February 17, 2015

International Trade

 

Venezuelan trade with countries of the Persian Gulf has not taken off

Nations of the Persian Gulf and Member States of the Organization of Petroleum Exporting Countries (OPEC) have approached Venezuela as a natural ally because of their energy relationship. But so far the agenda has remained a letter of intent and the signing of agreements while trade of goods plummets and the balance of trade continues favoring those nations. Most members of the Gulf Cooperation Council (GCC) set up diplomatic relations with Venezuela in the seventies. Over the past six years, Caracas has boasted a "unique partnership" with Saudi Arabia, UAE, Kuwait, Iraq, Qatar and Iran, as OPEC Member States in lobbying for oil fair prices and against "imperialism."
In fact, trade with these oil producing countries has been diving since 2008. While Venezuelan imports are 82% over exports, Venezuela has failed to attract the crown jewel of some of those petro-monarchies: their billionaire investment sovereign funds, which have been cashed in on by Ecuador and Brazil by means of key projects. (El Universal, http://www.eluniversal.com/economia/150214/venezuelan-trade-with-countries-of-the-persian-gulf-has-not-taken-off)

 

 

Oil & Energy

 

Venezuela oil price rises significantly for 2nd week

Venezuela's Ministry of Energy and Petroleum reports that the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending February 13 rose significantly for the second straight week. Venezuela's weekly oil basket jumped again for the second straight week, bouncing off of its lowest level since 2009.
According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending February 13 was US$ 47.05, up US$ 2.41 from the previous week's US$ 44.64. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2374190&CategoryId=10717; El Universal, http://www.eluniversal.com/economia/150213/venezuelan-oil-ends-at-usd-4705-per-barrel)

 

 

Commodities

 

SIDOR’s Class B shareholders called for a meeting at Las Banderas Square in Alta Vista next Tuesday, February 24, to pressure the CVG, as they have received no response on resuming the payment process of shares. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42783&idc=3)

 

 

Economy & Finance

 

Finance Minister says new gasoline prices coming; Central Bank President adds "conditions are ripe" for increase

Finance Minister General Rodolfo Marco says Venezuela will announce a change of policy soon on gasoline, signaling the government is moving ahead with a long-awaited hike in the world's cheapest fuel.  "Soon there will be important announcements on the issue of gasoline," Marco said in an interview...."A piece of candy cannot cost more than a liter of gasoline." At the same time, Nelson Merentes, President of the Central Bank of Venezuela (BCV) says that "the conditions are ripe" to increase the price of gasoline, without providing further details. He added that for over 100 years, Venezuela has adopted a rent-seeking economic model based on oil exports. From his point of view, considering the current slump in oil prices "is a good time to meet with productive sectors with a view to improving the production capacity and move toward an exports model." (Reuters, http://www.reuters.com/article/2015/02/14/us-venezuela-economy-fuel-idUSKBN0LI04N20150214; El Universal, http://www.eluniversal.com/economia/150216/president-of-central-bank-the-conditions-are-ripe-for-gasoline-increas)

 

Central Bank reports 2014 inflation was 68.5%

Venezuela's inflation rate rose to 68.5% in 2014, with consumer prices rising 5.3% in the month of December, says the Central Bank. The largest increases in December were in food and non-alcoholic beverages with an increase of 7.5%, followed by restaurant and hotel service with a rise of 7.4%. (Reuters, http://www.reuters.com/article/2015/02/14/venezuela-inflation-idUSL1N0VN2H720150214; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2374202&CategoryId=10718)

 

Currency devaluation further hurting multinational company profits

A massive effective devaluation of Venezuela's bolivar currency will likely badly dent 2015 earnings at a swath of major U.S. companies. The decision, announced late on Thursday, would almost wipe out the US$ 7.1 billion of Venezuelan monetary assets currently held on the books of 10 large American companies. At the new exchange rate of about 170 bolivars to the dollar, the value of those assets would drop by 93% to just $421 million, according to a Reuters analysis of regulatory filings. Currently those assets are valued based on the main official rate of 6.3 bolivars to the dollar, or a second rate at 12 bolivars. The Venezuelan authorities only allow a limited amount of business to be done at those rates as the country suffers from a shortage of available dollars, and some companies had recently taken big charges after valuing their assets at a third exchange rate of about 50 bolivars to the dollar, rather than the 6 or 12. However, that part of the system has now been replaced with the new free-floating rate, which was last quoted on Friday at 174 (even weaker than 170 on Thursday). That puts even the companies who had started to use 50 in a position where they may have to take another hit. The move represents an effective devaluation of more than 70%. (Reuters, http://www.reuters.com/article/2015/02/14/us-venezuela-economy-currency-analysis-idUSKBN0LI00W20150214)

 

