December 16th, 2010

Economics, Trade & Business

Venezuela Plans Financial Transactions Tax

Venezuela’s Finance Ministry is preparing a law to introduce a tax on financial transactions that would be enacted through decree powers requested by President Hugo Chavez. The tax, which would apply to all bank transactions, aims to head off a drop in government revenue expected next year. (Bloomberg, 12-16-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a6HG6spQKlzg)

Venezuela to increase VAT due to lower contributions from income tax and PDVSA revenues

The financial needs of the Venezuelan government have increased despite high oil prices. Therefore, it has decided to increase the Value-Added Tax rate to offset lower oil incomes and a decline in income tax collection due to the economic downturn. Last Monday, President Hugo Chávez Frías announced that the government would revise the VAT due to the state of emergency in the Venezuelan territory. He said that through the collection of taxes his administration would set up a fund to assist the population hit by rainfalls. However, before the emergency declared in several Venezuelan states due to heavy rains, the government had suggested that it required more funds for the next fiscal year. (El Universal, 12-15-2010; http://english.eluniversal.com/2010/12/15/en_eco_esp_venezuela-to-increas_15A4858611.shtml)

Venezuela Central Bank Said to Boost Sitme Bond Sales

Venezuela’s central bank plans to step up sales of dollar-denominated bonds it holds to become the main provider of foreign currency to importers next year, a government official said. Banco Central de Venezuela will sell as much as $40 million a day of government and state oil company bonds to supply the Sitme currency market for at least the first three months of the year, said the official, who asked not to be identified because he isn’t authorized to speak publicly. The government in June ordered commercial banks to sell their dollar-denominated bonds to supply Sitme. (Bloomberg, 12-14-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aHQZ7kAO5SwE)

Study to certify Coltan reserves (industrial name for columbite–tantalite) requires a $32 million investment, according to a proposal under consideration by the government. The information was part of a presentation at the Venezuelan Central University’s (UCV) School of Engineering Research Symposium at the beginning of December, with the title Mining Potential at the El Parguaza Zone, located to the west of Bolívar state. (Veneconomy, 12-16-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=24349&idc=3)

Venezuelan Urea diverted from Corn to Coca farming

It is a long way from the cornfields of Guárico, in central Venezuela, to the cocaine labs of Colombia. But Venezuelan farmers and the drug cartels are linked in a curious way -- to the detriment of the farmer. Urea, a nitrogen-rich fertilizer vital to crops from corn to tomatoes, is also used to fertilize the coca plants that provide the raw material for cocaine. A thriving black market that diverts the fertilizer from legal crops to coca has reduced agricultural production, contributing to Venezuela's increasing dependence on imported food. (Miami Herald, 12-13-2010; http://www.miamiherald.com/2010/12/13/1972175/coca-pushing-out-corn-in-a-black.html)

Mercosur discord eased by Paraguay deal on Venezuela

Latin America's Mercosur trade pact is going through a rare period of constructive cordiality after member countries reached agreements to solve two intractable problems -- discord over Venezuela's membership and an Argentine-Paraguay row over river transport that threatened to scuttle the group's next summit. Paraguayan ratification for Venezuelan membership, delayed over many years, became a near certainty after a congressional deal that had been delayed due to domestic politics. (UPI, 12-15-2010; http://www.upi.com/Science_News/Resource-Wars/2010/12/15/Mercosur-discord-eased-by-Paraguay-deal-on-Venezuela/UPI-22041292418025/)

Politics

Chavez seeks power to rule by decree for 1 year

Venezuelan President Hugo Chavez asked congress Tuesday to grant him special powers to enact laws by decree for one year, just before a new legislature takes office with a larger contingent of opposition lawmakers. The measure, which quickly received initial approval from the overwhelming majority of pro-Chavez lawmakers, would give the president the authority to bypass the National Assembly for the fourth time since he was first elected almost 12 years ago. (Miami Herald, 12-14-2010; http://www.miamiherald.com/2010/12/14/1973120/chavez-seeks-decree-powers-for.html)

How will Chavez decree rule impact Venezuela?

