Oil & Energy
As new blackout hits,
Venezuelans brace for more hardship
Much of Venezuela remained without electricity
Tuesday as a new power outage spread across the country in what many feared
will be a repeat of the chaos during the nation's largest-ever blackout earlier
this month. The Maduro regime canceled work and school again as the second
major blackout this month left streets mostly empty in Caracas and residents of
the capital wondering how long power would be out amid a deepening economic and
political crisis. The outage began around midday Monday and appeared to have
affected most of Venezuela's 23 states. While the lights flickered back on in
many parts after officials declared service would be restored within hours, the
grid collapsed again in the late evening, knocking out communications and
leaving much of the country bracing for the worst. As with the previous outage,
Nicolas Maduro's regime blamed U.S.-backed opponents, accusing them of
sabotaging the Guri dam, which supplies the bulk of Venezuela's electricity.
Officials said the "attack"
had been controlled, but their assurances, similar to ones the last time
around, did little to calm the anger of residents in Caracas who filled
traffic-clogged streets as they walked home after subway service in the capital
was suspended on Monday. Their patience grew increasingly thin when a second
outage struck late into the night, with residents in some neighborhoods banging
on pots and pans in pitch black to express their growing frustration. On
Tuesday morning, banks, shops and other businesses in Caracas were closed. Lights
were out in the Maiquetia airport near Caracas, a Reuters witness said, though
flights were not canceled. A worker checked passengers’ passports with a hand
lamp, while the belt carrying checked luggage was running with power from a
backup generator. NETBLOCKS, a non-government group based in Europe that
monitors internet censorship, said the late evening outage had knocked offline
nearly 90% of Venezuela's telecommunications infrastructure. Even the powerful
state TV apparatus was down. The Trump administration, which is campaigning to
remove Maduro, has denied any role in the outages. Meanwhile, electricity
experts and opposition leader Juan Guaidó fault years of state graft and
incompetence. Guaidó, who the U.S. and
dozens of other countries recognize as Venezuela's rightful leader, said he was
meeting with aides to determine actions "to
express the indignation of the entire population." The government
seeks to discredit Guaidó, presenting what it claims to be evidence purporting
to show opposition plans to hire mercenaries from Central America to carry out
targeted killings and acts of sabotage. During a news conference in the middle
of the blackout Monday, Communications Minister Jorge Rodriguez showed
screenshots of what are purportedly private text messages between Guaidó, his
mentor Leopoldo Lopez and other opposition insiders discussing payment details
to the hired guns through banks in Europe and Panama. Late Monday, Lilian
Tintori, the wife of Lopez, said a group of government loyalists on motorcycles
besieged her home in eastern Caracas, shouting epithets against her husband and
warning he would soon be thrown back in jail. Lopez has been under house arrest
following his conviction for stirring anti-government unrest in 2014 in a case
marred by irregularities. (The Miami Herald: https://www.miamiherald.com/news/business/article228416374.html;
Reuters: https://www.reuters.com/article/us-venezuela-politics/venezuela-blackout-leaves-streets-empty-school-and-work-canceled-idUSKCN1R71SU;
https://www.reuters.com/article/us-venezuela-politics-blackout/venezuela-blames-attack-as-another-crippling-blackout-hits-idUSKCN1R62A7;
Fox News: https://www.foxnews.com/world/new-power-outage-leaves-much-of-venezuela-in-the-dark;
Bloomberg: https://www.bloomberg.com/news/articles/2019-03-25/venezuela-can-t-keep-the-lights-on)
Oil rebounds as growth
angst eases and Venezuela tensions mount
Oil rebounded along with global markets as
pessimism over the global growth outlook eased a little, while rising tension
in Venezuela revived fears of supply losses. Futures rose as much as 1.4% in
New York after falling about 2% over the previous two sessions. Crude futures
have rallied about 30% in New York and London this year as the Organization of
Petroleum Exporting Countries and its allies implement production cuts to stave
off a global surplus. American sanctions on Iran and Venezuela have further
squeezed supplies, but the demand outlook remains clouded by a slowing world
economy and uncertainty over whether the U.S.-China trade war will be resolved.
