April 08, 2014

International Trade

Inbound cargo at Puerto Cabello, mainly construction material and foodstuff

• 18.951 tons of bagged cement from Aveiro, Portugal for PDVSA Industrial.
• 15.999 tons of US wheat for MOLINOS CARABOBO
• Two batches with over 15.000 tons of sémola durum for Molinos Carabobo.
• 13.000 tons of yellow corn and 6.000 tons of bulk soybean meal from Argentina, for several importers.
• 12.000 tons of yellow corn from CARGILL for AGRIBRAND PURINA and AVÍCOLA MAYUPAN
• 11.999 tons of American soy flour, in 2 batches
• 11.999 tons 859 kg of American soy flour from United States for IND Pollo Premium and Alimentos del Centro Alceca
• Over 6,000 tons of Argentine soy bulk of Industrias Oleaginosas, in 2 batches for Seravian and Agribrand Purina.
• 6.000 tons of soda ash from Solvay Chemicals for Venezolana del Vidrio
• Over 2.000 tons of sulfate and 6.000 tons of phosphate from US Mosaic Corporation for PEQUIVEN
• Over 1,847 tons of frozen chicken in 48 containers, from Jamaica for the government's CASA Corporation.
• 1. 422 tons of cattle standing from Brazil's SCT Artigas
• 895 tons of Portuguese cement for PDVSA Industrial.
• Over 880 tons of roofing in 166 containers, from Italpanelli Ibérica for PDVSA, along with several tons of construction kits and other building material. 
• Over 851 tons of semola durum spaghetti in 33 containers, from Jamaica for CASA.
• Over 665 tons of beef in 24 vans, from Jamaica for CASA.
• 572 tons of paper towels
• 563 tons of toilet paper for different consignees
• Over 524 tons of bottled soy oil in 23 containers, from Bunge in Jamaica, for CASA
• 330 tons of frozen chicken for CASA
• Over 177 tons of concentrated milk in 7 containers, from Jamaica, for Industrias Maru. 
• Over 109 tons of tissue napkins in 9 vans from Trinidad, for Papeles Venezolanos. 

From the port of Pertigalete came a lot more than five thousand tons of cement type 1 for PDVSA Industrial. More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/98327/-alimentos-y-materiales-de-construccin-llegaron-al-puerto; http://www.el-carabobeno.com/impreso/articulo/98384/-alimentos-y-materiales-de-construccin-encabezan-importaciones; Notitarde; http://www.notitarde.com/La-Costa/Llego-al-puerto-trigo-maiz-amarillo-y-harina-de-soya-2136450/2014/04/03/319000; http://www.notitarde.com/La-Costa/Llegaron-carne-de-bovino-pollo-aceite-y-pasta-para-Casa-2138884/2014/04/07/319720#!prettyPhoto)

Government food imports rose 51%

Government food distribution networks were supplied by imports during 2013, according to a report by the Ministry for Nutrition. The report indicates the government's Agricultural Supplies Corporation (CASA) bought 4,911,099 tons of foodstuff during the year, of which 87.52% was purchased on international markets (about 4,298,196 tons) and only 12.48% (612,993 tons) came from local producers. CASA imports rose 51% in 2013: Including, 4.298.196 tons of foodstuff; 624,600 tons of white and paddy rice, chicken, sugar, black beans, meat, milk, crude palm oil and refined soybean oil and soybean arrived in agreements with Argentina, Belarus, Brazil, Bolivia, Guyana, Nicaragua and Uruguay. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/importaciones-de-alimentos-del-estado-subieron-51.aspx#ixzz2yCGMyN3g)

Panama import debts under scrutiny by Venezuelan authorities

A report by CENCOEX (formerly CADIVI) indicates that 5,748 requests for FOREX to be applied to imports from Panama came from companies that were subsequently suspended or excluded from the system. This reflects a total of U$D 1.192 billion. The report includes a list of 412 companies that were under investigation. It also shows over 5,000 approvals for imports from 1006 exporters in Panama, which would mean the net debt owed by the Venezuelan government institution (CENCOEX) could be U$D 1.305 billion. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/investigacion/deudas-por-importaciones-desde-panama-estan-bajo-l.aspx#ixzz2yCEQ5DBI)

Oil & Energy

Venezuela: Producing oil amid political unrest

Concerns abound as to whether Venezuela's recent political unrest will eventually disrupt the flow of oil exports. But the biggest threat to Venezuelan oil production is not the protest movement but the continued degradation of the energy sector. PDVSA has never fully recovered from losing 40% of its experienced personnel after the 2002 strike, and it has since been made responsible for financing several social causes, which have drained its resources and reduced investment in exploration, production and maintenance. Combined with subsequent energy nationalizations, these factors have prevented PDVSA from producing at pre-2002 levels. Since foreign oil company holdings were nationalized in 2007, only a few countries -- mostly China and Russia -- have been willing to invest in Venezuela's energy sector. Some investors have become more willing lately, with companies striking U$D 10.4 billion worth of financial deals over the past year. These include CHEVRON, GAZPROM, China National Petroleum Corporation, Italy's ENI and Spain's REPSOL. These funds are being borrowed by Venezuela on the condition that it will then be reinvested in joint projects between those companies and PDVSA. The official goal of this round of financing has been to add more than 200,000 barrels per day over the next several years. But given the challenges facing the energy sector, not to mention declining output of older fields, added production may only compensate for declines elsewhere, assuming the goals are reached. Rising costs are also affecting companies that operate in Venezuela. This includes inflation, which reached 56% percent in 2013. The effect of inflation can be seen clearly in the recent agreement between the government and the Federation of Venezuelan Oil Workers on Feb. 5, when the government agreed to a 90% salary increase for the two-year contract. Also, the difference between the black market and official exchange rates also affects oil companies significantly. Though oil companies have been granted a more favorable exchange rate of VEB 11.3/U$D, the service providers they work with are frequently forced to use the black market rate. Meanwhile, shortages of other goods, including cement and steel, have hurt the energy sector by creating delays in production. Not only do the economic conditions discourage investment, but political unrest has raised doubts about the government's ability to manage the delicate domestic situation. With such low oil production and export rates, there are fewer dollars in Venezuela's domestic market to finance imports, which will only perpetuate ongoing shortages of basic goods and drive further unrest. The low price of gasoline has encouraged high consumption, which is compounded by all the fuel that is smuggled to Colombia. What fuel is consumed at home cannot be sold by PDVSA abroad, so foreign currency reserves will continue to dwindle -- they fell by nearly U$D 10 billion in 2013 alone. Right now, PDVSA has no choice but to absorb these costs until the government is ready to accept the political consequences of raising prices on consumers. (Stratfor, http://www.stratfor.com/sample/analysis/venezuela-producing-oil-amid-political-unrest)

