May 09, 2014

International Trade

Incoming cargo at Puerto Cabello

• 6,000 tons of paddy rice from Guyana for CASA
• 6,000 tons of paddy rice from Jamaica
• 31,000 tons of yellow corn for animal feed, from Japan
• Over 900 tons of pear and apple pulp, from Cartagena
• Over 300 tons of canned peaches and some 40 tons of frozen peas.
• Over 2,979 tons of chicken and beef in 17 vans from Argentina to CASA and Banco del Tesoro
• 1,470 tons of chicken in 46 containers from Brasil to CASA
• Over 662 tons of chicken in 20 vans from Uruguay to CASA
• Over 6,000 tons of yellow lard from Trasardet Service and Luzar Trading to Alimentación Balanceada, Agro Consorcio Urograin and Avícola de Occidente. 
• Over 2,000 tons of cardboard cutouts from Puerto Rico to Cartones de Venezuela
• 1,559 tons of construction material in 60 vans
• 256 tons of doors in 15 containers
• 1,303 prefabricated modules in 45 containers.
• Two 15-meter external lighting towers for CASA's cold storage facility in Barinas

13 ships remain at bay, 2 carrying rice and one bearing yellow corn; 2 bringing fertilizers; 2 with steel tubing; 1 bringing steel structures; 1 with chemicals; 3 bearing containers and one with cattle. More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/100596/movimiento--portuario; Notitarde; http://www.notitarde.com/La-Costa/Llegaron-al-terminal-maritimo-carabobeno-6-mil-toneladas-de-arroz-paddy-para-Casa-desde-Guyana-2155685/2014/05/07/32548;  and AVN, http://www.avn.info.ve/contenido/descargan-embarques-arroz-paddy-y-ma%C3%ADz-amarillo)

Logistics & Transport

COPA Air cuts Venezuela flights to reduce Bolivar risk

Panama’s COPA Airlines will cut routes to Venezuela starting this month as it struggles to repatriate funds trapped here. The Panama City-based airline, which has routes connecting the U.S., Caribbean and Latin America, said its owed U$D 488 million by the Venezuelan government, valued at the official bolivar rate of 6.29 per dollar. It didn’t give details on how many flights would be affected. “We’re reducing the amount of bolivars that we’re going to be accumulating to a point that is totally manageable,” Copa’s Chief Executive Officer Pedro Heilbron said on a conference call today. “We’ll only have to worry about the old stuff.” (Bloomberg, http://www.bloomberg.com/news/2014-05-08/copa-air-cuts-venezuela-flights-to-reduce-bolivar-risk.html)

IATA says Venezuela's air connections are at risk

An unidentified industry source reports that 5 more airlines will suspend operations in Venezuela and seek international arbitration due to delays in payment of government debt. "Headquarters are feeling frustrated by what seems to be a new sham by the Venezuelan government, which has been offering to pay airlines since last October but has not made good on any of the promises." More in Spanish: (El Nacional; http://www.el-nacional.com/; El Universal, http://www.eluniversal.com/economia/140508/denuncian-al-gobierno-por-incumplir-pagos-a-aerolineas)

Oil & Energy

Venezuela to ration electricity after Colombia cuts gas

The government announced the start of electricity rationing in western Zulia state as well as water rationing in Caracas to reduce demand on the power grid, a day after FORD Motor Co. halted production here. Colombia stopped natural gas sales to Venezuela last week to preserve fuel during the periodic regional dry spell known as El Nino. The energy-saving plan follows measures to ration water in the capital, where residents are struggling with shortages of basic goods including toilet paper and bottled water. The government said it will start rationing electricity and water as drought drains hydroelectric reservoirs and water tanks. The rationing plan will be in place until the wet season starts and water levels stabilize at major reservoirs, Rodriguez said yesterday. (Bloomberg: http://www.bloomberg.com/news/2014-05-07/venezuela-to-ration-electricity-after-colombia-cuts-gas.html)

Amuay refinery stopped due to steam failure

Amuay workers told Reuters Wednesday that in addition to the fluid catalytic cracking unit (FCC), two of five distillation units had also been stopped due to steam failures. They explained this failure affected the activation process of the FCC. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39192&idc=4)

El Palito refinery stops production of high-octane gasoline

Petróleos de Venezuela (PDVSA) reports that the fluid catalytic cracking plant at El Palito refinery is in maintenance shutdown. The unit is responsible for production of high-octane gasoline. "PDVSA informs the national public that maintenance works are being carried out at the fluid catalytic cracking unit (FCC), El Palito refinery, after finding an internal fault in the cyclone system located in the plant regenerator." (El Universal, http://www.eluniversal.com/economia/140506/el-palito-refinery-stops-production-of-high-octane-gasoline)

