August 27, 2019

International Trade

Venezuela, Russia sign ports agreement

Warships from Russia and Venezuela can dock at one another’s national ports under an agreement signed earlier this month between Venezuelan Defense Minister Vladimir Padrino López and his Russian counterpart, Defense Minister Sergei Shoigu, in Moscow. The Venezuelan official was in Moscow for nearly a week in mid-August. In a video posted on 15 August on the Twitter account of the Venezuelan military’s press office, Padrino López said bilateral defense ties commenced in 2001 and the new ports agreement will “strengthen these relations.” (Jane’s: https://www.janes.com/article/90647/venezuela-russia-sign-ports-agreement)

 

Venezuela Parliament says military agreement with Russia ‘unconstitutional’

Venezuela's National Assembly controlled by the opposition declared null and void a new agreement with Russia on military cooperation. The declaration was published on Monday. The document concerns "the agreement on military cooperation between the governments of Venezuela and Russia, signed by defense ministers Vladimir Padrino Lopez and Sergey Shoigu." "This agreement was not considered either by a commission on foreign policy, sovereignty and integration or by parliament, which makes it unconstitutional, and this means that it is null and void," the declaration said, calling it unconstitutional. The parliament also said that opening a Venezuelan embassy in North Korea was "a violation of the constitution", TASS reported. On August 15, Shoigu and Lopez signed an agreement on reciprocal visits of military ships at the meeting in Moscow. The defense ministers also discussed the situation in Venezuela and issues of bilateral military cooperation. (TASNIM News Agency: https://www.tasnimnews.com/en/news/2019/08/27/2084075/venezuela-parliament-says-military-agreement-with-russia-unconstitutional)

 

Oil & Energy

China's July Venezuela oil imports fall over U.S. sanctions

China’s crude oil imports from Venezuela plunged 62% in July from the previous month, Chinese customs data showed on Sunday, as growing tension between Washington and the Maduro regime made buyers wary of taking oil from this nation. Arrivals of crude oil from Venezuela were 703,742 tons last month, or 165,720 barrels per day (bpd), data from the General Administration of Customs showed. That is down from 275,646 bpd in June. With U.S. sanctions on Venezuela having already driven away many of its oil buyers, the Trump administration in early August kept up the pressure by threatening sanctions on any company that works with Maduro’s government. Venezuela’s oil exports fell 17.5% in July to their second lowest since Washington imposed the sanctions in January, according to internal data from the company and REFINITIV EIKON. China National Petroleum Corp, a leading buyer of Venezuelan oil, has halted loadings in August amid concerns over potential hits by the secondary sanctions. REFINITIV Oil Research showed only three cargos carrying a total 540,000 tons of crude have left from Venezuela for China so far this month, half of the figure in July. For the first seven months of the year, China’s imports of Venezuela crude oil fell 13.4% on a year earlier to 9.37 million tons, or 322,601 bpd. (Reuters: https://www.reuters.com/article/us-china-economy-trade-crude/chinas-july-venezuela-oil-imports-fall-over-us-sanctions-idUSKCN1VF06N; Lloyd’s List: https://lloydslist.maritimeintelligence.informa.com/LL1128939/VenezuelaChina-oil-flows-fail-to-stem-plunging-tanker-demand)

 

Half of Venezuela's oil rigs may disappear if U.S. waivers lapse

A looming U.S. sanctions deadline is threatening to clobber Venezuela’s dwindling oil-rig fleet and hamper energy production in the nation with the world’s largest crude reserves. Almost half the rigs still operating in Venezuela will shut down by Oct. 25 if the Trump administration doesn’t extend a 90-day waiver from its sanctions, according to data compiled from consultancy Caracas Capital Markets. That could further cripple this nation’s production because the structures are needed to drill new wells crucial for even maintaining output, which is already near the lowest level since the 1940s. (Bloomberg, https://www.bloomberg.com/news/articles/2019-08-22/trump-takes-aim-at-oil-rigs-crucial-to-venezuela-s-energy-future)

 

CITGO profits hit by fallout from split, sees 2H improvement -CEO

The two new top executives at CITGO Petroleum disclosed this week that net income in the second quarter slid to less than half its level a year earlier, hit by a broad slump for the refining industry as well as complications from U.S. sanctions on Venezuela and CITGO’s split with state-run oil company PDVSA. Chief Executive Officer Carlos Jorda and Chairwoman Luisa Palacios on Thursday laid out a plan to rebuild profits, pay down debt and invest in operations after a jarring split this year from parent Petroleos de Venezuela (PDVSA). But they conceded that their plans could be complicated by U.S. sanctions on Venezuela which have affected relationships with suppliers and partners. One contentious issue is whether CITGO or another PDVSA subsidiary is responsible for a payment of almost US$ 1 billion due to bondholders this fall. Houston-based CITGO, the eighth-largest U.S. refiner, ousted its CEO and other top executives early this year and halted all dealings with PDVSA after Washington levied sanctions on Venezuela intended to force Nicolas Maduro from power. (Reuters, https://www.reuters.com/article/citgo-ceo/citgo-profits-hit-by-fallout-from-split-sees-2h-improvement-ceo-idUSL2N25J0LQ)

 

Explosion rocks Venezuela oil plant

An explosion rocked a natural gas-filling plant in the Venezuelan state of Miranda, forcing the evacuation of 6,500 residents, TELESUR reports, adding the Venezuelan government has called the event an act of sabotage. The explosion caused no fatalities with only one worker at the plant reported injured. According to a report in the leftist daily Morning Star, “The attacks were branded ‘terrorism’ by the Maduro regime. This is the latest in a string of accidents that highlight the precarious energy situation in sanction-bound Venezuela. Earlier this year, several blackouts crippled the country, with the government calling them a sabotage as well. The latest blackout, in July, Caracas blamed on an electromagnetic attack. The blackouts hit Venezuela’s oil industry particularly hard, leading to a suspension of operations at crude upgraders and its main oil export terminal. (Oil Price: https://oilprice.com/Latest-Energy-News/World-News/Explosion-Rocks-Venezuela-Oil-Plant.html)

 

Economy & Finance

Cold, hard euros: Venezuela turns to European cash after U.S. sanctions

From supermarket checkouts in the capital Caracas to electronics stores in the central city of Maracay, Venezuelans struggling with hyperinflation and a deep economic crisis are turning to a new form of payment: euros in cash. Runaway inflation that has made even large piles of the local bolivar currency worthless - combined with the socialist government’s relaxation of restrictions on the use of foreign currency - has encouraged Venezuelans to turn to dollar bills for everyday transactions in the past year. But in the past four months, euros have also started proliferating in markets and stores here. With the stock of dollars in circulation still far greater than euros, Venezuelan merchants tend to quote items at the same price in the European and U.S. currency - ignoring the euro’s higher value on international markets. (Reuters, https://www.reuters.com/article/us-venezuela-economy-euros/cold-hard-euros-venezuela-turns-to-european-cash-after-u-s-sanctions-idUSKCN1VD195)

 

Politics and International Affairs

Guaidó vows to shun early election

Venezuela's National Assembly President and interim President Juan Guaidó said Friday that opponents of Nicolás Maduro won't participate in any early legislative elections he calls amid a protracted power struggle. Guaidó said in an interview with The Associated Press that it would be a "farce" to participate in any election with the Maduro regime still in control of the country. The man recognized by the U.S. as Venezuela's rightful leader also said he plans to keep the self-claimed title of "acting president" even after his one-year term as leader of the opposition-controlled National Assembly ends in the new year. "We are very clear that we're going to continue until the point that elections in Venezuela are in reality free," Guaidó said. He contended there are signs Maduro's government is weakening, alleging it is resorting to torturing opponents while growing isolated from its people and the international community. Socialist party chief Diosdado Cabello, a key Maduro ally, has said elections for the National Assembly — the most important opposition-dominated institution in Venezuela — could be held in January or earlier. The legislature's five-year term is set to end in December 2020 and elections are traditionally held in the last month of its term. (AP: https://news.yahoo.com/venezuela-opposition-leader-vows-boycott-164911841.html)

 

The price of removing Nicolas Maduro from office may be amnesty for his deputies, by Eli Lake

