March 03, 2017

International Trade

529 food containers have arrived at the Port of La Guaira

529 containers bringing food from Mexico, aboard the container ship CNP PAITA, have arrived at the port of La Guaira. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36067; Ultima Hora Digital, http://ultimahoradigital.com/2017/02/alimentos-llegaron-de-mexico-para-repartirse-en-los-clap/)

Cargo that has arrived at Puerto Cabello

·         30.000 tons of rice

·         27 containers of agro chemicals for state agency AGROPATRIA

·         30.000 tons of wheat for state agency Corporación de Abastecimiento y Servicios Agrícolas (CASA)

·         30.000 tons of white corn

An additional 574 containers bearing food, personal care products and medicine arrived from Cartagena-Colombia on the MAERKS WISMAR. The shipment includes 139 containers of food: canned tuna, black beans, white rice, powdered milk, pasta and margarine. 19 containers of medicine, 12 of personal care products, and 404 bearing vehicle spare parts and machinery. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36065; http://www.bolipuertos.gob.ve/noticia.aspx?id=36074: Ultima Hora Digital, http://ultimahoradigital.com/2017/02/30-mil-toneladas-de-arroz-son-descargadas-en-el-puerto-de-puerto-cabello/; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/arribaron-a-puerto-cabello-30-000-toneladas-de-arr.aspx)

 

Cargo that has arrived at Maracaibo

·         3.278 tons of food packets from México for the state government of Zulia state. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36063; El Mundo, http://www.elmundo.com.ve/noticias/mundo-corporativo/sociales/contenedores-con-alimentos-llegaron-al-puerto-de-m.aspx)

Cargo that has arrived at El Guamache (Margarita Island):

113 containers from Kingston, Jamaica, including 384 tons of food items such as rice, pasta and coffee, plus 1165 tons of vehicle parts and accessories, textiles, clothing and footwear, furniture and household products, hardware, health and personal care products such as soap, toothpaste and shampoo. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=36072)

 

Oil & Energy

Hitting Venezuela's Government where it hurts. Not yet two months into his tenure, U.S. President Donald Trump has demonstrated his intention to increase the pressure on Venezuela's government, whose imperatives are at odds with those of his own administration. Washington appears ready to impose further sanctions on Venezuelan officials and entities, perhaps even against the country's vital state oil and natural gas company, Petroleos de Venezuela (PDVSA). The U.S. government may find it easier to keep targeting Venezuela through sanctions than to organize a regional response. If the Trump administration imposes heavy sanctions on PDVSA, thereby preventing U.S. companies and businesses subject to Washington's jurisdiction from doing business with the oil firm, it could herald Maduro's ruin. Caracas depends on oil for about 95% of its total export revenue, and it has already had to slash imports over the past few years as a result of limited production capacity and sanctions. Tough sanctions on the state oil and gas company would only intensify the economic crisis and probably also the divisions within the government over whether Venezuela should continue down the path of international isolation. Whether more sanctions would cause the Maduro administration to change course depends on the ruling party's internal dynamics. (STRATFOR: https://www.stratfor.com/analysis/hitting-venezuelas-government-where-it-hurts)

 

