December 14th, 2012

Economics & Finance

Experts: Devaluation in Venezuela is a pressing need

The ECONOMÉTRICA think tank says in its latest report that "an adjustment in the foreign exchange rate cannot wait" even despite the President's health and the fact that elections may be held in the medium term. It says "A FOREX adjustment is necessary to partially reduce the accumulated fiscal and monetary imbalances, but on top of all, the adjustment is vital to avoid excessive shortage of US dollars and goods". Members of the Venezuelan economic cabinet agree on the need to devaluate the local currency due to both excessive demand of US dollars at an artificially cheap foreign exchange rate and the advantages of obtaining more local currency for each petrodollar so that the Government can fill the gaps in public accounts. Finance Minister Jorge Giordani, a highly orthodox Marxist seems to be the only one that does not concur. (El Universal, 12-13-2012; http://www.eluniversal.com/economia/121213/experts-devaluation-in-venezuela-is-a-pressing-need; http://www.eluniversal.com/economia/121212/lack-of-consensus-over-devaluation-in-venezuela)

Barclays vindicated as blown Chavez call redeemed: Andes Credit

When Barclays Plc recommended investors buy Venezuelan bonds on the bet President Hugo Chavez would lose his re-election bid in October, the bank said his cancer battle could drive him out of office even if he won. While Chavez rolled to an 11 percentage point victory that sparked the worst one-day bond rout in four years, the call is now rewarding investors with a 7% return this month that is more than 20 times the average for emerging-market debt. The surge pushed returns to 49% this year as Chavez’s cancer recurrence fuels speculation he’ll be replaced by a president who seeks to lure the investment he drove away. Barclays’s New York-based analysts, led by Venezuelan-born Alejandro Grisanti, say the rally isn’t over because the government’s debt remains cheap versus developing-nation peers. Venezuela’s dollar bonds due 2020 yield 8.76%, compared with yields below 5.5% on similar-maturity notes issued by Vietnam and Mongolia, countries that share the South American nation’s B+ credit rating from Fitch Ratings. (Bloomberg, 12-13-2012; http://www.bloomberg.com/news/2012-12-13/barclays-vindicated-as-blown-chavez-call-redeemed-andes-credit.html)

Harmonized public policies in Mercosur suggested

Carlos Larrazábal, president of the Venezuelan Confederation of Industries (CONINDUSTRIA) called for "harmonizing public policies" in all member states of the Common Market of the South (MERCOSUR) so as to guarantee its viability as regional bloc. He also reports that the Argentinean Industrial Association has said: "The success of MERCOSUR will depend on the similar development of its Member States." (El Universal, 12-12-2012; http://www.eluniversal.com/economia/121212/harmonized-public-policies-in-mercosur-suggested)

VenAmCham: Uncertainty will prevail in 2013

Gustavo Marturet, President of the Venezuelan-American Chamber of Trade and Industry (VENAMCHAM), says 2013 will be a year of "expectations and uncertainty." Venezuela's outlook "is complicated," he noted as he added that a similar situation is taking place at the international level. "We are going through a global situation. I mean, five years ago, we would not have foresee that Europe would be crippled from the economic standpoint or that the United States would face a recession, even though it appears to be near the end; or that emerging economies would perform so well." (El Universal, 12-13-2012; http://www.eluniversal.com/economia/121213/venamchams-chair-uncertainty-will-prevail-in-2013-in-venezuela)

Commodities

OPEC keeps output quota as El-Badri stays in top job

OPEC kept its production target unchanged for a second time this year as the group’s members judged prices are sufficiently high amid forecasts that supply will outpace demand for their crude in 2013. “Everything will stay as it is,” Saudi Arabian Oil Minister Ali al-Naimi said in Vienna. “We respond to customer demand. Whatever the customers want, we will give them.” The Organization of Petroleum Exporting Countries, which pumps 40% of the world’s oil, maintained its official quota at 30 million barrels a day, a level it now exceeds by about 1 million barrels a day. It failed to elect a new secretary-general. Brent crude, a benchmark contract for more than half the world’s oil, is heading for its highest-ever annual price, averaging U$D 111.78 a barrel this year. (Bloomberg, 12-12-2012; http://www.bloomberg.com/news/2012-12-12/opec-keeps-output-quota-as-el-badri-stays-in-top-job.html)

Venezuela's oil exports to the US will drop 15% this year

Statistics from the Venezuelan American Chamber of Commerce and Industry (VENAMCHAM) show oil exports from Venezuela to the US are much lower in 2012 than last year. It says its projection is for U$D 35.3 billion this year, which is 15.8% less than 2011. More in Spanish: (El Universal, 12-14-2012; http://www.eluniversal.com/economia/121214/preven-que-la-factura-petrolera-con-estados-unidos-caera-158)

