June 17, 2014

International Trade

Incoming cargo at Puerto Cabello

• 20,000 tons of auto parts from the US to DANAVEN
• 6,000 tons of rice from Guyana to CASA
• 2,000 tons of steel coils from Brazil and 344 tons of electric transformers from Cartagena, for CORPOELEC, the national electric company
• 503 tons of cement blocks and bricks from China

Nine vessels are at dock, loading and offloading, and 11 remain at bay.

More in Spanish: (Notitarde, http://www.notitarde.com/La-Costa/Seis-mil-toneladas-de-arroz-llegaron-para-Casa-2179793/2014/06/16/333539)

  

Cost of importing rises drastically on the wings of rampant inflation

The government has taken steps that will drive importing costs up. Last week the National Customs and Tax Administration Service (SENIAT) told customs managers that the customs duties will now be calculated using the FOREX rate applied to the imported goods. In other words, it will go from the rate of VEB 6.30/U$D1 to that used by the First Ancillary Foreign Currency Administration System (SICAD 1), which is VEB 10/U$D1, or SICAD 2, that is, VEB 50/U$D1, depending on the item importing. This translates into increases of 58.7% or 700%, respectively. (El Universal, http://www.eluniversal.com/economia/140616/importing-costs-on-the-rise-amid-rampant-inflation)

"Dramatic drop" in imports reported

Rusvel Gutiérrez, President of the Trade, Industry and Customs Brokers Chamber of Vargas State (La Guaira port) reports a "dramatic drop" of up to 95% in private imports so far this year. More in Spanish: (Notitarde, http://www.notitarde.com/La-Costa/Caida-dramatica-de-importaciones-2179262/2014/06/15/333383)

65% of food going into Táchira state is diverted across the border to Colombia

General Franklin García Duque, regional commander of the National Guard, says around 65% of the food that goes into Táchira state on the border with Colombia is diverted into the neighboring country where prices are much higher due to FOREX differences. More in Spanish: (El Nacional, http://www.el-nacional.com/)

Logistics & Transport

American Airlines Cuts 80% of Venezuela Flights

American Airlines, which was one of the largest foreign carriers into Venezuela with almost 7 flights daily from Miami, Dallas and New York, has announced that it is cutting flights to virtually 1 a day because of unexchanged currency.
As of March 31, American says that it had $750 million in bolivars that the Venezuelan government has refused to exchange for US dollars. The International Air Transport Association (IATA) says that airlines have almost $4 billion in unexchanged bolivars trapped in Venezuela, some of which have not been exchanged since 2012.
American says that it will discontinue 38 of its 48 weekly flights between the USA and Venezuela and end service between Caracas and Dallas, New York and San Juan after July 1. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2340438&CategoryId=10717; El Universal, http://english.eluniversal.com/economia/140617/american-airlines-cuts-flight-frequency-to-venezuela; Reuters, http://www.reuters.com/article/2014/06/17/venezuela-airlines-idUSL2N0OY0OA20140617; More in Spanish: Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/american-airlines-reduce-80-de-sus-vuelos-hacia-ve.aspx; El Nuevo Herald, http://www.elnuevoherald.com/2014/06/17/1775633/american-airlines-reduce-80-vuelos.html)

Sixteen airlines have yet to reach an agreement with authorities

Sixteen out of 25 international airlines have not yet entered into debt repayment agreements tendered by Venezuelan aviation authorities for settlement of the government's outstanding debt, says the Venezuela Association of Airlines (ALAV). The 16 major airlines are Air Canada, Air France, ALITALIA, American Airlines, AVIANCA, Caribbean Airlines, COPA Airlines, Delta Air Lines, Federal Express, Iberia, LACSA, LAN Airlines, LUFTHANSA, TACA, TAP Air Portugal and United Airlines. (El Universal, http://www.eluniversal.com/economia/140616/sixteen-airlines-yet-to-reach-an-agreement-with-venezuelan-govt)

Oil & Energy

Venezuela wants to regain US oil market

Venezuela wants to increase oil supplies to the United States to regain its market share lost over the past decade, as Caracas views the shale oil boom in the United States as an opportunity to increase heavy crude exports, according to Venezuelan Minister of Petroleum and Mining Rafael Ramírez. After meeting with investors and bankers in London last week, Ramírez –also the president of state-owned oil conglomerate PDVSA–, said Venezuela is working to get a loan of U$D 4 billion from China secured by oil sales. He also remarked that Venezuela's total debt with Beijing was under U$D 20 billion, which is much lower than market estimates of more than U$D 40 billion. (El Universal, http://www.eluniversal.com/economia/140616/venezuela-wants-to-regain-us-oil-market)

PDVSA will issue no more bonds this year

PDVSA President Rafael Ramírez says the company will issue no more bonds this year "because they are working with loans". He added: "we are not talking about restructuring, what we are doing is ’reprofiling’ our debt". More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/pdvsa-no-emitira-nuevos-bonos-este-ano.aspx#ixzz34nZ9vfjB; El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/pdvsa-no-emitira-nuevos-bonos-este-ano.aspx; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/revisan-formulas-para-reperfilar-deuda-nacional.aspx)

PDVSA to export gas to Colombia despite deficit

Venezuela is getting ready to export gas to Colombia under a bilateral agreement under which Colombia exported approximately 200 million cubic feet of gas per day to Venezuela since 2007. Venezuela is now due to export gas to Colombia beginning next July. Rafael Ramírez, Venezuela's Minister of Petroleum and Mining and president of state-run oil holding Petróleos de Venezuela (PDVSA), Rafael Ramírez, confirmed two weeks ago gas collected from PDVSA's Eastern Division would be carried to Colombia despite a deficit within the local market. (El Universal, http://www.eluniversal.com/economia/140616/pdvsa-to-export-gas-to-colombia-regardless-of-deficit)

Despite blackouts & losses, S&P affirms 'B-' ratings on Venezuela's electric company

S&P has affirmed its 'B-' ratings on CORPOELEC with a negative outlook that reflects that on Venezuela. "We believe there is an almost certain likelihood that the company's owner, the Bolivarian Republic of Venezuela, would provide timely and sufficient extraordinary support to the utility in the event of financial distress," says S&P. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2340390&CategoryId=10717)

Commodities

SIDOR paralyzed due to lack of supplies and spare parts

The SIDOR iron and steel industrial complex remains "paralyzed for lack of spare parts and material.. and not due to labor strife", according to Rafael Tizano, the main worker representative on the Board of the state owned company. He said 3 new pot carriers are not working due to a lack of spare tires. All of this "means that 5500-6000 ton of liquid steel are not being produced daily. As each ton is worth U$D 1,200, it translates into a daily loss of a little over U$D 6.6 million", says Tizano. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/actualidad/noticias/falta-de-repuestos-e-insumos-mantiene-paralizada-a.aspx#ixzz34tMiHR1b)