Economy & Finance

Venezuela running out of cash

The Central Bank of Venezuela says the country is down to just US$ 10.5 billion in foreign reserves. At the same time, Caracas must meet debt obligations of US$ 7.2 billion this year. The country had nearly US$ 30 billion in reserve five years ago; in 2015, it was down to US$ 20 billion. According to economists, the trend can't go on much longer, but it’s not easy to predict how long it would take Venezuela to reach the bottom. Nearly US$ 7.7 billion of the country’s remaining reserves is in gold, according to the latest financial report for 2016. Venezuela had to ship gold to Switzerland to foot debt bills last year. Dwindling reserves are only exacerbating the humanitarian crisis in the country. The economic blow has led to food and medical shortages, as well as skyrocketing prices. Inflation is expected to rise to 1,660% this year and 2,880% in 2018, according to the IMF. Among the key factors boosting inflation experts see the crashing bolivar, huge government spending, poor management of the country's infrastructure, as well as high level of corruption. However, oil prices averaging US$ 55 remain the major problem for the country’s economy. As the largest holder of reported oil reserves in the world, Venezuela produced over 2.4 million barrels of crude and condensates per day at the end of the last year, as per ministry data. Oil shipments make up more than 90% of the country's exports. That makes it more and more difficult for Caracas to pay debts and import food, medicine and other essentials for its citizens. The country's imports dropped 50% from a year ago, according to Venezuelan research firm ECOANALITICA. (RT: https://www.rt.com/business/379160-venezuela-ten-billion-down-oil/; Fox News: http://www.foxnews.com/world/2017/03/02/venezuelas-foreign-reserves-tank-to-10-5-billion-report-says.html)

South America's last bastion of Socialism is falling to pieces

The currency is worth a dime, though probably not even that much. The brain drain is immense. People are starving. Unemployment is in the double digits. Inflation is triple digits. And its president, Nicholas Maduro of the disastrous United Socialist Party of Venezuela, talks to deceased president Hugo Chavez who comes to him in the form of a little bird. South America's last hold-out of pre-colonial times is going broke. It has US$ 10 billion in foreign currency reserves. There are now individuals in South America that have more money than Venezuela's central bank. If Maduro wanted to be more like Cuba, he's got it, maybe minus the 57 Chevy's and armies of doctors. It's not just the popping of the oil bubble that's hurt Venezuela. Every other one trick pony has managed to survive. Venezuela's economy has contracted an impressive 18.6% in 2016. If there is a failed state in the America's, Maduro is running it. Dwindling oil revenues have knocked Venezuela out. It faces unprecedented social, political and economic crisis. The only thing that is keeping incomes up is the fact that Maduro keeps giving poor people money. In the absence of structural reforms and without a resolution to the political impasse between the ruling Socialists and the opposition, the country is set for another challenging year. The absence of real sector and inflation information makes any assessment of the economy difficult. (Forbes: https://www.forbes.com/sites/kenrapoza/2017/03/02/south-americas-last-bastion-of-socialism-is-falling-to-pieces/#3b804a292fd8)

Job losses, low wages add to Venezuela economic hardship

Multiple companies - local and foreign - are closing doors or cutting payrolls across Venezuela, which despite its oil wealth is suffering deep recession, triple-digit inflation and chronic shortages. As per CONSECOMERCIO, the major retail industry group, Venezuela in the past 18 months lost close to 1 million private sector jobs. "Who is creating jobs? Nobody," said CONSECOMERCIO Vice President Alfonso Riera. "That unemployed population unfortunately is migrating to the street, informal work or worse." Government critics say nationalizations of businesses and more than a decade of price and currency controls have crippled private enterprise, but President Nicolas Maduro says Venezuela is a victim of an "economic war" led by business leaders with U.S. help. Venezuela has not reported official unemployment figures since April 2016, when the rate was at 7.3%. A survey by three universities showed unemployment at the end of 2016 remained at that level. But the study also found 38% of those surveyed were working informal jobs ranging from buying and reselling goods to freelance work without benefits. Only 28% said they were public employees and 27% had a job in the private sector. Union sources said major companies such as food and beermaker POLAR, carmaker FORD and bottler COLA-COLA FEMSA all are reducing their workforce by negotiating redundancies and offering employees buyouts. "People are taking the packages," said Johnny Magdaleno, who leads a POLAR union. He said workers were being offered the equivalent of US$ 2,500 at the black-market exchange rate. "Production has fallen too much," he said. "The workers who are left are making 4,000 bolivars weekly ($1 at the black-market rate). That doesn't even enable them to buy a pack of flour."  (Reuters: http://www.reuters.com/article/us-venezuela-economy-idUSKBN16926M)

 

