Venezuelan Daily Brief

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

Wednesday, February 14, 2018

February 14, 2018

Oil & Energy


Venezuela oil production is plummeting

Venezuela's main source of cash is dwindling at a breathtaking pace. The country's oil output in January fell to its lowest level in nearly 30 years, not including a brief oil strike in 2003, according to S&P Global Platts. A monthly OPEC report published Monday revealed Venezuela pumped 1.6 million barrels of oil per day last month. Production in January was down 20% from a year ago. The staggering decline is another sign of Venezuela's economic and political crisis. Venezuela has more crude oil than any other country in the world and it heavily depends on the commodity to power its economy. Crude oil makes up about 95% of Venezuela's exports. The country has no other source of foreign income. Yet the government-owned oil company, PDVSA, has pumped less and less oil for the last few years because of corruption, crumbling infrastructure and a massive debt crisis – and the United States could get tougher on Maduro very soon. Secretary of State Rex Tillerson said last week on his tour of Latin American countries that the administration is still considering a ban on Venezuelan crude oil exports to the United States. Experts say a complete oil ban would be a devastating blow to Venezuela's economy and Maduro's political fortunes. (CNN Money:; Oil Price:


Venezuela's oil output crash is costly for U.S. refiners

U.S. Gulf Coast refiners are paying the price for shrinking Venezuelan crude output. U.S. production is at an all-time high, while output from Venezuela, despite a modest increase in January, is in decline. As a result, U.S. crude’s typical premium to heavy Venezuelan oil shrank to as small as 31 cents a barrel Friday, the narrowest since October. Most U.S. Gulf Coast refiners profit when crude grades like those from Venezuela are at a large discount to WTI because these so-called heavy crudes comprise 40% to 60% of the oil they process, said Fernando Valle, oil and refining analyst at Bloomberg Intelligence. Venezuelan oil is getting more expensive relative to U.S. benchmark amid falling output. “The narrowing can be attributed to a rapidly changing fundamental picture in both markets,” Mara Roberts Duque, a New York-based analyst at BMI Research, said by email. “Rising U.S. production is keeping a lid on the WTI upside while continued declines in Venezuelan output are supporting the local benchmark.” (Bloomberg:


Official: US believes ex-Venezuela oil czar took bribes

U.S. prosecutors believe Venezuela's former oil czar received bribes as part of a major graft scheme that allegedly took place in this nation's oil industry, an American official familiar with the probe said. Rafael Ramirez, who was one of Venezuela's most powerful officials until he quit as the country's U.N. ambassador in December, was named as a bribe recipient although not charged in an indictment against five other former senior officials that was partially unsealed Monday. In the indictment, prosecutors in Houston allege two of the charged individuals told businessmen that proceeds from bribe payments they made in exchange for quick payments and contracts with Venezuela's state-run oil giant PDVSA would be shared with a senior Venezuelan official, identified in the unsealed portion as "Official B." That unidentified Venezuelan politician is Ramirez, a U.S. official told The Associated Press. The official agreed to talk about the case only on condition of anonymity because they were not authorized to discuss the matter. (Fox News:; Bloomberg:



Venezuela army clashes with illegal miners, 18 reported dead

Soldiers clashed with illegal miners in southern Venezuela on the weekend, killing 18 people in a region notorious for violence and gang rivalries, a lawmaker and local media said. Bolivar state Governor Major General Justo Noguera said a military unit had fought off an attack, but gave no more details. “An investigation is under way,” he told reporters. Local newspaper Correo del Caroni reported that 17 men and one woman died in the incident on Saturday morning in an area known for gold and diamond mining. (Reuters,


Economy & Finance

PDVSA bonds join Venezuela bonds in trading flat (defaulted)

Following consultations with major market participants, the Emerging Markets Trading Association (EMTA) is recommending that, for all trades entered into on or after February 12, 2018, all Bonds issued by PDVSA that are on a U.S. sanctions exceptions list (see the Annex to the General License No. 3 related to the Executive Order:  should, unless otherwise agreed, trade “flat”. The Executive Order, together with the General Licenses, can be found here:, but counterparties are urged to refer to the U.S. Treasury’s website for further updates. To the extent that bonds are added to this Venezuela General License No. 3 Annex, they will be subject to this Market Practice, and to the extent that bonds are deleted from this Annex, they will not be subject to this Market Practice. (Latin American Herald Tribune,


US Treasury publishes 2 new Venezuela & PDVSA debt restriction explanations

The U.S. Department of the Treasury’s Office of Foreign Assets Control has published two new Venezuela-related frequently asked questions (FAQs).  The FAQs provide additional guidance on the debt-related prohibitions in Executive Order (E.O.) 13808, including the meaning of “new debt” for the purposes of E.O. 13808 and the receipt of certain late payments from the Government of Venezuela, including Petroleos de Venezuela, S.A. (PDVSA). OFAC does not consider debt that was created prior to August 25, 2017 to be “new debt” for purposes of E.O. 13808 so long as the terms of the debt instrument (including, for example, the length of the repayment period or any interest rate applied) agreed to by the parties do not change on or after August 25, 2017. For debt created on or after August 25, 2017, U.S. persons are not permitted to accept payment from PDVSA or other segments of the Government of Venezuela, absent a specific license or other authorization from OFAC, if payment for a debt is not received within the applicable period specified in E.O. 13808 (90 days for PDVSA, 30 days for other segments of the Government of Venezuela)? Because receiving payments outside of these specified maturity periods generally constitutes a prohibited dealing in debt, U.S. persons should ensure that payment terms accord with the applicable debt prohibition. In circumstances where PDVSA or another segment of the Government of Venezuela fails to pay a debt in full within 90 or 30 days, as applicable, U.S. persons must obtain a specific license from OFAC before accepting payment after the expiration of the applicable period. License applications involving circumstances that do not meet these criteria will be reviewed on a case-by-case basis with a presumption of denial, with the exception of activity that is in U.S. national security or foreign policy interests, including humanitarian-related transactions, legal services, or personal communication-related services. (US Treasury Department:


