July 13th, 2012

Economics & Finance

Central Bank claims reserves are adequate

Eudomar Tovar, first Vice President of the Central Bank claims international reserves are holding at a level adequate to the nation's needs. He says total reserves are currently at U$D 27.772 billion, and operating reserves available for imports and debt service are over U$D 4 billion. (El Universal, 07-13-2012; http://www.eluniversal.com/economia/120713/bcv-afirma-que-las-reservas-mantienen-un-nivel-adecuado)

Rise in debt increases risk of devaluation

Despite a prolonged boom in oil prices, internal government debt rose 262% over the past six years. It is now starting to increase massively. The Annual Debt Law had authorized the government to generate new debt up to VEB 64.3 billion, and it has done so at such a speed that the National Assembly is about to authorize an extra VEB 30 billion for bonds and treasury bills. More in Spanish: (El Universal, 07-13-2012; http://www.eluniversal.com/economia/120713/alza-de-la-deuda-en-bolivares-eleva-riesgo-de-devaluacion;  El Nacional; http://www.el-nacional.com/)

Government claims Chavez government has created 4 million jobs.

Speaking to the official news agency, Elias Eljuri, head of the government's National Statistics Institute claims that over the past 11 years some 4 million jobs have been created. More in Spanish: (AVN, 07-13-2012; http://www.avn.info.ve/contenido/se-han-creado-4-millones-empleos-durante-gobierno-chávez)

Commodities

Venezuela spent U$D 288 million importing gasoline from the US

The decay in domestic refining within Venezuela, plus increasing internal consumption have led Venezuela to import not only ingredients for producing oil byproducts, but also gasoline and liquid gas, according to statistics from the US Commerce Department which show Venezuela as importing 15,800 barrels per day in gasoline from December 2011 through April 2012. Using the average price of U$D 122 per gasoline barrel, it is estimated that around U$D 288 million has been spend on importing gasoline within those months. More in Spanish: (El Universal, 07-13-2012; http://www.eluniversal.com/economia/120713/el-pais-gasto-unos-288-millones-en-importar-gasolina-en-5-meses)

India state oil firms plan to boost Venezuela investments

Indian state-run oil companies plan to boost investments in Venezuela and source higher volumes of crude oil from the South American country, India's junior industry minister said on Wednesday. An Indian consortium led by ONGC Videsh, the overseas investment arm of oil explorer ONGC, plans to invest U$D 2.2 billion in the Carabobo oil fiaeld project, and another U$D 500 million in the San Cristobel oil field, Jyotiraditya Scindia said in a statement. (Reuters, 07-11-2012; http://www.reuters.com/article/2012/07/11/india-venezuela-energy-idUSL3E8IB2XN20120711; El Universal; http://www.eluniversal.com/economia/120711/indian-oil-companies-plan-to-invest-more-in-venezuela; Fox Business, http://www.foxbusiness.com/news/2012/07/11/india-state-oil-companies-to-invest-nearly-3-billion-in-venezuela/)

Government does not want others to export coke

Science and Technology Minister Jorge Arreaza says that the mountains of coke accumulating around the Jose refining plant in Anzoátegui state is due to the fact that the government "does not want others to take coke away". He acknowledged environmental concerns over the very large accumulation of coke in the area. Arreaza is President Chavez's son-in-law. More in Spanish: (El Universal, 07-13-2012; http://www.eluniversal.com/economia/120713/el-gobierno-no-quiere-que-otros-se-lleven-el-coque)

FORTUNE ranks PDVSA among the 40 largest companies in the world

The state-run Petroleos de Venezuela is ranked 36 of the largest companies in the world, according to annual rankings compiled by FORTUNE magazine. PDVSA came in two steps under Mexico's PEMEX, with revenues at U$D 124.754 billion. More in Spanish: (Ultimas Noticias, 07-12-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/pdvsa-entre-las-40-mayores-empresas-del-mundo.aspx)

International Trade

Brazilian FM defends Venezuela's entry into Mercosur

Brazilian Foreign Minister Antonio Patriota on Wednesday once again advocated the entry of Venezuela into the Common Market of the South and the suspension of Paraguay from the bloc. He added that such move is intended to send a "clear" message against "anti-democratic adventures." Patriota appeared before the Foreign Relations Committee, Brazilian Senate, and replied to criticism from some opposition legislators who rejected the decisions made by Argentina, Brazil and Uruguay to suspend Paraguay and allow Venezuela to join the bloc, Efe said. (El Universal, 07-11-2012; http://www.eluniversal.com/economia/120711/brazilian-fm-defends-venezuelas-entry-into-mercosur)

