October 10, 2016

International Trade

All border passes with Colombia now open again to cargo transit

Colombia’s tax and customs authority (DIAN) has announced that all seven border passes with Venezuela are now open to cargo transit in all forms of transportation. More in Spanish: (Notitarde, http://www.notitarde.com/Reabren-los-siete-pasos-fronterizos-con-Colombia/Economia/2016/10/09/1028717/)

 

Zulia governor says 880 tons of shrimp were exported to Europe, Asia and the US

Zulia state Governor Colonel Francisco Arias Cardenas has announced that 880 tons of shrimp worth US$ 2.640 million were exported in 44 containers, to the European Union, Asia and the United States, under the auspices of the Venezuelan government. He also said shrimp feed worth US$ 60 million would be imported in 2016-17 in order to increase shrimp production by 25,000 tons. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/venezuela-exporta-880-toneladas-camarones-mercados-europa-asia-y-eeuu; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela-exporta-880-toneladas-de-camarones-a-eur.aspx)

 

Minister announces 1.380 million aluminum containers have been exported to Brazil

Basic Industries Minister Juan Arias reports that 1.380 million aluminum containers from state company ALENTUY were exported to Brazil this year. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/industrias/alentuy-exporta-a-brasil-un-millon-380-mil-envases.aspx#ixzz4Mg8TE0lW)

 

Logistics & Transport

Airlines want their money back from Venezuela

Airlines have a question for U.S. regulators: Mind if we collude a bit? The carriers have made an unusual request of the U.S. Department of Transportation: They want antitrust immunity for one year so they can collectively discuss ways to retrieve US$ 3.8 billion currently held hostage by Venezuela’s deep economic slide. Since 2013, Venezuelan officials have virtually halted the repatriation of past ticket sales made in bolivars, the local currency. Inflation has soared and foreign currency reserves have dwindled to under $ 12 billion, as the government of President Nicolas Maduro imposed various currency exchange rates and the economy fell into disarray and food shortages. As a result, the flow of money homeward has slowed to a trickle for many multinational corporations operating in Venezuela. (Bloomberg, http://www.bloomberg.com/news/articles/2016-10-07/airlines-ask-permission-to-break-antitrust-law-but-only-a-little)

 

Oil & Energy

US$ 60 oil not ‘unthinkable’ this year, Saudi Energy Minister says

Saudi Arabia’s energy minister Khalid al-Falih said that he was optimistic major oil producers could agree to cut production by November and that it wasn’t “unthinkable” that crude prices could rise another 20% this year to US$ 60 a barrel. The minister’s words confirmed a decisive shift in policy by the Organization of the Petroleum Exporting Countries toward a return to market intervention—a role the oil cartel seemed to abandon two years ago when it refused to step in to prop up sinking prices. A production cut is meant to reorder the supply and demand landscape and push prices up during a historic market slump. Falih is attending a conference in Istanbul this week that has become a meeting point for major oil producers to try to hammer out a tentative agreement to reduce output. It follows an agreement in principle reached in Algiers last month. “I think a band would be able to make sure the ceiling can accommodate,” Falih said, adding that because of demand uncertainties “OPEC needs to make sure we don’t kill too much and create a shock.” In Istanbul, Falih is joining an effort to get non-OPEC members to participate in output cuts, including Russia, which produces more crude oil than any other country. He confirmed he is meeting with Russia’s energy minister this week to discuss cooperation and said non-OPEC producers should “absolutely” participate in efforts to balance the market. Falih said the time to act seems to have arrived. “I think market forces have shifted significantly between 2014 and now,” he said. (The Wall Street Journal: http://www.wsj.com/articles/saudi-energy-minister-optimistic-on-oil-production-deal-14760861599

 

… and President Maduro is now in Turkey for energy conference

President Nicolas Maduro is now in Istanbul to take part in the World Energy Congress, and has met with the city’s governor Vasip Sahin. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/presidente-maduro-llega-estambul-para-participar-congreso-mundial-energ%C3%ADa; El Universal, http://www.eluniversal.com/noticias/economia/maduro-turquia-estamos-luchando-por-estabilidad-del-mercado_621804; El Mundo, http://www.elmundo.com.ve/noticias/petroleo/industria/presidente-se-reunio-con-autoridades-turcas.aspx; http://www.elmundo.com.ve/noticias/petroleo/industria/ochenta-paises-participaran-en-congreso-mundial-de.aspx)

 

