August 20, 2019

International Trade

Cargo arrivals reported at Puerto Cabello

The local port authority is reporting the arrival of 10,743 ton of assorted merchandise at Puerto Cabello, including auto parts, personal care products, chemicals, textiles, and appliances, aboard vessels AS FABIANA, NIKOLAS, PERITO MORENO, CAP BEATRICE, CONTSHIP ZOE, FS IPANEMA and CFS PALAMEDES. It also reports the arrival of 81,290 tons of bulk products, such as 30,000 tons of soy on the BOSPHORUS PRINCE, and 40,000 tons of White corn aboard the CORAL ISLAND. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=43614)

 

Logistics & Transport

Vessels from Venezuela can still transit Panama Canal

The Panama Canal will allow vessels coming from Venezuela to transit the waterway provided they present the necessary paperwork, the canal authority’s chief said on Wednesday, suggesting a new round of U.S. sanctions on this country may not make any difference to canal traffic. (Reuters, https://www.reuters.com/article/us-panamacanal-venezuela/vessels-from-venezuela-can-still-transit-panama-canal-authority-idUSKCN1V41WM)

 

Oil & Energy

China CNPC suspends Venezuelan oil loading, worried about U.S. sanctions

China National Petroleum Corp, a leading buyer of Venezuelan oil, has halted August loadings following the latest set of U.S. sanctions. Two Beijing-based senior sources with direct knowledge of the matter told Reuters on Monday. "Trump's executive order gave a directive for the follow-up sanction measures that shall be announced by the U.S. Treasury... CNPC is worried that the company is likely to be hit by the secondary sanctions," said one source. A second person, an executive with a key marketer of Venezuelan oil in China, said his company had been notified of the suspension. "We were told that CHINAOIL will not load any oil in August. We don't know what will happen after." CHINAOIL is the trading vehicle of CNPC that lifts Venezuelan oil under term contracts and is one of Caracas' top oil clients. CNPC will wait for more guidelines from the U.S. Treasury before further moves in dealing with Venezuelan oil, said the first source. The suspension followed recent communications between the U.S. and Chinese governments, including a meeting between U.S. embassy officials in Beijing and top management at CNPC, the source added. Beijing has become increasingly pragmatic in recent years in an amply supplied global oil market and as Venezuela's economy plunged deeper into recession. For the first six months of this year, China imported 8.67 million tons of crude oil from Venezuela, or roughly 350,000 barrels per day, about 3.5% of its total imports, according to Chinese customs data. (Reuters, https://www.reuters.com/article/us-china-venezuela-oil-cnpc/china-cnpc-suspends-venezuelan-oil-loading-worried-about-u-s-sanctions-sources-idUSKCN1V909C)

 

Maduro battles for control of US-based refinery

The regime of President Nicolas Maduro on Thursday nullified the newly named board of Venezuela’s prized CITGO refineries in the U.S. amid a political battle for control of the country, saying opposition leaders had no right to appoint them. The opposition-run National Assembly appointed the 15-member CITGO board early this year after Guaidó declared presidential powers, arguing that Maduro’s re-election was illegitimate. CITGO is valued at an estimated $8 billion and includes three refineries in Louisiana, Texas and Illinois, in addition to a network of pipelines. Citgo is also at the center of court battles, such a lawsuit filed by Crystallex, which seeks to liquidate CITGO for payment following a disputed takeover of the Canadian mining firm by Venezuela’s late President Hugo Chavez. Russ Dallen, head of the Miami-based Caracas Capital Markets brokerage firm, said U.S. courts have already weighed in on who controls CITGO, deferring to the U.S. government’s recognition of Guaidó as Venezuela’s president, therefore recognizing his board appointments. Maduro’s state comptroller Elvis Amoroso, who made the announcement on state TV, also said the ad-hoc board members are banned from leaving the country and their Venezuelan bank accounts have been frozen. But it is unclear whether any of them continue to live here. Amoroso also said another five leading figures opposed to Maduro have been banned from politics for 15 years. They include former Attorney General Luisa Ortega, former Caracas Mayor Antonio Ledezma and three opposition lawmakers, all of whom are living in self-imposed exile. So far this year, Maduro’s government has stripped 18 opposition lawmakers of their immunity, exposing them to criminal prosecution in a sigh of heightened political tensions. (WTOP: https://wtop.com/latin-america/2019/08/venezuelas-maduro-battles-for-control-of-us-based-refinery/)

 

Economy & Finance

Turkish BANK ZIRAAT closes door on Venezuela amid U.S. sanctions

ZIRAAT BANK, Turkey’s largest bank by assets, has stopped offering services to Venezuela’s Central Bank in wake of tougher U.S. sanctions that raise the stakes for companies that do business with the Caribbean nation. The Ankara-based state bank confirmed the closing of its account without providing further details. Venezuela’s Central Bank was relying on ZIRAAT to pay contractors, move money and import products in Turkish liras. (Bloomberg: https://www.bloomberg.com/news/articles/2019-08-15/turkish-bank-ziraat-closes-door-on-venezuela-amid-u-s-sanctions)

 

Politics and International Affairs

In Venezuela talks, Maduro allies said they would consider fresh elections

Allies of Nicolas Maduro had discussed holding a presidential election in the coming months during talks to find a breakthrough in the country’s political crisis, four sources told Reuters on Monday. Opposition politicians will travel to Washington to speak to U.S. officials this week, the sources said. Maduro representatives and a delegation representing opposition leader Juan Guaidó have been meeting in Barbados as part of talks to resolve a political stalemate in the struggling nation that is suffering from a hyperinflationary economic collapse. Guaidó’s delegation had proposed a presidential vote in six to nine months on several conditions including changes to the election’s council and supreme court, said the sources, who asked not to be identified because the talks are confidential. The government had in theory agreed to a presidential vote on the condition that the United States lift economic sanctions, Maduro be allowed to run as the Socialist Party candidate, and that the vote be held in a year, one of the sources said. U.S. officials have expressed support for an election but without Maduro as a candidate, which may be a point of discussion, two of the sources said. Preparing groundwork for an election requires a raft of changes to state institutions, including both the elections council and the supreme court - both of which have aggressively intervened in election processes to favor Maduro. Another possible roadblock would be the existence of the Constituent Assembly, an all-powerful legislative body controlled by Socialist Party supporters that opposition leaders say could also intervene in any potential vote. (Reuters: https://www.reuters.com/article/us-venezuela-politics/in-venezuela-talks-maduro-allies-said-they-would-consider-fresh-elections-sources-idUSKCN1V91SF)

 

US talks secretly to Venezuela socialist boss

The U.S. has opened secret communications with Venezuela’s socialist party boss as members of Nicolás Maduro’s inner circle seek guarantees they won’t face retribution if they cede to growing demands to remove him, a senior U.S. administration official has told The Associated Press. Diosdado Cabello, who is considered the most-powerful man in Venezuela after Maduro, met last month in Caracas with someone who is in close contact with the Trump administration, said the official. A second meeting is in the works but has not yet taken place. The talks are still preliminary. It’s not clear whether the talks have Maduro’s approval or not. Cabello, 56, is a major power broker inside Venezuela, who has seen his influence in the government and security forces expand as Maduro’s grip on power has weakened. But he’s also been accused by U.S. officials of being behind massive corruption, drug trafficking and even death threats against a sitting U.S. senator. The administration official said that under no circumstances is the U.S. looking to prop up Cabello or pave the way for him to substitute Maduro. Instead, the goal of the outreach is to ratchet up pressure on the regime by contributing to the knife fight the U.S. believes is taking place behind the scenes among competing circles of power within the ruling party. Similar contacts exist with other top Venezuelan insiders, the official said, and the U.S. is in a listening mode to hear what it would take for them to betray Maduro and support a transition plan. At a press conference Monday, Cabello shied away from discussing any details of the meeting, at one point likening it to “a lie, a manipulation.” But he also said he has long stood welcome to talk to anyone, so long as any discussions take place with Maduro’s approval. An aide said the U.S. has been increasingly knocking on Cabello’s door, desperately looking to establish contact. The aide rejected the notion Cabello was somehow betraying Maduro, saying that Cabello would only meet with Americans if it contributes to lifting sanctions, he blames for crippling the oil-dependent economy. The aide spoke on the condition of anonymity because he isn’t authorized to discuss political affairs publicly. The U.S. has repeatedly said it would offer top socialists’ relief from sanctions if they take “concrete and meaningful actions” to end Maduro’s rule. As head of the constitutional assembly, Cabello has the power to remove Maduro, a position that could come in handy in any negotiated transition. The news site AXIOS reported Monday morning that Mauricio Claver-Carone is the U.S. official that has been in contact with Diosdado Cabello, the number two man in Venezuela and President of the polemical Constituent Assembly legislative. An opposition politician briefed on the outreach said Defense Minister Vladimir Padrino and Interior Minister Néstor Reverol are among those in indirect contact with the Americans, underscoring the degree to which Maduro is surrounded by conspirators even after an opposition-led military uprising in April was easily quashed. (AP: https://www.apnews.com/a3e6b0da8c5648558e61bbaa466fbb42; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2482306&CategoryId=10717)

