Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Thursday, May 2, 2019

May 02, 2019

Logistics & Transport
FAA issues Venezuela emergency order
The U.S. Federal Aviation Administration (FAA) on Tuesday evening issued an order prohibiting “all flight operations in the territory and airspace of Venezuela at altitudes below FL260” until further notice. This order came out due to the “increasing political instability and tensions”. This order is applied to all U.S. air carriers, commercial operators, and “all persons exercising the privileges of an airman certificate issued by the FAA,”. Except for pilots flying foreign-registered aircraft or foreign air carriers operating U.S.-registered aircraft. But pilots can deviate if necessary, in case of an emergency that “requires immediate decision and action for the safety of the flight.”  The FAA also said that any air operators currently in Venezuela, which would include private jets, should depart within 48 hours. Yesterday some airlines like Iberia or DHL cancel their flights to Caracas. The flight of Air France returned to Paris probably because of the political situation. (Sam Chui: https://samchui.com/2019/05/02/faa-issues-venezuela-emergency-order/#.XMrv6Y5KhPY)
 
Politics and International Affairs
US doing everything short of ‘the ultimate’, says Trump as protests continue
The United States is doing everything short of “the ultimate” to resolve Venezuela’s crisis, Donald Trump has vowed, after clashes between protesters and security forces broke out in Caracas following a dramatic but so far fruitless bid to force Nicolás Maduro from power by triggering a massive military rebellion. In an interview with Fox News, the US president, who is Venezuelan interim president Juan Guaidó’s most powerful international backer, vowed to continue supporting him in his battle against Maduro, who Trump called “a tough player”. “We are doing everything we can do, short of, you know, the ultimate,” Trump said, adding: “There are people who would like to have us do the ultimate.” Asked what the options were, Trump said: “Well, some of them I don’t even like to mention to you because they are pretty tough.” “It’s an incredible mess … The place is so bad and so dangerous … so something is going to have to be done,” the US president added in the rambling 10-minute interview. “A lot of things will be going on over the next week and sooner than that. We will see what happens.” David Smilde, a Venezuela expert from the Washington Office on Latin America, said the defection of the head of Venezuela’s intelligence services, SEBIN, showed Maduro’s military support was fragile. Jair Bolsonaro said Brazilian intelligence suggested “there is indeed a fracture which is moving closer and closer to the top of the armed forces. So, it is possible the government will collapse because some of those at the top switch sides,” Bolsonaro added. The US national security adviser, John Bolton, also claimed the Maduro regime was close to falling. “Our judgment is that the overwhelming number of military service members in the country support Juan Guaidó and the opposition,” Bolton said: “It’s just a matter of time before they come over the opposition and some of that could happen today.” (The Guardian: https://www.theguardian.com/world/2019/may/01/venezuela-protests-latest-Guaidó-calls-peaceful-coup-against-maduro; Bloomberg, https://www.bloomberg.com/news/articles/2019-05-01/trump-s-bet-on-Guaidó-is-tested-as-maduro-remains-in-caracas)
 
Pompeo says military action in Venezuela 'possible'
US Secretary of State Mike Pompeo reiterated Wednesday that US military action in Venezuela is an option in the wake of this week's violent protests, despite military officials and experts casting doubt on the prudence of such a move. "The President has been crystal clear and incredibly consistent. Military action is possible. If that's what's required, that's what the United States will do," Pompeo said on Fox Business Network. "We're trying to do everything we can to avoid violence. We've asked all the parties involved not to engage in the kind of activity. We'd prefer a peaceful transition of government there, where Maduro leaves and a new election is held. But the President has made clear, if there comes a moment -- and we'll all have to make decisions about when that moment is -- and the President will have to ultimately make that decision. He is prepared to do that if that's what's required." (CNN: https://www.cnn.com/2019/05/01/politics/mike-pompeo-venezuela-military-action/index.html)
 
U.S. military acknowledged exhaustive contingency planning for Venezuela
The Pentagon on Wednesday appeared to downplay any active preparations to directly intervene in Venezuela to topple Nicolás Maduro but acknowledged detailed contingency planning as political turmoil here deepens. Hours after U.S. Secretary of State Mike Pompeo said the United States was prepared to take military action, if necessary, acting U.S. Defense Secretary Patrick Shanahan said the United States had carried out "exhaustive planning" on Venezuela. But he and other officials continued to emphasize diplomatic and economic pressure to help oust Maduro, as opposed to a U.S.-military led regime change. Asked at one point whether the U.S. military had been given instructions to prepare for a conflict in Venezuela, perhaps by prepositioning U.S. troops, Kathryn Wheelbarger, the acting assistant secretary of defense for international security affairs, said: "We, of course, always review available options and plan for contingencies. But in this case, we have not been given (the) sort of orders that you're discussing, no," Wheelbarger told the House Armed Services Committee. So far, the U.S. military has been largely a spectator amid the unfolding U.S. foreign policy decisions on Venezuela, although it offered small contributions, like helping shuttle humanitarian aid to Colombia for further transport to Venezuela. It has also ramped up its intelligence collection and intelligence sharing with allies, like Colombia, while planning for a possible non-combatant evacuation of Americans from Venezuela, should the need arise. Such planning is standard in any crisis of Venezuela's magnitude. The top uniformed U.S. military officer, Marine General Joseph Dunford, said he was focused on intelligence gathering and being prepared to respond, if Trump sought greater involvement by the Pentagon. But he stressed that the military should act in a way that deepens its partnerships in Latin America -- where the prospect of U.S. military intervention is deeply unpopular. "I think it really is very, very important that we work with others in the region to solve this problem," Dunford said. U.S. Navy Admiral Craig Faller, commander of U.S. Southern Command, which oversees U.S. forces in Latin America, said a big focus for the United States and its partners in the region would be helping to restore vital Venezuelan economic infrastructure after Maduro's exit -- something he called "Day Now" planning. "We call it 'Day Now' because there is going to be a day when the legitimate government takes over, and it's going to come when we least expect it -- and it could be right now," Faller said. When asked if he saw a role for the U.S. military in overthrowing Maduro's government, Faller said: "Our leadership's been clear: It has to be, should be, primarily a democratic transition." Still, he said Southern Command was ready to act if called upon for any scenario. "We're on the balls of our feet," he said. Despite the normally apolitical role of members of the military, Faller voiced a direct -- and political -- message to the Venezuelan armed forces, calling on them "to do the right thing." "A transition to legitimate democracy is underway, and I have a message for the professionals in the Venezuelan military and security forces -- the brutal dictatorship of Maduro has led to this man-made crisis. Cuba and Russia have invaded your country and disgraced your sovereignty. You have a chance to do the right thing and alleviate the suffering of your people and your families -- those you have sworn an oath to protect," he said. In a sign the crisis was grabbing the full attention of Trump's national security leaders, Shanahan canceled a planned trip to Europe on Wednesday, in part to help coordinate with the White House National Security Council and State Department on Venezuela. (The New York Times: https://www.nytimes.com/reuters/2019/05/01/world/americas/01reuters-venezuela-politics-usa-military.html; Reuters, https://www.reuters.com/article/us-venezuela-politics-usa-military/u-s-military-not-given-orders-to-prepare-for-war-in-venezuela-idUSKCN1S744M; https://www.reuters.com/article/us-venezuela-politics-usa-planning/u-s-has-done-exhaustive-planning-on-venezuela-scenarios-shanahan-idUSKCN1S74CP)
 