International Trade

Imports from the US rose 41% this year, according to US Charge d'affairs in Caracas, James Derham. He said purchases from the US overtook the 2008 record, and added: "Demand has risen for different types of imports, and the situation is being driven by the macroeconomic situation, not a political decision. More in Spanish: (Tal Cual, 12-14-2012; http://www.talcualdigital.com/index.html)

Politics

Government says President Chavez is making progress and having a favorable recovery

After successfully going through surgery last Tuesday in Havana, Cuba, President Hugo Chavez is reported to be making a favorable and progressive recovery. In a statement issued Thursday, Information Minister Ernesto Villegas said that the recovery process, nevertheless, "will require a certain time as a consequence of the complexity of the surgery performed and complications occurred during the operation due to a bleeding that required corrective measures to control it." (AVN, 12-13-2012; http://www.avn.info.ve/contenido/president-chavez-makes-progressive-favorable-recovery; El Universal, http://www.eluniversal.com/nacional-y-politica/121213/communication-minister-chavez-is-in-progressive-favorable-recovery; Bloomberg, http://www.bloomberg.com/news/2012-12-13/chavez-suffered-complications-during-cancer-surgery.html; http://www.bloomberg.com/news/2012-12-11/chavez-undergoing-cancer-surgery-today-minister-says.html; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=656233&CategoryId=10717; Reuters, http://www.reuters.com/article/2012/12/13/us-venezuela-chavez-idUSBRE8BB0XY20121213; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelan-government-says-hugo-chavezs-cancer-operation-under-way/2012/12/11/e2b286fa-43f3-11e2-8c8f-fbebf7ccab4e_story.html; http://www.washingtonpost.com/world/the_americas/venezuela-information-minister-says-chavez-may-not-return-in-time-for-jan-10-inauguration/2012/12/12/cc44a226-44bc-11e2-8c8f-fbebf7ccab4e_story.html; CNN, http://edition.cnn.com/2012/12/11/world/americas/venezuela-chavez/index.html?iref=allsearch)

Vice President Nicolás Maduro should open a dialogue with opposition sectors, said the coalition (MUD) Deputy Secretary Executive Ramón José Medina. He expressed his concern not only for President Chávez health but also for the institutional health of the country. “We are waiting,” he says. (Veneconomy, 12-13-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33206&idc=1)

US expects compliance with the Constitution in a Chávez succession

In referring to President Chavez's recent cancer operation, US Department Spokesperson Victoria Nuland says "We would obviously like any succession to meet the terms of the Venezuelan Constitution. We are obviously watching the events (in Venezuela) carefully,", DPA cited. (El Universal, 12-11-2012; http://www.eluniversal.com/nacional-y-politica/121211/us-expects-compliance-with-the-constitution-in-case-of-chavezs-success)

Eighteen countries to take part on Venezuelan regional elections

Representatives of 18 nations will attend the upcoming regional elections this Sunday, as guests of National Electoral Council (CNE). Council President Tibisay Lucena announced that there will be representatives of 12 countries from South and North America and six European nations. (AVN, 12-13-2012; http://www.avn.info.ve/contenido/electoral-body-welcomes-international-accompaniment)

Capriles candidacy depends on local vote

Venezuela’s opposition alliance will probably choose Henrique Capriles Radonski as its presidential candidate should elections be called soon, provided he wins re-election as governor of Miranda state on Dec. 16, Ultimas Noticias reported, citing opposition officials. If Capriles loses to government candidate Elias Jaua in the vote for governor, the opposition alliance would consider a different candidate in the event of a presidential election, said Pedro Benitez and Simon Calzadilla, according to the Caracas-based newspaper. (Bloomberg, 12-13-2012; http://www.bloomberg.com/news/2012-12-13/capriles-candidacy-depends-on-venezuela-local-vote-ultimas-says.html)

Santos says Chavez is key to peace talks with FARC

Colombian President Juan Manuel Santos said Thursday that Hugo Chavez is essential to the ongoing peace conversations between his government and Colombian terrorist FARC guerrilla. He declared: "I must acknowledge that President Hugo Chávez Frías has been a key player in this getting together and peace process we have undertaken with FARC". More in Spanish: (AVN. 12-14-2012; http://www.avn.info.ve/contenido/santos-hugo-ch%C3%A1vez-es-fundamental-para-paz-colombia)