Telefonica cuts Venezuela asset value by US$ 3.2 billion on bolivar

Telefonica SA, the biggest European phone carrier in Latin America, reduced the value of its Venezuelan assets by 2.8 billion euros (US$ 3.2 billion) by switching to a lower exchange rate for last year. Telefonica will calculate its Venezuelan figures at 50 bolivars to the dollar when reporting earnings for 2014, the Madrid-based operator said Monday in a regulatory statement. That’s 76% lower than the 12 bolivars per dollar used in accounts earlier last year. (Bloomberg, http://www.bloomberg.com/news/articles/2015-02-16/telefonica-cuts-venezuela-asset-value-by-3-17-billion-for-2014)

 

ECLAC: Venezuela going in the "right direction" with new FOREX system

The Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, said the implementation of the new Foreign Exchange Marginal System (SIMADI) in Venezuela, which implies a partial devaluation of the local currency "goes in the right direction. Now we are going to see its implementation, the challenges it will bring," said Bárcena. However, the ECLAC Executive Secretary said that having three different foreign exchange rates was "complex," and she feels it is not the ideal situation. (El Universal, http://www.eluniversal.com/economia/150216/eclac-venezuela-goes-in-the-right-direction-with-new-forex-system)

 

Venezuelan government is not ready to face the crisis because of its ideological stand, says US Chargé d’affaires in Caracas Lee McClenny: "Repression, wider controls and more government involvement in (economic) processes is not going to help Venezuela”. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=42789&idc=1)

 

German FM: "Venezuela needs deep reforms to overcome the crisis"

Venezuela needs "deep reforms to overcome the crisis," according to German Foreign Minister, Frank-Walter Steinmeier. "I see the situation in Venezuela with great concern. The economic situation is extremely difficult and requires quick and courageous action by the government," Steinmeier said in an interview with Colombian newspaper El Tiempo, of Bogotá. (El Universal, http://www.eluniversal.com/nacional-y-politica/150216/german-fm-venezuela-needs-deep-reforms-to-overcome-the-crisis)

 

FORBES: God's letter to Maduro and what went wrong with the Venezuelan economy

After a worldwide trip to Russia, China, Iran and some Arab states seeking economic aid, Mr. Maduro simply announced to all: “God will provide.” The humorist Laureano Márquez (who belongs to the Venezuelan opposition) produced a widely read public letter purportedly from “God” in which He says: “I already provided you with fertile farmland, plains for the raising of cattle, forest tracts where you can grow cacao and coffee, major navigable rivers, beaches for tourism. … Underground I gave you the largest oil reserves in the planet and … gold, aluminum, bauxite, diamonds … 15 years of the greatest oil bonanza in the history of humanity … ”  Further, Mr. Márquez’s “God” cannot comprehend how the Chavistas have managed to ruin Venezuela’s economy. Such is the divine personage’s concern that He ends the letter with: “I’m sorry, my child. I have to tell you that your request for heavenly financing has also failed.” The crash in oil prices has devastated Venezuela’s troubled economy, which was already deeply undermined by a hugely corrupt and spendthrift administration. Caracas cannot continue liberally dispensing oil to Cuba and other Latin American countries favored by Chavismo. And Mr. Maduro lacks the charisma and political agility of his predecessor. But that’s not really true. The real problem is because they’re messing with markets. That there’s nothing wrong with the original stated goal, of making Venezuela a little less unequal, or of improving the living standards of the poor. Rather, it’s the way they tried to do this that was the mistake. Instead of just giving the poor more money to buy things in the market they decided to fix market prices. And that way disaster lies and it is this that has so screwed the Venezuelan economy. An attempt to have a non-market economy is always going to end in the most fearsome disaster, whatever else happens. All the oil price collapse has done is bring that near total breakdown forward a bit in time. The attempt to have a non-market economy was always going to end in these sorts of tears. (Forbes, http://www.forbes.com/sites/timworstall/2015/02/16/gods-letter-to-maduro-and-what-went-wrong-with-the-venezuelan-economy/)

 

 

Politics and International Affairs

 

Military pledge “unconditional” support for Maduro while US dismisses coup plot charges as "ridiculous"

Defense Minister General Vladimir Padrino says Venezuela’s armed forces remain squarely behind the government of President Nicolas Maduro, after authorities claimed to have thwarted a planned coup. The military “reiterates its unconditional support and absolute loyalty,” Padrino said on live television, flanked by the armed forces chiefs. He said his statement was intended to convey the armed forces’ “resounding rejection” of the conduct of several military officers arrested for their role in the purported plot to topple the leftist government. Maduro asked Venezuela's armed forces to be on guard with the US Embassy in Caracas, which he accused of contacting military officers to take part in a coup to overthrow him. State Department spokesperson Jen Psaki quickly retorted that "these latest accusations, just as all the latest of this kind, are ridiculous"; and added that “the Venezuelan government should stop trying to distract attention away from their nation's economic and political problems and focus on finding real solutions through democratic dialogue among Venezuelans...should respect human rights of its citizens and stop trying to intimidate its political opponents". (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2374158&CategoryId=10717; and more in Spanish: Infolatam, http://www.infolatam.com/2015/02/15/eeuu-ve-ridiculas-las-acusaciones-de-maduro-sobre-nexos-con-intento-de-golpe-2/; http://www.infolatam.com/2015/02/15/maduro-pide-fuerza-armada-estar-alerta-con-embajada-de-ee-uu-en-venezuela/)