Polar's packing material plant halts operations

Labor representative José Ruiz reports that Polar's packing material plant in Carabobo state has stopped operating - for the second time this year - due to lack of material. He said that they have run out of aluminum to manufacture cans for beverages, and adds that the government owes suppliers around U$D 549 million. Plant capacity is for 120 million cans monthly and was lately down to 40 million. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140617/planta-superenvases-de-empresas-polar-detiene-operaciones)

Coffins are now scarce in Venezuela

Employee reports indicate cremations at the East Caracas Cemetery have risen 50% over the past months since coffins are now scarce due to lack of metal sheets, varnish and satin. Coffin production has dropped around 50% due to lack of material, according to Ricardo Guedez, a board member of the Funeral Parlor Association in Venezuela. Many funeral parlors are encouraging cremations and only using coffins during wakes in order to recycle them. Funerals in Venezuela have also increased due to rising violence; over 11,000 were murdered here last year. One funeral parlor representative reports that around 70% of bodies received in his establishment had met a violent death, either through clashes in poorer neighborhoods or in robberies in upper scale areas. More in Spanish: (Infolatam)

Economy & Finance

Venezuela FX rates to move closer together Soon: Ramirez

Venezuela needs to converge its three official foreign exchange rates soon to slow the world’s fastest inflation and promote economic growth, Economy Vice President Rafael Ramirez told investors in London. As part of the government’s effort to shore up Venezuela’s economy, international reserves that are near a 10-year low will be reinforced by dollars currently kept in off-budget funds, says Ramirez. The London presentation was the first in a series of meetings to re-establish relations with the financial markets. (Bloomberg, http://www.bloomberg.com/news/2014-06-16/venezuela-fx-rates-to-move-closer-together-soon-ramirez.html)

Exchange rate may be strengthened by transferring funds from FONDEN to the Central Bank               

Some experts have been encouraged by an announcement made by Economic Affairs Vice President Rafael Ramírez that part of the surplus funds held in the National Development Fund (FONDEN) and the Chinese Fund will be incorporated into the nation's reserves. They believe this type of action could reduce pressure on the exchange rate. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/preven-fortaleza-cambiaria-por-traslado-de-recurso.aspx#ixzz34tMNahVH)

Soaring inflation raises pressure for economic reforms

Venezuela's inflation soaring above 60% has boosted pressure on President Nicolas Maduro to speed up a transition toward a market-driven economy as the model of state-controlled socialism heads toward stagflation. Sky-rocketing consumer prices and shortages of nearly a third of basic goods have helped push Maduro's approval rating to 37% percent and weakened his standing as the heir to the late socialist leader Hugo Chavez. The central bank blamed May's 5.7% inflation reading on three months of opposition protests, but economists say the true culprit is a doubling of the money supply since the start of last year and a 17% increase this year. "It's easier to blame the protests than to cut spending and maintain fiscal discipline, which has a high political cost," said Asdrubal Oliveros of Caracas-based ECOANALITICA. "If you don't reduce monetary distortions, you won't control inflation." (Reuters, http://www.reuters.com/article/2014/06/13/venezuela-economy-idUSL2N0OU0J020140613)

Stratfor: Venezuela paves the way for economic reforms

The demotion of a major economic official could clear the path for modest economic reforms. On June 9, Venezuelan President Nicolas Maduro removed Planning Minister Jorge Giordani from his positions on the Central Bank board of directors and the board of directors of state-run energy firm Petroleos de Venezuela. He will retain his position as planning minister, but his removal from the Central Bank and Petroleos de Venezuela boards could eliminate ideological dissent from within the Cabinet for limited economic reforms, which seem likely in the upcoming months. Maduro still will have to contend with the country's cash flow problems and reduced oil production and his own declining popularity. His administration will struggle to implement economic reforms over the next few months and could face increased unrest as a consequence (Stratfor, http://www.stratfor.com/sample/analysis/venezuela-paves-way-economic-reforms)

Informal employment reported up to 60%

Blanca Llerena, a director at the National Unified Federation of Independent Workers, reports the rate of informal workers is now up to 60% as people migrate from the formal economy into informality. She says independent studies show 7.3 people are now informal workers, and contradicts reports by the National Statistics Institute of 5.3 million informal workers. She adds: "Official data shows informal workers as part of the self employed segment in order to minimize the lack of formal job opportunities." More in in Spanish; (El Nacional, http://www.el-nacional.com/economia/Aseguran-informalidad-alcanza_0_427157375.html)

Basic food consumption dropping

Rising prices and product scarcity are leading families here to reduce their food purchases, even in basic items. A survey by the National Statistics Institute shows daily consumption of the 10 key food items in the basic diet diminished by 10% in the second half of 2013, as compared to the same period in 2012. "Daily per capita intake" diminished for corn flour (-16.5%), chicken (-7.4%), plantain (-7.38), rice (-10,5%), papaya fruit (-4.6%), pasta (-7.7%), beef (-7.3%), wheat bread (-1.8%) and potatoes (-2%). Beyond these items, consumption went down in 55 out of 62 items that are part of the food basket subject to price controls. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140617/disminuye-consumo-diario-de-alimentos-basicos)

The cost of living rose 78.8% in one year

The latest version of a traditional survey undertaken by CENDAS shows the cost of the Basic Family Basket rose 6.2% in May, up to VEB 19,454.80, and it now takes 4.6 minimum wages to purchase it. CENDAS reports the cost of living rose 74.8% in one year, from May 2013 to May 2014. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/el-costo-de-la-vida-aumento-74-8-segun-el-cendas-f.aspx#ixzz34tKs8whH)

Survey: Caracas is the most expensive city in the world for expatriates

Venezuela's capital is the most expensive city in the world for expatriates, according to a ranking published by human resources consulting firm ECA International. The Cost of Living Survey by ECA determined that Caracas jumped from position 32 in 2013 to the first place in 2014, thus replacing Oslo. (El Universal, http://www.eluniversal.com/economia/140616/survey-caracas-is-the-most-expensive-city-in-the-world-for-expatriates)