 

82% of Venezuelans polled believe Maduro should leave office in 2019

The latest poll by DATANALISIS shows 85.1% of the population has a negative view of the Maduro administration, and only 12.9% called it positive. 64.8% of Venezuelans pointed to the economy as the worst problem they are facing, and 18.3% mentioned social issues, as well as 16.3% pointed to political issues. More in Spanish: (El Nacional, https://www.elnacional.com/venezuela/datanalisis/)

 

US Southern Command head focused on ‘day after’ in Venezuela

The head of U.S. Southern Command says military officials are focusing on preparing for “the day after” once an “isolated” Nicolás Maduro leaves power. Navy Adm. Craig Faller warned Monday against Venezuela’s “formidable weapon system” and criticized Cuba, Russia and China for assisting Maduro, saying it was important to put “continuous pressure” on the “illegitimate regime” and organize humanitarian efforts. (Military Times: https://www.militarytimes.com/video/2019/08/06/saudi-special-forces-go-all-out-for-hajj-display/)

 

Trump has considered naval blockade of Venezuela

President Trump has reportedly suggested that the U.S. place ships along the coast of Venezuela to blockade goods from coming into the fraught nation. According to five current and former officials, the Pentagon hasn’t taken the suggestions by the president seriously because of its impracticability and because it would divert naval assets away from countering Iran and China, Axios reported. “He literally just said we should get the ships out there and do a naval embargo,” one official said. “Prevent anything going in.” “I’m assuming he's thinking of the Cuban missile crisis,” the official added. “But Cuba is an island and Venezuela is a massive coastline. And Cuba, we knew what we were trying to prevent from getting in. But here what are we talking about? It would need massive, massive amounts of resources; probably more than the U.S. Navy can provide.” (Washington Examiner: https://www.washingtonexaminer.com/news/trump-has-considered-naval-blockade-of-venezuela)

 

Russia warns US against imposing blockade on Venezuela

Russia on Tuesday warned the U.S. against "incautious steps" in tightening sanctions on Venezuela, and throwing a total blockade over the country. Speaking to reporters in Moscow, Deputy Foreign Minister Sergey Ryabkov called on Washington to assist Venezuelans in bridging existing chasms instead of hindering talks between the government and opposition. He said he would discuss the situation in Venezuela with Delcy Rodriguez, the country's vice president, who arrived in Russia on Monday for a working visit. "We will examine the situation, referring to the strengthening by Washington of illegal, illegitimate sanction measures, attempts to set up a blockade [on Venezuela]. We warn Washington against incautious steps in this area," Ryabkov said. (AA: https://www.aa.com.tr/en/world/russia-warns-us-against-imposing-blockade-on-venezuela/1560476)

 

Venezuelan exodus may soon double, triggering a bigger regional crisis

One of the things that surprised me the most during a lengthy interview with Juan Guaidó, the Venezuelan National Assembly president who is recognized by the United States and more than 50 countries as Venezuela’s legitimate leader, was his forecast that the number of Venezuelan exiles may “easily” reach 8 million by next year. It’s a mind-boggling figure because it would be twice the 4 million exiles that, according to a recent United Nations report, have already fled the country since dictator Nicolas Maduro took office five years ago. Eight million people would amount to about 25% of Venezuela’s population. Twice the current number of Venezuelan exiles would cause a much bigger economic, and perhaps political, earthquake for many Latin American countries. Asked about the Trump administration’s new economic sanctions on Venezuela, which ban U.S. transactions with state-owned Venezuelan businesses, Guaidó told me in the Aug. 12 interview that, “They seek to prevent the regime’s use of those resources to finance irregular (paramilitary) groups or to steal the Venezuelan people’s money.” Dismissing Maduro’s claims that Venezuela’s humanitarian crisis has been caused by U.S. sanctions, Guaidó said that, “The sanctions went into effect three days ago, whereas the 65% contraction of the economy has been taking place over the past six years. The Maduro regime bears total responsibility for the crisis.” Asked about the Cuban presence in Venezuela, Guaidó told me that there are “between 2,000 and 3,000 Cubans who are carrying out intelligence, counterintelligence, repression and even torture” for Maduro’s armed forces. I asked Guaidó whether he’s fearful that international pressure to restore democracy in Venezuela may weaken soon. Guaidó responded that governments come and go, noting that El Salvador’s new government, for instance, has switched sides to support him. He added that Maduro, too, is becoming weaker, as nearly 90% of Venezuelans want him to leave power, according to a recent MEGANALISIS poll. “Time is running against (all) Venezuelans, including Maduro, who is collapsing,” Guaidó told me. “What’s important is to take advantage of the window of opportunity we have to prevent an even bigger humanitarian catastrophe” and to “step up international diplomatic pressures to end the suffering of the Venezuelan people.” (The Oppenheimer Report: https://tribunecontentagency.com/article/venezuelan-exodus-may-soon-double-triggering-a-bigger-regional-crisis/

 

U.N. pleads for more help to relieve Venezuelan refugee crisis

United Nations High Commissioner for Refugees Filippo Grandi appealed on Sunday for more humanitarian aid for Venezuelan refugees pouring into neighboring countries where they are overwhelming social services and sparking local tensions. Grandi had planned to visit the Brazilian border town of Pacaraima this weekend, but authorities advised him to cancel due to protests by residents unhappy with the arrival of more than 500 Venezuelans a day. The UNHCR estimates 4.3 million Venezuelans have fled economic and political turmoil in their country, mainly to Colombia where there are 1.2 million and to Peru, Chile and Ecuador. Some 180,000 have stayed in Brazil. The U.N. and NGOs put out a humanitarian appeal for US$ 770 million at the start of the year and has received less than US$ 180 million, Grandi said in a telephone interview after visiting Chile and Brazil. “This is really one of the most under-funded humanitarian appeals in the world for one of the biggest crises,” he said. Financial institutions such as the World Bank and the Inter-American Development Bank are engaged but need to speed up their help, he said, to help sustain health and education systems. Grandi said there were signs of anti-immigrant sentiment spreading across the region, reflected in mounting restrictions on the movement of Venezuelans in Andean countries. But he praised Chile, which has received 400,000 Venezuelans, for granting safe passage and a guarantee of asylum. (Reuters: https://www.reuters.com/article/us-venezuela-brazil-refugees/u-n-pleads-for-more-help-to-relieve-venezuelan-refugee-crisis-idUSKCN1V80M8)

 