VENAMCHAM reports 42% increase in imports from the USA

Carlos Tejera, General Manager of the Venezuelan American Chamber of Commerce and Industry (VENAMCHAM) reports that while Venezuelan exports to the US dropped by 8%, imports from the US rose 42% during the first five months of the year. It is outstanding that oil imports rose 457% from 2011 to 2012. More in Spanish: (El Universal, 07-13-2012; http://www.eluniversal.com/economia/120713/venamcham-reporta-alza-de-42-en-compras-a-eeuu)

Imports from China increased 49% in one year

Imports from China increased 49% in a year for a total of U$D 1.7 billion between January and April 2012. This amounts to 13.4% of all imports, and places the Asian nation as a second source of the Venezuelan economy, according to data released by the National Institute of Statistics. More in Spanish: (El Nacional, 07-12-2012; http://www.el-nacional.com/)

Logistics & Transport

19 vessels remain at bay in Puerto Cabello, and La Guaira is unable to receive vessels

A total of 19 food-bearing vessels remain at bay in Puerto Cabello, waiting to dock. The ships are carrying bulk cargo such as yellow corn, malt, rice, soybeans, and livestock, and six are bearing containers. The option of diverting vessels from Puerto Cabello to the port of La Guaira is not available as the latter port is not operating at 100% capacity, according to Neidy Rosal, a member of the Carabobo State Legislative Council, who called for an improvement in offloading conditions at Puerto Cabello. More in Spanish: (El Carabobeño, 07-12-2012; http://www.el-carabobeno.com/impreso/articulo/23839/puerto-de-la-guaira-no-est-apto-para-recibir-buques-)

Politics

Chavez hits campaign trail in bid to prove he’s cancer-free

President Hugo Chavez is hitting the campaign trail in an attempt to persuade voters his battle with cancer hasn’t diminished his vitality ahead of what’s shaping up to be his toughest election. Mounted on a float-like truck, he attended a rally in the oil producing state of Anzoátegui on the northeastern coast and plans to hold a similar event in Barquisimeto in central Lara state July 14. The rallies are the first since the former tank commander marked the official start of campaigning July 1 with a caravan and speech in Maracay, 50 miles west of Caracas. (Bloomberg, 07-12-2012; http://www.bloomberg.com/news/2012-07-12/chavez-hits-campaign-trail-in-bid-to-prove-he-s-cancer-free.html)

Romney slams Obama for playing down threat of Hugo Chavez

Republican Mitt Romney chided President Barack Obama on Wednesday for playing down "the threat" posed by Hugo Chavez as he sought to portray the Democrat as soft on national security, an issue that may resonate with Latino voters in November's election. Romney was reacting to remarks Obama made to a Spanish language television station that Chavez's actions over recent years had "not had a serious national security impact" on America. (Reuters, 07-12-2012; http://www.reuters.com/article/2012/07/12/us-obama-romney-chavez-idUSBRE86A1HY20120712; El Universal, 07-11-2012; http://www.eluniversal.com/nacional-y-politica/120711/obama-hopes-that-venezuela-has-free-elections; The Washington Post, http://www.washingtonpost.com/politics/romney-obama-assertion-that-chavez-not-a-threat-to-us-is-stunning-and-shocking/2012/07/11/gJQAR49WdW_story.html; CNN, http://politicalticker.blogs.cnn.com/2012/07/11/romney-criticizes-obama-over-venezuela-comments/?iref=allsearch; Fox News, http://www.foxnews.com/politics/2012/07/11/romney-slams-obama-over-tunning-comment-on-chavez/; The Wall Street Journal, http://blogs.wsj.com/washwire/2012/07/11/gop-attacks-obama-for-downplaying-chavez-threat/?KEYWORDS=Venezuela)

Chavez says he seeks friendly relations with Catholic Church leaders

President Hugo Chavez says he’s seeking friendly relations with representatives of the Roman Catholic Church.

