January 09, 2015

International Trade

 

Panama's President ponders travel to Venezuela to speed up debt repayment

According to Panamanian media, the Minister of Trade and Industry of that country, Melitón Arrocha, said President Juan Carlos Valera "is pondering travel to Venezuela with a view to finding a solution or to speeding up the repayment of debt Venezuela  businesspersons owe to their Panamanian counterparts, estimated at US$ 1 billion."
Minister Arrocha is quoted as saying President Valera might travel in the upcoming months to meet with President Nicolás Maduro and discuss Venezuela's debt to businesspersons at the Colon Free Trade Zone and COPA Airlines. Venezuela's debt to Panamanian businesspersons is estimated at US$ 1 billion, while accrued debt to COPA airlines is US$ 500 million. (El Universal, http://www.eluniversal.com/economia/150108/panamas-president-ponders-travel-to-venezuela-to-speed-up-debt-repayme)

 

Oil & Energy

 

Venezuela partners said seeking oil payment as arrears mount

Foreign companies working to develop some of Venezuela’s most prized oilfields are asking to be compensated with crude as a way to recover hundreds of millions of dollars in unpaid cash owed to them, according to a person with direct knowledge of the request. The money is owed by Venezuela’s state oil company to partners including Spain’s REPSOL and India’s Oil & Natural Gas Corp. One of the companies is owed US$ 500 million. Output at the Carabobo and San Cristobal fields in the Orinoco heavy oil belt, meanwhile, is trailing targets. (Bloomberg, http://www.bloomberg.com/news/2015-01-07/venezuela-partners-said-seeking-crude-payments-as-arrears-mount.html)

 

Canada doesn’t need Keystone XL to win U.S. crude supply battle

Whether Keystone XL ever gets built, the record amount of Canadian oil flowing into the U.S. shows that some of the pipeline project’s original goals are already being met. The Canadian government and pipeline builder TransCanada Corp. have long argued the cross-border pipeline would bolster U.S. energy security by displacing crude from less reliable nations such as Venezuela. That’s happening now. (Bloomberg, http://www.bloomberg.com/news/2015-01-08/canada-wins-u-s-crude-supply-battle-without-keystone-xl.html)

 

Commodities

 

Medicine shortages are reported at 70%

Freddy Ceballos, President of the Venezuelan Pharmaceutical Federation, reports there is an up to 70% shortage in medicine, and calls the situation "critical" due to limited access to FOREX. He says medication for asthma or high blood pressure is not available, along with birth control pills and antispasmodic medicine, among others. More in Spanish: (Infolatam, http://www.infolatam.com/2015/01/08/federacion-venezolana-alerta-de-un-70-de-desabastecimiento-de-medicamentos)

 

50% drop in beef production is reported

Rubén Darío Barboza, President of the National Cattlemen Association, reports a 50% drop in beef production and says the lack of meat is due to lack of profitability. He called on the government to revise the price of beef and milk. More in Spanish: (Notitarde, http://www.notitarde.com/Economia/Fedenaga-registro-reduccion-de-50-en-produccion-de-carne/2015/01/08/483068/)

 

McDonald's runs out of French fries in Venezuela

Venezuela's more than 100 McDonald's franchises have run out of potatoes and are now serving alternatives like deep-fried arepa flatbreads or yuca, a starchy staple of traditional South American cooking. McDonald's is blaming a contract dispute with West Coast dock workers for halting the export of frozen fries to the country. John Toaspern, chief marketing officer with the US Potato Board, noted that Venezuela's import of frozen potatoes fell off a cliff long before the labor dispute escalated. During the first 10 months of 2014, the country imported just 14% of the frozen fries from major McDonald's supplier Washington State that it brought in for the same period the year before, according to federal data compiled by the board. (AP, http://news.yahoo.com/mcdonalds-runs-french-fries-venezuela-172701168.html)

 