Politics

María Corina Machado called in for questioning by the Prosecutor General

Questioning of Venezuelan opposition leader María Corina Machado at the Attorney General's Office ended after seven hours. Government spokesmen had accused the deposed deputy of involvement in a plot to kill the Venezuelan president and mount a coup.  The Prosecutor says her office does not suspect Machado of plotting to kill Maduro, despite accusations from government spokesmen, and insists she was called in as a witness. Machado says that her arrest would be final evidence that Venezuela is a "dying dictatorship", and that there is "not a shred of evidence that she has committed any crime". She also requested protection from the Inter American Human Rights Commission. Five more opposition members have been called in to the Prosecutor's office during this investigation. (El Universal, http://www.eluniversal.com/nacional-y-politica/140616/maria-corina-machado-i-spoke-with-consciousness; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/140617/fiscal-le-aseguro-a-machado-que-no-la-investiga-por-magnicidio; El Nacional; http://www.el-nacional.com/; and Infolatam)

Maduro congratulated President Santos on re-election

Venezuelan President Nicolas Maduro congratulated his counterpart Juan Manuel Santos, who was re-elected as president of Colombia in the second round of elections. "Between peace and no peace. Colombian people have clearly taken the path of peace," said Maduro, adding that the government and people of Venezuela are willing to work for peace in Colombia, and bet all their forces to reach the peace of all Colombians. (AVN; http://www.avn.info.ve/contenido/maduro-congratulated-president-santos-re-election; El Universal, http://www.eluniversal.com/nacional-y-politica/140616/maduro-celebrates-santos-reelection-endorses-talks)

Biden regrets the weakness of democratic institutions in Venezuela

US Vice President Joseph Biden said the Obama administration has tried to improve relations with democratically elected leftist governments in Latin America but called Venezuela "an emblematic case of the weakening of democratic institutions", More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140617/biden-lamenta-debilidad-de-las-instituciones-democraticas-en-venezuela)

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.

June 13, 2014

International Trade

Incoming cargo at Puerto Cabello:

• 33,000 tons of soy flour from Argentina, for CASA.
• 33, 000 tons of white corn from Mexico, for CASA
• 30,000 tons of paddy rice from Brazil, for CASA
• 2,428 tons, 877 kg of chicken from Argentina and Uruguay for CASA
• 1.023 tons of printing paper from Brasil for Industria Venezolana Endógena de Papel (INVEPAL)
• 832 tons of cheese and milk powder from Uruguay for Distribuidora Greacla and General de Alimentos Nisa
• 680 ton of bean seeds for CASA
• 436 tons of machinery for cargo handling for Empresa Mixta Comercializadora
• 234 tons of medicine from Farmacuba to Fundación Oro Negro
• 118 tons of food preparations from Italia for Inversiones Nutralia
• Shampoo and conditioner arrived for Procter&Gamble
• Prefabricated construction, for PDVSA IndustrialPersonal care products, milk, cream, tires, refractory bricks, frozen chicken, lentils and tomato paste.

Twelve vessels remain at anchor. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Desembarcaron-mas-de-2-mil-toneladas-de-pollo-para-Casa-2176757/2014/06/12/332901; http://www.notitarde.com/La-Costa/Llego-harina-de-soya-arroz-y-maiz-blanco-2177467/2014/06/12/333013)

Customs charges will adjust to the new exchange rates

Tariffs applied to incoming goods will henceforth charge at the SICAD I or SICAD II rates, as applicable. The VEB 6.30/U$D1 rate will no longer be used. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Tasa-de-impuesto-aduanero-dependera-del-tipo-de-cambio-2176758/2014/06/12/332902)

Customs workers protested in Vargas state to demand the repeal of the presidential decree creating the Venezuelan Foreign Trade Corporation, CORPOVEX. Protestors marched to the maritime Customs House. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39737&idc=3)

Logistics & Transport

Aviation authorities give airlines five days to submit airfares, airlines insist on a signed repayment agreement

General Hebert García Plaza, Minister for Aquatic and Air Transportation has told airline representatives that the government will soon establish parameters for adjusting airfares to and from Venezuela. Once the resolution is published airlines will be required to submit their adjustments within 5 days. Major airlines operating here insist they will not reach an agreement unless the government must signs an agreement for repayment of its FOREX debt. (El Universal, http://www.eluniversal.com/economia/140612/aviation-authorities-give-airlines-five-days-to-submit-airfares; and more in Spanish: (El Nacional; http://www.el-nacional.com/)

Oil & Energy

The OPEC will keep its current production decided at the end of 2011. Delegates of member nations have reached a consensus to maintain the 30 million barrels per day ceiling. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39739&idc=4)

Curacao's government and PDVSA will jointly seek investors for the Isla Refinery

Officials in Curacao say their government will join PDVSA in seeking investors for the island's ISLA Refinery, which is leased to PDVSA through 2019. The 96 year old refinery requires massive investment. More in Spanish: (En Oriente, http://enoriente.com/canales/yvn/29365-gobierno-de-curazao-y-pdvsa-firman-acuerdo-para-buscar-inversionistas)

Economy & Finance

Central Bank confirms 5.7% inflation in April, and 5.7% again in May

The bank says inflation has been propelled by political strife.  Accumulated inflation through May 2014 is 23% and projected annual inflation rose to 60.9%. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/inflaciones-de-abril-y-mayo-fueron-de-5-7-en-cada-.aspx#ixzz34W2bbPLj; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/claves-vea-que-fue-lo-que-mas-aumento-en-mayo.aspx; El Mundo, http://www.elmundo.com.ve/noticias/economia/banca/inflacion-de-abril-y-mayo-fue-de-5-7--cada-mes.aspx; El Universal,  http://www.eluniversal.com/economia/140613/la-inflacion-acumula-el-mayor-salto-desde-1996; El Nacional; http://www.el-nacional.com/)

Barclays: "Venezuela is in the middle of an economic collapse"

Investment banks expected president Nicolás Maduro would implement an adjustment plan including FOREX rate unification, raising the price of gasoline, monetary discipline, and tax reform. However, Alejandro Grisanti, analyst at Barclay's Capital, says that the current events point in the opposite direction. "There has been no progress towards such measures. At the end of April, public expenditure jumped by 20% in real terms. In the monetary area, between late March and early April, the central bank provided VEB 75 billion (U$D 11.9 billion) to fund state-run oil company PDVSA. No FOREX rate unification can be put in place because nobody is expecting currency controls to end; therefore, the parallel FOREX market will continue to exist," explains Grisanti. (El Universal, http://www.eluniversal.com/economia/140611/venezuela-is-in-the-middle-of-economic-collapse; http://www.eluniversal.com/economia/140611/high-turnover-in-economic-cabinet-termed-negative)