Politics and International Affairs

US Senate unanimously passes resolution demanding Trump act on Venezuela
US Senators unanimously passed a resolution Wednesday urging President Donald Trump to take further action against Venezuelan officials. The bill also expressed support for a controversial move by Organization of American States (OAS) head Luis Almagro to invoke the Democratic Charter. If invoked, Venezuela would be suspended from the OAS. When Almagro first announced the move in 2016, he also demanded President Nicolas Maduro be “immediately” removed from office, prompting many Latin American leaders to accuse the OAS head of overreach. Despite the controversy, the Senate bill called on Trump to “provide full support for OAS efforts in favor of constitutional and democratic solutions to the political impasse and to instruct federal agencies to hold officials of the Venezuelan government accountable for violations of US law and abuses of internationally recognized human rights.” The bill will now head to the House of Representatives. One of the main supporters of the bill, Senator Marco Rubio, thanked both Republicans and Democrats for supporting the move. The bill was co-sponsored by prominent Democrats including Senators Bob Menendez and Bill Nelson, along with Hillary Clinton’s 2016 presidential running mate Tim Kaine. (Venezuelanalysis.com: https://venezuelanalysis.com/news/12953; El Universal, http://www.eluniversal.com/noticias/daily-news/senate-lobbies-for-release-political-prisoners-venezuela_641844; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2431988&CategoryId=10717)

US Council on Foreign Relations: Options for U.S. Policy in Venezuela, prepared for the US Senate Committee on Foreign Relations. Venezuela’s economic, political, and social situation represents both a regional problem and a global affront to democratic values. As such it should be a priority for the current U.S. government, which should invest in the necessarily complex, time consuming, and fragile diplomatic processes to push for change, as well as to prepare for the day when it in fact may come. (Full presentation: ATTACHED)

Maduro looks to get on Trump’s good side with praise for Congressional address

Venezuela’s socialist dictator Nicolás Maduro appears to be attempting to ingratiate himself with his American counterpart Donald Trump, praising the president’s joint address to Congress on Tuesday as “the first time I hear a U.S. president speak of the struggle against drug trafficking.” He highlighted as significant President Trump’s emphasis on combatting drug addiction from the United States, particularly in poorer communities. Maduro’s compliments follow a month in which the U.S. Treasury Department designated his vice president, Tareck El Aissami, a “Specially Designated Narcotics Trafficker” for his ties to various cocaine-trafficking outlets and President Trump personally welcomed Lilian Tintori, wife of Venezuelan political prisoner Leopoldo López, to the Oval Office. Maduro nonetheless highlighted that he and President Trump “have differences” but reiterated that he wished to engage in respectful diplomatic relations with the White House, a departure from his regular warnings that President Barack Obama was preparing a ground invasion of Venezuela during his tenure. Among those differences is the fact that Maduro employs a known high-level drug trafficker as his second-in-command. According to the U.S. Treasury Department, El Aissami has cooperated with “groups as varied as the Mexican Zetas cartel and Hezbollah.” Reports — published prior to the Treasury using the Drug Kingpin Act to freeze El Aissami’s U.S. assets — accused him of, among other crimes, recruiting Latin American Muslims to join Hezbollah and running his own cocaine trafficking outfit the Cartel de los Soles. Diosdado Cabello, the Socialist Party’s minority leader in Venezuela’s National Assembly, is widely believed to be the Cartel de los Soles’s boss. While Maduro himself has never been accused of drug trafficking, reports have indicated he has funded political campaigns with drug money generated by Cabello and El Aissami. El Aissami responded to the Treasury sanctions with a full-page ad attacking the United States in the New York Times. In addition to sanctioning El Aissami, the Trump administration has called for the release of all political prisoners under Maduro’s chavista dictatorship. In February, Trump welcomed Tintori, an anti-socialist activist and wife of Popular Will party leader Leopoldo López, to the White House, publishing a photo standing next to her, Vice President Mike Pence, and Senator Marco Rubio on Twitter. (BREIBART: http://www.breitbart.com/national-security/2017/03/02/venezuela-tries-get-trumps-good-side-drug-war/)

