January 12, 2016

Oil & Energy

Venezuela crude falls to US$ 27.87 a barrel, its lowest level in 12 years

The average price of Venezuela’s crude basket fell US$ 1.19 this week to US$ 27.87 a barrel, its lowest level in 12 years. “Crude prices ended the week lower, mainly due to concern surrounding the performance of China’s economy and excess supply in the market,” Venezuela's Oil and Mining Ministry said in its weekly bulletin. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2403163&CategoryId=10717)

 

Who wins and who loses in a world of cheap oil

Oil is the most geopolitically important commodity, and the ongoing structural shift in oil markets has produced clear-cut winners and losers. And with no end in sight for low oil prices, their problems are going to only multiply. Oil-dependent and ailing Venezuela will suffer a great deal because of sustained low oil prices. Annual inflation is already at nearly 300% according to leaked central bank estimates. Inflation will mount and shortages will become even more extreme. Lower oil export revenues will reduce the country's expenditures not accounted for in the budget, which in 2015 supplied much of the additional foreign currency needed to finance imports and foreign debt payments. Venezuela will likely need to decrease imports, and the country could even default on its foreign debt later in 2016. In the near term, the government, now with an opposition supermajority, will take what steps it can to address the economic situation. Currency devaluation and consumer price hikes would be the most effective remedy, but these would come with unacceptable political costs. Further unrest is inevitable, and the government will need to work to contain this from spreading too widely. (Stratfor: https://www.stratfor.com/user/login?destination=analysis/who-wins-and-who-loses-world-cheap-oil&login=1)

 

PDVSA reported a “minor” fire at El Palito Refinery on Sunday which prompted the preventive halt of the plant’s treatment and conversion units until the causes of the event could be identified and corrected. Two workers were “slightly” injured, said the State oil company in its Twitter account, according to Reuters. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=46597&idc=4)

 

 

Economy & Finance

 

Maduro names young hardliner to run Venezuela's ailing economy

President Nicolas Maduro has named a hardline sociologist to steer Venezuela's economy during an acute recession that is battering the nation and has cost the ruling Socialists' control of congress. In a major cabinet reshuffle, the president appointed Luis Salas, 39, a professor at the Bolivarian University of Venezuela created by late leader Hugo Chavez, to the top economic position of vice president for the economy. Salas, who has repeatedly espoused Maduro's view of an "economic war" waged by right-wing foes and wealthy businessmen against the government, was also named head of a new Ministry for Productive Economy. The appointment will confound critics who say Venezuela desperately needs a loosening of state controls to revive production in a nation plagued by shortages and the world's highest inflation rate. In his writings, Salas has argued in favor of price controls, says inflation is used as a "political tool" to pressure governments, and blames fascism for what he calls economic sabotage. Splitting the former Economy, Finance and Bank Ministry into two, the president also named another university academic, Rodolfo Medina, as the finance and banks minister. Medina currently heads an office that draws up the state budget. Neither of the two academics named to the senior economic positions have prior ministerial experience. Salas immediately urged an end to what he termed alarmism over the country's finances and said it had enough experience to emerge from its current crisis. He argued that inflation doesn’t exist “in real life, and says policies to be announced would seek to avoid sacrifices by ordinary people as the price the country receives for oil exports plunges to a 12-year low. “Our goal is to see how we can respond to these external restrictions without making internal sacrifices,” says Luis Salas, who President Nicolas Maduro put in control of the economy this week: “That’s going to take creativity.” No single measure can solve the economic problems, said Salas, who went on to signal that he opposes raising subsidized prices for household goods in order to boost supply. “We’re not doing anything to make products available if the people can’t afford them,” Salas said. (Reuters, http://www.reuters.com/article/us-venezuela-politics-economy-idUSKBN0UM1NX20160108; http://www.reuters.com/article/us-venezuela-politics-idUSKBN0UK2IS20160107; El Universal, http://www.eluniversal.com/economia/160111/government-hopes-economic-emergency-decree-to-be-passed; Bloomberg, http://www.bloomberg.com/news/articles/2016-01-08/venezuela-economy-head-calls-for-creativity-as-oil-hits-new-low)

 

Luis Salas’ proposals at the recent PSUV party meeting

Luis Salas, the newly appointed Vice President for Economic Affairs, made the following proposals at the recent economic conference held by the ruling United Socialist Party (PSUV): 1. Reform the Labor Law and peg salaries to profits; 2. Reinforce the Fair Prices Law; 3. Call for a price freeze; 4. Start a campaign to incorporate the people into the political defense of Fair Price policies in broad terms; 5. Enable the Consumer Protection agency with real powers to decide, supervise and follow costs and prices, both domestic and international; 6. Start a family and personal savings campaign to defend people from speculation; 7. Move ahead on a proposal by President Chavez and confirmed by President Maduro to consolidate a public distribution network; 8. Strengthen the public commercialization network; 9. Have a coherent industrialization plan; 10. Carry out profound tax revolutions; 11. Have a real communications policy on economic affairs; 12. Be coherent in messages and policies arising from the messages. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/las-propuestas-del-ministro-salas-presentadas-en-e.aspx#ixzz3weGUp9A4)

 

VP Istúriz: “Economic war is the main cause behind election setback”

Executive Vice President Aristóbulo Istúriz claims the President’s office will stand by the people, because it is "aware" of the economic situation the country faces. "Even though some countrymen delve into the mistakes, in the flaws we have, and the omissions we do have, the vices, one should acknowledge that the main cause behind the (December) 6 setback was the economic war," Istúriz said. (El Universal, http://www.eluniversal.com/nacional-y-politica/160111/vp-isturiz-economic-war-is-the-main-cause-behind-electoral-setback)