 

López father reports son in isolation

The father of opposition leader Leopoldo López reports that his son - who bears his same name - is now "totally isolated" after being moved to a smaller cell by military officers who also destroyed all of this belongings. He said the move "took almost seven hours" without no presence by the Attorney General's office as required by law. He said they also broke Venezuelan laws by preventing his wife, children and mother from seeing him. More in Spanish: (Infolatam, http://www.infolatam.com/2015/02/16/padre-del-opositor-venezolano-lopez-dice-que-su-hijo-esta-aislado-en-prision/)

 

Spain plans to seek extradition of former member of ETA in Venezuela

The Spanish government is considering asking extradition from Venezuela of former ETA leader José Ignacio de Juana Chaos, under investigation for the crime of praising terrorism, after newspaper El Mundo published pictures of De Juana Chaos in Venezuela. "We will assess it. If appropriate and the judicial authority considers it appropriate, we would obviously request his extradition," Spain's Interior Minister Jorge Fernández Díaz told media. Fernández Díaz's remarks came after newspaper El Mundo published a report with photos showing the former leader of ETA in the town of Chichiriviche, northwestern Falcón state in Venezuela, where he allegedly manages a liquor store. (El Universal, http://www.eluniversal.com/nacional-y-politica/150216/spain-plans-to-seek-extradition-of-former-member-of-eta-in-venezuela; Fox News, http://www.foxnews.com/world/2015/02/16/spain-asks-interpol-to-check-if-wanted-armed-basque-group-member-is-living-in/)

 

 

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

November 02nd, 2012

Economics & Finance

Chávez predicts Venezuela's economy to grow at over 5%

During a press conference at Miraflores Palace, President Hugo Chavez said that, according to data from the Central Bank, Venezuela will continue to grow at the same pace it has for the past two years. "The numbers are going to be very positive, everything indicates we will continue to grow at over 5%", he said; and added that October inflation is below last year's. More in Spanish: (AVN, 11-02-2012; http://www.avn.info.ve/contenido/chávez-economía-venezolana-mantendrá-ritmo-crecimiento-5)

Venezuela to pay for SIDETUR nationalization

The Venezuelan government hasn’t dismissed workers from the company known as SIDETUR after it took control of its facilities, according to authorities. SIDETUR is a unit of Caracas-based steel company Siderurgica Venezolana SIVENSA. “We’ll fight anyone who tries to sabotage the nationalization process in court,” he said. “We’re going to determine a fair price and pay it.” (Bloomberg, 10-31-2012; Venezuela to Pay for Sidetur Nationalization; Fox News; http://www.foxnews.com/world/2012/10/31/venezuelan-official-says-shareholders-will-be-paid-fair-price-for-expropriated/)

Law on Fair Prices and Costs impacts profitability of companies

Businessmen indicate that enforcement of the Law on Fair Prices and Costs has hit profitability at production plants.

In an opinion poll conducted by the Venezuelan-American Chamber of Commerce and Industry (VENAMCHAM) of 137 companies, as many as 39.42% stated that the enforcement of the aforementioned law affected "profitability" negatively; 37.3% said, "There have been no changes;" and 28.47% said they were "searching a new cost model." (El Universal, 10-31-2012; http://www.eluniversal.com/economia/121031/law-on-fair-prices-and-costs-impacts-profitability-of-companies)

PDVSA announces payment of interest to bond holders

State-run oil company PDVSA announced to all holders of PDVSA 2017 bonds 2017 that interest accrued on such bonds for the year second half will be paid next November 2, and indicated all bond holders should contact the banks or the financial institutions where the bonds were purchased to get information about the status of the bonds and payment procedures. (El Universal, 10-31-2012; http://www.eluniversal.com/economia/121031/pdvsa-announces-payment-of-interest-to-bond-holders)

Consumption recovers while stocks fall

After an upward trend this year, the NIELSEN international consulting firm forecasts consumption growth at 4% in Venezuela by 2013. Their representative Pedro Manosalva says that after a five-year contraction in the food domestic consumption and personal care products, sales have increased by 7% this year, partially "due to lowered prices." Recovery was reported in "over half of the categories" included in the sample and "only 12% are still declining." The analyst outlined that the recovery of the volumes fluctuated from 2.4-6% between August and September. (El Universal, 10-31-2012; http://www.eluniversal.com/economia/121031/consumption-recovers-whereas-stocks-fall)