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 11th, 2012

Economics & Finance

Economic adjustments on hold

President Hugo Chávez's announcement about another surgery and hint about his possible disability not only changes the political scene, but also economic prospects. Experts had considered devaluation imminent in view of the significant fiscal deficit and pressure on foreign exchange, but now the situation is again unclear. Chavez appealed to Venezuelans to elect Vice President and Foreign Minister Nicolás Maduro should he become absent, which would bring on another election and continued manipulation of the economy. Maduro, speaking at a public event, says exchange controls "can improve and will improve". (El Universal, 12-10-2012; http://www.eluniversal.com/economia/121210/economic-adjustments-on-hold-in-the-current-state-of-affairs; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/nicolas-maduro-dijo-que-se-va-a-mejorar-el-control.aspx)

Venezuelan bonds rally, CDS fall on Chavez successor news

Venezuelan dollar bonds rallied sharply on Monday and debt insurance costs tumbled after the nomination of a successor by ailing President Hugo Chavez raised the prospect of his departure from office after 14 years in power. Venezuelan yield spreads over U.S. Treasuries fell 56 basis points to 758 bps, the narrowest since August 2008, on JP Morgan's EMBI Global index. The most-traded 2027 dollar bond jumped 2.3 cents on the dollar to 101.092. Chavez stunned Venezuela at the weekend with an announcement he had suffered a setback in his long-term battle with cancer and named Vice President and Foreign Minister Nicolas Maduro to take over, should he become incapacitated.

"This is the first time Chavez has been forthcoming on any kind of succession arrangement. With that, expectations are mounting that the Chavez ... rule will be coming to an end in the foreseeable future," said Stuart Culverhouse, head of research at Exotic brokerage in London. (Reuters, 12-10-2012; http://www.reuters.com/article/2012/12/10/venezuela-bonds-idUSL5E8NA8LX20121210; Bloomberg, http://www.bloomberg.com/news/2012-12-09/venezuela-s-chavez-says-he-needs-more-cancer-surgery-in-cuba-1-.html)

Pre-cooked corn flour, sugar, chicken and oil have been missing from market shelves for almost two weeks. Supermarket a personnel explains that providers are delivering fewer quantities and those customers “must get in line and run to get the items.” Street vendors said they overcharge the staples because they must pay more for the products. (Veneconomy, 12-10-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33161&idc=3)

A drop in operative international reserves forced the government to repatriate gold –a non-operative reserve- betting on the increase in the price of the metal, in order to later sell it due to a decline of liquid reserves, says economist Francisco Ibarra, who relies on studies that show the Central Bank’s monetary funds are at minimum levels. (Veneconomy, 12-10-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33160&idc=2)

Commodities

Oil exports averaged U$D 97.72/bbl. this week, up U$F 0.62/bbl. from last week (U$D 97.10/bbl.), says the Ministry of Oil and Mining. This year’s average to-date is U$D 103.82/bbl., more than twice the U$D 50/bbl used to estimate the 2012 budget. (Veneconomy, 12-07-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33145&idc=4)

International Trade

Venezuela’s formal entry into MERCOSUR took place during the bloc's presidential summit in Brasilia. The protocol that was signed by President Chávez and the presidents of Argentina, Brazil, Paraguay and Uruguay in Caracas in 2006 was published in the Official Daily of the Union. Venezuela's representative at the meeting is Oil Minister Rafael Ramírez. (Veneconomy, 12-07-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33144&idc=3)

Politics

Chavez back to Cuba for cancer treatment

President Hugo Chavez left for Cuba early on Monday for another round of cancer surgery, two days after he said tests showed "malignant cells" had appeared in the same part of the body where he had earlier undergone operations. Information Minister Ernesto Villegas said Chavez's Havana-bound plane had left Caracas at about 1:30 a.m. (0600 GMT). On Saturday, Chavez said he would undergo another operation in the coming days. "Unfortunately, during these exhaustive exams they found some malignant cells in the same (pelvic) area" he said then. "It is absolutely necessary, absolutely essential, that I undergo a new surgical intervention." He enthusiastically said "always towards victory. Long live the homeland!," attempting to send a calming message to Venezuelans. As he left for Havana he made it clear he was not turning over the presidency, but simply delegating his powers. He also formally swore in (Reuters, 12-10-2012; http://www.reuters.com/article/2012/12/10/venezuela-chavez-idUSL1E8NA0Y920121210; http://www.reuters.com/article/2012/12/10/us-venezuela-chavez-idUSBRE8B90CB20121210; El Universal, http://www.eluniversal.com/nacional-y-politica/121210/president-chavez-sets-off-for-havana; AVN, 12-10-2012; http://www.avn.info.ve/contenido/chavez-always-towards-life; CNN, http://edition.cnn.com/2012/12/10/world/americas/cuba-chavez/index.html?iref=allsearch; Fox News, http://www.foxnews.com/world/2012/12/08/venezuela-chavez-says-cancer-back-plans-surgery/; The Washington Post, http://www.washingtonpost.com/world/venezuelan-president-hugo-chavez-anoints-successor-and-heads-to-cuba-for-surgery/2012/12/09/ee8f9b9a-4220-11e2-8c8f-fbebf7ccab4e_story.html; and more in Spanish: El Universal; http://www.eluniversal.com/nacional-y-politica/121211/chavez-dice-que-no-entrega-el-mando-politico-sino-lo-delega)