Commodities

Packing and canning material production is paralyzed for lack of materials

José Manuel González, President of the Packing Materials Chamber says glass and aluminum packing industries are paralyzed and not producing containers for food and beverages. "There are no jars for mayonnaise or ketchup. Nor are there cans for soft drinks or malts." The government owes the industry some U$D 230 million. Inventories vary from industry to industry, and flexible packing plants are those with highest stocks, but only until the middle of the month. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Ministers met with automotive industry: GM will not stop operations; FORD to resume them in 15 days

Industries minister Jose David Cabello met with General Motors representatives to review and propel automotive manufacturing processes. The meeting was also attended by Road Transport minister Haiman El Troudi. Cabello reported that the meeting also reviewed complexities within the automotive industry. El Troudi says GM will not halt operations and that "Chevrolet will take part in the SICAD 1 auction this week for up to U$D 44 million." He also said FORD would resume operations in 15 days.  (AVN, http://www.avn.info.ve/contenido/national-government-meet-gm-representatives; and more in Spanish: El Universal, http://www.eluniversal.com/economia/140508/ofrecen-a-ensambladoras-cancelar-la-deuda-de-2014; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/el-troudi-general-motors-no-detendra-produccion-de.aspx#ixzz317SZUGD1;  El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/el-troudi--ford-reanudara-en-15-dias-sus-lineas-de.aspx#ixzz30vqxfAtT)

Economy & Finance

World Bank panel backs arbitrators in Venezuela-CONOCO dispute

A World Bank panel rejected Venezuela's request to change the arbitrators reviewing a dispute over compensation sought by U.S. oil company ConocoPhillips for 2007 expropriations. The International Center for Resolution of Investment Disputes, or ICSID, in March shot down Venezuela's appeal for a new hearing to contest a 2013 partial ruling that it failed to act in good faith in compensation negotiations with Conoco. (Reuters, http://www.reuters.com/article/2014/05/07/venezuela-arbitration-idUSL2N0NT04V20140507)

Chiefs for the country’s five economic zones appointed

President Nicolás Maduro announced the creation of an "economic offensive" fund with an initial capital of Bs.3.5 billion. He appointed five of his ministers to lead “the economic offensive” in five zones: Industry Minister José David Cabello (Central Zone), Trade Minister Dante Rivas (Andean Zone), Agriculture Minister Yván Gil (the Plains), Economy, Finance and Public Banking Minister Rodolfo Marco Torres (Western Zone) and Mining and Oil Minister, PDVSA Chief and Economic Vice President Rafael Ramírez (Eastern Zone). He also approved the creation of three strategic economic zones: Puerto Cabello-Morón in Carabobo state, the Orinoco Oil Belt and Jose-Guanta in Anzoátegui state. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39170&idc=2; http://www.veneconomy.com/site/index.asp?ids=44&idt=39169&idc=2; http://www.veneconomy.com/site/index.asp?ids=44&idt=39168&idc=2; and El Universal, http://www.eluniversal.com/economia/140508/new-positions-in-the-venezuelan-govt-to-deal-with-economic-crisis)

Politics

59.2% disapprove of Maduro's rule, and 59.1% say he must go before 2019

According to a poll by DATANALISIS President Nicolás Maduro's approval rating dropped to 37% in March, the lowest since he took office. An almost identical number, 59.1% say he must leave office before his term ends in 2019. A similar poll taken by DATANALISIS in February had shown his approval rating at 46.8%. Food shortages are the worst problem the population is facing, followed by crime, and inflation. Recent protests have also cut support for the opposition, as blockading streets has increased traffic congestion and scarcities. More in Spanish: (Infolatam)

Venezuela committing systematic human rights abuses, HRW report says

Human Rights Watch said in a new report that dozens of unarmed protesters have been subject to serious physical and psychological abuse during protests that have left at least 41 dead since February. Abuses have included broken bones, denial of medical treatment and threats of rape or death. HRW has documented at least 10 cases serious enough to be considered torture, and that nearly all of the 150 of the victims it found were denied basic due process, and that many were held incommunicado and denied access to legal counsel until minutes before they went to court, often in the middle of the night. "The scale of rights violations we found in Venezuela and the collaboration of security forces and justice officials in committing them shows these aren't isolated incidents or the excesses of a few rogue actors", said José Miguel Vivanco, Americas director at Human Rights Watch. "Rather, they are the part of an alarming pattern of abuse that is the worst we have seen in Venezuela in years." (The Guardian: http://www.theguardian.com/world/2014/may/05/venezuela-committing-systematic-human-rights-abuses)

Regime dismantles dissenters' "freedom camps" in East Caracas

Around 3:00 am on Thursday, officers of the Bolivarian National Guard (GNB) and the Bolivarian National Police (PNB) evicted the protest camps set up by dissenting students for several weeks in Alfredo Sadel Square in Las Mercedes (southeast Caracas), Bolívar Square in Chacao (northeast Caracas), Santa Fe (southeast Caracas) and at the HP Tower, at Francisco de Miranda Avenue (northeast Caracas) where the offices of the United Nations in Venezuela are headquartered. The tents were swept away and dozens of students were detained and taken to Fort Tiuna military base, southwest Caracas, and the headquarters of the National Bolivarian Police in Catia, northwest Caracas. (El Universal, http://www.eluniversal.com/nacional-y-politica/140508/venezuelan-govt-dismantles-dissenters-freedom-camps-in-east-caracas; Reuters, http://www.reuters.com/article/2014/05/08/us-venezuela-protests-raids-idUSBREA470MT20140508)