Russia hits back at U.S. over Venezuela, warns of ‘most serious consequences’
Russia has hit back at repeated warnings from the United States over Moscow's alleged role in Venezuela, where Washington has endorsed an attempt to oust the country's socialist regime. As the three-month standoff between Nicolás Maduro and opposition-controlled National Assembly speaker Juan Guaidó grew violent Tuesday, Secretary of State Mike Pompeo alleged that the Venezuelan leader "had an airplane on the tarmac, he was ready to leave" to Cuba, but "the Russians indicated he should stay." Russia dismissed this narrative Wednesday, with the two country's top diplomats reportedly having it out during a telephone call. "The focus was on the situation in Venezuela, where yesterday the opposition, with the clear support of the United States, attempted to seize power. It was stressed on the Russian side that Washington’s interference in the internal affairs of a sovereign state and the threat against its leadership is a gross violation of international law," the Russian Foreign Ministry said in a readout of the talk between Pompeo and Russian Foreign Minister Sergei Lavrov. "It was indicated that the continuation of aggressive steps would be fraught with the most serious consequences," the statement added. The State Department later released its own readout of the call, during which Pompeo "stressed that the intervention by Russia and Cuba is destabilizing for Venezuela and for the U.S.-Russia bilateral relationship," according to spokesperson Morgan Ortagus. "The Secretary noted the Russian Foreign Ministry’s April 30 statement calling for the renunciation of violence and support for Venezuela’s return to stability and prosperity," the statement read. "The Secretary urged Russia to cease support for Nicolas Maduro and join other nations, including the overwhelming majority of countries in the Western Hemisphere, who seek a better future for the Venezuelan people." (Newsweek: https://www.newsweek.com/russia-us-venezuela-conflict-warns-serious-consequences-1411720; Reuters, https://www.reuters.com/article/us-venezuela-politics-usa/tension-grows-between-u-s-and-russia-over-venezuela-standoff-idUSKCN1S73VN; https://www.reuters.com/article/us-venezuela-politics-usa-russia/pompeo-urges-end-to-russian-involvement-in-venezuela-state-department-idUSKCN1S74G8; https://www.reuters.com/article/us-venezuela-politics-russia-usa/russia-warns-u-s-over-aggressive-moves-in-venezuela-idUSKCN1S74BF; https://www.reuters.com/article/us-venezuela-politics-russia/russia-denies-u-s-claim-it-told-venezuelas-maduro-not-to-flee-idUSKCN1S73K3)
 
Thousands of Venezuelans have taken to the streets in Caracas heeding Juan Guaidó ‘s call
As tens of thousands of Venezuelan returned to the streets on Wednesday, Juan Guaidó, the young opposition leader who led that attempted mutiny on Tuesday morning, told demonstrators in the capital, Caracas, they needed to intensify their “peaceful rebellion” against Maduro. “Every day there will be acts of protest until we achieve our liberty,” Guaidó announced. “They thought they could suffocate our protest yesterday and they failed. We will remain in the streets until Venezuela is free.” The country’s political crisis returned to a protracted standoff punctuated by violence on Wednesday, with the government and protesters seeking to project strength at rival May Day rallies. “There’s no turning back,” Juan Guaidó, the opposition leader, told supporters in Caracas, the capital, where tear gas fired by riot police officers shrouded some protest sites. “Despite the repression, we’re still here.” There were reports late in the day that armed pro-government forces used live fire against some protesters in Altamira, part of a Caracas area where the opposition is strong. A 27-year-old woman died from a gunshot wound to the head while protesting there. Thousands of Mr. Guaidó’s supporters in Caracas and elsewhere heeded his call to demonstrate, although not enough to meet his promise to stage “the biggest march in history.” Still, his ability to remain at large and to rally supporters — after his attempt to recruit the military to his side sputtered on Tuesday — underlined the weaknesses in the regime of his opponent, Nicolás Maduro. Mr. Guaidó called on Venezuelan workers to begin “rolling strikes” starting Thursday, building to a general strike later in the month. It was unclear how much pressure that would apply since most companies already operate at minimum capacity after five years of recession. Momentum on the street has flagged. Protest fatigue and constant power and water outages have sapped morale. Attempts by Mr. Guaidó’s supporters to gather at rallying points in Caracas’s downtown Wednesday were swiftly repressed by police officers and national guard members with tear gas, forcing them to fall back to the middle-class opposition stronghold of Chacao in the east of the capital. But by late afternoon, many of the protesters in the capital Caracas had drifted home. National Guards fired tear gas at a hardcore of demonstrators who remained. Chacao’s health authorities said 39 protesters were injured on Wednesday. The defense minister, General Vladimir Padrino, said on Twitter that eight soldiers had been wounded by firearms while “confronting coup violence.” He added, “How long will the impunity last? Across town in central Caracas, thousands of Maduro’s supporters dressed in red marched along the main highway toward the presidential palace. Most appeared to be retirees or public sector workers. Many were brought in from across the country by public buses that stretched for miles on the side of the highway, underlining the government’s desire to portray strength and tenacity after the failed uprising. (The New York Times: https://www.nytimes.com/2019/05/01/world/americas/venezuela-protests-Guaidó-maduro.html; Reuters, https://www.reuters.com/article/us-venezuela-politics/venezuelan-protests-peter-out-as-maduro-hangs-on-u-s-and-russia-squabble-idUSKCN1S734M; Bloomberg, https://www.bloomberg.com/opinion/articles/2019-05-01/venezuela-s-Guaidó-takes-a-big-risk-for-a-small-win; https://www.bloomberg.com/news/articles/2019-04-30/Guaidó-s-high-risk-gamble-flops-as-maduro-keeps-grip-on-military; The Guardian: https://www.theguardian.com/world/2019/may/01/venezuela-protests-latest-Guaidó-calls-peaceful-coup-against-maduro)
 