Venezuela oil price slips

Venezuela's weekly oil basket stayed below the country's desired U$D 100 a barrel floor, slipping as Brent oil fell and WTI oil prices moved up toward each other. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending April 4 was U$D 95.27, down U$D 0.14 from the previous week's U$D 95.41. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=1909709&CategoryId=10717)

Commodities

Continuing shortages

According to DATANÁLISIS, the lack of basic foods on the store shelves has reached worrisome levels. During the first two months of this year the shortage of regulated products rose to 47.7%, which implies an unstoppable advance, compared with the behavior in recent years. According to the numbers reported by the consulting firm, in 2012 the shortage level was 15.9%, and rose to 37.2% a year later. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140407/escasez-continuada)

Economy & Finance

BARCLAY's is now estimating SICAD II will provide U$D 8.4 billion in FOREX

In a revised report on the new SICAD II FOREX allocation system, BARCLAY's Capital estimates it will provide U$D 8.4 billion, down from its original estimation of U$D 11.6 billion of 24 March. The report says "supply grew during the first week, but dropped considerably toward the end of the past week". More in Spanish: (El Universal, http://www.eluniversal.com/economia/140407/estiman-que-la-oferta-del-sicad-ii-estara-en-84-millardos-de-dolares)

Government allows exchange bureaus to bid within SICAD II, brokers return to the market

Exchange bureaus may now trade within the ancillary exchange market SICAD II. According to the latest provision their involvement will be regulated by the Central Bank. “Four bankers from ECONOINVEST served two years and seven months in jail without ever being tried or convicted when the law was changed after they were arrested and applied to them retroactively,” says Russ Dallen, head trader at Caracas Capital Markets. “In the sad comedy of errors that Venezuela’s economic management has become, the charges against the bankers were dropped when the law was changed again in January of this year.” (El Universal, http://www.eluniversal.com/economia/140407/venezuelan-govt-lets-exchange-bureaus-bid-at-sicad-2; and Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=1912990&CategoryId=10717)

Venezuela ranks below Cuba on private property rights

Venezuela's record on private ownership rights ranks among the worst in the world, as shown by the Social Progress Index, prepared by the US non-profit group Social Progress Imperative. In a list of 132 nations, Venezuela ranked 130, running last in Latin America, even after Cuba and other nations with stringent private property policies. The index, which also assesses public utilities, gave Venezuela the 113th position among 132 nations in electricity supply. (El Universal, http://www.eluniversal.com/economia/140407/venezuela-ranks-below-cuba-in-private-property-rights)

Land takeovers slowed down in 2013

A report from the Agriculture Ministry shows government land takeovers slowed down during 2013. 43,620 hectares were taken over last year, as opposed to 550,495 hectares grabbed by the regime in 2012, for a drop of 92%. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/en-2013-inti--freno-politica-de-intervencion-de-ti.aspx#ixzz2yIEKnXyu)

Politics

Maduro accepts proposal to meet with opposition

President Nicolas Maduro says he has accepted a proposal of the foreign ministers from the Union of South American Nations to meet with representatives of the opposition. “We had a rather broad conversation. They proposed to me to have a meeting with the opposition delegation and, well, I accepted, as I’ve been calling for political dialogue, for peace, for democracy for eight weeks,” said Maduro after meeting with the diplomats. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=1913323&CategoryId=10717; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=38791&idc=1; AVN, http://www.avn.info.ve/contenido/new-unasur-commission-caracas-peace-talks; El Universal, http://www.eluniversal.com/nacional-y-politica/140407/maduro-agrees-to-meet-with-dissenters-at-unasurs-request and http://www.eluniversal.com/nacional-y-politica/140407/opposition-unasur-hold-second-meeting-on-dialogue-in-venezuela; More in Spanish: CNN, http://cnnespanol.cnn.com/2014/04/07/cancilleres-de-unasur-regresan-a-venezuela-en-medio-de-la-conmocion-por-nuevos-casos-de-violencia/?iref=allsearch)

Opposition leadership sets conditions for talks with Maduro

In a letter to the UNASUR Foreign Ministers, the opposition's United Democratic Conference (MUD) has stated that it would talk to the government "on equal footing", and that the first meeting should be fully televised live nationwide. They also wrote that they expect to establish an agenda that establishes as its priorities an Amnesty law for all political prisoners, an independent Truth Commission to investigate crimes committed over the past weeks, a balanced renewal of powers such as the Elections Board and the Supreme Court, and disarming civilian paramilitary groups. The opposition's leadership says that - contrary to prior reports - UNASUR has not set up a committee of 3 foreign ministers to facilitate talks, and that the government has not formally invited the Vatican to take part, which they  the opposition - consider "essential" for talks. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140408/amnistia-y-desarme-civil-son-prioritarios-para-la-mud)

