October 20, 2016

International Trade

Cargo that has arrived at Puerto Cabello:

• 400 tons of catalyzers consigned to state oil company PDVSA
• 20 tons of surgical material consigned to state agency Fundacion Barrio Adentro
• 2,948 tons of white beans
• 880 tons of black beans
• 418 tons of beef
• 396 tons of sanitary napkins
• 308 tons of toilet paper
• 222 tons of whole milk
• 220 tons of cooking pasta
• 110 tons of medicine

All in 251 containers consigned to state agency CASA. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34659; El Mundo: http://www.elmundo.com.ve/noticias/economia/politicas-publicas/arribaron-a-puerto-cabello-5-502-toneladas-de-prod.aspx; El Universal, http://www.eluniversal.com/noticias/economia/llegan-mas-mil-toneladas-alimentos-productos-primera-necesidad_623307)

 

3,900 tons of food arrived at the port of Guanta, in Anzoátegui state, in 99 containers including precooked corn, rice, cooking oil, sugar, and milk. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/arribaron-3-900-toneladas-de-alimentos-a-anzoategu.aspx#ixzz4NWbrnJTg)

 

Oil & Energy

Congressional probe here says US$ 11 billion missing at PDVSA

A report by a Venezuelan congressional commission accused Petroleos de Venezuela (PDVSA) of corruption on Wednesday, saying about US$ 11 billion in funds went missing from the state-run oil company while Rafael Ramirez was at the helm from 2004-14. "It is more than the (annual) budget of five Central American countries," said Freddy Guevara, comptroller commission president and a member of one of Venezuela's opposition parties, alleging widespread malfeasance at the state oil producer. "If PDVSA is unable to pay its international creditors ... it is because they robbed this money," said Guevara. As he addressed his fellow lawmakers, he flicked between slides illustrating what he described as various cases of wrongdoing at PDVSA. The congressional investigation focuses on 11 cases, ranging from known scandals in an Andorran bank and PDVSA pension funds to alleged overpricing in purchases of oil equipment.  The accusations are based in part on documents from PDVSA, auditor KPMG and foreign investigations.  Interviews with a KPMG representative showed the company had informed PDVSA's auditing committee of "frauds," the report said. "The representatives of PDVSA had full knowledge of the existence of administrative irregularities," the report reads, adding KPMG has not provided further details, citing confidentiality policies.  The U.S. Justice Department has said there is a large, ongoing investigation into bribery at PDVSA. One slide displayed by Guevara titled "Those involved," showed dozens of arrows pointing at Ramirez, who served as Venezuela's oil czar for a decade before being sent to the U.N. The commission called on the National Assembly to deem Ramirez "politically responsible" for the irregularities and recommended a "no-confidence vote" against current PDVSA President Eulogio Del Pino. The investigation may have little impact, however, as President Nicolas Maduro's government has sidelined Congress since the opposition won control in a December vote and the Supreme Tribunal has annulled all its major decisions. Ramirez himself has asked the Supreme Tribunal to block the investigation. (The Fiscal Times: http://www.thefiscaltimes.com/latestnews/2016/10/19/Venezuela-congress-probe-says-11-billion-unaccounted-PDVSA; and more in Spanish: El Universal, http://www.eluniversal.com/noticias/politica/rafael-ramirez-pidio-tsj-anular-investigacion-que-abrio_623321; Infolatam: http://www.infolatam.com/2016/10/19/parlamento-venezolano-denuncia-malversacion-de-us-11-000-millones-en-pdvsa/)

 

Local billionaire to invest in state-controlled oil field

Billionaire businessman Oswaldo Cisneros, one of Venezuela’s richest men, is investing US$ 1 billion in a state-controlled oil field as the government seeks to attract more private funds for the struggling energy sector. A group of Venezuelan businessmen led by Cisneros and calling themselves Delta Petroleum NV will sign a deal next week to invest US$ 800 million in the PETRODELTA joint venture with state-run Petróleos de Venezuela SA in the country’s east, said the president of the state producer, which is known as PDVSA, and a spokesman for Cisneros. Earlier this month, Cisneros completed the purchase of 32% of PETRODELTA from Houston-based Harvest Natural Resources Inc. and Argentina’s PLUSPETROL for about US$ 200 million in cash and stock. PDVSA’S president, Eulogio Del Pino, says he wants to attract more private Venezuelan investors to mature oil fields to boost sagging output. “We believe oil prices will go up in the next two to three years and that’s why we’re making this bet on the sector now,” Cisneros said through a statement provided to The Wall Street Journal. “This is a good time to invest.” PETRODELTA is the latest in a series of low-profile oil ventures for Cisneros. In the past two years, he had purchased stakes in the PETROCABIMAS joint venture in western Venezuela and in the Colombian producer CANACOL Energy Ltd. He also bought the Venezuelan branch of Denmark’s MAERSK Drilling. Keeping a low profile, Mr. Cisneros has been among a few Venezuelan captains of industry of his generation to continue thriving under the Socialist government of President Nicolás Maduro and his predecessor, Hugo Chávez; and sits on Maduro’s National Council of Productive Economy, an advisory body made up of regime-friendly businessmen. (The Wall Street Journal: http://www.wsj.com/articles/venezuelan-billionaire-to-invest-in-state-controlled-oil-field-1476901300)