 

…but falls back on familiar defiant discourse after US Senate vote

Embattled President Nicolas Maduro warned Wednesday of a resurgence in “racism and xenophobia”, the day after the US Senate unanimously voted a resolution expressing “profound concern” about the present Venezuelan crisis.
It is a familiar pattern for Cuban and Venezuelan leaders, and, in his first public speech after the U.S. Senate’s vote, Maduro re-adopted it with ease. “I am making a worldwide alert in the face of surging dangerous, segregationist, racist and xenophobic currents that threaten to divide mankind even further, threaten to fill the whole world with war. That’s why I am calling and asking for the Venezuelan people to unite, to keep on making the revolution and keep on defending our identity,” Maduro said during an event of the CLAP, a new government mechanism to ration price-controlled foodstuffs administered by ruling party PSUV militants. Maduro didn’t mention the U.S. vote specifically, but he denounced “white supremacy” and it was enough for a crowd of hundreds, clad in red, to cheer for him. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2432136&CategoryId=10717)

 

US State Department reports Venezuela has “failed demonstrably” on drug traffic control

“During the past 12 months, the Venezuelan government failed demonstrably to make sufficient efforts to meet its obligations under applicable international counter-narcotics agreements or to uphold the counter-narcotics measures set forth in the Foreign Assistance Act.  Due to Venezuela’s porous border with Colombia, its weak judicial system, sporadic international counter-narcotics cooperation, and permissive and corrupt environment, Venezuela remains a major drug-transit country.  It is one of the preferred trafficking routes for illegal drugs, predominately cocaine, from South America to the Caribbean region, Central America, the United States, Western Africa, and Europe. In 2015, the Venezuelan government engaged in minimal bilateral law enforcement cooperation with the United States.  Venezuelan authorities do not effectively prosecute drug traffickers, in part due to political corruption. Although the Venezuelan government, as a matter of policy, neither encourages nor facilitates illicit drug production or distribution, and although it is not involved in laundering the proceeds of the sale of illicit drugs, public corruption is a major problem in Venezuela that makes it easier for drug-trafficking organizations to operate.  Additionally, the Venezuelan government has not taken action against government and military officials with known links to FARC members involved in drug trafficking.” US Department of State: https://www.state.gov/documents/organization/268025.pdf)

OAS Democratic Charter action on Venezuela hinges on Vatican

In response to the US Senate resolution, Luis Almagro, Secretary General of the Organization of American States (OAS) says: “As long as the Vatican remains there we will definitely take no action to apply the Democratic Charter. If we are told that dialogue is over and we receive notice from the opposition and the Vatican about it, we will recommend the timely steps to take”. Talks between the Maduro regime and the Venezuelan opposition remain paralyzed since December, with the opposition charging that the government has reneged on agreements. Spain has said it continues to support efforts by its former President José Luis Rodríguez Zapatero to prop up talks here. More in Spanish: (Notiminuto: http://www.notiminuto.com/noticia/para-la-carta-democratica-todas-las-miradas-van-al-vaticano/#

Colombia’s FM says dialogue is the only way to face Venezuela’s great problems

Colombian Minister of Foreign Affairs María Angela Holguín has called for more dialogue between the Venezuelan government and the opposition, sponsored by former presidents José Luis Rodríguez Zapatero (Spain), Martín Torrijos (Panama) and Leonel Fernández (Dominican Republic), in order to face up to this nation’s "great difficulties." During a press conference in Madrid, after a meeting with his Spanish counterpart, Alfonso Dastis, Holguín said Rodríguez Zapatero, “has made a great effort” for dialogue in Venezuela. “Polarization in Venezuela is immense, but through dialogue a solution will be found to a crisis that worries many countries around the world; we, in Colombia, have it closer,” the minister said. (El Universal, http://www.eluniversal.com/noticias/daily-news/holguin-dialogue-the-only-way-face-great-problems_642023; http://www.eluniversal.com/noticias/daily-news/colombia-backs-dialogue-venezuela_641837)

