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.

Tuesday, November 7, 2017

November 07, 2017

International Trade

130 containers of food and medicine offloaded at Puerto Cabello

130 containers bearing food and medicine have been offloaded at Puerto Cabello from the vessel NIKOLAS, from Cartagena, in Colombia. The shipment includes 50 containers of semolina pasta, 20 of milk, 15 of black beans, 10 of red beans, and 3 of beef, as well as chemicals for the pharmaceutical industry. All cargo was consigned to state agency CUSPALCA. More in Spanish: (Bolipuertos,


Oil & Energy

U.S. oil service firms face hit from Venezuela debt restructuring

U.S. oil service companies face hard decisions in the coming weeks on whether to continue working for Venezuela’s state-run oil company PDVSA, and the prospect of hundreds of millions of dollars in write-offs for overdue bills. The companies’ services are critical for Venezuela, which is struggling with a deep economic crisis marked by shortages of food and medicine. Oil accounts for over 90% of the nation’s export revenues. Socialist President Nicolas Maduro on Thursday said the country plans to potentially restructure some US$ 60 billion in bonds, widely seen as signaling a possible default that could affect other debt. New York-based investment firm Torino Capital estimates that, in addition to the bonds, Venezuela owes some US$ 26 billion to creditors and US$ 24 billion in commercial loans. (Reuters,


Commerce Secretary appears to have links to PDVSA, despite U.S. sanctions

Despite U.S. sanctions on Venezuela’s bond transactions in international markets and other restrictions against top officials, the Paradise Papers show that Secretary of Commerce Wilbur Ross has an important stake in multi-million-dollar businesses related with state-oil giant Petroleos de Venezuela (PDVSA). Ross still retains interest in Navigator Holdings, a shipping company incorporated in the Marshall Islands in the South Pacific that maintains a close relationship with Russia’s energy company SIBUR, which is run by President Vladimir Putin’s son-in-law Kirill Shamalov and other individuals who have been sanctioned by the U.S. Navigator Holdings has received millions of dollars every year in earnings due to coastal shipping services provided to PDVSA, which is no small client of Navigator Holdings. The state-oil company contributed to 10.7% of Navigator’s earnings during fiscal year 2014 and 11.7% in fiscal year 2015. (Newsweek:


Brother of former PDVSA head implicated in money laundering

Fidel Ramírez Carreño, brother of Rafael Ramírez Carreño, former President of PDVSA and Venezuela’s current Ambassador to the United Nations, has been listed among the beneficiaries of a money laundering scheme that provided fake consulting bills to send millions of dollars to the United States through a Doral, Florida, company called Miami Equipment & Export Co. The company is under investigation for selling Venezuela overpriced electric plants. A Venezuelan consortium called KCT Cumaná II International sent millions of dollars to the Doral company, which in turn transferred the funds to the private accounts of Venezuelan government officials and former officials. Luis and Luis Javier Díaz, owners of the Doral based firm, are being charged by the US government for operating an unlicensed bank and money laundering. The transactions, involving a PDVSA affiliate, took place while Ambassador Ramírez was the company’s CEO. His brother, Fidel, has held several government positions under the current regime. The money-laundering case is being filed by NY Southern District DA Joon A. Kim. More in Spanish: (Venepress:


Venezuela oil basket hits 2 year high

The price Venezuela receives for its mix of medium and heavy oil rose for a third straight week, hitting its highest level since July of 2015.  According to figures released by the Ministry of Petroleum and Mining, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending November 3 rose to US$ 52.90, up US$ 2.16 from the previous week's US$ 50.74.  According to Venezuelan government figures, the average price in 2017 for Venezuela's mix of heavy and medium crude is now US$ 44.96. (Latin America Herald Tribune:



Pets on the menu as Venezuelans starve

In a country that once was rich, but where people are beginning to starve, few animals are safe. One morning in August at the metropolitan zoo in the torrid city of Maracaibo, workers were shocked to find the bones of a buffalo and some wild pigs inside their cages with clear signs of mutilation. Thieves allegedly stole the meat to eat what they could and sell the rest on the local market. In west Caracas, at the zoo of Caricuao district, the same sort of thing happened. Watchmen found the bones and offal of a black horse inside its enclosure. Apparently the perpetrators only took the edible parts of the animal. Venezuela’s increasingly authoritarian President Nicolas Maduro knows people are going hungry in his country, but he doesn’t know what to do about it. He keeps announcing new stopgap measures, but his words don’t carry a lot of nutritional weight. One of the latest programs was the so-called rabbit plan, a failed attempt to start rabbit farms all over the capital to substitute the proteins that come from unaffordable chicken and even more unaffordable beef. But, indeed, Venezuelans traditionally do see rabbits as pets and not food, so in areas where the government brought rabbits to start farms people started adopting them, giving them funny nicknames, and even embellishing their long ears with colorful bows. No question of eating the little dears after that. (Barron ’s:


Economy & Finance

Venezuela’s debt struggle poses more questions for investors

Analysts and investors say there are more questions than answers surrounding Venezuela’s plans to “refinance and restructure” its financial liabilities. Venezuela has about US$ 63 billion of foreign bonds outstanding, according to TORINO Capital, while the central bank estimates the country’s overall foreign debts at about US$90 billion. The real number say most analysts is much higher.  PDVSA, the state oil company, has sold US$ 28.6 billion of bonds and owes billions of dollars more in “promissory notes”. Venezuela owes another US$ 4billion or so to creditors that have taken it to the World Bank’s ICSID court. Stuart Culverhouse, chief economist at EXOTIX, thinks total public sector external debts range between US$100 billion and US$ 150 billion. Even this is uncertain. A refinancing usually implies something voluntary while a restructuring means forcibly “haircutting” creditors. Crucially, US sanctions imposed this summer in practice means both options are off the table. That Maduro named vice-president Tareck El Aissami as the lead negotiator with bondholders complicates matters further. Aissami has himself been sanctioned by the US as an alleged narcotics trafficker, which means US investment groups — the biggest holders of Venezuelan debt — cannot enter talks with him.  “The logistics seem almost impossible,” notes Siobhan Morden, head of Latin American fixed income strategy at Nomura. “The cynical interpretation is that the impossible deadline for negotiations conveniently shifts the blame of default to bondholders for their unwillingness (inability) to negotiate.” Worries that a default would trigger creditor lawsuits that could imperil its vital oil export revenues have spurred Venezuela to stay current much longer than many expected. It has managed this largely through largesse from China and Russia and pushing the hardship on to ordinary Venezuelans by sharply limiting imports. The country’s options appear limited. Venezuela is overdue on the interest payments on bonds that mature in 2019, 2024, 2025 and 2026, demonstrating the “significant fiscal strain” the country is facing, S&P notes. Foreign currency reserves are below US$ 10 billion — and much of this is in gold that will be hard to liquidate. China is wary of deepening its financial exposure to Venezuela while the country has already restructured some of its bilateral loans from Russia. The markets have reacted badly. The price of Venezuela’s bond maturing in August next year has tumbled from 72 cents on the dollar to about 34 cents this week, as investors panicked after the restructuring announcement and bank traders pulled out of the market, causing prices to “gap” lower.  S&P last week downgraded Venezuela’s rating to the second-lowest rung possible without actually being in default, arguing there was an even chance of a full default within the next three months. That dour view is reflected in the spiraling cost of Venezuelan credit-default swaps. The most likely outcome, investors and analysts say, is a protracted period of financial limbo, with a restructuring precluded by US sanctions and Venezuela facing a barrage of lawsuits that will tie it up for years to come. (Financial Times:; Bloomberg:;; Dealbreaker:; FORBES:; Oilprice:; Barron’s: Latin American Herald Tribune,;; El Universal,


Venezuela bonds tumble, PDVSA bonds rise on partial default speculation

Venezuelan bond prices tumbled on Monday while those of state oil company PDVSA were mixed, affected by speculation that the government of President Nicolas Maduro could halt payments on sovereign bonds while maintaining payment on PDVSA debt. The country’s cash-strapped government invited creditors to a Nov. 13 meeting in Caracas on Friday, after announcing plans to potentially restructure some US$ 60 billion in bonds. Venezuela’s 2018N bond, the country’s next sovereign maturity, was down 31.125 points to a bid price of 34. Meanwhile, several PDVSA bonds were rising, with the benchmark 2022 rising 2.000 points to a bid price of 32. Investors remain confused by Maduro’s announcement that his government will continue to pay but that it will also refinance and restructure debts. The latter options are all but impossible given U.S. sanctions against Caracas that block U.S. citizens from acquiring newly-issued Venezuelan debt. Many believe Maduro’s announcement was meant to pave the way for default, because the country’s debt burden has left it desperately short of basic goods such as food and medicines - spurring malnutrition and preventable diseases. Next year service is close to US$ 9 billion, of which US$ 6 billion must be paid by Venezuela. Investors are still waiting for a US$ 1.2 billion payment on PDVSA’s 2017N bond that came due last week. Officials last week said they had initiated the payment. Such payments have been increasingly slowed, as banks worry about doing business with PDVSA following the U.S. sanctions. (Reuters:


National Assembly accuses Maduro of sinking bond prices in secret buy-back plan

Venezuela’s Parliament today accused President Nicolás Maduro, of announcing a foreign debt restructuring to sink the price of Venezuelan bonds, to allow them to be repurchased by funds willing to offer better payment terms. The charge was made today by the congressman Rafael Guzmán, on behalf of the Finance Committee’s opposition majority. He accused the government for providing "inside information" to "friendly funds." (Latin American Herald Tribune,


OP-ED: A debt restructuring that’s really a giant money laundering operation

Nicolás Maduro has announced Venezuela couldn’t keep paying its debts, and needed to restructure.  But “restructuring” - a negotiated outcome agreed with bond holders — is totally impossible in current circumstances. Even if sanctions didn’t rule restructuring out, it’d still be unrealistic without major, sweeping policy reforms, which Maduro certainly isn’t promising. Without them, you’d end up having to offer 30% yields or some similarly high number. And even if Maduro did promise sweeping neoliberal policy reforms, restructuring would still not be feasible, because PDVSA bonds have no collective action clauses, so it’s practically impossible for the government to deal with holdout bondholders.  Long story short, this talk of “restructuring” is just noise. They can’t restructure. One way to see it is that this is about the political marketing of an already expected default: an attempt to soften public opinion ahead of the inevitable. But if so, why would you exempt the 2017N maturity due today? Why would you pay that bond even after you’ve announced default? One possibility is that this is all a bit of high-stakes market manipulation designed to send the price of all Venezuelan bonds plummeting. The CITGO-backed PDVSA 2020s could be a buyback target in such a scenario. Last week, trading in 2017Ns saw unprecedented volume. The kind of volume you’d expect if a few very rich, very well-connected people had reliable information that the 2017Ns were the last bond Maduro was planning to pay. That’s the kind of volume that could be interpreted as a massive money laundering operation, with tons of dirty money rushing in to buy-up a sure-thing bond. (Caracas Chronicles:


Standard & Poor's downgrades Venezuela's credit rating

Credit rating agency Standard & Poor's reported on Friday that it has downgraded Venezuela’s debt notes with an outlook of probable default after the announcement made by Venezuelan President Nicolás Maduro about restructuring and refinancing. The decision followed a similar step taken earlier on Friday by credit rating agency Fitch, AFP reported. Rating lowered from CCC- to CC. In other words, the agency considers Venezuela’s debt in foreign currency as it were in default, with some possibility of recovery. (El Universal,


Venezuela bonds now yield a record 40 points over U.S. Treasuries

Venezuelan debt is teetering toward default with average prices near 30 cents on the dollar. As investors ponder an invite from the government to come to Caracas next week to discuss a restructuring (or renegotiation or refinancing, depending on which official is speaking), they now demand a record 40.8 percentage points of extra yield over U.S. Treasury bills to hold the country’s bonds. No one really expects those yields to pay out as Venezuela seeks debt relief, but they do give an idea as to just how distressed the securities have become. The spread implies that if the government were to issue new notes it would either have to pay a coupon near that figure or sell them at an extreme discount from the face price. In a normal sovereign restructuring, negotiations would probably lead to a haircut for bondholders around current prices. (Bloomberg, 