Armed civilians fight protesters

As Venezuela's civil unrest stretches into a fourth month, the government has relied mostly on National Guard troops to contain protesters. But it also has another, less formal tool: gangs of armed, pro-government civilians. Mobs of civilians on motorcycles have swarmed antigovernment demonstrations, sometimes firing weapons, sometimes swinging bats, and have stormed a university and burst into apartment blocks in search of adversaries, witnesses and rights groups said. José Pinto, head of the TUPAMARO Revolutionary Movement one of the best-known colectivo commanders says the group favors a tough crackdown on protesters, whom he called "bugs." Without uniforms or other identifying signs—members often wear helmets, dark glasses and masks—they are tough to identify. They operate with the explicit encouragement of the country's leaders, including Maduro, who recently called on them to "fight fire with fire" against the government's adversaries. (The Wall Street Journal: http://online.wsj.com/news/articles/SB10001424052702303948104579537963099935756 )

US 'deeply concerned' about protest-hit Venezuela

The United States is "deeply concerned" at what Secretary of State John Kerry has called "the deteriorating situation" in protest-hit Venezuela. "The serious and worsening economic and social challenges in Venezuela can only be resolved with the input of those people," Kerry yesterday told a conference on the Americas in Washington, saying demonstrators had "legitimate grievances". "We believe the future of Venezuela is for the people of Venezuela to decide," Kerry said. "But make no mistake: we will never stop defending the basic human rights that are essential to any functioning democracy, including the freedoms of expression and peaceful assembly." (Business Standard, http://www.business-standard.com/article/pti-stories/us-deeply-concerned-about-protest-hit-venezuela-114050800226_1.html)

U.S. lawmakers want Venezuela sanctions; administration says not yet

U.S. lawmakers are pushing for sanctions on Venezuelans linked to human rights violations, but Obama administration officials insist that acting now would harm negotiations between President Nicolas Maduro's government and the opposition following weeks of violent protests. Assistant U.S. Secretary of State for Western Hemisphere Affairs Roberta Jacobson told the Senate Foreign Relations Committee she shared lawmakers' concerns about human rights violations in Venezuela and a lack of results from the talks. The US government does not rule out the imposition of sanctions on Venezuelan government officers if the situation in Venezuela does not improve. However, despite the poor progress made in the talks between the government of President Nicolás Maduro and the opposition, it would rather wait and see. A bill calling for sanctions to be possibly voted soon was introduced in the US Congress. Maduro has responded by saying "I will respond firmly (to sanctions), I cannot be intimidated by anyone." (Reuters, http://www.reuters.com/article/2014/05/08/us-venezuela-protests-usa-idUSBREA470UY20140508; El Universal, http://www.eluniversal.com/nacional-y-politica/140508/us-govt-to-give-venezuela-leeway-before-sanctions; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/140508/maduro-dice-que-respondera-amenaza-de-sancion-de-eeuu )

Government-opposition peace talks postponed again

Venezuelan authorities and the opposition Democratic Unity Conference (MUD) have again postponed their 5th session of peace talks that began almost a month ago. Vice President Jorge Arreaza says "we have decided to postpone the meeting to next week while we await results from the working groups". This is the second time the meeting has been postponed. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/gobierno-y-oposicion-aplazan-nuevo-dialogo-de-paz.aspx#ixzz317SDH6sa )

Have US sanctions begun?

Diosdado Cabello reported that his American visa has been suspended as the result of a claim made by an Air Force retired official before the US government that Cabello had delivered U$D 1 million to terrorist Osama bin Laden in India. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39195&idc=1)

Panama's President-elect seeks to restore ties with Venezuela

Panama's President-elect Juan Carlos Varela says he will send a personal envoy to Caracas "within the next few days" to start the process of restoring diplomatic relations suspended since March 5th., More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/varela-enviara-emisario-para-restablecer-relacione.aspx#ixzz311cJfwUk)

El Universal daily in emergency lack of newsprint

A newsprint shipment forwarded to El Universal daily newspaper remains stuck in customs, leading the most senior daily in Caracas to take urgent steps and further ration newsprint. (El Universal, http://www.eluniversal.com/economia/140505/el-universal-in-state-of-emergency-amidst-lack-of-newsprint; http://www.eluniversal.com/nacional-y-politica/140507/deputy-urges-venezuelan-govt-to-deal-with-newsprint-crisis; http://www.eluniversal.com/nacional-y-politica/140507/deputy-herrera-private-newspapers-are-plotting-against-maduros-governm)