West Texas Intermediate for May delivery rose 717cents, or 1.3%, to US$ 59.59 a
barrel on the New York Mercantile Exchange as of 11:12 a.m. in London. It
closed 0.4% lower on Monday after swinging between a 1.5% loss and an 0.5% gain
earlier in the day. Brent for May settlement advanced 0.9% to US$ 67.79 a
barrel on the London-based ICE Futures Europe exchange, rising for a second
day. The global benchmark crude was at a premium of U$ 8.18 to WTI. (The
Houston Chronicle: https://www.chron.com/business/energy/article/Oil-Rebounds-as-Growth-Angst-Eases-and-Venezuela-13716649.php)
America imported no
oil from Venezuela last week. Here's why that's a big deal
America's once-robust imports of crude oil from
Venezuela have ground to a halt because of Trump administration sanctions and
chaos gripping this nation. The United States imported exactly zero barrels of
crude from Venezuela last week, according to government statistics. That's
never happened since the US Energy Information Administration began tracking
this weekly metric in 2010.It marks a sharp decline from the prior week, when
the United States imported 112,000 barrels per day from Venezuela. The plunge
in oil shipments from Venezuela helped lift US oil prices above US$60 a barrel
this week for the first time since November. The United States has never gone a
full month without importing oil from Venezuela since the EIA started measuring
this monthly data in 1973.Getting cut off from the United States adds to the
misery for Venezuela. Before the sanctions, the United States was Venezuela's
No. 1 oil customer. And the Venezuelan government relied on oil exports for 90%
of its revenue. The good news for the United States is that it's pumping tons of
oil at home. Powered by the shale revolution, US output has soared to record
highs. In fact, the United States is now the world's leading oil producer. The
bad news is that US refineries can't rely on American shale oil alone. That's
because not every barrel of crude is created equally. While US shale oil is a
high-quality light grade, the decades-old Gulf Coast refinery system is
configured to run on a healthy dose of lower quality heavy crude, the likes of
which is abundant in Venezuela. The situation has caused a strange phenomenon,
where heavy crude is trading on par or even at a premium to light crude.(CNN: https://edition.cnn.com/2019/03/21/business/venezuela-oil-imports-united-states/index.html)
Economy & Finance
IADB cancels China
meeting after Beijing bars Venezuela representative
The Inter-American Development Bank on Friday
called off next week’s meeting of its 48 member countries in China after
Beijing refused to allow a representative of Venezuelan opposition leader Juan Guaidó
to attend, two sources with knowledge of the decision said. The sources said the
decision was made in Washington on Friday at a meeting of the executive board
of the IADB, Latin America’s largest development lender, after China refused to
change its position. The sources said the board would vote within 30 days to
reschedule the annual meeting for another date and location. On Thursday, the
United States threatened to derail the March 26-31 meeting unless Beijing
granted a visa to Guaidó’s representative, Harvard economist Ricardo
Hausmann.The meeting, slated to bring together finance and development
ministers from the lender’s members, was meant to mark the bank’s 60th
anniversary. One source, speaking on condition of anonymity, told Reuters on
Thursday that China had proposed that no representative from either Maduro’s or
Guaidó’s camps attend the meeting to “depoliticize”
the gathering. In a statement posted later on its website, the IADB confirmed
that the meeting would not take place on March 28-30 in the city of Chengdu as
planned, but it did not give a reason. China’s foreign ministry said in its own
statement it regretted the decision but bore no responsibility. Spokesman Geng
Shuang said China “had difficulty
allowing” Guaidó’s representative to attend because Guaidó himself lacked
legal standing.“ Changing Venezuela’s
representative at the IADB won’t help solve Venezuela’s problems and (the
proposal) damaged the atmosphere of the IADB annual meeting and disturbed
preparations for the meeting,” he said. The Washington-based IADB was the
first multilateral lender to replace a Maduro-selected representative with one