Colombia wants to build Venezuela financial rescue plan

Colombia has contacted international lending agencies about devising a financial rescue plan worth up to US$ 60 billion for neighboring Venezuela if President Nicholas Maduro leaves power, Colombia’s finance minister said in an interview on Friday. Hyperinflation and severe recession in oil-rich Venezuela are prompting Venezuelans to flee over the border to Colombia, now about 2,000 a day, Colombian Finance Minister Mauricio Cardenas said. Officials the International Monetary Fund, Inter-American Development Bank and World Bank are just beginning to understand the impact of the exodus, he said. “What happens when Maduro falls? We should not improvise. There should be a plan because Venezuela will require financial support,” Cardenas said (Reuters,


Venezuela's 20-Cent bonds are one hedge fund's emerging-market pick

Peter Kisler says one of the best bets in emerging-market debt is a country racked by quadruple-digit inflation, a plunging currency, punishing sanctions and months of overdue payments. (Bloomberg,


The Economy Is Full of Crypto (And Collective Delusion)

We have talked a few times around here about a socialist republic that has been hit hard by sanctions imposed by the U.S. government and that, in response, is planning to issue its own cryptocurrency to raise money. I mean Venezuela. Venezuela's government is the one that is planning to issue a cryptocurrency to replace money that it has lost due to the policies of the U.S. federal government. (Bloomberg,


Venezuela’s economy is so bad, parents are leaving their children at orphanages

Poverty and hunger rates are soaring as Venezuela’s economic crisis leaves store shelves empty of food, medicine, diapers and baby formula. Some parents can no longer bear it. They are doing the unthinkable. Giving up their children. There are no official statistics on how many children are abandoned or sent to orphanages and care homes by their parents for economic reasons. But interviews with officials at FUNDANA and nine other private and public organizations that manage children in crisis suggest that the cases number in the hundreds — or more — nationwide. FUNDANA received about 144 requests to place children at its facility last year, up from about 24 in 2016, with the majority of the requests related to economic difficulties. A study by the Catholic charity CARITAS in poorer areas of four states found the percentage of children under 5 lacking adequate nutrition had jumped to 71% in December from 54% seven months earlier. For years, Venezuela had a network of public institutions for vulnerable children — traditionally way stations for those needing temporary or long-term protection. But child-welfare workers say the institutions are collapsing, with some at risk of closing because of a shortage of funds and others critically lacking in resources. So, increasingly, parents are leaving their children in the streets. In the gritty Sucre district of Caracas, for instance, eight children were abandoned at hospitals and public spaces last year, up from four in 2016. In addition, officials there say they logged nine cases of voluntary abandonment for economic reasons at a child protective services center in the district in 2017, compared with none the previous year. A child-welfare official in El Libertador — one of the capital’s poorest areas — called the situation at public orphanages and temporary-care centers “catastrophic.” One of Venezuela’s main adoption agencies, PROADOPCION, said that in 2017, his organization received 10 to 15 requests monthly from pregnant women seeking to give up their babies, compared with one or two requests per month in 2016. Overwhelmed, the organization had to turn down most of the women. It accepted 50 children in 2017 — up from 30 in 2016. (The Washington Post:


Politics and International Affairs

Lima Group countries slam Venezuela election plans, Maduro unwelcome at Americas Summit

The "Lima Group" of Latin American nations plus Canada on Tuesday criticized Venezuelan President Nicolas Maduro's decision to hold a presidential election on April 22 and urged him to reconsider the date. In a statement, the countries said there could not be free and fair elections in Venezuela as long as there were political prisoners. Peru's foreign minister also told a news conference that Maduro would not be welcome at the Summit of the Americas to be held in Lima in April. (The Daily Mail:


US says new sanctions can be applied it Maduro holds illegitimate elections

In a review of US Secretary of State Rex Tillerson’s trip to Latin America and the Caribbean, Francisco Palmieri, Principal Deputy Assistant Secretary of State for Western Hemisphere Affairs, again condemned the Maduro regime’s call for a snap election in which the main opposition candidates are barred from running: “We are working together with the countries of the region to ensure that Venezuelan elections are free, fair, and internationally verifiable. There must be international election observation for successful, legitimate elections to take place, and we will not accept elections that do not allow for the full participation of all political actors in Venezuela. It’s clear that the path that the Maduro regime is moving down at this time will result in an illegitimate election… If the Maduro regime holds an illegitimate election in April, the United States will continue to use all our political, diplomatic, and economic tools to help restore true democratic order in Venezuela. It’s hard to imagine an election, a snap election held in less than 60 days, meeting the international standards for a free, fair, and transparent election, particularly given the unwillingness of the Venezuelan regime to allow meaningful participation by the opposition parties or to address the conditions on the ground that resulted in multiple illegitimate elections last year… Secretary Tillerson has been very clear that what we want in Venezuela is a peaceful transition and the restoration of constitutional democratic order. The best way to solve the multiple crises inside Venezuela is for the Venezuelan people to be able to exercise their democratic rights and select the leaders, the real leaders, who can solve the multiple problems that the Maduro regime is inflicting on the country.” He said the Secretary advocated for increased regional attention to the crisis in Venezuela during every discussion. “It was clear the region shares our concerns in this regard. We must continue to work to fulfill the requirements of the Inter-American Democratic Charter. As Secretary Tillerson said in Argentina, we simply cannot allow and stand idly by to see a total destruction of democracy in Venezuela. With our regional partners we continue to pressure the corrupt Maduro regime to return to a democratic constitutional order… We would like to see an orderly, peaceful transition to democratic order in Venezuela.” Palmieri declined to elaborate on possible new sanctions: “I don’t think at this time I have anything to announce with regard to what kind of sanctions would be put in place with regard to oil, but the Secretary was clear: the United States will continue to consider the use of every political, diplomatic, and economic tool we have to help restore democracy in Venezuela to the benefit of the Venezuelan people… I think we will use all the tools available to us at any moment, at any time, and in any place, to help the Venezuelan people restore their democratic system of governance.” Regarding the possibility that President Maduro will attend the Summit of the Americas meeting in Lima next April, Palmieri said: “Should President Maduro decide to attend that summit, he would certainly have a lot to answer for in terms of democratic governance and corruption. And any Venezuelan participation would have to address those issues.” (US Department of State:


Venezuela fears ‘invasion’ after U.S. military chief visits Colombia

Venezuela on Monday accused neighboring Colombia of planning a bombing campaign or a “military invasion” amid heightened tensions in the region and a mass exodus fueled by Venezuela’s collapsing economy. “In Colombia, they are planning to revive eras that had ended in human history, like military bombing, a military invasion or the occupation, through blood and gunfire, of a peaceful country like Venezuela,” said Venezuela’s chief prosecutor, Tarek William Saab, according to the state-run AVN news agency. “We will not allow it.” Saab didn’t provide proof of his allegations, but other regional allies pointed to the weekend visit to Colombia by Admiral Kurt Tidd, head of U.S. Southern Command. Tidd and Colombian Vice President Óscar Naranjo met in the troubled coastal city of Tumaco on Saturday. According to the vice president’s office, they met to review bilateral efforts to stem the flow of drugs from Colombia’s Pacific coast. Bolivian President Evo Morales, a staunch Caracas ally, however, called Tidd’s presence “suspicious.” On Monday, the commander of Colombia’s armed forces, Gen. Alberto Mejía, suggested he had his hands too full with domestic issues to worry about Venezuela’s accusations. The statements also come as Venezuelan neighbors, including Colombia, Brazil and Guyana, have been tightening border controls in recent weeks to try to contain the flow of hundreds of thousands of Venezuelan migrants. (The Miami Herald:


The International Criminal Court opens preliminary examinations into Venezuela

The Prosecutor of the International Criminal Court (ICC), Fatou Bensouda, has announced they will open preliminary examinations into the situation in Venezuela. The ICC Prosecutor announced she would examine crimes allegedly committed in Venezuela since at least April 2017 in the context of demonstrations and related political unrest. She noted that the continued demonstrations led to excessive use of force to disperse demonstrators and arrested and detained thousands of people and that many of those detained have been allegedly subjected to serious abuse and ill-treatment. It was also reported that some groups of protestors resorted to violent means, resulting in some members of security forces being injured or killed. According to the Office of the High Commissioner for Human Rights, 124 people have been killed in the framework of the protests: 46 killings were allegedly have been committed by the security forces and 27 by the pro-government armed groups. The International Federation for Human Rights hailed the move and urged Venezuela “to conduct thorough, impartial, and independent investigations into those allegedly responsible for international crimes committed on their soil and to cooperate with the Court during these preliminary examinations.” Venezuela’s Foreign Ministry promptly rejected the decision and claimed not to have received any formal notice thereof. (FIDH:; and more in Spanish: (Noticiero Venevisión,


Trump denounces Cuban, Venezuelan repression

President Donald Trump has once again denounced the “repressive regimes” of Cuba, Venezuela, Iran and North Korea and said that his administration is on the side of all those people around the world suffering “persecution” because of their religious faith. Trump delivered his remarks at the annual National Prayer Breakfast in Washington, an event that traditionally blends politics and religion. The most recent State Department report on religious freedom, released last August, said that the religious environment in Cuba had improved in recent years, and in the case of Venezuela, the report only expressed concern over alleged “anti-Semitic” commentary in the state-run media. (Latin American Herald Tribune,


Rubio says world would support Venezuelan military ‘removing a dictator’

Marco Rubio took to Twitter on Friday morning to suggest that the world would support Venezuela’s military if it decided to “restore democracy by removing a dictator” as the country’s President Nicolas Maduro prepares for an April election some are already predicting to be rigged. (Bloomberg,


European Parliament calls for further sanctions on Maduro regime

The European Parliament has called for more sanctions on high officials of the Maduro regime and raise the possibility of taking economic steps against the state oil company (PDVSA) here. The EU legislature also demanded that political rights be restored to opposition politicians so they can take part in the announced presidential election. The vote in the European Parliament was 480 in favor, 51 against and 70 abstentions. More in Spanish: (Noticiero Venevisión,