Colombia’s armed groups prey on Venezuela migrants

A new report by Human Rights Watch (HRW) on violence in the department of Norte de Santander, Colombia, shows how vulnerable Venezuelan migrants are to the criminal groups that dominate the region. The report, entitled “The War in Catatumbo” and published August 8, documents abuses by armed groups against Venezuelan and Colombian civilians in Norte de Santander’s Catatumbo region in northeast Colombia along the border with Venezuela. It explains that groups like the National Liberation Army (Ejército de Liberación Nacional – ELN), the Popular Liberation Army (Ejército Popular de Liberación – EPL), and the dissidents of the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia – FARC), are responsible for an uptick in killings and other crimes. The affected Venezuelan citizens live in Catatumbo’s urban areas, including the municipalities of Tibú, Ocaña, El Tarra, Ábrego, Convención and Sardinata. In these areas, the migrants — including many minors and women — live in precarious conditions which leave them at the mercy of criminals, according to HRW. “We have documented on the ground that armed groups in Catatumbo commit all types of abuses: murders, disappearances, kidnappings, recruitment of minors, sexual violations, threats and displacements,” HRW Director José Miguel Vivanco told Semana. There are currently close to 25,000 Venezuelans in Catatumbo who, despite being aware of the security risks in the region, have crossed the border in search of work, food and medicine, according to Vivanco. The Venezuelans have arrived as tens of thousands of Catatumbo’s residents have been displaced by the conflict among the various armed groups. Desperate, the migrants find themselves caught in areas where these groups are vying for territory and control of criminal economies. Officials with the United Nations Office for the Coordination of Humanitarian Affairs (OCHA) on the border city of Cúcuta told InSight Crime that fear of being deported or arrested keeps Venezuelan nationals from seeking help from local authorities. (InSight Crime: https://www.insightcrime.org/news/brief/armed-groups-colombia-receive-venezuela-migrants/)

 

Fears grow of Venezuela malnutrition time bomb

The graffiti scrawled across a wall in Caracas is short but heartfelt. “Tengo hambre,” it reads. “I am hungry”. It is a cry increasingly heard across Venezuela. As Nicolás Maduro and western-backed opposition leader Juan Guaidó battle for the country’s future amid an economic collapse that has sparked severe shortages of food, fuel and medicine, millions of people are going hungry for extended periods and risking long-term damage to their health, humanitarian organizations have warned. “Six to eight million people are living in a state of undernourishment,” said Susana Raffalli, a veteran Venezuelan humanitarian adviser who has worked across the world with the Red Cross and UNICEF, the UN agency for children. Speaking before the latest US sanctions, she said: “That means the state cannot guarantee they have an adequate supply of food.” Ms. Raffalli’ s assessment is supported by the UN’s Food and Agriculture Organization. José Graziano da Silva, outgoing head of the FAO, said in a press interview last month that there had been a “dizzying increase” in hunger in Venezuela in recent years. In a recent report on global food security, the FAO estimates that between 2016 and 2018, about 21.2% of the Venezuelan population was undernourished. When Maduro came to power in 2013 the figure was 6.4%, it says. In a June report, UNICEFs estimated that 3.2m children in Venezuela were “in need of assistance”. Millions of poorer Venezuelans rely on monthly deliveries of government-subsidized food boxes for survival, a system critics denounce as a form of social control, alleging supplies are skewed towards supporters of the government. Delivery has become increasingly erratic, and the contents of the boxes are of variable quality, say aid workers. Washington has meanwhile accused the Maduro government of skimming off hundreds of millions of dollars from the food program, and last month-imposed sanctions on Maduro’s three stepsons over their alleged roles. One businessman with knowledge of the food situation in Venezuela, who spoke to the Financial Times on condition of anonymity for fear of government reprisals, said data show a large proportion of Venezuelans are living on between 1,500 and 1,900 calories a day. Malnutrition is particularly acute in the provinces, say aid workers. North-western Zulia state, on the border with Colombia, is one of the worst-hit areas. In a survey late last year, the Commission for Human Rights in Zulia State (CODHEZ), a local NGO, found that three-quarters of households in the state capital Maracaibo were suffering from hunger. Eight in 10 people said they could no longer afford protein such as chicken and beef and survived largely on arepas — traditional corn flour patties — margarine, pasta and rice. Since then, the situation has worsened as wages have failed to keep pace with galloping inflation. “The price of food went up 8,165% between last October and this June,” said Juan Berríos, a researcher at CODHEZ. Nine months ago, the monthly minimum wage bought 24kg of corn flour but now it buys less than 4kg. Venezuela will face long-term consequences from chronic undernourishment, especially of children, humanitarian organizations warn. NGO data seen by the FT show the weight and height of Venezuelan children have fallen significantly below the average for comparable populations. (Financial Times: https://www.ft.com/content/b6459434-b531-11e9-8cb2-799a3a8cf37b)

 

EDITORIAL: US sanctions are worsening Venezuela’s agony

“One of the worst man-made humanitarian disasters in the modern world.” US secretary of state Mike Pompeo’s assessment of Venezuela is sweeping, but fair. A nation which has the world’s biggest oil reserves but has descended into such economic chaos that up to a quarter of its population has fled should qualify by any standards. Those left behind face severe shortages of food, medicine and fuel. Malnutrition is stunting a generation of Venezuelan children. Top officials stand accused of corruption, drug trafficking and gold smuggling. Sadly, the cure adopted by the Trump administration is only making the patient sicker. Evidently the blame for the suffering of the Venezuelan people lies principally at the door of Chávez and his chosen successor, Nicolás Maduro, under whose rule the country has plumbed new depths. The Trump administration believes that by choking Venezuela’s economy harder Maduro can be ejected. The remedy is not working; other countries under drastic sanctions, such as Cuba, have similarly strangled economies, but long-lived leaders. The key to ending the agony lies in a much broader diplomatic effort. EU and Latin American nations have brokered talks between the government and opposition, but these have failed because Maduro’s key backers — Cuba, Russia and China — are missing. If Moscow, Beijing and Havana have nothing to gain from Maduro leaving power, they will continue to back him. Broad international talks to negotiate Maduro’s exit to a third country, installation of a respected interim president, equal treatment of all creditors and fresh elections are the way forward. This will not be popular with some in Washington. But the Venezuelan people’s suffering is rapidly worsening. Russian president Vladimir Putin suggested to this newspaper in July that Moscow’s interests in Venezuela were purely commercial and vowed that if Guaidó won an election, the Kremlin would work with him. That pledge should be put to the test. (Financial Times: https://www.ft.com/content/f7dd72a4-c044-11e9-b350-db00d509634e)

 

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.

01 December , 2016

International Trade

One day before suspension, Venezuela offers to adhere to MERCOSUR Economic Complementation Agreement

Foreign Minister Delcy Rodríguez says Venezuela is ready to adhere to the MERCOSUR (Common Market of the South) Economic Complementation Agreement #18, which aims at creating conditions for a common market by coordinating macroeconomic policies, tariff reductions and eliminating non-tariff barriers to trade, among others. Her announcement comes one day before a deadline for compliance by Venezuela set by MERCOSUR founding members: Argentina, Brazil, Paraguay and Uruguay. The founding members set December 1^st as a deadline for Venezuela to comply with all MERCOSUR standards or have its voting rights suspended indefinitely. In a joint statement, MERCOSUR demanded that Venezuela adopt “close to 300 rules” to comply with its obligations as a full member of the organization. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/venezuela-se-adhiere-al-acuerdo-de-complementacion.aspx#ixzz4RUDDRYfP; Infolatam: http://www.infolatam.com/2016/11/29/venezuela-comunica-resto-socios-se-adecuara-normativa-mercosur)

 

89 metric tons of optic fibers have arrived at La Guaira port from Curacao for the National Telephone Company (CANTV), to be used in repairing and maintaining company cables. More in Spanish: (Bolipuertos, http://www.bolipuertos.gob.ve/noticia.aspx?id=34802)

 