There weren't enough military defectors for Guaidó to declare a victory yesterday, he admits
Speaking to a crowd in Caracas, Juan Guaidó admitted that he did not have enough military defectors on his side to declare victory during yesterday's unrest. "We have to acknowledge that yesterday there weren't enough [pro-Guaidó military defectors]," the National Assembly President and opposition leader said. He added: "We have to insist that all the armed forces [show up] together. We are not asking for a confrontation. We are not asking for a confrontation among brothers, it’s the opposite. We just want them to be on the side of the people." (CNN: https://www.cnn.com/americas/live-news/venezuela-crisis-live-may-day-protests-intl/index.html)
 
Head of Venezuela's secret police turns his back on Nicolas Maduro
The head of Venezuela's secret police has broken ranks with Nicolas Maduro as the country braces for a second day violence following the turmoil surrounding a military uprising. In a possible sign that Maduro's inner circle could be fracturing, the head of Venezuela's secret police wrote a letter on Tuesday breaking ranks with the embattled leader.  In a letter directed to the Venezuelan people, Manuel Ricardo Cristopher Figuera - the head of Venezuela's feared SEBIN intelligence agency - said he had always been loyal to Maduro but now it is time to 'rebuild the country'. He said corruption has become so rampant that 'many high-ranking public servants practice it like a sport'. 'The hour has arrived for us to look for other ways of doing politics,' Figuera wrote. The authenticity of the letter circulating on social media was confirmed by a senior U.S. official. (The Daily Mail: https://www.dailymail.co.uk/news/article-6979389/Head-Venezuelas-secret-police-turns-Nicolas-Maduro.html)
 
US: Venezuelan officials who were negotiating Maduro exit have gone dark
US Special Representative for Venezuela Elliott Abrams said on Wednesday that top officials with the Venezuelan government who allegedly were negotiating with the opposition for Nicolas Maduro to step down have “turned off their cellphones.” “I’ve run across the fact that many of them have turned off their cellphones,” Abrams said in an interview with EFE. The US government said on Tuesday that three key officials with the Maduro government – Defense Minister Vladimir Padrino Lopez, Supreme Court of Justice president Maikel Moreno and Presidential Honor Guard commander Ivan Rafael Hernandez Dala – were negotiating with the opposition to break with Maduro and back Juan Guaidó, who has been recognized as the country’s interim president by 54 nations.
When asked if Padrino Lopez, Moreno and Hernandez Dala are the ones who have turned off their cellphones, Abrams said only that “I’m referring to many people at top levels of the Venezuelan government.” (Latin American Herald Tribune,
http://www.laht.com/article.asp?ArticleId=2478022&CategoryId=10717)
 
Maduro vows retaliation for “coup attempt” as he denies attempts to flee to Cuba
Nicolas Maduro declared victory in a defiant televised address late on Tuesday over the attempted uprising, vowing retaliation against those who plotted a "coup" to remove him from office. "This will not go unpunished," Maduro said in his first address, broadcast on television and the radio, since the pre-dawn attempt to remove him by a group of soldiers led by opposition leader and interim president Juan Guaidó. Maduro also used his speech to deny claims by US Secretary of State Mike Pompeo that he had intended to flee to Cuba amid a military uprising against him. "Mike Pompeo said that... Maduro had a plane ready to take him to Cuba, but the Russians prevented him from leaving the country. Mister Pompeo, please, this really is a joke," Maduro said. Maduro insisted he had seen off Tuesday’s attempt to topple him with the backing of “loyal and obedient” members of Venezuela’s Bolivarian armed forces. Flanked by Venezuela’s military and political elite, Maduro blamed Venezuela’s “coup-mongering far right” and Donald Trump’s deranged imperialist “gang” for what he called Tuesday’s attempted coup. “I truly believe … that the United States of America has never had a government as deranged as this one,” On Tuesday night at least 25 Venezuelan troops sought asylum in Brazil's embassy in Caracas, a senior Brazilian official said. A spokesman for Brazilian President Jair Bolsonaro said soldiers and lieutenants were among the applicants. The petitions for asylum came as Bolsonaro threw his support behind Venezuelans "enslaved by a dictator" "Brazil is on the side of the people of Venezuela, President Juan Guaidó and the freedom of Venezuelans," Bolsonaro said in a series of tweets. (The Telegraph: https://www.telegraph.co.uk/news/2019/04/30/venezuela-latestviolent-clashes-opposition-leader-juan-Guaidó/; The Guardian: https://www.theguardian.com/world/2019/may/01/venezuela-protests-latest-Guaidó-calls-peaceful-coup-against-maduro)
 
Opposition leader Lopez and family in Spain’s Venezuela Embassy
Venezuelan opposition figure Leopoldo Lopez, his wife Lilian Tintori and their 15-month-old daughter are currently in the Spanish embassy in Caracas just a day after the activist was released from house arrest in a dramatic operation orchestrated by interim President Juan Guaidó and a group of defecting soldiers, Spain’s foreign ministry said on Wednesday. Lopez, who had been serving an almost 14-year sentence under house arrest for charges linked to anti-regime protests back in 2014, was released Tuesday morning. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2478002&CategoryId=10717)
 
U.N. rights office concerned by use of force in Venezuela
The United Nations human rights office said on Wednesday it was “extremely worried” by reports of excessive use of force against demonstrators across Venezuela. “In light of the mass protests planned for today, we call on all sides to show maximum restraint and for the authorities to respect the right to peaceful assembly. We also warn against the use of language inciting people to violence,” it said in a statement. (Reuters, https://www.reuters.com/article/us-venezuela-politics-un/u-n-rights-office-concerned-by-use-of-force-in-venezuela-idUSKCN1S74DA)
 