backed by Guaidó. The move would eventually open lines of credit to Venezuela
should Maduro step down. The International Monetary Fund and World Bank have so
far not made a decision on whether to recognize Guaidó officially as head of
state. (Reuters: https://www.reuters.com/article/us-venezuela-politics-china-iadb-exclusi/exclusive-iadb-cancels-china-meeting-after-beijing-bars-venezuela-representative-idUSKCN1R32NU)
U.S. blacklists
Venezuelan state banks after arrest of Guaidó aide
The United States imposed sanctions on Friday
on Venezuela’s development bank, BANDES, a day after the Trump administration
warned there would be consequences for the arrest by Venezuelan authorities of
opposition leader Juan Guaidó’s top aide. The U.S. Treasury said it was slapping
the sanctions on Banco de Desarrollo Economico y Social de Venezuela, including
its subsidiaries in Uruguay and Bolivia. It also imposed sanctions on
state-owned Venezuelan commercial banks, including Banco de Venezuela and Banco
Bicentenario. “The United States will not
tolerate the arrest of peaceful democratic actors, including members of the
democratically-elected Venezuelan National Assembly and those Venezuelans
working with interim President Juan Guaidó,” the White House said in a
statement. The U.S. Treasury said Maduro tried to move US$1 billion out of
Venezuela through Banco BANDES Uruguay in early 2019 as he came under
increasing pressure from the United States and other countries in the region to
step down. BANDES has received billions of dollars over the past decade from the
China Development Bank, in exchange for oil, which the Venezuelan government
used to fund infrastructure projects. Uruguay has stayed neutral on Venezuela’s
political crisis and has called for dialogue, while China, Russia and regional
ally Cuba have backed Maduro. But the sanctions on BANDES could test Beijing’s
ties with Caracas, since it would impede Venezuela from restructuring its US$20
billion debt with China, opposition lawmaker Angel Alvarado said on Friday. The
sanctions freeze assets belonging to the banks and subsidiaries, and prevent
U.S. citizens from any dealings with them. They follow a raft of other
sanctions imposed by the administration of U.S. President Donald Trump in
recent months against Maduro, top government officials, and state oil firm
PDVSA. Trump’s national security adviser John Bolton tweeted earlier on Friday:
“BANDES bank is to Venezuela’s financial
sector what PDVSA is to its oil sector. This action will severely affect any
attempted currency movements by Maduro and his cronies moving forward. Do not
test the resolve of this Administration.” (https://www.reuters.com/article/us-venezuela-politics-usa-sanctions/u-s-blacklists-venezuelan-state-banks-after-arrest-of-Guaidó-aide-idUSKCN1R32FQ)
Politics and
International Affairs
2 Russian military
planes land in Venezuela, exacerbating political tension
A visit to Venezuela by two military airplanes
from Russia, which landed in broad daylight at the international airport in
Caracas, has set off alarms that the Kremlin might be acting more brazenly to
protect President Nicolás Maduro from the uprising against him. Russian and
Venezuelan officials have not disputed the arrival of the airplanes, which were
first seen at the airport on Saturday. Such flights ordinarily would be sent to
a protected military air base beyond the sight of the public. The planes
brought supplies and technical advisers to Caracas, Venezuela’s capital,
according to a Russian state news agency and a Russian diplomat. The visit was
related to military cooperation contracts signed years ago between Russia and
Venezuela, said the news agency, Ria Novosti, suggesting it was routine. A
Russian diplomat in Caracas, who spoke on condition of anonymity because the
diplomat was not authorized to speak to the media, confirmed the Ria Novosti
account and said there was nothing unusual. But opposition members said the
visibility of the military planes was unusual and had been meant to send a
message. The timing showed that both Russian and Venezuelan officials wanted to
convert a routine technical stop into a show of strength, said Rocio San
Miguel, a Venezuelan security analyst. Russia has maintenance contracts for
weapons sold to Venezuela under late President Hugo Chávez, including air
defense systems, fighter jets and tanks, that are worth billions of dollars.