Maduro is acting head of State

The National Assembly has once again rejected the term "temporary absence" in reference to the absence of President Hugo Chávez, who returned to Cuba to undergo cancer treatment. However, both the manner in which the leader spoke of trip to Cuba and the fact that he appointed Vice-President Nicolás Maduro as his political successor clearly indicate he has handed over all his powers. José Peña Solís, a former member of the Venezuelan Supreme Court says" "This time it is different from what has happened before. The president considered a scenario in which he may end up being physically or mentally unable to be in office. Thus, this time there are more reasons to believe that the Presidency is vacant and, therefore, Vice-President Maduro must fill that position". (El Universal, 12-10-2012; http://www.eluniversal.com/nacional-y-politica/121210/former-justices-maduro-is-the-acting-head-of-state; Reuters, 12-09-2012; http://www.reuters.com/article/2012/12/09/us-venezuela-chavez-maduro-idUSBRE8B806V20121209; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=654971&CategoryId=10718; Bloomberg, http://www.bloomberg.com/news/2012-12-09/venezuela-s-chavez-says-he-needs-more-cancer-surgery-in-cuba-1-.html; CNN, http://edition.cnn.com/2012/12/09/world/americas/venezuela-maduro/index.html?iref=allsearch)

Chávez took the first step towards his substitution, according to DATANÁLISIS President Luis Vicente León, who says Chavez did just what he ought to do. "I believe his message was clear and accurate. That is the first step towards his substitution," León remarked and added that by doing so Chávez staves off division within the revolutionary ranks. (El Universal, 12-10-2012; http://www.eluniversal.com/nacional-y-politica/121210/analyst-chavez-took-the-first-step-towards-his-substitution)

Everything set for Sunday regional elections

Carlos Quintero, Director of information technology of the National Electoral Council, has announced that "all technical, logistic and operational elements are ready" for regional elections December 16. Audits ended last Sunday, Dec. 09, when experts tested the running of the voting system. (AVN, 12-10-2012; http://www.avn.info.ve/contenido/everything-set-sunday-regional-elections)



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 07th, 2012

Economics & Finance

The 2013 Budget Bill was passed by the National Assembly, with government votes only, as the opposition called the VEB 396.4 billion budget insufficient, “arbitrary and lacking any planning.” The 2013 Special Indebtedness Bill (VEB 116.6 billion) also passed with the dissenting votes by the opposition. (Veneconomy, 12-05-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33108&idc=2)

Venezuelan bonds rally as Chavez silence grows

Venezuelan bonds surged the most in two years, sending yields to the lowest level since February 2008, on speculation President Hugo Chavez’s health is too fragile for him to complete his third term. The yield on Venezuela’s benchmark 9.25% securities due in 2027 fell 33 basis points, or 0.33 percentage point, to 9.18% at 3:12 p.m. in Caracas, according to data compiled by Bloomberg. Yields have plunged 1.74 percentage points since mid-November. The bond’s price rose 2.62 cents today to 100.50 cents on the dollar, the biggest one-day rally since June 2010. Chavez said Nov. 1 that he planned to attend a MERCOSUR trade summit in Brasilia. Failure to appear would heighten speculation that the president’s health is worse than he has let on and increase the possibility he won’t complete a third six- year term set to begin in January, said Emilio Garcia, a bond trader at BancTrust & Co. in Caracas. (Bloomberg, 12-05-2012; http://www.bloomberg.com/news/2012-12-06/venezuela-bonds-rally-on-speculation-chavez-sick-caracas-mover.html; http://www.bloomberg.com/news/2012-12-05/chavez-s-longest-silence-since-cancer-fuels-health-rumors.html)