PDVSA seeks to issue another US$ 4.7 billion in debt to pay off suppliers

State oil company PDVSA plans to issue up to US$ 4.7 billion in private debt in order to pay off pending bills from suppliers. The move could overshadow its attempt to roll over US$ 5.3 billion in bonds that mature during 2017 in order to relieve its payment flows over the next few months. A presentation from PDVSA to oil companies indicates that the company has been in touch with son 63 service providers and has offered to issue “promissory notes” to compensate for unpaid bills. It is not clear that the companies actually received the notes. In its latest financial report, PDVSA showed that in May-September this year it provided US$ 1.1 billion in “promissory notes” to 10 companies that provide transportation, drilling and maintenance. The companies include WEATHERFORD and HALLIBURTON, plus smaller local firms such as PROAMBIENTE and ELECNOR. Most local companies have been willing to receive the notes. More in Spanish: (Infolatam: http://www.infolatam.com/2016/10/06/pdvsa-planea-emitir-deuda-por-us4-700-milllones-para-pagar-facturas-vencidas/)

 

Venezuela oil price jumps above US$ 40 on OPEC output cut

The price Venezuela receives for its mix of medium and heavy continued rising aggressively, closing above US$ 40 for the first time since August after OPEC announced an agreement for an oil output cut. According to figures released by the Ministry of Petroleum and Mining, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending October 7 was US$ 41.58, up US$ 2.77 from the previous week's US$ 38.81. According to Venezuelan government figures, the average price in 2016 for Venezuela's mix of heavy and medium crude is now US$ 33.58 for the year to date. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2422699&CategoryId=10717)

 

REPSOL extends line of credit for joint venture in Venezuela

State oil company PDVSA and REPSOL have signed an agreement that calls for the Spanish energy company to provide a line of credit of up to US$ 1.2 billion to expand oil production here. REPSOL CEO Josu Jon Imaz and PDVSA chief Eulogio Del Pino put their signatures to the financing deal for the Petroquiriquire joint venture during a ceremony at the presidential palace, Miraflores. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2422675&CategoryId=10717; Bloomberg, http://www.reuters.com/article/us-venezuela-pdvsa-repsol-idUSKCN127272; http://www.reuters.com/article/venezuela-pdvsa-repsol-idUSL2N1CC1QG)

 

Expert says recovery of Venezuela's major dam is insufficient

The water level of Guri dam, Venezuela’s major electric power supplier, hit 263 meters above sea level last week. This figure is slightly above that recorded in 2015, yet insufficient to overcome challenges of the national power grid, says Jesús Rafael Pacheco, of Simón Bolívar University (USB). According to state power corporation CORPOELEC, the dam’s water level stood at 261.28 meters above sea level, a 1.72 meter raise on September 28^th 2015. Pacheco adds that the level “is eight meters below the value the dam should have if thermoelectric plants were in good conditions.” (El Universal, http://www.eluniversal.com/noticias/daily-news/expert-terms-insufficient-recovery-venezuelas-major-dam_620638)

 

PDVSA plans to reactivate 931 oil wells in Lake Maracaibo

State-run oil company Petroleos de Venezuela (PDVSA) and Chinese petroleum equipment manufacturer Shandong KERUI Group Holding Co. signed a partnership agreement to repair and connect 624 oil wells in Lake Maracaibo, north-western Zulia state, with an initial investment of US$ 30 million by the Chinese company. Production of crude oil and gas is expected to increase by 22,600 barrels per day (Mbbls/d) and 13 million cubic feet (MMCF), respectively. At the same time, PDVSA and the Bulgarian-Venezuelan Consortium are currently in talks to carry out activities similar to those agreed with KERUI and interconnect 307 wells in the country's largest lake. Should the talks be successful, the Bulgarian investor group ALECO will finance over US$ 100 million. The wells are distributed in nine production units, and with this addition, crude oil and gas production is expected to raise by 28 Mbbls/d and 30 MMCFPD of gas, respectively. (El Universal, http://www.eluniversal.com/noticias/daily-news/pdvsa-plans-reactivate-931-oil-wells-lake-maracaibo_621564)

 