 

Rodríguez says PDVSA could give CITGO a stake in oil production in Venezuela

State oil company Petroleos de Venezuela (PDVSA) is considering giving CITGO –its subsidiary based in the United States- access to participate in oil production ventures in Venezuela, says Francisco Rodríguez, Chief Economist of Torino Capital, an emerging market investment bank in New York. Rodríguez says PDVSA president and Minister of Petroleum and Mining Eulogio Del Pino disclosed the plan during an interview with Bloomberg News, by saying such a decision “could significantly increase the firm’s value.” “Such a scheme would make holders of the PDVSA 2020 bond senior to other PDVSA bondholders not just in terms of their claim on CITGO’s assets, but also of their claim on a fraction of Venezuela’s oil production, making the 2020 bonds much more attractive than current market estimates suggest,” the economist argued. Rodriguez has been pushing forward his own view on how to pull the country back from the brink. (El Universal, http://www.eluniversal.com/noticias/daily-news/pdvsa-would-give-citgo-stake-oil-production-venezuela_623055; Bloomberg, http://www.bloomberg.com/news/articles/2016-10-19/as-venezuelan-expats-see-end-a-harvard-wall-street-feud-emerges)

 

Maduro to visit oil producers, China

President Nicolas Maduro will visit OPEC and non-OPEC countries in coming days to push a deal to stabilize oil markets and will also travel to key financier China, as the cash-strapped nation seeks to ease a steep recession. OPEC agreed in Algiers on Sept. 28 to reduce production to a range of 32.5 million to 33.0 million barrels per day, which would be its first output cut since 2008. Another meeting on Nov. 30 is set to firm up details of the accord. "I'm going to make a lightning visit, lightning but also deep, to several oil-producing countries, OPEC and non-OPEC, to bring a proposal and finally close an agreement between OPEC and non-OPEC countries to stabilize the oil market and allow prices to bounce back in a stable way," Maduro said late on Tuesday night during his scheduled weekly televised broadcast. Maduro did not name the oil-producing countries he planned to visit, but said Russian President Vladimir Putin will support the OPEC initiative following a small rebound in prices. (Reuters, http://www.reuters.com/article/venezuela-oil-idUSL1N1CP0PF; and more in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/maduro-anuncia-gira-pa%C3%ADses-opep-y-no-opep-para-estabilizar-precios-del-petr%C3%B3leo)

 

Táchira state governor asks for gasoline price hike

Lieutenant José Gregorio Vielma Mora, the pro-regime Governor of Táchira state on the border with Colombia, calls current gasoline prices here “not fair and inadequate”, and has asked higher authorities to adjust them upwards. He said current prices are “an insult, a lack of respect toward the value of gasoline in Venezuela”. He added that it isn’t possible that 91 octane gasoline is sold for 1 bolivar here, while “in Colombia 87 octane gasoline costs 617 bolivars. This is unbearable and unimaginable”. “We can no longer give away gasoline. The cost of a liter of water is higher than that of a liter of gasoline”, he said. More in Spanish: (Noticiero Venevisión: http://www.noticierovenevision.net/economia/2016/octubre/19/172768=vielma-mora-propone-aumentar-el-precio-de-la-gasolina)

 

Commodities

Agriculture Minister claims beef, milk and pork production rose over past five months

Agriculture Minister Lieutenant Wilmar Castro Soteldo says beef, dairy, pork and chicken production rose over five months between April and September, More in Spanish: (Ultima Hora Digital, http://ultimahoradigital.com/2016/10/castro-soteldo-produccion-carnica-lactea-y-porcina-subio-en-cinco-meses/)

 

Economy & Finance

Venezuela bonds fall after PDVSA warns swap fail could compromise payments

Venezuela's bond prices fell this week after state oil producer PDVSA again extended a deadline for its US$ 5.3 billion debt swap offer and warned that if the operation failed the cash-strapped company might struggle to pay its debt. In a communiqué, PDVSA warned that “should exchange offers prove unsuccessful, it could be difficult for the company to make scheduled debt payment, including existing bonds.” The swap offer was designed to ease operations at the company heaving under low oil prices, slumping production and an extreme cash flow deficit that has left it unable to pay contractors on time. But low participation led PDVSA to sweeten the exchange's terms, extend deadlines and warn that it "could be difficult" to pay bondholders if the operation flops. The swap deadline was extended from Monday to Friday 22nd. The cost of a default would be steep for PDVSA and the market largely sees its comments as an attempt to push participation to the 50% threshold. "They're trying to scare the market," said one fund manager, adding he did not think the strategy would work. "They know the cost of not paying is much higher than the cost of paying." But if participation in the swap is low, bond prices will likely fall further and PDVSA will not get as big a financial breather. "We assume that these threats represent a negotiation tactic to encourage participation," said Siobhan Morden at Nomura Securities International, adding she could not rule out less commitment to paying debt down the line. "The reluctance of PDVSA to alter the terms and further improve the exchange ratio is worrisome as it does not show flexibility of respecting market forces to provide the necessary terms for a successful exchange," Morden said. (Reuters: http://www.reuters.com/article/venezuela-pdvsa-debt-idUSL1N1CO0JE; El Universal, http://www.eluniversal.com/noticias/daily-news/pdvsa-views-hard-debt-payment-the-event-failed-swap-offers_623285)