Opposition leader formally charged

Jailed opposition leader Leopoldo Lopez was formally charged Friday with inciting violence at an anti-government protest that has been followed by weeks of unrest across Venezuela. Chief prosecutor Luisa Ortega Diaz announced the charges a day before the legal deadline to make the case for keeping Lopez in custody. The Harvard-educated Lopez has become a cause celebre among opponents of President Nicolas Maduro during the month and a half he has spent in a military prison outside the capital. (The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelan-opposition-formally-charged/2014/04/04/119087bc-bc19-11e3-80de-2ff8801f27af_story.html; Fox News, http://www.foxnews.com/world/2014/04/04/venezuela-formally-accuses-opposition-leader-charges-could-lead-to-years-long/)

Latin American legislators have asked the International Criminal Court to prosecute Maduro

A group of Latin American legislators have asked the International Criminal Court at The Hague to formally prosecute President Nicolás Maduro for "systematic" human rights violations against opponents demonstrating in Venezuela's streets. Perú's Cecilia Chacón said: "There are already 40 dead, aside from crimes against humanity such as tortures and kidnappings." More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140408/solicitaron-a-la-corte-de-la-haya-que-procese-al-presidente)

Spain suspends exports of riot control material to Venezuela

Spain has indefinitely suspended the export of riot control equipment to Venezuela’s government following weeks of unrest there which have seen an increase in violence as police face sustained protests by the opposition. Foreign Minister Jose Manuel Garcia Margallo said “it is a fact” that Spain has suspended sales because “it is logical not to add fuel to the fire when there is a conflict.” The decision was made by a government panel March 6, but only now confirmed publicly. Garcia Margallo said Spain has a special interest in Venezuela because 200,000 Spaniards live there. (The Washington Post, http://www.washingtonpost.com/business/spain-suspends-riot-control-exports-to-venezuela/2014/04/05/984a797a-bcb9-11e3-9ee7-02c1e10a03f0_story.html; Fox News, http://www.foxnews.com/world/2014/04/05/spain-suspends-exports-riot-control-equipment-to-venezuela-socialist-government/)

Student leaders reports threats

Juan Requesens, president of the Federation of University Councils (FCU), reports that members of the Student Movement have been threatened via social networks by pro-government individuals. "My fellow students have been threatened via social networks; their telephone numbers have been shared. Paramilitary groups have been asked to look for them. Their (students') addresses and IDs have been posted; their capture has been ordered because they are fascist; pictures of their relatives have been leaked; they have been declared military targets. The government will not intimidate us. It will not frighten us; we will keep on demonstrating in the streets," Requesens said. (El Universal, http://www.eluniversal.com/nacional-y-politica/140407/student-movement-reports-threats-against-student-leaders)

TV journalist kidnapped by armed men

The father of a Venezuelan TV journalist says his daughter has been kidnapped by armed, masked men in the western section of the capital of Caracas. Luis Pinto reports that his daughter Nairobi Pinto was taken hostage Sunday afternoon at the entrance to the building where she lives. She is the chief of correspondents for the GLOBOVISION news channel and her whereabouts remain unknown. The elder Pinto called on the kidnappers to free his daughter during an interview with the local broadcaster Union Radio. Police officials have not commented on the case. (The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelan-tv-journalist-kidnapped-by-armed-men/2014/04/07/3616e5a0-be70-11e3-9ee7-02c1e10a03f0_story.html)

Oppenheimer: Danger of a coup in Venezuela

According to a study by the Netherlands based Global Partnership for the Prevention of Armed Conflict (GPPAC), the "most probable" scenario for Venezuela is anarchy, followed by "the possibility of intervention by the nationalist-institutional segment of the armed forces". Partnership co-chair Andres Serbin says those segments of the armed forces resent Cuban military advisors and the creation of paramilitary groups. In addition, they do not want to engage in repressing demonstrations by the opposition. Some local analysts are skeptical about the possibility of a military coup because of the degree of military control already in effect within the government. Others argue that Venezuela has already undergone a slow motion military coup with over 1600 officers in government positions. 25% of the Maduro cabinet, including the powerful Ministries of the Interior and Finance, and 52% of the governorships are in the hands of active or retired officers. In addition, Maduro has created a record number of officers: Venezuela has 1200 generals in a force of 120,000 soldiers. However, they say Chavez had a firm grip on the military whereas Maduro is a weaker president who is controlled by the military in many areas. Rocío San Miguel, who heads Control Ciudadano, a group that keeps close watch over the military says: "Under Chavez the military were under vertical control. Now military control is atomized, with the military holding parcels of power, with no control whatsoever." Serbin concludes that unless there are meaningful negotiations between the regime and the opposition, the alternative could be "a military coup, or a self-coup by the government itself, with an even greater cycle of violence that could end up in a civil war." More in Spanish: (Infolatam)

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.