Flight tracking websites showed an Ilyushin IL-62 jet and an Antonov AN-124
cargo plane flew from Moscow’s military airport to Caracas’s international
airport via Syria. The cargo plane flew back to Syria on Monday, according to
flight tracking website bosphorusobserver.com. The arrival of the advisers came
as Venezuela activated Russian-made S300 air defense systems last week,
according to satellite imagery analysis firm IMAGESAT Intl. Russia has also
recently deployed the S300 in Syria. US Secretary of State Mike Pompeo spoke
with Russian Foreign Minister Sergey Lavrov on Monday and called on Russia
"to cease its unconstructive
behavior" in Venezuela, State Department spokesman Robert Palladino
said in a statement. The United States "will not stand idly by as Russia exacerbates tensions in Venezuela,"
the statement said. "The continued
insertion of Russian military personnel to support the illegitimate regime of
Nicolas Maduro in Venezuela risks prolonging the suffering of the Venezuelan
people who overwhelmingly support interim President Juan Guaidó," the
statement said. The United States on Monday accused Russia of "reckless escalation" of the
situation in Venezuela. (The New York Times: https://www.nytimes.com/2019/03/25/world/americas/russian-planes-caracas.html;
Military Times: https://www.militarytimes.com/flashpoints/2019/03/25/pompeo-says-russian-troops-in-venezuela-increases-tensions/;
Haaretz: https://www.haaretz.com/us-news/u-s-calls-russia-deployment-of-planes-to-venezuela-reckless-escalation-1.7059121;
CNN: https://www.cnn.com/2019/03/25/americas/venezuela-news-roundup/index.html;
The Wall Street Journal: https://www.wsj.com/articles/u-s-chides-russia-for-military-aid-to-venezuela-11553553299;
McClatchy: https://www.mcclatchydc.com/news/politics-government/white-house/article228377779.html)
Guaidó accused of
plotting 'terrorist acts'
Jorge Rodriguez, the nation's minister of
communication, spoke on national television Saturday to accuse opposition
leaders, including National Assembly President Juan Guaidó, of plotting "terrorist acts" in the
country. Rodriguez said some of the evidence was collected from the personal
phone of Roberto Marrero, Guaidó's chief of staff, who was detained in Caracas
on Thursday and later accused of being involved in an alleged "terrorist cell" planning attacks
against high-level political figures. According to Rodriguez, Marrero
coordinated the arrival of "hitmen"
from El Salvador, Guatemala and Honduras to "kill members of the Venezuelan government." He said that about
60 "hitmen groups" were
prepared and "trained in Colombia,"
but that given the closure of the Colombian-Venezuelan border, only "30 groups entered Venezuela." Marrero's
lawyers have denied the claims and accused Maduro's regime of planting
evidence. Rodriguez did not present any evidence to support his claim. This is
not the first time the Venezuelan government has presented strong accusations
against the Venezuelan opposition based on text messages, emails or pictures.
And, with frequency, the elements are not presented by the Attorney General's
Office, but by Rodriguez himself. Surrounded by hundreds of people waving flags
and flashing cameras, Guaidó asked his followers to stay on the streets
demanding freedom and to not be afraid. "We have the support of important countries ... we are not alone,"
he said. Guaidó closed the rally by singing the national anthem and once again
spoke directly to Maduro: "You
believe you are going to intimidate us. Well, here we are, moving forward,
holding our heads high, taking it all for the freedom of Venezuela,"
he said. (CNN: https://www.cnn.com/2019/03/25/americas/venezuela-news-roundup/index.html)
House passes bills to
expand humanitarian aid in Venezuela and hurt Maduro
The House of Representatives passed three bills
on Monday to expand U.S. humanitarian assistance in Venezuela, examine Russia’s
growing military presence in the country and prohibit U.S. exports of crime
control materials that Nicolás Maduro can use against pro-democracy protesters.
The bills, led by South Florida Democrats Donna Shalala, Debbie Mucarsel-Powell
and Debbie Wasserman Schultz, are the first legislative responses to
Venezuela’s ongoing humanitarian crisis since the U.S. recognized Juan Guaidó
as the country’s legitimate leader in January. The bills were sent to the U.S.
Senate without opposition.“ The world has
witnessed the violent actions of Maduro’s security forces and their use of
arms, rubber bullets, tear gas, and other dangerous weapons to violently
disperse crowds during peaceful protests,” Shalala said. “With the passage of the Venezuela Arms
Restriction Act, we will move one step closer to ensuring that no weapons
originating in the United States are used to silence dissent through
intimidation, repression, or execution.” Republicans allowed the bills to
pass by a voice vote, meaning there was no significant opposition to any of the
proposals. Though some Democrats have questioned the U.S. decision to recognize
Guaidó, there was no formal opposition to the bills on the House floor.