Venezuelans turn to fish smuggling to survive economic crisis

People in Venezuela's savannah heartlands struggling to survive the national economic crisis have found a novel way to make ends meet: fish-smuggling to Colombia. While contraband of gasoline and medicine has been going on for years, little is known about the trade in tons of fresh-water fish by Venezuelans who pile them onto long, motorized canoes and traverse dangerous waterways for days into Colombia. Fishermen and traders in the border state of Apure, in Venezuela's "llanos" or agricultural plains, speak openly of negotiating with Colombian guerrillas and bribing Venezuelan authorities in a trade that keeps whole villages fed.  Working with boats and nets on the river Arauca, the fishermen sell their catches to traders who load as much as 3.5 tons per canoe for the trip to Colombia. A major player in the fish business estimates that about 80% of the fish trade into Colombia is illegal and that final profits averaged about 50-65 bolivars per kg after bribes and other costs. (Reuters, http://www.reuters.com/article/2015/01/07/us-venezuela-fishing-widerimage-idUSKBN0KG0X420150107)

 

Government discusses food supply with distributors

Carlos Osorio, Vice-President for Agro-Food Security and Sovereignty, has met with representatives of the main food distribution networks in the country, in order to evaluate supply levels, and develop policies that ensure access to goods and services during 2015. Osorio reported that meetings with distributors of other staples, such as chicken and beef will continue. (El Universal, http://www.eluniversal.com/economia/150107/venezuelan-government-probes-food-supply-with-distributors).

 

Government markets are closed for "inventory"; police and soldiers guard consumer lines

Government run MERCAL and BICENTENARIO markets have closed down in order to conduct inventories. In the meantime, national police and national guard members have been guarding consumers that line up at markets and pharmacies in Caracas, as scarce products start to appear. More in Spanish:(El Nacional; http://www.el-nacional.com/) 

 

Government to update food shortage data, spokesman says shortages cannot be concealed

The government has set up the National Center for Food Balance (CENBAL), to obtain factual and updated data on food shortages nationwide. Elías Eljuri, President of the National Statistics Institute (INE) remarked in a recent interview that "shortage is a problem that cannot be concealed" in Venezuela. Eljuri argued that food imports made by the State grew between 4-5% in 2012, and local production remained steady; he said, however, that nationwide shortages are a result of food smuggling. (El Universal, http://www.eluniversal.com/economia/150107/eljuri-shortage-is-a-problem-that-cannot-be-concealed; http://www.eluniversal.com/economia/150108/food-shortage-data-to-be-updated-in-venezuela) Lines of consumers continue to grow and some become unruly. PHOTOGRAPHS HERE: (El Mundo, http://www.elmundo.com.ve/noticias/negocios/consumo/fotos---asi-se-vivieron-las-colas-este-jueves-en-c.aspx#ixzz3OKIdfYUe)

 

FEDECÁMARAS is asking consumers to remain calm

Francisco Martínez, Vice President of FEDECÁMARAS, Venezuela´s largest business federation, has asked consumers seeking basic supplies to remain calm. "It is important to avoid nervous buying, only buy what is needed". He added that during this time of the year many stores operate at a slower pace due to inventories and vacations, but says that now "inventory shortages are larger as they started last year." He suggested further contact with authorities to seek solutions to these problems. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/150109/fedecamaras-llama-a-tener-calma-a-los-consumidores)

 

 

Economy & Finance

 

China turns its back on Maduro, brutal adjustments expected

The Chinese government seems to have abandoned the Maduro regime to its fate, with only a vague promise of financing long term projects in Venezuela instead of granting a US$ 16 billion loan that the government is urgently seeking to avert economic collapse. Experts believe the offer to finance industrial and energy products up to US$ 20 billion does not solve the enormous economic problems the regime is facing, which require and immediate cash injection to compensate the drastic drop in oil prices. Economics Professor Orlando Ochoa says: "They gave him something to say and not appear ridiculous, but the truth is he is coming back empty handed. The energy and industrial projects are letters of intent to be carried out over a number of years, if conditions are right. Venezuela has investment projects for more than US$ 150 billion which have not been carried out".