SPECIAL REPORT: A few key figures on Venezuela

• 0.5% economic contraction is the latest projection on Venezuela's economy by the UN Economic Commission for Latin America. It is the worst projection of the 20 economies it measures.
• 2559 people have been arrested since demonstrations started on Feb. 4 according to the Penal Forum.
• U$D 16,965 is the real per capita income in Venezuela according to the World Bank, the second highest in Latin America, after Uruguay.
• 18% drop in non-oil exports in 2012-2013, down to U$D 2.1 billion from U$D 6.816 billion in 2006.
• 15.8% unemployment under 24 years old in February 2014, according to the National Statistics Institute (INE). There are 2,181,777 active persons 15-24 years old.
• 29.5% is the March scarcity index on personal care products, according to the Central Bank.
• 43% salary increase decreed by the government during 2014, while March inflation rate was 59.4%.
• U$D 12 billion is the government's loss due to gasoline subsidies, says PDVSA.
• U$D 96.5 was the average per barrel price of oil last week, down U$D 1.2 from the previous week.
• U$D 18 million were paid by PDVSA to F1 Williams to cancel a contract with Pastor Maldonado. Despite results last season, Williams reported a U$D 15 million profit.
• 97% completion on the Guanapa thermoelectric plant which will add 50 MW to the electric grid.
• 1.16% is the final sales price coffee growers receive locally. The remainder goes to intermediaries and salesmen.
• 5-7%-15.8% is the price cut on MITSUBISHI vehicles, according to the Consumer Protection Agency.
• 32,25% cut in airline seats available to Venezuelans, since January. 5 additional airlines will cut back starting May.
• 12% cut in vehicle parts sales nationwide, according to the Auto Parts Industry Federation.
• 10,485 abandoned cars, 9,651 motorcycles and 539 bicycles were sent to SIDOR in order to produce steel for 32,772 housing units, according to government sources.
• 53.7 homicides per 100,000 inhabitants is the average in Venezuela, according to the UN, making it the 2nd homicide rate in Latin America, following Honduras.
• 45 bodies entered the Caracas morgue during the first 3 days in May, and 412 bodies arrived at the morgue in April. The daily average was 13.73.

More in Spanish: (El País en Cifras: http://gallery.mailchimp.com/ace8dc1769ffb46a91cbc8bb2/files/23a5ebf2-a618-42f3-83df-208d45ce8e5f.pdf)

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.

May 06, 2014

International Trade

Incoming cargo at Puerto Cabello

• Over 7.038 tons of chicken and beef from JBS S/A for the government's Corporación de Abastecimientos y Servicios Agrícolas (CASA)
• 521 tons of frozen beef from Marfrig Alimentos S.A., Minerva S.A. y Baldony S.A. for Consorcio Comeimport, Inversiones 6308, Importaciones y Exportaciones Mounty and Makro
• Over 200 tons of prefabricated buildings from Lenard Overseas for PDVSA Industrial

More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-7-mil-toneladas-de-carne-y-pollo-llegaron-al-puerto-2153154/2014/05/03/324652)

Venezuela and Vietnam review standing agreements

Vietnam's Foreign Affairs Vice Minister Ha Kim Ngoc is currently in Venezuela seeking to deepen strategic cooperation and review the status of major joint projects in the sectors is reviewed: energy, agriculture, aquaculture, electricity, industry and trade. More in Spanish: (AVN; http://www.avn.info.ve/contenido/venezuela-y-vietnam-revisar%C3%A1n-acuerdos-materia-energ%C3%A9tica-agr%C3%ADcola-e-industrial; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/mundo/venezuela-y-vietnam-revisan-acuerdos-en-materia-en.aspx; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela-y-vietnam-revisaran-acuerdos-en-materia.aspx; El Nacional, http://www.el-nacional.com/mundo/Venezuela-Vietnam-revisaran-energetica-industrial_0_403159829.html)

Oil & Energy

The price of Venezuelan oil drops again

Venezuela's weekly oil basket stayed below the country's desired U$D 100 a barrel floor and fell as markets around the world seemed to be well-supplied. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending May 2 was U$D 96.50, down U$D 1.21 from the previous week's U$D 97.71. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2126767&CategoryId=10717)

Ramírez says low gasoline prices are "burning away the future"

Government officials have for some time been considering adjusting domestic oil consumption prices and speak of public consultation on the matter. In a recent interview, Economic Affairs Vice President Rafael Ramírez said: "These prices make no sense...with these gasoline prices we are burning away the future." More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/ramirez---con-el-precio-de-la-gasolina-nos-estamos.aspx#ixzz30q2HAC1v)

Commodities

Pharmaceuticals scarcity level at 50%

Based on data supplied by the Central Bank, by the end of March, shortages of pharmaceutical products rose to 50%. The report verifies the day-to-day plight of patients. (El Universal, http://www.eluniversal.com/economia/140505/scarcity-of-pharmaceutical-products-at-50-in-venezuela)