 

In light of PDVSA swap, FITCH keeps CITGO on negative watch

If CITGO was taken away from Venezuela's PDVSA in a default, FITCH believes that CITGO could be investment grade. "Given CITGO's size, asset positioning, cash flow potential, and other factors, FITCH informally estimates that, on a stand-alone basis with no parental rating constraints, CITGO could be rated in the mid-to-high 'BB' range, and potentially investment-grade, depending on the company's capitalization following a change in control," FITCH theorized. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423457&CategoryId=10717)

 

National Assembly votes to carry 2016 national budget over to 2017, rejects Maduro budget

The National Assembly has voted to carry the 2016 Budget Law over into fiscal 2017, and rejected actions by the Executive branch in decreeing a new budget without parliamentary approval. Assembly Vice President Simón Calzadilla said “all public credit operations of any nature, both in local and foreign currency will be considered null and void” if transacted under the budget approved by the Supreme Tribunal. Pro government legislator Ramón Lobo admitted that the budget must be presented to the legislature, but said the Assembly is “in contempt” for not abiding by Supreme Tribunal rulings. The legislature also voted to advise “the Organization of American States (OAS) and the United Nations, along with other international organizations” that the Maduro budget is illegal. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/19/172775=asamblea-nacional-declara-que-presupuesto-2016-seguira-vigente-en-2017)

 

Politics and International Affairs

Opposition rejects Supreme Tribunal ruling on 20% voter signatures for recall referendum

Venezuela’s Democratic Unity (MUD) opposition coalition says it will disregard a ruling by the Electoral Chamber of the country’s Supreme Tribunal which holds that the collection of registered voter signatures for a recall referendum against President Nicolas Maduro should be attained in each of the 23 states of Venezuela plus the Capital District. In a decision posted on the TSJ website, the high court notes that “failure to collect such percentage in any of the states or the Capital District would make null and void the call for the recall referendum.” MUD Secretary General Jesús Torrealba said they will disregard the ruling and will only abide by what is established within the Constitution, which calls for a 20% of all voters nationwide. “It is they who are in contempt” he said in reference to the justices in the Supreme Tribunal. The ruling by the Tribunal means that even if the required 3.9 million signatures are collected the recall could not go forward if they fall short of 20% in any given state.  National Assembly President Henry Ramos Allup said the opposition would gather the requisite number of signatures, despite a ruling intended to make the process more difficult. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-high-court-signatures-for-recall-vote-state-state_623053 and more in Spanish: Infolatam: http://www.infolatam.com/2016/10/18/oposicion-venezolana-dice-que-desconocera-decision-del-supremo-sobre-el-20/; Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/18/172633=ramos-allup-desestimo-sentencia-del-tsj-sobre-la-recoleccion-por-estado-del-20

 

Elections Council announces and opposition rejects, 2017 timetable for regional elections

The National Elections Council (CNE) has announced that gubernatorial elections will be held during the first semester of 2017, and mayoralty elections are to be held during the second semester the same year. As per the Constitution these elections must be held by December this year, four years after they were elected in December 2012. Council Chairperson Tibisay Lucena did not set exact dates for either election. 23 governors – 20 of them pro-regime – will rule past their mandate. The opposition Democratic Unity (MUD) coalition immediately rejected the decision, demanded that Constitutional terms be observed, termed the timetable “tardy” and added that the move “confirms CNE irresponsibility and regime’s cowardice.” (El Universal, http://www.eluniversal.com/noticias/daily-news/opposition-rejects-timetable-for-election-governors-mayors-venezuela_623288; and more in Spanish: Infolatam: http://www.infolatam.com/2016/10/19/poder-electoral-venezolano-fija-para-2017-eleccion-de-alcaldes-y-gobernadores/; El Universal, http://www.eluniversal.com/noticias/politica/mud-rechazo-cronograma-del-cne-para-elecciones-regionales-municipales_623206)

 

Maduro threatens governors and mayors over 2017 budget, Capriles calls the threat “blackmail”