Oil & Energy

The OPEC deal is done. Here's what to expect from oil markets next

The Organization of the Petroleum Exporting Countries has committed its fractious members to their first oil production limits in eight years. The impact on the energy world was immediate: benchmark oil prices gained as much as 10% in New York and the share prices of energy companies around the globe jumped alongside the currencies of large exporters. Now comes the hard part. OPEC has agreed to cut production by about 1.2 million barrels per day, or about 4.5% of current production, to 32.5 million barrels per day. Top oil exporter Saudi Arabia faces the unenviable tasks of policing cartel members and keeping crude prices within a range that will relieve pressure on oil-producing countries' economies, but which will dissuade non-OPEC producers from increasing output. Analysts broadly expect an agreement to boost oil prices above US$ 50 a barrel and keep them there. Prices have wavered between about US$ 40 and US$ 54 since the spring Commodity watchers also believe the deal will set up a long-awaited balance between oil supply and demand in the first half of next year. But OPEC now has a difficult needle to thread. Oil rigs began popping up in U.S. oil fields when prices approached US$ 50 a barrel, and analysts believe high-cost producers outside OPEC will further ramp up production if crude prices rise above US$ 55 a barrel.  That includes U.S. shale drillers, which have built a backlog of partially completed wells in anticipation of a price recovery. Once prices rise, they could switch on that production-in-waiting. Goldman Sachs believes the deal will cause crude prices to spike in the first half of 2017, and then moderate in the second half as both OPEC and U.S. shale producers capitalize on the rally. But JPMorgan sees prices rising slowly but steadily quarter after quarter. The bank cautioned that the deal is essentially aimed at preventing an even larger buildup of oil stockpiles. Skeptics have long warned that OPEC members are notorious cheaters and may not stick to quotas agreed to in Vienna. But RBC Capital Markets said adherence may not matter so much this time for a simple reason: OPEC members are near full-tilt, and they don't have much more capacity to pump.  Beyond OPEC, other countries aren't helping out those who hope for higher prices, the International Energy Agency said in its latest oil market report. Demand for oil around the world is expected to increase by 1.2 million barrels a day in 2017, a rate of growth that would match this year. The IEA also projects Russia, the world's largest oil producer, to increase its crude output by 230,000 barrels a day this year. The agency says Russia could boost production by another 200,000 barrels a day next year. OPEC said it is seeking to secure 600,000 barrels per day of cuts from non-OPEC producers, and that Russia has committed to temporarily cut production by about 300,000 barrels per day, “conditional on its technical abilities,” Energy Minister Alexander Novak said in Moscow. But implementing the cuts will be difficult for Russia. The Russian government, which owns a majority share in that country's big oil companies, would face a revolt from minority shareholders if it sought to limit production, he said. From a technical perspective, Russia can't turn off the taps, because much of the production comes from areas with freezing temperatures where drillers must keep oil flowing, he added. Prior to OPEC's announcement, the IEA said it also expects Brazil, Canada and Kazakhstan to pump more in 2017. That would push total non-OPEC output growth to 500,000 barrels a day next year, compared with a projected decline of 900,000 barrels a day this year. "This means that 2017 could be another year of relentless global supply growth similar to that seen in 2016," IEA said. OPEC will meet again on May 25 next year, at which point it intends to extend the cuts by another six months, Qatari Energy Minister Mohammed Al Sada told reporters in Vienna. (CNBC: http://www.cnbc.com/2016/11/30/the-opec-deal-is-done-heres-what-to-expect-from-oil-markets-next.html; Bloomberg: https://www.bloomberg.com/news/articles/2016-11-30/opec-said-to-agree-oil-production-cuts-as-saudis-soften-on-iran; The Wall Street Journal: http://www.wsj.com/articles/opec-deal-to-curb-production-in-doubt-oil-prices-rebound-1480481281)

 

Venezuela to cut 95,000 BPD, but will haunt oil long after Vienna

President Nicolas Maduro has welcomed the OPEC consensus on cutting 1.2 million barrels per day (bpd) in the joint oil production. "I congratulate and thank our OPEC partners for the important agreement we have reached today to stabilize the market," he said in his Twitter account. Oil Minister Eulogio Del Pino said this country will cut 95.000 barrels per day, a 4.6% reduction from 2.06 million BPD to 1.97 million BPD, starting January 1^st; and Venezuela, Kuwait and Algeria will be part of a Ministerial Monetary Committee, established today by OPEC to monitor the development of the oil market.  But Venezuela's officials can't be so sanguine. Venezuela's real GDP per capita has gone from its highest in 3 decades to almost its lowest in the space of about 5 years. So even if Saudi Arabia OPEC does agree to cut production to support prices, Venezuela's problems won't disappear. Which means its status as a wildcard in global oil supply won't, either. PDVSA’s problems are structural, rather than cyclical. The company has never fully recovered from the general strike and subsequent purging under late president Hugo Chavez in 2002 and 2003, with production drifting down even during the boom in oil prices for much of the decade after 2004. Part of the problem is that, as is often the case with state-owned oil companies, PDVSA was a piggy bank for the government. Social expenditure outpaced investment in exploration and production consistently over the past decade. The decline is worse because PDVSA's production has been shifting toward heavier grades of crude oil from the so-called Orinoco oil belt. Heavy oil from the Orinoco belt has risen from 38% of Venezuela's falling output to almost half. This oil is harder to process, and gets priced at a discount. So along with simply producing fewer barrels, Venezuela gets less for each one. Meanwhile, as its lighter oil production declines, it has fewer of those barrels to blend in with the heavier crude to make it palatable to refiners. The consequent need to import more light oil effectively raises the cost of each barrel and drains the country of precious dollar reserves. The traditional discount on Venezuela's basket crude oil price versus Brent has widened out even more in the past couple of years. At this point, PDVSA is straining to keep going. It just got an extension on some debt coming due after weeks of brinkmanship with bondholders. Contractors such as Schlumberger Ltd. -- crucial to holding the line against further declines in oil production -- have reduced activity in Venezuela until unpaid bills are settled. And a large proportion of PDVSA's output is effectively mortgaged to creditors, such as China, or earmarked for subsidized customers, such as Cuba. For all its tribulations, PDVSA will do everything it can to avoid defaulting on its debts, for fear of what would happen if the bond market were closed to it. If oil prices do increase from here, perhaps as result of an OPEC freeze/cut, then that would provide more breathing room for both the national oil champion and the government. Venezuela's structural problems mean it needs more than just temporary breathing room, though. In an extreme scenario, food shortages, rampant inflation and an unpopular government's effective blockage of a recall referendum could lead to widespread civil unrest and possibly a collapse in both oil production and consumption, taking perhaps 1.5 million barrels a day of exports off the global market. That would be the scale of cut OPEC has talked about -- only a de facto one coming out of Caracas rather than Vienna. If prices plunge again in the absence of a credible OPEC cut, then this potential reality comes a bit more into focus. Yet, even if Venezuela avoids such chaos, its existing problems will haunt the oil market for years to come anyway. Remember, even when prices were high, PDVSA's output was declining and turning heavier. Having dropped by about 300,000 barrels a day this year, it could easily drop by the same amount next year -- which would equate to one quarter of the expected increase in global oil demand. That would, in turn, support prices -- but mainly to the benefit of rivals such as U.S. shale drillers and OPEC's more stable members, rather than Venezuela itself. (Bloomberg: https://www.bloomberg.com/gadfly/articles/2016-11-30/opec-meeting-venezuela-will-haunt-oil-long-after-vienna; and more in Spanish: El Economista: http://www.eleconomista.net/2016/11/30/ecuador-reducira-su-bombeo-en-26000-barriles-diarios-y-venezuela-en-95000; El Universal: http://www.eluniversal.com/noticias/economia/opep-acordo-recortar-produccion-petroleo_629328)

 

Economy & Finance

Venezuela's currency is in 'free fall'

It's the latest sign of Venezuela's extreme economic, political and humanitarian crisis. Sky high food prices -- or massive shortages of basic food and medicine -- have plagued Venezuelans for years and have gotten worse this year. Inflation in Venezuela is expected to rise 1,660% next year, according to the IMF. The country has been in recession for three years now.  One dollar fetched 1,567 bolivars on November 1. On November 28, a dollar was worth 3,480 bolivars on the widely-used unofficial exchange rate monitored by Dolartoday.com. "It's a currency that's going down the toilet," says Russ Dallen, managing partner at Caracas Capital Markets, an investing firm in Miami. "No one wants to hold on to something that's going to be worth 50% less in a month."  A few factors are behind the bolivar's most recent plunge. The government has been forced to pump cash into its system because the money in circulation isn't enough to pay for goods that cost a lot more. But with the value of the bolivar falling so dramatically, Venezuelans are desperately trying to exchange their bolivars for dollars, which are seen as a more a more valuable and stable currency. That's led to a scarcity of dollars. That's boosted the dollar's value versus the bolivar even more. 