Venezuela social media blackout lifted minutes before President Maduro's speech
The Venezuelan regime is clamping down on social media as Nicolas Maduro battles Juan Guaidó's calls for a popular uprising. Network data collected by internet observatory Netblocks shows the country's state-run internet provider restricted access to social media on Tuesday. The restrictions were imposed on Twitter, Periscope, YouTube, Facebook and several other services shortly after Guaidó announced what he called the final phase of Operation Freedom. Unrestricted internet access was finally restored just 20 minutes before a live-streamed speech by Maduro in which he accused the US and Colombia of backing opponents of his regime. According to Netblocks, the network data is consistent with state censorship events during other public appearances by Mr. Guaidó, as well as during "a politically significant session of the Venezuelan National Assembly" which was live-streamed. Access to each of the targeted services was intermittently available, as it was in previous filtering events, but Netblocks stated the extent of Tuesday's blocks was unprecedented in Venezuela. The online crackdown has been accompanied by a physical response to demonstrations in the streets. (SKY News: https://news.sky.com/story/venezuela-social-media-blackout-lifted-minutes-before-president-maduros-speech-11708427)
 
Brazil backs Venezuela uprising, but says it won't intervene militarily
Brazil’s government threw its support behind Venezuelan interim president Juan Guaidó’s push to oust Nicolas Maduro on Tuesday and called on other nations to do the same. Brazil’s President Jair Bolsonaro, a former army officer, wrote on his official Twitter account that the people of Venezuela are “enslaved by a dictator” and that he supports “freedom for our sister nation to finally become a true democracy.” His security adviser, retired general Augusto Heleno, said he was shocked by an image of an armored car of Venezuela’s National Guard apparently running over protesters. But he said the situation was not clear, Guaidó’s support among the military appeared to be “weak” and it was uncertain whether military officers were abandoning Maduro. Presidential spokesman General Otavio Rego Barros told reporters Brazil had completely ruled out intervening militarily in Venezuela and was not planning to allow any other country to use its territory for any potential intervention in its neighbor. Earlier, Brazil’s foreign Minister Ernesto Araujo said it was “positive” to see movement of some Venezuelan military toward recognizing Guaidó as the legitimate president of their country. “Brazil supports the democratic transition process and hopes the Venezuelan military will be part of that,” Araujo said. (Reuters: https://www.reuters.com/article/us-venezuela-politics-brazil/brazil-backs-venezuela-uprising-but-says-it-wont-intervene-militarily-idUSKCN1S61MK)
 
Number of Venezuelans fleeing to Brazil surges during attempt to oust Maduro
Close to triple the usual number of Venezuelans fled to Brazil on Tuesday, when Venezuelan interim president¿ Juan Guaidó led an attempt to oust socialist leader Nicolas Maduro from power, according to Brazilian government data released on Wednesday. Some 850 Venezuelans came to Brazil on Tuesday by foot, the government said, compared with the usual range of between 250 and 300. The migrants arrived in Brazil’s Roraima state, one of the country’s most isolated and poor, which borders Venezuela and has seen thousands of migrants arrive in recent months. A wider exodus has pushed millions of Venezuelans largely to Colombia and Peru. (Reuters, https://www.reuters.com/article/us-venezuela-politics-brazil/number-of-venezuelans-fleeing-to-brazil-surges-during-attempt-to-oust-maduro-idUSKCN1S740W)
 
We must protect our citizens first”: Peru expels 40 Venezuelans
Peru has deported more than 40 Venezuelan migrants for concealing they had criminal records or for residing illegally in the country, Interior Minister Carlos Moran said in the wake of first large expulsion since hundreds of thousands of Venezuelans fled to Peru to escape their country's economic crisis. The migrants were arrested in different districts of the capital, Lima, in a police operation early on Monday, and were put on a military plane headed to Venezuela hours later. Moran said most of the Venezuelans expelled had provided false sworn declarations in their residency applications that they had no criminal record, a violation of Peru's migration law punishable with deportation. Others were deported for residing illegally in the Andean country, Moran added, without providing details. Peru, which has a population of 32 million, has the second-largest population of Venezuelan migrants after Colombia. Most of the 700,000 Venezuelans in Peru arrived in the past year. "As a country, we have fraternally welcomed thousands of Venezuelans who have come to seek a better future," Moran told reporters. "But as a government, we must protect our citizens first, and these people who have entered lying, falsifying information, had criminal records, and that's a threat." Peru created temporary residency permits for Venezuelans in early 2017, allowing them to work and receive health and education services. But last year, the government of President Martin Vizcarra stopped allowing new applicants into the program, which has granted permits to more than 330,000 Venezuelans and is processing requests for 160,000 others. 67% of Peruvians now view Venezuelan immigration as negative, compared with 43% in February 2018, according to an Ipsos poll published in daily El Comercio on Monday. Crime was listed as the top concern, followed by fears about jobs. (Al Jazeera: https://www.aljazeera.com/news/2019/04/protect-citizens-peru-expels-venezuelans-190430052927726.html)
 
Cubans protest U.S. sanctions as Trump raises pressure on Venezuela
Millions of Cubans took to the streets on Wednesday in protest over new sanctions imposed on the Caribbean island by the Trump administration and U.S. efforts to topple the government of socialist ally Venezuela. “We will give a strong, firm and revolutionary response to the statements loaded with threats, provocations, lies and slander of the Yankee empire,” tweeted Cuban President Miguel Diaz-Canel as dawn broke over Havana. The annual marches across the Communist-run country, marking International Workers Day, provided the first opportunity to publicly protest a U.S. offensive against socialism in the region declared by U.S. national security advisor John Bolton late last year. That was followed by a series of new sanctions against Venezuela, Cuba and Nicaragua and the appearance of shortages of basic goods on the island. (Reuters, https://www.reuters.com/article/us-cuba-protests-usa/cubans-protest-u-s-sanctions-as-trump-raises-pressure-on-venezuela-idUSKCN1S742Q)
 