Commodities

Sale of oil byproducts to the US drops 43%

Venezuela's sales of oil byproducts to the United States have substantially declined amid deterioration of refineries and additional commitments to ship crude oil to allied countries, such as China. Statistics disclosed by the US Department of Energy, Venezuelan oil byproducts sales to the US averaged 52,000 barrels per day (bpd) from January to August 2012, down 43.4% from 92,000 bpd in the same period in 2011. In August 2012, crude oil shipments to the US rose by 17%, from 806,000 bpd to 943,000 bpd. However, a 5.7% decline was recorded in January-August 2012 compared to the same period in 2011, from 909,000 bpd to 857,000 bpd. (El Universal, 11-01-2012; http://www.eluniversal.com/economia/121101/venezuelas-oil-byproducts-sales-to-the-us-drop-43)

Sale of PDVSA byproducts in the free market stops after blast in Amuay

State-run oil company Petróleos de Venezuela (PDVSA) has stopped selling oil byproducts in the free market after the blast occurred two months ago in Amuay refinery, located in northwestern Falcón state. Since then, the refinery has been operating at half its capacity (333,000 barrels per day -bpd- out of 665,000 bpd). "There are no sales in the free market right now. As for byproducts, the few shipments are being sent only to China," a commercial operator reported. (El Universal, 11-01-2012; http://www.eluniversal.com/economia/121031/pdvsa-sale-of-byproducts-in-the-free-market-stop-after-blast-in-amuay)

Blackout hits Northwest Venezuela

A large power outage on Wednesday affected two northwestern Venezuelan states, Electrical Energy Minister Hector Navarro said. The blackout, the cause of which is not yet known, “is a significant failure” that reduced by 1 gigawatt the supply of electricity on the interconnected national power grid and affected the states of Lara and Yaracuy, Navarro told state-run TV channel VTV. He also said that “it would be irresponsible” to speculate about the cause of the outage at this time. (Latin American Herald Tribune, 10-31-2012; http://www.laht.com/article.asp?ArticleId=623969&CategoryId=10717)

International Trade

Imports feed consumption in Venezuela

Figures presented by the Central Bank of Venezuela (BCV) show that food production declined by 6.71% in July, 2012, compared to the same month in 2011. Between January and July 2012, the food sector in Venezuela shrank by 8.6%. Nevertheless, food, beverages and tobacco retail sales in specialized shops grew by 45.51% in July this year, in comparison with the same month in 2011. (El Universal, 11-01-2012; http://www.eluniversal.com/economia/121101/imports-feed-consumption-in-venezuela)

Logistics & Transport

China could apply cargo restrictions

The Ministry of Transport of China is studying the possibility of implementing a system that restricts cargo to Chinese flag vessels in order to assist government owned shipping firms. Specialized media report that "the Chinese government is considering a cargo reservation for transporting strategic and energy commodities on national flag vessels, in an attempt to rescue State shipping companies." According to Max Lin Tingyao Lloyd's List correspondent in Hong Kong, sources with the Ministry of Transport of China confirmed the possibility of booking charges, inspired by "long-standing practice of other countries." "This system will allow us to prioritize Chinese flag vessels to transport strategic goods". More in Spanish: (La Nación, http://www.lanacion.com.ar/1479119-china-podria-aplicar-la-reserva-de-cargas)

Politics

Chavez confirmed he will attend MERCOSUR meeting in Brasilia on December 7th, and says the nation is moving rapidly to take full advantage of the regional bloc’s potential. He made the announcement after meeting in Caracas with Brazilian Foreign Minister Antonio Patriota. The meeting was attended by Vice President and Foreign Minister Nicolás Maduro and Brazilian Industries Minister Alessandro Teixeira. Chavez said they are working quickly toward having a full agreement on a common external tariff by the time of the December meeting. He also called on the Venezuelan private sector to bring potential exporters to the negotiating table, and said: "We are obligated and will support them wherever we can and should: credit, financing, technology to raise production, and improved conditions for exporting."  Patriota said the relationship with Venezuela is one of that has the most potential, and announced Brazilian President Dilma Rousseff will attend Chavez's re-inaugural ceremonies in January. More in Spanish: (Infolatam, 11-01-2012; AVN; http://www.avn.info.ve/contenido/canciller-brasil-relación-venezuela-es-una-que-tiene-mayor-potencial; El Universal; http://www.eluniversal.com/nacional-y-politica/121102/brasil-evaluara-areas-para-invertir-en-venezuela)