April 04, 2014

International Trade

Inbound cargo at Puerto Cabello

• 25.000 tons of Argentine soybeans for Consorcio Oleaginoso Portuguesa.
• 4.292 tons of Brazilian meat from JBS and Minerva for CASA.
• 3.000 tons of construction material for PDVSA Industrial.
• 1.975 tons of frozen meat (special cuts) has arrived from ALBALINISA, Costa Rica for CASA and over 670 tons from Comercial San Martín for CASA.
• 684 tons of milk and cream milk from CENTROLAC for CASA
• 284 tons of frozen chicken from Seaterliang for La Productora y Distribuidora de Alimentos.
• 267 tons of coffee from ALBALINISA for Café de Venezuela.
• 212 tons of auto parts for FORD Motor.
• 136 tons of green peas from Prime Seeds Internacional for Comercializadora Agrícola Domínguez.
• 78 tons of paper for Stock Papelero
• Also ceramics, garlic, tires, cables and lamps.

Twelve ships remain at bay, three of them carrying containers, one with cattle, one with chemicals, one with fertilizers and six with bulk food. (El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/97965/-llegaron-ms--de-tres-mil-toneladas-en-carnes-para-casa; Notitarde; http://www.notitarde.com/La-Costa/Llegaron-mas-de-4-mil-toneladas-de-carne-para-Casa-2135601/2014/04/02/318723; El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/98016/-tres-mil-toneladas-de-carne-consignadas-a-casa-llegaron-a-puerto)

Venezuelan imports from Colombia rose 28% in January-February, driven by fuel imports

Colombia's National Statistics Department (DANE) says Venezuelan imports from Colombia rose 28% in January-February, to U$D 430.5 million, as compared to U$D 336.2 million in the same time frame of 2013. The largest item is fuel, for U$D 200 million, an increase of 179%. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/importaciones-desde-colombia-subieron-28--entre-en.aspx#ixzz2xj1Ox8l8)

Venezuela sends machinery, supplies to strengthen Haitian agriculture

The Venezuelan government has dispatched a ship bearing machinery and supplies to strengthen Haiti's agriculture. National Armed Force commander Gilberto Pinto Blanco says 80 tractors, 30 milking machines and  breeders will be shipped in three phases. He told media another vessel will depart in four days. (AVN, http://www.avn.info.ve/contenido/venezuela-sends-haiti-machinery-supplies-strengthen-agriculture)

Oil & Energy

PDVSA to get U$D 625 million in funding from SUELOPETROL

Oil and Mining Minister Rafael Ramírez says an agreement has been reached with SUELOPETROL for financing U$D 625 million in the PETROCABIMAS project. He says PDVSA has received U$D 11 billion in resources from transnational oil corporations so far, but would not say how long the process would take. (El Universal, http://www.eluniversal.com/economia/140403/pdvsa-to-get-usd-625-million-in-funding-from-suelopetrol)

Agreements have been signed to compensate oil service companies expropriated in 2009

Economic Affairs Vice President Rafael Ramírez has signed an agreement to compensate oil service companies expropriated in Zulia state in 2009. Companies to be indemnified for their property are Z&P, Atlántida Internacional, Ecope, Marítima Costa Azul, Vinccler and Zulia Towing. Ramírez said "other companies are missing" and now under review. More in Spanish: (La Verdad, http://www.laverdad.com/economia/49478-firman-convenios-para-indemnizar-empresas-petroleras-expropiadas-en-2009.html)

Commodities

Government tackles food shortage with ID card system

Battling food shortages, the Venezuelan government is rolling out a new ID system that is either a grocery loyalty card with extra muscle or the most dramatic step yet towards rationing in Venezuela, depending on who is describing it. President Nicolás Maduro's administration says the cards to track families' purchases will foil people who stock up on groceries at subsidized prices and then illegally resell them for several times the amount. Critics say it's another sign the oil-rich Venezuelan economy is headed toward Cuba-style dysfunction. Registration begins at more than 100 government-run supermarkets across the country. Patrons will register with their fingerprints, and the new ID card will be linked to a computer system that monitors purchases. A local consumer watchdog, the National User and Consumer Alliance, invoked the specter of Cuba's struggling economy and called the ID program rationing by another name. It predicted that Venezuelans without cards would soon be barred from shopping at state supermarkets. (The Guardian: http://www.theguardian.com/world/2014/apr/01/venezuela-food-shortage-id-cards)

CNH’s IVECO suspends Venezuela truck making on FOREX difficulties, auto makers in crisis

 CNH, the commercial-vehicle producer spun off from carmaker FIAT in 2011, said its IVECO unit halted production in Venezuela after currency devaluation caused “difficulties” with importing parts. “IVECO is reluctantly suspending, with immediate effect, its manufacturing operations in the country,” Amsterdam-based CNH said today. The truck maker will “resume manufacturing when market conditions improve and stabilize.” The move to suspend manufacturing follows FORD's decision in January to scale back production in the region because of the currency shortage. The Dearborn, Michigan-based carmaker said yesterday that it’s taking a first-quarter charge of about U$D 350 million because of a change in how it values the Bolivar. FORD said Venezuelan production was slashed 75% in the fourth quarter, and manufacturing will remain at that lower rate this year as car sales plunge. GM is taking a U$D 400 million charge because of Venezuela currency losses.  GM South America reported that it made U$D 327 million in 2013 before the U$D 400 million charge. FORD is only operating 3 days a week and TOYOTA and CHRYSLER have already stopped Venezuela operations.  February auto sales in all of Venezuela were 817 new units, down from 8,058 new units sold in February 2013. IVECO employees 400 workers in Venezuela to build trucks and bus chassis, the company said today. It produced 1,700 vehicles in the country last year. (Bloomberg: http://www.bloomberg.com/news/2014-04-02/cnh-s-iveco-suspends-venezuela-truckmaking-on-currencies.html)