60% of oil revenues go to imports, according to university professor and economist Luis Oliveros, who says, "60% has been directed to imports, 12% to different funds such as the FONDEN National Development Fund, and 2% to the international reserves, while capital outflows were 26%." (El Universal, 12-06-2012; http://www.eluniversal.com/economia/121206/venezuela-directs-60-of-oil-revenues-to-imports)

Dollar exchange rate should be around VEB 7.68:$ to be competitive, says CONINDUSTRIA President Carlos Larrazábal, upon presenting its Third Quarter 2012 Survey of 300 industrialists polled. Respondents noted a 47% drop in production, and warned that if there are no changes in public policies for 2013, growth will not go over 3%. (Veneconomy, 12-04-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=33094&idc=2; El Universal, 12-05-2012; http://www.eluniversal.com/economia/121205/competitive-forex-rate-needed-to-boost-industries)

Venezuela is off the international investment radar screens

A study on international investment trends by the World Bank's Multilateral Investment Guarantee Agency (MIGA) shows that most companies point to China, India, Brazil and Russia, plus a list of 29 nations that included México, Colombia, Perú and Argentina; but not Venezuela.  More in Spanish: (El Universal, 12-07-2012; http://www.eluniversal.com/economia/121207/venezuela-permanece-fuera-del-radar-de-la-inversion-extranjera)

Commodities

S&P lowers Venezuela’s Siderurgica del Turbio to ‘CCC-’

Standard & Poor’s Ratings Services lowered its long-term corporate credit and senior unsecured ratings on Siderurgica del Turbio, S.A. (SIDETUR) to ‘CCC-’ from ‘B-’. In October 2012, the government of the Bolivarian Republic of Venezuela (B+/Stable/B) took control of SIDETUR’s operating assets, but it hasn’t announced the amount or time of the compensation. The government also required the transfer of all funds in the company’s local currency bank accounts. The U.S. dollar denominated reserve account associated with SIDETUR’s notes due 2016 was not affected. (Latin American Herald Tribune, 12-05-2012; http://www.laht.com/article.asp?ArticleId=653999&CategoryId=10717)

International Trade

Venezuela will apply MERCOSUR nomenclature

Tovar Nunes, spokesman of the Brazilian Foreign Ministry announced that Venezuela will immediately apply 28% of MERCOSUR's common tariff in order to accelerate incorporation into the organization. It aims to achieve full adaptation by 2016. (El Universal, 12-06-2012; http://www.eluniversal.com/economia/121206/mercosur-discusses-speedy-adaptation-of-venezuela-to-the-bloc; AVN, 12-06-2012; http://www.avn.info.ve/contenido/mercosur-debate-bolivia039s-inclusion-full-member and more in Spanish: AVN; http://www.avn.info.ve/contenido/venezuela-acelera-paso-mercosur-adopci%C3%B3n-nomenclatura; El Universal, http://www.eluniversal.com/internacional/121207/mercosur-acelera-incorporacion-plena-de-venezuela-al-bloque; El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/cifras-clave-de-mercosur-con-el-ingreso-de-venezue.aspx)

Argentina´s bilateral trade with Venezuela has grown 30% in one year, says Argentina's Ambassador to Venezuela Carlos Alberto Cheppi, who adds that total Argentine exports to Venezuela should close this year at U$D 2.3 billion, while Venezuelan exports to Argentina would be around U$D 1.5 billion, and most of these are fuel. More in Spanish: (AVN, 12-07-2012; http://www.avn.info.ve/contenido/venezuela-y-argentina-aumentan-intercambio-comercial-m%C3%A1s-30)

Venezuela to create joint venture with SAMSUNG

Venezuela and South Korean multinational SAMSUNG have agreed to a joint venture to manufacture telecommunications components, says Science and Technology Minister Ricardo Menendez. The Venezuelan government, which will own 51% of the company, considers the deal a “strategic alliance” to boost Venezuelan exports of electronic parts to its partners in MERCOSUR, the minister said. (Latin American Herald Tribune, 12-05-2012; http://www.laht.com/article.asp?ArticleId=653991&CategoryId=10717)

Venezuela approves terms on U$D 417 million loans, AVN Reports

Venezuelan lawmakers approved the conditions of U$D 417 million of loans from Banco Bilbao Vizcaya Argentaria SA (BBVA) and Japan Bank for International Cooperation to finance transportation projects and a steel plant, the state news agency AVN said today on its website. BBVA will lend Venezuela 162 million euros (U$D 211 million) for a steel plant, while Japan Bank for International Cooperation will lend 17 million yens (U$D 206 million) to finance construction of warehouses for Caracas-Cua train line, according to the state news agency. (Bloomberg, 12-06-2012; http://www.bloomberg.com/news/2012-12-06/venezuela-approves-terms-on-417-million-loans-avn-reports.html)