Gubernatorial races take off

After receiving 6.5 million votes in the past presidential election, raising the opposition share by 7%, Miranda State Governor Henrique Capriles is now running for reelection, facing off former Vice President Elías Jaua. The formal race for 23 Governorships has now formally begun; 16 states are currently run by pro-Government governors, and 7 are opposition representatives. The key contest - to be held on December 16th - will be in Miranda State, surrounding Caracas, which has been a key opposition stronghold over the past years. As the campaign kicks off the opposition is accusing the Elections Board of sponsoring serious irregularities, such as allowing pro-government candidates to switch voting places and enter their picture on the ballot long after the period for registration has closed. More in Spanish: (Infolatam, 11-02-2012)

Spain's judiciary investigates the ETA-FARC-Chávez connection

Spain's Magistrate Eloy Velasco will ask the Venezuelan government for reports prepared by an Army officer here on relations between the ETA Basque terrorist organization, Colombia's FARC guerrilla and the government of Hugo Chávez. For some time now there have been reports of complicity between Chavez and terrorism in all of its forms. Two captured ETA terrorists interrogated in 2008 reported they had travelled to Venezuela for weapons training; and one of ETA's leaders, Mikel Carrera said that this nation was "safer than France" for them. Arturo Cubillas Fontán, convicted in Spain as a go between by the Basque terrorists and the Venezuelan Government is Security Chief of the Chavez National Land Institute, which has confiscated over 40,000 Venezuelan farms. More in Spanish: (Infolatam, 11-01-201)

October 14th, 2010

Economics, Trade & Business

Cost of banking crisis amounts to USD 962 million

More than a year after a group of small and medium-sized financial institutions went bankrupt, the Venezuelan Bank Deposit Guarantee and Protection Fund (Fogade) provided partial data about the banking crisis. Fogade must pay each depositor a deposit insurance amounting up to USD 6,977. As of October 10, the Venezuelan financial institution has paid about USD 962 million at the official exchange rate of VEB 2.60 per US dollar) to customers of seized banks Federal, Canarias, Banpro, Baninvest, Sol, Real and Inverunión. Not all depositors have claimed insurance payment. If they had done so so, Fogade would have had to pay USD 1.26 billion. (El Universal, 10-14-2010; http://english.eluniversal.com/2010/10/14/en_eco_esp_cost-of-banking-cris_14A4605533.shtml)

Goldman Sachs highlights upside potential of Venezuelan and Argentine debt

Argentine bonds with a coupon linked to growth look attractive ahead of the 2011 election, even after their recent rise, while Venezuelan debt would also have an upside potential, said Sam Finkelstein, a managing director in the emerging markets debt team at Goldman Sachs Asset Management, in London. "One should be aware of the risks of investing in Venezuela, but the risk of default is not imminent. I do not think that it is easy to invest in these instruments, but the outlook could change," he said. (El Universal, 10-14-2010; http://english.eluniversal.com/2010/10/14/en_eco_esp_goldman-sachs-highli_14A4607611.shtml)

Morgan Stanley warns about foreign exchange crunch in Venezuela

Venezuela keeps borrowing as a mechanism to ease the effects of the foreign exchange crunch on the domestic economy, and to find new funds that to help the country improve the profile of its liquid assets. State-run oil company Petróleos de Venezuela announced on Tuesday the issuance of USD 3 billion in bonds in a press release. The issue will have a semi-annual coupon and mature in 2015, 2016 and 2017, with equal repayment. Bonds may be purchased in the primary market, at the official exchange rate of VEB 4.30 per US dollar. (El Universal, 10-13-2010; http://english.eluniversal.com/2010/10/13/en_eco_art_morgan-stanley-warns_13A4600937.shtml)

BCV special coin will circulate its 70 anniversary

The Central Bank of Venezuela (BCV) will put into circulation on Friday October 15 a special issue of the currency of 0.50 cents, designed and minted by the Central Bank to celebrate its 70th anniversary. Will be issued five million pieces of that coin, which differs from the current 0.50 cents per show on the reverse the official logo of the 70 anniversary of the BCV, even if on the face are equal. (AVN, 10-13-2010; http://www.avn.info.ve/node/22880)

Andean Development Corp lends Venezuela $700 mln

The Andean Development Corporation approved a loan of $700 million for a Venezuelan hydroelectric dam and public transport project, the development bank said on Wednesday. (Reuters, 10-13-2010; http://www.reuters.com/article/idUSN1327896520101013)