No one should take Venezuelan dictator Nicolas Maduro’s words at face value. That applies to his claims last week that his regime is in secret negotiations with “high-ranking” American officials. His comments were almost certainly a gambit to divide the opposition during the on-again, off-again negotiations over new elections being brokered by the Norwegian government. They were a ploy to make the internationally recognized but largely powerless government of interim President Juan Guaidó believe that U.S. President Donald Trump was negotiating behind its back. That said, there is a kernel of truth buried in Maduro’s fiction. Trump also acknowledged talks at “a very high level” last week. U.S. National Security Adviser John Bolton has said these contacts are not authorized by Maduro and are aimed at ushering in free elections. So: America is talking to Maduro’s deputies — about how to get rid of Maduro. If the apparatchiks who preach socialism are now looking to protect their fortunes and stay out of jail, that may mean the collapse of the regime is nigh. At the same time, this back and forth highlight just how unsatisfactory the fall of Maduro is likely to be. His ouster will require the cooperation of his enablers — and the price of their cooperation, at a minimum, will be amnesty. Guaidó and his supporters have been keenly aware of this dilemma since January, when most of the Western Hemisphere recognized him as interim president of Venezuela. One of his first acts was to press the National Assembly to pass an amnesty law for civilian and military officials who worked to restore constitutional government. At the time, Human Rights Watch, which has documented much of the Maduro regime’s crimes, criticized the law for being dangerously vague and overbroad. More than eight months into his efforts to oust Maduro, however, some details are coming into focus — namely, the kinds of scoundrels that will evade justice in exchange for turning on Maduro. As one senior U.S. official told me, the U.S. has delivered messages to Maduro’s deputies, often through intermediaries, that they are interested not in vengeance but only in an orderly transition to free and fair elections. (Bloomberg: https://www.bloomberg.com/opinion/articles/2019-08-26/ousting-venezuela-s-maduro-may-require-amnesty-for-his-deputies)

 

U.S. sanctions on Venezuela undercut talks, key Maduro ally says

U.S. sanctions against Venezuela are making successful talks with the opposition impossible, said a key ally of Nicolas Maduro, demanding that President Donald Trump immediately act to drop them. "The stone in the way of any negotiation is sanctions," Tarek William Saab, Venezuela’s public prosecutor, said in a rare interview at the Public Prosecutor headquarters office in downtown Caracas. "It is a shot in the foot of any negotiation because how can you negotiate with a gun pointed at your head?" (Bloomberg, https://www.bloomberg.com/news/articles/2019-08-23/u-s-sanctions-on-venezuela-undercut-talks-key-maduro-ally-says)

 

Argentina poised to abandon Venezuela’s opposition

Election-bound Argentina is poised to withdraw from the vocal bloc of Latin American nations that supports Venezuela's political opposition and recognizes its leader, Juan Guaidó, as the country's interim president. Alberto Fernandez, the leading candidate to replace Argentina's president Mauricio Macri in 27 October elections, is signaling that his administration would not seek to remove Nicolas Maduro. If Fernandez and his unrelated running mate and former president Cristina Fernandez de Kirchner win the presidency, Buenos Aires would likely pull out of the Lima Group of Latin American countries and Canada that have been seeking to isolate the Maduro government in favor of a transition administration led by Guaidó. In a 25 August television interview, Alberto Fernandez made it clear that he disagreed with Macri who has long denounced Maduro's government as a dictatorship. "It is very difficult to qualify an elected government as a dictatorship. An elected government can become an authoritarian government," Fernandez said, explicitly challenging the position of the Lima Group, the US and most EU countries, which assert that Maduro was fraudulently re-elected in May 2018. "The institutions are working there, we can then discuss how they work, but formally there is an assembly, there are courts. A dictatorship generally lacks these things," he added in explaining why he does not deem Venezuela to be a dictatorship and prefers to describe Maduro's government as authoritarian. A Fernandez administration would bring Argentina closer in line to the stance of Uruguay and Mexico, which advocate non-intervention in Venezuela and object to extensive US financial and oil sanctions on the country. "I do not agree with all these proposals that line up Latin America behind (US president Donald) Trump and I value the proposal that was made by (Mexican president Manuel) Lopez Obrador and (Uruguayan president) Tabare Vazquez and I think I would add myself to those two to try to help find a solution for Venezuela," Fernandez said in the television interview. (Argus: https://www.argusmedia.com/en/news/1965727-argentina-poised-to-abandon-venezuelas-opposition?backToResults=true)

 

Maduro looks to North Korea for support – opens first embassy in Pyongyang

The deterioration of Venezuela’s relations with the Western world, imposition of harsh Western economic sanctions and open calls for regime change by the United States and many of its allies have led Caracas to strengthen ties with several Western adversaries since 2017. The country’s ties with Russia and China have been highly prolific, but a quieter but less conspicuous partnership which has been built has been that between Venezuela and North Korea. In December 2018 North Korean Presidium President and Head of State Kim Yong Nam paid a state visit to Caracas, and it was widely speculated that defense and economic cooperation was under discussion. North Korea opened an embassy in Caracas four years prior. Furthering a trend towards greater cooperation, on August 21^st, 2019, the Maduro regime opened its first embassy in Pyongyang which was attended by the deputy foreign ministers of both states. Maduro’s Deputy Foreign Minister Ruben Dario Molina stated at the event: “the people and leaders of Venezuela and the North Korea have become a target for attacks and threats by North American imperialism, which seeks to put us on their knees because of our implacable ideology and the desire to achieve economic and social progress.” His Korean counterpart Pak Myung Guk stated: “the government of the DPRK (North Korea) is constantly in its desire to expand and develop a relationship of friendship and cooperation with Venezuela, which are being placed in the flame of the general anti-imperialist struggle for independence and socialism.” (Check Point Asia Net: https://www.checkpointasia.net/venezuela-looks-to-north-korea-for-support-opens-first-embassy-in-pyongyang/)

 

Venezuelans stranded as Ecuador imposes new visa rules

Ecuador on Monday joined Peru and Chile in restricting Venezuelan immigration. To enter the country, Venezuelans now need to provide a criminal record, apply for a visa before arrival and present a valid passport. As the deadline neared, many Venezuelans in Ecuador rushed home to retrieve family members. Thousands more rushed east from their homes in Venezuela, eager to start a life in Ecuador that would soon be much harder to achieve. The last-minute wave sowed chaos for immigration officials on both sides of the Ecuador-Colombia border. Migrants waited hours in bitterly cold temperatures as they navigated immigration processes. Temperatures dropped to six degrees Celsius and many slept huddled together in blankets as they queued, in some cases overnight. Colombian migration officials did not know the exact number of Venezuelans who crossed before the border closed on Sunday, but a director at the Rumichaca office told Al Jazeera that more than 11,000 Venezuelans had crossed as of 6pm, well before the midnight deadline. According to Colombian immigration officials on the Venezuelan border in Cucuta, there are still more on the way. The chaos was not limited just to Colombia as masses of migrants huddled in Ecuador as well, waiting to be processed. Passports can cost several months’ salary for most Venezuelans, though many migrants told Al Jazeera the actual price is much higher when one factors in necessary bribes of US$ 100 to US$300. In a country where the monthly minimum wages has fallen to below US$ 5, that is beyond the reach of most Venezuelans. (Al Jazeera: https://www.aljazeera.com/news/2019/08/venezuelans-stranded-ecuador-imposes-visa-rules-190826134509203.html)

 

Venezuelan socialist defiant as US sanctions threaten baseball

Venezuela's upcoming baseball season will go on "even if we have to play ourselves," socialist party No. 2 Diosdado Cabello said on Monday, criticizing a move by US-based Major League Baseball to restrict players from participating because of US sanctions. MLB said last week it would suspend involvement in the Venezuelan league, which starts play in October, while it awaited word from the US government on whether its players' participation was consistent with Washington's sanctions on this nation, which are meant to force out socialist Nicolas Maduro. While the number of Venezuelan major league stars returning to their baseball-mad homeland to play has declined in recent years because of security issues and an economic crisis, many of the players on the Venezuelan league's eight professional teams also play for one of MLB's hundreds of minor-league affiliates. (The Sydney Morning Herald: https://www.smh.com.au/world/south-america/even-if-we-have-to-play-ourselves-venezuelan-socialist-defiant-as-us-sanctions-threaten-baseball-20190827-p52l2q.html)

 

Russia, China offer to help Venezuela in preparing for 2020 Olympics — Maduro

Russia and China have offered to help Venezuelan athletes to prepare for the next Summer Olympic Games, Nicolas Maduro claimed on Thursday. "Russia and China have offered us special help in training," Maduro said at a meeting with young athletes that was broadcast on Twitter. He said that "many athletes" will be able to go to Russia and China for training. "I am confident that we will show our best results in history at the Tokyo Olympics," Maduro noted. The next Summer Olympic Games will be held in Japan's Tokyo in July-August 2020. (TASS: https://tass.com/world/1073700)

 

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.