Venezuela loses right to vote at United Nations

Venezuela has lost its right to vote in the United Nations General Assembly because of the non-payment of its contributions, according to the organization. The country was in the same situation last year until regained the right to vote in that body after paying part of its debt. The UN rules establish the loss of the right to vote in the General Assembly for Member States that have outstanding payments to the organization's budget for an amount equal to or greater than the contributions that corresponded to them during the previous two years. Stéphane Dujarric, spokesman for the United Nations, said today that, as of January 29, these eight countries were in that situation: Venezuela, the Central African Republic, Dominica, Equatorial Guinea, Grenada, Libya, Suriname and Yemen. (Latin American Herald Tribune:


Venezuela’s misery fuels migration on epic scale

Hundreds of thousands of Venezuelans are fleeing their country’s misery and pouring across borders into nearby countries, particularly Colombia, creating a sharpening challenge for the region. As the collapse of Venezuela’s economy deepens, the number of those fleeing is accelerating. Nearly 3 million Venezuelans—a 10th of the population—have left the country over the past two decades of leftist rule. Almost half that number—some 1.2 million people—have gone in the past two years, according to Tomás Páez, a Venezuelan immigration expert at Venezuela’s Central University. Some 550,000 Venezuelans were in Colombia at the end of 2017, a 62% increase from a year before, according to the Colombian government, with another 50,000 entering so far this year. (The Wall Street Journal:


Colombia, Brazil tighten borders as Venezuelan crisis deepens

Colombia and Brazil tightened border controls with Venezuela on Thursday as both nations grapple with a mounting influx of hundreds of thousands of desperate migrants fleeing a worsening economic crisis. In a visit to the border region, Colombian President Juan Manuel Santos said he would impose stricter migratory controls, suspend new daily entry cards for Venezuelans and deploy 3,000 new security personnel along the frontier, including 2,120 more soldiers. Brazil's Defense Minister Raul Jungmann, speaking in the northern border town of Boa Vista, said the government would also deploy more troops and start relocating tens of thousands of Venezuelan refugees who have crossed the open frontier to seek food, work and shelter. Both countries said they would take measures to count the number of Venezuelan migrants who have entered their territory: Brazil through a census and Colombia through a registry. The moves to tighten border security could threaten a key social safety valve for desperate Venezuelans as hyperinflation and a severe recession grip their country. The steps also signaled a mounting regional frustration with Venezuela's unpopular President Nicolas Maduro, who will seek re-election on April 22 amid conditions that the United States and other countries say are stacked against a divided opposition. "I want to repeat to President Maduro - this is the result of your policies, it is not the fault of Colombians and it's the result of your refusal to receive humanitarian aid which has been offered in every way, not just from Colombia but from the international community," Santos said. While Venezuelan professionals such as doctors and engineers have found work in Colombia's big cities or its oil industry, the bulk of the poor have settled in border towns. (NASDAQ:


Desperate Venezuelans pouring into Brazil

Officials in northern Brazil are demanding federal aid to help manage the influx of people seeking food and shelter. Brazilian President Michel Temer interrupted his Carnival vacation to fly to Roraima on Monday and promised to provide whatever aid is necessary to the country's northern state, which has been overwhelmed by tens of thousands of desperate Venezuelans fleeing their country's collapsing economy and political turmoil. Some 40,000 Venezuelans have poured into the Roraima capital, Boa Vista, overwhelming local government agencies and infrastructure in the city of 400,000. Many of the displaced Venezuelans are living in the streets. The president suggested that some migrants could be moved to other states but insisted that Brazil would not turn its back on the people fleeing misery. Defense minister Raul Jungmann later said that the army would set up a field hospital along the border and work with local officials to build triage centers, the G1 news portal reported. There are growing fears among residents that the Venezuelans will take jobs away from Brazilians, who are concerned about their own country's lackluster economy. Two residences housing Venezuelans were set alight last week — five people were injured. A local man has been arrested in connection with the attack. The Roraima government gave federal officials a list of demands last week, including equipment, vehicles and its own security forces. Temer's government has so far agreed to double the number of federal security forces at the border to 200. After his meeting with local officials Temer reaffirmed that the government will not block Venezuelans from entering but it may try to organize the flow. (DW:


The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

Thursday, January 11, 2018

January 11, 2018

Logistics & Transport

Venezuela to open air bridge with ABC islands for safe return of people

The Venezuelan government has announced that it will re-open the air bridge with the Caribbean islands of Aruba, Curaçao, and Bonaire, collectively known as the ABC Islands, to allow those in the country to return to their respective countries safely. The decision comes after Venezuelan president, Nicolas Maduro, announced suspending all air and sea travel with the ABC islands for 72 hours as a measure against smuggling of the Venezuelan gold, silver, and copper through the islands. Tareck El Aissami, Venezuela's Vice President said in a tweet that a meeting to combat contraband would be arranged with the islands' authorities to discuss the issue. "High-level meeting with the authorities of these islands" will be arranged to come up with "a plan of action to combat the mafias" who steal and smuggle our goods, he wrote. The ABC islands have asked The Netherlands for help, and the Dutch Foreign Ministry issued a statement saying it is “disappointed” it was not formally informed of the blockade and confirmed conversations are under way between both nations. (Curaçao Chronicle:; and more in Spanish: (Noticiero Venevisión,;; El Universal,