 

Pérez Abad: Price of products must cover production costs

Miguel Perez Abad, the newly appointed Minister of Trade and Industry, says it is necessary to bring prices in line with production costs without hitting Venezuelans' purchasing power, in order to balance the country’s needs.
"We need a price policy under which the price of products is fair for the people, and yet it helps us protect domestic production and cover production costs both in the private and public enterprises. This is not easy, for we are emerging from a policy that has turned Venezuela into a country probably selling the cheapest products worldwide," the minister said during an interview. (El Universal, http://www.eluniversal.com/economia/160111/perez-abad-price-of-products-must-cover-production-costs)

 

Ideological differences within the new cabinet to hamper inflation control

The battle between radicals and pragmatists within the new economic team is back. Industry and Trade Minister Miguel Perez-Abad says that “we need a powerful alliance with the nation’s patriotic businessmen....We need all those who produce in the country to face the challenges of production and supplies during 2016…we must devise an aggressive plan to support small and medium industry in exporting”; and in contrast Economic Vice President Luis Salas says “the key elements that must be met immediately are product supply and controls on speculation”, adding that “speculative competition by large companies and merchants hurts the people and the entire supply chain”. More in Spanish: Barclays Capital says that Salas “has defended controls over adjustments” adding that the rest of the economic team is “more moderate and probably capable of cushioning his influence, but a coherent economic plan is unlikely due to the apparent divergent views within the team” Their report adds that Maduro seems to underestimate the magnitude of the economic crisis, and where fiscal austerity is needed they point out that he increased the number of ministries. (El Nacional, http://www.el-nacional.com/economia/Diferencias-ideologicas-gabinete-impediran-inflacion_0_772722788.html; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/barclays-ve-poco-probable-plan-economico-coherente.aspx#ixzz3wvlEVzhh)

 

Opposition seeks legislative control of central bank

Venezuela's opposition wants to use its majority in the new congress to bring the central bank back under legislative control in a first measure to try to influence economic policy, lawmakers said. President Nicolas Maduro eliminated, via decree, the National Assembly's control over nomination and removal of central bank directors on the eve of the new legislature's inauguration this week. That outraged the opposition coalition are planning to reform the law again to overturn Maduro's changes. "It's the first thing we are going to present (on economic matters), because it's the most immediate and the easiest," said Jose Guerra, an economist and former bank director expected to be on the new legislature's finance commission. Angel Alvarado, another opposition lawmaker expected to be on the commission, said the reform would also help control Venezuela's inflation by limiting money-flows to the executive via legislative control of allocations. The opposition coalition says Maduro's decree contravened the constitution, but any reform is likely to be appealed by the government at the Supreme Court which generally rules in its favor. Opposition lawmakers want to pressure the bank into revealing data on inflation and gross domestic product, which has also not considered a threat to national security or economic stability. (Reuters, http://www.reuters.com/article/us-venezuela-economy-idUSKBN0UL2OK20160107)

 

Implicit exchange rate strikes VEB 238/USD at the end of 2015

The balance of international reserves in the hands of the Central Bank of Venezuela (BCV) at the end of 2015 stood at US$ 16.53 billion, a 25% contraction, while monetary liquidity expanded 99.63% in the same term.
Monetary liquidity was VEB 3.94 trillion (US$ 626 billion). All this means more currency backed by fewer dollars from the international reserves. (El Universal, http://www.eluniversal.com/economia/160109/implicit-exchange-rate-strikes-veb-238usd-at-the-end-of-2015)

 

Meet 2016's worst economic performers

For the world's worst-performing economies, no good will come from New Year's resolutions to do better. For many, 2016 will only bring more disappointment, say economists surveyed by Bloomberg.  Oil-rich Venezuela will contract by 3.3% this year, the worst forecast of any of the 93 countries in our analysis, followed by junk-rated Brazil, debt-laden Greece and commodities-ravaged Russia. (Bloomberg, http://www.bloomberg.com/news/articles/2016-01-11/meet-2016-s-worst-economic-performers-flirting-with-disaster)

 

 

Politics and International Affairs

 

Venezuelan High Court declares opposition National Assembly null, Assembly investigates Court