Venezuela promises to become Latin America´s largest gas exporter

Eulogio Del Pino, Minister of Petroleum and Mining, says that Venezuela will be the largest exporter of gas in Latin America, able to produce 1,200 million cubic feet MMSCFD and 28,000 barrels per day (Mbbls/d) of condensate gas. He says that output will be reached under the Mariscal Sucre project, which encompasses four giant deposits located in northern Paria Peninsula (east Venezuela): Dragón, Patao, Mejillones and Río Caribe. "The Cardón project, developed in the Gulf of Venezuela, is producing some 600 million cubic feet per day (MMCFPD) in less than a year. Dragon Field will start producing 300 million MMCFPD and combined with the other deposits that make up the Mariscal Sucre Project, they will reach more than 1,000 MMCFPD in the coming years”, Del Pino explains. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuela-promises-become-latam-largest-gas-exporter_620943)

 

Commodities

The face of hunger and malnutrition in Venezuela

Venezuela is in the midst of a severe economic crisis. The country, though one of the richest in natural resources, has been called the worst economy of 2016 by the International Monetary Fund, and its inflation rate could reach 700% by the end of the year. Today, the biggest concern for Venezuelans is the food shortage, together with rampant crime and the lack of medicine. Every day, thousands of people reach supermarkets or shops, sometimes as early as dawn, patiently waiting in long lines just to buy a few pieces of basic food items, such as rice or flour, at a lower price set by the government. The alternative to "colas" (food lines in Spanish) can be found in expensive supermarkets, where only the wealthy can afford to shop. The others rely on "bachaqueros", or food smugglers who re-sell on the street subsidized goods at much higher prices. In the slums of Caracas, the situation is difficult. Many families are unable to provide two to three meals a day for their children. Lunch often consists of a banana or a piece of bread. As a result of this climate of uncertainty and helplessness, crime is rising fast in Venezuela, especially in Caracas, already ranked in 2015 as the most violent city in the world. In the rest of the country, the food crisis is worse, and health workers have noted increased cases of malnutrition within the poorest segments of the population. (Aljazeera: http://www.aljazeera.com/indepth/inpictures/2016/10/face-hunger-malnutrition-venezuela-161007055723064.html)

 

Economy & Finance

Venezuela PDVSA's bonds tumble after low participation in swap

State oil producer PDVSA's bonds dropped sharply on Friday after the company extended a deadline for its US$ 5.3 billion debt swap offer due to low bondholder participation, signaling that investor reluctance could scuttle the operation. PDVSA on Thursday moved the initial deadline from Oct. 6 to Oct. 12 and said that considerably less than half of outstanding bonds had been tendered. The swap requires more than 50% participation to go through.

The company's 2017 bond maturing in April fell 4.025 points to a bid price of 80.600, while the 2017N bond sank 2.050 points to a bid price of 84.150. The two bonds are a part of the swap operation. Venezuela's sovereign bonds were also down across the board, with the 2018 bond declining 6.769 points to a price of 78.306. (Bloomberg, http://www.reuters.com/article/venezuela-pdvsa-debt-idUSL2N1CD0RF, http://www.bloomberg.com/news/articles/2016-10-07/pdvsa-extends-debt-swap-deadline-on-low-bondholder-participation)

 

Venezuela says US$ 7 billion bond swap to continue as ConocoPhillips sues PDVSA for fraud,

State oil company Petroleos de Venezuela (PDVSA) says it will carry on with an ongoing US$ 7 billion bond swap, in spite of a legal action attempted before a Delaware court Thursday by a former partner, US oil giant ConocoPhillips, which objects to the use of U.S.-based refining company CITGO as collateral in the negotiation. This is the first legal challenge against the swap in the U.S., coming just days after the opposition dominated National Assembly of Venezuela, the country’s legislative arm, criticized the negotiation: The Assembly has said it will not approve the deal, theoretically making it illegal. “In relation with the action presented Thursday October 6th by ConocoPhillips in Delaware, in which it objects to a financing operation by CITGO Holding as well as the current bond swap operation, Petróleos de Venezuela, S.A. (PDVSA) informs that, firstly, the financing operations object of that action are perfectly legal and legitimate and, secondly, the new claims presented by ConocoPhillips lack any foundations whatsoever,” the company here said in a press release. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2422640&CategoryId=10717; Bloomberg, http://www.reuters.com/article/us-venezuela-pdvsa-debt-conocophillips-idUSKCN127284; http://www.reuters.com/article/venezuela-pdvsa-debt-response-idUSL2N1CD1ET)

 