Maduro offered future oil production, along with future mineral production from the state owned Guayana Corporation (CVG), which produces iron, aluminum and steel, but the Chinese government showed no interest in CVG and said it would only accept if CVG companies were put under their total control, due to rampant corruption there. Maduro's announcement on joint projects is taken as sign that a loan is not in the cards for the time being. Antonio De La Cruz, Executive Director of Washington based Inter American Trends, says the Chinese refusal is devastating to the Maduro regime: "It is a clear sign that the Chinese are no longer betting on him. To refuse help in the middle of this enormous crisis is tantamount to withdrawing political support". Francisco Ibarra, a director at ECONOMÉTRICA, says: "The mother of all adjustments is on its way, and these people have no idea of the tragedy the nation is going through at this time. It will be a gigantic adjustment, a brutal adjustment. The rate of exchange the bolivar should be adjusted to in order to balance accounts will be brutal and as a result the economic contraction will also be brutal". More in Spanish: (El Nuevo Herald, http://www.elnuevoherald.com/noticias/mundo/america-latina/venezuela-es/article5584149.html#storylink=cpy; Reuters, http://www.reuters.com/article/2015/01/07/venezuela-china-idUSL1N0UM1QP20150107; El Universal, http://www.eluniversal.com/economia/150107/maduro-venezuela-china-enter-into-agreements)

 

FOREX policy to be set after Maduro´s tour

General Rodolfo Marco, Vice President for Economic Affairs, said in Beijing that the government "will announce all the actions to be implemented to strengthen our economy", including foreign exchange policy,  after they are back in Venezuela, following President Nicolás Maduro's tour of China and the OPEC member nations. In the meantime ruling party legislator Jesús Faría stressed that Venezuela's next steps in the economic policy would depend on the agreements entered into with China. Faría admitted that Venezuela faces a "critical situation" and will be "aided" through the agreements China-Venezuela presidents make in different areas. (El Universal, http://www.eluniversal.com/economia/150107/forex-news-after-venezuelan-presidents-tour; http://www.eluniversal.com/nacional-y-politica/150107/deputy-economic-steps-depend-on-china-venezuela-talks)

 

Venezuela bondholders dismiss Maduro as default looms

Eight days after President Nicolas Maduro vowed to unleash a “counter offensive” to revive Venezuela’s economy, he’s yet to unveil any new measures. For bondholders, it’s just one more example of how his tough talk is seldom followed by actions. The nation’s sovereign notes lost 13.8% after the televised speech on Dec. 30, the most in developing countries, as a plummet in oil price deepens concern the government will renege on its obligations. Venezuela and its state oil company have US$ 68 billion of dollar bonds outstanding and they trade at US$ 30 billion. With the economy crippled by the world’s fastest inflation, shortages of basic goods and dwindling foreign reserves, Maduro has shied away from devaluing the bolivar or raising gasoline prices, politically unpopular measures that would boost the nation’s finances. The price for Venezuela’s oil, which accounts for 95% of export revenue, has fallen to a five-year low of $47.05 a barrel, 16 percent below the level Jefferies Group LLC says is needed to avoid a default. (Bloomberg, http://www.bloomberg.com/news/2015-01-08/venezuela-bondholders-dismiss-maduro-as-default-looms.html)

 

Venezuela bonds rise, Global 2028 up 3.350 points

Venezuela's global bonds rose on Thursday, following sharp losses in the previous session, with the Global 2028 bond rising 3.350 points to yield 24.550%. The Global 2015 bond, which comes due in March, was up 4.296 points to yield 29.638%, while the benchmark 2027 bond was up 1.944 points to yield 23.963%. (Reuters, http://www.reuters.com/article/2015/01/08/venezuela-bonds-idUSL1N0UN13820150108)

 

Minister says that Venezuela will pay debt obligations due in March

General Rodolfo Marco, Vice President for Economic Affairs and Finance Minister, says Venezuela will fully honor over US$ 2 billion in debt service due this coming March. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela-garantiza-pago-de-la-deuda-externa-en-ma.aspx#ixzz3O8ToIsfS; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/venezuela-garantiza-pago-de-la-deuda-externa-en-ma.aspx)

 