Goldman Sachs asset arm faces large paper loss on Venezuelan bond

Goldman Sachs’ asset management division is likely to be nursing a multimillion-dollar paper loss on a controversial Venezuelan bond purchase it made this summer after the country abruptly announced that it was seeking to restructure its foreign debts. Ricardo Penfold, a senior portfolio manager at Goldman Sachs Asset Management, earlier this year swooped on a big slice of a bond issued by PDVSA, Venezuela’s state oil company, people familiar with the matter say. Mr. Penfold paid US$ 865 million for bonds with a face value of US$2.8 billion — a price of just under 31 cents on the dollar — reflecting the elevated risks of a default even at the time. While GSAM has since sold off chunks of the bond, it was still listed as the single biggest overall owner of the PDVSA bond maturing in 2022, with a face value holding of US$ 1.3 billion at the end of the third quarter. But with Thursday’s announcement that Venezuela would seek to restructure all its foreign bonds, the bond is now trading at 25 cents on the dollar, down from 29 cents at the start of last week. That would translate into a paper loss of US$ 54 million in just five days if GSAM has not reduced its stake since the end of the third quarter. “The opposition has already said they won’t honor that bond, so you’re taking a big risk trading those,” said Russ Dallen of Caracas Capital, an investment bank boutique that follows Venezuela. (Financial Times:


Venezuela's debt restructuring is probably just a political gambit by Maduro, experts say

President Nicolas Maduro may be trying to shore up support for next year's presidential election with the announcement of a massive foreign debt restructuring. Last week, Maduro unveiled plans to restructure Venezuela's US$ 120 billion debt. The restructuring effort will be led by Vice President Tareck El Aissami, who will also start "the fight against the financial persecution of our country," Maduro said. But a successful debt restructuring seems unlikely now, given a series of sanctions imposed by the U.S. earlier this year. The announcement also raises concern that the oil-rich country could default on its debt. "There's a political angle to this," said Risa Grais-Targow, director of risk consultancy Eurasia Group's Latin America practice. "I think their eye is on the presidential election next year." By unveiling this restructuring, Maduro can score political points and help secure his place as the most powerful person in the country, said Reggie Thompson, Latin America analyst at STRATFOR, a geopolitical analysis platform. (CNBC:


Maduro chooses food over bondholders as Venezuela goes hungry

With foreign reserves at a 15-year low after years of ruinous economic stewardship, Maduro is caught between satisfying creditors and voters who struggle to afford basics like beef, chicken and milk. When Maduro said last week that he would renegotiate the nation’s crushing $140 billion-plus debt, he chose butter over bonds. Obtaining fresh financing is a tall order, given the authoritarian government’s increasingly toxic reputation and U.S. sanctions that prohibit Americans from receiving new bonds as part of a restructuring. But rather than simply declaring default, Maduro has summoned creditors to Caracas on Nov. 13 to discuss new terms. By staving off a final reckoning, the nation can keep control of oil-producing assets, use its       US$ 9.7 billion in reserves to purchase goods from abroad -- and keep food and other social aid flowing. Through food distribution programs like the CLAPs, or Local Committees for Supply and Production, Maduro has tried to hold sway over Venezuela’s urban poor and countryside -- long considered the bedrock of the socialists’ support. Rather than sending scarce subsidized goods to supermarkets or state food stores, the government since last year has supplied food to loyal neighborhood groups, which distributes it directly to their neighbors to head off reselling and long lines. As Maduro and his allies promise to improve shaky services and increase deliveries, critics say the program only extorts a hungry electorate. The government says it shelled out almost US$ 72 billion to pay principal and interest on bonds and loans since Maduro took office four years ago, but after making a final payment last week, the president suggested such funds would be better spent in social programs. “It could have been spent in schools, clinics, housing, a prosperous economy,’’ he said. Luis Vicente Leon, head of DATANALISIS, said that whether bondholders turn up for the meeting, the government will lay blame on the U.S., which Maduro has described as indulging in “financial persecution.” (Bloomberg:


Unversed in debt details, Venezuelans desperate for any relief

Venezuelans heaving under an unprecedented economic meltdown know little about the finer points of foreign debt negotiations, but long for anything that would put more food on their plate and slow the world’s highest inflation. Few on the streets of capital Caracas really understood unpopular leftist President Nicolas Maduro’s announcement this week that he would seek to refinance the oil-rich nation’s heavy bond burden of US$ 60 billion - or about US$ 2,000 per person. But those interviewed by Reuters said they were hoping any deals between the government and its multiple foreign creditors would free up foreign currency to increase imports of scarce food, medicine, and basic products. (Reuters,