1. Food prices have skyrocketed this fall as the government stopped enforcing some price controls following a food scarcity. Many vendors had stopped selling food because the price controls was forcing them to sell at a loss. Now, with the price controls gone, there's food available on supermarket shelves, but at such exorbitant prices that few Venezuelans can afford. 
2. The government recently increased the minimum wage by 40%.
3. Venezuela fully reopened its border with Colombia earlier this summer, allowing Venezuelans to go and exchange money to buy basic food and medicine. That drove up demand for dollars and more bolivars disappeared from circulation.
4. Finally, the government cut the cash requirements at banks in Venezuela, which also helped juice the number of bolivars in circulation.

Central Bank data shows liquidity grew 201% - 1.61 trillion bolivars – between September 30th and November 18th, from 3.6 trillion in November 2015 to 8.29 trillion now, an increase of 130.2%, which has caused devaluation and soaring inflation. Against this backdrop, there's no end in sight for Venezuela's cash crisis. "It's absolutely a worthless currency," says Siobhan Morden, head of Latin America fixed income strategy at NOMURA HOLDINGS. "1,000 to 2,000 to 3,000 -- it's just crazy. It's in free fall." (CNN Money: http://money.cnn.com/2016/11/29/investing/venezuela-worthless-currency/; and more in Spanish: (El Nacional, http://www.el-nacional.com/economia/gobierno-Bs-billones-economia-inflacion_0_967703387.html)

 

Venezuela will release even bigger bills to help shrink wallets

After years of soaring prices reduced the value of the largest 100-bolivar bill to just a few U.S. cents, Venezuelan authorities are finally preparing to issue larger-denomination bank notes, much to the relief of shoppers.  The notes -- 500 and 5,000 bolivars -- will be released toward the middle of next month, said a senior government official who isn’t authorized to talk about the plans publicly. Additional bills of 1,000, 2,000, 10,000 and 20,000 bolivars will enter circulation in the first half, the official said. The refusal of the authorities to issue bigger bills had forced Venezuelans to ditch wallets in favor of bags of cash for everyday transactions. Things have got so bad that some shopkeepers weigh wads of bank notes instead of counting them to save time. Venezuela’s money supply has risen 130% over the past year, according to the latest data available from the Central Bank in Caracas. On the black market, where a dollar costs more than six times as much as the weakest legal rate of 662 bolivars per dollar, the currency has slumped 65% this month alone. (Bloomberg: https://www.bloomberg.com/news/articles/2016-11-30/venezuelan-inflation-hits-currency-with-arrival-of-bigger-bills)

 

Venezuelan gold reserves to increase with artisanal ingots

President Nicolás Maduro has announced that the first artisanal gold ingots manufactured in the Orinoco Mining Arc, south Venezuela, would be sent to the vaults of the Central Bank of Venezuela (BCV), with a view to strengthening the country’s international gold reserves. (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-gold-reserves-grow-with-artisanal-ingots_629200)

 

Politics and International Affairs

Oppositions will pull out of talks if the government does not honor commitments

The Democratic Unity (MUD) opposition coalition has formally told Vatican and UNASUR mediators that they will not attend a second meeting on December 6^th, if the Maduro regime does not honor the commitments it made at their first meeting. It says: “Any form of dialogue, meeting or negotiation is useless if there is no guarantee that both sides will honor the agreements that are reached.” Mayor Carlos Ocariz, of the Primero Justicia party, said “we have complied with all that we formally agreed to on 11-12 November, and the government has complied with nothing”. He explained that the government has disregarded the agreement to call of the Supreme Tribunal’s ruling that the National Assembly is in contempt, to replace two members of the National Elections Council (CNE), free the political prisoners, and open a route for humanitarian aid. He said the opposition had suspended the political trial of President Maduro, called off demonstrations and withdrawn 3 contested legislators from Amazonas state. It said it will not return to the negotiating table if the government doesn’t urge the Supreme Tribunal to nullify its ruling of contempt along with sentences that have restricted the National Assembly’s powers; name two new members of the National Elections Council by December 4^th, when the term of Socorro Hernández and Tania D’Amelio expires; free political prisoners and set up a bilateral Truth Commission; open a humanitarian relief channel to import food, and medical supplies; call for new elections in Amazonas state at a mutually agreed upon date, through a Supreme Tribunal sentence. If the government has not complied by December 6^th, the MUD will announce its final decision and call for constitutional, electoral, democratic and peaceful action to overcome the political, institutional, social and economic crisis Venezuela is undergoing. It adds that “the obstinate refusal of the government to comply with its part of the agreements clearly points to internal divisions that prevent them from compliance and therefore sits down to talks to gain time and fool the people….the Democratic Unity coalition wants a dialogue that has results that allow this country to constitutionally and democratically elect a national unity government that is able to stop the economic crisis, recover political governability, rebuild social coexistence, and fully respect human rights.”  More in Spanish: (El Universal: http://www.eluniversal.com/noticias/politica/mud-amenazo-con-abandonar-dialogo-gobierno-cumple-acuerdos_629415)

 

Church authorities toughen stance on regime’s non-compliance with dialogue agreements

Roman Catholic Church authorities are witnessing the lack of commitment by the Maduro regime in complying with what it has offered at talks with the opposition sponsored by the Vatican and UNASUR. Monsignor Diego Padrón, Chairman of the Roman Catholic Bishops Conference, says “the government must comply with two things: freeing political prisoners and opening up a humanitarian channel to aid citizens needy of food and medicine…The Conference is not happy with the dialogue process and most of the people aren’t happy either….The people feel the government wants to control the dialogue, and the manner in which the government presents the dialogue to media transmits that negative impression”. At the same time, Jesuit father José Virtuoso, Rector of the Catholic University said “democracy in Venezuela is in a parenthesis because the government has managed elections arbitrarily. If there are no elections, dialogue must be abandoned.” More in Spanish: (El Universal: http://www.eluniversal.com/noticias/politica/runrunes_629257)

 

AI urges Venezuelan authorities to stop police raids.

Human rights organization Amnesty International urged Venezuelan authorities to stop implementing anti-crime operations called Operation Liberation and Protection of the People (OLP) and to develop “plans for comprehensive citizen safety which respect human rights.” In a communiqué disclosed on Wednesday, the organization noted that security plans needed to include the broad and diverse participation of civil society and the guidance of the Inter-American Commission on Human Rights and the Office of the United Nations High Commissioner for Human Rights. “The so-called OLP has been reported by civil society organizations and individual cases of arbitrary detentions, torture and other cruel, inhuman and degrading treatment such as forced disappearances and executions carried out by officials who should be responsible for ensuring compliance with the law,” the communiqué reads, EFE reported. Last weekend, 12 bodies were found in two mass graves in the Barlovento area, northern Miranda state. They had been detained a month ago, in the context in one of the security operations in question and had no criminal record, according to Venezuelan Ombudsman Tarek William Saab. (El Universal: http://www.eluniversal.com/noticias/daily-news/urges-venezuelan-authorities-stop-police-raids_629426)  

 