Bank of America: Venezuela is undergoing a deep crisis

A recent report by Bank of America Merrill Lynch shows President Maduro's popularity down to 30% due to a deep recession and accelerated inflation. The report says Maduro has low political capital which limits his capacity to carry out economic reforms. It says accumulated economic distortions have made it impossible to stop industrial production from dropping, and says "it is not clear whether the economic team in charge of macroeconomic policy shares the same view and whether it is in sync with the team that handles microeconomic policy". More in Spanish: (El Nacional; http://www.el-nacional.com/)

Talks suspended with business representatives as huge debt remains unpaid. Eduardo Garmendia, head of the National Industry Council (CONINDUSTRIA) says companies have submitted all of the information required to solve problems within the productive sector, and says “the ball is in the government’s court.” (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39739&idc=4)

SICAD 2 fails to abate the unofficial FOREX market

The government set up the First Ancillary Foreign Currency Administration System (SICAD 1) in March 2013, in an attempt to put an end to the unofficial FOREX market, which determines prices for many goods and services, and propels inflation. Following a poor performance with SICD 1, authorities implemented the so-called SICAD 2 a year later, allowing corporations and individuals to buy foreign currency at the exchange rate of VEB 49 per US dollar, 43% below the unofficial forex rate, yet supply fails to cope with demand. Economic research firms such as BARCLAYS say that the government's determination not to allow the FOREX rate for SICAD 2 to float based on supply and demand has translated into yet another FOREX rationing system. (El Universal, http://www.eluniversal.com/economia/140612/sicad-2-fails-to-vanquish-the-unofficial-forex-market)

Venezuelan debt up to U$D 122.3 billion by the end of Q12 2014, due to a more bonds issued on the local market. Domestic debt closed at U$D 56.8 billion in 2013, and rose to U$D 61.2 billion in March. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39728&idc=2)

Politics

Arrest warrant issued for Venezuelan opposition leaders

Venezuela's attorney general has issued arrest warrants against three prominent opposition leaders. They are Diego Arria, a former presidential candidate and United Nations ambassador; Pedro Burelli, former external director of the state oil company Petroleos de Venezuela; and Ricardo Koesling, a lawyer who has been a strong critic of the government. They are wanted for questioning in an alleged plot to assassinate President Nicolas Maduro. "Groups outside the law have violent political plans," said Attorney General Luisa Ortega. She said she would ask Interpol to issue international arrest warrants, as they may have left the country. The attorney general's office said the three were not officially charged with participating in the alleged assassination plan, but they had failed to testify in an investigation of the plot. Another opposition leader, former legislator Maria Corina Machado, has been accused of being the primary organizer of the alleged plot. She has been called in to testify on 16 June. Via Twitter, Mrs. Machado scoffed at the accusations, calling them "infamy." Ambassador Arria called plot charges a "fantastic contrivance" and says the regime is in its "terminal phase". He adds that the Venezuelan government has harassed him ever since he denounced the late President Arria in The Hague court. (BBC News, http://www.bbc.com/news/world-latin-america-27806616?utm_source=Sailthru&utm_medium=email&utm_term=%2AMorning%20Brief&utm_campaign=2014_MorningBrief%206.12.14; Fox News, http://www.foxnews.com/world/2014/06/11/venezuela-calls-for-arrestsof-3-government-opponents-for-alleged-plot-against/; El Universal, http://www.eluniversal.com/nacional-y-politica/140611/attorney-general-arrest-warrants-for-arria-burelli-and-koesling; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39738&idc=1; and more in Spanish: Infolatam).

Government repression increased 485% in February and March, compared to 2013, the highest figure in the last 25 years, according to PROVEA’s report “Venezuela 2014: Protests and Human Rights”. The NGO revealed 3,127 people have been detained for protesting so far, 2,463 of whom have been arraigned in courts and 119 have been remanded. It also showed there have been 157 documented cases of torture and cruel and inhuman treatment. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39729&idc=1)

Capriles calls for election of new electoral board

Venezuelan opposition leader Henrique Capriles Radonski has stressed the need for choosing the new authorities of the National Electoral Council (CNE) before engaging in any political agenda. Reference was made to the expiration of the tenure of the CNE directors. "Before talking about a constituent assembly, a vote should be held to replace the officials whose terms have expired," said the opposition leader during a meeting with workers from the state of Miranda, north Venezuela.  Capriles noted that choosing a new electoral board is vital to bring peace to the country. The Supreme Court has ruled that members of the CNE's Board whose term has expired can remain in office until the National Assembly chooses their replacements. (El Universal, http://www.eluniversal.com/nacional-y-politica/140611/capriles-calls-for-election-of-new-electoral-board; and more in Spanish: http://www.eluniversal.com/nacional-y-politica/140611/tsj-deja-hasta-nuevo-aviso-a-los-tres-rectores-del-cne)

Student protests revive as World Cup begins

Student protests have again erupted, with barricades and demonstration attuned to World Cup celebrations. Protests have taken place in Valencia, where 16 were wounded; Puerto Ordaz, where 4 students were detained; Maracay, Mérida, Caracas and the island of Margarita. More in Spanish: (El Nacional; http://www.el-nacional.com/)

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.

June 10, 2014

Logistics & Transport

45% of the domestic airline fleet at a standstill

Humberto Figuera, President of the Association of Venezuela Airlines (ALAV), Humberto Figuera says the plight of domestic carriers is equal to or more critical that of international airlines. He explains that 45% of the domestic fleet is grounded due to shortage of spare parts; and lack FOREX to pay for maintenance. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/figuera-45-de-la-flota-de-las-aerolineas-nacionale.aspx)

Airlines are slowly adjusting rates

 Some airlines that came to an agreement with authorities on repayment of its FOREX debt since 2012 have begun to apply adjusted rates and resume ticket sales as usual. Airlines such as INSEL y TIARA Airlines are selling tickets to Caribbean islands such as Aruba and Curacao, at around U$D 300 and U$D 330. INSEL reports fares to Miami at around U$D 540 are available for September, October and November. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/lineas-aereas-activan-nuevas-tarifas-de-boletos-po.aspx#ixzz34EGdCeea; El Universal, http://www.eluniversal.com/economia/140610/aerolineas-publicaran-en-julio-sus-tarifas-en-dolares; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/aerolineas-ya-comienzan-a-vender-pasajes.aspx)

