October 12, 2012

Economics & Finance

Government allocates U$D 3.5 billion in eight months

In 2003, ahead of a presidential election, President Hugo Chávez Frías launched so-called missions to replace social programs then in place. For nine years, the missions have become banners for the Government, which in turn has financed them using funds from different sources. From January to August this year, U$D 3.5 billion were allocated to standing missions (programs created since 2003) plus the so-called great missions (launched in 2011) with funding from the official budget, additional credit, and contributions from state-run oil company PDVSA. Official data shows that funding out of the yearly budget was U$D 837.2 million, non-budgeted funding was U$D 1.1 billion (over the last eight months), and transfers from the oil company U$D 1.4 billion. (El Universal, 10-10-2012; http://www.eluniversal.com/economia/121010/venezuelan-government-allocates-usd-35-billion-in-eight-months)

Venezuela compensates TERNIUM for nationalization of Sidor

The TERNIUM steel company, owned by Argentina´s TECHINT group, says Venezuela has finally paid off its debt on compensation for the nationalization of the SIDOR steel complex. TERNIUM shareholder SIDERAR says it "has duly received payment for the amount that had not been settled upon the compensation agreed in May 2009 for the transfer of its assets in Sidor," which total U$D 136.7 million. The payment was reported to have been made by Venezuelan Corporation of Guayana (CVG). (El Universal, 10-10-2012; http://www.eluniversal.com/economia/121010/venezuela-compensates-ternium-for-nationalization-of-sidor)

ECOANALÍTICA estimates inflation rate at 21% ending 2012

Last Tuesday, the Central Bank (BCV) published for the National Consumer Price Index (NCPI) in September, a monthly variation of 1.6% for an accrued amount of 11.5% and annualized inflation at 18%. Since the end of 2012 is three months away, the budget goal of 20-22% inflation becomes probable, and could be even below such estimate.

According to José Luis Saboín, an economist with the ECONOANALÍTICA think-tank, inflation at year end will be around 21%. The analyst explained that prices usually accelerate during the last quarter of the year due to seasonal consumption. (El Universal, 10-10-2012; http://www.eluniversal.com/economia/121010/inflation-rate-estimated-at-21-ending-2012)

Venezuelan bonds fall after Chávez's re-election

Amidst an outlook where investors reckon that the victory of Hugo Chávez in the October 7 presidential election would translate into the radicalization of the political process, and not quite effective measures to slow down indebtedness and fiscal deficit, Venezuelan bonds have registered a substantial fall.

The Global 27, which is the most representative paper of the Venezuelan bond basket, lost 4.54 percentage points, the deepest fall in four years, and ended at 86.63% of its value. (El Universal, 10-10-2012; http://www.eluniversal.com/economia/121010/venezuelan-bonds-fall-after-chavezs-re-election; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=606081&CategoryId=10717)

Commodities

PDVSA reports four accidents in six weeks

Over the past six weeks, four accidents have hit different facilities of state-run oil company Petróleos de Venezuela (PDVSA). 45 accidents have taken place in Venezuela's state oil firm to date this year. In addition to the explosion at the  Amuay refinery (northwestern Falcón state) on August 25; on September 19, lightning hit two storage tanks at El Palito refinery (northern Carabobo state), which caused a fire that lasted two days. Iván Freitez, executive secretary of the United Federation of Venezuelan Oil Workers (FUTPV) claimed this fire was not normal in that type of installation. He explained that if high flames were present in the flare through which gases are burnt-, it was a sign of a gas leak, or a failure in procedure. "The flames should have been lower," he said, and added that burning fuels is not frequent inside the refinery. (El Universal, 10-10-2012; http://www.eluniversal.com/economia/121010/pdvsa-has-recorded-four-accidents-in-six-weeks)

Politics

Chávez formally proclaimed President elect of Venezuela

On Wednesday, Tibisay Lucena, the president of the National Electoral Council (CNE), proclaimed Hugo Chávez elected president of Venezuela for the 2013-2019 presidential terms, after winning the October 7 presidential election. (El Universal, 10-10-2012; http://www.eluniversal.com/nacional-y-politica/121010/chavez-proclaimed-elected-president-of-venezuela)

Venezuela’s new Vice President is Nicolás Maduro, as announced by President Chávez after he was formally proclaimed President for the 2013-2019 term by the National Electoral Council (CNE). Elías Jaua who was Chávez’ Vice President until yesterday will run for the Governorship of Miranda. Chávez did not name the person to replace Maduro at the Ministry of Foreign Affairs. (Veneconomy, 10-11-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32402&idc=1; AVN; http://www.avn.info.ve/contenido/nicolas-maduro-new-venezuelan-vice-president; Reuters, http://www.reuters.com/article/2012/10/11/us-venezuela-election-vicepresident-idUSBRE8991QN20121011; Fox News, http://www.foxnews.com/world/2012/10/10/hugo-chavez-names-new-vice-president-in-venezuela-choosing-longtime-foreign/)

