March 17, 2016

International Trade

 

Uruguay “firmly” demands that Venezuela repay pending debt

Uruguay’s Foreign Minister Rodolfo Nin Novoa reports that his government has sent a “very diplomatic, but very firm” note to his Venezuelan counterpart demanding new talks on the repayment of a long standing debt for food exports. He added that Uruguay seeks to “irrefutably document the debt from one State to another, that one State admit it owes the other State that much money, because it not only involves dairy products, rice and chicken, but other important agribusiness ítems that were beyond that negotiation”. More in Spanish: (Notitarde, http://www.notitarde.com/Economia/Uruguay-exige-de-manera-firme-a-Venezuela-que-reconozca-deuda-atrasada--/2016/03/16/913644/)

 

Pérez Abad: E-commerce quota will not be removed from new FOREX system

Miguel Pérez Abad, Vice-President for the Economic Area and Economy Minister, has once more denied that the electronic quota in dollars for purchases abroad would be eliminated, following the implementation in past days of a floating forex rate called DICOM. He said "they (his administration) respect the quotas," adding that more foreign currency, when available, would be allocated to this mechanism. (El Universal, http://www.eluniversal.com/economia/160316/perez-abad-e-commerce-quota-will-not-be-removed)

 

 

Oil & Energy

 

Venezuela to shut down for a week to cope with electricity crisis

Venezuela is shutting down for a week as the government struggles with a deepening electricity crisis. President Nicolas Maduro gave everyone an extra three days off work next week, extending the two-day Easter holiday. Maduro had originally said over the weekend that the extended holiday would only apply to state employees. The government has rationed electricity and water supplies across the country for months and urged citizens to avoid waste as Venezuela endures a prolonged drought that has slashed output at hydroelectric dams. The ruling socialists have blamed the shortage on the El Nino weather phenomena and “sabotage” by their political foes, while critics cite a lack of maintenance and poor planning. (Bloomberg, http://www.bloomberg.com/news/articles/2016-03-16/venezuela-to-shut-down-for-a-week-as-electricity-crisis-mounts)

 

Del Pino says 20 countries to attend Doha April meet, talking to Iran

Venezuela's Oil Minister claims some 20 crude producing countries will meet in Doha for talks on April 17 and added he was personally speaking to his Iranian counterpart about the proposal. "The invitation backed by the countries that have proposed the production freeze until the middle of the year as a mechanism to balance prices and stocks will be applicable to OPEC and non-OPEC countries like Kazakhstan, Oman, Azerbaijan, Mexico, Colombia and others," Eulogio Del Pino said. (Reuters, http://www.reuters.com/article/us-oil-opec-talks-venezuela-idUSKCN0WI1R8; El Universal, http://www.eluniversal.com/economia/160316/twenty-oil-producers-to-meet-in-qatar-in-mid-april)

 

 

Commodities

 

Government scrutinizes COLGATE–PALMOLIVE

The National Superintendent for the Defense of Socioeconomic Rights has started an inspection and investigation of COLGATE-PALMOLIVE following charges by some labor representatives that the Company is causing shortages by offering only larger size product linespacking. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/gobierno-mete-la-lupa-en-colgate%E2%80%93palmolive.aspx#ixzz439h8JFEQ)

 

 

Economy & Finance

 

Twitter threat may endanger Venezuela's oil-for-cash China deals

Venezuela’s opposition Congress is threatening to undermine President Nicolas Maduro’s ability to obtain desperately needed cash. On March 1, National Assembly President Henry Ramos Allup said in a Twitter post that Congress may declare invalid financing deals signed by Maduro - when he’s no longer president. “Warning to foreign creditors: contracts in the national interest signed by the Chavista government without approval by the National Assembly will be null and void," said Allup, who has 783,000 Twitter followers. The post was re-tweeted 11,000 times and echoed by Jose Guerra, chairman of the Finance Committee. (Bloomberg, http://www.bloomberg.com/news/articles/2016-03-15/twitter-threat-may-endanger-venezuela-s-oil-for-cash-china-deals)

 

Empresas Polar are committed to Venezuela

Lorenzo Mendoza, Executive President of Venezuelan food manufacturer and supplier Empresas Polar, says the company is committed to the country's future, adding the group has confidence in the future and will keep on making proposals and delivering basic products to Venezuelans. Mendoza added that they are willing to take part in talks with the government provided that they are invited to do so. He said they have not been invited to participate neither in the Productive Economy Council nor in none of the fourteen areas designed to boost the country's economy –known as engines– especially that of the agro-business sector. "Even though special meetings have been arranged, we have not been called formally to hold a fruitful debate for the country's welfare," Mendoza said. (El Universal, http://www.eluniversal.com/economia/160316/lorenzo-mendoza-empresas-polar-are-committed-to-venezuela)

 