Venezuela’s business climate to worsen in 2015

Diego Moya Ocampos, a Senior Analyst at IHS Global Insights, says the country’s business climate should worsen still more in 2015, citing 28 new laws passed in November that will increase scrutiny on private enterprise. This, coupled with the country’s deteriorating political, economic, and social environment will worsen the country’s business climate, he says. The country could be set for social and political unrest as the economy implodes and scarcity increases. The new measures introduced by Venezuelan President Nicolás Maduro in November aimed at increasing the country’s tax collection amid falling government revenues due to a declining global oil price. (Latin Trade, http://latintrade.com/venezuelas-business-climate-to-worsen-in-2015/)

 

Dallen:  Hello 2015: Argentina and Venezuela – the emperor has no clothes

With Venezuela the range of options of what could happen next year is almost as infinite – ranging from more of the same and muddling through, to default, violence, coup, civil war and international brigades. On the economic front, whether Venezuela survives 2015 will depend almost purely on the price of oil, however. With Venezuela’s oil price hovering at just over US$ 50 a barrel, falling oil production and heavy domestic consumption (gasoline is less than a penny a gallon at the black market rate), Venezuela finds itself in dire straits. Out of an anemic 2.5m barrels per day of production (Saudi Arabia produces 9.6m bpd), Venezuela uses 800,000 bpd domestically. In addition, Venezuela provides 100,000 barrels a day to Cuba free, and sends between 250,000 and 450,000 barrels a day without payment to China – paying back loans of US$ 50 billion from the Asian dynamo. In short, Venezuela is left with income from just 1.3m to 1.5m barrels per day (Financial Times, http://blogs.ft.com/beyond-brics/2015/01/05/hello-2015-argentina-and-venezuela-the-emperor-has-no-clothes/)

 

Politics and International Affairs

 

Protests in east Caracas three days in a row, local mayor says violent protests "lack political efficiency"

Chacao, in east Caracas, was the epicenter of a demonstration on Wednesday evening. It has been three days in a row since alleged young locals have been taking the streets of the area. Residents report that since the beginning of the protests on Monday evening more people have been progressively joining them. Chacao Mayor Ramón Muchacho says "our country is going through a very complicated situation, and there are people who, based on the premise stating that the government ‘is weak', foster violent actions and protests,", in reference to protests that have been staged in Chacao municipality this week, which he labeled as "violent." Muchacho rejected those demonstrations; he says it is wrong to believe that violence, disorder, chaos or anarchy can harm the government. (El Universal, http://www.eluniversal.com/nacional-y-politica/150108/protests-in-east-caracas-three-days-in-a-row; http://www.eluniversal.com/nacional-y-politica/150108/venezuelan-mayor-violent-protests-lack-political-efficiency)

  

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.

 

February 25, 2014

Economics & Finance

Ramírez says new FOREX market to take wind out of black market

Venezuela's top economy official has vowed that a new currency exchange platform will undermine the spiraling black market for U.S. dollars by adding a market-based mechanism to existing currency controls. Economy Vice President Rafael Ramirez told reporters that the system known as SICAD 2 would be based on supply and demand and would create an exchange rate through a bond swap system known locally as "permuta." SICAD 2 will add a third rate to the 11-year-old currency controls that sell dollars at VEB 6.3 bolivars for preferential goods and at VE 11.8 for other items, both of which are far below the rate that greenbacks fetch on the black market. "We are going to let the (exchange) rate be determined by supply and demand," Ramirez told reporters during a press conference. "The enemy is the parallel exchange rate; we are going to bring it down." The government has now reformed the Exchange Crimes Law to allowed businesses and individuals to take part in foreign exchange transactions. The new market will take effect only when the Central Bank draws up a new set of currency regulations. Ramirez said he hoped that mechanism would be ready by Tuesday. SICAD 2 will hold auctions every day, with the amount on offer to be based on demand rather than a set amount. Buyers will not have to describe what the dollars will be used for when they bid, unlike other foreign exchange mechanism that exist under the currency controls. (Reuters, 02-24-2014; http://www.reuters.com/article/2014/02/24/venezuela-forex-idUSL1N0LT1RJ20140224; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=38247&idc=2; AVN, http://www.avn.info.ve/contenido/new-auction-convened-industrial-plastic-spares-health-sectors; El Universal, http://www.eluniversal.com/economia/140224/exchange-convention-is-pending-for-full-implementation-of-sicad-ii)