 

July 09, 2019

Oil & Energy

Squeezed by sanctions, Venezuela sells oil to tiny Turkish firm

With U.S. sanctions blocking Venezuela from selling oil to the United States, state-owned energy firm PDVSA has turned to several little-known buyers that include a tiny Turkish company with no refineries but ties to Nicolas Maduro’s regime. U.S. sanctions have driven away many customers. PDVSA’s exports have slumped by more than a fifth since sanctions were imposed. Its biggest buyers today are Chinese and Indian companies. Directors at a March 14 meeting of Maduro’s PDVSA board temporarily waived some requirements for new customers or suppliers, including that of having at least two years’ experience in the oil industry. In the wake of the changes, a Turkish company called Grupo IVEEX INSAAT started buying Venezuelan oil in April. Istanbul Chamber of Commerce records show that IVEEX INSAAT was formed less than a year ago with capital of just US$ 1,775 and listed “residential construction” as its main activity. It was one of only five firms that loaded tankers to take Venezuela’s upgraded crude - among its most valuable oil - from April through June, the documents showed. IVEEX loaded four cargoes of Venezuelan crude and products in April - equivalent to just under 8% of Venezuela’s oil exports - and nothing in May or June, according to PDVSA documents. Turkish corporate records show IVEEX INSAAT is owned by Miguel Silva, a Venezuelan businessman who heads the Caracas-based Venezuelan Exporters’ Chamber and served as a housing ministry commissioner in Maduro’s administration. Silva registered IVEEX INSAAT with a Turkish partner named Erhan Kap, an Istanbul tour guide, on Sept. 27, 2018, just a week after Maduro visited Istanbul. IVEEX reportedly has agreed to deliver refined products to Venezuela in exchange for receiving crude. With its refinery network crippled by maintenance issues, the OPEC nation has struggled with severe fuel shortages in recent months. The two other companies that only began chartering tankers to take PDVSA’s oil after sanctions hit are Panama-registered MELAJ Offshore Corp and Sahara Energy, a unit of Nigeria-based Sahara Group. The two loaded PDVSA oil cargoes shortly after the sanctions were announced. (REUTERS: https://www.reuters.com/article/us-venezuela-oil-turkey/squeezed-by-sanctions-venezuela-sells-oil-to-tiny-turkish-firm-idUSKCN1U324M)

 

OPEC wants quick resolution to tensions between US and Iran, Venezuela

OPEC has asked on Monday for a timely settlement to the tensions that have flared up between the United States and Iran and Venezuela. Iran and Venezuela, both founding members of OPEC, are both exempt once again from the production cut extensions that the cartel announced last week and will remain exempt for as long as they remain under sanction. Both Iran’s and Venezuela’s production woes have contributed significantly to the cartel’s over compliance to the group’s production cut quota, with Iran’s crude production falling from an average of 3.813 million barrels per day in 2017 to 2.370 million barrels per day in May 2019, and Venezuela’s crude production falling from 1.911 million bpd on average in 2017, to an abysmal 741,000 bpd in May 2019. But while the two countries combined seemingly did OPEC a favor by taking more than 2.6 million barrels of crude oil per day out of the market within that time frame, the tensions in the Persian Gulf and the dire situation in Venezuela are creating a market that OPEC is finding it difficult to both predict and manage. (Oil Price: https://oilprice.com/Latest-Energy-News/World-News/OPEC-Wants-Quick-Resolution-To-Tensions-Between-US-And-Iran-Venezuela.html)

 

Amuay and Cardon refineries halted by blackout

Venezuela’s Amuay and Cardon refineries are halted following a blackout in the early morning hours, two oil industry sources with knowledge of the issue said on Sunday. The twin refineries together form the 955,000 barrel-per-day (bpd) Paraguana Refining Center, which has been operating well below capacity for years because of chronic operational problems that have been aggravated by Venezuela’s economic crisis. “Blackout in both refineries,” one employee who works in the complex wrote in a text message. “It’s going to be difficult to get the system back up.” (Reuters, https://www.reuters.com/article/refinery-operations-pdvsa-amuay/update-1-venezuelas-amuay-and-cardon-refineries-halted-by-blackout-sources-idUSL2N24802S)

 

CHEVRON is playing a long game in Venezuela’s oil fields

Donald Trump may have slammed Venezuela with sanctions in an effort to change the regime of President Nicolás Maduro, but the country’s energy industry has an unlikely ally: CHEVRON Corp. Despite the U.S. administration’s push to disrupt the financial resources available to Venezuela’s leadership, the second-biggest U.S. oil company is working to bolster one of the Maduro government’s chief economic pillars—its ability to produce crude oil. CHEVRON is helping tap four fields in the country while testing new injection technologies to maximize production in one. CHEVRON is also helping pay for supplies, expenses, and even health care for workers at state-owned oil producer PDVSA to keep the crude flowing. CHEVRON’s actions are an attempt to play the long game in economically ravaged Venezuela. If Maduro retains power, CHEVRON will keep its tenuous—but still profitable—foothold in Venezuela. If he’s forced out and U.S. sanctions end, the company could be first in line to gain from the country’s vast geologic riches. The gamble puts CHEVRON in the same group as state-controlled producers from Russia and China that have been supportive of the Maduro regime—and potentially at odds with its home country. The company is working under a Department of the Treasury waiver of U.S. sanctions against Venezuela that expires on July 27. A decision by the U.S. government not to renew the waiver could cripple the production of more than 200,000 barrels a day at the four projects Chevron is keeping afloat, even though most of that production goes to PDVSA. And it could lead Maduro to hand CHEVRON’s stakes in these fields to other explorers.  Positioning itself to outlast Maduro won’t be easy. Last year two Chevron employees were arrested and held for seven weeks for reasons neither the government nor the company disclosed. Still, the oil producer continues to work with the government to keep its operation intact. That could mean braving Trump administration pressure and weathering the worsening humanitarian crisis, but the payoff might be worth the risks. “Whatever government that is coming in will be dealing with very diverse issues and doing it with very little cash in the bank, and that presents a unique opportunity,” says Schreiner Parker, vice president for Latin America at consulting firm RYSTAD Energy. “In the medium to long term with regime change, we believe Venezuela will become very investor-friendly, out of necessity more than anything.” (Bloomberg: https://www.bloomberg.com/news/articles/2019-07-09/chevron-is-playing-a-long-game-in-venezuela-s-oil-fields)

 

Economy & Finance

JP Morgan to cut Venezuela weight to zero in key indexes over five months

JP Morgan will reduce the weight of Venezuela's sovereign and PDVSA bonds to zero in its widely tracked indexes, the bank said on Tuesday, phasing them out over five months starting on July 31. Venezuela's weight was 0.5%, 0.9% and 1.2% in the EMBI Global Diversified, EMBI Global and EMBI+ indices, respectively, it added. As a result of dialing down the weighting, JP Morgan said the headline EMBIGD yield and spread were estimated to compress by about 45 basis points. JP Morgan said it could open another index watch process in "the event of any favorable official guidance around easing of trading restrictions or consistent, observable improvements in liquidity and replicability of Venezuela bonds." (NASDAQ: https://www.nasdaq.com/article/jp-morgan-to-cut-venezuela-weight-to-zero-in-key-indexes-over-five-months-20190709-00584)

 

Maduro regime says U.S. sanctions hit debt refinancing, oil sales

Nicolas Maduro’s Vice foreign minister William Castillo also Venezuela charged on Friday that U.S.-led sanctions had stopped foreign debt refinancing, blocked vital food and medicine imports, and cost billions of dollars in lost oil assets. Maduro’s government says Venezuela is the victim of a U.S. plot to topple him, eradicate socialism and hand the world’s largest oil reserves to multinationals. (Reuters, https://www.reuters.com/article/us-venezuela-un/venezuela-says-u-s-sanctions-hit-debt-refinancing-oil-sales-idUSKCN1U014B)

 

Bitcoin trading activity goes ballistic in Venezuela as rule of law erodes

The worse the political, social, and economic conditions in Venezuela get, the more that residents suffering under the Maduro regime pile into Bitcoin. According to Coin Dance, more than 47 billion Venezuela bolivars were traded against Bitcoin in the first week of July. This broke a previous record that had been set in mid-June. While the rising amounts of bolivars being spent on buying Bitcoin could be attributed to the fact that the Venezuelan currency is perpetually weakening, it also coincides with the price of the flagship cryptocurrency appreciating considerably in the last couple of weeks. As of April, the inflation rate in Venezuela was estimated to have hit 1,300,000%. Mid last month, the country announced a 50,000-bolivar bill designed to ease business transactions. Maduro will have released new banknotes for the second time in less than a year. Still, Venezuela ranks among the top 30 countries whose national currencies are the most traded for Bitcoin, according to Coinhills. While BTC/VES volumes have been on a steady increase since the beginning of 2018, Venezuela now has a national cryptocurrency, the Petro, which is competing for attention with Bitcoin. With Venezuelans already witnesses to how government-issued money can quickly lose its purchasing power in the face of hyperinflation, this move will only be beneficial to Bitcoin: The Maduro regime may be force-feeding the Petro on the people, but that will likely just serve as a gateway drug to Bitcoin. (CCN: https://www.ccn.com/crypto/bitcoin-trading-volume-venezuela/2019/07/08/)