Venezuelan President Hugo Chavez is taking decree powers for a year in a move he says is needed to deal with disastrous floods but opponents denounce as a calculated blow to democracy. What are the possible consequences for South America's biggest oil producer and its flamboyant socialist leader two years ahead of the next presidential election? (Reuters, 12-16-2010; http://www.reuters.com/article/idUSN1515206120101216)

Amendment to telecommunications law endorsed in first session

The National Assembly (AN) passed on Wednesday in a first session the amendment to the Telecommunications Organic Law with dissenting political Podemos party voting against. According to Deputy Ismael García, for Podemos party, the reform "violates and puts in the hands of the president and of Conatel (National Telecommunications Commission) in a discretionary manner the regulation of the radio spectrum." García warned that the biggest problem in the reform is that "it is targeted at those media which are not in line with the State and government policy." (El Universal, 12-15-2010; http://english.eluniversal.com/2010/12/15/en_pol_esp_amendment-to-telecom_15A4859331.shtml)

Petroleum & Energy

Venezuelan crude oil production dropped in November 2010, compared to the same period last year. According to figures published by the OPEC, last month, Venezuela produced an average 2.2 million barrels of crude per day, down 3% from November 2009. (Veneconomy, 12-14-2010; http://www.veneconomy.com/site/index.asp?idt=24303&idc=4&NPag=2&Start=15&aaD=2010&ids=44&Var_Send=1&mmD=12&ddD=14&mmH=12&ddH=16&aaH=2010&Send=Buscar)

Brazil: Pdvsa is likely to walk out of refinery project

After nearly five years of disagreements, Brazilian oil company Petrobras admitted that state-run oil company Petróleos de Venezuela is likely to desist from participating in a project to build the Abreu e Lima refinery in the Brazilian state of Pernambuco. Petrobras has already started works but has not received funds from Venezuela, which is expected to invest USD 4.47 billion in the project. (El Universal, 12-14-2010; http://english.eluniversal.com/2010/12/14/en_eco_art_brazil:-pdvsa-is-lik_14A4854251.shtml)

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

December 13th, 2010

Economics, Trade & Business

ECLAC Venezuelan economy projected to close 2010 with a 1.6% contraction

The Venezuelan economy will close this year with a contraction of 1.6% according to projections by the Economic Commission for Latin America and the Caribbean (ECLAC), which disclosed its regional its balance in Santiago de Chile. The organization notes that the country will recover next year with a growth of 2%. As for the region, projected growth is 4.2% in 2011, a 6% lower performance at the close of this year. (El Mundo, 12-13-2010; http://www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=26&Id_Noticia=11373)

PDVSA said to plan $2 billion bond sale before year-end

Petróleos de Venezuela SA plans to sell $2 billion in bonds to the central bank to repay a loan, said a government official with direct knowledge of the transaction. The bond sale will take place before the end of December, said the official, who asked to stay anonymous because the plan isn’t public. With the bond sale, the state-run oil company will have practically repaid the full amount of the loan, the person said. (Bloomberg, 12-13-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aitFIwX7uY4g)

Chávez to decree Venezuela sales tax rise

President Hugo Chavez said on Monday he would use special decree powers to hike Venezuela's sales tax rate and raise cash to help the South American nation recover from disastrous floods. "We need extraordinary funds and one of the laws we are going to approve is going to be a rise in sales tax," Chavez said. The Venezuelan leader said the government had still not decided by how many points it wanted to raise the tax from the current level of 12 percent. But any increase would have only a "minimal effect" on inflation, Chavez said. Each percentage point rise in the sales tax would raise 5 billion bolivars, Chavez said, without specifying over what time period that would be. (Reuters, 12-13-2010; http://www.reuters.com/article/idUSN1323747220101214)

Venezuelan government exonerates debts of flood-hit farmers

The government will exonerate agricultural debts acquired by farmers and producers with private or public institutions in the region of Sur del Lago, western Venezuela, informed last Sunday Agriculture and Lands Minister, Juan Carlos Loyo. Loyo commented the State is taking measures in the agricultural area with the aim to benefit all farmers who were affected by the heavy rains which hit the country. “Any agricultural producer who has a debt and had a partial or total loss will be exonerated by the Government and we will make it by means of an instrument which is being requested in Parliament,” he informed. (AVN, 12-13-2010; http://www.avn.info.ve/node/33673)