Venezuela's Supreme Court has declared that the new opposition-dominated congress' decisions are void until it unseats three barred lawmakers, bringing the country closer to a showdown over power in the legislature. Opponents of the socialist revolution launched by Hugo Chavez took control of congress for the first time in 17 years last week. The high court barred three opposition lawmakers from taking their seats to give officials time to look into allegations of electoral fraud. The decision comes in response to a petition by the Chavista minority in the Assembly. Despite having signed two agreements to abide by election results, Chavistas called fraud in the voting process in Amazonas state and challenged their election, upon which that state’s legislators were immediately suspended by the Tribunal. That ruling angered members of the opposition, who called it an attempt to undermine their historic victory in legislative elections in December, and they swore the lawmakers in anyway. They accuse the Supreme Court of being an arm of President Nicolas Maduro's socialist government and of seeking to steal away its two-thirds majority in congress with the ruling. On Monday, the court upped the ante in the confrontation by ordering congress to unseat the three deputies from the remote state of Amazonas. It ruled that all its actions are null in the meantime. The decision, which applies to "all acts that have been taken or will be taken" by the new congress, seems to render the body powerless for now. The congress has not yet passed any legislation. Some in the opposition denounced it as a coup and vowed to continue defying the court. While it has not yet passed any legislation, early Monday lawmakers began the process of debating a law that would give amnesty to jailed opposition leaders who human rights groups consider to be political prisoners. They also formed a congressional committee to look into irregularities in the rush appointment of 13 Supreme Court judges just after the socialist party lost Dec. 6 legislative elections. They say the appointments are proof the court is rigged.  The new President of the National Assembly, Deputy Henry Ramos, denies there is contempt, and says that contempt is to go against the will of the people. “One cannot be in contempt of those who elect themselves. We do not go through the screening of another power to exercise our constitutional rights”. He said there will be no collision between the legislature and the judiciary, and that if any side wants to create a conflict “it will only be a round of shadow boxing”. The opposition will remain a decisive majority even minus the 3 legislators from Amazonas. (The New York Times: http://www.nytimes.com/aponline/2016/01/11/world/americas/ap-lt-venezuela-congress.html; El Universal, http://www.eluniversal.com/nacional-y-politica/160111/top-court-orders-removal-of-three-opposition-lawmakers; http://www.eluniversal.com/nacional-y-politica/160111/committee-to-investigate-designation-of-13-top-tribunal-justices; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=46595&idc=1; and more in Spanish: (Infolatam: http://www.infolatam.com/2016/01/11/supremo-venezolano-declara-en-desacato-al-parlamento-por-juramentar-diputados/; El Nacional, http://www.el-nacional.com/politica/Ramos-Allup-Asamblea-Nacional-tamiz_0_770923076.html)

 

Contested legislators demand ruling by the National Elections Council

Nirma Guarulla, Julio Ygarza and Romel Guzamana, the newly elected opposition legislators from Amazonas state, went before the Supreme Tribunal to swear in their attorneys that will represent them in the challenge brought against them by the government party. Ygarza said: “we are opposing that illegal, unconstitutional and immoral sentence by the Electoral Chamber” and called upon the National Elections Council to speak out, adding that “today the Supreme Tribunal is requesting the resolution (declaring them elected) from the National Elections Board, after it took the decision”. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/160108/diputados-impugnados-exigen-al-cne-se-pronuncie)

 

Maduro to send ‘economic emergency’ law to National Assembly

Trade and Foreign Investment Minister Jesus Faria says that an economic emergency decree proposed by President Maduro to the National Assembly is intended to immediately apply sensible steps to transform the nation into productivity and generate confidence. Maduro is scheduled to speak to the National Assembly next Friday, to present his 2015 yearly report. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/emergencia-econ%C3%B3mica-incluye-medidas-sensatas-para-impulsar-transformaci%C3%B3n-productiva; El Universal, http://www.eluniversal.com/economia/160112/piden-sincronizar-accion-del-ejecutivo-y-legislativo; http://www.eluniversal.com/nacional-y-politica/160112/comision-de-an-investigara-designacion-de-magistrados; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/faria--decreto-de-emergencia-propondra-medidas-sen.aspx)

 

A dangerous stand-off looms between the government and the newly elected parliament

Chavismo has been wounded, but it is far from defeated. Parliament aside, all the main institutions of government remain under its control. The setback to the regime has made it more authoritarian. Before parliament’s opening Venezuela’s Supreme Court had ruled that four of the incoming MPs from the state of Amazonas, three of them from the opposition Democratic Unity alliance (MUD), could not be sworn in. They are the subjects of investigations into possible electoral fraud. This ruling threw into doubt the two-thirds majority the MUD appeared to win in the election on December 6th. Such a “supermajority” would allow the opposition to begin the process of appointing and dismissing Supreme Court judges and to convene a convention to rewrite the constitution. The day after its opening parliament defiantly swore in the three MUD deputies, restoring the opposition’s two-thirds majority. One of the last acts of the outgoing assembly was to stuff the court with 13 new pro-government judges. Maduro has already suggested that all legislation that he disagrees with, including a proposed amnesty to secure the release of scores of political prisoners, will be deemed unconstitutional by the Supreme Court. “It is difficult to imagine that congress can have an institutional conflict against the Supreme Court and win,” says Luis Vicente León, a pollster. Ramos, a veteran of the Democratic Action party, was the choice of smaller parties within the MUD. They fear domination by the younger Justice First party, led by Henrique Capriles, who nearly won a presidential election in 2013. Ahead of parliament’s opening session he confirmed that he would seek the constitutional removal of Maduro from the presidency within six months, presumably by launching a referendum to recall him from office. A decree by Maduro, enacted before the new parliament opened, shows that the regime has little intention of doing anything new about the dire state of the economy. It strips the assembly of its right to appoint directors of the Central Bank, or even to question them. As the confrontation between president and parliament worsens, Venezuelans wonder what role the army will play. The government’s eccentric claims about what is constitutional put the armed forces in an awkward position. “The military says it is going to defend the law, but what is the law?” wonders León. Venezuela’s looming struggle is largely about the answer to that question. (The Economist: http://www.economist.com/news/americas/21685522-dangerous-stand-looms-between-government-and-newly-elected-parliament-coming

 

Defense minister calls for caution and respect by all sectors

Defense Minister Major General Vladimir Padrino López, has called upon all sectors in the country to act with caution and respect. "We do not want war. Who would be interested in a civil war?" he said. He again referred to the removal of the pictures of late Venezuelan President Hugo Chávez and of Liberator Simón Bolívar from the headquarters of the National Assembly. (El Universal, http://www.eluniversal.com/nacional-y-politica/160111/venezuelan-defense-minister-calls-for-caution-and-respect-from-all-sec)