OP-ED: How an elaborate plan to topple Venezuela’s President went wrong, by Uri Friedman
In the effort to topple Nicolás Maduro, Colombia’s ambassador to the United States once told me, the military men propping up Venezuela’s authoritarian president are like chess pieces. If they defect from the regime, “you lose that chess piece,” Francisco Santos explained. “They work better from the inside.” As Tuesday, April 30, began, the United States and its allies thought they finally had checkmate, after months of building up the opposition leader Juan Guaidó as Venezuela’s legitimate president and recruiting more than 50 nations to their cause. By the end of the day, the board had been flipped upside down, pieces were scattered everywhere, and Secretary of State Mike Pompeo was on CNN blaming the kingmakers, Russia and Cuba, for sabotaging the game. Donald Trump’s administration has at the same time continued issuing warnings to Maduro and his associates, though it’s unclear what effect they will have or whether they will save Guaidó. (In the latest sign that major U.S. actions could still be in the offing, acting Defense Secretary Patrick Shanahan has canceled a trip to Europe in order to coordinate with the National Security Council and State Department on Venezuela.) Maduro’s airplane was on the tarmac and he was prepared to depart for Cuba on Tuesday morning, but “the Russians indicated he should stay,” the U.S. secretary of state revealed. (The Russians have disputed this account.) The Cubans, he added, are “protecting this thug” and are “at the center of this malfeasance.” Donald Trump, who earlier in the day had cheered on the pro-democracy demonstrators on Twitter, returned to the site to threaten a “complete embargo” and “highest-level sanctions” on Cuba if “Cuban Troops and Militia do not immediately CEASE military and other operations” in Venezuela. As Operation Freedom went sideways, U.S. officials began divulging details of an effort that had gone spectacularly wrong. Bolton named three top Venezuelan officials—Defense Minister Vladimir Padrino; Supreme Court Chief Justice Maikel Moreno; and the commander of the presidential guard, Iván Rafael Hernández Dala—who he claimed had been engaged in lengthy talks with the Venezuelan opposition and had “all agreed that Maduro had to go,” only to renege this week (at least so far) on their commitments to facilitate a democratic political transition. In a tweet addressed to the three men, Bolton suggested that the terms of the deal had been to help remove Maduro from power in exchange for amnesty from Guaidó and the lifting of U.S. sanctions against them. Wednesday, Bolton outlined how the plan was supposed to work. The senior officials and Guaidó would sign documents memorializing their agreement. The Venezuelan Supreme Court would declare Maduro’s Constituent Assembly illegitimate and thereby legitimize the Guaidó-led National Assembly. Military leaders like Padrino would then have the political and legal cover to act against Maduro. Yet “for reasons that are still not clear, that didn’t go forward yesterday,” Bolton admitted. Another senior official, the head of Venezuela’s intelligence service, did in fact split with Maduro, according to U.S. officials. Bolton offered one theory for why the plan never came to fruition: The Cuban government had prevailed on the three officials to stick with their boss. Fear of the tens of thousands of Cuban security forces in the country, he argued, is keeping military officials in check. On television and Twitter on Tuesday, the defense minister repeatedly backed Maduro. But by ratting out Padrino and the other officials, and thus exposing them to Maduro’s retribution, U.S. officials seemed to be deliberately sowing dissension and mistrust in the upper echelons of the Maduro government—as a means of deepening its dysfunction and pressuring top officials to move against Maduro before he moved against them.  Ahead of more anti-Maduro demonstrations on Wednesday, Bolton tried to put a rosy spin on Tuesday’s tumultuous events. Maduro’s support within the military has cratered and his support among the Venezuelan public is nonexistent, he argued, forcing the Venezuelan dictator to desperately cling to Cuba, a cadre of corrupt officials, and paramilitary groups known as colectivos. Nevertheless, he acknowledged that if the campaign to dethrone Maduro fails, Venezuela could “sink into a dictatorship from which there are very few possible alternatives.” The results of that campaign now—something utterly unsettled, halfway between kleptocracy and democracy—were on display in Washington, D.C., on Tuesday at the Venezuelan embassy. Pro-Maduro activists affiliated with Code Pink and other groups, who had occupied the abandoned building and plastered it with messages denouncing American imperialism and regime change, confronted pro-Guaidó protesters across steel barricades and expressionless Secret Service agents. The dueling chants and posters punctuated the confusion of the present moment. (The Atlantic: https://www.theatlantic.com/politics/archive/2019/05/white-house-venezuela-maduro-failed/588454/)

 

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.

 

Thursday, April 11, 2019

April 11, 2019


Oil & Energy

Venezuela reports collapse in oil supply, tightening global market

Venezuela’s oil output sank to a new long-term low last month due to U.S. sanctions and blackouts, the country told OPEC, deepening the impact of a global production curb and further tightening supplies. In a monthly report released on Wednesday, the Organization of the Petroleum Exporting Countries said Venezuela told the group that it pumped 960,000 barrels per day (bpd) in March, a drop of almost 500,000 bpd from February. Venezuela’s production figure brings its numbers closer to outside estimates, which have been saying the country’s economic collapse has taken a bigger toll on its oil industry. Output in Venezuela, once a top-three OPEC producer, has been declining for years due to economic collapse. In March, supply dropped due to U.S. sanctions on state oil company PDVSA designed to oust President Nicolas Maduro, and power blackouts. (Reuters: https://www.reuters.com/article/us-oil-opec-report/venezuela-reports-collapse-in-oil-supply-tightening-global-market-opec-idUSKCN1RM1BT)

 

Oil edges higher as Venezuela output collapses

Oil prices rose to their highest in more than five months Wednesday as a sharp decline in Venezuelan oil production more than offset the effect of a weekly report showing another increase in U.S. inventories of crude oil. West Texas Intermediate futures, the U.S. oil benchmark, ended 1% higher at US$ 64.61 a barrel on the New York Mercantile Exchange, the highest since Oct. 31. (The Wall Street Journal: https://www.wsj.com/articles/oil-edges-higher-as-venezuela-output-collapses-11554911649)

 