Oil & Energy

China's debt-ridden GZE taps private refiner for Caribbean project

China’s debt-ridden GUANGDONG ZHENRONG Energy (GZE) has asked a private refining group to join a multi-billion dollar investment in an aging Caribbean oil plant to shore up financing on the deal, said two Chinese executives involved in the matter. The Curacao government last week scrapped a preliminary deal with GZR to operate the century-old Isla refinery, saying the state-controlled commodity trader lacked the financial muscle for the job on its own. Taking over the 335,000 barrels-per-day (bpd) refinery, operated for decades by Venezuela’s cash-strapped state oil firm PDVSA, would give China a foothold in the Caribbean’s second-largest refinery, which has also been a key transfer point for Venezuelan oil heading to Asia. (Reuters,


Dutch regulators extend time for PDVSA's oil-facility repair review

Dutch authorities on Tuesday agreed to Venezuela’s state-run oil company PDVSA’s request to extend the time needed to demonstrate its financial ability to repair a decaying oil-storage facility on the Caribbean island of Bonaire. The terminal is a key PDVSA facility and its loss would hurt shipments to customers in Asia. In December, Dutch regulator Human Environment and Transport Inspectorate (ILT) told PDVSA unit Bonaire Petroleum Corp (BOPEC) that it must detail a plan to repair deficiencies and provide the necessary financing or face a loss of its operating license. (Reuters,


Algeria sends more oil to Cuba as Venezuelan supplies fall

Algeria sent 2.1 million barrels of crude oil to Cuba last year and will ship the same amount in 2018, an official at state energy firm SONATRACH said on Wednesday, helping Cuba to offset lower supplies from the island’s closest ally, Venezuela. “We delivered in 2017 three times 700,000 barrels, a total of 2.1 million barrels to Cuba,” Omar Maaliou, SONATRACH’s vice president in charge of trade and marketing, told Reuters. “We will do the same this year, the first 700,000 barrels are about to be delivered.” Saharan Blend light sweet crude is Algeria’s main export grade. Cuba and Algeria have maintained a close relationship in recent years. The island annually imports some US$ 200 million to US$ 300 million of oil products from the African country, including some purchases of naphtha. (Reuters,


No more oil from Venezuela for Haiti

Jude Alix Patrick Salomon, Haiti’s minister of the economy and finance, has revealed that the financial sanctions imposed by the Trump administration against Venezuela, including limiting banking transactions, have resulted in Venezuela no longer sending oil to Haiti since October 2017, because the Bank of the Republic of Haiti is no longer able to make payments in foreign currency. As a result, the PETROCARIBE fund is no longer supplied and Haiti is deprived of this important source of low-rate financing, HaitiLibre reported. This situation now makes things more difficult in Haiti, which must henceforth obtain fuel in the international market and is more exposed to fluctuations in the spot market, while waiting to find a viable alternative, such as long-term fuel orders, which will require guarantees from Haiti. (Caribbean News Now:



Photos of empty grocery shelves show dire situation In Venezuela

Desperate Venezuelans swarmed supermarkets on Saturday in a rare chance to stock up on basic goods amid a spiraling economic crisis that has resulted in widespread poverty and food shortages. Embattled President Nicolás Maduro, who has consistently blamed the nation’s financial woes on low oil prices and a U.S.-led plot to topple his regime, ordered grocery stores to reduce their prices in an effort to fight staggering hyperinflation (Venezuela’s inflation rate reportedly soared to 2,616% in 2017.) The slashed prices prompted mobs of shoppers to flock to the stores, leaving strikingly bare shelves behind. (Huffington Post:; Reuters:


Looted supermarkets halt new product orders

Employees report that Venezuela’s looted supermarkets have halted new product orders. “What you see on shelves is what there is. The stockrooms are empty, and we don’t know when new products will arrive. It will be difficult to replace inventories, we don’t know what will happen”, says one. Another confirmed new purchasing has been paralyzed since authorities are forcing them to sell at prices below those provided by suppliers. Government supervisors continue their daily visits and continue to order price reductions. More in Spanish: (El Nacional;


Economy & Finance

Venezuela’s Parliament outlaws Maduro’s cryptocurrency, calls it a “fraud

The Venezuelan Parliament, run by the opposition, voted on Tuesday to declare Nicolas Maduro’s plan to issue an oil-backed cryptocurrency—the Petro—illegal, claiming that it violates the constitution and attempts to mortgage part of the country’s oil reserves. It called the decision “totally null and void.” According to Parliament, the Petro issuance is an attempt by the government to avoid control over public debt operations as set in article 312 of Venezuela’s constitution. While Maduro is recruiting miners for the digital currency, the opposition-led Parliament denounced the cryptocurrency move, called it illegal, and warned potential investors and cryptocurrency market players that the Petro emission is illegal, as is any other obligation by the state of Venezuela backed by oil or other mineral reserves. “This is not a cryptocurrency, this is a forward sale of Venezuelan oil,” legislator Jorge Millan said, as quoted by Reuters. “It is tailor-made for corruption,” Millan added. He said: “We find ourselves before a new kind of fraud, disguised as a solution the (financial) crisis. This incompetent government wants to compensate for lack of oil production with these virtual barrels.” According to digital currency experts, Venezuela’s inability to manage its economy and the Socialist party’s historic lack of respect for private property will deter investors from snapping up Petros.  (Oil Price:; The Coin Telegraph:; Reuters:


… and Petro Superintendent says Venezuela´s “cryptocurrency” allocations to be controlled by regime

Carlos Vargas, the Petro’s Superintendent, says the new “cryptocurrency” cannot be mined and will instead be allocated by the Maduro regime through a bidding system like that used to control normal currency allocations. He claimed over 50,000 have registered for the project. More in Spanish: (El Nacional;