Argentina and Venezuela to build textile joint venture

The first textile joint venture in Portuguesa state will be built in the framework of the agreements between Venezuela and Argentina, to promote national production of fabric and rescue the production of cotton. The factory is expected to cost about 7.69 billion dollars. The Mayor of Araure, Jose Rafael Vasquez, where the factory will be built, announced that the works have already begun and the factory should be fully operational by March. It will be the largest textile company in Venezuela and with it, Portuguesa will generate 80% of the national cotton production,” he commented. (AVN, 12-13-2010; http://www.avn.info.ve/node/33744)

Politics

Chavez seeks decree powers over opposition protests

Venezuelan President Hugo Chavez is set to ask the National Assembly to grant him powers to enact legislation without its approval; a move the opposition says is intended to weaken the new congress being sworn in next month. Decree powers are needed to quickly allocate resources to build homes and repair infrastructure after heavy rains killed 35 people and left 124,000 homeless, Chavez said Dec. 10. The government will request permission as early as today and begin to pass legislation on Dec. 17, he said. (Bloomberg, 12-13-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=a5aSH4Qme6ac)

Venezuela ranks 76th in quality of democracy

Norway is the most complete and developed democracy in the world, followed by Sweden and Finland, according to an interdisciplinary study prepared by the Vienna-based institute. In the 100-country list, New Zealand, which ranks sixth, is the only non-European country. The ranking considers indicators related to politics, economy, gender equality, access to education, health and environmental protection. The first Latin American country is Uruguay (21), while Chile and Costa Rica rank 28 and 29, respectively. Argentina ranks 38, ahead of Brazil (43), El Salvador (45), Ecuador (49), México (51), Colombia (55), Paraguay (59), Nicaragua (63), Bolivia (64), Honduras (70), Guatemala (74) and Venezuela (76). (El Universal, 12-13-2010; http://english.eluniversal.com/2010/12/13/en_pol_esp_venezuela-ranks-76th_13A4848855.shtml)

Venezuelan bill seeks to regulate the right to strike in the oil industry

Labor conflicts and union demands are perceived by the Executive Office's authorities as possible threats to the oil industry's operations. Therefore, a possible legal instrument to regulate oil workers' right to strike is being considered by Venezuelan authorities. According to an article of the draft Organic Law for Protection of the National Hydrocarbons Sector, "the right to strike may be exercised within the companies included in the national oil and gas sector, in the terms and conditions authorized by the Ministry with competence over labor issues. It will also provide the minimum services to be carried out to ensure the continuity and regularity of operations." (El Universal, 12-13-2010; http://english.eluniversal.com/2010/12/13/en_pol_esp_venezuelan-bill-seek_13A4848493.shtml)

Reform of the Telecommunications Act

The Democratic Unity Bureau warned that the planned amendments to the Telecommunications Law is evidence, once again, of the government's intention to establish greater controls to prevent the free flow of information and opinions in Venezuela. "If the Venezuelan democratic society does not reject it (...), the country would end up with one version of events that will be presented by the government controlled media (...) A citizen would have no option to choose and could only have access to the services provided by the government," warned the executive secretary of the UNT, Ramon Guillermo Aveledo, who condemned the Government's attempt to "seize the airwaves and even online." (Ultimas Noticias, 12-13-2010; www.ultimasnoticias.com.ve/Noticias/MUD-condena-reforma-a-Ley-de-Telecomunicaciones.aspx)

Petroleum & Energy

Venezuela Oil Minister: OPEC unlikely to change output in 2011

OPEC is unlikely to change its production ceiling in 2011 even though the price of oil could rise, Venezuela Oil Minister Rafael Ramirez said Saturday. Speaking to reporters after the Organization of Petroleum Exporting Countries' meeting, Ramirez said that oil's likely rise to the $100 per barrel does not reflect its true cost to consumers, as it is due to the relative weakness of the U.S. dollar. "The price we are seeing is not real," he said. "The price is affected by the dollar devaluation and the cost of services." (Fox Business, 12-11-2010; http://www.foxbusiness.com/markets/2010/12/11/venezuela-oil-min-opec-unlikely-change-output/)

US documents: Chavez's oil industry deteriorating

U.S. officials detailed declining conditions in Venezuela's oil industry in memos released by WikiLeaks, saying the country's growing economic problems are taking a toll on President Hugo Chavez's popularity. In one confidential document dated Oct. 15, 2009, the U.S. Embassy said "equipment conditions have deteriorated drastically" since the government expropriated some 80 oil service companies earlier that year. It said safety and maintenance at the now state-owned oil facilities were in a "terrible state." (AP, 12-10-2010; http://news.yahoo.com/s/ap/20101211/ap_on_bi_ge/lt_wikileaks_venezuela_1)

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.