 

Politics and International Affairs

Guaido announces fresh talks with Maduro regime

Venezuelan opposition leader Juan Guaido on Sunday announced fresh talks with the government of President Nicolas Maduro. Guaido, who became acting president earlier this year, said the Norway-brokered talks aim "to establish a negotiation on the end of the dictatorship," referring to Maduro's regime. "The Venezuelan people, our allies and the world's democracies recognize the need for a truly free and transparent electoral process that will allow us to surpass the crisis and build a productive future," he said. Guaido is hoping the negotiations eventually lead to Maduro stepping down and "free elections with international observers." In May, delegations representing both parties met in Oslo under Norwegian mediation. However, the talks have yet to provide a path forward for the political impasse here. But Venezuela's opposition is wary of talks with Maduro's regime. Previous attempts to end the country's political crisis have failed, with critics saying they have only served to further solidify his rule. Norway which hosted the preliminary talks and is mediating the protracted process says the aim of the upcoming round of discussions in Barbados, is to move further forward towards a constitutional settlement. The opposition led by Juan Guaido wants a transitional government to replace the regime of Nicolas Maduro, and then free elections monitored by international observers. Guaido insists he`s the legitimate Interim President, recognized by more than fifty nations all around the world.  While Maduro states he`s the democratically elected President. (DW: https://www.dw.com/en/venezuelas-guaido-announces-fresh-talks-with-maduro-regime/a-49507748; Vatican News: https://www.vaticannews.va/en/world/news/2019-07/venezuela-cardinal-government-opposition-dialogue.html; Reuters, https://www.reuters.com/article/us-venezuela-politics/venezuela-opposition-says-it-will-meet-maduro-envoys-in-norway-mediated-talks-idUSKCN1U20TF; https://www.reuters.com/article/us-venezuela-politics-norway/venezuela-talks-to-resume-this-week-norway-idUSKCN1U30GU)

 

Barbados welcomes being the site for talks as CARICOM leverages ties with Caracas

Barbados Prime Minister Mia Amor Mottley Monday welcomed plans by both sides to hold talks in Barbados. “Since January, the government of Barbados along with other CARICOM governments has made it clear that the time for dialogue is never over. As a zone of peace, we will want to see a very peaceful resolution to the problems in Venezuela,” Mottley told reporters. Caribbean Community (CARICOM) leaders who have in the past adopted a position of non-interference and non-intervention in the affairs of this country, last week re-affirmed that position during their annual summit held in St. Lucia. Mottley made it clear that apart from hosting the meeting, Barbados will be playing no major role in the discussions. “This is a matter that requires the utmost patience, so it is not something that you should be asking me or anybody about on a daily basis, let the people talk. When you have deep divisions, it takes time and I have every confidence in the government of Norway being able to do what CARICOM has wanted done since January,” she said. Caribbean nations that used to rely on cheap Venezuelan oil are now hoping to leverage their ties with Caracas to help broker a negotiated settlement to the political crisis there. "This issue is one for the Venezuelans to work out," Trinidad´s prime minister Keith Rowley said. Norway's prime minister Erna Solberg was a guest at the CARICOM summit, and the group is playing the role of an honest broker in the Venezuelan crisis, St. Kitts-Nevis prime minister Timothy Harris said. (Caribbean Broadasting Corporation: http://www.cbc.bb/wordpress/2019/07/09/pm-pleased-with-plans-for-negotiations-to-end-venezuela-crisis/; Argus Media: https://www.argusmedia.com/en/news/1935802-caribbean-sets-stage-for-thorny-venezuela-talks)

 

Maduro 'optimistic' as crisis talks resume

Nicolás Maduro said he was "optimistic" as talks between his regime and the opposition to resolve the country's political crisis resumed on Monday. Preliminary talks held in May in Oslo petered out without an agreement. Maduro said a six-point agenda was being discussed at the meeting which is being hosted by Barbados. He did not give further details. The Norwegian foreign ministry is again acting as a mediator, as it did at the previous meeting in Oslo, but has so far only commented to confirm the meeting was taking place. Maduro revealed that Monday's meeting lasted five hours. He also said he thought "a path to peace" could be found. Just a week ago Guaidó ruled out a return to negotiations, citing as a reason the death in custody of an army captain whose body showed signs of torture. Guaidó has not said why his stance has changed. Some in the opposition say the talks are a ruse by the government to buy itself more time in power. On Friday Maduro said he doesn’t think it necessary to hold presidential elections in the country right now. "What does the people of Venezuela need today? Elections? I don’t think so," he told journalists. "The people of Venezuela needs economic revival, peace and constitutional stability. And it is necessary to reelect the National Assembly for that," he said. "The opposition wants no elections," he said. "If we say elections will be held in 30 days, they will begin inventing reasons to dodge them." (BBC: https://www.bbc.com/news/world-latin-america-48904193; TASS: https://tass.com/world/1043923)

 

Venezuela's rule of law has crumbled under Maduro, international legal group reports

The rule of law has crumbled in Venezuela under the regime of Nicolas Maduro which has usurped the powers of the legislative and judicial branches, an international legal watchdog said on Monday. The International Commission of Jurists (ICJ) called on Venezuelan authorities to reinstate democratic institutions as part of a solution to the political, economic and humanitarian crisis engulfing the OPEC member. The government and a compliant Supreme Court effectively stripped the National Assembly of most powers after the opposition won a majority in 2015 elections. Lawmakers loyal to Maduro generally do not attend the sessions but go to meetings of the Constituent Assembly, a legislative body that meets in the same building. The Constituent Assembly, created in a 2017 election boycotted by the opposition, is controlled by the ruling Socialist Party and its powers supersede the National Assembly. Sam Zarifi, ICJ secretary-general, presented its latest report on Venezuela: “No Room for Debate”. “The focus of this report is on the usurpation of the authority of the legislative by the government in Venezuela. This comes after the judiciary was taken over,” he told a news briefing. The Constituent Assembly was “formed improperly and illegitimately” and has gone far beyond its stated role, Zarifi said, adding: “In fact it seemed to do everything but really discuss a new Constitution”.  “Addressing the problem of the National Constituent Assembly is a crucial step in any political solution to the crisis that has gripped Venezuela,” ICJ’s Zarifi said, urging the government to engage with the opposition-led legislature. (NBC News: https://www.nbcnews.com/storyline/venezuela-crisis/venezuela-s-rule-law-has-crumbled-under-maduro-international-legal-n1027406)

 

Poll shows 64,6% of Venezuelans would vote in any new presidential election

A recent poll by the Catholic University’s Center for Political Studies and Government, along with DELPHOS, shows that 64.6% of Venezuelans are willing to vote if new presidential elections are called; and the number goes up to 70.2% if Nocolás Maduro resigns and stays out of the process, the National Elections Council is changed and there are international observers. An opposition candidate would get 67% of all votes (12.9 million) and a regime candidate would receive 33% (6.3 million). Another 15.1% of those polled indicated they might vote. More in Spanish: (El Universal, http://www.eluniversal.com/politica/44895/646-de-los-venezolanos-votarian-en-elecciones-presidenciales)

 

Venezuelans deserve better life, free from fear, UN Human Rights Chief says

The United Nations High Commissioner for Human Rights said on Friday that Venezuelans deserve a better life that is free from fear and whereby they have access to food, water and health services during the presentation of her report on Venezuela before the Human Rights Council. “The fate of more than 30 million Venezuelans rests on the leadership’s willingness and ability to put the human rights of the people ahead of any personal, ideological or political ambitions,” Michelle Bachelet said during presentation of her report in Geneva. The report accuses the Nicolas Maduro regime of grave human rights violations and documents, among other serious incidents, more than 6,800 extra-judicial killings by the Venezuelan armed forces between January 2018 and May 2019. These killings, “should be fully investigated, with accountability of perpetrators, and guarantees of non-recurrence,” added Bachelet. The UN High Commissioner for Human Rights also denounced a pattern of torture reports during arbitrary detentions and mentioned the recent death of Rafael Acosta, a retired navy captain, who died in custody. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2480704&CategoryId=10717)