Oil & Energy

Petroleum minister hopes OPEC to keep oil production ceiling

Venezuela's Minister of Petroleum and President of Petróleos de Venezuela (PDVSA), Rafael Ramírez, says he hopes the Organization of Petroleum Exporting Countries (OPEC) will keep its output ceiling unchanged at 30 million barrels per day during their current meeting in Vienna. (El Universal, http://www.eluniversal.com/economia/140609/petroleum-minister-hopes-opec-to-keep-oil-production-ceiling)

PDVSA delivered two diesel shipments to BP and GUNVOR

Venezuela diesel exports resumed this January after years of devoting their entire diesel production to the domestic market, while a growing demand from power plants has limited sales in recent months and forced PDVSA to boost imports. More In Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/pdvsa-entrego-dos-cargamentos-de-diesel-a-bp-y-gun.aspx)

Commodities

SIDOR has been shut down for 29 days since April, at lowest productivity in history

SIDOR is reaching the worst levels in productivity in its entire history due to labor strife. The industrial conglomerate has been paralyzed for 29 days since the end of April due to worker shutdowns over back pay due and a lack of spare parts and supplies. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140609/desde-abril-sidor-ha-estado-paralizada-por-29-dias)

Suppliers have cut off credit to Venezuela's chemical industry

Juan Pablo Olalquiaga, President of the Chemical and Petrochemical Industry Association, says that even if the government pays all it owes to the local chemical industry and they can repay their pending external debts, international suppliers are no longer willing to grant credit lines and will only dispatch supplies through up-front payments. "They say they have lost confidence in the Venezuelan market due to repayment delays", he says. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Economy & Finance

U$D 15.6 billion debt service will further pressure on reserves during 2014

The Government faces heavy debt service obligations during the remainder of 2014, which will generate more pressure on international reserves. Official data shows total internal and external debt service on capital repayment, plus interest on bonds and loans is U$D 15.6 billion. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140610/pagos-de-deuda-externa-presionaran-mas-las-reservas)

Central Bank sees 2-4% contraction in Q1 2014, recession looms

As industrial production, construction and agriculture keep dropping despite increased government spending and cheap lending, Central Bank numbers now project a 2-4% economic contraction for Q1 2014. Technically, there has been an ongoing recession after two consecutive quarters, and nothing now indicated a change in tendency for April and May, despite a 13% jump in government spending. Despite this, automotive production collapsed 76% in Q1, the chemical industry is 50% below last year, construction is contracting due to scarce cement and iron bars, and basic foods such as milk, sugar, cooking oil and wheat flour are scarce. Rather than weaken, inflation has accelerated over the past few months and is now projected at 60% for this year. More in Spanish: (El Universal: http://www.eluniversal.com/economia/140609/crecen-el-gasto-y-el-credito-pero-el-pais-se-dirige-a-la-recesion=)

Bank of America-Merrill Lynch reports local private consumption dropped 5.4% in 2013

A report from Bank of America-Merrill Lynch shows local private consumption dropped much more than reported by authorities. It shows a drop of 5.4% and a 2.7% contraction in family income during 2013. This information contradicts a 1.3% increase reported by Venezuela's Central Bank, and indicates "there is a distortion in prices". Based on projected poverty rates they can detect a 5.6% drop in production. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Venezuela studying new ways toward exchange adjustment

Analysts polled by Reuters say authorities are discussing scenarios that create more fiscal resources, without further sacrificing popularity of President Nicolas Maduro, recently reported at 31%. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/reuters-venezuela-estudia-formulas-para-un-nuevo-a.aspx)

New Central Bank authorities reported to have ordered a review of inflation calculations as projections soar

An unofficial source reports the Central Bank - after several directors were replaced - has ordered its technical team to adjust the National Consumer Price Index before they decide to continue publishing them. The proposal is reported to have come from the National Statistics Institute, which requested a change in measurement methodology. Some economists are predicting 2014 could close with an 80% inflation rate, and say April inflation may have been 5.7%. Economist Antonio Paiva, the government considers the inflation rate “subversive so it hides it, delays it; they don’t deliver it.” (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39688&idc=2; and more in Spanish: El Nacional; http://www.el-nacional.com/)

Politics

Talks between the government and opposition remain paralyzed after 2 months and no results

Talk begun on April 10 between government representatives and leaders of the opposition Democratic Unity Conference (MUD), under the auspices of the South American Union (UNASUR) and the Papal Nuncio, remain frozen and with no results. On May 13, MUD Secretary General Ramón Guillermo Aveledo, announced they were suspending talks until the regime produces "concrete actions". They have not met since, although Ecuador´s Foreign Minister Ricardo Patiño has been talking to both sides this week in order to get them started again. (El Universal, http://www.eluniversal.com/nacional-y-politica/140610/el-dialogo-cumple-dos-meses-suspendido-y-sin-resultados; and more In Spanish: Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/patino-tratara-en-venezuela-dialogo-entre-gobierno.aspx)

Opposition groups seek early election, indicates a Constitutional assembly

Opposition leader María Corina Machado told a group of supporters and leaders of the Voluntad Popular party, which rallied to express solidarity with her after she was interrogated on "conspiracy" accusations by government representatives, that it is time to create a board unity platform to seek the resignation of Nicolás Maduro and renew a social covenant that includes all Venezuelans. She said the Constitution provides they way to do so, either through an amendment or a national constituent assembly.  She spoke before thousands of Venezuelans who oppose the socialist-led government, in a peaceful rally in the capital to protest the detention of an opposition leader and to call for an early presidential election. Anti-government activists massed to voice support for opposition leader Leopoldo Lopez, who has been held in a military prison since being arrested in February on charges of fomenting violence as a result of the initial protests. A judge ordered last week that Lopez proceed trial. (Fox News, http://www.foxnews.com/world/2014/06/08/anti-government-activists-in-venezuela-rally-to-give-support-to-jailed/; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/140609/sector-opositor-anuncia-que-buscara-adelanto-de-comicios)

Businessman reports "conspiracy" emails were forged by regime

Pedro Mario Burelli, a prominent Venezuelan businessman accused by the government of plotting to kill President Nicolás Maduro, reports emails presented by authorities as "proof" of a conspiracy are forged. Burelli, who has resided in Washington for the past 10 years, says the Venezuelan Embassy has circulated forged emails which is a crime under US law. He says: "all the emails shown are from Google accounts. We are following established procedures - through my legal counsel - to obtain technical information and confirmation that will show how all this was set up on the basis of forged emails". And adds "I am not conspiring to kill the President of Venezuela, illegitimate though he may be, nor for a coup d'etat...I will explain my contacts with the State Department whenever Mr. Maduro clarifies his relationship with the Cuban government". More in Spanish: (Infolatam)

Guyana pressures Venezuela into negotiation

Guyana is exerting pressure on Venezuela to discuss sea boundaries in order to go ahead with prospecting in the sea area claimed by this country. "We have delivered several reminders. For us, enough time has elapsed to begin (the talks) and it is time to push further into it," says Guyana's Minister of Foreign Affairs Carolyn Rodrigues-Birkett. Both Guyana's Minister of Environment Robert Persaud and Minister Rodrigues-Birkett understand that an agreement with Venezuela is needed for oil prospecting. (El Universal, http://www.eluniversal.com/nacional-y-politica/140609/guyana-pressurizes-venezuela-into-negotiation)

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.