Logistics & Transport

Non-commercial air operations restricted in Maiquetía

The Ministry of Air and Aquatic Transportation, through the National Civil Aeronautics Institute (INAC), has confirmed an administrative decision whereby "air operations at Simón Bolívar International Airport of Maiquetía shall be restricted immediately for general aviation aircraft from 6 a.m. to 10 a.m. and from 4 p.m. to 7 p.m." (El Universal, 12-05-2012; http://www.eluniversal.com/economia/121205/non-commercial-air-operations-restricted-in-maiquetia)

La Guaira Port expansion and modernization is 33% completed, according to Pedro Castro, Vice Minister for Air and Water Transportation, and Vice President of the Port Authority. The project has been under way for one year. More in Spanish: (Bolipuertos, 12-07-2012 http://www.bolipuertos.gob.ve/noticia.aspx?id=6439; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/en-2014-estaria-lista-modernizacion-del-puerto.aspx; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/remodelacion-del-puerto-de-la-guaira-terminara-en-.aspx)

Politics

Chavez arrives back after cancer treatment in Cuba

President Hugo Chavez arrived back in Caracas in the early hours of the morning Friday, according to a video released two hours later by state television, but not carried live. Chavez, accompanied by his daughter Maria, was received by Vice-President Nicolas Maduro, Diosdado Cabello, President of the National Assembly, and a very small group of  officials. In a sort of date stamp, he recalled that yesterday, December 6, marked 14 years of the start of the Bolivarian revolution. He said that would be echoed in the December 16 governor elections, 8 days from now. (Latin American Herald Tribune, 12-07-2012 http://www.laht.com/article.asp?ArticleId=654187&CategoryId=10717)

Uncertainty increases due to Chavez's absence from MERCOSUR

After days awaiting confirmation, Brazil's Foreign Ministry finally announced that President Chavez would not attend the ongoing MERCOSUR Presidential Summit in Brasilia, which he had said he would - "God willing" - attend in a statement on November 1st. Nicolás Maduro, Vice President and Foreign Minister, also failed to attend the meeting; Venezuela's delegation was led by Vice Minister Verónica Guerrero. Former Minister Teodoro Petkoff, a political analyst and journalist, says the President's "health is pretty deteriorated", and "he is now really taking his treatment seriously". He says it is noteworthy that Chavez "is no longer doing things he enjoys: campaigning, supporting his candidates, attending summits..." (Infolatam, 12-07-2012; http://www.infolatam.com/2012/12/07/la-forzada-ausencia-de-chavez-en-mercosur-reabre-incertidumbre-en-venezuela/)

Diosdado Cabello: The power behind the throne

Former Lieutenant Diosdado Cabello, President of the National Assembly and of the government's United Socialist Party has taken the front during the campaign for state governors, as his power within the party and public exposure grows exponentially. During the absence of President Chavez, Cabello is at the center of political debate, increasing rumors that point to him as the man destined to succeed Chavez. His priority during these weeks has been to position himself as the guardian of "chavista" legacies and values at stake during campaigns speeches in seven states, a role previously assigned to the President himself.  Governor Henrique Capriles Radonski, running for reelection in Miranda, centers his fire on Cabello, calling his opponent, former Vice President Elías Jaua, a "Cabello puppet". Cabello's positioning has created tension within party lines, with local leaders accusing Cabello of acting in an authoritarian and excluding manner. Freiman Páez, a dissident regional leader, describes the former coup participant as "the Stalin of Venezuelan politics". (Infolatam, 12-07-2012; http://www.infolatam.com/2012/12/05/diosdado-cabello-el-poder-detras-del-trono-en-el-regimen-chavista/)

US seeks improved relations with Caracas, according to Mike Hammer, Assistant Secretary of State for Press, who adds that "unfortunately Caracas has not shown an interest in exchanging ambassadors". More in Spanish: (El Universal, 12-07-2012; http://www.eluniversal.com/nacional-y-politica/121207/eeuu-busca-vinculos-para-mejorar-relacion-con-caracas)