Their dealings have been tense in the past. Church representatives have accused the socialist leader of becoming increasingly authoritarian and Chavez has strongly criticized Cardinal Jorge Urosa, saying he has misled the Vatican with warnings that Venezuela is drifting toward dictatorship. (The Washington Post, 07-11-2012; http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-says-he-seeks-friendly-relations-with-catholic-church-leaders/2012/07/11/gJQABJbQdW_story.html; Fox News, http://www.foxnews.com/world/2012/07/11/chavez-seeks-friendly-ties-with-catholic-church/)

National Elections Board proposes pact on election rules, Chavez quickly says he will sign

The pro-government majority National Elections Board has set forth an agreement for presidential candidates to respect election results, and avoid violence. President Hugo Chavez was quick to say he would sign immediately, while opposition leaders - and the only independent Elections Board member - say the agreement failed to include provisions on the use of government funds and resources, and the abuse of media time by the government in favor of Mr. Chavez. More in Spanish: (AVN, 07-13-2012; http://www.avn.info.ve/contenido/cne-aprueba-acuerdo-compromiso-candidatos-presidenciales-para-respetar-resultados; http://www.avn.info.ve/contenido/chávez-anuncia-que-firmará-acuerdo-electoral-propuesto-cne)

July 10th, 2012

Economics & Finance

56% of reported foreign investment is non repatriated dividends

According to an UNCTAD (UN Commission for Trade and Development) report on foreign investment in 2012, Venezuela received foreign investments of U$D 5.3 billion. However, more than half the amount - some 56% is due to repressed earnings by multinational corporations that have not been able to repatriate dividends because they have not been authorized by the local currency board. Eduardo Porcarelli, executive director of the National Investment Promotion Council says "Venezuela has exchange controls and part of the earnings must be reinvested locally as they cannot be repatriated. It is difficult to ascertain which companies have an investment policy and which do so as they have no other choice." More in Spanish: (El Nacional, 07-10-2012; http://www.el-nacional.com/)

Price adjustments frozen in order to contain inflation

Executive Vice President Elias Jaua has conceded that the slowdown in inflation this year is the result of "a correct policy of regulation and subsidies" on the part of the government. Official anti-inflation strategy has been to freeze price adjustments, not only on regulated items, but also on other products that impact the National Consumer Price Index. More in Spanish: (El Universal, 07-10-2012; http://www.eluniversal.com/economia/120710/gobierno-contiene-la-inflacion-al-evitar-ajustes-de-precios)

Government spending is up  by 24% in real terms, according to information supplied by the Ministry of Finance for the first half of 2012. (El Universal, 07-09-2012; http://www.eluniversal.com/economia/120709/central-government-spending-leaps-24)

International reserves rose 12% in four days, from U$D 25.238 billion to U$D 28.393 billion, which increases the amount of currency disposable for imports and FONDEN programs in advance of October elections. More in Spanish: (El Universal, 07-10-2012; http://www.eluniversal.com/economia/120710/reservas-internacionales-suben-12-en-cuatro-dias)

Commodities

Chavez sees oil stabilizing at U$D100 per barrel

President Hugo Chavez says that "The price of oil is going to stabilize around U$D100 per barrel. Everything seems to indicate that," he told a news conference. International reserves were dropping, Chavez said, except in a few countries like Venezuela, Iran and Saudi Arabia. "And the needs are going to keep growing," he said. (Reuters, 07-09-2012; http://www.reuters.com/article/2012/07/09/us-venezuela-oil-idUSBRE8681CC20120709)

Venezuela’s export barrel recovered significantly, gaining U$D 6.70/bbl. or 7.77% to U$D 92.87/bbl., during the week that concludes today, informed the Oil and Mining Ministry in its Twitter account. The Venezuelan oil has thus put an end to eight consecutive weeks of losses during which it lost over 20% of its price. (Veneconomy, 07-09-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31206&idc=4)

TOTAL aims to triple output at Venezuelan gas field

French oil major TOTAL said on Monday it would boost capacity later this year at the Yucal Placer gas field in Venezuela as part of a plan to triple its output by the end of 2014. The Yucal Placer field, a project whose owners also include Spanish energy company REPSOL YPF and Venezuela's INEPETROL and OTEPI, came on stream in 2004. Work on the new development phase of the field will start later this year to increase production to around 300 million cubic feet per day, or approximately 55,000 barrels of oil equivalent, by the end of 2014, TOTAL said. That is three times its current production. (Reuters, 07-09-2012; http://www.reuters.com/article/2012/07/09/total-venezuela-idUSL6E8I97L720120709)

Cement production dropping

Spokesmen for the National Cement Workers Union are warning that cement production - in an industry taken over by the government in 2008 - has dropped from 10,000 metric tons per year to 7.9 million tons, which is 20% less than production capacity. More in Spanish: (Ultimas Noticias, 07-10-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/alertan-sobre-caida-de-la-produccion-de-cemento.aspx)