SIMADI exchange rate continues to devalue

The official SIMADI FOREX rate rose again to VEB 230.83/US$1, for an incrrease of VEB 5.19, according to Venezuela’s Central Bank. More in Spanish: (Notitarde; http://www.notitarde.com/Economia/Simadi-cerro-en-en-Bs-23083-por-dolar/2016/03/16/913632/; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/simadi-sube-ligeramente-y-cierra-en-bs--225-64.aspx; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/dolar-simadi-sube-bs-5-19-y-cierra-en-bs-230-83.aspx)

 

 

Politics and International Affairs

 

VP Istúriz: “We have a duty to re-establish relations so that the country may live in peace”

During his presentation to the National Assembly of the reasons for an extension of an economic emergency decree in Venezuela, Executive Vice-President Aristóbulo Istúriz declared that it is fundamental to build confidence in the country to lift it out of crisis. The official decided to attend the Congress regular meeting to seek to hold talks with those who still oppose the government. "We have the duty to re-establish relations so that the country may live in peace," he said, adding: "I have the duty to respond to the opposition and the country," He claimed the reasons behind the executive order include "the economic war" and the "crisis in the oil-rentier model." Central Bank President Nelson Merentes is also scheduled to go before the National Assembly to address the issue of the economic emergency decree. (El Universal, http://www.eluniversal.com/nacional-y-politica/160315/venezuelas-vp-we-have-a-duty-to-resume-relations-for-the-countrys-peac; http://www.eluniversal.com/nacional-y-politica/160315/vp-reasons-for-economic-emergency-in-venezuela-have-not-been-overcome; and more in Spanish: Notitarde; http://www.notitarde.com/Economia/Nelson-Merentes-acudira-este-jueves-a-la-Asamblea-Nacional/2016/03/16/913705/)

 

Maduro: "Only we guarantee that the nation is viable"

President Nicolas Maduro claims that "only we (his government) guarantee that Venezuela is viable." Responding to recent comments by US President Barack, he said there is a "criminal attack" by "an empire that seeks to destabilize the Government of Venezuela. Obama is obsessed with putting an end to the Bolivarian revolution." Directly addressing President Obama he said: "Barack Obama, in Venezuela, the revolution does not surrender, nobody surrenders. Our love for the homeland shall prevail (...) If I ever see Obama face to face I will tell him he is tainted with a stain for threatening our homeland." Obama has said in an interview that he did not want to see the country fail despite the tense relations between Washington and Caracas. "It's not in America's interest to see Venezuela fail, because if Venezuela fails then that could have an impact on the economies of Colombia or Central America or Mexico, and that in turn can affect U.S. economies," (El Universal, http://www.eluniversal.com/nacional-y-politica/160316/maduro-we-guarantee-that-the-nation-is-viable; Reuters, http://www.reuters.com/article/us-usa-venezuela-obama-idUSKCN0WH05H)

 

Congress Speaker says Obama's executive order is not meddling

Congress Speaker Henry Ramos Allup says the one-year extension of an executive order by US President Barack Obama declaring Venezuela an "unusual and extraordinary threat," has "no implications on the country" and is not "meddling." Ramos added: "I personally think that, apropos Obama's remarks, (the government) is using (the executive order) as a mechanism to distract Venezuelans from the hard situation the country is going through in the economic, political and social fields". (El Universal, http://www.eluniversal.com/nacional-y-politica/160316/congress-speaker-obamas-decision-is-not-meddling)

 

Venezuelan legislators to meet with OAS's Almagro in April

Opposition legislator Luis Florido, head of the Standing Committee on Foreign Policy, Sovereignty and Integration of the National Assembly (AN), has announced that National Assembly representatives will meet with Luis Almagro, Secretary General of the Organization of American States (OAS) early in April to request the application of the Hemisphere’s Democratic Charter to the case of Venezuela. Florido's remarks came during the presentation of a report on the tour of Chile and Uruguay he undertook along with anti-government deputies William Dávila and Carlos Valero to denounce the country's current economic, political and social situation, and to seek support from OAS member nations. (El Universal, http://www.eluniversal.com/nacional-y-politica/160315/venezuelan-congress-to-meet-with-oass-almagro-in-april)

 

 

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.

March 15, 2016

International Trade

 

25,000 tons of baking wheat have arrived at Puerto Cabello, according to Nutrition Minister General Rodolfo Marco Torres, More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Llegaron-mas-de-25-mil-toneladas-de-trigo-panadero/2016/03/10/908661/)

 

Oil & Energy

 

Guri – source of 65% of Venezuela’s electricity – 3.56 meters from collapse

Experts say the Guri dam, which is the source of 65% of all of Venezuela’s electricity, is less than four meters from reaching the level where power generation will be impossible. “Venezuela had the money to make this work -- we shouldn’t be at this crisis stage," said Miguel Lara, an engineer that worked for OPSIS, the office that used to interconnect private and government electricity companies in Venezuela before the 2006-2007 nationalizations. "They were just careless with the installed capacity. I will not say that the system will collapse, but we are certainly operating in a dangerous area." Water levels at the hydroelectric dam are 3.56 meters from the start of a "collapse" of the national electric system, say experts. Guri water levels are at their lowest levels since 2003, when a nationwide strike against Hugo Chavez reduced the need for power, masking the problem. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2407640&CategoryId=10717)