 

Chavistas protest removal of Chavez portraits

The United Socialist Party of Venezuela, or PSUV, and other Chavistas organizations that refused to accept opposition apologies about the removal of pictures of the late President Hugo Chavez and a regime sponsored version of Simon Bolivar from the National Assembly, gathered Saturday in a number of cities to protest against what they consider an “insult.” In Caracas, youths of the PSUV, the Communist Party (PCV) and other organizations gathered at the museum-home of the hero of Venezuelan independence, two blocks from the seat of the legislature, where the new speaker and opposition leader Henry Ramos Allup took office last Tuesday and immediately ordered that the portraits be removed from the premises. Ramos Allup had himself filmed while asking some workers to deliver the portraits of Chavez “to the widow and her daughters” or to the Presidential Palace, or to toss them in the garbage together with the portraits of Bolivar worked up “on computers” and which he termed “falsifications.” (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2403208&CategoryId=10717)

 

US Senator Menendez calls for action on Venezuela Maduro regime violations

U.S. Senator Bob Menendez (D-NJ), senior member of the Senate Foreign Relations Committee and author of the Venezuela Defense of Human Rights and Civil Society Act, today sent a letter to President Obama outlining a series of concrete actions the United States should take to make certain the international community speaks and, more importantly, works in unison to deter any deviation from an orderly transition of power in Venezuela. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2403185&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.

 

January 05, 2016

International Trade

 

Imports from Nicaragua decrease

Imports from Nicaragua have dropped over 10% for the first time since 2008. They shrank 13.59% in volume and 16.28% in value. Milk exports, which is the main Nicaraguan export to Venezuela, increased. Sugar, cooking oils and coffee exports dropped in value and volume. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/disminuyen-envios-desde-nicaragua.aspx#ixzz3wMmSquan)

 

 

Oil & Energy

 

Venezuela delays gas exports to Colombia, citing climate

Venezuela's state oil company, PDVSA, has delayed the export of natural gas to Colombia because of climate factors, the Colombian Mines and Energy Ministry said on Friday. In a letter to the Colombian government on Wednesday, PDVSA said the exports would not begin because of "climate variability," the ministry said in a statement. The exports are part of a deal between the two countries, which includes provisions for the neighbors to supply their own markets if necessary before exporting. "The contract specifies the delivery of 39 million cubic feet a day from Venezuela, which corresponds to just over 3% of daily supply in Colombia," the statement said. Colombian state oil company ECOPETROL has asked PDVSA to give a new date by which the exports could begin. (Reuters, http://www.reuters.com/article/colombia-venezuela-gas-idUSL1N14L0EH20160101; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2402783&CategoryId=10717; El Universal, http://www.eluniversal.com/economia/160104/venezuelas-pdvsa-blames-el-nino-for-halt-in-gas-export-to-colombia)

 

Maduro says Venezuela oil price finishes 2015 below US$30

The price Venezuela receives for its mix of heavy oil continued tumbling throughout December finishing the year below US$ 30 a barrel, according to President Nicolas Maduro. "The oil price today closed at US$ 29.26," Maduro said. "That's the key foreign exchange earnings of the country. However, Venezuela is not going to stop. We have to generate the national wealth. With that in mind, I have been preparing a set of actions to shield us and prepare for 2016 and take decisions that guaranteed the works delivered in 2015 to the people." He then promulgated 4 new laws as his ability to rule by decree ended that evening. According to Venezuelan government figures, the average price in 2015 for Venezuela's mix of heavy and medium crude was US$ 45.23 for the year. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2402814&CategoryId=10717)

 

Venezuela says a meeting between OPEC and non-OPEC countries is necessary

Eulogio del Pino, Minister of Petroleum and President of state-run oil company Petróleos de Venezuela (PDVSA) has stressed the need to hold an urgent meeting with oil producing countries members and non-members of the Organization of Petroleum Exporting Countries (OPEC) in January. "We have been discussing the need to urge leaders of OPEC and non-OPEC countries to hold an urgent meeting in January, since this is statistically the month with the lowest energy consumption worldwide, and with current supply levels, the price of the oil barrel could drop some US$ 10 more. That is why a joint action by all oil producing countries is necessary, in accordance with the fundamental principles of the OPEC (...), including the defense of fair prices of a non-renewable natural resource," Del Pino stressed. (El Universal, http://www.eluniversal.com/economia/160104/venezuela-deems-necessary-a-meeting-between-opec-and-non-opec-countrie)

 

 

Economy & Finance

 

Maduro limits Congress's power over Central Bank

President Nicolas Maduro has limited the National Assembly's powers over the Central Bank.  The president will now no longer need legislative approval to hire and fire Central Bank directors. The change was announced shortly before a new assembly, controlled by an opposition coalition, is due to be sworn in later on Tuesday. Maduro approved the change to the law governing Venezuela's Central Bank on 30 December, one day before his power to legislate by decree expired. The amended law not only curtails the powers of the assembly over Central Bank appointments, it also allows the bank to withhold data if it deems its publication a threat to national security or economic stability. Under the new law, the Central Bank can also allocate money to the state without the approval of the National Assembly. Opposition politicians said it was the latest in a series of moves to undermine the power of the legislative following last month's elections. "The reform [of the Central Bank law] is a legal monstrosity to protect a highly questioned president," opposition lawmaker Jose Guerra said. The opposition had announced that it would make economic reform one of its legislative priorities. (BBC News, http://www.bbc.com/news/world-latin-america-35231562)