International Trade

Paraguay sues to prevent Venezuela's entry into MERCOSUR

Paraguay has presented the MERCOSUR Permanent Tribunal with a suit against its suspension as a member of the trading group, as well as against Venezuela's incorporation without the approval of the Paraguayan Senate. A spokesman for the legal team says "Our action points to the violation of treaties such as the Asunción Agreement, the Ouro Preto and Ushuaia Protocols, as well as international law tenets on equal justice and non intervention." More in Spanish: (El Nacional, 07-10-2012; http://www.el-nacional.com/)

Uruguay's Vice President says MERCOSUR is "seriously wounded" by Venezuela's entry

Uruguayan Vice President Danilo Astori, who is responsible for his government's economic team, considers Venezuela's entry into MERCOSUR negative for the region, and says it was "agreed to at a summit held in Mendoza by the Presidents of Argentina, Brazil and Uruguay, without regard for current institutions". He calls the event the most serious institutional wound suffered by MERCOSUR in all its history. More in Spanish: (El Universal, 07-10-2012; http://www.eluniversal.com/nacional-y-politica/120710/dicen-que-ingreso-de-venezuela-a-mercosur-deja-grave-herida)

Venezuela in conflict with MERCOSUR doctrine

If Venezuela enters MERCOSUR as full member next July 31 it will have to change into a free-market economy instead of one controlled by the government. This is opposite of what Venezuela has been doing, but the Asunción Treaty  which establishes a Common Market between Argentina, Brazil, Paraguay and Uruguay requires "the free movement of goods, services and factors of production between countries through, inter alia, the elimination of customs duties and non-tariff restrictions on the movement of goods, and any other equivalent measures." (El Universal, 07-09-2012; http://www.eluniversal.com/economia/120709/venezuela-clashes-with-mercosur-doctrine; http://www.eluniversal.com/economia/120707/venezuela-four-years-to-adopt-mercosur-rules)

Chavez will travel to Brazil for MERCOSUR entry

President Hugo Chavez confirms he will travel to Río de Janeiro on July 31st for his country's incorporation into MERCOSUR. More in Spanish: (Últimas Noticias, 07-10-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/chavez-estara-en-brasil-para-ingreso-al-mercosur.aspx)

Logistics & Transport

Shippers report "widespread congestion" at local ports, apply surcharges

Shipping companies have notified Venezuelan clients of a surcharge for bringing cargo into the country due to "widespread congestion". A local client has received a message from a shipping company which says "We must advise you that due to the general situation at Venezuelan ports we will a Congestion Surcharge/Destination starting July 1st, 2012". The surcharge will be U$D 50 on 20 foot containers; U$D 100 on 40 containers and an equal amount for "high-cube" equipment. This is not an isolated case as there is "great concern among worldwide shippers due to enormous delays on vessels when they come to Venezuela", says a source close to maritime transportation. The increase in incoming vessels bearing imported food is one of the key causes for delays. "We have had ships waiting up to 30 days in order to dock. The government has become the main importer and does so without any planning", says another source. The situation has become further aggravated at Guanta, where - according to sources close to the terminal - a group of "pirates" assaulted cargo at a one of the ships at dock. More in Spanish: (El Universal, 07-08-2012; http://www.eluniversal.com/economia/120708/navieras-reportan-congestion-generalizada-en-puertos-locales)

Politics

Chavez will not debate Capriles or sign pre-election game rules

In his first campaign press conference President Chavez called any pre-election rules agreement "illegal", and refused to debate Henrique Capriles. He has announced he will start touring the country in his reelection bid. "That proposal for not co-opting all mass media, not using public resources, and respecting election results, would be a part of  a destabilizing strategy", he said. More in Spanish: (El Nacional, ; http://www.el-nacional.com/)

Chavez again claims he is "totally free" of cancer

This Monday President Hugo Chavez again declared himself fully recovered from cancer and ready to return to the streets for his re-election campaign ahead of an October vote. "Free, free, totally free," an ebullient Chavez told reporters when asked if he was free of the disease that struck a year ago. (Reuters, 07-09-2012; http://www.reuters.com/article/2012/07/10/us-venezuela-election-chavez-idUSBRE8681CQ20120710; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=535359&CategoryId=10718; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-says-hes-beaten-cancer-recuperation-wont-affect-re-election-bid/2012/07/09/gJQA72Y6YW_story.html; Fox News, http://www.foxnews.com/world/2012/07/09/chavez-says-been-completely-cancer-free/)