Newsprint from Colombia undergoes delays at the border

The first of two trucks bearing 52 tons of newsprint sent by Colombian newspapers to their beleaguered colleagues in Venezuela was finally allowed to continue on after being held up for hours by the National Guard. The second truck should be authorized to proceed shortly. The Colombian Association of Newspaper and Media Editors loaned the 52 tons of newsprint from Canada to Venezuelan newspapers El Nacional, El Impulso and El Nuevo País in order to provide operations for 15 days, following a refusal by the Maduro government to provide FOREX for newsprint imports by opposition publications. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140403/carga-de-papel-periodico-de-colombia-permanece-en-la-frontera; and http://www.eluniversal.com/nacional-y-politica/140402/diarios-de-colombia-envian-papel-a-prensa-venezolana)

Economy & Finance

A fiscal reform is in the works

President Nicolás Maduro says his government will enact a fiscal reform, in order to improve the country's budget execution and tax collection. He remarked that the reform would be "egalitarian and fair". Deputy Ricardo Sanguino, Chairman of the National Assembly's Finance and Economic Development Committee says "we are heading for a less regressive system", and that there is now increase foreseen in the sales tax or any other rate. "Those who make more will pay more", he said. (El Universal, http://www.eluniversal.com/economia/140402/venezuelan-president-nicolas-maduro-prepares-fiscal-reform; and more in Spanish: (El Nacional; http://www.el-nacional.com/; and El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/maduro-anuncia-que-haran-reforma-fiscal-para-const.aspx#ixzz2xj16yaxA)

Venezuela may slowly move toward open currency market.

Venezuela may move toward an open currency market after more than a decade of exchange controls, according to Ricardo Sanguino, Chairman of the National Assembly's Finance and Economic Development Committee. "The trend in the medium and long term could be that we have an open market for currency without the application of an exchange rate anchor," he said. El Mundo Economia y Negocios. (Reuters, http://www.reuters.com/article/2014/04/03/venezuela-forex-idUSL1N0MV0ZA20140403)

FOREX reserves up by U$D 453 million in Q1 2013

International reserves rose by U$D 453 million to U$D 21.934 billion in Q1 2014, but remain 20% below the same period in 2013. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/reservas-internacionales-subieron-453-millones-en-.aspx#ixzz2xopCf3Vg)

Data verification blamed for delays in FOREX allocation to participants in the new SICAD 2 system

According to Central Bank Board member Armando León, the delay in delivering actual FOREX to parties taking part in the new SICAD 2 system is due to verification that must be carried out by banks in order to determine the origin of funds and match income to FOREX acquisition. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/verificacion-de-data-retrasa-depositos-en-divisas-.aspx#ixzz2xoqXIWvn)

CENCOEX temporarily loosens requisites for FOREX allocation

The National Foreign Trade Center (CENCOEX) has loosened some of the requirements companies must meet in order to acquire FOREX. Guarantee funds can now be provided in Bolivars, and not in US dollars, as originally stipulated. More in Spanish:  (El Universal; http://www.eluniversal.com/economia/140402/cencoex-flexibiliza-requisitos-para-la-solicitud-de-las-divisas; Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/cencoex-anuncia-que-transitoriamente-fianza-para-importaciones-podr%C3%A1-ser-tranzada-bol%C3%ADvare; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/fianza-para-importar-a-venezuela-se-podra-pagar-en.aspx)

SICAD 2 average rate trends down to VEB 49.03/U$D. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/tasa-del-sicad-2-sigue-baja-y-se-ubica-este-mi%C3%A9rcoles-bs-4903-d%C3%B3lar; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/tasa-sicad-2-vuelve-a-bajar-y-se-coloca-a-bs-49-03.aspx)

Labor strife causes 35% drop in productivity

According to estimates by FEDECAMARAS, Venezuela's main business grouping, around 35% of the nation's productivity is hurt by labor strife, not counting other problems such as lack of raw material and fewer companies. FEDECAMARAS President Jorge Roig says some industries are practically paralyzed. He reported that the chemical industry is working at 20% capacity, metal related industries are around 40% capacity, plastics at 50% and the food sector is at 60% capacity. "It's the perfect storm. We have all three problems at once: Not enough companies, no raw materials and labor strife", he said. (El Universal, http://www.eluniversal.com/economia/140402/conflictos-laborales-afectan-35-de-la-productividad)

  

Exchange offices are 85% paralyzed ever since family remittances to Colombia were suspended, along with changed conditions for sending funds abroad. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140402/85-de-operaciones-de-casas-de-cambio-estan-detenidas)

Politics

Bishops say regime seeks totalitarian rule, Vatican still awaits invitation to mediate

Venezuela’s organization of Roman Catholic bishops is accusing the government of seeking totalitarian-style rule, comments that potentially could complicate the Vatican’s offer to facilitate talks between the socialist government and its opposition. The Conference of Venezuelan Bishops is calling on President Nicolas Maduro to halt his crackdown on critics who have been protesting in the streets for seven weeks. The conference president is Bishop Diego Padron accused Maduro of attempting to criminalize dissent. The statement comes a few days after the Vatican said it was willing to facilitate talks between the two sides. Maduro indicated he would accept such talks, but the position of the various groups that constitute the opposition remains unclear. The Vatican is still waiting for a formal invitation to serve as mediator or as a third of good faith in the dialogue between the regime and the opposition, according to Monsignor Padrón. (The Washington Post; Fox News, http://www.foxnews.com/world/2014/04/02/bishops-group-says-venezuela-seeks-totalitarian-rule-could-hinder-vatican-role/; and Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=38751&idc=1)