Venezuelan business sector rejects state-centered policies

"Economic despotism" implemented by Hugo Chávez's government has put Venezuela country in a "state of shock" and will only lead to the "destruction of the country," said Noel Álvarez, the president of the Venezuelan Federation of Trade and Industry Chambers, to sum up the perception of local entrepreneurs vis-à-vis the decisions made by the Executive Office. "The only results of a foolish and unfeasible economic project are economic downturn and (a litany of) excuses. (This model), which aims at establishing only one employer who, through the tyranny of monopoly, wants to make decisions in each sector of our public and private lives," said the business leader in the closing session of the 66th annual meeting of Venezuela's private business chamber, held in Puerto Ordaz, a major city of southern Bolívar state. (El Universal, 10-13-2010; http://english.eluniversal.com/2010/10/13/en_eco_art_venezuelan-business_13A4601133.shtml)

The costs of the revolution

Venezuela is paying a high price for the imposition of the Castro-communist project. In the interests of the revolution, the regime has been legislating grotesquely outside the bounds of the Constitution and, resorting to farcical illegality, wiping out private property by dint of “expropriations,” which, in fact, is no more than pillage by those who abuse their power in the belief that it is eternal. These mass “expropriations” of private companies are costing the country dear, not only because this practice has meant the destruction of the domestic productive apparatus, but also because of investments that have not been made. In the first quarter of 2010, direct investment was -US$1.8 billion. (Veneconomy, 10-14-2010; http://www.veneconomy.com/site/)

Politics

Chávez to strengthen ties with Russia, Iran and Libya

Venezuela's President Hugo Chávez is starting in Moscow on Thursday an international tour that will take him to Iran, Belarus, Ukraine, Syria, Libya, Algeria and Portugal, in order to strengthen his political and economic relations with these countries. "It is an extremely important trip that will allow us to deepen our relations in a multi-polar world," said the Venezuelan president. Chávez, who is an advocate of a new world order and has worked to counteract the traditional influence of the United States over Latin America, has established for years a web of relations with countries such as Iran, Russia, Syria or Libya, based on political affinity. Later, he has signed important cooperation agreements. (El Universal, 10-13-2010; http://english.eluniversal.com/2010/10/13/en_pol_esp_chavez-to-strengthen_13A4601257.shtml)

Chavez defends nuclear energy right, denies ETA link

Venezuela's President Hugo Chavez hailed its alliance with Russia and said his country had a right to develop nuclear energy as he started a visit to Moscow on Thursday. Chavez is planning to buy tanks in Russia, after committing to $5 billion in earlier arms deals, and discuss construction of a nuclear plant which will use Russian technology. "We are going to develop nuclear power and nothing will stop us," he told Russian and Venezuelan students at the Library of Foreign Literature in Moscow. He denied that two members of the ETA militant group were trained in Venezuela and called Spain's charges "part of the aggression by the (U.S.) empire." (Reuters, 10-14-2010; http://www.reuters.com/article/idUSLDE69D1YO20101014)

Venezuelan Attorney General vows to probe alleged ETA member

Venezuelan Attorney General Luisa Ortega Díaz said that her office will take all necessary steps in the context of the investigation carried out into José Arturo Cubillas Fontán, for his alleged connection with Basque terrorist group ETA and the rebel Revolutionary Armed Forces of Colombia (FARC). Ortega Díaz stated in a press release that all people possibly related to the investigation, even those living outside Venezuela, will be summoned. (El Universal, 10-14-2010; http://english.eluniversal.com/2010/10/14/en_pol_esp_venezuelan-attorney_14A4607091.shtml)

"Armed forces refuse indoctrination"

In the opinion of the director of the Projective Policy Study Center (CEPPRO), José Machillanda, it can inferred from the recent remarks of the former chief of the Operational Strategic Command, General Jesús Gregorio González González, " that there is inside the military component, a group of professional military chiefs that openly rebuts the intended indoctrination, fracture and breakup of the armed forces." In the words of González González, "we cannot link our military to the president or the leftwing trend under the current government." For Machillanda, the general's message mirrors "a behavior nearing military professionalism and contains a political-military request for the president to observe the Constitution." (El Universal, 10-13-2010; http://english.eluniversal.com/2010/10/13/en_pol_esp_armed-forces-refuse_13A4602091.shtml)

New Minister of the President’s Secretariat is recently re-elected legislator Francisco Ameliach (PSUV-Carabobo), according to a presidential decree published in Monday, October 11 Gaceta Oficial, circulating today. (Veneconomy, 10-14-2010; http://www.veneconomy.com/site/?ids=44&idt=23456&idc=1)

 

Petroleum & Energy

PDVSA to Sell Refinery Stake to Russia, Chavez Says

Petróleos de Venezuela, S.A., the state-owned oil company, agreed to sell a German refinery stake to a Russian company, President Hugo Chavez said, without naming the potential buyer or the refinery. “This is a good deal for us and Russia is very interested in the stake for geopolitical purposes,” Chavez said today on state television after arriving in Russia for an official visit. “This liberates us from an asset that we don’t need and will allow us to invest in other areas.” (Bloomberg, 10-14-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aD9LIxh7yiU0)