June 06, 2014

International Trade

Incoming cargo at Puerto Cabello:

• 66,000 tons of rice for CASA. 33 thousand tons from the US and 33,000 tons from Brasil.
• 31,600 tons of corn from Argentina.
• 2,900 tons of MT Neodene from Shell Chemical for Química Venoco
• 1,594 tons of paper and cardboard cutouts for Cartón de Venezuela
• 1,045 tons of milk and cream for CASA
• 900 tons of chicken and margarine from Jamaica, for CASA
• 644 tons of fresh pork for CASA
• 573 tons of paper from Pérez Trading for INVEPAL
• 515 tons of sweetened condensed milk for Banco Nacional de Crédito
• 436 tons of beans from Chile
• 368 tons of roofing sheets from Fletes Consolidados
• 314 tons of beef for Podra y Distribuidora
• 291 tons of floor tiles for Hierro Cojedes Mérida
• 247 tons of toilet paper from Jamaica, for Papeles Venezolanos.
• 187 tons of expandable polymers from Polioles for Pequiven
• 121 tons of building material for PDVSA
• 85 tons of newsprint from Britain for Engelbert Transportes INT. 
• 55 tons of type 1 cement for Invecem 55
• Milk and cream, fresh pork and frozen beef for CASA
• Sanitary napkins for Procter & Gamble

Exports from Puerto Cabello:

• 414 tons of coaxial and electric cable for Chicago and Houston.

Twelve ships remain at anchor. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Desembarcaron-mas-de-60-mil-toneladas-de-arroz-2172515/2014/06/04/331407; http://www.notitarde.com/La-Costa/Descargaron-pollo-y-margarina-en-el-puerto-local-2173109/2014/06/06/331599; http://www.notitarde.com/La-Costa/Llegaron-mas-de-600-toneladas-de-carne-de-cerdo-2171956/2014/06/03/331121 El Carabobeño; http://www.el-carabobeno.com/impreso/articulo/102838/-leche,-nata-y-carne-de-cerdo-arribaron-al-puerto-carabobeo)

Some shippers have adjusted their rates to the SICAD II exchange rate

Some shipping lines have started to charge for their services and operations - among them the use of containers and container delays - using the SICAD II exchange rate (approximately VEB 50/U$D1). More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Algunas-lineas-navieras-empezaron-a-cobrar-sus-servicios-a-tasa-Sicad-II-2171955/2014/06/03/331120)

Logistics & Transport

Venezuela now conditions airline repayment to tariff adjustments

Humberto Figuera, President of Venezuela's Airline Association (ALAV) says authorities have established a new and unforeseen condition for repaying the government's pending FOREX debt with airlines. He says that once repayment terms that are being established with some airlines are approved by the Ministry for Aquatic and Air Transport, and the Civil Aviation Authority, authorities are requesting a "tariff schedule" from the airlines. Figuera says that "if these tariffs are agreeable to authorities they go ahead with repayment; if they are not, payments are not scheduled. This is a new condition that was not set in agreements reached on May 29th". More in Spanish: (El Universal, http://www.eluniversal.com/economia/140606/autoridades-supeditan-pago-a-aerolineas-a-nuevo-esquema-de-tarifas; El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/a-la-fecha-7-aerolineas-han-concretado-pacto--pero.aspx)

CORPOVEX could cause shutdown of 3,000 customs agencies

The National Customs Agencies Association (ASONAGA) and the Chamber of Customs Users and Professionals (CADUAINCO) warn that CORPOVEX could replace customs agencies. Concerns are based on the latest FOREX tender under the First Ancillary Foreign Currency Administration System (SICAD 1), in which the National Center for Foreign Trade (CENCOEX) said purchase orders for FOREX can be placed via CORPOVEX only, instead of public banks. This means CORPOVEX will become the broker. (El Universal, http://www.eluniversal.com/economia/140605/fears-that-corpovex-leads-to-shutdown-of-3000-customs-agencies)

Oil & Energy

PDVSA signed agreements with ENI and REPSOL to exploit condensed reserves (natural gas liquids) in the Perla 3X gas field, located off shore Falcón state, 50 kilometers off the Paraguaná Refining Complex. In 2010, the three oil companies concluded tests that confirmed the existence of 15 billion cubic feet gas in that field. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39630&idc=4; El Universal, http://www.eluniversal.com/economia/140605/pdvsa-signs-agreements-with-eni-repsol; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2332337&CategoryId=10718)

Economy & Finance

PDVSA expected to seek bank loan to pay off bonds due in 2014

Petroleos de Venezuela S.A (PDVSA) is seeking a loan to pay off U$D 3 billion of debt that matures this year and isn’t planning additional dollar bond sales in 2014, according to a company official familiar with the matter. PDVSA expects to obtain a seven- to eight-year loan from an international bank and then work to refinance an additional U$D 11.9 billion of debt due through 2017, according to the official, who asked not to be identified. The plan to limit debt sales for the rest of the year comes after the company said May 14 that it was selling U$D 5 billion in notes due in 2024 in a private placement to state banks. Barclays Psaid the next day that it expected PDVSA’s new issuance for the year to exceed its previously forecast amount of U$D 6 billion because of a shortage of dollars in the country and a “large concentration of payments” due in the last quarter of the year. (Bloomberg, http://www.bloomberg.com/news/2014-06-05/pdvsa-said-to-seek-bank-loan-to-pay-off-bonds-due-in-2014.html)

Lower gold price puts further pressure on Venezuelan international reserves

Gold prices have entered a downward spiral which, if unstopped, will have a serious impact on Venezuela, as gold makes up 70.7% of the country's international reserves. Early on Thursday, the gold price was estimated at U$D 1,246 per ounce, which means a U$D 46 drop (3.5%) with respect to May. US multinational investment banking firm Goldman Sachs estimates that the downturn will continue until gold averages U$D 1,050 during the rest of the year. (El Universal, http://www.eluniversal.com/economia/140605/lower-gold-price-puts-further-pressure-on-venezuelan-international-res)