Venezuela congress authorizes parallel PDVSA board to negotiate foreign debt

Venezuela’s opposition-controlled National Assembly on Tuesday allowed a parallel board of directors of state-run oil company PDVSA to negotiate foreign debt ahead of a looming payment deadline that could put its crown jewel overseas asset, U.S. refiner CITGO, at risk. The board’s new head will be former PDVSA executive Luis Pacheco, said lawmaker Elias Matta, head of the assembly’s energy commission. The expanded board would also be able to represent the company overseas, Matta said in congress. The ad hoc board, which the Assembly on Tuesday expanded to nine members from five, is part an effort by opposition leaders who have disavowed the regime of Nicolas Maduro to control PDVSA’s overseas assets. Maduro’s ruling Socialist Party continues to control the company’s day-to-day operations. The move will allow the board to decide whether to make a US$ 71 million interest payment due April 27 on PDVSA’s 2020 bond, which is backed by a 49% stake in CITGO, said opposition lawmaker Elias Matta, the head of the Assembly’s energy commission. “They will evaluate if they are going to pay the bonds. That is now their decision,” Matta said in a telephone interview, adding that the board would have to inform the Assembly should it decide to pay. “We will do everything we have to do to protect the republic’s assets.” (Reuters, https://www.reuters.com/article/us-venezuela-politics-pdvsa/venezuela-congress-allows-parallel-pdvsa-board-to-negotiate-foreign-debt-idUSKCN1RL2CQ; https://www.reuters.com/article/venezuela-politics-pdvsa/venezuela-national-assembly-approves-expansion-to-pdvsa-ad-hoc-board-idUSL1N21R14F)

 

Two of Venezuela's four crude upgraders restart after blackout: document

Two of Venezuela’s four crude oil upgraders, which are necessary to process the country’s extra-heavy crude into exportable grades, have restarted after halting activities due to blackouts in March. The PETROCEDENO upgrader, a joint venture between state oil company PDVSA, France’s TOTAL SA and Norway’s EQUINOR ASA, and the PETROPIAR joint venture with U.S. CHEVRON Corp both restarted, according to the document. The upgraders, together with the Petrosinovensa mixing facility, were set to produce 298,000 barrels of upgraded crude on Tuesday. (Reuters, https://www.reuters.com/article/us-venezuela-oil/two-of-venezuelas-four-crude-upgraders-restart-after-blackout-document-idUSKCN1RL2FE)

 

Economy & Finance

Maduro is cut off from US$ 400 million in cash held at the IMF

As Nicolas Maduro steps up his search for cash overseas, another door is slamming shut. The International Monetary Fund suspended the Venezuelan strongman’s access to almost US$ 400 million of special drawing rights, citing political chaos since National Assembly President Juan Guaidó claimed in January that he was the nation’s rightful leader, said two people familiar with the matter. Venezuela already whittled its SDR holdings down from almost US$ 1 billion in March 2018. The IMF’s caution marks at least a temporary defeat for Maduro’s government as it seeks to gather money held abroad to stave off a devastating economic collapse that could undermine key support from top military commanders. The SDRs represent one of the regime’s last remaining sources of cash. Almost two-thirds of Venezuela’s US$ 9 billion in foreign reserves are in the form of gold, which has been difficult to liquidate because of U.S. sanctions. Guaidó’ s camp has all but declared victory in the battle over who has access to the SDRs. Ricardo Hausmann, a Harvard professor and economic adviser to Guaidó, said the IMF is safeguarding the assets until a new government takes over. “Those funds will be available when this usurpation ends,” he said in an interview at Bloomberg headquarters in New York. Venezuela’s relationship with the IMF has long been contentious. In 2007, then-President Hugo Chavez pledged to cut ties with the fund. That plan was never carried out because leaving the IMF risked triggering a technical default in which investors could demand immediate repayment on some bonds. Since then, Venezuela has defaulted on more than US$ 10 billion in payments. (Bloomberg: https://www.bloomberg.com/news/articles/2019-04-10/imf-freezes-venezuela-funds-as-members-debate-who-s-president)

 

Venezuela removes eight tons of gold from central bank

Venezuela removed eight tons of gold from the central bank’s vaults last week, and the cash-strapped socialist regime is expected to sell the bullion abroad as it seeks to raise hard currency in the face of U.S. sanctions, a lawmaker and one government source said. With sanctions imposed by Washington choking off revenues from exports by state oil company PDVSA, Nicolas Maduro’s increasingly isolated regime has turned to sales of Venezuela’s substantial gold reserves as one of the only sources of foreign currency. The government source said the central bank’s reserves had fallen by 30 tons since the start of the year before U.S. President Donald Trump tightened sanctions, leaving the bank with around 100 tons in its vaults, worth more than US$ 4 billion. At that rate of decline, the central bank’s reserves would nearly disappear by the end of the year, leaving Maduro’s regime struggling to pay for imports of basic goods. (Reuters, https://www.reuters.com/article/us-venezuela-gold-exclusive/exclusive-venezuela-removes-eight-tonnes-of-gold-from-central-bank-sources-idUSKCN1RL247)

 

Fund sues Venezuela for US$ 26 million in unpaid bonds, interest

Global fund manager PHARO has sued Venezuela for US$ 26 million in unpaid bond principal and interest, a U.S. court filing showed, as legal claims by creditors piled up against this nation whose economy is suffering from a hyperinflationary collapse. In a complaint filed with the New York State Supreme Court late on Monday, PHARO said two funds that it controls own US$ 1.5 million in bonds that matured in 2018 and more than US$ 200 million in bonds set to mature in October 2019. Venezuela failed to pay interest and principal on the 2018 bonds and missed three interest payments on the 2019 bonds, it added. (Reuters, https://www.reuters.com/article/us-venezuela-bonds/fund-sues-venezuela-for-26-million-in-unpaid-bonds-interest-idUSKCN1RL25D)

 

Venezuela unemployment nears that of war-ruined Bosnia, IMF says

Venezuela’s unemployment rate is soaring to levels unseen in the world since the Bosnian war came to an end more than two decades ago, according to the International Monetary Fund. Joblessness will reach 44.3% in 2019 and will slam nearly half of Venezuela’s labor force in 2020, the IMF said in its World Economic Outlook published on Tuesday. Bosnia and Herzegovina’s joblessness was 50% in 1996, immediately after its 3 1/2-year domestic war, according to the multilateral’s database. The Venezuelan depression is among the deepest economic catastrophes ever suffered by a nation outside of wartime. This year alone, the Andean nation’s output will shrink by a quarter -- the most worldwide since the 2014 start of the Libyan civil war, according to the IMF. The contraction has become so large that it’s generating “sizable drag” on growth not just in Latin America, but also in emerging markets as a whole. (Bloomberg, https://www.bloomberg.com/news/articles/2019-04-09/venezuela-unemployment-nears-that-of-war-ruined-bosnia-imf-says)