Fund managers set to mark down Venezuela bond holdings

Fund managers holding Venezuela government bonds face a day of reckoning after months of waiting for more than half a billion dollars in late interest payments. Since November, investors following guidelines established by the Emerging Markets Traders Association have marked their Venezuela bond holdings to include all the interest they were owed, even though it hadn’t shown up yet. The trade group decided to scratch that rule Monday, and say that beginning today the nation’s debt will trade flat, or without accrued interest. If the coupons are eventually paid, they’ll go to whoever holds the bonds that day. The decision, which followed a week of talks with market participants, comes two months after rating companies deemed Venezuela to be in default. Typically, defaulted bonds begin to trade flat after the grace period on missed debt payments expires. But with President Nicolas Maduro and his allies repeatedly saying the nation would honor its debt -- and with several delayed coupons on bonds issued by the state oil producer eventually making their way to creditors -- the market had given Venezuela the benefit of the doubt. Recently, the government’s gone silent on its bonds, spurring concern it’s selectively defaulting. Those creditors who’d been following EMTA guidelines will now have to write off the accrued interest they’d accounted for on Venezuelan notes from their net asset value. They should also write down any missed coupons they’re entitled to reflect their expected recovery value. By making these changes in January, money managers avoided suffering the loss in their 2017 performance. The recommendation doesn’t apply to debt issued by state-owned Petroleos de Venezuela, which will continue to trade with a payment for accrued and unpaid interest. Another impact from the change may be that Venezuela’s creditors that had patiently waited for their interest payments may now seek to demand immediate repayment of their principal -- a process known as acceleration. Most bonds require holders of just 25% of an outstanding security to agree to do so. “Acceleration becomes the next step -- and a check to see if Venezuela will quickly cough up the money to pay the coupon and halt a potential acceleration,” Russ Dallen, the managing director at Caracas Capital, wrote in a note to clients. “Venezuela’s reaction to the potential acceleration could be the final clarification for still-hopeful bondholders about whether they were actually going to get paid or not.” (Bloomberg:; The Wall Street Journal:


Venezuela 2020 bond cut to default by S&P

"Venezuela failed to make US$ 45 million in coupon payments for its global bonds due 2020 within the 30-calendar-day grace period," reports global ratings agency S&P. "In line with our criteria for timeliness of payments, we are lowering the issue rating on this bond to 'D' from 'CC'. We are affirming the long-term foreign currency sovereign credit rating on Venezuela at 'SD'." On Jan. 9, 2018, S&P Global Ratings lowered its issue rating on the Bolivarian Republic of Venezuela's global bond due 2020 to 'D' from 'CC'. At the same time, we affirmed our long- and short-term foreign currency sovereign issuer credit ratings at 'SD/D'. The long- and short-term local currency sovereign credit ratings remain at 'CCC-/C' and are still on CreditWatch with negative implications, where we placed them on Nov. 3, 2017. Other foreign currency senior unsecured debt issues not currently rated 'D' are rated 'CC'.  Our CreditWatch negative listing reflects our opinion that there is a one-in-two chance that Venezuela could default again within the next three months. We could lower specific issue ratings to default ('D') if Venezuela doesn't make its overdue coupon payments before the stated grace period expires, or upon the execution of the announced debt restructuring. (Latin American Herald Tribune:; Reuters,


World Bank estimates 4.2% GDP contraction in Venezuela in 2018

The World Bank’s “World Economic Forecast” estimates that Venezuela’s economy will shrink 4.2% this year. It adds that Venezuela had a 11.9% “recession” in 2017, that was “deeper than had been estimated”. In the meantime, Latin America and the Caribbean grew by 0.9%. More in Spanish: (El Universal,


Venezuela reports it paid part of its debt to Brazil four months late

Venezuela’s government has paid part of its US$ 262.5 million four-month overdue import debt to Brazil on January 5th, according to official sources. Brazil’s Ministry of Finance reports it is the balance of a debt due in the Q2 2017. (Noticiero Venevisión,


Cabello claims Maduro regime to buy top private bank BANESCO for US$ 3.5 million

A top Socialist Party official claimed on Wednesday that Venezuela's government is in talks to buy the country's top private bank, BANESCO, for US$ 3.5 million, potentially expanding state control over a banking sector struggling under soaring inflation. Socialist Party Vice President, Lieutenant Diosdado Cabello, said talks would begin this week and that BANESCO President Juan Carlos Escotet had accepted an offer made by the government. "We're going to buy BANESCO, really cheap," said Cabello, who is a member of an all-powerful legislative body called the Constituent Assembly, during his weekly television show. "We want to thank Escotet. ... BANESCO will become part of the public banking system." Reuters was unable to immediately obtain comment from BANESCO or Mr. Escotet. (CNBC:


Politics and International Affairs

OP-ED: Scenarios for the future of Venezuela, by Dr. R. Evan Ellis, Research Professor, Strategic Studies Institute, U.S. Army War College. Scenario 1: Muddling through / Chinese-Russian vassal state; Scenario 2: Transition to more rational authoritarian kleptocracy; Scenario 3: Break and successful reestablishment of order by military; and Scenario 4: Breakdown of order and disintegration into chaos.  It is a testament to the deterioration of the situation in Venezuela that none of the most plausible scenarios are “good news” stories, although some are less undesirable than others. It is incumbent on the United States and its partners in Latin America and the Caribbean not only to work together to plan for what could transpire in Venezuela but also to collaborate that other unfolding tragedies do not degenerate to the same extent. See full report: ATTACHED.