President Nicolas Maduro warned all mayors and governors nationwide must abide by the Supreme Tribunal’s ruling on the 2017 budget if they want to receive their mandated regional funding from his government. He said those who do not recognize the Tribunal’s sentence will not receive a penny. Miranda state Governor and former Presidential candidate Henrique Capriles Radonski terms the move by Maduro “blackmail”, and asked his advisors for legal counsel on responsibilities that can be incurred by accepting what he termed an “illegal” budget. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/actualidad/politica/gobernadores-y-alcaldes-deben-firmar-sentencia-del.aspx#ixzz4NWaMWseq; http://www.elmundo.com.ve/noticias/actualidad/politica/ejecutivo-aprueba-bs--115-mil-millones-para-gobern.aspx; Noticiero Venevisión, http://www.noticierovenevision.net/politica/2016/octubre/19/172750=capriles-califico-como-un-chantaje-que-maduro-no-envie-recursos-a-quienes-no-acepten-el-presupuesto-2017)

 

Venezuela frees US Citizen after 4 months in prison

A U.S. citizen was released in Venezuela after four months in prison and forced to go into exile Wednesday, according to the opposition to President Nicolas Maduro. Francisco Marquez, who holds dual U.S. and Venezuelan citizenships, was freed after being imprisoned for four months without a trial. Marquez, an opposition organizer, was arrested during the first stage of the ongoing recall process against Maduro, for allegedly carrying large amounts of cash -- which by itself is not a crime in Venezuela, unless the cash is tied to money laundering.
Legal analysts say forcing Marquez to abandon the country in exchange of giving him his freedom is illegal in Venezuela. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423458&CategoryId=10717)

 

Fr. Arturo Sosa new head of Jesuit order, says neither regime or opposition has plan to change oil dependency

The Jesuit order has elected Venezuela’s Fr. Arturo Sosa as their new Superior General. Former head of the Venezuelan Jesuit province, Fr. Sosa was appointed as Superior of the Jesuits in Venezuela in 1996, guiding through the stormy waters of Hugo Chavez’s dictatorship. In 2004, he was named General Counselor of the Society of Jesus, a position he held until 2011. He has until now served as president of the University in the State of Táchira, a role he has also held since 2004. Fr. Sosa’s election as the 31st General Superior of the Jesuits marks the first time a Latin American has led the Society, and he takes the helm under the Catholic Church’s first Jesuit and Latin American Pope, Francis I. During his first press conference, Fr. Sosa said “the situation in Venezuela is very hard to explain to someone who does not live there”, adding that the entire nation lives on petroleum income which is solely administered by the state and this makes forming a democratic society very uphill. He added that the “income fueled model” headed by Chavez and Maduro “cannot be sustained”, and that neither the government or the opposition “have a plan” to resolve that situation. Fr. Sosa insisted on the need to “build bridges” because “no one wants the violence that exists any more”. (Catholic News Agency: http://www.catholicnewsagency.com/news/venezuelan-fr-arturo-sosa-elected-as-new-head-of-jesuit-order-75293/; and more in Spanish: Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/18/172552=nuevo-“papa-negro”-asegura-que-ni-gobierno-ni-oposicion-tienen-un-plan-para-venezuela)

 

Brazil to evaluate situation of Venezuelans arriving at border

The Brazilian government has said it will evaluate the situation of about 1,000 Venezuelans who have crossed the shared border to take up residence in the northern state of Roraima, where authorities are asking for federal help to take care of them. Justice Minister Alexandre de Moraes met with Roraima Gov. Suely Campos, who asked for federal funds to take care of the needs of the immigrants. According to official figures from the Justice Ministry, since January some 1,800 Venezuelans have entered Roraima and requested asylum or refuge for various reasons, including alleged political persecution in their homeland. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423455&CategoryId=10717; El Universal, http://www.eluniversal.com/noticias/daily-news/brazil-concerned-about-inflow-venezuelans-across-the-border_623059)

 

Venezuelan and Colombian authorities capture ELN guerrilla leader

Operating jointly, Venezuelan and Colombian authorities have captured a leader of Colombia’s ELN guerrilla on Venezuelan territory, says the Colombian navy. Operating under code name “Felipe”, he is an expert in explosives who has perpetrated attacks on Colombian forces and kidnappings in the El Amparo area along the Arauca river in Southern Venezuela. More in Spanish: (Noticiero Venevisión: http://www.noticierovenevision.net/internacionales/2016/octubre/19/172716=autoridades-colombianas-y-venezolanas-capturan-a-jefe-de-guerrilla-eln)

 

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.