Judge Afiuni's case to be presented at National Assembly

Following an Opinion from the United Nations Working Group on Arbitrary Detention, the National Assembly’s Domestic Policy Committee, headed by opposition lawmaker Delsa Solórzano, will review the case of judge María Lourdes Afiuni, who was accused of releasing businessman Eligio Cedeño. Afiuni spoke at a private hearing, and claimed her case “has revealed the horror that the country’s justice system has been turned into.” “Afiuni, who was released on parole in 2013, also said that: “Here (in Venezuela) the fear of judges prevents things from being clarified; they only follow instructions from the Executive Office. Thus, legal autonomy and independence are gone”. (El Universal, http://www.eluniversal.com/noticias/daily-news/judge-afiunis-case-presented-venezuelan-congress-meeting_629431)

 

As Venezuela talks stutter, detained Maduro foes languish

A hundred or so opponents of President Nicolas Maduro have been detained on accusations or formal charges of plotting to overthrow his socialist government. Their fate is high on the agenda of Vatican-brokered talks between the government and opposition, intended to halt unrest and prevent further bloodshed in a deeply divided country in the midst of a crippling recession. Though the month-long talks have been faltering, several of the detainees - whom the opposition call political prisoners but Maduro says are coup-plotters and criminals - were released as early goodwill gestures around Pope Francis' initiative. But the opposition is demanding freedom for all, raising families' hopes. "None of them should be there in the first place. They use the prisoners as hostages, bargaining chips," said Adriana Pichardo, a legislator and rights spokeswoman for the hardline Popular Will party whose members have taken the brunt of arrests. Local rights group Penal Forum lists 108 political prisoners currently, up from 11 when Maduro was elected president following Chavez's death from cancer in 2013. The opposition coalition puts the current number higher, at 135. In the last two years, there have been 6,811 politically-motivated detentions, though most of those were short-term and spiked during a wave of anti-Maduro protests in 2014, according to Penal Forum which tracks cases and offers free legal assistance. The accusations range from stashing arms and explosives, to inciting violence and hate via Twitter and political ads. Of 53 new detainees in 2016 on Penal Forum's list of political prisoners, 49 were taken after former government leaders from Spain, Panama and the Dominican Republic began promoting talks in May, the rights group said. "They free some, but they've already taken more, so where is the gain?" Penal Forum director Alfredo Romero said. "That's their game." (Reuters: http://www.reuters.com/article/us-venezuela-politics-prisoners-idUSKBN13P1YT)

 

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.

November 24, 2016

International Trade

Maduro, Foreign Minister claims Venezuela remains in MERCOSUR

Foreign Minister Delcy Rodríguez says Venezuela will continue to preside pro tempore over the Common Market of the South (MERCOSUR). “Venezuela is neither leaving nor being expelled from MERCOSUR. We will never accept this kind of aggression against our Fatherland”, she tweeted in rejection of an announcement by Uruguay’s President Tabaré Vásquez and Paraguay’s Foreign Minister Eladio Loizaga, saying that Venezuela will be suspended from MERCOSUR if it has not complied with all the organization’s rules by December 1^st. President Nicolas Maduro said the group of MERCOSUR founding nations was applying “a sanction that does not exist”. Experts, however, report that the other 4 nations within MERCOSUR are applying the Vienna Convention on Treaty Rights in this case under the “pacta sunct servanda” clause that states that any treaty in force requires the parties to comply in good faith, which applies to international organizations. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/economia/2016/noviembre/22/176386=presidente-maduro-expreso-que-nadie-podra-sacar-a-venezuela-del-mercosur; El Mundo, http://www.elmundo.com.ve/noticias/actualidad/politica/maduro--nadie-podra-sacar-a-venezuela-del-mercosur.aspx; El Mundo, http://www.elmundo.com.ve/noticias/economia/politica/aplican-convencion-de-viena-para-suspender-a-venez.aspx#ixzz4QpN3G8Ql; AVN; http://www.avn.info.ve/contenido/venezuela-ni-se-va-ni-expulsan-mercosur; El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/rodriguez--venezuela-ni-se-va--ni-la-expulsan-de-m.aspx)

 

ECLAC estimates 26.1% drop in Venezuela’s exports in 2016

The UN Economic Commission for Latin America and the Caribbean (ECLAC) estimates a 5% drop in Latin American exports during 2016, and expects a slight recovery in 2017. Venezuela has experienced the worst contraction in the region: at 26.1% this year. More in Spanish: (El Carabobeño: http://www.el-carabobeno.com/cepal-exportaciones-america-latina-se-contraera-5-2016/)

 

Burnt petcoke cargo sets sail from Venezuela, exports resume

A vessel carrying Venezuelan petroleum coke whose load caught fire set sail late on Tuesday for Colombia, allowing exports from the terminal to resume after a three-week halt while authorities decided what to do with the ship. The PETROSANFELIX terminal where the vessel was stuck accounts for more than a third of the around 150,000 tons of petroleum coke that Venezuela can export per month. Utilities buy the product and mix it with coal to burn at power plants. The Top Trader, chartered by U.S. Koch Industries and carrying 22,000 metric tons of petroleum coke, sailed on Tuesday, according to Thomson Reuters vessel tracking data. The cargo was sailing for Cartagena, Colombia, a change from the original destination in Europe. Petroleum coke is a product derived from upgrading Venezuelan Orinoco belt's extra heavy oil into a crude more valuable for refiners. The coke is typically transported from production facilities to the terminals at a high temperature, but many customers do not accept loading the cargoes if they detect fire. Frequent outages and logistics problems have created an accumulation of millions of tons of petroleum coke at PDVSA's eastern terminals in recent years. Exports have also been affected in the past. After the Top Trader left the Petrosanfelix terminal, loading operations resumed at that facility, while other PDVSA ports were also loading petroleum coke this week, according to an independent report. (Reuters: http://www.cnbc.com/2016/11/23/reuters-america-burnt-petcoke-cargo-sets-sail-from-venezuela-exports-resume.html)

 

Customs impounds humanitarian shipment sent to CARITAS here

SENIAT customs authorities reported they have impounded 525 boxes of medicine and 92 boxes of nutrition supplement consigned to CARITAS Venezuela. They declared the cargo abandoned because it lacked permits, and consigned it to the Social Security Institute. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politica/seniat-declara-en-abandono-legal-cargamento-de-car.aspx#ixzz4Qv7xNPhP)

 

New currency bills reportedly have arrived at La Guaira port

Cipriana Ramos, President of the National Trade Association (CONSECOMERCIO) says the current currency scarcity could improve with the arrival of newly minted bills at La Guaira port. She said: “We were able to see a cargo that arrived at La Guaira on Tuesday and was strongly guarded by national security” More in Spanish: (El Nacional; http://www.el-nacional.com/economia/Presumen-billetes-denominacion-llegado-Guaira_0_963503883.html)

 

Venezuela's iron and steel complex plans to raise US$ 54 million in exports in 2017

Venezuela's iron and steel complex expects to raise US$ 54 million next year for exports of industry and building materials, said Carlos Padilla, Planning Director of the complex. He told the government news agency that about 30,000 tons of finished products −including steel bars, beams, angles and fences, and more than 80,000 tons of base steel for billets. He said that Panama and Brazil, as well as other Caribbean nations, are the main destinations for the export of steel material. (AVN, http://www.avn.info.ve/contenido/venezuela039s-iron-and-steel-complex-plans-raise-54-million-exports-2017)

 

Oil & Energy

Maduro orders an “absolute restructuring” of PDVSA

President Nicolas Maduro has issued a decree ordering an “absolute restructuring” and “change of course” at state oil company PDVSA, to “defeat corruption and bureaucracy” within. He claimed there are “infiltrators” inside the Venezuelan oil industry, and that he will have “zero tolerance with corruption and treason”. He called on PDVSA President Eulogio Del Pino, who is also Oil and Mining Minister, work with the company workers in a group for “specific change policies” to “strengthen” the industry, and ordered an increase in production. Venezuela’s National Assembly last week voted to censure former PDVSA President Rafael Ramírez, currently Venezuela’s UN ambassador, whom they accused of being a part of a US$ 11 billion corruption case. Maduro said Ramírez was being targeted in a defamation campaign by imperialists, and Ramírez said he would sue the legislature. More in Spanish: (EFE: http://www.economiaynegocios.cl/noticias/noticias.asp?id=311421)