 

New law now penalizes dollar transactions

President Nicolás Maduro has decreed that the use of an informal dollar FOREX rate to set prices for goods and services nationwide is now illegal and carries penalties of up to 12 years in jail. The new law creates a domestic production certificate as a new way to obtain FOREX for the government. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/hasta-12-anos-de-carcel-por-fijar-precios-a-dolar.aspx#ixzz3wMlLFL2O; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/las-nuevas-sanciones-por-ilicitos-cambiarios.aspx; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/hasta-12-anos-de-carcel-por-fijar-precios-a-dolar-.aspx; AVN; http://www.avn.info.ve/contenido/prohibici%C3%B3n-fijaci%C3%B3n-precios-d%C3%B3lar-especulativo-proteger%C3%A1-ingresos-venezolanos)

 

Maduro enacts new laws to increase taxation

President Nicolás Maduro has enacted several laws that aim to increase taxes and government revenue. One is a tax on large financial transactions which will now be charged 0.75% per transaction. Maduro claims this new tax will apply only to some 3,000 people and entities who hold large amounts of capital and will not hurt workers. He also announced that the government will henceforth not allow companies to adjust for inflation in order to avoid “fiscal evasion” More in Spanish: (AVN; http://www.avn.info.ve/contenido/impuesto-grandes-transacciones-financieras-generar%C3%A1-ingresos-para-inversi%C3%B3n-social; http://www.avn.info.ve/contenido/contribuyentes-gran-capital-pagar%C3%A1n-impuestos-ajustados-sus-ganancias)

 

Law on Labor Stability extended for three years

President Nicolás Maduro has extended Venezuela’s Labor Stability Law for three years, through 2018, which forbids companies from laying off workers and employees without government approval. Business has criticized the decree, saying it does not foster productivity. More in Spanish: (AVN; http://www.avn.info.ve/contenido/ley-inamovilidad-laboral-se-extiende-tres-a%C3%B1os; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/en-gaceta-oficial-ley-que-establece-inamovilidad-l.aspx)

 

Maduro says he may decree a national emergency on the economy, announce new cabinet

President Nicolas Maduro announced that he has received a proposal to set forth a constitutional national emergency plan for economic recovery: “I am evaluating, within the framework of a national economic recovery plan, decreeing a constitutional national emergency to face the great challenges of the economy and raise production, trade, distribution and price regulation…and I expect the National Assembly to support and approve it”. He said “specific plans are being drawn up by segments: milk, beef, cleaning goods, consumer products”.  Maduro added that “within the next few hours I will announce the makeup of the new Bolivarian government, its new structure”. More in Spanish: (Noticias24, http://www.noticias24.com/venezuela/noticia/306748/maduro-evalua-decretar-una-emergencia-nacional-constitucional-para-la-economia/)

 

2015 inflation was 270.7%, the highest in Venezuela’s history

Inside sources at Venezuela’s Central Bank are reporting 2015 inflation was the highest in the nation’s history, and closed at 270.7% for the year. President Maduro has ordered the bank to conceal all economic statistics. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Inflacion-cerro_0_769123206.html)

 

China study says Venezuela is the riskiest nation on earth for Chinese investments

A study by the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, published by Zhou Xin in the South China Morning Post, evaluates 57 nations that receive Chinese investment funds, and finds that Venezuela is the riskiest market for Chinese investors, worse even tan Iraq and Sudan. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Venezuela-riesgos-inversiones-China_0_767923241.html)

 

 

Politics and International Affairs

 

Opposition taking over Congress, showdown looms

Venezuela's opposition is taking control of Congress for the first time in 16 years, setting up a power struggle with President Nicolas Maduro amid a worsening economic crisis. The Democratic Unity coalition won a two-thirds majority in December's legislative election by capitalizing on anger over a shrinking economy, soaring prices and chronic product shortages reminiscent of Soviet-bloc economies. The coalition plans to swear in all of its 112 elected deputies but the Supreme Court has ruled that three of them cannot take office because their election victories face legal challenges. The court did not describe the underlying arguments against the election of the deputies, all of whom are from the rural and sparsely populated southwestern state of Amazonas. Disputing all the results in that state required the Socialist Party to contest the seat won by its own candidate. The opposition dubbed the ruling a "judicial coup" meant to strip it of its two-thirds majority in the National Assembly. Opposition lawyers say the ruling is "incoherent" and insist it cannot take precedence over election results. But former Supreme Court justice Luis Martinez has warned that swearing in the blocked deputies could allow the Socialist Party to argue that Congress has been illegally constituted and thus its decisions are null and void. Legislator Henry Ramos, who was tapped by the opposition coalition to be the National Assembly's next speaker, said the legislature's microphones have been sabotaged and television equipment removed from Congress to impede a live broadcast of the change of leadership. Opposition leaders accuse the government of undermining the incoming assembly with last-minute appointments of Supreme Court justices and by changing a central bank law to eliminate congressional control over the bank's leadership. Maduro has dismissed the new assembly as "right-wing" and "bourgeois. Government allies and opposition sympathizers have planned marches to downtown Caracas today, a scenario that has in the past has led to street violence as protesters clash with one another or with security forces. Although the opposition's victory was driven by anger over the economy, it has few options to resolve the crisis because Maduro's government handles economic policies. Opposition lawmakers have instead promised to take up an amnesty law seeking the freedom of opposition activists jailed for protesting against Maduro, and a measure to grant property titles to those who received homes from the government. President Maduro made a last minute call for a peaceful event saying “Tomorrow let us contribute so that the Assembly is installed in peace, as the Constitution mandates, with respect toward the Constitution, the laws and all branches of government”. He ordered the Ministry of the Interior, Justice and Peace to protect all political party movements called for this day. (The New York Times, http://www.nytimes.com/reuters/2016/01/05/world/americas/05reuters-venezuela-politics.html); and more in Spanish: (AVN; http://www.avn.info.ve/contenido/bienvenida-instalaci%C3%B3n-asamblea-nacional)