UNASUR committee returns next week

Ecuadorian Foreign Affairs Minister Ricardo Patiño has confirmed that the UNASUR Foreign Minister's Committee (Brazil, Colombia, Ecuador) will be back in Caracas April 6-7 to continue working towards dialogue between the parties in conflict. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=38752&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/140402/unasur-envoys-to-return-to-venezuela-on-april-7-8)

Democratic Unity Conference seeks mediator for Elections Board selection

As the National Assembly takes the first steps toward replacing 11 Supreme Court justices and 3 Election Board Directors whose terms have been expired for several months, there are no opposition legislators on the committees set up to do so by the Assembly. A request by opposition legislators to postpone setting up the committees for one week was ignored. The Democratic Unity Conference will seek international mediation, chosen "by mutual agreement" and asks that mediators participate in the process. Neither side has sufficient votes to replace justices and election authorities whose terms have expired. If the necessary votes are not reached after three sessions of the National Assembly, candidates can be selected by a simple majority in a fourth session, according to Article 8 of the Supreme Court Law. More in Spanish: (El Nacional: http://www.el-nacional.com/politica/MUD-mediador-supervise-renovacion-CNE_0_383961856.html)

Amnesty International reports dozens of Venezuela torture accounts

Amnesty International has received dozens of accounts of torture allegedly carried out by government security forces in Venezuela since protests that have left at least 37 dead broke out in February. “We’ve received reports from detainees who were forced to spend hours on their knees or feet in detention centers,” Amnesty wrote in a report, adding that other Venezuelans said they suffered sexual abuse and threats of murder. “Inhuman and degrading treatment inflicted on detainees appears to be intended to punish them for their involvement, or suspected involvement, in the protests,” Amnesty said. (Bloomberg, http://www.bloomberg.com/news/2014-04-01/amnesty-reports-dozens-of-venezuela-torture-accounts.html; El Universal, http://www.eluniversal.com/nacional-y-politica/140403/ngo-reports-2118-arrests-across-venezuela-during-protests)

Street barricades a deadly protest, Caracas "war zones" multiply

The barricades in Caracas and a swath of Venezuela cities aim to disrupt, frustrate and ultimately trigger a popular revolt. But like the broader, mostly peaceful anti-government movement they grew out of, the tactic has so far failed to sow wider unrest. However, protests have grown stronger, as has repression by the National Guard; and strife has spread to additional areas of Caracas, such as Terrazas del Ávila and the working class neighborhoods pf ¨ Píritu and La Parrilla, in Petare. Offices at the Housing Ministry in Chacao were burned by hooded individuals passing for protesters. (The Washington Post; Fox News, http://www.foxnews.com/world/2014/04/02/venezuela-street-barricades-draw-ire-president-as-well-as-his-opponents/; and more in Spanish: El Nacional; http://www.el-nacional.com/)

Vargas Llosa to visit Venezuela to back anti-Maduro groups

The Peruvian Nobel Prize winning author, Mario Vargas Llosa, has said that he will travel to Venezuela to lend his support to opposition groups. He accused President Nicolas Maduro of trying to install a "Cuban-inspired dictatorship" in Venezuela, and said that all Latin American countries would be under threat if Maduro succeeds. (BBC)

Deputy Machado asks Brazilian senators to look closely at the Venezuelan crisis

Opposition Deputy María Corina Machado went before the Brazilian Senate's Foreign Affairs Committee to denounce "brutal repression" by a "rogue regime," as she described the Maduro government. Machado was invited by the Committee to discuss the crisis in Venezuela. During the meeting, she asked Brazil to "not close their eyes" to the repression "Venezuelan people" are suffering. (El Universal, http://www.eluniversal.com/nacional-y-politica/140403/ex-deputy-machado-asks-brazilian-senators-to-look-at-the-venezuelan-cr)

Brazil, Chile reply to Machado criticism, defend UNASUR's work

Brazil and Chile defended the work of the Union of South American Nations (UNASUR) in promoting political dialogue in Venezuela, after opposition Deputy María Corina Machado questioned the reliability of the regional bloc's role in the Venezuelan peace process. In reply, Brazilian Foreign Minister Luiz Alberto Figueiredo, and his Chilean counterpart, Heraldo Muñoz, said jointly that UNASUR's work has generated "trust" in the bloc and the organization was simply trying to push forward dialogue for reconciliation. (El Universal, http://www.eluniversal.com/nacional-y-politica/140403/brazil-chile-defend-unasurs-work-in-reply-to-machados-critiques)

Maduro article published by The New York Times

Nicolás Maduro appears to have been so irked by the article by Leopoldo Lopez that was published by The New York that he sent an op-ed piece under his own signature to the daily that was published this Wednesday. Maduro defends his regime with half truths and flagrant lies, and demonizes protestors on the streets of Venezuela for the last 51 days. He repeats his desire to enter talks with the US Government and warns that if sanctions proposed in the US Congress take place the poor would be the hardest hit. "Now is the time for dialogue and diplomacy", says the article. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=38749&idc=1; The New York Times and The New York Times; BBC, http://www.bbc.com/news/blogs-echochambers-26859560; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/140403/maduro-alerta-que-sanciones-de-eeuu-afectarian-a-los-pobres)

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.

April 01, 2014

International Trade

Inbound cargo at Puerto Cabello

• Over 486 tons of dairy products have arrived from ports in Chile, México and Uruguay, including 4 vans bearing 112 tons of butter. 
• NESTLÉ México sent its Venezuelan affiliate 8 containers carrying over 137,000 tons of baby formula. 