FORD halts operations in Venezuela due to lack of parts

FORD Motor Venezuela is stopping all activity in Venezuela as scarce inventories available have now been used up. It hopes to start operating again on May 30th but there is no assurance it will by then have received the needed vehicle components. It will continue to meet payroll commitments during the shutdown. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ford-paraliza-operaciones-en-venezuela-por-falta-d.aspx#ixzz30q0T76GL; El Mundo, http://www.elmundo.com.ve/noticias/negocios/automotriz/ford-paraliza-operaciones-por-falta-de-insumos.aspx)

Economy & Finance

CITI has released its April 2014 commentary on Venezuela (attached) with the following conclusions:

• Venezuela is in a downward spiral, economically, socially and politically, with no end in sight
• The economy is becoming more rather than less dependent on oil
• The private sector is reducing investment, as much by necessity as choice, further
• reducing the economy’s productive capacity
• The exchange rate regime can best be described as ‘dysfunctional’, with rapid
• inflation and a major shortage of foreign exchange likely to dictate further
• significant changes over the next few years
• The shortage of foreign exchange will lead foreign companies to reduce the scale
• of operations in the country and to accept large balance sheet losses

Fitch downgrades Venezuela's CITGO outlook to negative

Fitch Ratings has affirmed the Issuer Default Ratings (IDR) for CITGO Petroleum Corporation (CITGO) at 'BB-' and the company's senior secured ratings (including the revolver, term loans, and fixed-rate industrial revenue bonds [IRBs]) at 'BB+'. The Rating Outlook has been revised to Negative from Positive. The recent downgrade of CITGO's ultimate parent PDVSA is the main reason for the revision in Outlook at CITGO. Approximately U$D 1.08 billion in balance sheet debt is affected by today's rating action. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2111330&CategoryId=10717)

Bond market prices lower risk of Venezuela default

Recent credit default swap (CDS) spread movement for Petroleos de Venezuela (PDVSA) is copying Venezuela's and credit protection for the oil giant still being priced at stressed levels, according to Fitch Solutions in its latest CDS Case Study Snapshot. Five-year CDS on PDVSA have tightened 38% since mid-February and 19% over the past month, a trajectory similar to Venezuela. 'The CDS market is currently charging a 24% premium for credit protection on PDVSA's debt, as compared to the sovereign, up from 17%,' says Director Diana Allmendinger. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2110859&CategoryId=10717)

Politics

Poll shows 79.5% think Venezuela is doing badly

Eight out of 10 Venezuelans believe the country's situation is negative, according to a nationwide poll conducted by research firm DATANÁLISIS. Based on a poll taken between March 31 to April 20, 79.5% believe the country's situation is bad, 18.5% said it is good, and 2% made no comments. Half of those identified as Government supporters described the situation as bad. The figure goes up among dissenters and those who do not take any sides: 96.9% and 89.6%, respectively. (El Universal, http://www.eluniversal.com/nacional-y-politica/140505/a-total-of-795-thinks-venezuela-is-doing-bad)

"If Maduro wants to quit the talks, then he should just say so"

Just as a signature collection process for a proposed amnesty law was launched nationwide, Ramón Guillermo Aveledo, Secretary General of the Democratic Unity Conference (MUD) replied to a comment by President Nicolás Maduro accusing the opposition coalition of "blackmailing" the government by demanding concrete results from bilateral meetings started on April 10. "We‘ve been granted short-term credit by the people; that's what I refer to when I talk about showing results. That's no blackmail, it's a practical thing. In the presence of results, the promissory note will be extended by the holder, i.e. the people. Signs of credibility will be most needed along the long road ahead," Aveledo says. (El Universal, http://www.eluniversal.com/nacional-y-politica/140503/if-maduro-wants-to-quit-the-talks-then-he-should-just-say-so)

Maduro bodyguard shot dead

29 year-old Lieutenant Marco Cortez, a member of President Maduro's bodyguard unit was shot dead from another running vehicle while he was driving on a Caracas freeway, with his wife - who was unharmed. He was pronounced dead on arrival at the Military Hospital. He also worked on the security detail for the late President Chavez. One week ago the bullet riddled body of former Director of Intelligence, Eliécer Otaiza, was found in a little travelled road near Caracas. Maduro claimed he was the victim of former politicians now living in Miami. More in Spanish: (Infolatam)

Regime says 58 foreigners among unrest detainees

Interior Minister General Miguel Rodriguez Torres told a news conference that 58 foreigners had been arrested on suspicion of inciting anti-government protests and violence that have rocked the nation for the last three months. He said Colombians, an American, a Spaniard and an Arab were among the scores of "mercenaries" rounded up before and during demonstrations against the socialist government. He showed reporters numerous flow-charts and photos of alleged meetings, phone calls and plotting. (Reuters, http://www.reuters.com/article/2014/05/02/us-venezuela-protests-idUSBREA410TN20140502)