 

Opposition picks leader ahead of Congress takeover

Venezuela’s newly elected opposition lawmakers have chosen Henry Ramos Allup as president of Congress, as they prepare to take power with a legislative majority in the recession-battered country for the first time in sixteen years. The legislators, who are set to take control of Congress today, voted in a secret ballot, said Jesus Torrealba, secretary of the anti-government coalition. Ramos Allup, 72, heads the Democratic Action political party that is part of the coalition.

“We’re going to legislate,” Ramos Allup said Monday, promising to probe allegations of corruption within President Nicolas Maduro’s government. “We’re going to regulate. Many ministers and government officials will be called in for questioning.” Ramos Allup reported on Monday that the security chief of the administrative headquarters of the Parliament, located in downtown Caracas, banned him from entering that building. He was also insulted by gangs of Maduro regime supporters in the area. Ramos Allup later said he has information that the Armed Forces will guarantee order today when the new Assembly takes office, by “ensuring the perimeter”. He called upon the government to “tell their people” to join their representatives “in peace and quiet”. (Bloomberg, http://www.bloomberg.com/news/articles/2016-01-04/venezuela-opposition-chooses-henry-ramos-allup-to-lead-congress; The Miami Herald, http://www.miamiherald.com/news/nation-world/world/americas/venezuela/article52817875.html; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2402847&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/160104/opposition-deputy-henry-ramos-banned-from-entering-the-congress; BBC News, http://www.bbc.com/news/world-latin-america-35220773?utm_source=Sailthru&utm_medium=email&utm_campaign=New%20Campaign&utm_term=%2AMorning%20Brief; and more in Spanish: Infolatam, http://www.infolatam.com/2016/01/04/impiden-ingreso-del-nuevo-presidente-del-parlamento-venezolano-al-legislativo/)

 

US says Venezuelan government interfering in new National Assembly

The United States expressed concern on Monday about what it said was interference by the Venezuelan government in the country's National Assembly, which convenes on today for its first session with an opposition majority in more than 16 years. "We are concerned by the Venezuelan government's efforts to interfere with the newly elected National Assembly exercising its constitutionally mandated duties," State Department spokesman John Kirby told reporters. (Reuters, http://www.reuters.com/article/us-venezuela-usa-idUSKBN0UI1Y520160104?feedType=RSS&feedName=worldNews)

 

Is Venezuela's opposition strong enough to rule?

Venezuela turned staunchly against the ruling United Socialist Party (PSUV) in parliamentary elections Dec. 6, giving the opposition a two-thirds supermajority in the National Assembly. MUD leaders have two different ideas on how to move forward. One option is to forcefully dismantle the legal protections built up over 17 years to guard the presidency and to eventually call a referendum against Maduro. The other is to negotiate legislative solutions to the country's political and economic problems. Regardless of which option opposition leaders choose, they will have to negotiate with the most powerful components of Venezuelan politics, including the security elements, dissident chavistas and, most challenging of all, the multiple and unstructured political patronage networks known colloquially as 'colectivos.' The opposition announced in late December that it intends to remove Maduro in 2016 through legal maneuvers; and in the short term, government officials are not likely to negotiate with MUD, but as civil strife intensifies, with the almost certain political gridlock ahead, leaders and supporters of the ruling party will become more willing to work with MUD leaders. In the meantime, Venezuela’s economic problems will only worsen in 2016. (Stratfor, https://www.stratfor.com/analysis/venezuelas-opposition-strong-enough-rule)

 

SPECIAL REPORT: Venezuela into the abyss? Through the opposition victory in the December 6 Venezuelan elections, it is possible to foresee an eventual end to 17 years of populist socialism which has destroyed the Venezuelan economy and governing institutions and polarized its people.  Yet in approaching that end, Venezuela is arguably passing through one of the most dangerous periods in its contemporary history.  The actions taken by all parties in Venezuela, by the United States, and by the rest of the international community, will have an enduring effect far beyond Venezuela’s borders. (Special report by Dr. R. Evan Ellis)

 

 

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

December 29, 2015

International Trade

 

Japanese Chamber President says companies to spur projects in Venezuela

According to Erwin Miyasaka, the President of the Venezuelan - Japanese Chamber (CAVEJA), Japanese companies are contemplating to resume commercial projects in Venezuela in 2016, particularly in the areas of energy, petrochemicals, the automotive industry and technology. "We hope to take in many off track activities in the Energy Cooperation Committee set up by both nations," he says. "Biannual meetings provide a forum for sharing common interests and open up a whole world of opportunities." In Miyasaka's opinion, Venezuela is one of the few attractive countries to invest in the region. "Even with prices of US$ 40 a barrel the business of hydrocarbons and derived products is profitable on the basis of domestic costs," he says. "With the current Organic Law of Hydrocarbons, according to experts in the field, there would be no need to change." (El Universal, http://www.eluniversal.com/economia/151226/japan-to-further-projects-in-venezuela)