FEDECAMARAS: new decree "addresses many business needs"; CONINDUSTRIA " it is no panacea"

Jorge Roig, president of the nation's main business organization FEDECÁMARAS, says the new exchange system addresses many of the needs for the private sector, but adds: "It could have been excellent news for both international markets and the Venezuelan economy, because it will quench the fiscal need for foreign currency", but adds it arrives at the most unfortunate and inconvenient time for the nation. The new law removes penalties from the exchange system and allows parties other than PDVSA to acquire FOREX freely in the market.  Eduardo Garmendia, head of the National Industry Council (CONINDUSTRIA) says the new system is no panacea because "a market that starts out under controls is never a good sign", adding: "We will study the decree...up to now what official spokesmen have said is that it will be a market controlled within two brackets". More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/gremios/fedecamaras--nueva-ley-recoge-muchas-de-nuestras-a.aspx#ixzz2uKWGOMa4; http://www.elmundo.com.ve/noticias/economia/gremios/industriales-afirman-que-el-sicad-2-no-resolvera-t.aspx#ixzz2uKVRKDJO; El Universal, http://www.eluniversal.com/economia/140225/instan-al-gobierno-a-tomar-medidas-economicas-adecuadas)

Venezuela bonds rally after move to ease dollar shortages

Venezuelan dollar bonds rallied the most in emerging markets after the country moved to allow for more dollar sales and amid optimism there will be a political fix to end protests that have left at least nine people dead. The extra yield investors demand to own Venezuelan bonds instead of Treasuries fell 0.44 percentage point to 13.73 percentage points at 1:26 p.m. in New York, according to JPMorgan Chase & Co.’s EMBIG Diversified index. Dollar bonds due 2027 jumped 1.9 cents on the dollar to 68 cents, the highest price on a closing basis since Jan. 29. In an effort to mitigate record shortages of everything from food to medicine that spurred a month of protests, Venezuela distributed rules today allowing state oil producer Petroleos de Venezuela SA, companies and individuals to buy and sell dollars in a regulated market. The move will create a new exchange rate for dollar purchases given the scarcity of foreign currency available at the official rate of about 6.3 bolivars per dollar as Venezuela bleeds reserves. (Bloomberg, 02-24-2014; http://www.bloomberg.com/news/2014-02-24/venezuelan-bonds-rally-after-move-to-alleviate-dollar-shortages.html)

Experts warn scarcities will worsen in the next few months

Companies that manufacture, process and import such consumer products such as food, cleaning items, spare parts, and packaging material are alarmed at the drop in product inventories and supplies. They say scarcity will become worse in March - if urgent steps are not taken - as there is no plan to access funds and pay foreign suppliers in order to start importing again. Prices on controlled items have also been frozen for the past two years, with no adjustment. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Unions call for recovery of the national productive system

Pro and anti government unions agree that imports must be brought down by reactivating the industrial system. The Bolivarian Workers Union have admitted to failures in the management of companies taken over by the government and has called for a review of the effectiveness of in order to generate employment, recover the 25 industrial areas and devise a special plan for infrastructure. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140224/sindicatos-instan-a-reactivar-aparato-productivo-nacional)

Oil & Energy

PDVSA, PERENCO discuss U$D 600 million financing for venture

Venezuelan state oil company PDVSA and Anglo-French oil firm PERENCO are in talks for a U$D 600 million financing deal to boost production at the PETROWARAO joint venture, says Oil Minister Rafael Ramirez. PDVSA says that since the start of last year it has brought in close to U$D 10 billion in financing from joint venture partners to help boost stalled oil production, shoring up its financing after it sharply cut back on bond issues. "PERENCO is going to bring another U$D 600 million more, just like we've been doing with other countries," Ramirez said. (Reuters, 02-24-2014; http://www.reuters.com/article/2014/02/24/us-venezuela-perenco-idUSBREA1N1WL20140224)

Commodities

Has food rationing begun?