Venezuela sacrifices drinking water to pay bondholders

At a time when Venezuela’s record U$D 25 billion in arrears to importers has its citizens waiting hours in line to buy drinking water and crossing borders in search of medicine, President Nicolas Maduro is using the nation’s dwindling supply of dollars to enrich bondholders. Venezuela, which imports just about everything, and its state oil producer have paid U$D 2.8 billion in interest to overseas creditors this year, according to Barclays. Including debt principal, bondholder outlays will balloon to almost U$D 10 billion by year-end, the London-based firm estimates. (Bloomberg, http://www.bloomberg.com/news/2014-06-05/venezuela-sacrifices-drinking-water-to-pay-bondholders.html)

Politics

Lopez and students to remain in jail until trial, Capriles terms Venezuela's justice "rotten"

A Venezuelan judge has ordered opposition leader Leopoldo Lopez to stand trial on charges of instigating violence at an anti-government protest in February. Lopez of the Popular Will party has been in jail since he handed himself in to the authorities on 18 February. If found guilty, Lopez could face up to 10 years in jail. Judge Adriana Lopez made the decision to send Lopez for trial shortly after 03:00 (07:30 GMT) after a marathon session which began on Monday. Lilian Tintori, Lopez's wife said he would face charges of damaging property, arson and instigating violence. Attorneys for López expect the trial to be held toward the end of August, and believe it will be very short as the defense has been denied the right to present witnesses and evidence to prove his innocence. Two students, Marco Coello and Christian Holdack, who have been behind bars since February on charges of alleged "public instigation, arson, damages and collusion" will also remain in jail and face a trial. Upon learning the news, former opposition Presidential candidate Henrique Capriles said the decision has hatched by the regime and called Venezuela's system of justice "rotten". (BBC; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39640&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/140605/judge-gives-the-green-light-to-sue-leopoldo-lopez-in-jail;  http://www.eluniversal.com/nacional-y-politica/140605/lopezs-attorneys-we-will-face-trial-tied-and-silent; http://www.eluniversal.com/nacional-y-politica/140605/capriles-court-ruling-against-lopez-was-hatched-by-the-govt; and more in Spanish: Infolatam)

Prosecutor summons Machado and other opposition leaders for alleged assassination plot

Following charges by Jorge Rodríguez, a leader of the pro-government PSUV party, of a plot to assassinate President Maduro and stage a "military coup", Venezuela's General Prosecutor Luisa Ortega has issued warrants summoning deposed legislator María Corina Machado, Ambassador Diego Arria, former President of the UN Security Council; former Presidential candidate Henrique Salas-Römer; former PDVSA director Pedro Burelli, and others to her office to "pursue this investigation". Rodríguez went on nationwide radio and TV to show several emails allegedly sent by Machado to several of the individuals now summoned. The mails also mentioned the new US Ambassador to Colombia, Kevin Whitaker. Machado has accused Rodríguez of presenting fake emails, and denies seeking an assassination or a coup. She simply asks Maduro to resign. More in Spanish: (Infolatam)

International Jurists Commission says Venezuela's 'very weak' judiciary undermines rule of law

Venezuela's judiciary is persecuting students, dissidents and independent judges while turning a blind eye to most crimes in a country with one of the world's highest murder rates, says an international human rights watchdog. About 1,500 students face prosecution after three months of street protests this year with no evidence they took part in any criminal act, including about 160 still behind bars, the International Commission of Jurists (ICJ) said. Forty-two people, including 38 civilians, were killed in the daily marches to decry crime, inflation and food shortages in Venezuela. Excessive use of force by security forces has been documented as well as least 14 alleged cases of torture. (Reuters, http://www.reuters.com/article/2014/06/05/us-venezuela-judiciary-idUSKBN0EG1SP20140605)

US says the decision to keep López in jail hurts "dialogue"

Marie Harf, deputy spokesperson for the US State Department, says the decision to keep López in jail while awaiting trial is "damaging" to the dialogue between the regime and the Venezuelan opposition. She added that the US government believes "dialogue is the way to go" in Venezuela, and "not political arrests and an attempt to criminalize dissent". More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140606/eeuu-dice-que-prision-de-lopez-perjudica-el-dialogo)

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.

June 03, 2014

Oil & Energy

Venezuela warns of retaliation for Colombia gas suspension

Venezuelan Energy Minister Rafael Ramirez said the suspension of gas from Colombia could affect the supplies that Venezuela sends to that country in the future. “Colombia suspended its gas and not for anything that happened here, so what I say with all respect to Colombians is that if they continue to do this, we’re not sending them any gas when it’s our turn,” said Ramirez when asked about the cut in supplies announced by Colombian authorities. Colombia’s Energy Minister Amylkar Acosta announced in April the suspension of gas to Venezuela to protect the domestic power supply against the expected effects of the El Niño phenomenon. Ramirez said that Venezuela is increasing its own gas production and that it respects Colombia’s decision. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2311965&CategoryId=10717)

PDVSA’s production in 2013 was down 27% from 1997, according to the CEPAL’s most recent report. Investments in the oil sector rose 5% last year. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39556&idc=2)

Paraguaná Refining Center is operating at 62% capacity after a series of accidents and “scheduled” stops in the refinery, according to an internal report seen by Reuters this Thursday. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39555&idc=4)

Venezuelan oil price trends up

Venezuela's weekly oil basket stayed below the country's desired U$D 100 a barrel floor but continued rising for the third consecutive week, driven by positive economic results in the US and China and geopolitical tensions in Ukraine and Libya. According to figures from the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending May 30 was U$D 98.31, up U$D 0.21 from the previous week's U$D 98.10. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2316376&CategoryId=10717)

El Salvador joins PETROCARIBE

Ramiro Vásquez, a member of the political team in charge of ALBA Oil in El Salvador says "the first decision of the new government is to incorporate El Salvador" into PETROCARIBE and it will be "a very important step toward deeper relations within our continent". More in Spanish: (PDVSA, http://www.pdvsa.com/)

Economy & Finance

Venezuela says it will release U$D 2.1 billion in FOREX to companies, including airlines

Venezuela says it will begin releasing U$D 2.1 billion in hard currency to companies that have struggled to obtain greenbacks through currency controls. Officials say some U$D 1.2 billion will go to small and medium-sized businesses in the food, health, chemicals and heavy industry sectors- Economic Affairs Vice President Rafael Ramirez said U$D 930 million more will be disbursed to larger companies, including U$D 486 million to airlines. (Reuters, http://www.reuters.com/article/2014/05/30/venezuela-economy-idUSL1N0OG1JV20140530; More in Spanish: PDVSA, http://www.pdvsa.com/; Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/gobierno-inicia-liquidacion-de-divisas-pendientes-.aspx)