 

Power demand in Venezuela falls upon measures adopted

The Venezuelan Electric Power Energy authoritu has confirmed that domestic electric demand has decreased as well as the water level of major local Guri dam in southeastern Bolívar state in the last two days due to, among other things, decisions made to strengthen the country's thermoelectric park and measures to reduce energy consumption. Experts supported a measure announced by President Nicolás Maduro declaring Easter as a non-working week. (El Universal, http://www.eluniversal.com/economia/160314/power-demand-in-venezuela-falls-upon-measures-adopted)

 

 

Commodities

 

Getting sick in Venezuela has become a death sentence

That Venezuela currently faces an acute shortage of medical supplies and medicines is one of the tragic results of the chaos wrought upon the country’s imports sector by the combination of plunging oil prices, economic mismanagement, and draconian currency controls. In particular, the state’s heavy-handed price control policies make importing pharmaceuticals and other medical goods a losing game. The Venezuelan government’s penchant for nationalization as an easy proxy for “decisive action” has led to its taking over key outfits within the domestic pharmaceutical sector over the years, further degrading its capacity to produce such products internally. As a result, everything from Tylenol to life-saving chemotherapy drugs, condoms, and even bug spray — here in the heart of the Zika Virus outbreak — have become unobtainable. Social media like Twitter and Facebook are awash with pleas for help acquiring urgently needed medications, often from anguished parents on behalf of their children. All too often the drugs cannot be found and the children die. Under present conditions only one in two hemophilia sufferers will be able to secure their prescribed medications. The Venezuelan Pharmaceutical Federation estimates that as many as 80% of all medicines are currently scarce or unavailable. With the human costs of the pharmaceutical crisis worsening daily, Venezuela’s National Assembly — which went over to the opposition in the December 2015 elections — has requested emergency assistance from the World Health Organization in a deal that could provide technical aid and much-needed supplies for the suffering population. The Assembly has also received formal unilateral offers of aid from the Spanish government, the Brazilian parliament, and the Panamerican Health Organization. Similar conversations are underway with the Red Cross and the United Nations. Unfortunately, such offers are dependent upon official cooperation, including a formal government request for aid from Maduro — who has ignored public calls to accept outside assistance.  Meanwhile the Venezuelan Association of Medical and Dental Equipment Suppliers, Laboratories and Related Industries has all but given up, complaining that inventories for medical and surgical equipment are effectively depleted. Nearly 70% of surgical wards in public hospitals have been rendered inactive. (Foreign Policy: http://foreignpolicy.com/2016/03/11/getting-sick-in-venezuela-has-become-a-death-sentence/)

 

POLAR warns malt barley supply levels are critical, along with other staples

Lorenzo Mendoza, President of POLAR Enterprises, has warned that malt barley supplies for producing beer and malt are at critical levels, along with oatmeal, tomato paste, wheat and tuna. He said the Margarita Tuna plant in Sucre state remains completely paralyzed for lack of supplies.More in Spanish: (Notitarde; http://www.notitarde.com/Economia/Polar-alerta-que-inventarios-de-cebada-malteada-son-criticos/2016/03/15/912244/; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/lorenzo-mendoza-celebra-75-anos-de-empresas-polar.aspx; El Nacional, http://www.el-nacional.com/economia/Lorenzo-Mendoza-presente-dificil-trabajar_0_811119109.html;  http://www.el-nacional.com/economia/Lorenzo-Mendoza-Inventarios-tomate-criticos_0_811119028.html)

 

Food production in Venezuela can only recover in 2017

Favorable consequences for domestic food production can arise should specific measures be adopted in this field, sayd Carlos Albornoz, head of National Livestock Federation (FEDENAGA). He notes the food issue here will not be solved in 2016. "It is virtually impossible for us to tackle it this year," due to a lack of supplies, tools, and equipment to overcome the crisis. "There is a catastrophe in primary production sector which translates into lack of goods and services." He says fields are currently facing "uncertainty and unprofitability". (El Universal, http://www.eluniversal.com/economia/160314/food-production-in-venezuela-can-get-recovered-in-2017)

 

 

Economy & Finance

 

Maduro regime seeks to extend economic emergency powers, will seek legislative approval