US Senate to explore human rights abuses in Venezuela

The US House Committee on Foreign Affairs has scheduled a hearing for Thursday, May 8, on allegations of human right abuses taking place during the street protests that have taken a death toll of 41 in Venezuela. The session will be attended by Roberta S. Jacobson, the United States Assistant Secretary of State for Western Hemisphere Affairs; Moisés Naím, an expert with the Carnegie Endowment for International Peace; José Miguel Vivanco, the director of the division for the Americas of NGO Human Rights Watch, and ex US Ambassador to Venezuela, Patrick Duddy. (El Universal, http://www.eluniversal.com/nacional-y-politica/140502/us-senate-to-explore-human-rights-abuses-in-venezuela)

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.

May 02, 2014

International Trade

CASA received two 700 thousand tons of basic food

• Over 2,783 tons of staples such as milk, cream, meat, wheat flour and other products from Albalinisa for Corporación de Abastecimientos y Servicios Agrícolas (CASA)
• 283 thousand tons of frozen meat from Strading for Proveeduría y Distribuidora
• 251 tons of milk and cream from Nestlé Brasil for subsidiary in Venezuela
• 132 tons of personal hygiene products from P&G Chile for subsidiary in Venezuela
• 87 tons of personal hygiene products from Unilever Brasil for Unilever Andina

Bulk Loads

• Over 92,000 tons of yellow corn on three ships from Brazil and the US for state distributor CASA and CARGILL.
• 27 thousand tons of yellow corn from United States, Liver Trading for Industrias del Maíz y Seravián
• 1.601 tons of corn seed from Monsanto Brasil and Pionner Hi Brad for CVA Empresa Comercial e Insumos & Suministros and Monsanto Venezuela
• Over 1.400 tons (3.000 heads) of cattle from Brasil for Inversiones Machocapa y Frigorífico Super Carne
• 4.123 tons of Construction Materials from Yakima Trading Corporation for PDVSA Industrial
• Over 3,898 heads of cattle from Brazil to several consignees in Venezuela.         

More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/100023/-casa-recibi-dos-mil-700-toneladas-de-alimentos-bsicos; Notitarde, http://www.notitarde.com/La-Costa/Arribaron-3-mil-cabezas-de-ganado-bovino-al-puerto-2150649/2014/04/29/323876; and http://www.notitarde.com/La-Costa/Llegaron-mas-de-92-mil-toneladas-de-maiz-amarillo/2014/04/30/324118)

Logistics & Transport

Venezuela not paying airlines U$3.9D billion promised: IATA. Venezuela’s government isn’t honoring its pledge to provide as much as $3.9 billion to airlines with bolivars trapped in the country, said the International Air Transport Association, known as IATA. President Nicolas Maduro last month authorized the release of dollars owed to 24 airlines operating in the country, basing the total on the official exchange rate at the time of the ticket sales, Venezuelan Airlines Association President Humberto Figuera told reporters March 28. “Since then there has been very little progress,” Tony Tyler, IATA’s General Director, said in a statement published on the organization’s website today. “The situation is unacceptable.” At least 11 airlines have cut capacity on Venezuelan flights in the past year, some by as much as 78%, as the currency controls made it increasingly difficult to expatriate local earnings, according IATA. Air Canada stopped flying to Caracas in March. The value of revenue trapped in bolivars is being whittled away by the highest inflation in the world and frequent devaluations of Venezuela’s currency. Colombia’s AVIANCA has about U$D 300 million in cash in the country, or about 40% of its total cash holdings, according to company filings and conference calls. Panama City-based COPA has U$D 487 million in Venezuela. (Bloomberg, http://www.bloomberg.com/news/2014-04-29/venezuela-not-paying-airlines-3-9-billion-promised-iata.html)

Oil & Energy

Fitch downgrades Venezuela's CITGO outlook to negative. Fitch Ratings has affirmed the Issuer Default Ratings (IDR) for CITGO Petroleum Corporation at 'BB-' and the company's senior secured ratings (including the revolver, term loans, and fixed-rate industrial revenue bonds [IRBs]) at 'BB+'. The Rating Outlook has been revised to Negative from Positive. The recent downgrade of CITGO's ultimate parent PDVSA is the main reason for the revision in Outlook at CITGO. Approximately U$D 1.08 billion in balance sheet debt is affected by today's rating action. Fitch downgraded the IDR of PDVSA from 'B+' to 'B' and revised its Outlook from Stable to Negative, citing PDVSA's inextricable linkage to the government of Venezuela, which in turn has experienced heightened macroeconomic instability, delays in implementation of policies to address rising inflation, distortions in the foreign exchange (FX) market and deterioration in external accounts. (Latin America Herald Tribune, http://www.laht.com/article.asp?ArticleId=2111330&CategoryId=10717)