Informal employment creation was 65% in one year

The National Statistics Institute (INE) reports 65% of all new jobs created in 2013 were in the informal sector, which is at a disadvantage in the area of labor stability, special benefits, wage increases, private health insurance, savings bank, and other benefits. (El Universal, http://www.eluniversal.com/economia/140602/informal-employment-hits-65-of-the-economy-in-one-year)

Food basket price up 69.1% in one year

Sustained increases in the price of food are reflected in a survey by the Center for Documentation and Social Analysis (CENDA). By March the minimum wage (U$D 519.1) could afford only 45% of the basic food basket, which went up 13% in the first quarter. The price variation in one year was 69.1%. (El Universal, http://www.eluniversal.com/economia/140602/food-basket-price-up-691-in-one-year)

Possible US sanctions would not hit oil or the economy

US Representative Joaquín Castro, one of the proponents in the bill recently passed in the US House of Representatives that aims to sanction those who violate human rights in Venezuela says: "sanctions recently approved do not touch upon the oil sector or any other part of the Venezuelan economy". More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/posibles-sanciones-de-eeuu-a-venezuela-no-abarcari.aspx#ixzz33TiU8Q6u)

Venezuela off the radar screen for foreign investment

A report on foreign investment by the UN Economic Commission for Latin America and the Caribbean (ECLAC) shows that out of U$D 129.890 billion foreign investment inflows into the region in 2013, Venezuela received a mere 4%. More in Spanish: (El Universal; http://www.eluniversal.com/economia/140603/el-pais-esta-fuera-del-radar-de-la-inversion-extranjera)

Venezuela against the wall, a special financial presentation by Russ Dallen, of the Latin America Herald Tribune. The initial slides show a drastic drop in reserves from U$D 40 billion to U$D 20 billion, even as the major component gold rose, rising 60% inflation, falling currency, and a 60% scarcity index. It shows declining US oil imports and increasing US domestic oil production (Slides 7-9) as well as the fall in Venezuela's oil exports to the US, Venezuela's dropping oil production and who actually pays for Venezuela's oil (US, China and India) and how much money that is in real terms. Venezuela's oil sales may net around U$D 50 billion depending on actual production, yet imports alone were U$D 59 billion, though they are crashing rapidly as widespread shortages show. While Venezuela's production in the east and west of the country has been falling, their Orinoco production is growing rapidly, as the billions invested by serious international oil companies like Chevron, ENI, REPSOL, ROSNEFT, CNPC, & ONGC (not to mention the expropriated billion dollar investments by ConocoPhillips and ExxonMobil) continue to ramp up production.  Venezuela has virtually finished its own pipeline to bring oil from the infrastructure poor Orinoco area to its giant Jose Refinery and Terminal Complex on the Caribbean this week. The 154 mile pipeline can carry 750,000 BPD, though there are other bottlenecks and infrastructure is needed. Slide 15 and 16 show just why Venezuela, with the world's largest oil reserves, has lower production than the US, Canada and Mexico -- crashing foreign direct investment, which actually went negative in 2009 and is the lowest as a percentage of GDP in the hemisphere, save for Ecuador.  Slide 17 shows Venezuela's cost to borrow in international markets is also the highest in the region. Slide 18 shows new car sales in Venezuela, which fell 87% in the last year to just 817 new cars in February, whereas in 2007, new car sales were over 25,000 a month. See the slide presentation at: (Center for Security Policy: http://www.centerforsecuritypolicy.org/wp-content/uploads/2014/05/Russ-Dallen-)

Politics

Jailed activist awaits judge's ruling

A local court is holding a hearing to determine whether opposition leader Leopoldo Lopez will be freed or must wait in jail while facing charges of inciting violence and arson during anti-government protests. The closed-door proceedings at the Caracas courthouse are to resume today, after a 10-hour session yesterday. Lopez spearheaded protests in February seeking to pressure President Nicolas Maduro into resigning. (The New York Times: http://www.nytimes.com/aponline/2014/06/02/world/americas/ap-lt-venezuela-jailed-activist.html?ref=americas&utm_source=Sailthru&utm_medium=email&utm_term=%2AMorning%20Brief&utm_campaign=2014_MorningBrief%2006%2003%2014&_r=0)

OAS Secretary General says effective solution to Venezuelan crisis is "difficult"

OAS Secretary General José Miguel Insulza says an end to the conflict in Venezuela requires concessions "on both sides" and urged them to dialogue "without prejudices". He adds that "it is difficult to expect a quick and effective solution" due to "enormous division and polarization". The OAS' general secretary referred to the lack of progress in the Venezuelan government-opposition talks, which are in theory "intended to be about listening and putting prejudice aside." (El Universal, http://www.eluniversal.com/nacional-y-politica/140602/oas-compromise-by-both-parties-required-to-solve-conflict)

U$D 18 billion sent to Cuba over three years

Cuban economy did not crash in the last decade simply because of support from Venezuela. In only the last three years, U$D 18 billion have been transferred in form of loans, investments or grants. (El Universal, http://www.eluniversal.com/nacional-y-politica/140602/usd-18-billion-heading-for-cuba-in-three-year-term)

Guyana seeks maritime boundary demarcation with Venezuela

Guyanese Minister of Foreign Affairs, Carolyn Rodrigues-Birkett, is seeking to resume negotiations with Venezuela over their shared sea borders. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/guyana-reclama-delimitar-frontera-maritima-con-ven.aspx#ixzz33TgBWKjJ)

'Chavista' school books stoke passions in Venezuela

Venezuela's government has published dozens of new textbooks that glorify late president Hugo Chavez and belittle his adversaries, infuriating opposition critics who call them part of a campaign to indoctrinate school children. Originally introduced in mid-2011, the textbooks have become a hot-button issue again amid a broad state-run review of the education system that some fear could boost the ruling Socialist Party's imprint on classrooms. "The government has made great efforts to redefine historic events with an ideological bent, and these books represent that intention," said Juan Maragall, education secretary in the opposition-run state of Miranda. "Teachers are concerned." The government has distributed 42 million copies that were originally going to be obligatory, but officials backed away from that after furious opposition to the idea. Still, they are widely used because they are free, reaching an estimated 6 million kids at 80% of the country's schools. (Reuters, http://www.reuters.com/article/2014/06/02/venezuela-education-idUSL1N0OG1CY20140602)

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.