…and Maduro orders PDVSA to sue US newspaper after failure of $7 billion swap

President Nicolas Maduro has ordered his Oil Minister, Eulogio Del Pino, who also serves as president of the state oil company Petroleos de Venezuela SA (PDVSA), to sue the owners of a Venezuelan newspaper "directed from Miami" for "spreading false information" about the oil company. "I have given the order for violating the constitution and forming part of a campaign to destroy PDVSA's financial and development possibilities as part of a dirty campaign against Venezuela," said Maduro during a broadcast that must be carried by every radio and television channel in the country. He did not name the newspaper he described as "garbage" and said that it had a small issue of "just two thousand" copies, which is close to the final print runs of the Latin American Herald Tribune's predecessor The Daily Journal in Caracas.  (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2422720&CategoryId=10717)

 

Minister claims foreign investment here was US$ 12 billion in 2016

Foreign Trade and Investment Minister Jesús Faría reports that foreign investments in gas, oil and mining here is US$ 12 billion, from countries such as China, Canada, South Africa and Russia. He also says he has met with around 70 businessmen from Germany, France and Portugal, to push forward on 5 projects in the areas of pharmaceuticals, agribusiness, ports and infrastructure. More in Spanish: (Notitarde, http://www.notitarde.com/-Inversion-foranea-suma-12000-millones-en-2016/Economia/2016/10/09/1028714/; El Universal, http://www.eluniversal.com/noticias/economia/traeremos-300-millardos-fugados_621710;El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/faria--inversiones-extranjeras-suman--12-mil-millo.aspx)

 

An unlikely winner in Venezuela crisis: high-end real estate

Building luxury apartments or corporate office towers might seem like an odd investment in an economy reeling from a deep recession, triple-digit inflation and chronic product shortages. Unless it's Venezuela. The combination of soaring prices and exchange controls that prevent businesses from buying dollars has made high-end real estate an attractive way for companies to protect the value of revenue earned in the increasingly worthless bolivar currency. Cranes clutter the skyline of the Caracas municipality of Chacao, home to the capital's financial district and most of its embassies, despite a backdrop of huge supermarket lines that have become a symbol of the country's economic decay. Las Mercedes, a neighborhood developed in the 1950s as an exclusive residential zone that is now filled with garish restaurants and bars, is also awash in real estate development. (Reuters, http://www.reuters.com/article/us-venezuela-construction-idUSKCN12715A)

 

Politics and International Affairs

National Assembly President predicts Supreme Tribunal will quash recall process

National Assembly President Henry Ramos Allup has charged that the Supreme Tribunal will issue a ruling that strips legislators of parliamentary immunity, and also seeks to quash a recall referendum against President Nicolas Maduro. Ramos said: “Indeed, next Tuesday they will perpetrate these two crimes against the Constitution: To eliminate immunity in order to put critical legislators in jail should we criticize this shameful regime that is killing Venezuela; and second, to kill, murder the recall referendum…because the government knows that if that instrument is used, it will have to leave office if rejected popularly”. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/politica/2016/octubre/6/171378=presidente-de-la-an-afirma-que-el-tsj-promovera-sentencia-para-eliminar-el-fuero-de-los-diputados-opositores)

 

Opposition leader Capriles vows to end Maduro rule

Henrique Capriles told the BBC that 80% of the population wanted change and the opposition would be able to collect 4 million signatures and force a recall referendum. "We are having the worst situation in our history," he said. Oil accounts for most of Venezuela's export revenues but plummeting prices and economic mismanagement have brought the country to economic collapse.  Last month pro- and anti-government demonstrations attracted hundreds of thousands of people. Opposition supporters blame President Nicolas Maduro for Venezuela's economic crisis and accuse the electoral commission of delaying a referendum that could shorten his stay in power. But Capriles said he believed the opposition can force a referendum to take place. "We have to collect signatures," he said. "It's four million people and that is going to be so important that it is going to open the door for the referendum and the people are going to vote and we are going to have a new government in our country.  It looks very difficult to have it, but so important that it is going to be very difficult for Maduro to avoid the referendum." (BBC News: http://www.bbc.com/news/world-latin-america-37582569)

 

Cabello says regime will seek to charge Leopoldo Lopez with homicide

Lieutenant Diosdado Cabello, First Vice President of the ruling United Socialist Party (PSUV) says that relatives of 43 people killed during protests called by opposition leader Leopoldo Lopez in early 2014 are moving to charge him with murder at local courts. Cabello called Lopez a “murderer”. A peaceful demonstration called by Lopez on 12 February 2014 ended in violence, and set off a wave of protests through the following months, in which 43 died. Venezuela’s opposition terms Lopez’ arrest “political”, while Cabello is insisting that “Leopoldo Lopez must remain in prison. He has to pay for those 43 dead.” More in Spanish: (Infolatam: http://www.infolatam.com/2016/10/06/cabello-dice-que-solicitaran-que-el-opositor-lopez-sea-acusado-de-homicidio/)