PDVSA will reduce crude oil exports and increase sales through auctions. Venezuela's government oil company PDVSA will reduce crude oil deliveries by 20% to regular clients from terminals in Eastern Venezuela and increase by 50% the amount of crude oil and byproducts it sells through auctions. Regular clients include US firms Phillips 66, Valero Energy y CHEVRON, Cuba's CUPET, PETROCHINA, India's Reliance y Essar and its own US refining network CITGO Petroleum. (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/pdvsa/pdvsa-reducira-exportaciones-de-crudo-y-vendera-ma.aspx#ixzz30YHHr2Fm; El Economista, http://eleconomista.com.mx/industria-global/2014/05/01/venezuela-vendera-mas-petroleo-mediante-subastas; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/pdvsa-reducira-exportaciones-de-crudo-y-vendera-ma.aspx)

Commodities

A report by the Ministry for Planning -obtained by the Latin American Herald Tribune - confirms production falls across almost all industries:

• Cement production decreased at least 11% from last year.
• Steel production was down 48% (p.12) and Reinforcing Steel Bars were down 81%.
• Bauxite production was up, but that was after several months of no production (accumulated stockpiles?).
• Aluminum production (which the Bauxite is for), was down 16%, but worse, is down 50% in 2 years (p.15).  Production of aluminum conductors by CABELUM (for electrical production and distribution), fell 66.8 % since March 2013.
• Gold production has fallen 64.1% in one year.
• Oil production has barely moved (and has some seemingly ugly falls) at 2.878 million barrels a day in February of 2014.
• Car sales were 817 units in February and 1,675 in March. 12,039 cars were sold in March 2013. (p.70)

The financial graphs are also interesting.

• Financial reserves down from $29 to $20 billion in one year.
• Venezuela's borrowing cost: 9.81% over US treasuries compared to Mexico at just 1.54% more than the US government.
• "Real wages" in 2007 terms are only 628 bolivars a month (of course, that isn't "real" when reflecting the black market fall, or even this month's increasing use of SICAD 2 at 49 bolivars to the dollar while the official rate remains at 6.3.

Polar halts pasta production. Venezuela's largest private company, Empresas Polar, says it is halting production of pasta due to delays in foreign currency allocations from the government. "The Polar Food plant in Maracaibo, which makes the pasta brands Primor and Gran Senora, is obliged to temporarily suspend operations due to a delay in currency payments," said Polar. (Reuters, http://www.reuters.com/article/2014/04/29/us-venezuela-economy-idUSBREA3S14820140429; Bloomberg, http://www.bloomberg.com/news/2014-04-29/venezuela-s-largest-food-co-shuts-pasta-plant-on-fx-shortages.html; Fox News, http://www.foxnews.com/world/2014/04/29/venezuela-food-giant-halts-production-pasta-saying-government-not-allotting/)

Venezuela to crush cars, bikes to build houses. Venezuela said on Tuesday it would start crushing abandoned cars and bicycles to provide raw materials for housing construction and supplement drastically reduced amounts of local steel. "We have sent 10,485 automobiles, 9,651 motorbikes and 539 bicycles to the national steel industry," Maria Martinez, a deputy justice minister, said during a visit to an abandoned car deposit outside Caracas. That quantity of steel, she said, could be used for rebars, which reinforce concrete, in the construction of tens of thousands of housing units. (Reuters, http://www.reuters.com/article/2014/04/29/us-venezuela-autos-idUSKBN0DF1VX20140429)

Hit by forex issues, El Universal cuts print edition again. The extinct Foreign Exchange Administration Board (CADIVI) –now revamped as the National Foreign Trade Centre (CENCOEX)- has delayed issuing authorizations for purchasing foreign currency to a point in which a newsprint cargo forwarded to El Universal daily newspaper –which is vital for the daily operations of the news outlet- has not passed through customs. Therefore, El Universal has decided to take urgent steps and is further rationing newsprint. (El Universal, http://www.eluniversal.com/economia/140430/hit-by-forex-issues-el-universal-cuts-print-edition-again)

Economy & Finance

Maduro decrees a 30% minimum wage hike. Venezuela raised the minimum wage by 30% on 1 May, and raised pensions by the same amount. The increase is below the level of annual inflation, which official figures put at 56.2% for 2013. In an address to workers from different key sectors, Mr. Maduro said he hoped that "by the end of the year, we will be choking off and overcoming (...) inflation". Critics say that while the new minimum salary amounts to U$D 675 at the government-set exchange rate, it adds up to little over U$D 67 at the black market rate. Opposition leader Henrique Capriles said the 30% raise was "insufficient" and that a real improvement would only be achieved if wages were lifted above the level of inflation. The increase comes just months after the government raised the minimum wage by 10%. The president also did not rule out another raise in the last trimester of the year, at which point he promised to "re-assess" wages. (BBC: http://www.bbc.com/news/world-latin-america-27219014; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39097&idc=2; Bloomberg, http://www.bloomberg.com/news/2014-04-29/venezuela-raises-minimum-wage-30-amid-world-s-fastest-inflation.html; Fox News, http://www.foxnews.com/world/2014/04/29/venezuela-president-raises-minimum-wage-by-30-percent-in-face-galloping/)