 

European Foreign Service asks Venezuela to abide by its Constitution

Adrianus Koetsenruijter, Head of the South America Division of the European External Action Service (EEAS), has strongly recommended that the Venezuelan government must abide by the Constitution and made an appeal for renewed dialogue between government authorities and the dissent. “It has to do with respect for the Constitution, respect for fundamental rights and liberties, such as freedom of speech, opinion and association,” Koetsenruijter while speaking at the European Parliament Committee on Foreign Affairs. He reported that many Venezuelans have been incarcerated in the absence of proper conditions of transparency, and insisted that the government ought to observe the “basic principles of democracy”. (El Universal, http://www.eluniversal.com/noticias/daily-news/european-external-service-exacts-venezuela-observance-constitution_641647)

 

New charges brought against imprisoned Defense Minister

A military court here has brought new charges against former Defense Minister General Raúl Isaias Baduel, who was due to be freed today after serving seven years and eleven months for alleged corruption. He is now being accused of “treason”, and was forcibly transferred to the military court by the Military Counter-Intelligence agency. Baduel’ s legal counsel termed the charges “unfounded military criminal persecution”. Baduel had been on conditional freedom since mid-2015, but was detained again on January 12^th for allegedly violating the conditions of his parole. Baduel was Defense Minister under the late President Hugo Chavez and one of his closest advisors. He is considered to have been the key force in bringing Chavez back to power after he was ousted for 48 hours in April 2002, but signed a 2010 manifesto publicly calling on the late president to resign, thus becoming a key opposition figure. More in Spanish: (Infolatam: http://www.infolatam.com/2017/03/03/dictan-nueva-privativa-libertad-exministro-baduel-e-imputan-otros-cargos/
 

In search of Venezuelan pilots of a plane in flames in Honduras

Honduras police authorities are searching for the pilots of a plane with Venezuelan registration that entered the country on Monday morning and landed to the north of the nation. Honduran investigators suspect that the plane had been used to carry narcotics, in keeping with the standards of such flights related to drug trafficking, such as arriving in the early hours of the morning, landing on non-authorized areas and setting fire to the plane after the unloading, DPA cited. The aircraft with Venezuelan registration landed in a field in the city of Choloma, around 280 kilometers from Tegucigalpa. (El Universal, http://www.eluniversal.com/noticias/daily-news/search-venezuelan-pilots-plane-flames-honduras_641648)

 

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

April 28, 2016

International Trade

Container handlers announce 50% increase in freight charges

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

 

Oil & Energy

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

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

 

Venezuela oil refineries face operating woes, PDVSA launches tenders

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

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

 

Venezuela proposes non-OPEC oil producers attend Vienna meeting

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

 

Commodities

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

 

Economy & Finance

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

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

 

IMF terms Venezuelan mid-term outlook unsustainable

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

 

…and minister admits “difficult” situation

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

 

Venezuela economic crisis means fewer meals, more starch

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

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

 

Crisis compels Venezuelans to resell poor-quality goods

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

 

Military register 69% product scarcity in 4 states

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

 

Politics and International Affairs

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

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

 

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

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

 

Protests in Venezuela over shortages and blackouts

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

 

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

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

 

National Assembly to ask OAS to debate Venezuelan situation

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

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

 

Defense minister deplores "systematic" attacks against the Armed Forces

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

 

Senator Rubio calls for further sanctions on Venezuela

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

 

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

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

 

 

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

March 11th, 2011

Economics & Finance

Venezuela Roils Multinationals

Venezuela's currency devaluation wreaked havoc on the balance sheets of multinational companies last year and remains a challenge for companies operating in the country this year. It's the latest in a series of issues—ranging from price fixing to the nationalization of certain industries—that multinationals are contending with in the Latin American country as they chase growth markets outside the U.S. and Europe and set their sights on Latin America's burgeoning middle class.