Government PDVAL food distribution network will have a centralized system within three months to limit customer purchases of basic food items to only once a week. Customers will need to register their ID card number before entering their stores and will not be allowed to buy there again in that week. The pilot program has begun at the San José’s PDVAL Diana. (Veneconomy, 02-24-2014; http://www.veneconomy.com/site/index.asp?ids=44&idt=38245&idc=3)

Food will be imported from Argentina to ensure supply

Economy Vice President Rafael Ramírez claims "we are defeating scarcity by importing many more products" and says officials have travelled to Argentina to purchase U$D 1.6 billion worth of food. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140225/importaran-alimentos-de-argentina-para-asegurar-el-abastecimiento)

Maduro may raise agriculture product prices

President Nicolas Maduro says he will not rule out increasing agriculture prices, in order to "regularize the economy". More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/maduro-no-descarta-aumentar-precios-de-productos-a.aspx#ixzz2trILl11G; El Mundo, http://www.elmundo.com.ve/noticias/economia/agro/presidente-no-descarta-aumentar-precios-de-product.aspx)

International Trade

In-bound cargo at Puerto Cabello:

• 5,000 tons of milk from New Zealand in 86 containers, on the "Atlantic Voyager", for state owned Supply and Agricultural Service Corporation (CASA). 
• 511 tons of milk, for CASA, from Argentina.
• Over 3,000 tons of frozen chicken, also for CASA, from Brazil
• 4,304 tons of black beans, for CASA and other consignees, from Panama.
• 6,050 heads of cattle, from Brazil, for several consignees.
• Over 199 tons of white newsprint, from Vancouver, for Distribuidora y Almacenaje Graneles.
• Over 272 tons of toilet paper from Kingston, Jamaica, for Papeles Venezolanos

More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-5-mil-toneladas-de-leche-llegaron-al-puerto-2112976/2014/02/24/310557; http://www.notitarde.com/La-Costa/Llegaron-caraotas-negras-al-puerto-de-Puerto-Cabello-2111454/2014/02/22/308121; El Carabobeño, http://www.el-carabobeno.com/impreso/articulo/94831/-al-puerto-llegaron-ms-de-5-mil-toneladas-de-leche-entera; http://www.notitarde.com/La-Costa/Arribaron-al-puerto-mas-de-3-mil-toneladas-de-pollo-2110115/2014/02/20/306687; http://www.el-carabobeno.com/impreso/articulo/94406/-ms-de-6-mil-cabezas-de-ganado-en-pie-arribaron-al-puerto)

Colombia's economy is being hit by Venezuelan unrest

Social tensions in Venezuela are causing Colombia losses around U$D 4.8 million daily for land carriers, a U$D 1 million freeze on remittances and an increase in staple prices. Over the past few days Venezuelan nationals have blocked the international bridges that join both nations thus blocking cargo transport. Pedro Aguilar, President of the Colombian Truckers Associations, says 500 merchandise bearing trucks are parked at the borders. “This is more than U$D 4.8 million in daily losses”. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/perdidas-millonarias-en-colombia-por-tension-socia.aspx#ixzz2uEb3P7mm)

Logistics & Transport

Airlines are on stand-by to leave Venezuela

An anonymous inside source reports some international airlines operating here are awaiting approval from headquarters to cease all operations in Venezuela due to the high unpaid debt the government owes them, adding that Venezuela does not have the funds to meet the U$D 3.5 billion debt due this past January. "The decision will be reversed only if there is payment within the next few days, if not, it will stand." More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Aerolineas-esperan-orden-irse-pais_0_361764013.html)

PDVSA seeking ways to deliver gas to the Andean region

Street protests in Mérida and Táchira states have made it difficult to transport goods, as well as fuel - amid conflicts in which bonfires are being lit. This has hurt distribution of propane gas tanks and is leading PDVSA to "seek contingency means to distribute gas", according to PDVSA President Rafael Ramírez. More in Spanish: (El Universal; http://www.eluniversal.com/economia/140225/pdvsa-busca-mecanismos-para-enviar-gas-a-los-andes)