 

 

 

October 18, 2016

International Trade

Trade remains paralyzed after border reopened with Colombia

Two months after the border between Venezuela and Colombia was partly opened to pedestrians, shopkeepers and industry on both sides are still waiting for trade to pick up, On the Venezuelan side there is little to offer, and in the Colombian border city of Cucuta the value of Venezuelan currency dropped 40% since the Colombian market is stuffed with bolivars. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/economia/2016/octubre/16/172412=comercio-sin-reactivarse-tras-apertura-de-frontera-con-colombia-)

 

30,000 tons of wheat for state agency CASA have arrived at Puerto Cabello. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34651; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/arriban-a-puerto-cabello-30-mil-toneladas-de-trigo.aspx)

 

Oil & Energy

PDVSA extends us$ 7 billion swap for 4th time

Petroleos de Venezuela, S.A. (PDVSA) has announced again the extension of the Deadline of the offers to exchange (the “Exchange Offers”) of up to U.S. US$ 5,325 million aggregate principal amount of PDVSA’s outstanding 5.250% Senior Notes due 2017 (the “April 2017 Notes”) and 8.50% Senior Notes due 2017 (the “November 2017 Notes,” and together with the April 2017 Notes, the “Existing Notes”) for new 8.50% Senior Secured Notes due 2020 (the “New Notes”).  The state oil company warns "If the Exchange Offers are not successful, it could be difficult for the Company to make scheduled payments on its existing debt, including the Existing Notes, which would result in the Company evaluating all alternative options." The Company has extended each of the Early Tender Deadline and the Expiration Date to 5:00 P.M. New York City time on October 21, 2016, unless further extended by PDVSA in its sole and absolute discretion. The Early Tender Deadline was previously scheduled to expire at 5:00 P.M. New York City time on October 17, 2016, and the Expiration Date was previously scheduled to expire at 5:00 P.M. New York City time on October 17, 2016. All other terms and conditions to the Exchange Offers remain the same. The consummation of the Exchange Offers is conditioned upon, among other things, the valid tender of at least 50% of the aggregate principal amount of the Existing Notes. Last week, oil giant ConocoPhillips filed a lawsuit against PDVSA and CITGO trying to block the use of CITGO as collateral, calling it a "fraudulent transfer" to avoid their creditors. CRYSTALLEX -- owed US$ 1.4 billion -- has also alleged the same fraud in its suits against Venezuela, PDVSA and CITGO. Venezuela and PDVSA must pay $1.8 billion this month and $3 billion next month in debt interest and maturities. Half of the US$ 4 billion in PDVSA 8.5% of November 2, 2017, must be paid this November 2 unless the swap is successful in reducing that number. (Latin American Herald Tribune: http://laht.com/article.asp?CategoryId=10717&ArticleId=2423302; Reuters, http://www.reuters.com/article/venezuela-pdvsa-bond-idUSC2N13F00C)

 

PDVSA accuses newspaper of defamation, harming bond swap

State oil company PDVSA has filed a lawsuit against local newspaper El Nuevo Pais, accusing it of defamation and damaging efforts to persuade investors to take up a US$ 5.3 billion bond swap offer. Petroleos de Venezuela President Eulogio Del Pino personally lodged the accusations against the anti-government Caracas-based newspaper for saying in an article last week that the company was in financial trouble. "They are trying to harm, in whatever way they can, an operation that we have offered transparently," Del Pino said of El Nuevo Pais outside the Caracas courthouse after filing the lawsuit. "The socialist government is privatizing PDVSA," El Nuevo Pais said in its article, referring to the use of PDVSA's U.S. subsidiary CITGO Holding Inc as collateral to back the new debt. (Reuters: http://www.reuters.com/article/us-venezuela-pdvsa-idUSKBN12E20P)

 

Venezuela oil price gaps up for 3rd week

The price Venezuela receives for its mix of medium and heavy continued rising for the third consecutive week on prospects for an agreement for an oil output cut. According to figures released by the Ministry of Petroleum and Mining, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending October 14 was US$ 43.09, up US$ 1.51 from the previous week's US$ 41.58. According to Venezuelan government figures, the average price in 2016 for Venezuela's mix of heavy and medium crude is now US$ 33.77 for the year to date. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423253&CategoryId=10717; El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-oil-basket-climbs-usd-4309-per-barrel_622715)

 

Economy & Finance

Maduro ignores Venezuelan Congress and sends budget to Courts

President Nicolas Maduro has presented the 2017 budget to Venezuela’s top court, sidestepping the opposition-controlled National Assembly. The move caps almost a year of clashes between the executive and the newly elected congress, which has seen its powers whittled away by the courts as it looks to oust Maduro. The Supreme Court, stacked with pro-government judges, paved the way for the decree earlier this week, removing Congress’s budgetary authority. “No one can go against the ruling of the Supreme Court; it’s binding,” Maduro said while signing the decree in front a crowd of cheering supporters. (Bloomberg, http://www.bloomberg.com/news/articles/2016-10-14/maduro-ignores-venezuelan-congress-and-sends-budget-to-courts; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2423185&CategoryId=10718)

 

Opposition serves notice that public credit operations under 2017 budget can be disowned