 

Maduro slams UN human rights report, says it's full of lies

Nicolás Maduro on Monday said he had demanded the rectification of what he described as lies included in the latest United Nations report on human rights in this country. He also said that the United Nations High Commissioner for Human Rights and former president of Chile, Michelle Bachelet, had "made a wrong call" with the report's outcome. (EFE: https://www.efe.com/efe/english/world/venezuela-s-maduro-slams-un-human-rights-report-says-it-full-of-lies/50000262-4018799)

 

Venezuelan bishops condemn death of naval captain while in custody, other atrocities

The Venezuelan bishops' justice and peace commission have condemned the death in custody of Rafael Acosta Arévalo, a naval captain who was arrested over an alleged assassination plot against president Nicolas Maduro. Acosta's lawyer alleges the officer had been tortured while in custody. Two members of Venezuela's military counterintelligence agency have been charged in relation to Acosta's death. The bishops also protested that police had allegedly disfigured and left blind Rufo Chacón Parada, a youth, as he was demonstrating about the lack supplies in the country. “The Venezuelan state is responsible. We will not consent to the manipulation, dissimulation and downplaying of these grave incidents,” the bishops' justice and peace commission stated July 4. The bishops said that “the forced disappearance, torture, cruel, inhuman or degrading treatment, excesses committed by the police … against Venezuelans are practices that have taken hold in the military and police corps, and are occurring on an ongoing basis, like a secret that cries out in our consciences.” “Silence is not an option in face of so much outrage,” the bishops said. The bishops noted that the men charged in relation to Acosta's death, Lt Ascanio Tarascio and Sgt Esteban Zarate, are 22 and 23, and asked: “This is the generation the armed forces are passing the baton to? Who taught these young men how to do so much harm to their brothers? What are the responsibilities of their superiors in the chain of command in these institutions?” They emphasized that “these young perpetrators are also victims of a system that has allowed this moral and spiritual degradation in our country.” In addition, a Venezuelan Cardinal is accusing the Maduro regime of intimidation and has reiterated his appeal to Nicolas Maduro to engage in dialogue. In an interview with the Pontifical Foundation ‘Aid to the Church in Need’, Archbishop Baltasar Porras of Merida, apostolic administrator of Caracas and President of Caritas Venezuela, shone the light on the limitations and intimidation perpetrated by the government against Church officials and organizations. He decried the fact that those who are bringing aid to the impoverished population and even parishes are continuously under pressure to stop their work.  (Catholic News Agency: https://www.catholicnewsagency.com/news/venezuelan-bishops-condemn-death-of-naval-captain-while-in-custody-74364; Vatican News: https://www.vaticannews.va/en/world/news/2019-07/venezuela-cardinal-government-opposition-dialogue.html)

 

Venezuelan journalist Braulio Jatar conditionally released, barred from leaving country

Venezuelan online and radio journalist Braulio Jatar was formally released from house arrest today after receiving official notification from a criminal court in his home state of Nueva Esparta. As mandated by the court, Jatar - who was charged but not tried for money laundering -- is barred from leaving Nueva Esparta and is required to present himself before that court every 15 days, according to his statement. Jatar's release was first announced by U.N. High Commissioner for Human Rights Michelle Bachelet on July 5, according to press reports. According to the reports, Bachelet had requested the release of Jatar and other high-profile prisoners during her June visit to Venezuela. The news came after the U.N. Human Rights Council held a debate on Bachelet’s report of a visit to Venezuela in June. The report accused Venezuelan security forces of sending death squads to murder young men but a vice minister rejected that in a speech to the Geneva forum on Friday. “The welcome releases of 62 detainees then (in June), with a further 22 – including journalist Braulio Jatar and judge (Maria) Lourdes Afiuni – set free yesterday and the authorities’ acceptance of two human rights officers in the country, signify the beginning of positive engagement on the country’s many human rights issues,” Bachelet said. (Committee to Protect Journalists: https://cpj.org/2019/07/venezuelan-journalist-braulio-jatar-conditionally-.php; Reuters, https://www.reuters.com/article/us-venezuela-un-prisoners/venezuela-releasing-judge-journalist-20-students-u-n-idUSKCN1U016V)

 

US expresses concerns for wrongfully detained U.S. persons (CITGO 6) in Venezuela

The United States demands that the former Maduro regime release the wrongfully detained “CITGO 6” in Venezuela. These men are suffering serious health conditions and must be released immediately. Maduro loyalists continue to prevent the families and attorneys of American prisoners from assisting with basic access to food and medicine, without regard for mental health and general well-being of those detained. These affronts to basic dignity will not be ignored.  The Department of State continues to press Maduro’s representatives for their assurance of the safety and welfare of Americans wrongfully detained in Venezuela. (US Department of State: https://www.state.gov/concerns-for-wrongfully-detained-u-s-persons-citgo-6-in-venezuela/)

 

UN agencies welcome regional road map to help integrate ‘continuing exodus of Venezuelans’

A new road map adopted by Latin American and Caribbean countries, to help better integrate refugees and migrants from crisis-hit Venezuela into new host societies, drew a warm welcome from two UN agencies on Monday. UN refugee agency UNHCR, and the International Organization for Migration (IOM) lauded the joint declaration that agrees to reinforce cooperation, communication and coordination between the countries of transit and destination; strengthen measures against people-smuggling and trafficking; and protect the most vulnerable by combatting discrimination, xenophobia and sexual and gender-based violence. The road map was adopted late last week during the International Technical Meeting of the Quito Process, in the Argentine capital, Buenos Aires, with the participation of 14 Latin American and Caribbean governments, UN agencies, regional organizations, development banks and civil society The meeting highlighted the actions and efforts of the regional countries, not only in terms of reception, documentation and humanitarian assistance, but also in promoting access to health, education, employment, and housing on behalf of Venezuelan refugees and migrants. The Road Map of the Buenos Aires Chapter sets out specific actions on human trafficking, healthcare and for recognizing academic qualifications of Venezuelan professionals, as well as establishing information and reception centers. A so-called Information Card for Regional Mobility is a priority commitment, to complement and strengthen the documentation and registration processes at national levels where it exists or is being developed. According to data from national immigration authorities and other sources, the number of refugees and migrants from Venezuela around the world has now exceeded four million. (UN News: https://news.un.org/en/story/2019/07/1042041)

 

On Venezuelan Independence Day Maduro called for “dialogue” as Guaido slammed 'dictatorship'

Venezuela’s bitterly divided political factions held competing commemorations of the country’s independence day on Friday, with President Nicolas Maduro calling for dialogue and opposition leader Juan Guaido decrying alleged human rights violations by Maduro’s “dictatorship.” Speaking to a gathering of top military officials, Maduro reiterated his support for a negotiation process mediated by Norway between his socialist government and Guaido, the leader of the opposition-held National Assembly who argues Maduro’s 2018 re-election was a fraud. (Reuters, https://www.reuters.com/article/us-venezuela-politics/on-venezuelan-independence-day-maduro-calls-for-dialogue-as-guaido-slams-dictatorship-idUSKCN1U022E)

 

Maduro ratified General Padrino as Defense Minister

Nicolas Maduro on Sunday announced he will maintain Defense Minister General Vladimir Padrino in his post, following months of rumors that top military brass would be replaced after a failed uprising in April. The Trump administration identified Padrino among the top officials involved in negotiations with opposition leader Juan Guaido to create a transition government on April 30, in response to the country’s economic meltdown. Since then, General Padrino has publicly professed loyalty to Maduro along with the majority of the armed forces, which are seen as the main reason why Maduro held on to power despite a hyperinflationary collapse. (Reuters, https://www.reuters.com/article/us-venezuela-politics-military/venezuelas-maduro-ratifies-padrino-as-defense-minister-idUSKCN1U305G)

 

OP-ED: Will more talks that do not include the military resolve Venezuela’s crisis?