 

Politics and International Affairs

OAS votes to recognize Juan Guaidó’ s ambassador

The members of the Organization of American States (OAS) voted on Tuesday to recognize Juan Guaidó’ s ambassador as the country's official representative to the organization. The move solidifies Nicolas Maduro's exit from the regional body, further isolating Venezuela from its neighbors. The OAS is the second multilateral organization in the hemisphere to recognize representatives designated by Guaidó, after the Inter-American Development Bank accepted Ricardo Hausmann as its Venezuelan envoy last month. With 18 votes in favor, nine against, six abstentions and one absence, the OAS confirmed Gustavo Tarre as Venezuela's new delegate. After a heated debate, the OAS permanent council made the decision by a vote of 18 in favor, nine against, and six abstentions. One delegate was absent. The council asked OAS Secretary General Luis Almagro to send the text to UN Secretary General Antonio Guterres. The text states that "Nicolas Maduro's presidential authority lacks legitimacy and his designations for government posts, therefore, lack the necessary legitimacy." The countries that voted against Tuesday's decision were Venezuela, Antigua and Barbuda, Bolivia, Dominica, Grenada, Mexico, Saint Vincent and the Grenadines, Suriname and Uruguay.  (DW: https://m.dw.com/cda/en/oas-votes-to-recognize-juan-Guaidós-ambassador/a-48269376; France24: https://www.france24.com/en/20190409-oas-recognizes-Guaidó-envoy-until-new-venezuela-polls)

 

 You shouldn’t be here’: U.S. pushes U.N. to pull Maduro envoy’s credentials

Vice President Mike Pence on Wednesday urged the United Nations to revoke the credentials of Nicolás Maduro’s ambassador to the world body, portraying him as a loyalist to the country’s disputed president, Nicolás Maduro, and to a government that has allowed crime, violence and starvation to rise. In a 20-minute speech to the United Nations Security Council, Mr. Pence called for a formal recognition of Juan Guaidó as the rightful leader of Venezuela, which he called “a failed state — and as history teaches, failed states know no boundaries.” Mr. Pence turned to Maduro’s representative, Samuel Moncada Acosta, telling him, “You shouldn’t be here.” “You should return to Venezuela and tell Nicolás Maduro that his time is up,” Mr. Pence said. “It’s time for him to go.” The Council meeting addressed the situation in Venezuela, which officials and experts are increasingly describing as a humanitarian crisis that has led about 3.5 million citizens to flee the country. Mr. Pence also accused China and Russia of meddling in efforts to remove Mr. Maduro. While “Russia and China continue to obstruct at the Security Council,” Mr. Pence said, “rogue states like Iran and Cuba are doing all they can to prop up the Maduro regime.” But on Wednesday, he did not give a firm answer when asked by a reporter where the United States would draw a line on Russia’s involvement. He also did not give a timeline when asked if the possibility of American military intervention, an option long played up by administration officials, was drawing closer as conditions in Venezuela worsened. In briefings held before Mr. Pence arrived to speak, (The New York Times: https://www.nytimes.com/2019/04/10/world/americas/pence-venezuela-un-envoy.html; Bloomberg, https://www.bloomberg.com/news/articles/2019-04-10/pence-demands-un-expel-venezuela-s-ambassador-support-Guaidó)

 

U.N. Aid Chief says 'very real humanitarian problem' in Venezuela

United Nations aid chief Mark Lowcock told the U.N. Security Council on Wednesday that there is a "very real humanitarian problem" in Venezuela and that the world body is ready to do more if it gets more help and support from all parties. "The scale of need is significant and growing. The United Nations is working in Venezuela to expand the provision of humanitarian assistance," Lowcock said. "We can do more to relieve the suffering of the people of Venezuela, if we get more help and support from all stakeholders." He briefed the council on a recent U.N. report on the situation that estimates about a quarter of Venezuelans are in need of humanitarian assistance and painted a dire picture of millions of people lacking food and basic services. Some 3.4 million Venezuelans have left the country, Lowcock said. This number was expected to rise to some 5 million by the end of the year, said Eduardo Stein, the joint envoy for Venezuelan refugees and migrants for the U.N. refugee agency and the U.N. migration agency. Lowcock stressed the need for humanitarian efforts to be neutral, impartial and independent. Lowcock said the number of U.N. staff in Venezuela had nearly doubled since 2017 to some 400 and that U.N. agencies were working in all 24 Venezuelan states. (The New York Times: https://www.nytimes.com/reuters/2019/04/10/world/americas/10reuters-venezuela-politics-un.html)

 

US, EU at odds over Venezuela sanctions

The crisis in Venezuela is causing divisions between the Trump administration and EU governments, which have failed to back Washington's call for tougher sanctions against Nicolas Maduro. Disregarding evidence presented at a NATO summit last week indicating that Maduro is digging in with the aid of Russia, the EU decided against widening Venezuelan sanctions during a foreign ministers’ meeting Monday. “The EU is against implementing sanctions on Venezuela as a country,” said Spanish Foreign Minister Josep Borrel at a press briefing following the meeting. He left open the possibility of applying individual sanctions against some members of Maduro’s government. Last week, the United States expanded sanctions to block Venezuela’s oil exports by targeting its tanker fleet, declaring that 34 of its vessels could be embargoed or seized through new measures announced by the U.S. Department of Energy. Europe, on the other hand, continues receiving oil from Venezuela despite crippled production. Spain’s oil company REPSOL recently reached an agreement with the cash-strapped Maduro government to pay down the company’s US$ 2 billion investment with added shipments of oil. And almost 100 Spanish companies continue operating in Venezuela, including one of Spain’s largest banks, BBVA, which could be vulnerable to future sanctions. Borrel has said he discussed Spain’s financial stake at a meeting with U.S. Secretary of State Mike Pompeo last week in Washington and complained about administration plans to toughen the embargo on Cuba. Spain’s large presence in Venezuela — where the Spanish expatriate community numbers about 250,000 dual nationals — makes Madrid the lead government on EU policy toward the Latin American country. Italy and Portugal also have substantial expatriate communities and commercial interests in Venezuela including investments by Italy’s oil company ENI. The Trump administration used last week’s NATO summit to argue Venezuela presented a new threat from Russia, which has supplied sophisticated arms and military advisors to revamp Maduro’s air force, armored units and special forces. Borrel has said Russia’s presence in Venezuela is small and should not constitute a “problem” for NATO. Spanish Prime Minister Pedro Sanchez has said that Spain would “roundly oppose” any U.S. military action against Venezuela and that he would urge the rest of the European Union to do the same. Spanish officials say they are doubling down on efforts to find a political solution through negotiations between Maduro and Guaidó. Speaking from Brussels Monday, Borrel said Maduro had requested an “activation” of the EU-led Montevideo group, which includes Mexico, Uruguay and other Latin American governments offering mediation. (VOA: https://www.voanews.com/a/us-eu-at-odds-over-new-sanctions-against-venezuela/4869617.html)