Office to monitor public institutions created

In order to reaffirm leadership, re-elected President Hugo Chávez has turned to self-criticism. Throughout his presidential campaign he called for more efficiency and announced the creation of a ministry responsible for following up on government plans. On Tuesday he said he would transform the Ministry of the Secretariat into a "powerful ministry able to monitor plans and programs," which is pretty much similar to what he had said in previous days. (El Universal, 10-10-2012; http://www.eluniversal.com/nacional-y-politica/121010/office-to-monitor-public-institutions-created-in-2010)

Henrique Capriles Radonski registered his candidacy to be re-elected in Miranda State

Former opposition presidential candidate Capriles returned to his position as Governor of Miranda State and registered to run for reelection next December 16th. (Veneconomy, 10-11-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32400&idc=1)

October 09th, 2012

Economics & Finance

Expropriation of strategic companies in Venezuela will remain on recently re-elected President Chávez’ agenda says his Vice President Elías Jaua. He explained that Chávez will strengthen “control over strategic parts of the economy” such as energy, people’s food, inputs for construction” (Veneconomy, 10-08-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32365&idc=1; Reuters, 10-07-2012; http://www.reuters.com/article/2012/10/08/us-venezuela-election-nationalizations-idUSBRE89701X20121008)

Controls to remain

Luis Vicente León, of DATANALISIS, has spoken to the economic scenario and expectations for a new economic policy. He foresees a devaluation that could be more than 60% during the first quarter 2013, and adds "It needs it and has the capital to do so".  He also expects continued exchange controls, but believes it is possible there will be a bigger opening for imports. IESA Economics Professor José Manuel Puente believes the exchange rate could be adjusted at any time, and says the socialist project will be expanded and will mean more economic imbalance. Puente adds that the Central Bank is selling gold reserves in order to maintain liquidity and a secondary exchange market. More in Spanish: (Tal Cual; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/elecciones-2012/121009/analistas-afirman-que-el-ajuste-del-tipo-de-cambio-sera-en-2013)

Fitch warns about the deficit, saying "the reelected government faces the challenge of adjusting its exchange policy and there continues to be great uncertainty on whether it will be able to curb the fiscal deficit while sustaining economic growth and fighting inflation." It adds that rapid expansion in public spending led to an enlarged deficit, which is estimated at 6.9% if GDP in the case of the national government, while international reserves have diminished as oil income was sent to "non transparent special funds". More in Spanish: (El Universal; http://www.eluniversal.com/nacional-y-politica/elecciones-2012/121009/fitch-alerta-sobre-el-deficit-en-las-cuentas-publicas)

CITI forecasts slight drop in Venezuelan bonds

Several international financial research sources have estimated the short term impact of the Chavez reelection. CITI estimates as light drop in Venezuelan bonds as markets open, but says they will not drop more than 150 points. It added: "In a poll of 100 investors, only 16% said they would lower their position if Chavez won, and 40% said they would sustain the fall." More in Spanish: (El Nacional; http://www.el-nacional.com/)

Chavez win called by BOFA sparks selloff as Barclays flops

State-oil company bonds tumbled after President Hugo Chavez won re-election by more than 10 percentage points in a vote that some polls had showed was too close to call. Notes due 2017 from Petroleos de Venezuela SA (PDVSA), fell 2.63 cents to 87.11 cents on the dollar as of 1:11 p.m. in New York, where trading was limited because of a holiday. The currency slid to a record low in unregulated trading. (Bloomberg, http://www.bloomberg.com/news/2012-10-08/chavez-win-called-by-bofa-points-to-bond-rout-as-barclays-flops.html)

Commodities

Analysis: Chavez win keeps Venezuela oil policy intact

President Hugo Chavez's re-election on Sunday means Venezuela's state oil company PDVSA will remain highly politicized and will continue its discount supply deals with his socialist allies. Critics say Chavez has hobbled PDVSA with the weight of his government's financial demands - it helps pay for everything from sports teams to health clinics and home building - meaning it has neglected to invest enough in the oil business. (Reuters, 10-08-2012; http://www.reuters.com/article/2012/10/08/us-venezuela-election-oil-idUSBRE8970UR20121008; Bloomberg, http://www.bloomberg.com/news/2012-10-08/chavez-declared-winner-over-capriles-in-venezuelan-election-1-.html)

Food industry expects price adjustments, following strict controls held in place during the election campaign.  During the previous two years adjustments had been made on a steady basis to avoid inflation. More in Spanish: (El Universal; http://www.eluniversal.com/nacional-y-politica/elecciones-2012/121009/sector-de-alimentos-espera-ajuste-en-precios-regulados)