The Maduro regime has published a decree extending his economic emergency powers through next May, and the National Assembly has announced it will be in full session for the next eight days to decide whether his request is granted or not. Henry Ramos Allup, President of the parliament, says economic affairs ministers will be called in to explain what has been done and what they expect to accomplish. Executive Vice President Aristóbulo Istúriz has been called up before the Assembly to explain why the decree should be extended. Pro regime party leader Diosdado Cabello has confirmed that Istúriz will go before the Assembly; and former Vice President – now legislator – Elías Jaua has said that government officials “are always willing to cooperate, report and abide by the Constitution and laws, but not to be a part of a circus”. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/160315/cabello-confirmo-asistencia-de-isturiz-hoy-a-la-asamblea; http://www.eluniversal.com/nacional-y-politica/160314/an-interpelara-a-isturiz-por-decreto-de-emergencia; Infolatam: http://www.infolatam.com/2016/03/13/parlamento-citara-a-ministros-de-maduro-antes-de-decidir-emergencia-economica/;  Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/an-declaro-sesion-permanente-para-estudiar-decreto.aspx; http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/isturiz-no-he-recibido-comunicacion-por-parte-de-l.aspx#ixzz42s7XaVO5; El Nacional, http://www.el-nacional.com/politica/AN-Isturiz-revisar-prorroga-decreto_0_810519027.html;

 

Economic VP claims "DICOM is a floating forex rate and will operate as a market" with up to US$ 7 billion available

Miguel Pérez Abad, Venezuela’s VP for Economic Affairs and Minister for Industry and Trade, says the newly-implemented foreign exchange systems will fluctuate freely, and that the government expects to allocate between US$ 5.5 billion and US$ 7 billion to private business through this system during 2016. He adds that the nation is seeking voluntary debt renegotiations to improve cash flow.  The newly created rate rose to VEB 225.22/US$1, for a jump of VEB 18.44 in less than one week. Perez Abad expects the new policy to bring about a “deflation” this year, and trusts that inflation will slow down. He says he is sure that when the new system is fully operational the black market will start to disappear. (El Universal, http://www.eluniversal.com/economia/160312/dicom-is-a-floating-forex-rate-and-will-operate-as-a-market; Reuters, http://www.reuters.com/article/us-venezuela-economy-idUSKCN0WC2M2; Bloomberg, http://www.bloomberg.com/news/articles/2016-03-10/venezuela-will-retain-right-to-intervene-in-new-forex-market; and more in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/simadi-sigue-en-alza-y-cierra-en-bs--225-22-por-do.aspx#ixzz42xzaYoEL; El Nacional, http://www.el-nacional.com/economia/Dolar-flotante-cerro-lunes-BsUSD_0_811119072.html; Infolatam: http://www.infolatam.com/2016/03/10/venezuela-vendera-de-5-500-a-7-000-millones-de-dolares-en-nuevo-sistema-cambiario/; http://www.infolatam.com/2016/03/13/vicepresidente-de-economia-venezolano-augura-deflacion-para-finales-de-2016/)

 

“The black market will continue to rise unstoppably”, says Luis Vicente León

DATANALISIS President Luis Vicente León explains that the growth of Venezuela’s black market is due to an absence of FOREX, exchange controls, and mistrust of monetary authorities by those who hold local currency. “One does not need to be too sharp to understand that the black market will continue on an unstoppable path, where the sky’s the limit”, he says. He says stagnant FOREX allocations are due to the short cash flow which arises from low oil prices. More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Luis-Vicente-Leon-crecimiento-imparable_0_809919071.html)

 

Venezuelan military forces control an industrial empire of 17 companies

Venezuela’s “socialist” and “chavista” military have decided to diversify: they produce goods and services for their own consumption, such as bullets and vests, food, vehicles, water and even import light bulbs from China. They have 17 wholly owned or mixed ventures under their control: in building infrastructure, manufacturing equipment, and providing goods and consumer products. Their latest business venture is CAMIMPEG, to provide services for the oil industry. Rocío San Miguel, of the Citizen Control NGO says: “these companies distort the functions of the armed forces.” Former Defense Minister, retired General Fernando Ochoa Antich, says “they go beyond the Constitutional functions of the Armed Forces …unfair competition is created…that is not more efficient than the private sector, but guarantee a monopoly”. He adds that the ratio and TV concession is absurd, “their ratings must be zero”, and says the beneficiaries are power centers “more or less committed to “chavismo” and “madurismo”. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/FANB-emporio-industrial-empresas-propias_0_810519026.html)

 

 

Politics and International Affairs

 

National Assembly has approved new Referendum Law in first round of voting

A majority of the National Assembly has passed the draft Organic Law on Referendums in its first round of voting (two rounds are required) in a move to cut short President Nicolás Maduro’s term of office, and hold new presidential elections this year. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/160311/ley-de-referendos-aprueba-an-en-primera-discusion; El Nacional, http://www.el-nacional.com/politica/Ley-referendos-protegera-identidad-solicitantes_0_808719384.html)

 