Representatives from Venezuelan President Nicolás Maduro’s government and the opposition are expected to meet this week in Barbados for another round of talks mediated by Norway. Previous discussions to end the country’s ongoing political crisis have ended in deadlock. The talks so far have involved two parties: Maduro’s government, which still controls state institutions largely due to military backing; and the opposition led by Juan Guaidó, who is recognized as Venezuela’s acting president by more than 50 countries. Guaidó, like many in the opposition, is skeptical of dialogue. Maduro’s critics see it as a stalling tactic. What to expect: Guaidó has demanded a solution this time, but the talks could again be limited by the two-party approach, said Moises Rendon, the associate director of the Americas program at the Center for Strategic and International Studies. “The new round of negotiations has a flaw that hasn’t been addressed in the last rounds: who is representing Maduro’s government and who is representing Guaidó’s government,” Rendon said. “I don’t think it’s going anywhere, because you don’t have the full representation of all the forces within the Maduro regime”—including the military.” Last week, the United Nations released a report alleging thousands of extrajudicial killings carried out by Venezuelan special forces over the past 18 months. “That will help on the leverage of the Guaidó side,” Rendon said. But it could have limited impact on this week’s negotiations. “The [U.N.] report did not go that far in terms of connecting the human rights violations they described to the Maduro government,” he added. “It’s not shedding light on who’s responsible.” (Foreign Affairs: https://foreignpolicy.com/2019/07/09/another-round-of-talks-for-venezuela-maduro-guaido-iran-europe-trump-uk-darroch/)

 

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.

 

June 27, 2017

International Trade

130 containers of food, medicine and personal care products arrived at La Guaira port from Cartagena, Colombia, aboard the MAERK WISMAR. This cargo includes cooking oil, rice, beans, sugar, spaghetti, corn flour, tuna, milk, mayonnaise, tomato sauce, toilet paper, diapers, shampoo, brushes, soap, sanitary napkins and medicine. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=37426; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/arribaron-a-la-guaira-130-contenedores-con-aliment.aspx)

 

Logistics & Transport

DHL restores service to Venezuela

DHL Express Venezuela has reestablished its import and export operations here, says DHL Venezuela president César Ramírez, who confirmed the arrival of a special company Boeing 737flight from Panama. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/negocios/empresas/dhl-normaliza-su-servicio-en-venezuela.aspx#ixzz4lCKw38fZ)

 

Oil & Energy

Venezuela oil price crashes through US$ 40

The price Venezuela receives for its mix of medium and heavy oil fell 4.1% to its lowest point since the coordinated OPEC supply freezes were announced in November. According to figures released by the Ministry of Petroleum and Mining, the average price of Venezuelan crude sold by PDVSA during the week ending June 23 fell to US$ 39.23, down US$ 1.66 from the previous week's US$ 40.89. As per Venezuelan government figures, the average price in 2017 for Venezuela's mix of heavy and medium crude fell to US$ 43.77. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2438826&CategoryId=10717)

 

Crisis-stricken Venezuela looks to import fuel

Venezuela is seeking more than 13 million barrels of fuel imports by the end of the year, which constitutes about a third of what the nation needs annually. Refineries are operating at less than 50% of their installed capacity—which is 3.1 million bpd—due to insufficient supplies of crude oil and to insufficient maintenance. Refinery maintenance is being overlooked as the state oil company focuses its efforts on producing enough oil to repay debts accumulated over the last few years mainly to China and Russia amid the oil price crash. Venezuela pumped 1.95 million bpd as of this April, according Caracas, production in April averaged 2.19 million bpd. Whatever the actual number, it’s below the average of 2.31 million bpd from April 2016. The decline is not huge, but it is significant in the context of the oil-for-loan deals and the capacity utilization rate of Venezuelan refineries. It is likely that Caracas will seek to import more fuels to satisfy its daily needs of 200,000 bpd. (Baystreet: https://www.baystreet.ca/articles/commodities.aspx?articleid=31056)

 

Venezuela lost over 200,000 bpd of oil production in 2017

According to opposition Congressman and economist José Guerra, Venezuela is in the worst of the worlds, by losing market and with low prices in a context where the government shut foreign financing. The chair of the Standing Committee of Finance and Economic Development of the Venezuelan National Assembly (AN), José Guerra, warned that in the middle of the political standoff, Venezuelans are not aware that the economic issue is worsening at fast pace. Guerra explained that two elements contribute to exacerbate the economic crisis in Venezuela: “first, the concomitant fall of oil production and prices; second, the pronounced depreciation of the bolivar.” (El Universal, http://www.eluniversal.com/noticias/daily-news/guerra-venezuela-lost-over-200000-bpd-oil-production-2017_658331)

 

Portugal investigates fraud linked to PDVSA funds

Portugal is investigating alleged appropriation of funds belonging to Venezuelan state oil company PDVSA that were channeled through now-defunct Portuguese bank Banco Espirito Santo between 2009 and 2014, PDVSA said on Saturday. PDVSA's reputation has been tarnished in recent years by high-profile corruption investigations including guilty pleas by two U.S.-based contractors who authorities said ran a US$ 1 billion corruption scheme associated with PDVSA contracts. Venezuela's opposition-led Congress last year said about US$ 11 billion in funds went missing at PDVSA while Rafael Ramirez, currently Venezuela's U.N. envoy, was at the helm from 2004 to 2014. Ramirez slammed the report as "irresponsible lies." (Reuters, http://www.reuters.com/article/us-venezuela-pdvsa-idUSKBN19F0SL; El Universal, http://www.eluniversal.com/noticias/daily-news/portugal-spain-probe-into-diversion-pdvsa-funds_658327)

 

Commodities

Venezuelan families now pay 4 times as much for food, reduce intake

According to the prestigious CENDES think tank within the Venezuelan Teachers Federation, families here must now pay 4.3 times as much for the same basic products they were able to purchase last year, as prices rise and their purchasing power shrinks. Last month, families needed 15.2 minimum wages to buy the 58 components of the basic food product basket. This means a minimum wage covers barely 6.6% of the basket. Venezuelan family daily intake has become lower due to scarcity and high prices. They still have lunch, but do without breakfast or dinner on a daily basis. More in Spanish:  (El Nacional; http://www.el-nacional.com/noticias/economia/ano-familias-pagaron-cuatro-veces-mas-por-cesta-alimentaria_188978; http://www.el-nacional.com/noticias/economia/familias-reducen-porciones-comida-por-escasez-altos-precios_189009)

 

Economy & Finance

Venezuela in talks with NOMURA to sell fixed-income securities -sources

Venezuela's central bank is seeking to sell fixed-income securities to NOMURA Holdings Inc as a way of raising cash amid an economic crisis, an opposition deputy and a finance industry source said on Thursday, only weeks after a similar deal embroiled the Japanese bank in controversy. Opposition legislators this month publicly chided NOMURA for participating along with GOLDMAN SACHS Group Inc in a US$ 2.9 billion bond operation that helped the government of President Nicolas Maduro bolster the country's flagging foreign currency reserves. The talks revolve around US$ 710 million in securities known as credit-linked notes that were issued by NOMURA to Venezuela in 2008, according to the finance industry source, as a way for the then-prosperous country to invest its plentiful oil revenue. Venezuela, struggling under triple-digit inflation and Soviet-style product shortages as its socialist economy unravels, is willing to sell the notes back to NOMURA at a discount before the notes mature. "NOMURA is buying back notes that are held by the central bank," opposition legislator Angel Alvarado, who is part of a broad effort to pressure global banks not to provide financing to Venezuela, told Reuters. "The government is continuing with its desperate strategy of selling off assets because its cash-flow limitations." Venezuela's Central Bank Governor Ricardo Sanguino denied it was in negotiations with NOMURA, but Venezuela has recently negotiated such deals through intermediaries. Alvarado on Thursday published letters by Congress chief Julio Borges to U.S. regulatory agencies including the Securities and Exchange Commission (SEC) asking for a probe into Nomura and Goldman for the May bond operation. "The pricing and spread paid by each institution to Dinosaur (an intermediary) suggest price fixing and above-market commissions," read the letters. "We believe there is enough evidence to open an investigation against GOLDMAN SACHS and NOMURA." Following the uproar over its purchase of PDVSA bonds in May, GOLDMAN issued a statement that cited the presence of an intermediary in the operation, noting that it therefore did not directly do business with the Venezuelan government. Borges' letters describes this argument as "subterfuge" because neither institution has the financial resources for such an operation. (Reuters: https://www.reuters.com/article/us-venezuela-nomura-hldgs-idUSKBN19D2GE)

 

Venezuelan dictator’s Wall St. lifeline

Wall Street continues to trade Venezuelan oil bonds issued in 2014, helping to get the country out of debt, writes Jeff Jacoby for Townhall. The problem: These “hunger bonds” line the pockets of investors while “Maduro’s access to cash and his grip on power remain intact.” Though Jacoby is uneasy with the free world’s role in boosting an oppressive regime, he admits there are no easy answers: “Cutting off Maduro’s access to cash might lead to even worse repression and hunger. Propping up his regime by buying Venezuelan debt could have the same effect.”

http://nypost.com/2017/06/26/venezuelas-wall-street-lifeline-baseballs-head-games-and-more/

 