 

Venezuela refinery network operating at roughly a third

Venezuela's refinery network was operating at about a third of capacity, according to union sources and workers, as state oil company PDVSA struggles with equipment issues after years of underinvestment. Venezuela's biggest refinery, 645,000-barrel-per-day Amuay refinery, was operating at only 260,000 bpd with two of its five crude distillation units out of service, union leader Ivan Freites told Reuters, citing an internal report. Its flexicoker remains down, Freites added.  Adjacent Cardon, with capacity of 310,000 bpd, was at 120,000 bpd, added Freites, a fierce critic of PDVSA and the government of socialist President Nicolas Maduro.  Meanwhile, the smaller refineries of El Palito and Puerto La Cruz, with capacities of 146,000 barrels per day and 187,000 bpd respectively, were barely refining any crude, according to a separate union leader and a worker. The El Palito refinery was halted in October for scheduled maintenance, according to PDVSA. Union leader Freddy Alvarado said on Wednesday that the complex remained shut. The catalytic cracking and alkylation units at Puerto la Cruz have been inoperative since the start of November, union leader Jose Bodas said earlier this month. Over the weekend, the refinery's reformer unit for octane 95 gasoline stopped operating, Bodas added. Venezuela's refineries have been plagued with blackouts, equipment issues and stoppages for years. PDVSA often blames problems on "saboteurs" intent on bringing down socialist rule in Venezuela, and says its foes and hostile media try to exaggerate refinery issues. Critics say years of underinvestment and poor maintenance are the cause. U.S. refining firm CITGO Petroleum is sending more products to its parent company, PDVSA, to compensate for problems in the domestic network, according to sources and Reuters data. (Reuters: http://www.reuters.com/article/us-venezuela-refinery-idUSKBN13I2MA)

 

Economy & Finance

Maduro threatens legal action against JPMorgan

President Nicolas Maduro has ordered state oil company PDVSA to look into legal action against JPMorgan after the U.S. investment bank reported delays in US$ 404 million in bond interest payments. PDVSA said on Monday it was using a 30-day grace period for coupon payments on its 2035 bond but that reports of other payment delays were wrong. It suggested paying agent CITIBANK was creating a backlog that had spooked markets. "JPMorgan's attitude is of a criminal nature," Maduro said. He claimed local and foreign opponents were conspiring to give a false impression that Venezuela is on the verge of a debt default. Maduro accused JPMorgan of falsely reporting that PDVSA was in default. In fact, the report in question said payments on three bonds were not made on time and that the company had a "30-day grace period to make payments on the coupons before (the situation) becomes an event of default." Maduro said he had asked PDVSA head Eulogio Del Pino to study legal options. "The least JPMorgan can do is apologize to the Venezuelan people," Maduro said. Maduro also said the U.S. Treasury Department was behind a campaign against PDVSA. PDVSA said it had "punctually" paid this month's obligations for 2021, 2024 and 2026 paper but had activated the grace period for the 2035 bond. "I'd tell the bondholders to call CITIBANK and ask why they are delaying payment of money that is already in their accounts," Del Pino said on state television. He suggested CITIBANK was participating in "attacks" on Venezuela's socialist government and implied that it had reneged on its contract, but later said the bank confirmed it was making payments. CITIGROUP told bondholders in a letter in July that PDVSA would need to name a new paying agent for seven outstanding dollar-denominated bonds, but will stay on as paying agent until PDVSA finds a new one. (Reuters: http://www.reuters.com/article/us-pdvsa-debt-idUSKBN13H24G?il=0; El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-oil-authority-blames-citibank-for-bond-payment-delay_628216; http://www.eluniversal.com/noticias/daily-news/venezuelan-govt-ponders-lawsuit-against-morgan_628283)

 

Faría says economic crisis is not over

Foreign Trade and Investment Minister Jesús Faria say Venezuela has not yet overcome its economic crisis, calling it deep and structural. He claims economic activity has improved substantially and expects slight growth in 2017. More in Spanish: (Noticiero Venevisión, http://www.noticierovenevision.net/economia/2016/noviembre/22/176374=ministro-jesus-faria-afirmo-que-la-crisis-economica-no-ha-sido-superada)

 

Venezuelan top court rules that the extension of state of emergency is constitutional

Venezuela’s Supreme Tribunal has declared that the extension for more 60 days of the state of exception and economic emergency, decreed by President Nicolás Maduro is constitutional and said he is authorized to continue “adopting urgent, conclusive, and exceptional measures required to ensure full enjoyment of their rights by the population, to preserve domestic order, and to ensure timely access to goods, services, food, medicines and other products which are essential for everyday life.” (El Universal, http://www.eluniversal.com/noticias/daily-news/venezuelan-top-court-rules-constitutional-extension-state-exception_628328)

 

 

Politics and International Affairs

Opposition says Vatican-brokered talks are 'frozen'

Venezuela’s opposition said that talks with the government were “frozen” after officials failed to attend meetings, throwing cold water on Vatican-brokered attempts to bridge the country’s deep political crisis. Though the formal talks, which began last month, appeared to have led to the release of a handful of detained activists, hopes for real rapprochement were always slim. The two sides are fundamentally at loggerheads, with the opposition seeking to oust the socialist president, Nicolás Maduro, while authorities vow he will not leave office before his term ends in 2019. “The government, in an irresponsible manner, froze the dialogue process by not showing up to two technical meetings last night,” said opposition coalition leader Jesús Torrealba. Opposition activists said authorities backed away after the national assembly on Tuesday held a heated session in which they slammed Maduro over a drug scandal. Two nephews of Maduro’s wife were found guilty this month on charges in the US that they tried to carry out a multimillion-dollar drug deal to help their family stay in power. “The government is using the debate as an excuse,” said two-time presidential candidate Henrique Capriles, accusing authorities of not being committed to talks. “The government has not complied with any of its promises. They promised to free political prisoners; there are more than 100 imprisoned. They promised [to open] a humanitarian channel; not a single medicine has come in.” “They [the government] don’t want to fulfill any commitments”, he said. During the talks, the opposition and the government have agreed to hold parliamentary elections in the contested state of Amazonas, which could give Maduro’s opponents a supermajority in congress to enact sweeping new laws and fire ministers. It is unclear whether the elections will take place if the talks don’t resume. It was not clear if the talks could be revived or if the opposition would resume a more militant agenda, which before the talks included protests and putting Maduro on trial before the national assembly. Spain’s ex-prime minister José Luis Rodríguez Zapatero and US diplomat Thomas Shannon were holding or seeking meetings with both sides. Dialogue had divided the diverse opposition coalition, with some activists feeling the government was duping the opposition to buy time. Previous sit-downs also showed little progress. Chavista lawmaker Elias Jaua, the government negotiator in talks with the opposition, claimed that an early election as an attempt to remove President Nicolas Maduro from power was never on the table, never mind what the opposition says. Carlos Ocariz, an opposition representative in government-opposition talks, said the government “lies” when claiming that the removal of President Nicolás Maduro from office was never addressed in the negotiating table. In that connection, Ocariz said that “since the very first day” they proposed early elections or the activation of a recall referendum against Maduro. He pointed to in-house strife within pro-regime forces, tweeting that: “honoring agreements has become a nightmare for them and has made their in-house warfare worse. That’s why any excuse is good enough to back away”. He asked mediators to pressure the government to comply on agreements. (The Guardian: https://www.theguardian.com/world/2016/nov/23/venezuela-nicolas-maduro-opposition-vatican-talks-frozen; The Wall Street Journal: http://www.wsj.com/articles/venezuela-talks-break-down-opposition-claims-1479934607; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2425748&CategoryId=10717; El Universal, http://www.eluniversal.com/noticias/daily-news/elections-recall-vote-proposed-since-the-launch-dialogue-venezuela_628320; and more in Spanish: Globovision: http://globovision.com/article/ocariz-solicitamos-a-los-mediadores-que-exijan-al-gobierno-cumplir-con-los-acuerdos)