Politics

Hugo Chavez beats Henrique Capriles in Venezuela’s presidential election

Fighting for his political life, President Hugo Chavez overcame a vigorous challenge by Henrique Capriles in Sunday’s presidential election, receiving another six-year term that will give the populist firebrand the opportunity to complete the consolidation of what he calls 21st century socialism in one of the world’s great oil powers. The victory, announced by the National Electoral Council late Sunday, gave Chavez the win with 54.4% of the vote, while Capriles took 44.9%. In winning his fourth presidential election since 1998, Chavez captured just over 7.4 million votes to 6.1 million for his adversary, turning back what had been a determined battle by Capriles, a 40-year-old former governor. “I congratulate the opposition and the leaders of the opposition, because they recognize the victory of the people,” Chavez told throngs of supporters gathered outside the presidential palace. “That’s why I send them this greeting and extend my arms to them, because we are all brothers in the fatherland of Bolivar.” The electoral mission of the Union of South American Nations (Unasur) called the experience a "superb lesson". The representative of the European Union for External Relations, Catherine Ashton, asked Venezuelan President Hugo Chávez to avail himself of his renewed government to reach out a hand to all the sectors of the society and foster fundamental liberties; OAS Secretary General José Miguel Insulza spoke of an "exemplary election process" and said they were "good for the region as they show the only option for nations is democracy"; and several Latin American Presidents, including Argentina and Cuba congratulated Chavez on his victory. (The Washington Post, 10-07-2012; http://www.washingtonpost.com/world/venezuelans-flood-polls-for-historic-election-to-decide-if-hugo-chavez-remains-in-power/2012/10/07/d77c461c-10c8-11e2-9a39-1f5a7f6fe945_story.html; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=603023&CategoryId=10717; El Universal, 10-08-2012; http://www.eluniversal.com/nacional-y-politica/121008/unasur-venezuela-gave-a-superb-lesson; http://www.eluniversal.com/nacional-y-politica/121008/european-union-asks-chavez-to-offer-a-hand-to-all-venezuelans; http://www.eluniversal.com/nacional-y-politica/121008/latin-american-presidents-congratulate-chavez and more in Spanish: Tal Cual; http://www.talcualdigital.com/index.html)

Opposition votes grew since 2006, but not enough

Although the reelected President took 55% of the vote, across the board figures show the opposition gained by up to 24 points over 2006 results in some states, such as Amazonas. The increase was not enough to overcome pro Chavez votes, which remained stagnant but did not diminish. The opposition became a majority in the Andean states of Mérida (51,41%)  and Táchira (56,41%); and in populous Miranda, around Caracas, the difference was a mere 0,2% in favor of Chávez. In Zulia, however, the opposition lost 2.11 points since 2006; whereas in Lara and Monagas, where both governors turned against Chavez, the opposition also gained, by 15.38 and 12.16 points, respectively. More in Spanish:  (Tal Cual; http://www.talcualdigital.com/index.html)

Chavez telephoned Capriles

According to campaign chief Armando Briquet President Hugo Chavez telephoned Henrique Capriles and for the first time called him by his name as opposed to the epithets and insults he had used during the campaign. Briquet denied the call was "the beginning of a dialogue", yet underlined the need for "mutual recognition, lowering tension, insults and disqualification of those who disagree". He said Capriles said what he had to say and Chavez also expressed his views, and if that leads to a dialogue it is welcome. More in Spanish: (Tal Cual; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/elecciones-2012/121009/chavez-y-capriles-sostuvieron-una-amena-conversacion)

Romney: Chávez's and Castro bothers' ideology has failed

US presidential candidate Mitt Romney says Latin America is resisting the "failed ideology" of reelected President Hugo Chávez and the Castro brothers in Cuba, in a speech on foreign policy that did not specifically address the results of the Venezuelan presidential election held on Sunday. Romney says, "Our neighbors in Latin America want to resist the failed ideology of Hugo Chávez and the Castro brothers and deepen ties with the United States on trade, energy, and security," AFP cited. (El Universal, 10-08-2012; http://www.eluniversal.com/nacional-y-politica/121008/romney-chavezs-and-castro-bothers-ideology-has-failed)

‘Sigh of relief’ in Cuba as ally and oil benefactor Hugo Chavez wins reelection in Venezuela

President Hugo Chavez’s reelection was welcome news on the streets and in the halls of power of Cuba, which relies on Venezuela for a big chunk of its economy through trade and preferential oil shipments. Chavez counts former Cuban President Fidel Castro as a friend and mentor, and his opponent, Henrique Capriles, had promised to change a relationship he described as financing Cuba’s political model. (The Washington Post, 10-08-2012; http://www.washingtonpost.com/world/the_americas/sigh-of-relief-in-cuba-as-ally-and-oil-benefactor-hugo-chavez-wins-reelection-in-venezuela/2012/10/08/e82b50ec-1178-11e2-9a39-1f5a7f6fe945_story.html)