Doing business overseas can bring with it challenges such as unstable currencies and political turmoil, but Venezuela has proven to have an inordinate number of pitfalls. (The Wall Street Journal, 03-07-2011; http://online.wsj.com/article/SB10001424052748704076804576180772710245068.html)

Decline in investment limits Venezuelan economic recovery

After two years of decline, skyrocketing oil prices are a key factor bolstering Venezuela's economy. However, some serious imbalances -such as the collapse of investment- have become an almost insurmountable barrier.
Petrodollars allow both the government to encourage consumption and companies to increase sales, just as in previous periods when crude oil prices sharply increased. However, when machinery and equipment available are used to a maximum level, economic growth goes to a standstill due to the investment deficit.
The Central Bank of Venezuela (BCV) data show that after a period of recovery, following a lockout in 2002, investments in machinery and equipment that help to increase production have fallen in the past three years, for an accumulated decline of 15.4% between 2007 and 2010. (El Universal, 03-09-2011; http://english.eluniversal.com/2011/03/09/decline-in-investment-limits-venezuelan-economic-recovery.shtml)

Supply of US dollars through SITME falls by 28.5% percent

In March 2010, the Venezuelan Ministry of Finance closed down the Forex parallel market that allowed individuals and businesses to buy US dollars through brokerage firms. Since then, the Venezuelan market has faced a severe shortage of foreign currency. The Executive Office created the Transaction System for Foreign Currency Denominated Securities (SITME), so that individuals and corporations could purchase US dollars at a higher price that the official exchange rate but at a lower price than the unofficial market. There is an underlying problem in this: the supply of foreign currency is very small. Data from SITME’s administrator, the Central Bank of Venezuela (BCV), shows that between September and December 2010, the daily supply of US dollars averaged USD 42 million, but it fell further to USD 26 million in January and slightly increased to USD 30 million in February. (El Universal, 03-08-2011; http://english.eluniversal.com/2011/03/08/supply-of-us-dollars-through-sitme-falls-down-to-285-percent.shtml)

Venezuelan private sector GDP plummets; public sector's soars

On May 27, 2010 Venezuela's President Hugo Chávez admitted that he aims at "burying Venezuelan capitalism." He vowed that his government would take control of key economic areas. In fact, the process had begun earlier when Venezuelan authorities launched a frantic nationalization process in 2007. Data from the Central Bank of Venezuela (BCV) show that private sector's production has not grown since 2007 and it has instead accumulated a 6.6 percent fall in the last three years. In the same period, the State has increased its control of the economy. In fact, public sector's GDP advanced by 18 percent throughout the period. (El Universal, 03-08-2011; http://english.eluniversal.com/2011/03/08/venezuelan-private-sectors-gdp-plummets-public-sectors-soars.shtml)

Colombia sales to Venezuela fell 74.5% in the last 2 years

None of the 13 agreements signed by the authorities last week provide an incentive for Venezuelan exports. The 13 agreements signed last week between officials of Colombia and Venezuela concentrated on purchases from the neighboring country. Bilateral trade, which peaked at USD 7.29 billion dollars in 2008, collapsed over the following years because of political differences between Presidents Chavez and Uribe and economic problems due to falling oil prices. The Colombian National Bureau of Statistics reports that trade with Venezuela fell to USD 4.61 billion dollars in 2009 (36.8% less than in 2008) and USD 1.73 billion in 2010 (62.5% by below the previous year), for a cumulative decline of 76.3%. More information in Spanish. (Canal de Noticias, 03-10-2011; http://www.canaldenoticia.com/index.php?option=com_content&view=article&id=45245:ventas-a-colombia-retrocedieron-745-en-los-ultimos-2-anos&catid=48:america&Itemid=67)

