, http://www.el-nacional.com/politica/Mision-Unasur-Venezuela-sigue-estancada_0_732526980.html)

 

European Union says Venezuela bans diplomats from trials

Federica Mogherini, the European Union's (EU) high representative, says that "unfortunately, Venezuelan security personnel have made it impossible since February for EU diplomats to observe trials, even though they are supposed to be public". She said that both the EU and the OAS have expressed their willingness to support upcoming elections here, "but have not received an invitation by the government or by Venezuela's election authorities". A delegation of 3 members of the European Parliament is visiting Venezuela to meet with both government and opposition representatives on an "exploratory" mission to "evaluate the political situation" and "prepare to send" a full delegation. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/151104/union-europea-dice-que-venezuela-prohibe-presencia-diplomatica-en-juic)

 

Universities fear a takeover by the government

Venezuela's University Professors Federation calls a document sent out by the National Assembly a "threat" against university autonomy and the freedom of trade unions. The pro-regime majority in the Assembly has accused the professors of paralyzing activities in 10 major universities nationwide, where students and faculty are protesting a lack of resources.  The resolution, signed by National Assembly President, Captain Diosdado Cabello, among others, claims universities are sequestered by different forces and that university authorities have established a "state of siege" on the rights of students for an education. The pro government legislators are calling for an audit and intervention of paralyzed universities here. Dr. Cecilia García-Arocha, Rector of Venezuela's Central University says that for 8 years they have warned of budget deficits and that they will receive only 32% of their requests for 2016 and 90% of it goes to salaries well below any standard. Student leaders have accused the Maduro regime of provoking the crisis in order to take over autonomous universities. More in Spanish: (El Universal, http://www.el-nacional.com/sociedad/Universidades-temen-intervencion-gobierno_0_732526987.html)

 

US says Venezuela is the main transit route for Colombian drugs

US Assistant Secretary of State for Anti Narcotics Affairs, Ambassador William Brownfield, says Colombian drug lords have decided the "cheapest and most efficient" way to transport over half of their products are through the Venezuelan border. According to a UN report, Colombia exported 442 tons of cocaine in 2014. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/151103/eeuu-venezuela-es-la-principal-ruta-de-salida-para-las-drogas-colombia)

 

 

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.