Norway closes diplomatic mission in Venezuela, citing rampant violent crime

Norway will close its embassy in Venezuela because of rampant crime and move the diplomatic mission to neighboring Colombia, its ambassador said Wednesday. Norwegian ambassador Lars Vaagen said the decision to move the embassy to Bogota next year was made after analyzing the problem of widespread violent crime in Venezuela. “We see the security situation as increasingly difficult,” Vaagen said in a telephone interview. Norway’s embassy in Caracas has been operating for almost 45 years. In polls, Venezuelans consistently rate violent crime as their top concern. (The Washington Post, 12-05-2012; http://www.washingtonpost.com/world/the_americas/norway-closes-diplomatic-mission-in-venezuela-citing-rampant-violent-crime/2012/12/05/f33b9264-3f1b-11e2-8a5c-473797be602c_story.html; El Universal, 12-05-2012; http://www.eluniversal.com/nacional-y-politica/121205/norway-moves-diplomatic-delegation-from-venezuela-to-colombia; Fox News, http://www.foxnews.com/world/2012/12/05/norway-closes-diplomatic-mission-in-venezuela-citing-rampant-violent-crime/)

Transparency International calls Venezuela the most corrupt country in Latin America.

In its Annual Report, Transparency International, ranks Venezuela 165th along with Haiti, after both obtained 19 points in the 100-point scale. The two countries are ahead only of Afghanistan, North Korea, Somalia or Iraq, which were the most corrupt nations worldwide. (El Universal, 12-05-2012; http://www.eluniversal.com/nacional-y-politica/121205/ngo-venezuela-is-the-most-corrupt-country-in-latin-america; Fox Business, http://www.foxbusiness.com/news/2012/12/05/factbox-transparency-international-global-corruption-index/)

December 04th, 2012

Economics & Finance

Venezuela headed for economic adjustments despite oil boom

The last thing one expects from someone who has won a lottery is that after six years their debts are higher, they are having difficulties to meet daily expenses, and they have slightly reduced poverty. Yet, Venezuela may well be an exception. Despite the six-year oil boom, Hugo Chávez's performance on social affairs is quite poor with respect to his first term in office. Key indicators have clearly dropped. In fact, when he starts his new term (2013-2019) on January 10, he will be leading a country that is headed for major adjustments, including devaluation and a cut in expenditure. (El Universal, 12-03-2012; http://www.eluniversal.com/economia/121203/venezuela-is-headed-for-economic-adjustments-despite-oil-boom)

Devaluation and spending cuts are likely to curb consumption in Venezuela

Consumption in Venezuelan households' consumption hit its highest level ever since 1998 during the 3rd quarter 2012, with a 7.8% leap over the same period in 2011, according to data from the Central Bank of Venezuela (BCV). Consumption has skyrocketed amid increased government spending on subsidies and welfare programs, wage increases, lower unemployment and cheap imports. However, a bleak outlook is forecast for 2013. Analysts believe that the Government will be forced to cut expenses and devaluate the Venezuelan bolivar. Both moves may have a negative impact on people's purchasing power. A likely reduction of spending would translate into fewer subsidies, modest wage raises and an economic slowdown. In turn, devaluation would lead to more expensive imports and boost inflation. (El Universal, 12-01-2012; http://www.eluniversal.com/economia/121201/likely-devaluation-and-spending-cuts-are-to-curb-consumption-in-venezu)

After the presidential election, inflation coming back up

In an effort to raise purchasing power, government authorities reined in price adjustments on regulated goods and services during presidential elections. Now that the political objective is past, staples will inevitably become more expensive if serious shortages are to be avoided. (El Universal, 12-01-2012; http://www.eluniversal.com/economia/121201/after-the-presidential-election-inflation-comes-to-the-fore)

Venezuela stock market rises 248% on optimism for political change from Chavez illness

Venezuela's stock market rose sharply the week ending November 30, with the Caracas Stock Index up 6.3% at 407,593, with investors betting that once again there is an increased probability for political change after President Hugo Chavez returned to Cuba for more cancer treatment. (Latin American Herald Tribune, 12-03-2012; http://www.laht.com/article.asp?ArticleId=653722&CategoryId=10717)

Pro government assemblyman says private industry grew by 6.1% late in 2012

According to Jesús Faría, a pro-government member of the National Assembly's Finance Committee, the nation's private industry grew by 6.1% during the last quarter of 2012. Faría made a contrast between his numbers and information that private industry "is allegedly besieged (by the Government) and afraid of expropriation." (AVN, 12-03-2012; http://www.avn.info.ve/contenido/private-industry-grew-61-cent-late-2012)

Commodities

Basic industries run at 40% capacity despite higher staff costs

Industrial production in the Guayana region has failed as an alternative to oil; and has rather become a burden on public finances. The Central Bank reports that metal manufacturing fell 35.3% during the third quarter. As a result, basic industries resorted to borrowing money from the government to pay their staff. (El Universal, 12-01-2012; http://www.eluniversal.com/economia/121201/basic-industries-run-at-40-of-their-capacity-despite-higher-staff-cost)