 

 

Economy & Finance

 

Guerra says economy could further deteriorate in 2016

Economist José Guerra, recently elected as an opposition legislator to the National Assembly, says the nation is undergoing an economic tragedy due to a severe contraction along with inflation that is destroying wages. He says GDP shrank 11%, inflation rose 200% and food prices increased 250% as scarcity of regulated food reached 80%. “All of this lead to a 40% drop in wages and pensions, only a nation devastated by war has such statistics. The Central Bank’s monetary policy played a large role in price trends, by financing the deficit by printing money.” More in Spanish: (El Nacional, http://www.el-nacional.com/politica/Jose-Guerra-situacion-deteriorarse-todavia_0_764323604.html)

 

2015 was the worst economic crisis in 100 years

According the ECOANALITICA think tank, 2015 has seen the worst economic crisis in a century, due to scarcities and lower buying power, which have diminished the quality of life for middle and lower class Venezuelans as a result of FOREX cuts for private imports and individuals which hurt food subsidies as well as remittances, Internet operations, travelers and students. FOREX allocations to these activities dropped 66% from US$ 137.5 million daily in January-November 2014 to US$ 46 million daily in the same time frame during 2015. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/subsidios-dolares-clase-media-baja_0_764923645.html)

 

Majority in the National Assembly will call for economic reform

Re-elected legislator Julio Borges says the role of the majority in Parliament is to demand that the government take steps on the economy to meet the needs of Venezuelans. He said “the regime must decide if it will be a part of those changes the nation is demanding, or if it continues paralysis”. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politica/mayoria-parlamentaria-exigira-medidas-en-materia-e.aspx#ixzz3vhicl9b7)

 

PSUV economists say 6.30 FOREX dollar rate must disappear

Economists within the pro-government United Socialist Party (PSUV) met recently to seek proposals for the government on economic policy. One of their suggestions was to modify exchange policy, and legislator Jesus Faría spoke of an option to reach a single exchange rate by doing away with the 6.30 rate. Other economists called this rate “unsustainable”. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/economistas-proponen-desaparicion-del-dolar-a-6-30.aspx#ixzz3vbucc6b6)

 

International reserves rose US$ 1.830 billion

According to Central Bank data published December 23rd, Venezuela’s total FOREX reserves rose US$ 1,830 billion to US$ 16.518 billion, up to October levels. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/energia/reservas-internacionales-aumentaron--1-830-millone.aspx#ixzz3vhhI1ZiU; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/reservas-internacionales-aumentaron-1-830-millones.aspx)

 

 

Politics and International Affairs

 

Opposition will call for “change in government” if National Assembly work is blocked

Re-elected legislator Julio Borges, coordinator of the PRIMERO JUSTICIA party, supported statements by Henry Ramos Allup, Secretary General of ACCIÓN DEMOCRÁTICA, also re-elected to the National Assembly, on “changing the government” in six months, and specified that seeking the constitutional means for it will depend on whether the government “sabotages the changes for which millions of Venezuelan’s voted for”. Ramos has written that the coalition will “honor” all proposals made during the campaign among them “the commitment to seek within the six months following the inauguration of the new National Assembly a constitutional, democratic, peaceful and electoral way to change the government”. He added that the coalition proposals were “signed and ratified by all of those who are part of democratic unity, and they are still in force and unscathed and we will honor them”, and said no matter will be prioritized because they are all “dramatically urgent”. Earle Herrera, a re-elected pro-government legislator, says his side is prepared in case the opposition wants to invoke constitutional means against the President, such as a referendum to revoke his mandate: “The Constitution…has answers for each of the constitutional options the opposition calls for”, he says. Ramos and Borges are currently the leading contenders to preside the incoming National Assembly. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/151228/mud-apelara-a-propuesta-de-cambio-de-gobierno-si-se-impide-labor-de-la)

 

Opposition seeks to elect new National Assembly president by consensus

The leaders of parties within the Democratic Unity Conference (MUD) that have elected legislators are meeting to discuss a proposal by PRIMERO JUSTICIA to seek a consensus on rules to guide the work of the full opposition caucus, including choosing Assembly authorities and committees. If no consensus is reached, it seems probable the new authorities, including the President, will be elected through a vote on January 3^rd. After the New Assembly takes office on January 5^th, the coalition will announce its agenda. In a statement published on the Internet, the group again called for “freeing political prisoners, the return of exiles and the end of persecution against thousands of students and young people”. The statement emphasizes that “what is at stake is the viability of the nation itself, beyond the stability of a government”. (El Nacional, http://www.el-nacional.com/politica/MUD-agotar-consenso-presidente-AN_0_764923643.html; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/mud-anunciara-este-martes-su-agenda-para-el-5-e.aspx#ixzz3vhkQOcWU)

 

Audits discard fraud claims in December 6th elections

Two audits carried out after the December 6^th elections show the system performed correctly with few election infractions, which throws out fraud arguments alleged by authorities. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/Auditorias-posteriores-tierra-argumentos-fraude_0_764923586.html)

 

Supreme Tribunal endorses outgoing National Assembly decisions

The Constitutional Chamber within the nation’s Supreme Justice Tribunal has decided that all decisions taken by the outgoing National Assembly during the special sessions called by outgoing Assembly President Captain Diosdado Cabello, are legal and there is no limitation on the matters they can decide. In this way they intend to reinforce the appointment of 13 new Tribunal justices despite charges that their designation is unconstitutional. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/TSJ-avala-decisiones-Asamblea-saliente_0_761324048.html)