Maduro vows not to resign, refutes charges of foreign birth

President Nicolas Maduro has repeated that he will not resign and said the opposition can do “whatever it wants,” but it will fail in its attempt to cut short his time in office. “They can do what they want! I am here to fight and Maduro will be here until the very last day!” of his term, which ends in 2019, the head of state said. To achieve this he counts on “the support of the people, of the armed forces, on history and with the absolute determination that here, nobody will cave in. Let them come for me, because there are plenty of people willing to confront them and conquer them,” he said. Addressing charges that he was born in Colombia or has dual citizenship through his mother, Maduro said he was born in Caracas, and that his mother – who hailed from the Colombian side of the border - travelled to this city to give birth. “Where was I born? I am proudly Caracanean and Bolivarian”. He said his birth certificate is readily available “a public document” and that the Elections authority has shown it, calling the whole issue a “stupidity”. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2407634&CategoryId=10718; Summarium: http://sumarium.com/maduro-reitera-que-nacio-en-caracas/)

 

Regime reproaches National Assembly President for being “rude”

Venezuela’s Executive Vice President Aristóbulo Istúriz has criticized the president of the local Parliament and opposition leader Henry Ramos Allup, saying that he “cannot behave like a rude troublemaker” and must respect the country’s president, Nicolas Maduro. The public recrimination came one day after Ramos Allup called Maduro “a fool” and referred to his government as an “outlaw.” (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2407689&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/160314/congress-to-question-vp-isturiz-over-emergency-decree)

 

Obama concerned about Venezuela's struggling economy

U.S. President Barack Obama has voiced concern about the struggling Venezuelan economy and said he did not want to see the country fail despite the tense relations between Washington and Caracas. "It's not in America's interest to see Venezuela fail, because if Venezuela fails then that could have an impact on the economies of Colombia or Central America or Mexico, and that in turn can affect U.S. economies," Obama told CNN Espanol. "The sooner the Venezuelan people can determine a government that they have confidence in that is legitimate, and that can start instituting economic policies that pull them out of the spiral that they're in, the better off it's going to be for all of us," Obama said. (Reuters: http://www.reuters.com/article/us-usa-venezuela-obama-idUSKCN0WH05H)

 

UNASUR's Samper calls for "institutional dialogue" in Venezuela

Ernesto Samper, Secretary General of the Union of South American Nations (UNASUR), has called for an "institutional dialogue" between the government and the opposition, as he deemed that polarization was not "the best way" for understanding. Samper has stressed the need to adopt economic measures aimed at overcoming the political and economic crisis in Venezuela, Efe reported. (El Universal, http://www.eluniversal.com/nacional-y-politica/160314/unasurs-samper-calls-for-institutional-dialogue-in-venezuela)

 

Newspaper editor receives four years in prison

A court in Venezuela has sentenced a newspaper editor to four years in prison for defamation after the paper investigated alleged corruption at a major company, the newspaper has said.  Critics denounced the sentence by the court yesterday in the southern state of Bolivar against Correo del Caroni chief David Natera as an attack on press freedom and a form of preventive censorship aimed at discouraging investigative reporting.  The newspaper published a series of investigative articles between May and September 2013 accusing several businessmen linked to the iron ore miner CVG FERROMINERA ORINOCO of embezzlement, extortion and conspiracy. Critics jumped on the news of Natera's sentencing.  “Correo del Caroni was found guilty for exercising its editorial independence and contributing to transparency," the paper's editor Oscar Murillo tweeted. This sentence is aimed at intimidating Venezuelan media "to force them to submit to censorship and self-censorship that is unnecessary in a democratic country," Tinedo Guia, president of the National Journalists' Union, told reporters. Natera’s sentence is not yet final, but the judge has imposed a steep tax penalty, prohibited him from leaving the country, and barred him from publishing news about the mining company. Once a final sentence is issued, Natera will have ten days to appeal. Freedom House issued the following statement: “Venezuela’s justice system is criminalizing free and independent journalism by imprisoning a news director and striving to silence criticism of any kind,” said Carlos Ponce, director for Latin America programs. “The court’s ruling highlights the government’s efforts to intimidate journalists and muzzle investigations into corruption within state-run companies.” (Business Standard: http://www.business-standard.com/article/pti-stories/venezuelan-newspaper-editor-receives-four-years-in-prison-116031200085_1.html; Freedom House: https://freedomhouse.org/article/venezuelan-court-sentences-journalist-prison)

 