Protests make cargo transport deficiencies worse

Giovanni Lupi, who heads the Central Venezuela Transport Chamber (CATRACENTRO) says distribution has been hit by 20% due to circulation delays because of protests in major cities. "Carriers are afraid as some trucks and lorries have been burned". In some areas, vehicles that have an accident are plundered by mobs for their cargo, such as a cattle-bearing lorry that was overturned near Morón (Carabobo state), and its cattle was slaughtered and quartered by a raiding mob. Transport was hurting even before the protests, as 40% of the entire fleet is paralyzed for lack of spare parts. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140225/protestas-profundizan-las-fallas-del-transporte-de-carga-del-pais)

Politics

Protest ranks grow broader

The biggest protests since the death of the longtime leader Hugo Chávez nearly a year ago are sweeping Venezuela, rapidly expanding from the student protests that began this month on a campus in this western city into a much broader array of people across the country. Residents in Caracas, the capital, and other Venezuelan cities have piled furniture, tree limbs, chain-link fence, sewer grates and washing machines to block roads in a coordinated action against the government. President Nicolas Maduro has taken a hard line on expressions of discontent, squeezing the news media, arresting a prominent opposition politician and sending the National Guard into residential areas to quash the protests. Unlike the protests in neighboring Brazil last year, when the government tried to defuse anger by promising to fix ailing services and make changes to the political system, Maduro calls protesters fascists conducting a coup against his government. He has largely refused to acknowledge their complaints, focusing instead on violence linked to the unrest. Maduro’s stance is mirrored by the intensity among the protesters. While he has called for a national conference and some opposition politicians have urged dialogue, a majority of protesters here, most of them longtime government opponents, rejected that option. “They’ve been mocking us for 15 years, sacking the country,” said Ramón Arellano, 54, a government worker, while a burning refrigerator in the street behind him blotted out the sky with a cone of black smoke. “A dialogue from one side while the other turns a deaf ear, that’s not fair.”  Like most of the protesters here, Arellano said he wanted a change of government. Protesters say that could be achieved by having Maduro resign, or be removed through a recall election or changes to the Constitution. (The New York Times: http://www.nytimes.com/2014/02/25/world/americas/in-venezuela-middle-class-joins-protests.html?ref=americas; http://www.nytimes.com/2014/02/25/opinion/rash-repression-in-venezuela.html?_r=0)

Opposition cancels Maduro talks as unrest grows, 13 dead in protests

Opposition leader Henrique Capriles pulled out of talks with President Nicolas Maduro after the death toll rose to 13 and both sides traded insults over the weekend. Maduro last week called on governors to meet at the presidential palace in Caracas today for talks, warning there would be legal consequences for skipping. Capriles said Feb. 22 he would attend while demanding the government free opposition leader Leopoldo Lopez, who was imprisoned last week on charges of inciting violence at rallies. “How can I go amid the repression, amid the violation of human rights,” Capriles, a two-time presidential hopeful and currently a state governor, told reporters. “The presidential palace is not the place for dialog in the country...I will not go there to whitewash a dying regime” 13 people have died in nearly two weeks of protests against the leftist regime, according to Attorney General Luisa Ortega. With regard to two of the three deaths in Caracas after an opposition rally on Feb. 12 outside her office, Ortega said that “it is very clear how the incidents occurred” and there are three agents of the SEBIN intelligence service in custody. (Bloomberg, 02-24-2014; http://www.bloomberg.com/news/2014-02-24/venezuela-opposition-cancels-maduro-talks-as-unrest-grows.html; El Universal, http://www.eluniversal.com/nacional-y-politica/140224/capriles-not-to-hold-government-meeting-with-maduro; Latin American Herald Tribune, 02-24-2014; http://www.laht.com/article.asp?ArticleId=1650197&CategoryId=10717; Reuters, http://www.reuters.com/article/2014/02/24/venezuela-protests-idUSL1N0LT11O20140224)

Excessive repression criticized by party loyalist, asks for release of political prisoners