Seven ships remain at bay, three of them carrying 60,000 tons of yellow corn, along with another three bearing over 69,000 tons of soy. Another vessel is carrying over 305,000 tons of tires. More in Spanish:  (El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/97845/-leche-infantil,-completa,-en-crema-y-mantequilla-arrib-al-puerto; and Notitarde; http://www.notitarde.com/La-Costa/Siete-buques-con-alimentos-esperan-en-bahia-2134439/2014/03/31/318317)

50% increase in land cargo container freight rates in effect as of today

Starting today a new 50% rate increase will apply to land cargo container freight from Puerto Cabello. More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/97842/-nuevas-tarifas-para-fletes-de-cargas-contenerizadas-a-partir-de-hoy)

Logistics & Transport

AVIANCA surges with COPA on Venezuela’s pledge to pay

Avianca and COPA stock has rallied on speculation Venezuela will let airlines exchange their bolivars for dollars at the official rate. COPA, Venezuela’s second-biggest carrier by capacity, rose 4.4% to U$D 141.67 today in New York for the biggest gain in six weeks. American depositary receipts of AVIANCA, Colombia’s largest airline, jumped 3% to U$D 17.24. President Nicolas Maduro authorized his government to pay U$D 3.8 billion owed to international airlines, revenue calculated using the official exchange rate at the time of the sale, and Venezuelan Airlines Association President Humberto Figuera told reporters in Caracas. While the official exchange rate is 6.3 bolivars per dollar, currency controls have left the bolivar trading at about ten times that in the black market. (Bloomberg, http://www.bloomberg.com/news/2014-03-28/venezuela-will-pay-all-airline-debt-at-original-fx-rate.html)

Oil & Energy

Venezuela offers 2.3 million barrels on the open market

State-run PDVSA is offering at least 2.3 million barrels of crude, ultra low-sulfur diesel (ULSD) and jet fuel on the open market for delivery in April from its 187,000 bpd Puerto la Cruz refinery and other terminals in east Venezuela, an internal document says. The company has ramped up tenders in recent weeks amid a bigger need for cash and decreasing domestic fuel demand because of protests against President Nicolas Maduro. The tenders for April come after tenders in March to sell 730,000 barrels of ULSD, jet fuel, natural gasoline and light virgin naphtha. (Reuters, http://www.reuters.com/article/2014/03/28/oil-venezuela-exports-idUSL1N0MO20K20140328)

Venezuela oil price tips up

Venezuela's weekly oil basket stayed below the country's desired U$D 100 a barrel floor, but tipped up after three straight weeks of declines as world oil prices rose over concerns caused by the Russian invasion of Ukraine, strife in OPEC members Libya and Nigeria, and delays in Iran's return to the market. 

According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending March 28 was U$D 95.41, up $0.40 from the previous week's U$D 95.01. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=1868583&CategoryId=10717)

Commodities

SIDOR steel production at 40% due to strikes

Rafael Tizamo, Labor Affairs manager at SIDOR says production there is around 40%, and the state owned conglomerate is undergoing a crisis in productivity due to constant work stoppages. "The union does not cooperate to increase productivity", he said. (El Mundo, http://www.elmundo.com.ve/noticias/economia/industrias/produccion-de-acero-de-sidor-es-de-40---a-causa-de.aspx#ixzz2xXGu0twq)

Economy & Finance

FEDECAMARAS President says companies are still awaiting FOREX from SICAD II transactions

FEDECÁMARAS President Jorge Roig says doubts persist on the new FOREX allocation system and some signs are not encouraging. The head of Venezuela's principal business organization says: "We know of no effective allocations" after one week of SICAD II operations. Roig added that according to reports from the business community, it is difficult to understand the allocation criteria used by authorities. "Those who bid above the average price do not receive allocations", he said. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140401/empresas-aun-esperan-por-el-pago-de-las-divisas-en-el-sicad-ii)

All people doing business in Venezuela must register with the government

Fair Price Superintendent Andreína Tarazón has announced the immediate creation of a Single Personal Register (RUPDAE) for all those who do business in Venezuela. The registry will include importers, distributors and trade and those who fail to comply within 180 days will be fined. Trade Minister Dante Regime says the registry will allow the regime to plan trade nationwide. He says "it is a planning instrument to know how much they produce and what they produce, in order to plan FOREX use and favor raw materials". More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/implementan-registro-%C3%BAnico-personas-dedicadas-actividad-econ%C3%B3mica; http://www.avn.info.ve/contenido/registro-%C3%BAnico-permitir%C3%A1-planificar-actividad-econ%C3%B3mica-pa%C3%ADs: Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/implementan-registro-unico-para-ordenar-actividad-.aspx; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/arranca-registro-obligatorio-de-actividades-econom.aspx)

Venezuela hikes bank reserve rate again in inflation fight

Venezuela's Central Bank has raised the reserve amount that banks must deposit with it by 1.0 percentage points to 21.5% amid government efforts to tame an annual inflation rate of more than 57%. The measure, which takes effect today, is the latest in a series of increases in the reserve ratio. (Reuters, http://www.reuters.com/article/2014/03/31/venezuela-economy-rates-idUSL1N0MS0YS20140331; El Universal, http://www.eluniversal.com/economia/140331/central-bank-of-venezuela-increases-legal-reserve)

Shortages remain untamed during the first quarter

Companies have recorded monthly production loses at 10% due to unjustified shutdowns. Food manufacturers expected authorities to pay the foreign currency debt, which has been pending for more than 250 days. Although companies submit their cost structure quarterly, the prices of some products remain frozen. (El Universal, http://www.eluniversal.com/economia/140331/shortage-untamed-in-the-first-quarter-in-venezuela)