IMF gives Venezuela six months to supply economic data

The International Monetary Fund (IMF) gave Venezuela on Friday six months to produce statistics on the domestic economy, following the government failure to meet the deadline stipulated in the IMF regulations. Should Venezuela fail to supply the requested information, the IMF could end up expelling it. The board of the International Monetary Fund (IMF) found that Venezuela did not deliver data on time on the operations of the Social Security Institute and total exports and imports of commodities, expressing their value in local currency, per country of destination and country of origin, AP quoted. The organization explained in a release that the meeting of the executive board of directors had been slated well in advance and it is not related at all with the announcement made on the eve by Venezuelan President Nicolás Maduro on the beginning of restructuring of the Venezuelan foreign debt for U$D 120 billion. (El Universal,


OP-ED: How Long Can Venezuela Count on Russia and China? by Geoff Ramsey

Venezuela has found in Russia a source of quick loans and oil deals that have been essential to the government’s efforts to stay afloat. In the near term, it appears that Russia is willing to accept the high risks associated with lending to Venezuela in exchange for an increasing role in the country’s oil industry. This has been a major point of concern U.S. policymakers. The Venezuela Humanitarian Assistance and Defense of Democratic Governance Act—which passed the House Foreign Affairs Committee on September 28 and is awaiting consideration by the full House—specifically tasks the State Department and intelligence community with providing a report on Russia’s activities in Venezuela. Much of the discussion on Venezuela’s international backers have tended to lump Russia and China in the same boat, with some painting them both as “enablers” of the Maduro government. However, these arguments obscure more than they reveal. For one thing, Russia’s economic support has clear limits. Russia’s economy has been degraded by declining oil prices and sanctions. Russia has a GDP smaller than that of New York state, and its capacity to project power abroad is somewhat exaggerated. While the Russian government has been willing to accept higher risks in backing Maduro, they do not appear to have the resources to provide an indefinite lifeline. China’s government, on the other hand, has a far greater capacity to do so, but appears to have more interest in looking beyond the Maduro government than its Russian counterparts. Unlike Russia, though, China moved to stop issuing new loans to the country in 2016, and has held unofficial meetings with individual members of the opposition to seek assurances that debt would be honored by a potential opposition government in the future. More recently, PETROCHINA announced that its U.S. affiliate would respect the U.S. debt sanctions announced by the White House in August, and China has reportedly grown impatient with increasing delays in shipments of Venezuelan crude. International relations analysts have pointed to two other clear incentives for China to support a resolution to the Venezuelan crisis. The first of these reasons, put plainly, is that serving as a lifeline to the Maduro government is bad for China’s “brand” in Latin America. The second reason for a Chinese interest in backing away from Maduro and supporting transition is China’s own evolving approach to relations with other developing nations. In recent years, analysts suggest that China has been cautiously reevaluating its long-held policy of non-intervention in other states’ internal affairs. Now, China is calculating that the benefits of having Maduro in power outweigh the risks of his government’s economic mismanagement. However, the differences between the Chinese and Russian approach to the Venezuelan crisis suggest that China’s support for Venezuela cannot be taken for granted. Moving forward, it is unlikely that the Chinese government will be an entirely inflexible ally to Maduro. (WOLA:


Politics and International Affairs

Maduro's allies strip leading legislator of immunity, launch trial

Prominent Venezuelan lawmaker Freddy Guevara has sought refuge in the Chilean ambassador’s residence in Caracas amid fears he could be jailed, a development that leaves the ailing opposition with even fewer leaders to take on leftist President Nicolas Maduro. Venezuela's pro-government constitutional assembly (ANC) stripped Guevara of his immunity from prosecution in a case that is fueling fears of another crackdown on President Nicolas Maduro's opponents. Guevara released a video saying he doesn't regret his call for civil obedience after the unanimous vote Monday. Guevara was one of the leaders of this year's deadly protests against Maduro and the second highest-ranking member of the opposition-controlled congress. The opposition and local media said that SEBIN intelligence agents had surrounded Guevara’s house over the weekend. The vote by the constitutional assembly was widely expected after the supreme tribunal Friday barred Guevara from leaving the country and accused him of instigating unrest and other crimes. By law only congress can determine whether a legislator's immunity should be lifted. The Venezuelan Supreme Court (TSJ), which is packed with government loyalists, ordered on Friday that Guevara be stripped of his immunity and prosecuted for crimes of "association, persistent public instigation and the use of an adolescent to commit crimes." Twelve governments — including those of Mexico, Brazil and Canada — issued a joint statement on Saturday calling the Supreme Court's accusations against Guevara a "new blow to the rule of law and separation of powers in Venezuela." The 31-year-old lawmaker is the vice president in the opposition-controlled National Assembly. Chile is willing to grant political asylum to Venezuelan opposition politician Freddy Guevara, Chilean Foreign Minister Heraldo Munoz said on Monday. The Maduro regime’s Foreign Ministry demanded other countries cease their “aggressions” against this country. The head of the opposition-controlled Venezuelan Parliament, Julio Borges, called the Supreme Court’s ruling “absolutely political ... arbitrary ... outside the law”. Borges said that the move by the TSJ is “one more attempt” to try and “destroy the Parliament,” adding that since the opposition took control of the chamber after the 2015 legislative election, the government has sought to divest it of its functions. The National Assembly will take this new instance of political persecution to the World Parliamentary Union and other international organizations. Guevara could become the highest-profile Venezuelan politician to seek exile in recent years. (The New York Times:; DW:; Fox News:; The Chicago Tribune:; Reuters,; Latin American Herald Tribune,;; and more in Spanish: El Universal,; Noticiero Venevisión,;