Venezuela surges toward 60%, inflation lowers 2014 growth estimations. Venezuela's annual inflation rate has surged toward 60% after a sharp jump in March attributed to violent protests that have left at least 41 people dead, the country's central bank said. A statement on the bank's website reported that inflation in March rose to 4.1% last month, up from 2.4% in February, blaming the rise on the protests over rampant crime, inflation and shortages of essential goods. Inflation now stands at 59.35%, against 57.3% in February, a record in 15 years. The report said food and drinks had seen the biggest price rise in March, climbing by 6.1% compared to February. The bank also lowered its figure of gross domestic product in 2013 to 1.3%, against the 6% that had been forecast. For the second consecutive month, the central bank also declined to release figures on its scarcity index, which measures shortages. The last available scarcity index figure in January showed a shortage rate of 28%.(The West Australian, https://au.news.yahoo.com/thewest/business/world/a/22964889/venezuela-surges-toward-60-percent-inflation/)

UN-ECLAC now predicts Venezuela's economy will shrink 0.5% in 2014. The UN Economic Commission for Latin America and the Caribbean is now projecting Venezuela as the only country in the region with negative growth, and will shrink by 0.5%, More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/cepal-economia-venezolana-se-contraera-0-5-en-2014.aspx#ixzz30Mmfy6EW)

Gold Reserve says decision closer on $2 billion Venezuela expropriation. Gold Reserve Inc. has announced that the arbitral tribunal at the World Bank's International Centre for Settlement of Investment Disputes (ICSID) hearing their case against Venezuela has requested both parties to submit their costs by May 26, 2014. “This request to submit the costs associated with our arbitration with the Bolivarian Republic of Venezuela brings the arbitration process one step closer to completion,” said Gold Reserve President Doug Belanger. Gold Reserve is claiming damages arising from violations of three provisions of the Canada-Venezuela bilateral investment treaty resulting in the effective expropriation of Gold Reserve's sizable investments in the Brisas gold/copper project and the Choco 5 property (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2097824&CategoryId=10717)

Politics

Maduro claims the working class would rise up against any "non-Bolivarian" government. During a May Day speech to pro-government labor organizations, President Nicolás Maduro said that if he were deposed the working class would rebel; and threatened that "whether this revolution continues to be peaceful does not depend on us, it depends on a crazed minority on the right that is determined to destroy the Bolivarian Revolution". He added that if he were deposed "the people would decree a general strike and enter into civilian and military insurrection". More in Spanish: (Infolatam)

US charges Venezuela is "permissive" toward terrorism. A US State Department report on worldwide terrorism in 2013 says there is credible information that Venezuela has established a "permissive atmosphere" that benefitted such groups as Colombia's FARC guerrillas and Lebanon's terrorist HEZBOLA organization. The same report says Venezuelan authorities "are not cooperating fully" with US antiterrorist efforts. The report also cites Venezuelan ties to Iran. More in Spanish: (El Universal, http://www.eluniversal.com/internacional/140502/eeuu-acusa-a-venezuela-de-ser-permisiva-con-el-terrorismo)

The United States says it is "critical" for results to emerge from Venezuela's dialogue; Maduro lashes back. US Assistant Secretary of State for the Western Hemisphere Roberta Jacobson has said it is "critical" for results to emerge from political dialogue in Venezuela. Maduro quickly replied: "I reject and condemn insolent interference from the United States", and added that "US Secretary of State John Kerry is threatening Venezuela by saying 'As long as there is dialogue in Venezuela, the US will not take action against Venezuela,,, these are unfortunate words and I am going to bring it up at the dialogue table and at UNASUR", (El Universal, http://www.eluniversal.com/nacional-y-politica/140430/the-united-states-terms-critical-to-see-results-in-venezuelas-dialogue; and more in Spanish: AVN; http://www.avn.info.ve/contenido/presidente-maduro-rechaza-injerencia-estados-unidos-proceso-di%C3%A1logo-nacional)

The American Embassy in Venezuela resumed the issuance of tourist visas, according to its web page. The Embassy reports that even though it does not have a full staff, it can now once again issue a limited number of appointments for first time tourist visa requests (B-1/B-2). (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39091&idc=1)

El Salvador's president in Venezuela for talks. The elected president of El Salvador, Salvador Sanchez Ceren, is in Venezuela for talks on expanded technology, educational and trade agreements. More in Spanish: (AVN; http://www.avn.info.ve/contenido/presidente-electo-salvador-lleg%C3%B3-venezuela; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/presidente-electo-de-el-salvador-arribo-a-venezuel.aspx)

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.