October 05th, 2012

Economics & Finance

Chávez pulls purse strings in election bid

In facing a tough re-election fight on Sunday, President Hugo Chávez is trying to improve his odds by repeating his past formula for electoral success: lavish government spending to pull support. With a weak economy and rampant crime, many voters are reconsidering their support for Mr. Chávez after nearly 14 years in charge, and leaning toward his rival, 40-year-old state Gov. Henrique Capriles. Yet, thanks to big government spending, Mr. Chávez is a slim favorite to win another six-year term in the Oct. 7 vote. "I think that's been his formula," said Michael Shifter, president of the Inter-American Dialogue, a Washington think tank. "Whether that works for him this time around is another question." Analysts wonder whether the spending spree will buy as many votes this time around as in past elections, particularly given double-digit inflation and homicide rate that reached a record 19,000 last year, according to the nonprofit Venezuelan Violence Observatory.(The Wall Street Journal, 10-04-2012; http://online.wsj.com/article/SB10000872396390444138104578030700356304858.html)

Brazil is covering Venezuela's back

In 2003, the trade between the two countries amounted to U$D 800m. By 2011, this figure had gone up to U$D 5bn. The two countries tightened institutional links through consultancy on public policies and training courses for leaders. However, the main goals of Lula and Chávez were geopolitical. Samuel Pinheiro Guimarães, the most influential diplomat in the Brazilian chancellery, explained that Brazil's strategy sought to prevent the "removal" of Chávez through a coup, to block the reincorporation of Venezuela into the North American economy, to extend Mercosur with the inclusion of Bolivia and Ecuador and to hinder the US project to consolidate the Pacific Alliance, which includes Chile, Colombia, Mexico and Peru. (The Guardian, 10-02-2012; http://www.guardian.co.uk/commentisfree/2012/oct/02/brazil-has-venezuela-back?newsfeed=true)

BOFA says Chavez defeat bets are overdone in bond market

Bank of America Corp. recommended selling Venezuelan bonds, saying that their rally shows investors are overestimating the chances that President Hugo Chavez will lose this month’s election. It told clients to sell dollar bonds due in 2028 and 2034, saying they’ve become expensive. Yields on the bonds due 2028 have plunged 2.25 percentage points since the end of June to 10.62% and touched a four-year low of 10.54% yesterday. Bank of America analysts led by Jane Brauer wrote in a report that Chavez is likely to defeat opposition candidate Henrique Capriles Radonski in the Oct. 7 vote and could win by a wide enough margin to give him room to pursue “more radical policies". It said its “central scenario” is Chavez winning by between seven to 10 percentage points. (Business Week, 10-02-2012; http://www.businessweek.com/news/2012-10-02/bofa-cuts-venezuela-bonds-as-chavez-odds-of-defeat-overestimated)

Hyundai stops assembling cars in Venezuela

Jorge Díaz Del Castillo, senior commercial vice-president of MMC Automotriz, a joint venture established with Venezuelan and Japanese capital for the assembling of Hyundai, Mitsubishi, and Fuso cars, announced that the enterprise would stop assembling Hyundai cars in its facilities, located in Anzoátegui state, northeast Venezuela. "Hyundai has not renewed the technology license agreement, in complying with a corporate strategy," Del Castillo informed. (El Universal, 10-04-2012; http://www.eluniversal.com/economia/121004/hyundai-stops-assembling-cars-in-venezuela)

Commodities

Gas leak in Pdvsa refinery was detected more than one hour before the blast

Authorities have not publicly revealed official details and explanations of what really caused the explosion of an olefin cloud at Pdvsa-owned Amuay refinery, on August 25, which killed 42 and injured over a hundred. A task force comprised by 11 deputies of the Venezuelan National Assembly and a group of nine people, including ex-managers, workers and specialists from Paraguaná Refining Complex (CRP) declared that operational reports from Cardón refinery showed, "On August 24 at 11:30 p.m. olefins were being transferred from Amuay refinery to an alkylation plant in Cardón refinery when a loss of pressure and flow occurred." Therefore, there were signs of gas leaking at least one hour and forty minutes before the explosion. (El Universal, 10-04-2012; http://www.eluniversal.com/economia/121004/gas-leak-in-pdvsa-refinery-was-detected-more-than-one-hour-before-the-)

The Energy Journal: Chávez defeat could spark Venezuelan oil comeback

Could the potential election defeat of Hugo Chávez lead to lower oil prices? That is the tantalizing question raised by an article in the FT that reviews Mr. Chávez’s negative legacy on Venezuelan oil production and posits that a victory by challenger Henrique Capriles could boost Venezuela’s sagging oil output. Both candidates vow to boost output to 6 million barrels a day, but Mr. Capriles has more credibility in the market, the story notes. Such a jump in Venezuelan output would also have consequences for OPEC, of which Venezuela is a member. The prospects for a Venezuelan boost under Mr. Capriles is an intriguing possibility, but would be more a medium-term play given that a turnover would also lead to new faces in top oil jobs in Venezuela. (The Wall Street Journal, 10-03-2012; http://blogs.wsj.com/marketbeat/2012/10/03/the-energy-journal-chavez-defeat-could-spark-venezuelan-oil-comeback/)