Missing Venezuela miners' bodies found, regime held responsible for negligence

The bodies of 17 miners have been found in a mass grave in Venezuela, from among 28 missing after an armed attack, officials said Monday. The bodies were found in a pit in the town of Tumeremo, in far southeastern Venezuela near the border with Brazil. Family members say the miners failed to return home from their shifts on 4 March, and reports soon emerged that they had been gunned down by attackers trying to take over their unlicensed small-scale gold mine. Chief prosecutor Luisa Ortega earlier said investigators were still seeking to determine the motive for the crime. Some witnesses say that a gang shot the miners and cut some up with a chain saw on March 4. The government has pointed the finger at foreign paramilitaries, while opponents have accused security forces of being negligent. President Nicolas Maduro last week ordered the army into the remote area in southeastern Venezuela, calling the case "a possible massacre in a war between gangs." Interior Minister Gustavo Gonzalez said authorities suspect the attack on the miners was ordered by an Ecuadoran man with ties to Colombian paramilitaries named Jamilton Andres Ulloa Suarez, alias ‘The Mole’. Carlos Chancellor, the head of Sifontes, the municipality that includes Tumeremo, charges that access to the area where the killings took place is controlled by the Venezuelan military; and human rights NGPO CONFAVIC has blamed the government for the lack of precautions that led the killings. (Reuters: http://uk.reuters.com/article/uk-venezuela-miners-idUKKCN0WG2AJ; Sigmalive: http://www.sigmalive.com/en/news/international/142838/missing-venezuela-miners-bodies-found#sthash.2o1GoteJ.dpuf; and more in Spanish: Globovision: http://globovision.com/article/cofavic-masacres-en-tumeremo-no-han-sido-suficientemente-investigadas)

 

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.

March 10, 2016

Logistics & Transport

 

American Airlines to ax newly reinstated Caracas-New York route

American Airlines announced it will ax its Caracas to New York route on April 4 due to low demand just over three months after reinstating it. The surprise move comes amid a years-long battle between American Airlines Group and the Venezuelan government in which the world's largest airline says it has not been able to repatriate revenue. In January, the Fort Worth-based company wrote off US$ 592 million which it said was stuck in Venezuela due to the government's failure to exchange it for hard currency. President Nicolas Maduro's cash-squeezed socialist government has said it is negotiating solutions. "We are suspending service on the JFK-Caracas route until market conditions improve," said Martha Pantin, a spokeswoman for the airline. "This suspension is due to demand not being strong enough to support this route." Since reinstating the flight in December, many seats have remained unfilled except around holiday periods. Many airlines have reduced routes in recent years saying they were collectively owed several billion dollars in revenue for tickets sold in the local bolivar currency. The flights are priced in U.S. dollars, which put them out of reach for many Venezuelans amid the national economic crisis. The airline continues to run two daily flights to Caracas from Miami. (Reuters; http://www.reuters.com/article/us-americanairlines-venezuela-idUSKCN0WA24N)

 

 

Oil & Energy

 

Venezuela military company to start servicing PDVSA soon

Deputy Defense Minister Alexander Hernandez said CAMIMPEG, a new company formed by Venezuela's military, will begin providing state oil producer PDVSA with services including drilling, logistics and security in less than a month. It will have a commercial relationship with PDVSA and work alongside foreign companies. Hernandez's comments came after speculation among investors and foreign oil partners that CAMIMPEG could be a means to shield assets from seizure in the event of a debt default. PDVSA has a heavy repayment schedule this year, and Venezuela's economy is in crisis. (Reuters, http://www.reuters.com/article/us-venezuela-pdvsa-military-idUSKCN0WA1XW)

 

Level of major Venezuelan dam reaches collapse zone

Venezuela's National Electric Corporation (CORPOELEC) reported that the water level of major Guri dam has hit 248.02 meters above sea level, below the minimum level recorded in 2010 at that hydroelectric power station, located in Bolívar state, in southeastern Venezuela. The Guri dam has reached the so-called "collapse zone" -a level below 248 meters above sea level- three times in the past. As water levels approach 240 meters above sea level, the operational safety of the turbines is endangered.(El Universal, http://www.eluniversal.com/economia/160309/level-of-major-venezuelan-dam-reaches-collapse-zone)

 

 

Commodities

 

Local gold production dropped 47.12% during 2015

According to the 2015 annual report from the Oil and Mining Ministry, national gold production contracted 47.12% last year, from 1055.5 kilos in 2014 to 558.1 kilos in 2015. The report points to the performance of Venezuela’s General Mining Company (MINERVEN) and says “the development of plans was hit mainly by the drop in income from fine gold sales as a result of lower production due to lack of materials and critical spare parts, as well as the delay in investments.” More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/petroleo/mineria/la-produccion-de-oro-en-el-pais-se-contrajo-47-12-.aspx#ixzz42UiMywLr; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/la-produccion-de-oro-en-el-pais-se-contrajo-47-12-.aspx)

 

Oil minister presents Venezuelan mining potential in Canada

Oil and Mining Minister Eulogio del Pino has urged Canadian investors to take part in developing mining reserves in Venezuela. He briefed members of the Prospectors and Developers Association of Canada (PDAC) on the nation’s potential in gold, coltan, copper, diamond, and bauxite. (El Universal, http://www.eluniversal.com/economia/160308/oil-minister-displays-in-canada-venezuelan-mining-potential)

 

 

Economy & Finance

 