DATANALISIS: Pro Chavez voting intention at 57.22%

The latest survey by polling firm DATANALISIS, carried out between May 29 and June 28, 2012, shows voting intention in favor of Hugo Chavez Frias at 57.22%. A pro government television analyst has said that -according to the survey- if elections took place on Sunday, Chavez would have 47% and his nearest contender Henrique Capriles Randonski 30%, with undecided voters at 23%. (AVN, 07-09-2012; http://www.avn.info.ve/node/121454)

Chavez congratulates Mexico’s Peña Nieto on election victory

President Hugo Chavez has congratulated Mexico’s president-elect on his victory in the July 1 balloting and expressed his willingness to deepen bilateral ties, according to a statement by the Venezuelan Foreign Ministry. (Latin American Herald Tribune, 07-07-2012; http://www.laht.com/article.asp?ArticleId=534261&CategoryId=10717)

July 06th, 2012

Economics & Finance

MERCOSUR entry translates into more imports, more government weight in the economy

Industry Minister Ricardo Menéndez has stressed that one of the advantages of joining the South American trading area was to have cheaper food imports, at zero tariffs; but Ismael Pérez Vigil, Executive President of the National Industrial Council (CONINDUSTRIA) warns that joining "21st Century Socialism" and the MERCOSUR will increase strengthen an economy based on imports, which is what Venezuelan industrialists fear the. Perez Vigil added that it will also increase the government's weight within the economy. Minister Menéndez said MERCOSUR entry: "will bring tariffs down to zero and, certainly, make those goods cheaper."He noted that 52% of Venezuela's purchases from Mercosur Member States are tied to foodstuff (El Universal, 07-05-2012; http://www.eluniversal.com/economia/120705/mercosur-means-higher-venezuelan-state-weight-on-economy and http://www.eluniversal.com/economia/120704/venezuelan-govt-underscores-cheaper-imports-through-mercosur)

Questions raised on Venezuela joining MERCOSUR

More than six years after Hugo Chavez said that joining MERCOSUR was Venezuela's destiny, the presidents of Argentina, Brazil and Uruguay have decided that his oil-rich nation will finally become the fifth full member of the common market. Venezuela holds the world's largest crude oil reserves and the move potentially links the region's top energy and agricultural suppliers. But the decision at last week's summit to welcome Venezuela into Mercosur after the leaders temporarily suspended Paraguay has brought questions about the move's timing and legality. Such decisions must be unanimous under Mercosur rules, and Paraguay's senate has long objected to Venezuela's membership. Uruguay's President José Mujica has taken "full responsibility" for allowing Venezuela's entry after his Foreign Minister criticized the manner in which the decision was taken. (Fox News, 07-04-2012; http://www.foxnews.com/world/2012/07/04/questions-raised-on-venezuela-joining-mercosur/ and more in Spanish: El Universal; http://www.eluniversal.com/economia/120706/uruguay-comprometido-con-el-petroleo-venezolano)

ECONOMÉTRICA alerts of quick increase in foreign debt service

The Government's aggressive use of foreign debt since 2007 will translate into a higher exposure by the national and state owned Petróleos de Venezuela (PDVSA) over the next five years, says the ECONOMÉTRICA analysis firm. Their report adds that there is a worrisome increase in the rate of debt service payments to hard currency income for oil exports. More in Spanish: (El Universal, 07-06-2012; http://www.eluniversal.com/economia/120706/alertan-sobre-veloz-crecimiento-del-servicio-de-deuda-en-divisas)

Year-end inflation may close at 20%

Eudomar Tovar, First Vice President at the Central Bank believes inflation could close the year between 20-22%, under budget projections. He based his statement on the Consumer Price Index for June, saying "there is a significant decrease in the trend to accelerated inflationary increase...which indicates to us we will close the year below the budgeted target...in this sense it is necessary to continue working on productivity". More in Spanish: (Últimas Noticias, 07-06-2012; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/inflacion-podria-cerrar-el-ano-en-20-.aspx)

Commodities

PDVSA sends 2.3% of production to MERCOSUR

After seven years of trying to diversify export destinations, PDVSA has raised remittances to China, but not to the four nations within the MERCOSUR trade bloc. Exports to Argentina, Brazil, Paraguay and Uruguay were 2.3% of total volume last year, with a tendency to diminish as Argentina and Brazil spur exploration in order to reduce imports. More in Spanish: (El Nacional, 07-06-2012; http://www.el-nacional.com/)

Paraguay opens bid to replace PDVSA as a fuel source

A decision by Venezuela to paralyze fuel shipments to Paraguay has led the latter to seek other sources, according to PETROPAR President Sergio Escobar. More in Spanish: (El Universal, 07-06-2012; http://www.eluniversal.com/economia/120706/paraguay-abre-licitacion-para-reemplazar-a-pdvsa-como-proveedor)