Politics

Venezuela: Political spiral of violence a threat to the rule of law

Venezuela risks one of the worst threats to the rule of law in decades if the different political forces do not commit to fully respecting human rights, according to a new Amnesty International report on the current crisis in the country. The report, Venezuela: Human Rights at risk amid protests, documents allegations of human rights violations and abuses committed in the context of the massive public demonstrations since early February. “The country runs the risk of descending into a spiral of violence unless steps are taken to bring the conflicting parties around the table. This can only happen if both sides fully respect human rights and the rule of law. Unless this happens, the death toll will continue to rise with ordinary people bearing the brunt,” said Erika Guevara Rosas, Americas Director at Amnesty International. So far 37 people have lost their lives and more than 550 have been injured including at least 120 through the use of firearms. According to figures released by the Office of the Attorney General on 27 March 2,157 have been detained during the protests. According to allegations received by Amnesty International, the country’s security forces have resorted to the excessive use of force, including the use of live fire, and even torture when dealing with protesters. The report also documents human rights abuses committed by pro-government groups, protesters and unidentified individuals. (Amnesty, http://www.amnesty.org/en/news/venezuela-political-spiral-violence-threat-rule-law-2014-04-01)

The Supreme Court says Machado divestment is "appropriate", Machado calls decision an "aberration"

The Constitutional Chamber of Venezuela's Supreme Court has published a decision confirming that by speaking at the OAS as a member of the Panamanian delegation, legislator María Corina Machado gave up her rights as a legislator. Previously, the National Assembly President, Army Captain Diosdado Cabello, declared her inadmissible and his sentence as supported by the pro government majority in the Assembly, in a stark departure from Constitutional rules. Machado responded by calling the Court's decision an unconstitutional "aberration" that confirms there is no separation of powers in Venezuela, and will lead a march today to the Assembly, where Cabello says she will not be allowed to enter. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/tsj-declaro-procedente-destitucion-de-maria-corina.aspx#ixzz2xd6rf26v; El Universal, http://www.eluniversal.com/nacional-y-politica/140401/tsj-avala-salida-de-machado-de-la-asamblea-nacional; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/cabello-maria-corina-machado-no-va-a-entrar-en-la-.aspx#ixzz2xd77lwFR; and El Universal, http://www.eluniversal.com/nacional-y-politica/140401/diputada-desafia-a-cabello-y-afirma-que-estara-hoy-en-la-an; and Noticiero Digital, http://www.noticierodigital.com/2014/04/maria-corina-machado-decision-del-tsj-es-una-aberracion/?utm_source=NoticieroDigital.Com&utm_medium=twitter)

Vatican says it’s willing, able to help Venezuela

The Vatican says it is willing and able to help intervene diplomatically in Venezuela’s crisis after weeks of deadly unrest but says it must study expectations and options about what role it could play. President Nicolas Maduro has accepted the idea of a good-faith facilitator after coming under mounting pressure to reconcile with opponents who have been protesting for nearly three months. He mentioned Vatican Secretary of State Cardinal Pietro Parolin, until last year the Vatican’s ambassador to Caracas. The Vatican spokesman, the Rev. Federico Lombardi, has said the Holy See and Parolin were “certainly willing and desirous to do whatever is possible for the good and serenity of the country.” But he said the Vatican needed to understand if Vatican intervention would bring about a “desired outcome.” (Time, http://time.com/42235/vatican-says-its-willing-able-to-help-venezuela/)

Brazil grows wary of Venezuela under Maduro, reduces support

Brazil has toned down its support for Venezuelan President Nicolas Maduro because of disappointment over how he is handling mounting economic problems and opposition-led street protests. The shift, while subtle, has deprived Maduro of some of the regional backing he wants at a time of food shortages, high inflation and political uncertainty. Broadly speaking, Brazilian President Dilma Rousseff has been increasingly disappointed by some of Maduro's actions and has reined in the more enthusiastic support that characterized Brazil-Venezuela relations under the late Hugo Chavez, according to two officials close to Rousseff's government. Worsening turmoil in Venezuela could endanger the sizeable interests of Brazilian companies in Venezuela. They include conglomerate ODEBRECHT SA. Brazilian newspaper VALOR ECONOMICO reported this month that Venezuelan public-sector companies already owe Brazilian companies as much as U$D 2.5 billion in debt. The shifting stance does not amount to increased support for the Venezuelan opposition, the officials emphasized. Henrique Capriles, the Venezuelan opposition's leading figure, has pointed to Brazil's ruling Workers Party as having the kind of policies he would embrace if elected. Both sides are eager to curry Brazil's favor and the signals sent by Rousseff's government are closely watched in Venezuela. (Reuters, http://www.reuters.com/article/2014/03/28/us-brazil-venezuela-idUSBREA2R0ZP20140328)

Venezuela forces 'clear' protest city of San Cristobal

A top Venezuelan military commander says the security forces have retaken control of the streets in the western city of San Cristobal. Many of the city's roads had been blocked by barricades erected as part of anti-government protests. The head of the National Armed Forces Strategic Operational Command, Gen Vladimir Padrino, said the police and the National Guard had "ended the curfew imposed by terrorists". (BBC)

55% of Venezuelans think Maduro regime is no longer democratic

"They may term me a ‘dictator', but I do not care," said Nicolás Maduro on February 7, 2014 after announcing stringent laws against sensationalism. Today, given the crackdown on recent anti-government demonstrations, the public things the regime has lost the democratic quality the late President Hugo Chávez always boasted of.

Based on the last survey conducted by the IVAD polling firm, 55% of the population believes the government "is no longer democratic." (El Universal, http://www.eluniversal.com/nacional-y-politica/140331/55-of-venezuelans-think-maduros-govt-is-no-longer-democratic)

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.