RIL signs agreement with Venezuela for heavy oil project

Reliance Industries today said it has signed an agreement with Venezuela for a project to produce heavy oil. RIL signed a Memorandum of Understanding with Venezuelan state oil monopoly Petroleos de Venezuela, or PDVSA, to develop a project in the Orinoco extra heavy crude belt, the company said in a statement here. Also, the firm signed a new agreement to buy more Venezuelan oil for its twin refineries at Jamnagar in Gujarat. "PDVSA will supply between 300,000 and 400,000 barrels per day of Venezuelan heavy crude oil to RIL's two refineries in Jamnagar under a 15-year crude oil supply contract," the statement said. (India Times; http://economictimes.indiatimes.com/news/news-by-industry/energy/oil-gas/ril-signs-areement-with-venezuela-for-heavy-oil-project/articleshow/16658723.cms)

Politics

Hugo Chávez: a strongman's last stand

Amid rumors of failing health and with the country's infrastructure crumbling, Hugo Chávez faces an election that will decide the fate of the Venezuelan revolution. No one ever accused Hugo Chávez of thinking small. He casts politics as an existential contest between good and evil, the oppressed and the oppressor. The next battle is on Sunday, when he seeks a third term to extend his 14-year rule to 2019. There is a clenched tension in the streets, for no one knows what will happen. Some polls give the president a wide lead, others show him trailing. The election will decide the fate of Chávez, 58, and his revolution. Lose, and the revolution dies. Win, and it survives, but only for as long as the leader has a pulse. Cancer treatment has bloated and debilitated the "comandante". Few believe his claims to be cured of a disease whose exact nature and location remains a closely guarded secret. Some palace insiders whisper it is terminal. The revolution hangs by a thread. There appears to be no plan B, no successor. Chávez surrounded himself mostly with mediocrities, valuing loyalty over competence or, it turned out, honesty. Last week a Reuters investigation detailed how more than half of public investment churns into secretive funds controlled by Chávez with no oversight by auditors or congress. With the chief ailing they look lost. Chávez's absence from many rallies has given him the air of Banquo's ghost.  After a recent spate of bad news – a prison riot, a collapsed bridge, an oil refinery accident – Chávez reached for a telling metaphor. "The show must go on." Maybe it will, maybe he will win, and live to rule. But what cost the spectacle? (The Guardian, 10-02-2012; http://www.guardian.co.uk/world/2012/oct/02/hugo-chavez-strongmans-last-stand)

Chavez, Capriles Rally Thousands as Venezuela Campaign Ends

President Hugo Chavez and his rival Henrique Capriles Radonski addressed thousands of supporters today as the official campaign period ended before the Oct. 7 election. Chavez spoke for about 30 minutes heavy rains that left his clothing completely drenched. “I won’t talk long because of the circumstances,” said Chavez, who also sang and danced on the wet stage. “I’m here, just as I said I would be. Thanks to you and thanks to God.” Capriles, the 40-year-old former governor of Miranda state, filled the widest and longest avenue in the city of Barquisimeto in central Lara state, spoke for 55 minutes, thanked his supporters and said Chavez’s government was “tired” after almost 14 years. “President Chavez, your time is over, I want to thank you from the bottom of my heart for showing me the direction to take, it’s love not hate, light not darkness,” Capriles said. “You were a good contender without a doubt, you abused of your position of authority, but this was always a spiritual fight, David against Goliath, and we all know David wins.” (Bloomberg, 10-04-2012; http://www.bloomberg.com/news/2012-10-05/chavez-capriles-rally-thousands-as-venezuela-campaign-ends-3-.html)

President faces first real threat

Henrique Capriles is a skinny marathon runner and opposition governor who has done something no Venezuelan politician has managed in the past 14 years: pose a serious threat to President Hugo Chávez. This Sunday, Venezuelans vote in presidential elections that will be the first time since Mr. Chávez won power in 1998 that the outcome isn't a foregone conclusion. Opinion polls vary widely, partly because Venezuelans mistrust pollsters. Some surveys show Mr. Chávez with a 10- or even 20-point lead. Others show the race neck-and-neck. Respected local pollster Consultores 21 said Tuesday its last pre-election survey shows Mr. Capriles ahead ... (The Wall Street Journal; http://online.wsj.com/article/SB10000872396390443862604578032722399157826.html?KEYWORDS=venezuela)

Will Venezuelans oust Chavez? Miracles do happen, by Enrique Krauze

If Henrique Capriles Radonski triumphs in Venezuela’s elections on Oct. 7, it will be a democratic feat without precedent in Latin American history. It is possible that an opposition candidate has never faced a force like that represented by Hugo Chavez. His government doesn’t employ physical violence as a state policy, but it exercises another kind of coercive and menacing violence, manifold and oppressive. Its power comes from the ballot box under the tight control of arms -- his arms. Anything can happen, including an outbreak of the endemic violence that has plagued Venezuelan history. I have faith in - (a Capriles victory as a) - civic miracle. And I hope that such a victory will herald not only the return of democracy but something much more important and necessary: the reconciliation of the Venezuelan family, divided today by an ideological hatred that is alien to it, that has poisoned it for almost 15 years, and that has choked all possibility of harmony. (Bloomberg, 10-03-2012; http://www.bloomberg.com/news/2012-10-03/will-venezuelans-oust-chavez-miracles-do-happen.html)