Rift at Venezuela broker-dealer TORINO leads to founder's exit

The co-founder of one of the most respected broker-dealers focused on Venezuela left the company amid a disagreement about the firm’s direction. Jorge Piedrahita departed New York-based TORINO Capital on June 13 after he unsuccessfully pushed to expand its businesses in Argentina, Brazil and Central America to colleagues who favored an all-in approach on Venezuela, which has some of the world’s riskiest and highest yielding bonds amid a dearth of official data that makes any insights on the country more valuable. The emerging-market investment bank hired Francisco Rodriguez, a former Bank of America Corp. economist and one-time head of Venezuela’s congressional budget office, last year to beef up its research on the chaotic, oil-rich nation. The firm, which has about a dozen employees in New York, also includes five research assistants in Caracas who assist Rodriguez with his reports on Venezuela’s ever-changing politics, default odds and foreign-exchange systems. (Bloomberg: https://www.bloomberg.com/news/articles/2017-06-27/rift-at-venezuela-broker-dealer-torino-leads-to-founder-s-exodus)

 

Whoops! CITIGROUP's valuation flub leads to a quick rating reversal

First, there were Goldman Sachs’s “hunger bonds.” Now, Venezuela’s giving another Wall Street bank fits. CITIGROUP cut shares of Latin American e-commerce behemoth MERCADOLIBRE to neutral just four days after calling them a buy. Turns out analyst Paola Mello had overestimated its valuation due to a mixup about the outlook for long-term revenue growth in Venezuela. One sympathizes with Mello. It’s incredibly difficult to make forecasts related to Venezuela with any degree of certitude at the moment, given that annual inflation is estimated at 600%, businesses must cope with myriad official and unofficial exchange rates, and the country has been wracked with deadly anti-government protests amid food shortages. (Bloomberg, https://www.bloomberg.com/news/articles/2017-06-23/whoops-citigroup-valuation-flub-brings-quick-reversal-on-rating)

 

Politics and International Affairs

Pressure mounts on Maduro

On Monday, citizens, students, politicians and activists shut down the streets of Caracas and several cities around Venezuela, following a call by the Democratic Unity opposition coalition to interrupt all traffic for 4 hours to protest government repression and the call for what they call a “fraudulent” and unconstitutional National Constituent Assembly. National Guard and Police tried to curtail their activities by gassing protesters, who quickly reassembled. A group of workers were arrested as they tried to block the main thoroughfare in Caracas, the Francisco Fajardo thruway. During the evening violence, burning and looting broke out at several locations, particularly in the city of Maracay, a military bastion around 70 miles West of Caracas, which was formerly a pro-Chavez stronghold. Demonstrators are holding rallies on an almost daily basis to demand Maduro’s resignation and new elections. Thousands of anti-government protesters once again took to the streets on Saturday in opposition organized marches to military bases around the country to demonstrate against the killing of an unarmed 22-year-old activist who was shot dead by a military police sergeant on Thursday. David Vallenilla, 22, was shot at close range by a military police sergeant, apparently with rubber bullets, as youths tried to pull down the fence around an air force base in Caracas and threw rocks at officials who had fired tear gas from inside. His father, describing himself as a former boss and friend of President Nicolas Maduro on Friday urged an investigation into the killing. Demonstrators rallied outside La Carlota air base where the protester was shot dead – and were greeted with tear gas and rubber bullets, sending protesters running. Though most of the demonstrators protested with banners and slogans, another small group entered the air base throwing rocks and Molotov cocktails after breaking through the railings around it. Maduro warned on Saturday, during a speech marking Independence Day, that some of those detained would face a military trial and would be “severely” punished. “Desperation, hatred, and fury thrive among the enemies of the fatherland,” said Maduro, describing the OAS’s inability to produce a statement on Venezuela as a victory for the country. Seventy-five people have died in the protests over the past three months. (Euro News: https://uk.news.yahoo.com/pressure-mounts-venezuela-maduro-005433128.html9; http://www.euronews.com/2017/06/25/clashes-in-caracas-as-venezuela-opposition-rally-over-activists-death; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2438824&CategoryId=10717; Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKBN19E2G8; The Atlanta Black Star: http://atlantablackstar.com/2017/06/26/protests-continue-unabated-politically-torn-venezuela/; MSN: http://www.msn.com/en-gb/video/other/venezuela-students-protest-against-bid-to-rewrite-constitution/vp-BBDk45E; and more in Spanish: Notiminuto: http://www.notiminuto.com/noticia/en-fotosi-asi-transcurre-trancazo-en-caracas/)

 

Heroes or agitators? Young lawmakers on Venezuela's front line

A group of young Venezuelan lawmakers has risen to prominence on the violent front line of anti-government marches that have shaken this country for three months, bringing 75 deaths. One was knocked off his feet by a water cannon. Another was pushed into a drain. Most have been pepper-sprayed, tear-gassed, beaten and hit by pellet shots. On the streets daily leading demonstrators, pushing at security barricades and sometimes picking up teargas canisters to hurl back at police and soldiers, the energetic National Assembly members are heroes to many opposition supporters. The dozen or so legislators, all in their late 20s or early 30s, belong mainly to the Justice First and Popular Will parties, which are promoting civil disobedience against a president they term a dictator. They march largely without protective gear - unlike the masked and shield-bearing youths around them - though supporters and aides sometimes form circles to guard them. They do not receive salaries since funds to the National Assembly were squeezed, living instead off gifts from relatives and friends. And some still reside at home with parents. Some have dubbed the band of lawmakers "the class of 2007" for their roots in a student movement a decade ago that helped the opposition to a rare victory against Maduro's popular predecessor Hugo Chavez in a referendum. State airlines refuse to sell them tickets, and private carriers are under pressure to do the same, meaning they cannot fly around the country. Some have also had passports confiscated or annulled, blocking foreign travel. Their mantra is peaceful protest, and indeed when marches have not been blocked - such as to a state TV office and the Catholic Church headquarters - there has been no trouble. But some admit to tossing back gas canisters or throwing the odd stone, and there has been criticism the legislators have not done enough to restrain violence within opposition ranks, from burning property to lynching someone. But to President Nicolas Maduro's socialist government, they are the chief "terrorists" in a U.S.-backed coup plot aimed at controlling the vast oil wealth of the nation. Officials accuse the lawmakers of paying youths and even children as young as 12 to attack security forces, block roads and burn property. They have threatened to jail them. The lawmakers scoff at that, saying they now carry the nation's dreams for change while an ever-more desperate Maduro is clinging to power against the majority's will. (Reuters, http://www.reuters.com/article/us-venezuela-politics-lawmakers-idUSKBN19H0E8)

 

Switch in military leadership seen as bolstering PSUV faction

President Nicolas Maduro has appointed Admiral Remigio Ceballos Ichaso to replace Defense Minister General Vladimir Padrino Lopez as head the country's Strategic Operational Command, a position that gives Ichaso operational control of the Venezuelan armed forces. A Stratfor source has said that Diosdado Cabello, an influential powerbroker in the country, influenced Maduro's decision. The move made June 20 could be an attempt by Cabello to shield himself and his allies in the ruling United Socialist Party of Venezuela (PSUV) from pressure by members of the armed forces. In his new position, Ichaso gains the power to issue orders directly to the country's eight lower-level regional defense zone commanders. Padrino Lopez remains defense minister. The PSUV has been riven into opposing factions that disagree on a constitutional rewrite ordered by Maduro. A core of ruling party elites allied with the president intends to rewrite parts of the constitution to cement their hold over the country's institutions amid Venezuela's deepening economic crisis. The country's political opposition, along with the dissident Chavistas, perceives the involvement of the armed forces, whether through political pressure or a coup, as vital to ending the constitutional redo. Therefore, it's not surprising that, faced with a dissident movement within his own party and an increasingly disloyal military, that Cabello would try to shield himself through his influence with the military. It's customary for the Venezuelan armed forces to reshuffle its commanders at this time of year, and Cabello appears to have used his influence in this process to protect himself. Still, Venezuela's economic crisis is set to grow more intense, and political confrontation by the opposition and dissident Chavista faction against the government will only increase. As the constitutional rewrite process proceeds, it will trigger additional protests, and the armed forces' loyalty will remain in doubt despite the PSUV's influence in appointing its leadership. (Stratfor: https://worldview.stratfor.com/article/venezuela-switch-military-leadership-seen-bolstering-psuv-faction)

 

Maduro invites 5 nations to facilitate talks with opposition

President Nicolas Maduro has announced that representatives of Uruguay, the Dominican Republic, El Salvador, Nicaragua and Saint Vincent & Grenadines will be arriving within the next few weeks, to help create a communications thread between his regime and the opposition so that they can return to a dialogue. At the same time, he said Venezuela could return to the Organization of American States (OAS) if Secretary General Luis Almagro resigns. In referring to international rejection of his National Constituent Assembly, Maduro said “only we Venezuelans decide our affairs”. More in Spanish: (Notiminuto: http://www.notiminuto.com/noticia/pdte-maduro-la-oea-que-se-olvide-de-venezuela/