Venezuela, Bolivia and Argentina with the highest inflation rates

Venezuela, Bolivia and Argentina are the Latin American countries where food prices have increased the most over the last year, according to official data from Latin American governments that were compiled by Spanish news agency EFE. Between January 2010 and January 2011, the price of foodstuffs was up 37.2% in Venezuela, well above general inflation rate in (28.5%). Food prices shot up 14% in Bolivia whereas general inflation rate rose 8.4%. Finally, the price of foodstuffs in Argentina edged 13.1% and the inflation rate climbed to 10.6%. The upward inflationary trend persists in Paraguay, Venezuela and Bolivia. (El Universal, 03-07-2011; http://english.eluniversal.com/2011/03/07/venezuela-bolivia-and-argentina-with-the-higher-inflation-rates.shtml)

Venezuela shuts down five more brokerage firms, Gazette Says

Venezuela’s securities regulator ordered four brokerage firms closed after spotting irregularities in their operations and granted another brokerage permission to close permanently, according to a resolution published in today’s Official Gazette. The government shut down Strategos Sociedad de Corretaje, SFC Investment Venezuela Sociedad de Corretaje, Fidevalores Sociedad de Corretaje and La Primera brokerages. The regulator granted the Banexpress firm permission to cease operations, the resolution said. (Bloomberg, 03-09-2011; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aOHRyVMcM9LM)

Government decrees animal protein customs waivers for imports related to bovine production as well as to those necessary elements for the provision of animal protein to the population (Friday, March 4 Gaceta Oficial, circulating today). The waiver depends on the issuance of the Non-Production or Insufficient Production Certificate which must accompany the information on the products to be imported. (Veneconomy, 03-09-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=25179&idc=3)

Commodities

China May Approve PetroChina-Venezuela Refinery This Year

China may approve a 57 billion-yuan (USD 8.7 billion) refining venture between PetroChina Co. and Petróleos de Venezuela SA this year, according to the economic planning agency in Guangdong, where the plant will be built. The southern province will also develop emergency oil reserves, Li Miaojuan, director of the Guangdong Development and Reform Commission, told reporters at the National People’s Congress in Beijing today, without giving details. Guangdong, the nation’s manufacturing hub, is adding oil- processing capacity to meet rising demand for industrial fuels including diesel. Construction of the 400,000 barrel-a-day refining venture in Jieyang may begin this year, the provincial government said on March 5. The plant’s capacity will almost match PetroChina’s 410,000 barrel-a-day Dalian refinery, the company’s biggest. The planned Jieyang venture highlights the expanding energy ties between Venezuela and China. (Bloomberg, 03-10-2011; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aR37FuVxmG8s)

Strike ends at CVG VENALUM

After lengthy meetings, workers of state-run aluminum smelter CVG VENALUM Decided to end the strike that began March 1. However, workers expect to register the agreement with the Labor Inspectorate of the Bolívar state on Wednesday afternoon to authenticate the agreement related to the payment of Sunday's salary as a holiday on-duty, and wage adjustments, among other benefits. (El Universal, 03-09-2011; http://english.eluniversal.com/2011/03/09/strike-at-cvg-venalum-ends.shtml)

Venezuela closes 360 MW unit in Tacoa TPP after fire

Venezuela's state power corporation CORPOELEC shut down a 360 MW unit in its Tacoa thermoelectric power plant (TPP) yesterday due to a fire, which was immediately brought under control, CORPOELEC said. The accident will not affect the power supply to the metropolitan area of Caracas city, as the 360 MW were replaced by other power units. (ADP News, 03-10-2011; http://adpnews.info/?nid=b6a9a216987b5088)