Jesus Torrealba, Secretary General of the Democratic Unity (MUD) opposition coalition says Venezuela can repudiate public debt to other nations due to the irregular approval of the 2017 Budget by the Supreme Tribunal. “Any nation or individual who may take part in a public credit operation with the Bolivarian Republic of Venezuela, must know that since the government is in contempt of the Constitution by illegally approving the budget, any such debt can be repudiated by a sovereign Venezuela. You are warned”, he said. Francisco Rodriguez, of Torino Capital, agrees that the 2017 Public Debt Law could come under question if it is not approved by the parliament. “We believe there is a strong legal case for a future administration to declare that debt contracted during 2017 is not valid without an Annual Debt Law that is approved by the National Assembly. This argument could potentially damage not only new bonds issued by Venezuela, but also any other local or international financial debt, including commercial, bilateral and multilateral bonds, as well as internal debt issued in bolivars.” Rodríguez says debt by PDVSA, the Central Bank and state owned banks are exempt from legislative approval, but Legislator José Guerra, who chairs the Budget Subcommittee at the National Assembly, reported that at least one multilateral organization has decided to withhold a US$ 400 million loan for housing due to the lack of legislative approval. He added that sovereign debt and bonds cannot be issued without support by the Legislature, and said “a large part of the failure in the recent bond swap is because investors are cautious that the operation is illegal”. Guerra also says “since CITGO is placed as a guarantee it is in the national interest and must be approved by the National Assembly”.  Guerra adds that multilateral organizations such as the Inter-American Development Bank and the Andean Development Corporation could avoid new funding to Venezuela. He concludes by saying: “The government is taking the worst route. I do not believe any investment bank will dare make the mistake of putting together a foreign financing package without the Assembly’s backing. There will be no outside financing and this will impact the economy, which will sink further in 2017”. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/14/172294=mud-afirma-que-el-pais-no-podra-reconocer-deudas-de-credito-publico-ante-ilegalidad-de-presupuesto-2017; and Factor MM: http://factormm.com/organismos-multilaterales-comienzan-a-exigir-aval-de-la-an-para-dar-financiamiento-al-regimen/)

 

Venezuelan domestic budget FY2017 above 447% last year

Venezuela’s domestic budget FY2017, submitted to the Supreme Tribunal of Justice (TSJ), exceeds by 447% the budget for 2016 enacted last year. While the current budget was drawn up as based on crude oil prices at US$ 40 per barrel the financial plan for 2017 was estimated at US$ 30 per barrel, a “conservative figure” in words of President Nicolas Maduro. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-domestic-budget-fy2017-above-447-last-years_622925)

 

Regime backs away from price controls as citizens go hungry

President Nicolas Maduro’s government has begun dismantling price controls, a major policy shift that aims to ease widespread unrest by letting shops sell food at market prices but is worsening Venezuela’s already punishing inflation. What began as a limited experiment in March in western Zulia state, which borders Colombia, has since been rolled out to six other border states, according to ruling-party governors and interviews with supermarket owners and shoppers across the country. The scheme allows state governments and private retailers with access to dollars to import everything from ketchup to rice from neighboring Brazil, Colombia and tiny Trinidad and Tobago. Officials who pushed for the changes in the provinces said they did so because people were desperate. The downside for Venezuelans is a tremendous rise in prices—sometimes as much as 20 times the regulated price. That is further fueling inflation that the International Monetary Fund already predicts will rise by 500% this year, the highest rate in the world. The phasing out of the price controls is already hitting black-market dealers who have been reselling shoppers marked-up products they obtained at government-set prices. Private distributors are importing the food using savings exchanged for dollars on the black market, which is illegal but being condoned by officials, said Asdrubal Oliveros, who closely tracks government policies as director of Caracas-based research firm ECOANALÍTICA.  (The Wall Street Journal: http://www.wsj.com/articles/venezuela-backs-away-from-price-controls-as-citizens-go-hungry-1476475368)

 