Maintenance shutdown at PETROPIAR

PETROPIAR, a heavy crude oil upgrader jointly operated by state-run oil holding Petróleos de Venezuela (PDVSA) and US CHEVRON, will stop operating for 46 days for maintenance and also to expand its processing capacity by 17% to 210,000 barrels per day (bpd).  PDVSA promised that the downtime scheduled from July 8 through August 23 would not impact production. (El Universal, 07-04-2012; http://www.eluniversal.com/economia/120704/maintenance-shutdown-at-petropiar)

Venezuelan Construction Chamber (CVC, after its initials in Spanish) reports there are 107,000 ongoing housing construction developments paralyzed at by the end of this year’s first quarter, up 18.8% from the same period in 2011 (80,000 housing units). CVC Chief Gilbert Dao pointed out that in addition, some 90,000 projects (up 12.5% from the 80,000 in the first quarter of 2011) which have not even begun work. (Veneconomy, 07-04-2012)

International Trade

Belarus to develop a space station in Venezuela

Belarus is to take part in the construction of a space station for satellite launching in Aragua state (central-northern Venezuela), says Venezuelan Ambassador to Minsk Américo Díaz Núñez, adding that the space station will be just one of the projects to be jointly executed by Venezuela, China and Belarus. "The satellites are currently manufactured in China, but an agreement has been reached to assemble them in Venezuela," he added. (El Universal, 07-04-2012; http://www.eluniversal.com/nacional-y-politica/120704/belarus-takes-part-in-construction-of-space-station-in-venezuela; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=532397&CategoryId=10717)

And also a thermo-electric plant

China, Belarus and Venezuela will build a thermo-electric plant in the Santa Inés industrial zone in Barinas state, a project estimated at U$D 900 million. It will be financed by China while Belarus offers the technology. It is expected to be ready in three years. (Veneconomy, 07-04-2012)

Logistics & Transport

Delays at customs have increased in the last two weeks, said CONSECOMERCIO Customs Committee chief Cipriana Ramos. She pointed out an increase of imports has resulted in a collapse of communication systems and that the merchandise could be subjected to up to five inspections in light of the number of agencies and requirements at local ports. (Veneconomy, 07-04-2012)

27 ships idle at port, waiting docking and two ships have remained at dock, waiting to be unloaded, for almost three weeks, according to a confidential report from the Puerto Cabello harbor made public by Carabobo state Legislative Council Deputy Neidy Rosal. Eleven of the 27 ships carry grain. (Veneconomy, 07-04-2012)

Politics

Global leftists close ranks with Chavez

120 leftist parties from all over the world and 400 international delegates within the so-called Sao Paulo Forum are meeting for the first time in Caracas, in support of President Hugo Chávez for his third reelection. Their master document reads: "US meddling and influence can be felt in the Bolivarian Republic of Venezuela through several attempts at influencing the Venezuelan election, promoting undemocratic clues ahead of the election of October 2012. For the Venezuelan and hemispheric left, the reelection of Commander Hugo Chávez is of the essence," they admonished. (El Universal, 07-04-2012; http://www.eluniversal.com/nacional-y-politica/120704/world-leftwing-closes-ranks-with-venezuelan-leader; AVN, 07-04-2012; http://www.avn.info.ve/contenido/sao-paulo-forum-give-proposals-face-world-capitalist-crisis)

Paraguay accuses Chavez of meddling, withdraws envoy

Paraguay's new government ordered home its ambassador in Venezuela on Wednesday after accusing President Hugo Chavez's government of meddling in an attempt avert the impeachment of the leftist Paraguayan president's last month. The swift impeachment of Paraguay's former President Fernando Lugo drew strong criticism from left-leaning governments in South America. Chavez ordered Venezuela's ambassador to leave Paraguay and halted oil shipments in protest. (Reuters, 07-04-2012; http://www.reuters.com/article/2012/07/04/us-paraguay-venezuela-idUSBRE8630R520120704; El Universal; http://www.eluniversal.com/nacional-y-politica/120704/paraguay-recalls-ambassador-to-venezuela)

July 03rd, 2012

Economics & Finance

Central Bank seeks BANDES, FONDEN backing as reserves drop

BANDES (Bank for Social and Economic Development) and FONDEN (National Development Fund) have been transferring US dollars to the Central Bank (BCV) in order to compensate for the drastic reduction of international reserves as a result of falling oil prices. Under an agreement made last week after operating cash reserves dropped to U$D 1.2 billion, less than enough for a month's imports, BANDES and FONDEN agreed to each sell U$D 1 billion to the Central Bank. In addition, BCV exchanged around U$D 1.7 billion in notes that cannot be traded for foreign currency by FONDEN. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Workers in turmoil as Guayana "socialist" industries fail to meet payrolls