Venezuela to invest U$D18 billion in oil by year end

Eulogio del Pino, PDVSA's Vice President for Exploration and Production says the state oil company, will invest U$D 18 billion this year and expects to invest a similar amount next year. He claims PDVSA is producing 3 million barrels a day, including 2.5 million barrels daily in the Orinoco belt. Del Pino also commented that Venezuela expects verdicts soon in some international arbitration cases. (Bloomberg, 12-02-2012; http://www.bloomberg.com/news/2012-12-02/venezuela-to-invest-18-bln-in-oil-by-year-end-panorama-says.html)

Domestic gasoline consumption grew 13% in one year, up to 83,000 barrels daily during the third quarter, according to a report by OPEC. At this rate, Venezuela's growing gasoline consumption will only be second to Brazil. More in Spanish: (El Nacional, 12-04-2012; http://www.el-nacional.com/)

Venezuela produces world class chocolate, despite having to deal with difficulties presented by the Chavez administration. Chocolates El Rey is producing some of the best chocolate in the world, which is exported to the United States, Europe and Japan. More in Spanish: (El Mundo, 12-04-2012; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela-produce-chocolate-de-clase-mundial.aspx)

International Trade

Venezuela, China reach agreements on electric, energy & oil

During high level bilateral meetings under way in Beijing, Venezuela and China entered into new agreements for cooperation on electric power and oil. Oil Minister Rafael Ramírez announced:"An agreement for the development of 900 megawatts of oil coke-based and carbon-based electric power has been entered into. New areas set for exploration, namely Junín 10 Sur, and the development of current fields have been agreed upon." (El Universal, 12-03-2012; http://www.eluniversal.com/economia/121203/venezuela-china-reach-agreements-on-electric-energy-amp-oil)

8,000 tons of powdered milk arrived into Puerto Cabello

317 containers bearing over 6.32 tons of powdered milk have arrived into Puerto Cabello from Argentina, sent by SANCOR UNIDAS to the CASA government agency. The same agency also received over 2,210 tons of frozen beef from SADIA and FERRERO DO BRASIL. More in Spanish: (El Carabobeño, 12-04-2012; http://www.el-carabobeno.com/impreso/articulo/41262/al-puerto-carabobeo-arribaron-cerca-de-ocho-mil--toneladas-de-leche-entera-en-polvo)

Politics

Nicolas Maduro calls for respect for President Chavez's life

Nicolás Maduro, Venezuela's Executive Vice President demanded respect for the life of the president of the Republic, Hugo Chavez, who is in Cuba undergoing a medical treatment. He criticized opposition leader’s use of President Chavez's health "to launch biased campaigns and demoralize the population". (AVN, 12-02-2012; http://www.avn.info.ve/contenido/nicolas-maduro-demands-respect-president-chavez039s-life; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=653639&CategoryId=10717)

Chavez expected at MERCOSUR summit in Brasilia

Jose Antonio Marcondes, Brazil's Ambassador to Venezuela says President Hugo Chavez is expected at a MERCOSUR summit meeting scheduled for this coming Friday in Brasilia. Another Brazilian government source says "There is the expectation that Chavez will take part in the summit, but there is yet no confirmation". The meeting will be Venezuela's first as a full member of the regional group, and will also consider the entry of Ecuador and Bolivia. More in spines: (El Nacional, 12-04-2012; http://www.el-nacional.com/ and AVN; http://www.avn.info.ve/contenido/cumbre-mercosur-tratar%C3%A1-avances-ingreso-venezuela-al-bloque; El Universal, http://www.eluniversal.com/internacional/121204/ingreso-a-mercosur-es-estrategico-para-chavez)

15 new ambassadors have been appointed

According to an announcement by Communications and Information Minister Ernesto Villegas, President Chavez has named 15 new Ambassador by making use of his electronic signature in Havana. The report says new ambassadors have been posted to Belize, Dominica, Grenada, Mexico, Nicaragua, Dominican Republic, Iran, Iraq, Mozambique, Congo Republic, Gambia, Benin, Kenya, the Arab League, and MERCOSUR/ALADI. More in Spanish: (El Universal, 12-04-2012; http://www.eluniversal.com/nacional-y-politica/121204/presidente-hugo-chavez-designa-a-15-nuevos-embajadores; AVN; http://www.avn.info.ve/contenido/presidente-hugo-ch%C3%A1vez-firm%C3%B3-designaci%C3%B3n-15-nuevos-embajadores) 


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.