 

Designation of Supreme Tribunal justices published

On December 23rd, the official Gazette published the designation of 13 Supreme Tribunal justices made by a simple majority of the outgoing National Assembly during a special session. The new members of the powerful Constitutional Chamber are Calixto Ortega, Luis Damiani-Bustillos, and Lourdes Suárez-Anderson. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/151229/en-gaceta-la-designacion-de-magistrados-del-tsj; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/lista---en-gaceta-designacion-de-magistrados-del-t.aspx)

 

Venezuelans in U.S. linked to US$ 1 billion in PDVSA bribes

The U.S. accused two men of taking part in a US$ 1 billion bribery scheme to secure contracts with Venezuela’s state oil company and linked one of the duo to a former head of Venezuelan military intelligence wanted for alleged cocaine trafficking. Roberto Rincon-Fernandez, a Venezuelan national, was ordered held without bail on charges of conspiring to launder money and violating the Foreign Corrupt Practices Act in connection with Petroleos de Venezuela SA, according to an order signed Dec. 19 by U.S. Magistrate Judge Nancy K. Johnson citing an indictment.  Abraham Jose Shiera-Bastidas, a Venezuelan living in Florida, was jailed in Miami on the same charges. The bribes included monetary gifts, travel, hotel reservations, meals, liquor, car rental, a yacht, a US$ 14,000 stay at the Fontainebleau Hotel on Miami Beach, and other gifts to obtain “business on behalf of Rincon’s and Shiera’s companies,” according to the joint indictment filed in Miami. In her order to keep Rincon behind bars, Johnson said he “has significant assets which could fund a fugitive life-style” and there’s a “serious risk” he could flee. Rincon, with homes in Aruba and Spain, has a “close personal friendship” with retired Venezuelan General Hugo Carvajal, who was arrested in Aruba on Rincon’s private aircraft and later released, according to the order. Carvajal – recently elected to the National Assembly on the government party ticket - is wanted in the U.S. for drug trafficking and Aruba has declined to extradite him, according to Johnson’s order. The case is U.S. v. Rincon-Fernandez, 15-cr-654, U.S. District Court, Southern District of Texas (Houston). (Bloomberg, http://www.bloomberg.com/news/articles/2015-12-22/venezuelan-in-houston-linked-to-1-billion-in-pdvsa-bribes)

 

Venezuela reached homicides record in 2015

According to the Venezuela Violence Observatory (OVV) non-government organization, violent deaths in this nation were up to 27,875 this year, a 12% increase over last year – up to 90 for every 100,000 inhabitants, which makes Venezuela one of the most violent nations in the Hemisphere. At mid-year the government was admitting to only 66 homicides per 100,000 inhabitants. More in Spanish: (Infolatam, http://www.infolatam.com/2015/12/28/las-muertes-violentas-aumentan-en-venezuela-durante-2015/)

 

Venezuela ceases mediator role in talks with Colombia’s ELN

Venezuela has allegedly abandoned its role as a mediator in the rapprochement efforts that have been under way for two years between the Colombian government and the guerrilla National Liberation Army (ELN) intended to start a peace process similar to that taking place since 2012 in Cuba with the Revolutionary Armed Forces of Colombia (FARC). The digital edition of Colombian newspaper El Tiempo reported that "according to sources close to the rapprochement," the government of Venezuelan President Nicolás Maduro has "decided to freeze its mediation". (El Universal, http://www.eluniversal.com/nacional-y-politica/151228/venezuela-ceases-mediator-role-in-talks-with-the-eln)

 

Two hurt when Venezuelan police chopper crashes in Colombia

Both occupants were injured when a helicopter of Venezuela’s national police crashed just across the border in the northern Colombian province of La Guajira, Colombia’s defense minister said. The aircraft crashed onto a parking lot in the village of Paraguachon in the Colombian municipality of Maicao, but did not catch fire, Luis Carlos Villegas said.
According to the minister, the two crew members flying the Bell helicopter were injured and were taken to medical centers in Venezuela. “Our presence at the site was a humanitarian effort to see if the crew members were being well looked after, and through diplomatic channels we will proceed to establish with the Venezuelan government what should be done with the helicopter wreckage that is left on this side of the border,” the minister told reporters. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2402558&CategoryId=10717)

 

Samper: Changes of course in Argentina, Venezuela are normal in democracy

Ernesto Samper, Secretary General of the Union of South American Nations (UNASUR), says political changes in Argentina and Venezuela are a "normal change in direction" within a democratic system, and he refused claims that the region is in the middle of ideological confrontation. "There is no need for drama over these changes," he added. (El Universal, http://www.eluniversal.com/nacional-y-politica/151228/samper-changes-of-course-in-argentina-venezuela-are-normal-in-democrac)

 

Fourth CELAC Summit to be held in Quito on January 27, 2016

The Fourth Summit of the Community of Latin American and Caribbean States (CELAC) will be held on January 27 next year in Quito, Ecuador. Cuban Vice-Foreign Minister Abelardo Moreno said that the 33 countries comprising the CELAC would seek to establish new ways to reduce inequality in the region. "There are great expectations. CELAC is our mechanism for political agreement, which has consolidated upon the summits held so far," Moreno said. (El Universal, http://www.eluniversal.com/nacional-y-politica/151228/fourth-celac-summit-to-be-held-in-quito-on-january-27-2016)

 

 

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.