Law and order breakdown in parts of inflation-hit Venezuela

Shops and homes have been looted for a second day in the once prosperous town of Ciudad Guayana in north east Venezuela. With inflation at the rate of 2,600% many are struggling to buy food and medicines ... that is if they are on sale in the first place. Anger and frustration have sparked unrest and the National Guard are often too stretched to maintain law and order: At least five food stores were looted over-night and police sources say 20 people have been arrested, but its’ not just the shops which are vulnerable, some home have been struck as well. Erika Garcia tearfully recounted how looters ransacked her food shop and home just 10 minutes after National Guard soldiers who had been patrolling the area withdrew late on Monday night (Euronews:; Reuters,


Video report shows 55 National Guard members arrested in mutiny over food

According to a video circulated on Twitter by journalist Daniel Blanco, some 55 members of Venezuela’s National Guard have been arrested – presumably at the Caracas Fuerte Tiuna garrison – after a mutiny demanding food and more benefits. The video – presumably taped inside the barracks – allegedly took place three days ago. More in Spanish: (NTN24:


Teen shot dead in food truck looting here

A 19-year-old Venezuelan was shot dead Wednesday when hundreds of people looted trucks carrying flour and chicken in the western city of Guanare, as the oil-rich but impoverished country faces desperate food shortages. According to police and military reports obtained by AFP the unrest began when about 1,000 people looting the trucks started fighting among themselves. Jose Materan, 19, received two gunshot wounds and died in hospital, where three others were being treated for injuries. It was not immediately clear who fired at him. Many of the looters made off with bags of wheat flour or chicken, police said. There have been in the past several days looting and attempted looting in a number of towns and cities nationwide here. Local universities say 30.2% of Venezuelans face poverty and 51.5% extreme poverty while the government puts the figures at 18.3% and 4.4%, respectively. (Channel News Asia:


Talks to ease Venezuela's crisis set to resume

Talks to ease Venezuela's dire political and economic straits are scheduled to resume Thursday, even as severe food shortages fuel looting and the president and parliament spar anew over access to humanitarian aid. To address Venezuelans' desperation, representatives of Maduro's administration and the opposition coalition Democratic Unity Committee (MUD) plan to meet Thursday in the Dominican Republic for two days of renewed talks. On Friday, they're to be joined by international observers: Danilo Medina, the Dominican Republic's president, as well as officials from Bolivia, Chile, Mexico and Nicaragua. The ruling Social Party's team seeks international recognition of the National Constituent Assembly as well as an end to international economic sanctions that have reduced the debt-ridden country's access to foreign currency. The United States considers the Constituent Assembly – an all-powerful super-body packed with Maduro supporters – to be fraudulently chosen and a threat to the democratically elected National Assembly. Opposition representatives – led by the National Assembly's outgoing president, Julio Borges – want the administration to respect that legislature, permit foreign humanitarian aid, release political prisoners and commit to democratic elections. Maduro, who faces re-election in December, has accused Borges of maligning his administration. Simon Calzadilla, an opposition lawmaker expected this week at the talks in Santo Domingo, said the MUD was negotiating in good faith. "We are waiting for an agreement to be reached for the good of the country, to get out of this crisis," he said in a phone interview with VOA. "… I hope the government understands that its model has failed, that institutions must be restored through a comprehensive agreement that gives good news to all." Calzadilla would not comment on whether the Maduro administration's December 24 release of dozens of prisoners stemmed from negotiations earlier that month. "We have agreed to maintain prudence," he said. Previous rounds of negotiations have left deep fissures in Venezuela's opposition. The talks are opposed by political leaders such as Antonio Ledezma, the former Caracas mayor who in November fled house arrest for exile in Spain. "We hope that no one will recognize the National Constituent Assembly or request the lifting of sanctions against individuals accused of corruption and violating human rights," he said on social media last month. Richard Blanco, a National Assembly lawmaker and head of the opposition group July 16 Fraction, also said last month that he had low expectations for the talks. "There will be no results of any kind here," he predicted. "Nothing will happen at all." (VOA News:


National Assembly president says all laws from ANC are null and void

Omar Barboza, the new President of Venezuela’s legislature, says that no law proclaimed by the pro-regime Constitutional Assembly (ANC) is valid since this is the exclusive right of the legitimate National Assembly. He says: “The Constitutional Assembly is not legal or constitutional, it is simply a political fact because if they approve something, and the government and the Armed Forces – or some parts of the Armed Forces – support them, they are of course a reality we cannot deny exists ---- so when they approve laws they are merely usurping functions, because approving laws is remains with the National Assembly.”  He expressed concern over Venezuela’s economic predicament and supported upcoming talks between the regime and the opposition. More in Spanish: (Noticiero Venevisión,


Opposition groups to take to the streets again if negotiations fail

Congressman Juan Andrés Mejía, of the Voluntad Popular (VP) opposition party that is headed by jailed leader Leopoldo López, says they will again take to the streets defending the rights of the people if negotiations starting today in the Dominican Republic fail. He said everything indicates “we will not be able to move forward in this alleged negotiation” and blamed the Maduro regime for its failure. More in Spanish: (Noticiero Venevisión:


Regime continues its excessive and arbitrary response to protests

On December 27, the powerful Chavista politician Diosdado Cabello announced the detention of Jonatan Diniz, a Brazilian living in Los Angeles who was visiting Venezuela for a nongovernmental group that he directs, which provides food and aid to people in need. Diniz had been detained, Cabello said, for “belonging to a criminal organization with international reach.” Cabello accused Diniz of using the organization as a “façade” to receive “dollars” and to “finance terrorists.” After Diniz spent nearly 10 days incarcerated at intelligence headquarters in Caracas, the Brazilian Foreign Affairs Ministry was able to negotiate his release and departure from Venezuela. Many others haven’t been so lucky. Since 2014, dozens of political prisoners have been held at the same intelligence offices where Diniz was held, some of them for months on end. A crackdown on dissent between April and July 2017 left dozens of people dead, hundreds injured, and thousands detained. More than 750 civilians have been prosecuted—improperly, in military courts—for offenses including rebellion and treason. Detainees have been systematically abused and in some cases tortured by techniques that include electric shock and asphyxiation. Most of these crimes have gone unpunished. In December, several street protests broke out in Venezuela after the government failed to deliver pernil—a leg of pork traditionally served at Christmas in Venezuela—to Venezuelans with access to boxes with food items subject to government price controls. Officials had promised to include pernil in the boxes, and in a country facing severe shortages of food, this was a valuable opportunity for people to secure protein, which is limited in many Venezuelans’ diet. On December 31, a member of the Bolivarian National Guard who, according to witnesses, was drunk, opened fire without warning on a line of people waiting for the expected rations of pernil, killing an 18-year-old pregnant woman who had stood in line for hours. After the news of the killing went viral, a Bolivarian National guard sergeant was detained in relation to this case. During a protest in Valencia on January 3, 30 people partially closed a road, burned tires in front of a mayor’s office, insulted security agents, and shouted: “Damn Nicolás Maduro!” At the protest, police detained Ronald Cevilla, 25, and Erika Palacios, 41. The charges against them include “instigating hatred”—a crime established in November by the pro-government Constituent Assembly that seized powers from the opposition-led National Assembly in August. The vague and overbroad language of the law imposes prison sentences of up to 20 years for those who “encourage, promote, or incite hatred.” Cevilla and Palacios remain behind bars. No independent institutions remain in Venezuela to act as a check on executive power. Without strong international pressure, 2018 may well be the year in which Venezuela’s government entrenches its repressive powers and the impunity it has enjoyed for terrible abuses. (Human Rights Watch:


US and Spain to discuss Venezuela

U.S. Under Secretary of State for Political Affairs Thomas A. Shannon is in Madrid to meet with his Spanish counterparts on “matters of common interest”, such as the situation in Venezuela. More in Spanish: (El Universal,


U.S. embassy in Venezuela to begin issuing visas again. But who can afford them?

For the first time in more than 18 months, Venezuelans trying to go to the United States for business or pleasure can apply for a visa in Venezuela. In a statement on its website, the U.S. embassy in Caracas said it will begin accepting applications for B-1 and B-2 visas — used for temporary business and tourism travel — starting Jan. 17. Visa services in the South American country have been suspended since May 2016, when Washington and Caracas both ejected diplomats and the embassy said it didn’t have the staff to process visas. An embassy spokesperson Wednesday said the consular office was now almost fully staffed. The move will be a welcome relief for Venezuelans who have been forced to make a grueling overland trek to neighboring Colombia to apply for a visa. Even so, at a cost of US$ 160 per visa application, the price is prohibitive for most Venezuelans. The minimum wage is equal to about US$ 7 a month. The move comes just weeks after Todd Robinson was appointed as the embassy’s chargé, the highest-ranking official absent an ambassador. In a Spanish-language statement, Robinson said the renewed activity “will help support legitimate trips to the United States while we protect our citizens.” (The Miami Herald:


Economic woes forces women into prostitution to feed children

Sputnik Mundo found out how prostitution helped both women survive the economic crisis that has gripped Venezuela for a fourth year. The fall in oil prices, which forms more than 96% of Venezuela's income, led to the strangulation of the country, with a debt of $150 billion. In such a grim situation, children and families with many children became the most vulnerable segment of society. According to some women, on a “good” day they make US$ 4 or 5. However, it is barely enough for them to make ends meet, as they pay for the rent on a daily basis and also hire a taxi that takes them to the brothel and brings them back home. Apart from the tough economic situation the women are forced to deal with, they face heartbreak and emotional pain as well. In Venezuela there are no laws that explicitly prohibit or permit prostitution. The Ministry of Health does not keep prostitution statistics, and female workers say they feel very helpless. According to police reports, in the center of Caracas alone, there are more than 40 brothels of various categories. (Sputnik News:


Venezuela's 'butt-lift' boom

Brazil has long had a thriving plastic surgery industry that has fueled countless liposuctions, implants, nips and tucks. But recently, the economic woes of Brazil’s northern neighbor Venezuela are prompting more Brazilians to cross the border for surgery, where cosmetic tweaks are far cheaper. The sudden increase in purchasing power has created a unique opportunity for Francisca Maia Vasconcelos, who has built a business, ferrying patients, mostly from the city of Manaus in Brazil, across the border to the Venezuelan town of Puerto Ordaz, where surgeries are cheaper. Though prices vary, a liposuction, breast and buttock augmentation surgery in Venezuela can cost Brazilians around 10,000 real ($3,098). In Brazil the same procedures can cost closer to 30,000 real. (BBC:


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.