Over 5000 workers are going without wages in Guayana as "socialist" state industries BAUXILUM, CARBONORCA and TAVSA fail to meet payroll obligations, and have sent workers home at reduced pay. The companies also deduct social security, insurance and housing benefits and do not transfer funds to service providers. Private aluminum processing firms such as SURAL, WESTALCA and PIANMECA have also reached agreements with their workers to stay home at reduced pay due to lack of aluminum to process. ALCASA President Ángel Marcano failed to show at a scheduled meeting with CARBONORCA workers, and a meeting has been scheduled today with Guayana Corporation President Gil Barrios, whose attendance has not been confirmed. Antonio Rivas, a PSUV government party labor leader, says the main reason for failure are debts by ALCASA and VENALUM, while opposition leaders point to a contract with GLENCORE which commits a significant percentage of alumina, without payment to BAUXILUM, the largest of the companies involved. Workers say the government has stopped payments as a “retaliation” for protests. More in Spanish: (Tal Cual, 07-02-2012; http://www.talcualdigital.com/index.html)

Chavez says June inflation dips to 1.4%, annualized inflation running at 21.3%

Consumer prices rose 1.4% in June, less than the 1.6% increase in May, says President Hugo Chavez. The nation had the highest annual inflation in the Americas last year at 27.6%, and economists had predicted it would be higher in 2012 due to a pre-election spending bonanza by President Chavez's government. Yet officials have had some success combating rises with new price controls in some basic areas, including food and health, from the end of last year. Chavez claimed year-to-date inflation for 2012 was 7.5%, while the annualized rate for the last 12 months was 21.3%. Economists have questioned whether the government's latest price controls will be a sustainable solution for rising prices, or could just be artificially suppressing a major inflation spike later in the year. There are also fears of shortages of products as some businesses opt not to sell rather than adhere to the price controls. (AVN, 07-02-2012; http://www.avn.info.ve/contenido/year-year-inflation-records-lowest-rates-2008; El Universal, 07-02-2012; http://www.eluniversal.com/economia/120702/venezuelan-govt-places-84-of-the-2012-debt; Reuters, 06-29-2012; http://www.reuters.com/article/2012/06/29/venezuela-inflation-idUSL2E8HTIR820120629)

Commodities

Oil exports to US down 12.5% in Q1 2012

The US continues to lose ground within the list of PDVSA clients. The volume of oil exports from Venezuela to the US has continued to slide downward. US Energy Department reports indicate that from January to April 2012, Venezuela sold the US an average 892,000 BPD in oil and related products, a reduction of 12.5% from the previous year. More in Spanish: (El Universal, 07-03-2012; http://www.eluniversal.com/economia/120703/venta-de-petroleo-a-eeuu-cayo-125-en-el-primer-cuatrimestre)

Venezuela Oil Falls to U$D 86.17

Venezuela's weekly oil basket fell U$D 3.92 to U$D 86.17 as oil prices continued to fall in international markets on fears of economic problems across Europe, continued high production by OPEC, mainly Saudi Arabia, and the increasing flows out of the US as the Seagate Pipeline was reversed, causing the price of Brent to fall back toward its eventual average below West Texas Intermediate (WTI). (Veneconomy, 06-29-2012; http://www.laht.com/article.asp?ArticleId=528831&CategoryId=10717)

New labor conditions to increase PDVSA operating cost by 60%

Collective bargaining discussions have entered their final phase, and emerging labor cost could rise by 60% over the next two years if PDVSA accepts union demands. New labor legislation requires that operating costs within PDVSA must rise 35% above last year. PDVSA operating costs, which include wages and labor benefits, closed last year at VEB 50.4 billion, with a variation of VEB 13.2 billion. Revised estimates accept that PDVSA and related companies will be required to increase payroll expenses in order to meet new Labor Law requirements, on average around 20%, including the reduction of working hours and eliminating outsourcing within three years. More in Spanish: (El Nacional, 07-03-2012; http://www.el-nacional.com/)

Government banks have loaned PDVSA U$D 2.4  billion in 5 months

Despite oil prices, PDVSA has continued to demand financial assistance from the official banking system. From November 2011 to April 2012 it has sought direct loans from Banco de Venezuela and Banco del Tesoro for U$D 2.4 billion. More in Spanish: (El Universal, 07-03-2012; http://www.eluniversal.com/economia/120703/banca-publica-presto-a-pdvsa-24-millardos-en-cinco-meses)