Younger candidate challenges Hugo Chavez

Hugo Chavez shows no sign that he's facing the strongest challenge to his 13-year rule in Venezuela. Chavez's opponents are confident that this Sunday, Capriles will unseat the long-ruling leftist leader, a refrain previously heard before eventual defeats. The incumbent is a political survivor and remains popular at home. But there are signals, observers say, that this time Chavez really is on the ropes. Observers say Capriles, 40, represents a moderate alternative. As expected, both sides claim they will be victorious -- and both sides have polls to back up those claims. Part of the problem is "an inherent bias in polling companies," according to Inaki Sagarzazu, a Venezuelan professor of politics at the University of Glasgow in Scotland, who has taken a closer look at the pollsters. Capriles, he noted, also must believe it is a close race, as evidenced by a speech this summer in which he spoke directly to the military, assuring them and other institutions that things will be OK if he wins. The back-and-forth accusations can only mean one thing, according to analyst Sagarzazu: "All the shenanigans that have been happening point in the direction that the government knows that things are close." (CNN, 10-03-2012; http://edition.cnn.com/2012/10/03/world/americas/venezuela-elections/index.html?hpt=ila_c1)

Win or lose, Capriles may win in Venezuela, by Andres Oppenheimer

Anything is possible in Venezuela’s elections Sunday, but there is a good chance that opposition candidate Henrique Capriles Radonski will do better than any of his predecessors in the polls, and that — win or lose — he will put President Hugo Chavez’s 14-year-old regime against the ropes. There is a plausible scenario that even if Capriles loses by a narrow margin, a good showing in Sunday’s election will allow him to keep the opposition unified, and to become a viable alternative to a president who may have terminal cancer, and who has no successor who could beat Capriles. Many analysts see change in the air. In a Sept. 26 report entitled “Now or in a little while,” Barclays bank told its clients that “even in the event of a Chavez victory, we think that given the signs of his weak health conditions, if not now, political change could come in just a little while.” The odds are against Capriles, but he has better chances than any previous opposition leader to succeed Chavez. Win or lose on Sunday, he could still win in the end. Read more here: (The Miami Herald, 10-03-2012; http://www.miamiherald.com/2012/10/03/3033066/win-or-lose-capriles-may-win-in.html#storylink=cpy)

Defense minister claims Chavez opponent would dismantle armed forces

Venezuela's defense minister is claiming that opposition presidential candidate Henrique Capriles plans to dismantle the country's armed forces. Gen. Henry Rangel made the claim Tuesday in a TV interview after Capriles announced that an active general had agreed to be his defense minister. Capriles didn't name the general, but Rangel said he didn't believe any Venezuelan general would betray President Hugo Chavez's socialist government by accepting the appointment. Venezuela's military is constitutionally neutral but Chavez has packed its leadership with loyalists. That has raised questions about whether the armed forces would remain neutral if the results of Sunday's elections are in dispute. Read more: (FOX NEWS, 10-02-2012; http://www.foxnews.com/world/2012/10/02/venezuela-defense-minister-claims-chavez-opponent-would-dismantle-armed-forces/#ixzz28LQls3dG)

October 02nd, 2012

Economics & Finance

End of election campaign spurs bond trading

Venezuelan bond sales have been fueled by rising expectations that Capriles is gaining on incumbent President Chavez, and thus have raised bond prices. More in Spanish: (El Mundo, 10-02-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/recta-final-de-la-campana-provoca-mayor-demanda-po.aspx)

Rise in Venezuelan gov't expenditure hits public finances

Official data shows that the Venezuelan oil basket is averaging U$D 105 per barrel. However, the country's international reserves and deposits in US dollars are dropping, public debt is increasing sharply, state-run oil company PDVSA is demanding additional financial aid from the Central Bank (BCV), and the Foreign Exchange Administration Commission (CADIVI) finds itself unable to provide enough US dollars to citizens and companies. (El Universal, 09-29-2012; http://www.eluniversal.com/economia/120929/rise-in-venezuelan-govt-expenditure-lashes-public-finances)

Commodities

Venezuelan oil basket down to U$D 100.58 per barrel

The Ministry of Petroleum and Mining says the price of Venezuela's oil basket has dropped since last week (U$D 102.76), by 2.12% (U$D 2.18) and closed at U$D 100.58 per barrel. (El Universal, 09-28-2012; http://www.eluniversal.com/economia/120928/venezuelan-oil-basket-down-usd-10058-per-barrel)