 

Opposition will demand that Elections Council fix imbalance in voting machine distribution

Juan Carlos Caldera, who represents the Democratic Unity (MUD) opposition at the National Elections Council says that Maduro’s opponents are drawing up a list of polling places in order to protest with the Council about imbalances in the distribution of polling machines that must be installed for the planned 20% voter signature drive to call for the President’s recall. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/mud-reclamara-cne-desequilibrio-maquinas-centros-votacion_621442)

 

Argentina's FM advises President Maduro "to be careful with his words"

Argentine Foreign Minister Susana Malcorra told Venezuela’s President Nicolas Maduro that “it is necessary to be careful with the use of words, especially as a leader,” after Maduro called his Argentine counterpart Mauricio Macri as a “political hitman” and “imperial puppet.” Malcorra said Maduro’s aggressive speech stems from the “intrinsic tensions” Venezuela is going through, and added that both Heads of State “view the reality from different angles, yet that is not a reason to disrespect another president.” “There are people who get angry and believe that we can intervene with a magic wand and solve those problems. When the democratic charter is invoked as in the case of Mercosur (Common Market of the South) or OAS (Organization of American States), consensus from all Member States is needed. Achieving it is not that simple; the alternative is assisting Venezuelans in finding a solution,” she added. (El Universal, http://www.eluniversal.com/noticias/daily-news/argentinas-advises-president-maduro-careful-with-his-words_621593)

 

OAS Almagro, Brazil's Temer agree on "need" for recall vote in Venezuela

Luis Almagro, Secretary General of the Organization of American States (OAS), has visited Brazilian President Michel Temer, and both of them talked about the “need” for a recall vote in Venezuela this year, as sought

by the opposition political sector, yet put off for 2017 by the country’s electoral authorities. (El Universal, http://www.eluniversal.com/noticias/daily-news/almagro-brazils-temer-agree-necessity-recall-vote-venezuela_621536)

 

Brazilian Foreign Minister charges Venezuela increases cocaine exports

Brazil’s Foreign Minister José Serra says “Venezuela’s situation is increasingly worrying”, and adds that this country is “increasing cocaine exports”. He said the fact that the Vatican has joined the search for talks between the Maduro regime and its opposition has created hope, but added “it will be complicated to arrive at a formula for a transition”; and said “a way out can be found, but it will not be simple”. More in Spanish: (El Universal: http://www.eluniversal.com/noticias/politica/canciller-brasileno-venezuela-exporta-cada-vez-mas-cocaina_621462)

 

Venezuela to rebuild housing in Cuba in the wake of hurricane Matthew.

A Venezuelan navy vessel has left port here with 375 tons of construction equipment and material to help rebuild housing in Cuba following the path of hurricane Matthew. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/venezuela-envia-maquinas-para-reconstruir-viviendas-cuba_621747)

 

Pope names new Venezuelan cardinal

Pope Francis I named an additional Venezuelan cardinal, he is Baltasar Porras, Archbishop of Mérida, who said the appointment “shows the affection the Pope has for us, and understanding that we are undergoing a difficult situation”. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/baltazar-porras--anuncio-del-papa-expresa-su-amor-.aspx#ixzz4Mg8fl9uC)

 

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

January 05, 2016

International Trade

 

Imports from Nicaragua decrease

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

 

 

Oil & Energy

 

Venezuela delays gas exports to Colombia, citing climate

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

 

Maduro says Venezuela oil price finishes 2015 below US$30

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

 

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

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

 

 

Economy & Finance

 

Maduro limits Congress's power over Central Bank

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

 

New law now penalizes dollar transactions

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

 

Maduro enacts new laws to increase taxation

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

 

Law on Labor Stability extended for three years

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

 

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

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

 

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

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

 

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

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

 

 

Politics and International Affairs

 

Opposition taking over Congress, showdown looms

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

 

Opposition picks leader ahead of Congress takeover

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

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

 

US says Venezuelan government interfering in new National Assembly

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

 

Is Venezuela's opposition strong enough to rule?

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

 

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

 

 

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