Venezuela's new dual FOREX rate launched

Venezuela's new dual foreign exchange system, with one rate fixed at 10 bolivars to the dollar and another "floating" at a starting rate of 206 bolivars, is now coming into operation, according to the vice president for economy. Miguel Perez has reiterated that the socialist government is "religiously" honoring foreign debt payments and did not have solvency problems despite the current "economic emergency." Venezuela last month made a US$ 1.5 billion debt payment, but investors are fretting as to whether it will be able to pay state oil company PDVSA's heavier obligations later in the year. "Venezuela does not have a solvency problem," Perez said. "We have a cash-flow problem." The official said details of the new foreign exchange mechanism would be published today, meaning the system should come into being from now. The 10 bolivar rate at the newly-named DIPRO system would be used for priority food and medicine sectors, Perez said. (Reuters, http://www.reuters.com/article/us-venezuela-economy-idUSKCN0WB28P; Bloomberg, http://www.bloomberg.com/news/articles/2016-03-09/venezuela-to-implement-new-foreign-exchange-system-on-thursday; El Universal, http://www.eluniversal.com/economia/160309/floating-exchange-rate-for-travel-quotas-in-venezuela)

 

Most economists call the new exchange system more of the same failed policies

• Pedro Palma, former President of the National Economic Council, says: “These announcements are more of the same. Exchange controls remain untouched…This all will have a large inflationary impact, and I doubt they will allow really free fluctuation. The black market rate will not disappear.”
• Alejandro Grisanti, of BARCLAYS, says “I unfortunately see no change in the announcement by Pérez Abad. The step repeats previous forex rules with a different name and does not deal with the main economic problem, which is the black market rate”. He believes it illogical for PDVSA to deliver FOREX to the Central Bank at the SIMADI rate (VEB 206.92/US$1) and for the bank to reallocate them at VEB 10/US$1.
• Luis Vicente León, of DATANÁLISIS, says “There are no surprises in the exchange announcements. Neither is there any change as to what has not worked to date….it goes from an absurd 6.3 rate to another absurd rate of 10 for basic goods, which will be allocated on a discretionary basis….to allocate foreign exchange at 10 or 200 is an economic crime that simply favors manipulators, no matter their political inclination”
• Juan Pablo Olalquiaga, president of the National Industry Federation (CONINDUSTRIA) says: “there will be no great change because the issue is the volume of FOREX, and apparently there isn’t any, unless they have enough or get an international loan”. He adds that “they will not bring a change to the economy”.
• Leonardo Buniak, of Planificación Estratégica, says the underlying problem is: “How much FOREX does Central Bank have to support the fluctuating rate?”
• Arístides Maza Tirado, President of Venezuela’s Banking Association, says “this new stage of a dual exchange is a start in the right direction” which will lead to “a single rate, which is what the country needs.”

More in Spanish: (El Nacional, http://www.el-nacional.com/economia/Luis-Vicente-Leon-Entregar-bolivares_0_808119394.html; Notitarde, http://www.notitarde.com/Economia/Control-dual-no-soluciona-el-problema-del-mercado/2016/03/10/907499/; El Mundo http://www.elmundo.com.ve/noticias/economia/gremios/conindustria-considera-que-nuevo-sistema-cambiario.aspx#ixzz42UgeEmQC; El Universal, http://www.eluniversal.com/economia/160310/creen-que-nuevo-sistema-cambiario-necesita-divisas)

 

Venezuela seeks new repayment system with China

Oil and Mining Minister Eulogio Del Pino says Venezuelan and Chinese authorities are analyzing adjustments to the multibillion-dollar financing arrangement, where the nation repays China by delivering oil. More in Spanish: (Notitarde; http://www.notitarde.com/Economia/Venezuela-evalua-con-China-metodos-para-pagar-prestamos-2629988/2016/03/08/906286/; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/del-pino--evaluamos-con-china-hacer-ajustes-en-acu.aspx)

 

Venezuelans will pay 1500% more for FOREX to travel abroad

Miguel Pérez Abad, Vice President for Productive Economics said the new exchange rate to be applied to Venezuelans trying to purchase FOREX for travel abroad will be 1500% more than it is now. It will go from VEB 13/US$1 to around VEB 200/US$1. The government will continue subsidizing foreign travel, but much less than it has been doing. Rigid procedures will remain in place and Pérez Abad did not specify how much each traveler would be allocated. More in Spanish: (Infolatam: http://www.infolatam.com/2016/03/09/venezolanos-pagaran-un-1-500-mas-por-un-dolar-para-viajar-al-exterior/)

 