Early extraction in the Orinoco Oil Belt begins

PETROMIRANDA and PETROMACAREO, the former a joint venture with a Russian consortium and the latter with Vietnam, produced the first samples of extra-heavy crude oil in each project. PDVSA’s plan is to increase production of the Oil Belt by 1.2 million barrels per day to 2 million bpd by 2014. (Veneconomy, 10-01-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32274&idc=4)

International Trade

Hugo Chávez rival pledges seismic shift in foreign policy

The challenger to Hugo Chávez in the Venezuelan presidential election has vowed a dramatic change in foreign policy if he is elected next Sunday, shifting his country away from China and Russia and reviewing crucial oil deals. Henrique Capriles, who has gained ground in recent polls, said he would halt arms purchases from Russia, rethink relations with Iran and revise deals to exploit one of the world's biggest recoverable oil resources in the Orinoco belt. In an interview during a campaign stop, Capriles said he would end the Chávez policy of promoting worldwide revolution and focus on Venezuela's needs. Polls suggest the race may be tight. Some say Capriles may be leading by two points. If the results are close many fear a period of instability. Capriles has said he will win by a wide margin and a transition will be peaceful. " (The Guardian, 09-30-2012; http://www.guardian.co.uk/world/2012/sep/30/venezuela-chavez-challenger-election-pledges)

China’s Development Bank has lent Venezuela U$S 42.5 billion since 2007 with the collateral guarantee of revenues from the world’s greatest oil reserves, according to data compiled by Bloomberg from agreements announcements by President Chávez’ government. This month, Chávez said he was seeking a third line of credit for 2013. (Veneconomy, 09-28-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32262&idc=2)

China builds, launches second satellite for Venezuela government

China has launched a second satellite built for Venezuela's government. The remote sensing satellite soared into orbit atop a rocket from the northwestern Chinese province of Gansu. The launch was shown live on Venezuelan TV on Friday night. Venezuelan President Hugo Chavez applauded as he watched alongside aides in Caracas, congratulating those who worked on the project. (Fox News, 09-29-2012; http://www.foxnews.com/world/2012/09/29/china-builds-launches-second-satellite-for-venezuela-government/)

Politics

Hugo Chavez pledges to deepen socialist policies if re-elected in Venezuela vote

President Hugo Chavez pledged to redouble his efforts to create a socialist system if re-elected in Sunday’s election, saying the next six-year term would bring bigger changes.  “We’ve laid the foundations of 21st century socialism and today we launch, well, the second cycle,” Chavez said. “We’ll launch the second socialist cycle, from 2013 to 2019, with much more strength.” He is also again saying he believes he has overcome his cancer. (The Washington Post, 10-01-2012; http://www.washingtonpost.com/world/the_americas/hugo-chavez-pledges-to-deepen-socialist-policies-if-re-elected-in-venezuela-vote/2012/10/01/a378b3ac-0c2f-11e2-97a7-45c05ef136b2_story.html and more in Spanish: El Universal; http://www.eluniversal.com/nacional-y-politica/121001/president-chavez-reckons-he-beat-cancer-and-is-healthy)

Opposition rallies in massive show of force for Capriles 

Opposition candidate Henrique Capriles, 40, closed his whirlwind presidential campaign with a massive rally Sunday that clogged the streets of the capital and left his supporters hoping they might end the 14-year administration of President Hugo Chávez. Capriles has seen his popularity swell as he’s tried to convince people that they have nothing to fear from change. In some cases, he’s vowed to push Chávez’s signature socialist reforms even further. “I haven’t seen a campaign like this since perhaps 1963,” said Alfredo Weil, a former member of the national election council, who now runs the election watchdog group Esdata. “The energy he has put in to it is just staggering.” Capriles has asked voters to judge Chavez’s priorities after 13 years in power and decide if they were happy with their lives today. (Miami Herald, 09-30-2012; http://www.miamiherald.com/2012/09/30/v-fullstory/3028039/venezuelas-opposition-rallies.html#storylink=cpy#storylink=cpy; Univision, http://wires.univision.com/english/article/2012-10-01/surging-capriles-threatens-venezuelas-chavez?refPath=/noticias/america-latina/venezuela/; Bloomberg, http://www.bloomberg.com/news/2012-10-01/venezuela-s-capriles-closes-caracas-campaign-as-thousands-march.html; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=32277&idc=1)

Two Venezuelan opposition activists shot dead, OAS Secretary General deplores killings

Gunmen shot and killed two local leaders of parties backing presidential challenger Henrique Capriles on Saturday in the worst violence of a volatile campaign before Venezuela's election next weekend. Capriles' party, Primero Justicia (First Justice), said the gunmen fired from a van that witnesses identified as belonging to state oil company PDVSA or the local mayor's office during a rally in the agricultural state of Barinas. The government of President Hugo Chavez, who is seeking re-election, confirmed the deaths and vowed the perpetrators would be brought to justice. Interior Minister Tareck El Aissami said the circumstances of the attack were still under investigation. OAS Secretary General José Miguel Insulza deplored the killings and hopes that "democracy will be strengthened" in these elections. (Chicago Tribune, 10-02-2012; http://www.chicagotribune.com/news/sns-rt-us-venezuela-electionbre88t006-20120929,0,6079891.story; and more in Spanish: Tal Cual; http://www.talcualdigital.com/index.html; El Universal, http://www.eluniversal.com/nacional-y-politica/121002/insulza-llama-a-venezolanos-a-no-extremar-la-polarizacion-ante-comicio)