 

…. then Maduro backs down, meets with Zapatero and says government has not withdrawn from talks

President Nicolas Maduro denied the government was withdrawing from the talks. After a meeting with Spain’s Rodríguez Zapatero, he said: “The dialogue table continues to move forward, is consolidating”, he said, expressing optimism over a process sponsored by the Union of South American Nations (UNASUR) and the Vatican. He demanded that the National Assembly exclude three legislators from Amazonas state that were incorporated in defiance of a Supreme Tribunal ruling. He claimed his regime has completely complied with all agreements. The mediators also met with representatives of the Democratic Unity (MUD) opposition alliance and said both sides were willing to continue. More in Spanish: (Infolatam: http://www.infolatam.com/2016/11/23/gobierno-venezolano-niega-haber-abandonado-la-mesa-dialogo-oposicion/; Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/noviembre/23/176579=mediadores-del-dialogo-reiteran-)

 

Supreme Tribunal urges National Assembly to formally separate contested legislators

The Supreme Tribunal’s Constitutional Chamber has urged the National Assembly to take formal action to separate three contested legislators from Amazonas state, as it did on January 11^th this year, since the three legislators said they were willing to withdraw. The Tribunal again held that all acts of parliament in defiance of Tribunal orders are null and void. Hector Rodríguez, head of the pro-government minority caucus at the National Assembly said that new pro Maduro legislators and a new “revolutionary” governor would soon be elected in Amazonas state. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/noviembre/23/176546=tsj-exhorto-a-la-an-a-desincorporar-formalmente-a-diputados-impugnadosM http://www.noticierovenevision.net/politica/2016/noviembre/23/176581=hector-rodriguez-afirmo-que-en-amazonas-elegiran-a-diputados-del-psuv-en-apoyo-al-presidente-maduro)

 

Foreign Minister, Capriles, trade accusations over diplomatic passports held by convicted drug dealers

Foreign Minister Delcy Rodríguez has brought charges with the Prosecutor General against Miranda state governor and opposition leader Henrique Capriles, accusing him of “presumably” forging official documents. She denied a charge that Efrain Campo Flores and Francisco Flores de Freitas, the nephews of First Lady Cilia Flores that were recently convicted for drug trafficking in NY, were holding Diplomatic Passports when they were arrested. Capriles quickly retorted: “Now the issue is over the passports they themselves issued and not with the drugs that went through from the Presidential airport ramp. They have no shame!”. More in Spanish: (Noticiero Venevision: http://www.noticierovenevision.net/politica/2016/noviembre/23/176517=delcy-rodriguez-denuncio-a-capriles-por-falsificacion-de-documentos; El Nacional, http://www.el-nacional.com/politica/Capriles-respondio-acusaciones-Delcy-Rodriguez_0_963503797.html; El Universal, http://www.eluniversal.com/noticias/politica/canciller-desmiente-emision-pasaportes-implicados-caso-campo-flores_628147)

 

Opposition lawmaker jailed for 2 years joins legislature

The National Assembly welcomed opposition lawmaker Rosmit Mantilla, the country’s first openly gay legislator, who was released from jail last week after being imprisoned for two-and-a-half years as a new member. Mantilla was received with applause and was sworn-in before the leadership of the legislature headed by speaker Henry Ramos Allup, who invited him to take a seat and participate in the debate. “Outside (in the street) there’s hunger, there’s insecurity, I was imprisoned by the SEBIN (national intelligence service), but Venezuela is imprisoned by hunger and insecurity,” Mantilla told reporters after being sworn-in. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2425768&CategoryId=10717)

 

What it's like being a political prisoner in Venezuela under Maduro

Since Nicolas Maduro became president in 2013, the Venezuelan government has arrested and detained thousands of citizens. Most but not all are let go within a few days. One who remains incarcerated is opposition leader Leopoldo Lopez. Another is Joshua Holt, an American from Utah. Francisco Marquez wants the international community to understand something about the government of Venezuelan President Nicolas Maduro: "You are dealing with a government that currently engages in having political prisoners and systematic torture within their prison system." Marquez says he's seen it himself. He was released from a Venezuelan prison in late October after spending four months as a political prisoner.  Marquez says he witnessed the torture of political prisoners as well as common inmates. Marquez is 30 and a dual citizen of the United States and Venezuela, lawyer by training and a political activist by choice. He graduated from Harvard's Kennedy School of Government in 2012. He was arrested in June while working for the political opposition and campaigning for a referendum to remove Maduro from office. He was in jail for a month before being charged with money laundering and conspiracy to incite violence. He says the prison conditions were dungeon-like. "Almost no sunlight, very dark, very humid. Full of mosquitoes. I actually got dengue fever," he says. Marquez says the brutal treatment he witnessed is systematic. "It's not like a one-off prison guard doing this. The warden in my prison, I saw him as he beat other prisoners with what all the prison guards had: this bat with a flat surface," he recalls. Alfredo Romero, a human rights lawyer in Caracas who works on behalf of political prisoners, says since student protests rocked Venezuela in 2014, there have been hundreds of political prisoners, but the actual number in jail at any one time rarely rises above 100 to avoid international scrutiny. Romero says that's a perfect example of the Venezuelan government's revolving-door method of dealing with political prisoners. "They keep people for four months, one year, 20 days," Romero says. "Then they release them and put new people into prison. It's never the same people. It's never the same number." Romero says as of Nov. 22, there are 108 political prisoners in Venezuela. Some are incarcerated. Others have restrictions on their freedom. They can't leave the country. They must present themselves to court. They're prohibited from talking to the media or attending public meetings. "Most of them are protesters, students. Some have been persecuted for tweeting," he says. The United Socialist Party of Venezuela controls the judicial system, which intimidates the political opposition through arrests and detentions, a point echoed in a 2015 report by Human Rights Watch. Romero says since January 2014 there have been nearly 7,000 political arrests and detentions. (PRI: http://www.pri.org/stories/2016-11-23/what-its-being-political-prisoner-venezuela-under-maduro)

 

President dances salsa while Venezuela churns

Venezuelans are running short of food, medicine and patience, but fear not: President Nicolas Maduro is here to cheer them up -- by dancing salsa. Grinning under his black mustache, the burly, towering socialist swivels his hips and twirls his wife Cilia Flores in front of the cameras. With hunger and violent crime gripping the country and the opposition calling for his head, this is Maduro's new strategy for winning hearts and minds. That is an uphill battle; most Venezuelans would like him to leave power. Wednesday was a case in point as Maduro celebrated his 54th birthday with a live performance by old-school salsa greats El Gran Combo de Puerto Rico. But his continued capering amid the crisis, and his recent launch of a dedicated salsa radio show, seem like bad taste to some weary citizens. Spoof photo "memes" of Maduro online have shown him dancing in various inappropriate settings: at the scene of a crime or in a long queue for food. Maduro launched his radio show "Salsa Hour" late last month on the same day that opposition lawmakers called for a political trial against him. Now Maduro is using salsa's popular beats to reach out to ordinary Venezuelans who deserted him in that vote, says social psychologist Ricardo Sucre. "He wants to show himself to be confident and relaxed, not as though his government is about to fall." With his long broadcasts, Maduro is carrying on a tradition of his late mentor and predecessor Hugo Chavez. But Maduro lacks Chavez's charisma, Sucre says, but all the same "Chavez chose him as his successor because he could get through difficult times without looking nervous." Maduro weathered a scandal last week when a US jury convicted two of his wife's nephews of plotting to smuggle cocaine. But the following Sunday, the presidential couples were on television dancing for the nation. "Are you still dancing now?" said senior opposition leader Henrique Capriles. "The country is waiting for you to face up to things." (Agence France Presse: http://news.abs-cbn.com/overseas/11/24/16/president-dances-salsa-while-venezuela-churns)

 

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.