Hedge fund plows half its money into Venezuela bond and wins big

When Carmelo Haddad and Francisco Ghersi invested half their hedge fund’s money into a soon-to-mature Venezuela bond in mid-January, only two outcomes were possible: the trade could go horribly wrong or it could pay off fabulously. After all, the odds that Venezuela would make the Feb. 26 payment were far from good. Racked by political turmoil, the economy was on the brink of collapse as slumping oil prices deprived the government of much-needed income. At the time, traders put the chance Venezuela would default in the next 12 months at 80% -- by far the highest probability in the world. Venezuela went on to make the US$ 1.5 billion payment, handing the founders of Knossos Asset Management a return of 12% in just 45 days -- or an excess of 150% on an annualized basis. (Bloomberg, http://www.bloomberg.com/news/articles/2016-03-08/hedge-fund-plows-half-its-money-into-venezuela-bond-and-wins-big)

 

 

Politics and International Affairs

 

Venezuela lawmakers call for recall vote, renewed protests

Venezuelan opposition parties united to call for a referendum to oust President Nicolas Maduro and renewed protests starting this Saturday to get him to leave office before his term ends in 2019. Lawmakers, led by Jesus “Chuo” Torrealba, outlined a three-pronged campaign to seek to shorten term limits through a constitutional amendment, launch the recall referendum and mount a campaign to pressure Maduro into resigning. “The current state of the country demands that we place greater emphasis on mobilization and pressure,” Torrealba said, calling a for national protest against Maduro on Saturday. "Change is coming and no one can stop it," Jesus Torrealba, the head of the Democratic Unity (MUD) coalition, told reporters. Miranda state governor Henrique Capriles Radonski, speaking on the issue, said the "recall referendum may take place in October". He added: "My proposals have always included (a constitutional) amendment and a recall referendum, since the amendment may be requested right now and be subject to consultation once approved. And the recall referendum is the measure that will lead us to the political change we all want".  (Bloomberg, http://www.bloomberg.com/news/articles/2016-03-08/venezuela-lawmakers-call-for-recall-vote-protest-against-maduro; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2407324&CategoryId=10717; Reuters, http://www.reuters.com/article/us-venezuela-politics-idUSKCN0WA1UK; El Universal, http://www.eluniversal.com/nacional-y-politica/160309/capriles-recall-referendum-may-take-place-in-october)

 

Regime withdraws its top representative in the US in protest over renewed executive order

President Nicolas Maduro has ordered the withdrawal of Venezuela’s main US representative in Washington DC, Maximilien Sánchez Arvelaiz, acting charge d’affaires at the embassy, in protest for the renewal of US President Barack Obama’s executive order calling Venezuela “an extraordinary and unusual threat”. Arveláiz spent 18 months in Washington without receiving approval from the US State Department. In making the announcement, Maduro said: “Obama had plenty of chances to rectify”, adding that one gesture would be to approve Arveláiz’s nomination. “Eighteen months, what was stopping him?”, says Maduro, adding that Obama acted “at the request of the oligarchic right”. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/160310/maduro-retiro-a-encargado-de-negocios-en-washington; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/maduro-retira-a-encargado-de-negocios-en-washingto.aspx)

 

National Assembly will investigate US$ 142 billion allocations for food supplies

At the request of National Assembly Deputy Manuela Bolívar, the legislature’s Comptroller Committee will look into what happened to US$ 142 which allegedly went to nutrition programs, despite which, “the nation is undergoing a food scarcity crisis”. Legislator Bolivar says: “50% of Venezuelans have only two meals a day, but US$ 142 billion have been delivered to the “Mission Alimentation” food program. Where is that money? We believe there has been a mixture of theft and inefficiency in managing those resources.” More in Spanish: (El Nacional, http://www.el-nacional.com/politica/Investigaran-destino-millardos-alimentos_0_808119433.html)

 

Maduro orders militarization of mineral-rich zone after miners’ disappearance

President Nicolas Maduro has created a “special military zone” to protect the Orinoco “mining arc”, a zone rich in minerals, after the disappearance of 28 miners in the region, all of them presumably murdered, according to relatives. “I have decided to create a special military zone of protection for all the mining municipalities and to deploy ... strengthened military units,” said Maduro. He also said that the alleged massacre of the miners was part of a “national and international media campaign” against his government directed by a sector of Venezuela’s opposition in the town of Tumeremo, near Essequibo, a part Guyana claimed by Venezuela, and along the route to the border with Brazil. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2407342&CategoryId=10718; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2407314&CategoryId=10717; El Universal, http://www.eluniversal.com/nacional-y-politica/160309/maduro-situation-south-venezuela-may-be-due-to-gang-confrontation)

 

Ombudsman admits evidence suggests crimes were perpetrated south Venezuela

Ombudsman Tarek William Saab said that a government joint task force investigating a situation involving a group of miners missing in Tumeremo town (southeastern Bolívar state) managed to collect convincing evidence of criminal interest, which reveals that crimes were committed. He indicated there is evidence that a number of Colombian nationals took part in the event. (El Universal, http://www.eluniversal.com/nacional-y-politica/160309/ombudsman-evidence-suggests-crimes-were-perpetrated-south-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.