Election Fuss: Polling Gaps

Venezuelan polling firms are painting starkly different pictures of the coming presidential election: One group shows President Hugo Chávez comfortably ahead, while another shows a tight race. The divide confuses voters and investors alike ahead of the Oct. 7 poll, in which the nearly 14-year incumbent hopes to win a new six-year term. Mr. Chávez faces Gov. Henrique Capriles, who has gained ground in recent months by promising to keep many of the president's popular social programs, but open the economy to more private investment and crack down on corruption and crime. (The Wall Street Journal, http://online.wsj.com/article/SB10000872396390444549204578020620791147426.html)

Capriles has identified his future Vice President, Defense Minister

Henrique Capriles told foreign media he has already identified his future Executive Vice President, as well as the man who will be his Minister of Defense - an officer currently active within the national Armed Forces. According to Rocío San Miguel, who leads Citizen Control, the announcement is a "powerful message that tells us the Armed Forces are not "chavista" because there are officers willing to take the position in his future administration". More in Spanish: (Tal Cual, 10-02-2012; http://www.talcualdigital.com/index.html)

Capriles vows to help Colombia, cool ties with Iran

Opposition leader Henrique Capriles pledged to help Colombia in its peace talks with rebels and distance himself from Iran should he defeat President Hugo Chavez in an increasingly tight race ahead of Sunday's election. In a press conference he also said he would visit Brazilian President Dilma Rousseff once elected; and that the United States should review its relations with nations in the region: "I do not believe the manner in which relations with the South has been correct; I have said Venezuela will have a respecful and equal relation, with the United States, as with all countries". (Reuters, 10-01-2012; http://www.reuters.com/article/2012/10/01/venezuela-election-idUSL1E8L1BJR20121001 and more in Spanish: Tal Cual; http://www.talcualdigital.com/index.html)

Chavez says he would vote for Obama if American

President Hugo Chavez has weighed in on the U.S. presidential race, saying he prefers President Barack Obama. Chavez also said in a televised interview that aired Sunday that he'd like to have "normal" relations with the U.S. government. The Venezuelan leader says, in his words, "If I were American, I'd vote for Obama." (Fox News, 10-01-2012; http://www.foxnews.com/politics/2012/10/01/venezuela-chavez-says-would-vote-for-obama-if-american/)

He’s known as the James Carville of Latin America. But can he help Hugo Chávez?

Ostensibly, this Sunday’s presidential election in Venezuela is a battle between two native sons: the incumbent, Hugo Chávez, and his challenger, Henrique Capriles Radonski. Behind the scenes, however, an equally ferocious clash is taking place between Brazilian campaign strategists, imported to capture the hearts and minds of Venezuela’s 19 million voters. And in this contest, the spin maestro to beat is João Santana—Chávez’s friendly flack, a low-profile, understated intellectual who is quietly rewriting the book on how to ace elections in Latin America. Santana is to the resurgent Latin American left what James Carville was for Democrats in the United States during the 1990s. Unfortunately, for Chávez, Santana’s makeover might not be enough. Most polls show the president parked below 50 percent and Capriles closing the gap. In Latin America, even the greatest of kingmakers is only as good as the man who wears the beret. (The Daily Beast; 09-30-2012; http://www.thedailybeast.com/newsweek/2012/09/30/joao-santana-the-latin-american-james-carville.html)

Venezuelan youth could decide if Chavez remains in power

Angie Rivas grew up in a “Chavista” household, one so supportive of President Hugo Chavez that family members participated in the populist leader’s huge rallies and voted with the masses as he fended off challengers in one election after another. But Rivas, 25, is one of an increasing number of young Venezuelans who have grown tired of the rampant crime and moribund economy, the electrical blackouts and Chavez’s bombastic speeches. This group could be decisive in an election Sunday that will determine whether Chavez rules until the end of the decade.  “I was only 11 when Chavez got into power,” said Rivas, who is campaigning for opposition leader Henrique Capriles. “But there are holes in the roads, you cannot find a job, there is crime and problems with health care and education. That’s because of 14 years in which the government hasn’t done anything.” The two sides are fighting over an ever-expanding and politically energized segment of the population: the estimated 7.5 million Venezuelans between the ages of 18 and 30 who make up 40% of the electorate. (The Washington Post, 09-29-2012; http://www.washingtonpost.com/world/the_americas/venezuelan-youth-could-decide-if-chavez-remains-in-power/2012/09/29/33358164-0a5f-11e2-9eea-333857f6a7bd_story.html)