Politics and International Affairs

National Assembly approves motion to rescue democracy and the Constitution

Venezuela’s National Assembly has passed a historic resolution declaring that “Nicolas Maduro’s government is attempting to ignore the Venezuelan electorate’s will for change, rejecting and creating obstacles to the legitimate right to vote”; and that Venezuelan democracy is facing “its most serious crisis since the Executive and the Supreme Tribunal do not recognize the authority of the National Assembly”, which implies the “nullification of the will of voters that elected it on December 6^th, 2015, rejecting popular sovereignty, as well as the life of democracy and the rule of law”. It further declared that in ruling that the national budget should be submitted to the Constitutional Chamber, that Chamber has committed “an atrocious usurpation of this parliament’s duties” and “totally exceeded” its jurisdiction. Further that “the Supreme Tribunal of Justice has betrayed its reason to exist, abandoned its role as guarantor of basic rights and the Constitution’s supremacy, because its rulings show lack of independence and objectivity”; and that “the justices in the Electoral Chamber and the Constitutional Chamber of the Supreme Tribunal do not represent justice and authority, or the Constitution”; that they “usurp authority for justice due to the vices in their appointments” particularly those made “following legislative elections on December 6^th, 2015.” Further, that with the “crude violation of basic rights, principles and values upheld in the Constitution”, the Citizen and Electoral powers are acting in a manner “servile to the interests of the government”. As a consequence of all this, the National Assembly will reject the authority or validity of Executive acts and Supreme Tribunal sentences that run “counter to democratic values, principles and guarantees, and injure basic rights”. It also demanded that the National Elections Council act as an independent power to “set a definite timetable for a recall vote” against President Maduro, and the “election of state governors, all within calendar 2016.” The National Assembly further calls upon the National Armed Forces to “demand that the President and the National Elections Council guarantee the political rights of Venezuelans and respect the will of voters”, as well as contribute to restoring the rule of law, basic rights and democratic principles. It also calls on the Supreme Tribunal’s Electoral Chamber to once and for all incorporate legislators elected from Amazonas state on December 6^th 2015 or else call for new elections in that state. The Assembly also voted to replace Supreme Tribunal justices unconstitutionally appointed on December 23^rd 2015, and create a special committee to analyze illegal procedures in the appointment of National Elections Council members by the Supreme Tribunal on December 26^th 2014. The Assembly called on international organizations, through the UN High Commissioner for Human Rights, the Secretary General and Permanent Council of the Organization of American States (OAS) to act on behalf of democracy and human rights in Venezuela; and on international organizations and Latin American legislatures, the authorities of the Common Market of the South (MERCOSUR) and the Union of South American Nations (UNASUR) to remain watchful and help restore democratic institutions in Venezuela. More in Spanish: (El Universal: http://www.eluniversal.com/noticias/politica/aprobo-acuerdo-para-rescate-democracia-respeto-constitucion_622480)

 

Supreme Tribunal deals blow to bid to unseat Maduro

Venezuela's government-stacked courts have dealt another blow to the opposition's attempts to unseat President Nicolas Maduro. In a decision Monday, the Supreme Court ruled that opponents must collect signatures from 20% of registered voters in each of Venezuela's 24 states in order to force a recall referendum. The opposition had argued it needed to garner only 20% nationally to trigger the vote. The ruling will make it harder for opponents to mobilize support, especially in rural states dominated by the government, when it attempts next week to collect and electronically verify 4 million signatures over three days allotted for the petition drive. The court said on Monday: "The failure to collect that percentage in any of the states or the capital district would nullify the validity of a presidential recall referendum." Polls show Venezuelans overwhelmingly want to cut short Maduro's term. But the embattled socialist still has control over key institutions including courts and the electoral council. Opposition leader Henrique Capriles Radonski, Governor of Miranda state, says the Supreme Tribunal is following orders from the government and its rulings are increasingly violating democratic procedures. He warns that the government is trying to cling to power at any cost and that if the referendum is denied people must prepare to take over Venezuela to defend the Constitution. (BBC News: http://www.bbc.com/news/world-latin-america-37688901?utm_source=Sailthru&utm_medium=email&utm_campaign=New%20Campaign&utm_term=%2AMorning%20Brief; ABC News: http://abcnews.go.com/International/wireStory/venezuelas-high-court-deals-blow-bid-unseat-maduro-42871166; and more in Spanish: Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/16/172407=henrique-capriles-expreso-que-el-tsj-solo-sigue-ordenes-del-ejecutivo; AVN; http://www.avn.info.ve/contenido/tsj-ratifica-que-20-firmas-para-solicitar-referendum-se-haga-estado; El Universal, http://www.eluniversal.com/noticias/politica/sala-electoral-decide-que-recoleccion-del-debe-ser-por-estados_623048)

 

Maduro meets Zapatero, Samper: MUD rejects dialogue without the recall referendum

President Nicolas Maduro has again met with Spain’s former President José Luis Rodríguez Zapatero and UNASUR Secretary General Ernesto Samper, allegedly to discuss promoting talks with the Venezuelan opposition. However, the Democratic Unity (MUD) opposition coalition says their key objective is collecting 20% of registered voter signatures and that there will be no dialogue without a recall referendum, despite claims by the regime and President Maduro’s meetings. National Assembly President Henry Ramos Allup says “Any possibility of talks is contingent on the recall”. More in Spanish: (El Nacional, http://www.el-nacional.com/politica/MUD-reitera-dialogo-revocatorio_0_941306130.html; Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/16/172377=maduro-se-reunio-con-el-expresidente-espanol-jose-luis-rodriguez-zapatero)

 