December 9th, 2010

Economics, Trade & Business

Guasare coal declares force majeure -buyers

Venezuelan coal miner Guasare Coal International has declared force majeure on December shipments from the port of Maracaibo, European coal buyers said on Tuesday. Guasare, a joint venture between Venezuela's state-owned Carbozulia, U.S.-headquartered Peabody and Anglo American Plc, operates the Paso Diablo mine in Venezuela's western Zulia state. Paso Diablo produces around 6 million tonnes a year of high energy content coal, which is sold to industrial users and power plants in Europe, Brazil, Canada, the U.S. and Caribbean. (Reuters, 12-07-2010; http://www.reuters.com/article/idUSLDE6B61ND20101207)

Venezuelan Industrial sector closed the year down 3%

The industrial sector closed the year in a tailspin. Conindustria President, Carlos Larrazabal, reported yesterday that 2010 "concludes as we had anticipated, with a stagnant economy, estimating a further drop in manufacturing GDP of 3%." We have had six consecutive quarters of decline… so we've lost five years of growth." (Ultimas Noticias, 12-09-2010; http://www.ultimasnoticias.com.ve/Noticias/Industriales-cierran-el-ano-con-una-caida-de-3-.aspx)

Venezuela's consumption shrinks for second year in a row

Venezuela's consumption rate was characterized by a slowdown in 2010. After showing high levels of growth in previous years, it downsized for second year in a row. Luis Vicente León, the director of polling firm Datanálisis reported that domestic consumption has fallen 3.3 percent this year, similar to the drop in 2009, when the economic downturn amounted to 3.2 percent. This slowdown, which amounts to 7-8 percent in the past two years, has created pessimism in Venezuelan consumers who "consider they have lost their quality of life." (El Universal, 12-08-2010; http://english.eluniversal.com/2010/12/08/en_eco_art_venezuelas-consumpt_08A4830973.shtml)

Nationwide Consumer Price Index (NCPI) posted an accumulated increase of 923% in the 11 years and 10 months of Chávez’ administration, said private firm Capital Market Finance director Jesús Casique. The increase of prices of goods and services happened despite the controls enforced by the President at the beginning of 2003 and the appearance of the bolívar fuerte in 2008. (Veneconomy, 12-09-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=24245&idc=2)

Rains to boost inflation in agricultural products

Rains and floods have battered farmers, who so far have reported losses in crops of plantains, vegetables, cocoa and taro in 11 Venezuelan states. This will further undermine agriculture production, which is already insufficient, and acts as a catalyst for inflation. Data provided by the Central Bank of Venezuela (BCV) shows that, between January and November 2010, prices of agriculture products increased by 51.3 percent. Inflation has hit low-income families the hardest, since they spend more than half of their income on food. While the Venezuelan government could boost imports in order to increase the supply of products, such a move has proven unsuccessful in recent years. (El Universal, 12-09-2010; http://english.eluniversal.com/2010/12/09/en_eco_esp_rains-to-boost-infla_09A4834291.shtml)

Venezuelan Government to cancel debt of producers affected by rains

The Venezuelan Government will cancel the debts of the agricultural producers in the Sur del Lago region, in the Zulia state (Venezuela’s northwest), who lost their crops, homes and possessions due to the precipitations that fell in the country in the past weeks. The announcement was made by the President of Venezuela Hugo Chavez during an inspection by the affected zone. “I have decided to begin with a process to restructure the debts and credits to producers. Those who lost all their crops will not pay anything; therefore, we will evaluate farm by farm. I promise to cancel the debts of all the producers,” he explained. (AVN, 12-09-2010; http://www.avn.info.ve/node/33044)

Rains threaten to undermine economic rebound in 2011

Asdrúbal Oliveros, the director of Ecoanalítica, believes that the consequences will be felt in 2011 rather than in the fourth quarter this year. "The greater impact will come in the first quarter next year. Since agriculture has little weight in GDP, growth in trade, transport and storage would be most seriously hit." Official statistics show that agriculture accounts for less than 3 percent of GDP, while trade, transport and storage, overall, amount to 13.1 percent of GDP. (El Universal, 12-08-2010; http://english.eluniversal.com/2010/12/08/en_eco_esp_rains-threaten-to-un_08A4830055.shtml)