Venezuela's oil production up 111,000 bpd

According to the monthly report of the Organization of Petroleum Exporting Countries, Venezuela's oil production increased by 4.8 percent in September, hitting 2.4 million bpd, a little less than 10 percent of OPEC's oil production. Venezuela's oil production averaged 2,288,000 bpd in August, while it increased by 111,000 bpd in September to 2,400,000 bpd. (El Universal, 10-13-2010; http://english.eluniversal.com/2010/10/13/en_eco_art_venezuelas-oil-prod_13A4602571.shtml)

China-Venezuela agreement terms for the development of the Junín 4 Bloc at the Orinoco Oil Belt include a $900 million bonus fee CNPC would pay Venezuela; a 25-year exploitation term that could be extended for a further 15 years if both parties meet the agreed Mixed Company’s (Venezuela, 60% and China, 40%) Investment Plan (October 11 Gaceta Oficial). (Veneconomy, 10-14-2010; http://www.veneconomy.com/site/?ids=44&idt=23458&idc=4)

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.

October 11th, 2010

Economics, Trade & Business

Osorio: Polar and Cargill must go to the state

"Oligopolies do not ensure food security in the country and the Bolivarian government has seeking solutions to this problem for  11 years. There are two opposing extremes: the socialist and capitalist. Yankees’ attacks through their domestic lackeys have failed to halt the advance of the revolutionary laws. The Bolivarian government has made progress in these 11 years, despite capitalist and imperialist efforts." The speaker is not a stale leader of the radical left, but rather a general of the National Bolivarian Armed Forces. The People's Minister for Food, Carlos Osorio, is an example of the new era in Venezuela, in the process of building socialism. Companies like Polar and Cargill, as happened with Agroisleña should be in the hands of the state, said Osorio. The new coalition of forces in the National Assembly to be installed on January 5, 2011, will not be an impediment to the progress of the Revolutionary Government. (Correo del Orinoco, 10-11-2010; http://www.correodelorinoco.gob.ve/economia/osorio-polar-y-cargill-deben-pasar-a-manos-estado/)

Venezuela has seized about 185 industries in 2010

Carlos Larrazábal, the president of the Venezuelan Confederation of Industries (Conindustria), said that the Venezuelan government has seized at least 185 manufacturing companies in 2010, excluding firms in the agriculture sector. "We are concerned that the Venezuelan government will continue to seize companies without complying with Article 115 of the Constitution," Larrazábal said about the recent seizure of Agroisleña, Venoco and Fertinitro. (El Universal, 10-11-2010; http://english.eluniversal.com/2010/10/11/en_eco_esp_venezuela-has-seized_11A4591655.shtml)

Venezuela nationalizes Koch, Eni fertilizer plant

Venezuela's President Hugo Chavez nationalized a large U.S. and Italian-owned fertilizer factory on Sunday, just days after vowing to radicalize his state-led revolution in the aftermath of elections last month. The government will take over Fertinitro, one of the world's main producers of nitrogen fertilizer and part-owned by private U.S. company Koch and Saipem a subsidiary of Italy's Eni, Chavez said. During 12 years in power, the 56-year-old former soldier has put large swathes of the OPEC member country's economy into state hands. On Sunday, he also announced the nationalization of Venezuelan motor lubricants company Venoco. (Reuters, 10-10-2010; http://www.reuters.com/article/idUSN1026579720101011)

Venezuela's business sector asks top court for ruling on private property

Venezuela's private business association Fedecámaras will request that the Supreme Tribunal of Justice (TSJ) issue a ruling on the status of private property, said Noel Álvarez, the president of the Federation of Trade and Industry Chambers (Fedecámaras). "We are going to file an action with the TSJ for it to determine whether private property has been infringed or not," the business leader told private TV news channel Globovisión. (El Universal, 10-11-2010; http://english.eluniversal.com/2010/10/11/en_eco_esp_venezuelas-business_11A4591333.shtml)

Venezuela's government increases control over agricultural and industrial sectors

Venezuelan state policy to control the means of production was reinforced after President Hugo Chávez signed a decree expropriating Spanish farming supply firm Agroisleña, which provided supplies to 70 percent of the country's farmers before it was seized by the government. With  the seizure of Agroisleña, which was renamed Agropatria, the Venezuelan government aims at expanding and tightening the grip over food production. The first seizures of lands, which now total about 2.9 million hectares (7.17 million acres), were carried out at the end of 2004 with a series of expropriation decrees of farms located in the central state of Cojedes. (El Universal, 10-11-2010; http://english.eluniversal.com/2010/10/11/en_eco_esp_venezuelas-governme_11A4590051.shtml)