Mucarsel-Powell’s bill compels the Trump administration to outline a long-term
humanitarian aid strategy in Venezuela and allocate at least US$ 150 million in
federal funding for humanitarian aid in 2020 and 2021. Wasserman Schultz’s bill
would compel the State Department to monitor and provide Congress with steps to
limit Russian military influence in Venezuela. The three South Florida
Democrats are in lockstep with Florida Republicans in support of Guaidó’s
nascent government and Wasserman Schultz and Shalala recently visited the
Colombia-Venezuela border. But their efforts have been overshadowed by
Democrats who argue that recognizing Guaidó is a prelude to a U.S.-backed coup
and Republicans like Sen. Marco Rubio who communicate directly with the
president on the importance of maintaining a hard line against Maduro. Another
piece of legislation that would expand Temporary Protected Status for
Venezuelans has the support of Democrats and Republicans from South Florida,
though some of Trump’s advisers are wary of expanding immigration protections
after they sought to cut TPS for countries like Haiti, Nicaragua and El
Salvador. Rubio is also planning to reintroduce a bill that expands
humanitarian assistance in Venezuela and provide funds for pro-democracy
groups. (The Miami Herald: https://www.miamiherald.com/news/nation-world/world/americas/venezuela/article228383199.html;
AP: https://www.apnews.com/3affa036dbea48b794ef33c19fd5e0a4)
US warns it will protect its 40,000 citizens in
Venezuela
The US government took the unprecedented step
of revealing the number of US citizens currently living in Venezuela. Spain’s
ABC daily has published an interview with US State Department spokesman Robert
Palladino where the Trump Administration warns Nicolás Maduro directly that it
Will not tolerate abuses against US citizens on Venezuelan soil. “The US is seriously concerned for the
wellbeing and safety of all Americans detained in Venezuela, and for deports
that prison officials are blocking their families and lawyers from delivering
food to them. We will make Maduro and his jailers responsible for their safety
and wellbeing”. Previously, US National Security Advisor John Bolton had
revealed that there are at least 40,000 US citizens living in Venezuela. More
in Spanish: (Globovision, http://globovision.com/article/eeuu-advierte-que-protegera-a-sus-40-mil-nacionales-en-venezuela)
OP-ED: Russia is making
the US look weak in Venezuela, by Erin Dunne
It’s no secret that President Trump wants
illegitimate Venezuelan dictator Nicolas Maduro out. But as the Trump
administration pressures Maduro’s regime and continues to back opposition
leader Juan Guaidó, Russia has successfully positioned itself as a roadblock to
Washington-backed regime change. And if existing shadowy ties between the
Moscow and Caracas weren’t already a serious concern for Washington, the two
Russian air force planes that touched down in Caracas over the weekend
certainly are. Those planes carried 100 troops, a Russian defense official and
almost 40 tons of cargo. They not only provide much-needed materiel assistance
for Maduro, but they also send a clear message to Washington that the U.S.
isn’t the only international player interested in Venezuela. That Russia would
take stronger steps to back Maduro isn’t entirely unexpected. Indeed, at the
end of January there were already Moscow-linked military contractors on the
ground in Venezuela to support Maduro. Moreover, Russia has been a staunch
backer of Maduro’s regime, investing billions of dollars in military contracts
and other projects. That has left Moscow with a vested interest in keeping
Maduro in power, both to cash in on their monetary investments and to reap the
rewards of their influence. But the real motive for Russian President Vladimir
Putin seems to be what Russian and before them Soviet leaders have always
relished: challenging U.S. authority in what Washington views as its own backyard.
Putin is complicating U.S. plans to end Maduro’s grip and restore stability to
the region. Russia's investment in the government of a failed state is likely
to yield few if any long-term direct returns on investment. That makes this
challenge to the U.S. the most plausible reason behind Moscow’s continued
support for Maduro. Likewise, the 100 Russian troops that Moscow has put on the
ground, even backed by a generous shipment of equipment, is hardly enough to
secure an embattled regime, although it could be enough to create a headache
for Washington. Russia's actions not only make U.S. involvement more dangerous
by introducing the potential to spark engagement with Russia, but they also
undercut existing efforts against Maduro limiting the impact of sanction. They
give Maduro new military power to rely on and lend him international backing
even as the U.S. and other countries have increasingly isolated him. Secretary
of State Mike Pompeo warned on Monday that the U.S. does not take these actions
lightly. As he put it, U.S. and its allies “will
not stand idly by as Russia exacerbates tensions in Venezuela.” Just what
Pompeo has in mind is unclear. What is obvious, however, is that Russia has
made Washington look weak. (The Washington Examiner: https://www.washingtonexaminer.com/opinion/russia-is-making-the-us-look-weak-in-venezuela)
OP-ED: Maduro faces
mounting pressure to quit, yet he persists, by Philip Reeves
Two months have elapsed since the Trump
administration threw its weight behind a multipronged campaign to oust Nicolás
Maduro, after an economic collapse that has led more than 3 million Venezuelans
to move abroad and created widespread hunger and shortages. Since then, Maduro
— who is fond of comparing himself to a boxer in the ring — has been absorbing
one body blow after another. Yet, somehow, Maduro remains in the ring — still
on his feet, on TV in front of a crowd, cheerfully goading his enemies.