Colonel Ameliach to file lawsuit to block recall referendum procedures by MUD

Colonel Francisco Ameliach, Governor of Carabobo State and Vice-President of ruling United Socialist Party of Venezuela (PSUV), says he will ask the Supreme Tribunal to issue a legal stay to prevent the Democratic Unity (MUD) opposition alliance from moving on to the next phase in recall procedures against President Nicolas Maduro, including collecting 20% of signatures of registered voters. Tomas Guanipa, Secretary General of the opposition Primero Justicia party, called Colonel Ameliach’s announcement “shameless” and charged that the Carabobo state Governor is among those who are pushing for the nomination of Lieutenant Diosdado Cabello to replace Maduro. (El Universal, http://www.eluniversal.com/noticias/daily-news/psuv-file-lawsuit-against-opposition-alliance-for-alleged-offense_622968; and more in Spanish: Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/16/172382=francisco-ameliach-aseguro-que-solicitara-medida-cautelar-para-que-rr-no-avance-; El Universal, http://www.eluniversal.com/noticias/politica/tomas-guanipa-psuv-oficialismo-busca-sustituto-maduro_622862)

 

Venezuela’s legal institutions and bar associations denounce Supreme Tribunal rulings

In an unprecedented move in Venezuela’s history, the National Lawyers Federation, the Lawyers’ Social Security Institute (INPREABOGADO) and the bar associations in 21 states, along with several NGO’s related to the legal profession have condemned recent decisions by the Supreme Tribunal of Justice (TSJ). Several NGO’s will take their case to the Organization of American States, the United Nations, and the Iber-American Union of Legal Guilds and Associations, to denounce “unconstitutional and partisan” actions by the Supreme Tribunal here. They accused the Tribunal of usurping legislative functions, and creating a “carte blanche for government corruption”.  (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-lawyers-meet-protest-top-courts-decisions_622955; and more in Spanish: Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/octubre/15/172354=denunciaran-actuacion-del-tsj-ante-la-onu-y-la-oea-)

 

Dissident “chavistas” call for signatures against Maduro

A group of dissident “chavistas” and former Chavez cabinet members and military officers has called for signatures against President Nicolas Maduro, in defense of the Constitution. More in Spanish: (El Universal, http://www.eluniversal.com/noticias/politica/disidentes-del-chavismo-llaman-firmar-contra-maduro_623050)

 

Wives of political prisoners accuse Cabello of torture

Lilian Tintori, wife of imprisoned Voluntad Popular leader Leopoldo Lopez, along with the wife of jailed San Cristobal Mayor Daniel Ceballos, and former legislator Maria Corina Machado, has denounced a leader Lieutenant Diosdado Cabello, of the pro-regime PSUV party, for being the mastermind behind the illegal imprisonment of her husband, and filed an accusation with the Prosecutor General’s office accusing him of violating human rights, torture, and aggression. She says he is behind the mistreatment of the Lopez family when they visit the jailed leader and having them followed, having them filmed and then broadcasting the contents on his television show; and added that he “orders judges and jailers to break the law”. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/nacionales/2016/octubre/15/172348=denuncian-a-diosdado-cabello-ante-la-fiscalia-general

 

"Increased crime mirrors security failure in Venezuela"

The head of the Venezuelan Violence Watch (OVV), Roberto Briceño León, blamed the country's increased crime on failed security plans implemented by the government in recent years. “Efficiency of a public policy is apparent in its results. Murders, theft, kidnappings and violence in prisons have skyrocketed, so we can say that the 22 plans implemented have failed,” he added. According to a research based on official data, Briceño León estimated 118 arrests in every 100 killings in 1998 in Venezuela, and from 2006 onwards, there have been as few as eight or nine arrests. In other words, no arrests in almost 91% of the murders. (El Universal, http://www.eluniversal.com/noticias/daily-news/increased-crime-mirrors-security-failure-venezuela_622540)

 

Infant mortality soars in Venezuela

Infant mortality is rising fast here, at a time when it is falling in almost every other part of the world, in one of the most alarming signals that Venezuela’s social and state structures are unraveling. Venezuela’s overall infant mortality rate—defined as deaths within the first year of life—is currently 18.6 per 1,000 live births, according to the most recent government statistics. That is well beyond the upper range of 15.4 UNICEF estimates for war-torn Syria. Statistics on infant mortality in Venezuela are difficult to come by because the government no longer reports them regularly. Doctors at state hospitals, which most babies are born, are often sanctioned or threatened with job loss for making data public. The dire state of health care—once a pillar of the socialist government’s so-called people’s revolution—has become a state secret here, with armed security guarding health-care facilities and throwing out journalists who manage to enter. In September, Venezuelans were outraged by leaked photos of newborns in cardboard boxes in the maternity ward of the state-run hospital Domingo Guzmán Lander in the eastern state Anzoátegui. The governor of the poor coastal state said the boxes were substitutes for incubators, adding volunteers could decorate them. Hospitals sometimes lack running water and disinfectants and often face shortages of antibiotics and baby formula. The situation poses danger for mothers as well. Childbirth-related maternal deaths in state hospitals are five times what they were in 2012, according to Venezuelan government statistics, bucking the global trend of a fall in maternal mortality by 44% percent since 1990, according to the United Nations. (The Wall Street Journal: http://www.wsj.com/articles/infant-mortality-soars-in-venezuela-1476716417)