A senior member of Venezuela's governing United Socialist Party (PSUV) has criticized the government's handling of recent opposition protests. Jose Gregorio Vielma Mora - the governor of western Táchira state, where the current wave of protests began - said the deployment of troops to his region was "unacceptable". The governor also called for the release of protesters and opposition leaders who have been detained in the wave of protests which started earlier this month. "All those who are in jail for political reasons, send them home," he said. He insisted that students had the right to demonstrate peacefully and said they should be applauded for wanting to make their voices heard. Vielma Mora said he opposed "the use of weapons and abusive behavior at peaceful demonstrations"; and added he had asked the National Guard to respect demonstrators' right to protest. He also said that after an "excessive use of force" by the National Guard during protests in Táchira on Thursday, he had demanded the replacement of the officer in charge, Gen. Noel Bermudez Pirela. The governor also said that it had been a "grave error" by the government to order military planes to fly over the state capital, San Cristobal: "I'm against that, and it made me angry It was unnecessary to have military planes fly over San Cristobal". PSUV official and Foreign Minister Elias Jaua said the party would be contacting Vielma Mora to "discuss his opinions". (BBC; El Universal, 02-24-2014; http://www.eluniversal.com/nacional-y-politica/140224/governor-terms-unacceptable-excess-the-militarization-of-tachira-state)

U.S. urges calm in Venezuela, encourages dialogue, rejects Maduro's request to talk to Obama

The United States is working with the Organization of American States (OAS) and regional partners to urge calm in Venezuela, the White House said on Monday, as the country faces its most sustained unrest in a decade. White House spokesman Jay Carney expressed concern about developments in Venezuela and said the United States has made clear that with the OAS and regional partners "we are working to urge calm and encourage a genuine dialogue among all Venezuelans...Another way of putting this is that when President (Nicolas) Maduro calls for a dialogue with the U.S. president and an exchange of ambassadors, he should focus instead on a dialogue with the Venezuelan people - because that it what is at issue here," Carney told a news briefing. (Reuters, 02-24-2014; http://www.reuters.com/article/2014/02/24/us-venezuela-protests-usa-idUSBREA1N1MB20140224; El Universal, http://www.eluniversal.com/nacional-y-politica/140224/us-urges-maduro-to-pursue-dialogue-with-venezuelans-rather-than-washin)

SPECIAL REPORT: Venezuelans fear 'Syria scenario'

A former socialist guerrilla and leader of the Left Revolutionary Movement (MIR) says the current political climate - where armed pro-government collectives are asserting themselves in poor neighborhoods - "is part of a worldwide experience with paramilitary groups... These groups are often better armed than the police." They have been intimidating government critics, including those on the left, during recent unrest. A state official who trains Venezuelan security forces and spoke on condition of anonymity adds:"Let's not mince words. Objectively, these are paramilitary groups... They might run some positive community development projects [in poor areas] but they are out of control. Since 2005 they have become the avant-garde for certain sectors of Chavismo". Motorcycles are the preferred transportation for collective members. Pro and anti-government intellectuals agree that urban, armed conflict between unconventional actors is a dangerous, if still unlikely, possibility. Some collective members now work as security operatives in the Caracas mayor's office or in other government departments, the state official said. Some analysts blame them for intensifying the spiraling crime rate in Venezuela - which claimed around 20,000 lives in the past year - and for recent violence targeting student demonstrators who oppose the government. The government official confirmed that armed collectives have been known to be responsible for street crime and alleged political intimidation. "The government has instructed the police not to interfere with things in the territorial spheres of the collectives," he said. Juan Montoya, a leading figure in the collectives, and a supporter of political violence against his opponents died after being shot in the head in what appears to be a targeted killing during the February 12th protest that began peacefully. National Assembly President Diosdado Cabello then said the "revolutionary" Montoya was "vilely assassinated by the fascists". In an April 2013 interview, Montoya claimed to have a direct line of communication to Cabello's office, from which he would receive directives on where to aim his violence. "Juan wasn't any regular collective member. He was informed, educated and had military training. He was a member of the board of directors of 107 collectives in Caracas. We believe it was a deliberate assassination. The aim of that was to awaken the hate of armed groups to start a confrontation," says Armando, a member of the collectives. Maduro later said the SEBIN, Venezuela's intelligence service, was instructed to stay in its barracks that day. But some members of the group took to the streets with their weapons, apparently disobeying a direct order, leading some analysts to question how much control Maduro has over the security forces. (AL-JAZEERA, http://www.aljazeera.com/indepth/features/2014/02/armed-venezuelans-fear-syria-scenario-20142242182313941.html)

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