Economics &
Finance
Finance Minister optimistic on
economic growth in 2013
Finance Minister Nelson Merentes is ruling out a setback
in the nation's economy this year, and claims growth reported at 2.6% in the
second quarter confirms that economic deceleration in the first quarter –when GDP
only rose 0.5%– is a thing of the past. He also says that in order to have steady
growth, certain obstacles need to be cleared, such as the number of permits
companies need to keep their business moving; tackling the problem of absenteeism
in the labor force; and continued cooperation with the Central Bank on monetary
policy. (El Universal,
09-05-2013; http://www.eluniversal.com/economia/130904/finance-minister-optimist-about-growth-of-the-venezuelan-economy-in-20;
VENECONOMY, http://www.veneconomy.com/site/index.asp?ids=44&idt=36178&idc=2)
World Bank's ICSID rules Venezuela unlawfully
expropriated ConocoPhillips’ billion dollar investments
The World Bank's International Center for the Settlement
of Investment Disputes (ICSID) has ruled that Venezuela unlawfully expropriated
ConocoPhillips’ significant oil investments in the PETROZUATA and HAMACA heavy
crude oil projects and the offshore COROCORO development project and that
Venezuela’s actions amounted to an unlawful expropriation. In doing so, ICSID
also confirmed its jurisdiction over the dispute. “We welcome this decision by the Tribunal,” said Janet Langford
Kelly, senior vice president, Legal, General Counsel and Corporate Secretary of
Conoco. “This ruling sends a clear
message that countries cannot expropriate their investments without fair
compensation.” ConocoPhillips, headquartered in Houston, Texas, has
operations and activities in 30 countries, U$D 55 billion in annualized
revenue, U$D 117 billion of total assets, and approximately 17,500 employees as
of June 30, 2013. (Latin American Herald Tribune, 09-04-2013; http://www.laht.com/article.asp?ArticleId=985824&CategoryId=10717;
Reuters, http://www.reuters.com/article/2013/09/04/conocophillips-venezuela-idUSL2N0H013020130904;
Bloomberg, http://www.bloomberg.com/news/2013-09-04/conocophillips-says-tribunal-rules-venezuela-seizure-unlawful.html)
....PDVSA dismisses ICSID ruling, says the amount of compensation
must yet be established
Petroleum minister Rafael Ramirez says that the National
Government is going to continue defending what he termed the country's sovereignty
over its energy resources, and adds: "It
is not about international laws, not ConocoPhillips' law, this is about our
laws, based on our Constitution." PDVSA, however, has set aside U$D
1.244 billion for cases under litigation, according to its own audit report,
and has released a press statement saying the Court has yet to establish an
amount for compensation, which it says "will doubtless be a small fraction of the exorbitant amount that has been
claimed" by ConocoPhilips. (AVN, 09-04-2013; http://www.avn.info.ve/contenido/venezuela-reaffirms-energy-sovereignty-icsid;
El Universal, http://www.eluniversal.com/economia/130904/venezuela-is-a-sovereign-country-with-its-own-laws; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=36176&idc=4; and more in Spanish: El Universal;
http://www.eluniversal.com/economia/130906/pdvsa-aprovisiono-1244-millones-para-litigios;
and PDVSA, http://www.pdvsa.com/)
Expert charges DERWICK Associates
overbilling estimated at U$D 2.93 billion
Energy expert José Aguilar estimates DERWICK Associates,
the energy company
involved in a mega corruption scandal, overcharged the Venezuelan State as much as U$D 2.933
billion. Aguilar argues that DERWICK Associates is the "tip of the iceberg" in a
considerably larger swindle that could have cost Venezuela in excess of U$D
23 billion. Aguilar named international corporations taking part in
the scam: Argentina's IMPSA, Spain's IBERDROLA and DURO FELGUERA, France's
ALSTOM, China's CMEC and SINOHYDRO, Germany's FERROSTAL, Thailand's TSK, as
well as the US's WALLER MARINE. In every single project in which these companies
and a host of local partners have been involved overbilling ranges from
48% to as much as 515% according to Aguilar. Aguilar has identified 40 projects,
which are then analyzed according to: announced power in megawatts, announced
costs, fair international price, overprice percentage, promised date of
project completion, contractor/s, whether project is operating, megawatts
available/unavailable, megawatts pending, and delay in number of months since
announced completion of project. It makes shocking copy, from
IMPSA's 0% rate of delivery in Tocoma nearly six years after project
should have been completed to CMEC's 24-month delay in Planta Centro in
Carabobo. (Infodio, 09-03-2013; http://infodio.com/030813/jose/aguilar/derwick/associates/billion/scam;
Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=36177&idc=4)
Multinationals protect funds in
Venezuela by buying real estate
According to a special report by The Wall Street Journal,
US companies that are unable to repatriate dividends have turned to buying real
estate in order to protect their earnings from inflation and the threat of