 

OAS head offers to quit if Maduro holds free elections, frees political prisoners

After President Nicolas Maduro suggested this week Venezuela could return to the Organization of American States (OAS) if its Secretary General Luis Almagro stepped down, Almagro hit back: “Here is my response: I will resign from the General Secretariat the day that free, fair and transparent national elections are held without impediments,” Almagro said in a video message posted on Twitter. Almagro conditioned his resignation offer on a long list of demands, including free elections, the release of hundreds of political prisoners, respect for the National Assembly, a guarantee of Supreme Court independence and the opening of a humanitarian aid channel into the country. Almagro recognizes that the list is long. “Regrettably, there are many things that are necessary for the freedom of Venezuela. In exchange for the freedom of Venezuela, I offer my post. Because we will never resign, we will not resign, until we have in our hands the freedom of Venezuela,” he says near the end of the video. Maduro offered no immediate response to Almagro’s offer. But he has labeled the OAS a puppet of Washington, and he accuses opposition activists of sowing chaos to plot a coup against him. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2438790&CategoryId=10717; Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKBN19F0OU; Euro News: https://uk.news.yahoo.com/pressure-mounts-venezuela-maduro-005433128.html9)

 

Attorney General says Venezuela has become a “police state”

Attorney General Luisa Ortega Díaz says that the judiciary’s subservience to the secret police has made this country into a “police state”, not one where citizen rights are upheld. “They have put the cart before the horses here, the SEBIN (Bolivarian Intelligence Service) dictates guidelines to the judiciary, and they obey. This is not the rule of law, this is a police state”, she says. Ortega adds that the Supreme Tribunal (TSJ) here violated the National Assembly through a set of rulings that disrupt constitutional order, and that “if the Constituent Assembly consolidates itself, Venezuelans will undergo the darkest times of all our republic’s history. If this project goes through, democracy will be definitely undone.”  More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/politica/fiscal-ortega-diaz-afirma-que-venezuela-es-un-estado-policial)

 

Maduro’s son, wife, and closest supporters nominated to National Constituent Assembly

Nicolás Ernesto Maduro Guerra, the 27-year-old only son of President Nicolás Maduro, expects to become one of the 545 members of the National Constituent Assembly that Maduro proposes to elect on July 30^th, to rewrite Venezuela’s constitution. Maduro Guerra, who has held several public positions in his father’s administration since 2013, joins First Lady Cilia Flores, former Foreign Minister Delcy Rodríguez, legislator Captain Diosdado Cabello, and several other Maduro confidants in the roster of pro-regime nominees for the proposed Assembly. The Democratic Unity opposition coalition has refused to take part in the process, calling it a “fraud”. More in Spanish: (Notiminuto: http://www.notiminuto.com/noticia/hijo-de-maduro-se-postulo-a-la-asamblea-constituyente/

 

Venezuela risks becoming Caribbean 'North Korea,' former leaders say

Two former Latin American presidents said the world is running out of time to find a solution to the crisis in Venezuela as President Nicolas Maduro aims to consolidate power over the country. Despite widespread protests, Maduro’s push to “put a group of his friends in what is called a ‘constituent assembly,’ would be the end of democracy and the annihilation of the Republic of Venezuela,” said Jorge Quiroga, former president of Bolivia. That election “will install a Soviet state in Venezuela, liquidate democracy, end the Congress, cancel elections and turn Venezuela into a sort of Caribbean ‘North Korea’,” he said. Joined by former Colombian President Andres Pastrana, Quiroga spoke to journalists at the Vatican on 23rd June on the deteriorating situation in Venezuela and attempts to diffuse the crisis following their meeting with Cardinal Pietro Parolin, Vatican secretary of state. (The Catholic Universe: http://www.thecatholicuniverse.com/venezuela-risks-becoming-caribbean-north-korea-former-leaders-say-13568)

 

Ecuador ex-President claims Venezuela leader is non-violent

Former Ecuadorian President Rafael Correa claims Venezuela’s President Nicolas Maduro is a good person who is non-violent. Asked about violence stemming from a political and economic crisis in Venezuela and nearly daily street protests against Maduro’s leftist government, he replied: “Oftentimes the violence comes from the right. There are groups there that want to create chaos and violence, but what you read in the newspapers is that the repression and violence comes from the security forces, from the government. And that’s not the case”. He claimed Venezuela is under permanent attack from foreign powers, saying the assault was media-driven and economic in nature and was doing that country a great deal of harm. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2438789&CategoryId=10717)

 

US urges global action on "tragic situation" in Venezuela

The United States mission at the United Nations (UN) demanded on Thursday “action” in view of the “tragic situation” in Venezuela. Venezuelan "people are starving while their government tramples their democracy," said US Ambassador to the UN, Nikki Haley, in a statement. Her appeal was made shortly after the end of the meeting in Cancún, Mexico, of the Organization of American States (OAS) General Assembly, without any resolution intended to cancel a national constituent assembly attempted by the Venezuelan government to re-write the constitution. (El Universal, http://www.eluniversal.com/noticias/daily-news/urges-global-action-tragic-situation-venezuela_658325)

 

The Netherlands prepare to evacuate citizens in Venezuela

The Netherlands government is preparing to evacuate Dutch citizens living in Venezuela due to social unrest here. Foreign Minister Bert Koenders and Kingdom Affairs Minister Ronald Plasterk have sent a joint letter to the Dutch Parliament expressing their deep concern and have for some time advised Dutch citizens to avoid unnecessary travel to Venezuela. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/noticias/internacional/gobierno-holandes-prepara-evacuacion-de-sus-ciudadanos-que-habitan-en-venezuela)

 

Historian claims Venezuela's government hopes for international sanctions

Historian Agustin Blanco Munoz of the Central University of Venezuela says it is unlikely that international pressure can make the Maduro regime restore the rule of law. He compares the Venezuelan government to Fidel Castro's communist regime in Cuba, which was effectively expelled from the OAS in 1962 and hit with an expanded trade embargo. "The OAS helped them stay in power another 55 years," he said. "Had the US bombarded Cuba with food and medication, would it be different today? Did the supply shortage actually harm Castro?" That is why Blanco Munoz does not believe that Maduro and his supporters would be upset about sanctions. In fact, Venezuelan vice-president Diosdado Cabello had announced before the OAS meeting: "They would do us a favor." Blanco Munoz doubts that the OAS would impose sanctions against Venezuela, although he adds: "But if they do, PSUV leaders will throw a party." (DW: http://www.dw.com/en/venezuelas-government-hopes-for-international-sanctions/a-38174996)

 

His country in turmoil, Royals’ Escobar balances baseball with thoughts of Venezuela

Alcides Escobar has never endured a season like this. He has never performed this poorly at the plate, even after years of declining offense. Never felt the mental weight of a slump this deep. Never felt the pressure of looming free agency, either. And yet, when Escobar discusses the challenges of 2017, he is not just talking about the batting average that finally surpassed .200. On most nights, when the game is over and the at-bats are done, Escobar returns to the clubhouse and grabs his phone, scouring the latest news from back home. “It’s hard,” Escobar said in a recent interview in Spanish. “When you get to the stadium you have to focus on your job. But when it’s done, you start looking at Twitter and Instagram and reading the news and your mind just goes back to Venezuela. It’s where I was born and raised, I always offer support to my people. I know something better will come.” Escobar, of course, is not alone. On opening day, there were 77 Venezuelan players on major-league rosters, more than 10% of the league. Many of them are among the game’s greatest stars, from Detroit’s Miguel Cabrera to Houston’s Jose Altuve to Salvador Perez, Escobar’s friend and teammate. Across baseball, more and more Venezuelan players have begun speaking out against the violence against protesters. Yet many remain reluctant to publicly criticize the government. Escobar has sought to occupy a space in the middle. Every day, he retweets articles about the protests. In May, Escobar spoke about his country in a video for La Vida, a branch of the Hall of Fame that celebrates Latin baseball. “I hope it doesn’t become worse,” he said, looking toward the camera. “I hope that we don’t see more deaths, that we don’t have more violence.” The message came a month after Perez addressed the situation in an Instagram post, stating that he was neither a “Chavista” — a supporter of former president Chavez — nor in opposition. (The Kansas City Star: http://www.kansascity.com/sports/mlb/kansas-city-royals/article158334814.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.