Venamcham presents the top 100 in Venezuela

Carlos Henrique Blohm, the president of the Venezuelan American Chamber of Commerce and Industry (Venamcham), announced the list of the Top 100 Companies in Venezuela. He said that the ten first companies are: Pdvsa, Cantv, Movistar, Mercantil, Banesco, Farmatodo, Provincial, Seguros Caracas, Digitel, Banco de Venezuela and Coca-Cola. In a survey of 287 companies that participated in the poll, 53 percent considered that there will be no changes in national expectations. (El Universal, 12-09-2010; http://english.eluniversal.com/2010/12/09/en_eco_art_venamcham-presents-t_09A4835057.shtml)

Politics

Venezuela govn’t takes stake in anti-Chavez TV

Venezuela's government has taken control of a fifth of the shares in Globovision, a sign of mounting pressure on the opposition television network opposed to President Hugo Chavez. Chavez has in the past threatened to close Globovision, which has a strong editorial line against his socialist policies and is seen by its supporters as a bastion of opposition to the many pro-government television stations. (Reuters, 12-07-2010; http://www.reuters.com/article/idUSN079924120101207)

Transport & Logistics

Sea Departure Restrictions Lifted

Motivated by improving sea conditions in the states of Sucre, Nueva Esparta and Falcon, the National Institute of Aquatic Spaces (INEA) lifted the restrictions on departures for smaller vessels (less than 150 gross tonnage units). The general manager of Harbor Master, Christopher Figueroa, reported that evidence such entities have clear skies, good visibility, calm seas and moderate winds. (Ultimas Noticias, 12-08-2010; http://www.ultimasnoticias.com.ve/Noticias/Inea-levanta-restriccion-de-zarpes.aspx)

Petroleum & Energy

Venezuela orders oil companies to lift output

Venezuela's oil minister has given oil companies including Chevron, Repsol, BP and Petrobras 30 days to raise production at more than 20 joint ventures, as the OPEC nation struggles with falling output of its main export, according to a letter seen by Reuters on Wednesday. In the letter, Oil Minister Rafael Ramirez gave the companies 30 days to present a new production plan and requested they seek their own financing. Several firms want another month, a company source said. The joint ventures have a combined output capacity of at least 400,000 barrels-per-day. (Reuters, 12-08-2010; http://www.reuters.com/article/idUSTRE6B756O20101208)

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.

December 6th, 2010

Economics, Trade & Business

Venezuela, Colombia develop new commercial agreement

The governments of Venezuela and Colombia are negotiating to boost a new commercial accord upon the basis of complementariness and joint economic development. The information was given by Venezuelan Foreign Minister Nicolas Maduro to state-run television VTV at the end of the 20th Ibero-American Summit, which took place in Mar del Plata, Argentina. According to the press office, Maduro detailed part of the bilateral meeting held with his Colombian counterpart Maria Angela Holguin about the new economic accord. According to him, they are structuring joint teams to broaden specific cultivation projects and to develop the national coffee production plan, with Colombian investment and Venezuelan experience. (AVN, 12-06-2010; http://www.avn.info.ve/node/32439)

China, Venezuela pledge to boost cooperation

China and Venezuela Friday pledged to boost bilateral relations and cooperation. The pledge came out of a meeting between Chinese Vice Premier Li Keqiang and a Venezuelan government delegation, which is in China for the ninth meeting of the China-Venezuela Senior Mixed Committee. Hailing the fast growth of China-Venezuela relations in recent years, Li said the two sides have enjoyed fruitful cooperation in areas including energy, agriculture, culture and infrastructure. (China Economic Net, 12-04-2010; http://en.ce.cn/National/Politics/201012/04/t20101204_22021861.shtml)

Transparencia Venezuela says government to increase IVA

Transparencia Venezuela said that the draft 2011 budget estimated revenues with the largest non-oil tax burden in recent years, reaching spending of 57.9%. It was 53.1% in 2010. They estimate there will be an IVA (Value Added Tax) increase from 12% to 15%. (El Nacional, 12-06-2010; http://www.el-nacional.com/www/site/p_contenido.php)