Nationalized agroindustry to offer products with discounts between 40 and 60%

The Venezuelan State company Agropatria (new name for the recently nationalized Agroisleña) will offer agricultural products at discounts between 40 and 60 percent, compared to the prices of said company when it was under private control. Agroisleña was nationalized on October 4 to put the company at the disposal of country’s agricultural development. During his weekly show “Alo, Presidente,” the Venezuelan Head of State ordered the reduction of 49.3% of the prices of 12 fertilizers, 43% the prices of 260 agrochemicals, and an average of 41.7% the prices of black beans, corn and rice seeds. (AVN, 10-11-2010; http://www.avn.info.ve/node/22405)

National Statistics Institute highlights Venezuelan inflation decreasing tendency

The President of the National Statistics Institute (INE) Elias Eljuri highlighted on Monday a deceleration of the inflation rate in Venezuela, estimating that the indicator will finish 2010 at about 27%, a figure well below the 40% predicted by “opposition” analysts. He reiterated that the inflation rate of 1.1% in September reflects this decreasing tendency and represents a significant reduction compared to the rate of 2.5% obtained in the same month last year. (AVN, 10-11-2010; http://www.avn.info.ve/node/22426)

Politics

Chavez backs China over Nobel for jailed dissident

Venezuelan President Hugo Chavez expressed solidarity with China's government Sunday over the awarding of the Nobel Peace Prize to a jailed Chinese dissident. He suggested the prize should not have gone to Liu Xiaobo, who has drawn praise from Western governments as an advocate of gradual political change without any violent confrontation with Chinese leaders. "This (Liu) is like Obama, the other peace prize," Chavez said. (Miami Herald, 10-10-2010; http://www.miamiherald.com/2010/10/10/1866972/chavez-backs-china-over-nobel.html)

The wave continues to swell

Since the appearance of the computers belonging to Raúl Reyes in 2008, the wave of compromising evidence indicating that the Hugo Chávez administration has ties with the narco-terrorist group, the Revolutionary Armed Forces of Colombia (FARC), has not ceased to grow. Now, this year, new facts have emerged that would seem to corroborate the high level of collaboration maintained by the Venezuelan Government not only with the FARC, but also with terrorist groups such as the National Liberation Front (ELN), and Euskadi Ta Askatasuna (ETA). On July 22, Álvaro Uribe presented accusations against Hugo Chávez before the International Criminal Court (ICC) and filed a lawsuit against the Bolivarian Republic of Venezuela before the inter-American Court of Human Rights (IACHR). (Veneconomy, 10-11-2010; http://www.veneconomy.com/site/?ids=44&idt=23417&idc=4)

Venezuelan opposition reinvents itself

Venezuelan opposition leaders have realized that unity works. They support this idea and they highlight this fact from their different political views. Ramón Guillermo Aveledo, the executive secretary of the Democratic Unified Panel (MUD), says that it is the best course to follow in the coming years. "Unity has proven successful. Unity -as people demand and as political success requires - has been endorsed by the successful election results," he said. According to Aveledo, they are now faced with a new challenge: proposing a real agenda to both slums and affluent residential areas. Such agenda should include "the fight against crime and against the high cost of living and the protection of private property." (El Universal, 10-08-2010; http://english.eluniversal.com/2010/10/08/en_ing_esp_venezuelan-oppositio_08A4577251.shtml)

ETA members claim they were trained in weapons use in Venezuela

The government of Venezuela's President Hugo Chávez has decided to launch an investigation into the activities of ETA activist Arturo Cubillas Fontán after it emerged that he provided weapons training to Xabier Atristain and Juan Carlos Besance, two alleged members of Basque terrorist group ETA, in Venezuela in 2008. (El Universal, 10-08-2010; http://english.eluniversal.com/2010/10/08/en_ing_esp_eta-members-claim-th_08A4582691.shtml)

Petroleum & Energy

Venezuela approves China's stake in Orinoco Oil Belt

Venezuela has approved China's stake in a joint venture to tap up to 400,000 barrels per day of extra-heavy crude oil in the Orinoco Oil Belt, under an agreement published in Venezuela's Official Gazette on Monday.
The Venezuelan government has negotiated several oil interests in the Junín block with companies from China (CNPC), Russia (Rosneft), Vietnam and Italy (ENI) after it completed a successful bidding of two multimillion projects in the Carabobo block of Venezuela's Orinoco belt. (El Universal, 10-11-2010; http://english.eluniversal.com/2010/10/11/en_eco_esp_venezuela-approves-c_11A4591291.shtml)

Domestic gas market requires over 2,000 million additional cubic feet (MMcf) -excluding what is demanded by the oil industry-  to satisfy domestic demand. This means production would have to double. PDVSA consumes 71% of the 7,000 MMcf a day of national production. (Veneconomy, 10-11-2010; http://www.veneconomy.com/site/?ids=44&idt=23417&idc=4)

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.