Venezuela, China agree to enlarge electricity grid

The National Electrical Corporation (CORPOELEC) and its Chinese counterpart have entered into an agreement to expand the 400-KW electricity grid which will link Tocoma hydroelectric power station in Bolívar state, south Venezuela, with the Uribante-Caparo Development in Andean Táchira state. "This is an overarching project that counts on an up-front investment of U$D 302 million, expected to be completed in 30-month term," says Corpoelec president Argenis Chávez. (El Universal, 07-02-2012; http://www.eluniversal.com/economia/120702/venezuela-china-agree-to-enlarge-electricity-grid)

GDP rise has not been reflected on local production

The Venezuelan economy, which historically has depended on revenues from raw materials, has intensified its monogamous relation to oil over the last decade, to such an extent that 96% of foreign exchange entering the country corresponds to Venezuelan crude oil and by-product exports. This has happened in a period in which oil prices have reached more than USD 115 per barrel, thereby increasing revenues entering the Republic.

Even though oil boom has made it possible to increase public spending so as to reactivate the Venezuelan economy, indicators reveal severe distortions in the local economic apparatus.

In the first quarter of 2012, the Venezuelan economy grew 5.6%, for the highest increase over the past fifteen quarters, and a sign that recession had been overcome. (El Universal, 06-30-2012; http://www.eluniversal.com/economia/120630/gdp-rise-has-not-been-reflected-on-local-production)

International Trade

Venezuelan entry raises storm within MERCOSUR, formal entry delayed to July 31st

Uruguayan Foreign Minister Luis Almagro says his country opposed the manner in which Venezuela is entering MERCOSUR. "It was not the time and should not be carried out under these conditions, and we have legal, political and ethical grounds on the matter... I was against it on those terms". Diego Canepa, Uruguay's Under Secretary of the Presidency explained that his nation's acceptance of Venezuela's incorporation came after a "negotiation" in which it demanded no economic sanctions should be imposed on Paraguay; and accepted due to "political circumstances". Argentina has said Venezuela´s entry complies with standing treaties, and Brazil says the decision was unanimous, agreed to by the presidents of these three nations, meeting alone, without any ministers or staff. At Uruguay's request, Venezuela's formal incorporation was delayed until July 31st. More in Spanish: (El Nacional; http://www.el-nacional.com/; El Universal, 07-03-2012; http://www.eluniversal.com/nacional-y-politica/120703/uruguay-sigue-pendiente-el-ingreso-de-venezuela-al-mercosur; El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/argentina-dice-que-ingreso-de-venezuela-a-mercosur.aspx; http://www.elmundo.com.ve/noticias/economia/internacional/brasil-dice-que-la-decision-de-incorporar-a-venezu.aspx; http://www.elmundo.com.ve/noticias/economia/internacional/uruguay-acepto-a-venezuela-en-mercosur-a-cambio-de.aspx)

Trade deficit with MERCOSUR rose 1300% since 2001

Venezuelan imports from Argentina, Brazil, Paraguay and Uruguay rose to U$D 6.7 billion in 2011, more than triple Venezuela's exports which came to U$D 1.9 billion, according to official figures reported to the Latin American Integration Association. As imports multiplied 23 times over exports, the deficit has risen to1300% since 2001, when it was U$D 341.4 million. During these years imports rose 583%, and exports rose only 25%. The last time Venezuela had a positive trade balance with MERCOSUR nations was 2000. More in Spanish: (El Nacional, 07-03-2012; http://www.el-nacional.com/)

Politics

Chavez and rival Capriles rally supporters as presidential campaign starts in Venezuela

Venezuela’s presidential campaign officially began Sunday with President Hugo Chavez and opposition leader Henrique Capriles rallying their supporters for what promises to be a hard-fought contest leading up to the October vote. Chavez wore his red beret, waving and blowing kisses as he greeted crowds of supporters from atop a truck that rolled from north-central Carabobo state to the nearby city of Maracay, where he spoke from a stage. (The Washington Post, 07-01-2012; http://www.washingtonpost.com/world/the_americas/chavez-and-rival-capriles-rally-supporters-as-presidential-campaign-starts-in-venezuela/2012/07/01/gJQAEWSbGW_story.html; Fox News, http://www.foxnews.com/world/2012/07/01/chavez-capriles-begin-venezuela-campaigns/)