further devaluation. Companies such as DIRECTV, AVON and MARSH have been buying
office buildings here. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/transnacionales-respaldan-su-dinero-comprando-inmu.aspx#ixzz2e6zyaWwh)
Bolivia's debt to Venezuela U$D at 158.3
million
Bolivia's debt to Venezuela is U$D 158.3 million, 3.6% of
that nation's total debt, which was estimated at U$D 4.3 billion by June 30,
2013. The EFE news agency has reported that under the diesel fuel import
agreements, Bolivian state-owned oil company YPFB's short term debt to
Venezuela is U$D 6.4 million. The Central Bank of Bolivia has reported an
increase in Bolivia's foreign debt by about U$D 171.1 million. (El Universal, 09-04-2013; http://www.eluniversal.com/economia/130904/bolivias-debt-owed-to-venezuela-at-usd-1583-million)
Venezuela, Haiti rank last in terms
of competitiveness
Latin America continues showing low productivity despite
robust growth in recent years, according to the Global Competitiveness Index
2013-2014 issued in Geneva by the World Economic Forum (WEF). Based on the
report, Chile leads the region in terms of competitiveness ranking 34th,
followed by Panama (40th), Costa Rica (54th), and Mexico (55th). Meanwhile,
Brazil dropped eight steps with respect to last year and ranks 56th, whereas
Venezuela and Haiti rank last at 134th and 143rd, respectively. (El Universal, 09-05-2013; http://www.eluniversal.com/economia/130904/venezuela-haiti-rank-last-in-terms-of-competitiveness)
Commodities
Maduro, Energy Minister indicate
sabotage caused the recent power outage
Electric Energy Minister Jesse Chacon says the power
outage that struck around 70% of the nation including Caracas was caused by a
loose mesh in one of the towers in Line 765. He said "we suspect an
activity aimed at taking out the line clamps, and added that "the first
report after electric utility CORPOELEC team arrived, points to manipulation of
the mesh connection mechanisms." President Maduro went farther and told a
rally of supporters that "I have no
doubt...that today we have had a general rehearsal of an electric strike
against the Venezuelan people." The opposition has pointed to
incompetence and widespread corruption as the cause. (El Universal, 09-05-2013;
http://www.eluniversal.com/economia/130905/energy-minister-manipulation-caused-the-outage;
and more in Spanish: INFOLATAM).
India's Reliance Industries eyes
Venezuelan oil blocks
Reliance Industries Ltd (RIL) says it is evaluating
opportunities toward a multi-billion dollar investment on two to three oil
blocks offered by Venezuela as it looks at countries from Myanmar to Canada to
expand its overseas energy assets. “We are
looking at two things in Venezuela. One is, we have a long term (crude oil)
supply contract and we are looking at enhancing the quantities under this
contract, possibly from next year,” RIL executive director PMS Prasad told
reporters. RIL currently imports about 300,000 barrels per day (bpd) of oil from Venezuela for processing at its
twin refineries at Jamangar in Gujarat. It now wants to increase these volumes,
possibly to 400,000 bpd. “The second is,
we are also looking at investing in Venezuela. They have given us opportunities
for us to evaluate and make a decision,” Prasad said. Last year RIL signed
a memorandum of understanding with Petroleos de Venezuela, or PDVSA, to develop
a project in the Orinoco extra heavy crude belt. Prasad said the project may
involve developing the field and setting up an upgrader to convert the
synthetic oil into oil that can be processed in refineries.
(The Hindustan Times; http://www.hindustantimes.com/business-news/CorporateNews/RIL-eyes-Venezuela-oil-blocks/Article1-1117078.aspx)
Venezuela, Trinidad & Tobago to
jointly drill for gas
Venezuela and Trinidad & Tobago will jointly drill for about 12
trillion cubic feet (TCP) deposits between the two Caribbean islands and
Venezuela's Atlantic coast through state-run oil company Petroleos de Venezuela
(PDVSA) and US Chevron. Petroleum and Mining Minister Rafael Ramírez has
announced that he and his Trinidadian counterpart, Kevin Ramnarine, reached the
decision on Tuesday evening."We are
to sign the minutes of approval of the operations of the joint wells next week
in Caracas with Minister Ramnarine here in person", he added. (El Universal, 09-05-2013; http://www.eluniversal.com/economia/130905/venezuela-trinidad-amp-tobago-jointly-drill-gas)
International Trade
US trade deficit with Venezuela rose
to U$D 2.3 billion in July
The US deficit with Latin America and the Caribbean in
trading goods and services rose 32% in July, to U$D 2.8 billion, according to the
US Department of Commerce. The US deficit with the region in July stood at
3.9%, for a total U$D 70.4 billion. In January-July, the US deficit with Latin
America and the Caribbean was U$D 20.1 billion, that is, nearly 46.9% below the
previous year (U$D 37.9 billion). (El Universal, 09-04-2013; http://www.eluniversal.com/economia/130904/us-deficit-with-venezuela-widens-to-usd-23-billion-in-july)
Equipment failures delay activity at La Guaira port
There is only one X ray unit