Inflation, inflation! The big headache

Inflation has become the government’s "headache" because it has not been able to solve it so far, and neither seems to have a solution for the near future, meaning 2011 and 2012. This impacts with greater force and depth those who earn less and, of course, purchases of goods and services, including food. This Government has recorded an average inflation of about 21%, which may not be alarming, but, as we said, erodes daily wages, with the aggravating circumstance that the average results from an irreversible increase which, instead of showing a downward trend, is rising. (Tal Cual, 12-06-2010; www.talcualdigital.com/index.html)

New CADIVI rule requires updated data from companies

Companies registered in the Foreign Exchange Administration Commission (CADIVI) must perform a data update between 3 January and 3 March next year under a new order released today by the agency in Official Gazette No. 39,566. Order No. 106, repealing No. 010, "regulates the requirements and procedures to be followed by applicants for registration or users to update data in the Members of the Foreign Exchange System Administration Registry (RUSADIR)", the document says. (El Mundo, 12-06-2010; www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=26&Id_Noticia=11169)

Capitalism and socialism coexist

Economist Ronald Balza says that while Carlos Andres Perez turned policy towards a social market economy without anesthesia, Chavez took from 1999 to 2005 to admit he is a socialist. His aspiration of a socialist system has been implemented gradually and in some cases, two systems, capitalism and socialism coexist as needed. In the meantime, the legal scaffolding to generate the social fabric in which communes and other structures of the people can be created is being put into place. (El Mundo, 12-06-2010; www.elmundo.com.ve/Default.aspx?id_portal=1&id_page=19&Id_Noticia=39319)

Former government official repeats claim that BBVA is for sale

A former top official in Venezuela's government Sunday repeated his claim that the local unit of Spanish bank Banco Bilbao Vizcaya Argentaria S.A. is being offered up for sale, leading the bank to once again deny it. Jose Vicente Rangel, who was President Hugo Chavez vice president until 2007 and now hosts a Sunday talk show, said a week ago that BBVA's Venezuela unit, BBVA Banco Provincial, was up for sale at a price tag of about $2 billion. BBVA quickly denied it and called Rangel's comments "irresponsible." On Sunday, Rangel stood by his initial comments and said the source who gave him the information is reliable. (Fox Business, 12-05-2010; www.foxbusiness.com/markets/2010/12/05/venezuela-government-official-repeats-claim-bbva-unit-sale/)

“Temporary occupation” of Alvenca

On Thursday, after an inspection by INDEPABIS along with regional authorities, it was decided to “temporarily occupy” Aluminios de Venezuela C.A. (Alvenca), which processes aluminum frames and is located in La Victoria Industrial Zone in Aragua state. Its 101 workers had paralyzed the company 12 days ago to protest the discussion of labor benefits and alleged administrative and operational irregularities. (Veneconomy, 12-04-2010; www.veneconomy.com/site/index.asp?ids=44&idt=24166&idc=3)

Politics

Venezuela moves flood-hit families into resort hotels

Venezuelan security forces have started housing families displaced by floods in tourist hotel rooms following an order by President Hugo Chavez to make use of vacant accommodation, local media said on Monday. Heavy rains have killed at least 32 people and forced more than 100,000 from their homes in recent days. Emergencies have been declared in various states, and the country's Caribbean coast has been particularly hard hit by mudslides. In a televised broadcast from one flooded area on Sunday, the president told the National Guard to begin moving families into vacant hotel accommodation. (Reuters, 12-06-2010; http://www.reuters.com/article/idUSTRE6B54IS20101206)

Venezuelans elect 11 mayors, 2 state governors

An opposition candidate won the mayorship of Venezuela's second-largest city of Maracaibo Sunday, claiming the big prize in regional elections seen as a test of President Hugo Chavez's popularity, according to initial results.

Venezuelans also elected governors in two rural states that have traditionally favored pro-Chavez candidates and mayors in 10 municipalities besides Maracaibo. Candidates from Chavez's ruling party captured 7 of the 11 mayorships and one state, according to official results released by local election authorities. (Miami Herald, 12-05-2010; http://www.miamiherald.com/2010/12/05/1958375/venezuelans-to-elect-11-mayors.html)