Maduro's adversaries had hoped for success by now. They are beginning to ask
what else they and their international supporters need to do to topple him. No
one doubts that Maduro would fall if the men in charge of Venezuela's armed
forces withdraw their support. Some heavy hitters on the world stage continue
to back him — notably China, Iran, Turkey and Russia. Fractures have appeared
in the lower ranks. Yet Venezuela's military high command has remained loyal,
despite Guaidó's offer of amnesty to armed forces that abandon the government.
Maduro's opponents explain the continued support by saying senior army
commanders pocket millions from illicit black-market activities, including food
and currency rackets and narcotics and gold smuggling. Venezuelans also
frequently attribute their generals' dogged loyalty to the role played by Cuba,
Maduro's closest foreign friend. Large numbers of Cuban agents operate within
the Venezuelan military, monitoring the ranks for signs of betrayal. The
National Assembly voted to block the government's long-running shipments of
heavily discounted oil to Cuba, in the hope this will encourage the Cubans to
withdraw their spies. But the state-run oil company is not expected to abide.
As Guaidó's U.S.-backed campaign to assume power enters its third month, Maduro
appears to be stepping up the use of force against his opponents. After
Venezuela's huge power outage, Maduro called for the mobilization of
colectivos, an armed pro-government motorcycle militia with a reputation for
using extreme violence. Many Venezuelans feel the same about other security
forces: Thirty-seven people were reported killed in Caracas during house raids
in January by the national police's special force, according to United Nations
High Commissioner for Human Rights Michelle Bachelet. Most of the victims were
from poor neighborhoods and were suspected of participating in anti-government
protests, she said. Many Venezuelans believe — and often hope — the U.S. will
lead a military intervention that will finally drive out Maduro. That
conviction is reinforced by the Trump administration and Guaidó: Both regularly
emphasize that "all options are on the table." Yet the idea is widely
opposed in the international arena, and there is little sign of enthusiasm for
it in Washington. Maduro's hard-core support is small: just 14%, according to a
February survey by the Caracas-based polling company DATANALISIS. Guaidó scored
61%. The same survey included another striking statistic: 47% still support
Chávez, who died of cancer in 2013. Luis Vicente León, head of DATANALISIS,
cites this as evidence that in the long term, the Chavistas could eventually
make a comeback in Venezuela, "even with transparent and clear
elections." Maduro now faces an even tougher test. Blows are raining down
on him, as he dodges and weaves to somehow keep his broken economy running. The
oil sanctions the U.S. imposed on Venezuela in late January are making an
impact. With the world's largest proven oil reserves, Venezuela's production
dropped by 142,000 barrels per day from January to February, according to OPEC.
That is far below Venezuela's output from a few years ago. The industry's
infrastructure is falling apart; many thousands of engineers have left; the
state-run oil company finds it increasingly difficult to import diluents needed
to raise Venezuelan crude to export grade. The Maduro government is scrambling
to find fresh clients for crude oil that it is no longer exporting to the U.S.
Despite this, it is far from certain Maduro will fall. That concerns rights
groups, which fear U.S. sanctions are deepening the hardship of a
long-suffering population and weakening their ability to organize against
Maduro's government. Crashing an economy alone does not always bring a
government down. Pollster León recalls: "Everyone thought the same with Cuba, Iran, Syria, Zimbabwe and North
Korea." (NPR: https://www.npr.org/2019/03/25/706635580/venezuelas-maduro-faces-pressure-from-much-of-the-world-yet-he-persists)
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.