operational at La Guaira Customs, causing delays to lorries entering and
departing the port. 100 empty wagons are stranded. BOLIPUERTOS functionaries
say it will be another month before the port becomes fully operational. Emidio
Palumbo, President of the Heavy Cargo Transportation Chamber, says matters will
become worse as "Christmas season
imports will begin arriving in the next few days." More in Spanish: (El Nacional; http://www.el-nacional.com/)
Highest price rises in 10 years
reported for imports
Central Bank data shows a 32% jump in the price of
imported goods over the past seven months, which is the highest such increase
since 2003. More in Spanish: (El Universal, http://www.eluniversal.com/economia/130906/bienes-importados-registran-la-mayor-alza-de-precios-en-10-anos)
Protests shut down bridges on the
Colombian border
Petty smugglers protesting controls by the National Guard on food
extraction at the border have shut down the cross-border bridges that connect
Venezuela and Colombia. They burned two vehicles and tires on the Simón Bolívar
International Bridge that joins San Antonio with Cúcuta; as well as the
Francisco de Paula Santander International Bridge that joins the town of Ureña
and Colmbia. More in Spanish: (El
Universal, 09-06-2013; http://www.eluniversal.com/economia/130906/cerraron-puentes-internacionales-con-colombia-por-protestas; El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/cierran-puentes-internacionales-que-comunican-con-.aspx)
Logistics
& Transport
Thirteen domestic local airports to be modernized
Hebert García Plaza, Minister for Air and Aquatic
Transportation announced that the government will invest VEB 2.3 billion in
restoring 13 national airports, and said they will reopen another 5 airports.
García said two of these have already begun operations: in Mérida and at
Higuerote, in Miranda State. Other airports are to be opened in Carabobo,
Táchira and Nueva Esparta states. (AVN,
09-04-2013; http://www.avn.info.ve/contenido/thirteen-domestic-airports-be-modernized)
...and García Plaza also announced that nine
Swedish reach-staker machines have arrived to speed up loading and unloading containers
at La Guaira. The machines are valued at U$D 585,516 each. (Veneconomy, 09-04-2013; http://www.veneconomy.com/site/index.asp?ids=44&idt=36175&idc=3)
Politics
Poll shows two thirds disapprove of
the Maduro regime, disapproval trend increasing
The latest poll taken by the Venezuelan Data Analysis
Institute (IVAD) reflects increasing disapproval of the Maduro regime.
Disapproval ratings grew to 67.5% in August, up from 65.3% in July and 61.8% in
June. In the poll, 66.9% consider the political situation "unstable" and 43.1% would have
voted now for Henrique Capriles, as opposed to only 39.8% for Maduro. 48.3%
said they did not agree with Maduro's election, and 44.6% said that "Nicolás Maduro has done away with Hugo Chavez's
legacy during his administration". More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/130906/venezolanos-reprueban-al-gobierno-a-cabello-y-a-la-an)
Analysts say six months after his
demise, Chávez continues to overshadow Maduro
Hugo Chavez has been fading from television screens, but
six months after his death, his shadow continues to dominate the Maduro regime.
Although Nicolás Maduro has tried to build up his own image as a "worker president" that plays at
sports and music, he continues to praise the departed leader even as he both
benefits and suffers from his legacy. IESA Professor José Manuel Puente says:
"What we are now seeing is the
consequence of these 13 years in power, and now the bombs are exploding in the
face of the government and they don't know what to do as it is the legacy of
the 'supreme commander'". Puente adds: "we are undergoing a process of atomization, with internal confrontation
within the government over economic policy options". Political analyst
John Magdaleno says "The absence of
Chavez has made Venezuela's reality more visible", adding that the
late President had a talent for making serious problems "invisible". Pro-Chavez analyst
Nicmer Evans says the regime's "great
dilemma" is "how to
establish a balance between President Chavez's presence and legacy, and create
an independent style for Maduro." More in Spanish: (INFOLATAM)
Human Rights Watch asks MERCOSUR to
help keep Venezuela in the Inter American Human Rights Court.
José Miguel Vivanco, Human Rights Watch Director for the Americas has
written the presidents of Argentina, Brazil, Paraguay and Uruguay requesting
that they pressure Venezuela to reverse its decision to withdraw from the Inter
American Human Rights system and the Inter American Human Rights Court that is
based in San José, Costa Rica. Vivanco reminded the heads of state that over
the past decade dozens of Venezuelans have resorted to the Court to denounce
executions, the jail system, the lack of independence by the judiciary or the
violation of freedom of expression. More in Spanish. (El Universal, 09-06-2013; http://www.eluniversal.com/nacional-y-politica/130906/piden-a-mercosur-que-evite-la-salida-de-la-corte-idh)
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.