Diplomatic frictions between US and Brazil due to Chávez

According to diplomatic cables leaked by the whistleblower website Wikileaks and published by the French newspaper Le Monde, US and Brazilian diplomats consider Venezuela to be a threat to the region, although they agreed that isolation was not the solution. They also said that Hugo Chávez is like the proverb: a barking dog doesn't bite. The US diplomatic cables reveal the different positions of the Brazilian politicians with regard to Venezuela's President Hugo Chávez. (El Universal, 12-06-2010; http://english.eluniversal.com/2010/12/06/en_pol_esp_diplomatic-frictions_06A4821213.shtml)

Paraguayan President urges politicians "not to equate Chávez with Venezuela"

President Fernando Lugo requested the country's political elite "not to equate" President Hugo Chávez with Venezuela. Lugo reiterated his support to Venezuela's entry into Mercosur. "Unfortunately this issue has become highly politicized and Venezuela has been compared with (President Hugo) Chávez," Lugo said in an interview published by the newspaper Tiempo Argentino. (El Universal, 12-06-2010; http://english.eluniversal.com/2010/12/06/en_pol_esp_paraguayan-president_06A4821651.shtml)

Transport & Logistics

One hundred and forty-three roads have been affected nationwide by the rains, informed Transport and Communication Minister Francisco Garcés. Sixty-four of those are the result of landslides, 12 are fallen bridges with partial damages and the rest is mostly roads that gave way and other problems. Yesterday evening, the La Ranita Bridge on the Morón-Coro road collapsed. (Veneconomy, 12-04-2010; www.veneconomy.com/site/index.asp?ids=44&idt=24165&idc=3)

Petroleum & Energy

PDVSA's refineries are a bargain for Germany

In the framework of his most recent tour through Asia, the Middle East and Europe, President Chávez, on 14 October announced on a visit to Moscow the signature of 30 bilateral agreements, the sale for an amount 1,600 million dollars to the Russian oil firm Rosneft of all PDVSA shares in the four refineries in the Ruhr Oel German company, whose crude processing capacity is of more than 216 000 barrels per day. Currently, PDVSA still has a 50 percent stake in the joint venture (Ruhr Oel), while the other half belongs to British Petroleum. The refineries are located in the cities of Gelsenkirschen, Neustadt, Karlsruhe and Schwedt. (Tal Cual, 12-06-2010; http://www.talcualdigital.com/index.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.

December 2nd

Economics, Trade & Business

Venezuela to Liquidate Banco Federal, Official Gazette Says

Venezuela ordered the liquidation of Banco Federal CA and three related companies, according to a resolution published in the Official Gazette today. The country’s banking regulator took over Federal in June, citing liquidity concerns, and has been paying the bank’s customers through government-run banks and the deposit guarantee fund. Venezuela will sell off assets to pay bank employees and repay the deposit fund, Finance Minister Jorge Giordani said Aug. 10. (Bloomberg, 12-02-2010; http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=awSl7cqXE8bI)

Morgan Stanley fears high import demand

The U.S. firm Morgan Stanley is very clear in its expectations for next year: the supply of local inputs will be limited by the negative impact of expropriations. Given this scenario, the bank believes that the Venezuelan authorities will focus directly on stimulating consumption by importing more goods. "We expect imports of goods to remain the most important component of the demand for dollars," says the report of the firm. (El Universal, 12-02-2010; http://www.eluniversal.com/2010/12/02/eco_art_morgan-stanley-teme_2124673.shtml)

Politics

U.S. views Chavez in "axis of mischief"

Cuban intelligence services directly advise Venezuelan President Hugo Chavez in what a U.S. diplomat called the "Axis of Mischief," according to a State Department cable released by the WikiLeaks website. Other releases by the group revealed U.S. anxiety at Chavez's "coziness" with Iran, and concerns by Venezuelan Jews over what they see as government prejudice against them. Worries over Cuba's role in Venezuela, a top U.S. oil supplier, were shown in a 2006 diplomatic message. "Cuban intelligence has much to offer to Venezuela's anti-U.S. intelligence services," said the cable posted on wikileaks.org on Wednesday. (Reuters, 12-01-2010; http://www.reuters.com/article/idUSN0115084120101202)

Key political risks to watch in Venezuela

President Hugo Chavez's latest nationalization drive, political tensions in parliament, moves against the oil industry and the long tail-end of a recession are all risks to watch in Venezuela in the coming months. Chavez has nationalized a lot of businesses in Venezuela and he will nationalize more before the next presidential election in 2012. After 12 years in office, the former soldier shows no signs of slowing his drive to recreate Venezuela as a socialist state. (Reuters, 12-01-2010; http://www.reuters.com/article/idUSRISKVE20101201)