 

Honduran, Nicaraguan, Venezuelan leaders not invited to Salvadoran's swearing-in

El Salvador’s incoming president Nayib Bukele said on Tuesday he would not be inviting the leaders of Honduras, Nicaragua and Venezuela to his June 1 inauguration after criticizing them as illegitimate rulers. In a Twitter post, the 37-year-old Bukele confirmed news reports that invitations were not being extended to Juan Orlando Hernandez, president of neighboring Honduras, Daniel Ortega, president of Nicaragua, or Venezuelan President Nicolas Maduro. Bukele, who won an election in February, did not say why the presidents would not be asked, but he has previously criticized all three as men who did not deserve to be in power due to controversies that have clouded their administrations. (Reuters, https://www.reuters.com/article/us-elsalvador-inauguration/honduran-nicaraguan-venezuelan-leaders-not-invited-to-salvadorans-swearing-in-idUSKCN1RM0BD)

 

Maduro says Venezuela ready to receive international aid

Nicolas Maduro has said his country was ready to receive international aid following a meeting with the Red Cross chief, as this nation plunged into a new round of blackouts. "We confirm our readiness to establish cooperation mechanisms for international assistance and support," Maduro said on Twitter on Tuesday. Maduro, who denies that the current situation in Venezuela can be described as a humanitarian crisis, reiterated after the meeting that collaboration with the International Committee of the Red Cross (ICRC) should respect "the Venezuelan legal order." An ICRC delegation led by its president Peter Maurer has been here since Saturday and is due to finish its visit on Wednesday. The ICRC said last Friday in a statement it was "concerned by the serious impact that the current situation has on Venezuelans, especially those who do not have access to basic services." (Al Jazeera: https://www.aljazeera.com/news/2019/04/maduro-venezuela-ready-receive-international-aid-190410083550252.html)

 

Red Cross regains access to Venezuela jails, military prisons

The International Committee of the Red Cross has regained access to prisons in Venezuela, including highly guarded military facilities where dozens of inmates considered political prisoners are being held, as strongman Nicolas Maduro seeks to counter mounting criticism of his government’s human rights record. International Red Cross President Peter Maurer on Wednesday wraps up a five-day visit to Venezuela, where the Geneva-based group is among international organizations trying to carve out a space to deliver badly needed humanitarian aid and technical assistance free of the winner-take-all politics contributing to the country’s turmoil. The group had been denied access in Venezuela at least since 2012. The renewed visits in Venezuela began March 11 when a Red Cross delegation visited a model prison in Caracas, the Simon Bolivar Center for the Formation of New Men. Eighty-seven foreigners are being held. But more significant was the visit two weeks later to the military-run Ramo Verde prison outside Caracas, which holds 69 people the opposition considers political prisoners. Most people held at the Ramo Verde are military personnel accused of plotting to overthrow Maduro. Many more, including five oil executives with U.S. passports, are being held in the basement jail of the military counterintelligence headquarters in the capital. In another attempt to counter growing criticism, Maduro last month welcomed a delegation sent by the United Nations’ High Commissioner for Human Rights. He previously had called s999uch visits a politically biased threat to Venezuela’s sovereignty. (NBC News: https://www.nbcnews.com/news/latino/red-cross-regains-access-venezuela-jails-military-prisons-n992981)

 

Raúl Castro pledges Cuba will never abandon Venezuela

Raúl Castro has promised that Cuba will never abandon its leftist ally Venezuela despite US “blackmail”, even as the Trump administration threatened more sanctions over its support. In a speech to the national assembly, the head of the Cuban Communist party said the island had been increasing defense preparedness in recent months in view of mounting US hostility. The island nation had also been adopting economic measures to contend with the Trump administration’s tightening of the decades-old US trade embargo, Castro told legislators. “We will never abandon our duty of acting in solidarity with Venezuela,” Castro said. “We reject strongly all types of blackmail.” Shortages of basic goods have increased recently, including flour, eggs and chicken, with the state even reducing the size and circulation of its newspapers due to a lack of newsprint. The situation could worsen further in coming months in view of the tightening US trade embargo, Castro warned. (The Guardian: https://www.theguardian.com/world/2019/apr/10/raul-castro-cuba-never-abandon-venezuela)

 

U.S. ready to take on Russia and other 'foreign powers' in Venezuela, John Bolton says

President Donald Trump's national security adviser John Bolton has warned nations seen as obstacles to U.S. plans for Latin America that they must leave Venezuela and stop defending the socialist government opposed by the Trump administration. Responding to Tuesday's Newsweek article discussing the recent arrival of Russian, Chinese and Iranian planes intended to support Maduro and his government, Bolton told radio host Hugh Hewitt that "President Trump is determined not to see Venezuela fall under the sway of foreign powers."  "Look, our objective is a peaceful transition of power to Juan Guaidó and the opposition," Bolton said during Wednesday's program. "But let’s not forget we’ve got between 40,000 to 50,000 American citizens in Venezuela." "We’ve got countries, as you mentioned, Colombia and Brazil on the border with millions of Venezuelan refugees who have come across. We’ve got terrorist organizations like the ELN [National Liberation Army] and FARC [Revolutionary Armed Forces of Colombia] who threaten Colombia," he added. "We’re going to protect American national interest, and Maduro and his cronies ought to know that President Trump is very serious when he says all options are on the table." (Newsweek: https://www.newsweek.com/bolton-russia-china-iran-venezuela-powers-1392304)

 

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.