PDVSA's Curazao (Isla) refinery halts four units temporarily

Four units of the Isla refinery, operated by Venezuelan state oil company Petróleos de Venezuela (PDVSA), suspended operations on Saturday due to steam supply problems, Reuters reported. Among the halted facilities are one distillation and two hydro treatment units, according to union leader Angelo Meir. The units are expected to remain closed for a week. Isla is a 335,000-barrel-per-day refinery on the Caribbean island of Curacao. PDVSA uses the refinery and the nearby Bullenbaai terminal to refine, store and ship Venezuelan oil to Asia. (ADP News, 03-10-2011; http://adpnews.info/?nid=2bfa98b1498c065e)

Logistics & Transport

Puerto Cabello may close down

According to Alexis Polanco, president of the National Workers Union, Carabobo section, "There will be a conflict here in the next months due to the terrible state the port of Puerto Cabello. If nothing is done to solve problems, the port will shut down". He pointed out that the situation within is not the same as two years ago. Destacó que el panorama dentro de las instalaciones no es el mismo de hace dos años. In his view the port started to decay drastically since the Government took over its management. Polanco said that when the port was taken over 30 loading and unloading cranes were operational, as opposed to just 8 at this time. The situation is not encouraging in the port which receives 70% of imported foodstuffs. Polanco says port authorities are military and have no experience managing ports. "What is happening is disastrous. There are no bathroooms or dining areas. Road conditions are terrible. Perimeter fences that separate the city from the port are have fallen down". More in Spanish. (Tal Cual, 03-11-2011; http://www.talcualdigital.com/ediciones/2011/03/11/default.asp)

Politics

Congress passes no laws and has no agenda two months after two months in session

Zero laws, zero agenda. This is the count two months after the swearing-in of the new National Assembly (AN). The brand-new Assembly incorporated opposition representatives after five years of voluntary absence and brought a new regulation on the interior and debate. The legal instrument, drafted by pro-government representatives, halved the number of monthly ordinary sessions. While congress standing committees have held some meetings to prepare a tentative agenda, thus far the meeting of the Advisory Committee, which sets the items in the agenda, has been postponed several times. Ending February was the last time when committees' chairs met with the heads of the parliament. No final work plan was released. (El Universal, 03-08-2011;

http://english.eluniversal.com/2011/03/08/congress-without-laws-or-agenda-two-months-after-the-beginning-of-sessions.shtml)

Venezuela and Brazil discuss strategic alliances

Brazil's ambassador in Venezuela, José Antonio Marcondes, said Wednesday that Venezuela and Brazil discussed further strategic alliances. "It is clear that between Venezuela and Brazil there is still much room to grow, to explore new opportunities for cooperation. Brazil is willing to share all their experiences of development with Venezuela," after meeting with the president of the National Assembly (AN), Fernando Soto Rojas. He said that Venezuela and Brazil carry out joint projects in housing, agriculture, energy, border development, banking, among others, adding that such agreements may increase. (AVN, 03-09-2011; http://www.avn.info.ve/node/47197)

ALBA aims at mediation in Libya

Member states of the Bolivarian Alliance for the Peoples of Our America (ALBA) began taking steps to create a mediation team to try to end violence in Libya and enable the African country to find a peaceful solution to the political crisis it endures three weeks ago. Ecuadorian deputy foreign minister Kintto Lucas said the statement according to a report from AFP. He also affirmed that the Bolivarian bloc “is proposing some trips and contacts” to start creating the peace commission, initiative raised by Venezuelan President Hugo Chavez. (AVN, 03-10-2011;

http://www.avn.info.ve/node/47310)

At the UN, Venezuela ratifies support for creation of Palestinian State

Venezuela ratified at the United Nations (UN) in Vienna its support for the creation of a Palestine State and the right to self-determination of its people, the Venezuelan government reported on Tuesday. The Venezuelan delegation expressed its position in an international meeting to address the Palestinian issue, particularly the situation of political prisoners and the Israeli detention centers, according to a statement issued by the Venezuelan government, DPA reported. (El Universal, 03-09-2011;

http://english.eluniversal.com/2011/03/09/venezuela-reiterates-at-un-support-to-the-creation-of-palestinian-state.shtml)

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.