Diplomacy a la Chávez

Always a master of diplomacy, Venezuelan President Hugo Chávez has given some advice to the U.S. Secretary of State: "Hillary Clinton should resign, it's the least she can do with all of this spying and delinquency in the State Department." Using WikiLeaks' publication of 250,000 diplomatic cables as a springboard to attack the U.S. Secretary personally, Chávez said that "Mrs. Clinton thinks she is superior to Obama. Since she is white, she thinks she is superior to the black guy." In a classic act of Freudian displacement, Chávez called the United States a 'failed, illegal state, which threw respect for its allies overboard in order to further pursue its domination and abuses." Other State leaders and diplomats don't interpret the leaks to be quite as damning. Some world leaders have stated they understand the comments are part of the reality in conducting foreign relations. One of Secretary Clinton's counterparts even joked that Mrs. Clinton need not worry, saying: "You should see what we say about you." (What´s Next Venezuela, 12-01-2010; http://en.whatsnextvenezuela.com/)

Business organizations from Latin America, Spain and Portugal asked the Venezuelan government to stop its “attacks” on the private sector, which they claim is destroying the productive system and causing thousands of jobs to disappear. They also expressed their concern over the “verbal and physical violence in this country against the business institutions and their leaders.” (Veneconomy, 12-02-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=24135&idc=3)

The Latinobarómetro poll

Support for democracy in Latin America continues to edge up, as does backing for private enterprise. Two related things stand out in the results of this year’s poll, taken in September and early October. The first is Latin America’s fairly sunny mood. The second is the increasing stability of attitudes towards democracy and its core institutions. Support for democracy has risen noticeably in several countries on the Pacific rim of South America. (The Economist, 12-02-2010; http://www.economist.com/node/17627929?story_id=17627929)

Transport & Logistics

Continued restriction of sailings in Puerto Cabello

The departure of vessels of less than 150 units of gross tonnage (UAB) is still suspended in Puerto Cabello. Oscar Benito Ramírez Petit, head of the Port Authority, said the sea conditions have not improved. The decision to prolong restrictions was given on Wednesday afternoon, following a reappraisal of weather conditions. (Notitarde, 12-02-2010; http://www.notitarde.com/notitarde/plantillas/nota.aspx?idart=1194548&idcat=9849&tipo=2)

Petroleum & Energy

Venezuelan crude oil and byproduct exports to the US decline 12 percent

Venezuelan oil exports continue to drop in 2010 compared to last year. According to data provided by the US Energy Information Administration (EIA), the statistical arm of the Department of Energy, sales of Venezuelan crude oil and byproducts to the United States amounted to 1,008,000 barrels per day in September 2010. The figure represents a 12 percent fall in Venezuelan oil exports to the United States compared to the amount of oil and byproducts exported in September 2009, when they averaged 1,146,000 bpd. (El Universal, 12-02-2010; http://english.eluniversal.com/2010/12/02/en_eco_art_venezuelan-crude-oil_02A4805811.shtml)

Eni, Repsol in gas pricing talks with Venezuela

Eni and Repsol are negotiating a price with Venezuela's PDVSA for natural gas they plan to extract starting in 2013; a document seen by Reuters shows, in a sign the country is closer to producing offshore gas. Venezuela has vast reserves of natural gas in the Caribbean but development of the fields has been slow -- in part because of concerns among foreign firms about what they see as unfavorable prices offered by PDVSA for the gas extracted. (Reuters, 12-01-2010; http://www.reuters.com/article/idUSN0114283320101201)

China's Sinopec to have a stake in Orinoco Oil Belt

China's Sinopec will partner with the state-run oil company Petróleos de Venezuela (Pdvsa) to develop the Junín 1 and Junín 8 oil blocks at the Orinoco Oil Belt. The joint venture is aimed at producing 200,000 bpd in each block, Venezuela's Energy and Petroleum Minister Rafael Ramirez said. Pdvsa also signed a joint venture agreement to develop the 400,000 bpd Junín 4 block together with state-owned China National Petroleum Corporation (CNPC), Pdvsa said in a press release. (El Universal, 12-02-2010; http://english.eluniversal.com/2010/12/02/en_eco_esp_chinas-sinopec-to-h_02A4806455.shtml)