Venezuela frees two anti-Maduro activists; scores still jailed

Venezuelan authorities overnight freed two activists who were in jail for more than a year after being accused of plotting against socialist President Nicolas Maduro, the opposition said on Saturday. Delson Guarate, who had been a mayor in central Aragua state, and former student leader Yon Goicoechea were among nearly 400 jailed anti-Maduro activists who rights campaigners say are political prisoners but whom the government calls coup-plotters. “I‘m with my family today,” tweeted Goicoechea, displaying a photo of himself against the backdrop of Caracas’ Avila mountain. “Tomorrow I’ll address the country. God is with us.” (Reuters,


Canada imposes sanctions on Maduro and 18 government officers

Canada imposed sanctions on 52 government officers of Venezuela, Sudan and the Russian Federation on charges of human rights abuses and corruption. The Canadian government renewed on Friday sanctions against Venezuelan President Nicolás Maduro, in addition to 18 government authorities for “gross violations of internationally recognized human rights or acts of significant corruption.” Under the new Justice for Victims of Corrupt Foreign Officials Act, Canadian Minister of Foreign Affairs, Chrystia Freeland, announced targeted sanctions against 52 individuals. In addition to Maduro, other officials include Executive Vice-President Tareck el Aissami; Adán Chávez and Argenis Chávez, brothers of late President Hugo Chávez, and multiple ex ministers and pro-government deputies. (El Universal,


Venezuela's hate crime law seeks to silence political opposition, bishops warn

The president of the Venezuelan bishops' justice and peace commission has criticized a hate crimes law passed on Thursday, charging that its aim is to silence those opposed to the socialist government of Nicolas Maduro. The Law Against Hatred and Fascism, the Nov. 2 legislation passed by the Constituent Assembly, will be used by Maduro's government against the opposition “so we can't even speak or protest,” said the Emeritus Archbishop of Coro Roberto Lückert Leon. The Constituent Assembly's president, Delcy Rodriguez, has said the law targets media that “promote hatred and racism.” Lückert stated that news media critical of the government have been undercut by Maduro's government. “Right now, they've hamstrung the news media. They're using the supply of newsprint to undermine us. The oldest newspaper in Coro is called La Mañana. The can't print it because they're not giving them any newsprint; on the other hand, they gave to the paper that they founded a building, machinery, and newsprint, and it comes out every day. That's freedom of the speech? No.” Archbishop Lückert stated that “as a Venezuelan, the only solution for the country that I have is elections; but elections that are transparent and fair.”  However, he said that now the Venezuelan people are profoundly upset by the National Electoral Council, which “is completely sold out to the government” and which manipulated recent elections, so Maduro's party would win. The prelate also said the Constituent Assembly “is an invention Maduro brought in from Cuba,” where there are no political parties or independent news media”. Cardinal Jorge Urosa Savino of Caracas called the Constituent Assembly “fraudulent and illegitimate” in a recent interview. “It's made up of political activists at the service of the government and it's not going to resolve the problems with the economy. What's needed here is to change the Marxist, totalitarian, and statist ideology that has brought the country to ruin,” he charged. Cardinal Urosa said Maduro wants to “decapitate the opposition so there's just one political party.” (EWTN:


OP-ED: Is Venezuela's Maduro regime on its way out the door? by Michael Rowan

The reported hope that Venezuela’s dictatorial regime may collapse in the face of its tardiness in paying bond bills is wildly exaggerated. What may be happening is the new normal for Venezuela: just more lying. Consequently, a whole lot more killing, disease and starvation may be in store for the population. Sorry to say it, but relief from oppression and social collapse may not be on the horizon. Hugo Chavez built a very powerful machine to unravel Venezuela’s democracy and free market, and it is not going to be easy to set it right. It might never happen. But as they say, the bigger they are the harder they fall. The strength – and weakness -- of the current gang in power is their connection to the US$300 billion missing from public accounts since 2000. Where is that money? Without control of the state, that gang is toast. The game of the world’s outlaws is to ultimately escape from dependence on law and the dollar. Venezuela, Iran and Russia have exerted ferocious effort to destroy the dollar and failed. China is cleverly on both sides of that game, which is a big game, the world game. Chavez went “all in” with Venezuela’s chips in that game and lost big time. Yet while Venezuela is only a pawn in that game, and easily sacrificed, it still has oil and other assets – official corruption, for example – which have great value to outlaws. Maduro should look on the bright side: he’s worth a lot more alive than gone and forgotten by the bad guys. (Latin American Herald Tribune:


OP-ED: If the Trump doesn't do something, Venezuela will collapse, by Roger Noriega

The Trump administration’s targeted sanctions have taken a toll on the regime and its corrupt leaders, and the U.S. president has pressed regional and European partners to back an urgent democratic transition. However, without stronger internal opposition and tougher international efforts, Maduro will either consolidate a dictatorship or collapse the country altogether. After more than a decade of beleaguered opposition to the regimes of Hugo Chávez and his acolyte Maduro, most Venezuelans prefer fundamental change and are seeking new ways to obtain it. Creating a much more coherent and resolute opposition—which earns the confidence of the people and the international community—is a key to avoiding a catastrophic meltdown or dictatorship in Venezuela. Much tougher, clear-headed U.S. leadership is indispensable to that outcome. What is lacking is a strategy to focus these pro-democracy efforts in a more decisive, coordinated way. This should be the task of the State Department. It is not too late for the White House to empower a coordinator to lead a whole-of-government effort on Venezuela and work with global partners to promote democracy and adopt targeted sanctions. (Newsweek:


Guyana has been outfoxed by Venezuela

Guyana has bungled its handling of the territorial controversy with Venezuela. The talks which were held recently in New York between the foreign Ministers of Guyana and Venezuela suggest strongly that Guyana will not achieve its objective of having the matter placed before the International Court of Justice. Venezuela launched a diplomatic blitz when Guyana tried to isolate it within CARICOM, and Guyana had no response to that blitz, because it did not have the resources or the know-how to respond. CARICOM was always going to call for talks and negotiations as a condition of its support for Guyana’s position. One mistake that Guyana made was to place all its eggs in one basket. It decided to go for a juridical settlement of the dispute without carefully contemplating how realistic were the chances of success. The matter is never likely to end up before the ICJ, because Venezuela is not a member of the ICJ and it requires the approval of both parties to a controversy for a matter to go in front of the ICJ. So, Guyana is misdirecting its diplomatic efforts – in a direction in which there is little hope. Even if the matter does go to the ICJ eventually, this is a drawn-out process. Guyana is now locked into a good offices process, which can drag on for another 10 years. (Kaietur News:



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, October 12, 2017

October 12, 2017

International Trade

3,411 tons of food and medical supplies have arrived at Guanta port in 142 containers aboard the SAN ANTONIO from Panama. The shipment includes wheat flour, sunflower oil, surgical masks, syringes. More in Spanish: (Bolipuertos,; El Universal,


Logistics & Transport

Venezuela reels under ongoing transport crisis

Catching a bus in the Venezuelan capital today and making it to the desired destination on time can be quite an ordeal for commuters, as the country’s transport infrastructure is in shambles due to high maintenance costs, decreased tax revenue, rampant inflation and a system that is chronically understaffed. Venezuela’s spiraling transport crisis, trade union representatives say, is owing to government apathy and withdrawal of subsidies and a lack of investment in the sector. The president of a local union of transporters of Caracas, Hugo Ocando, told EFE that while salaries of drivers are fixed, maintenance costs are unpredictable as the country’s economy, in many areas, runs on the black market price of foreign exchange. According to Ocando, 70% of the country’s transport system has been paralyzed and in the Greater Caracas area alone, on-road vehicles have reduced from 18,000 to 6,000. (Latin American Herald Tribune,; EFE:


Oil & Energy

Big buyer of Venezuelan crude oil halts purchases from national oil company
The fifth largest U.S. buyer of Venezuelan crude, PBF Energy, has halted direct purchases from state-run oil company PDVSA, according to four sources, deepening a rift amid sanctions on this country. PBF is the second buyer in as many months to go elsewhere for its oil and further disagreements could spell new hardships for PDVSA, which owes bondholders US$ 1.2 billion in debt payments due this month. Venezuela relies on oil for over 90% percent of export revenue and U.S. refiners are among its largest cash-paying customers. PBF notified PDVSA last month it "is not going to take any more Venezuelan crude cargoes" from the state-run firm, said a PDVSA source who could not be identified because the information was not public. That notification came after a more than 40-day standoff over a previous shipment. In July, a Venezuelan heavy oil cargo intended for PBF sat off Louisiana awaiting a letter of credit to complete the sale. The tanker discharged in August. PBF has not directly purchased oil from PDVSA since early September, according to Thomson Reuters trade flows data. PDVSA's insistence that PBF prepay for cargoes hamstrung negotiations, the PDVSA source and one of the traders said, while the refiner suggested an open credit mechanism that would allow it to pay at least 30 days after delivery. In September, PDVSA also lost a supply contract for naphtha and natural gasoline to Brazilian petrochemical firm BRASKEM SA. Falling output and oil-quality issues have contributed to PDVSA's struggles to retain customers, and the situation worsened once its name appeared in a U.S. sanctions list. Venezuela in September sent less than 500,000 bpd of crude to the United States, its main destination for oil exports. The volume marked a 38% decline compared with the same month in 2016. Disruptions in imports from Venezuela also have affected Phillips 66, the firm said in August. PDVSA's supply to the U.S. refiner's Sweeny facility in Texas has dropped by more than two thirds this year in part due to oil quality issues forcing the firm to cancel cargoes and request price discounts. (CNBC:; Reuters,

Florida businessman admits to bribery scheme at Venezuela's PDVSA
The part owner of several Florida-based energy companies on Wednesday became the latest person to plead guilty as part of an ongoing U.S. investigation into bribery at Venezuela’s state oil company PDVSA. Fernando Ardila Rueda, 49, pleaded guilty in federal court in Houston to two counts, including that he violated the U.S. Foreign Corrupt Practices Act in connection with a scheme to pay bribes to PDVSA employees, the U.S. Justice Department said. He became the 10th person to plead guilty as part of a larger investigation by the Justice Department into bribery at Petroleos de Venezuela SA (PDVSA) that became public with the arrest of two Venezuelan businessmen in December 2015. The two men were Roberto Rincon, who was president of Tradequip Services & Marine, and Abraham Jose Shiera Bastidas, the manager of Vertix Instrumentos. Both pleaded guilty last year to conspiring to pay bribes to secure energy contracts. (Reuters:


Economy & Finance

Maduro came back empty handed from his recent trip to Moscow, with no announcement of any new money. Discussions were instead focused on solving existing issues. It is possible that Russia might prefer to see proof of Maduro’s strength before adding exposure, but in any case, Russia does not have the capacity to satisfy Venezuela’s financing needs. China’s potential support remains a more critical factor. While uncertainty is likely to remain elevated, overcoming the Q4 17 obstacles that both the opposition and the government face could be supportive of a possible negotiated solution to the crisis in 2018, which would be critical to avoiding default next year and/or in determining the conditions for a potential debt restructuring. (SEE ATTACHED BARCLAY’S REPORT)


IMF says Venezuela inflation may rise beyond 2,300%
Venezuela’s triple-digit annual inflation rate is set to jump to more than 2,300% in 2018, the highest estimate for any country tracked by the International Monetary Fund. An intensifying political crisis that’s spiraled since 2014 has weighed heavily on economic activity. Gross domestic product is expected to contract 6% next year, after shrinking an estimated 12% in 2017, the IMF said in its latest World Economic Outlook report published Tuesday. While Venezuela’s central bank stopped publishing inflation data in December 2015, the IMF argues the country’s consumer prices are estimated to leap 2,349.3% in 2018, the highest in their estimates, followed by the Democratic Republic of the Congo’s 44%. As oil production declines and uncertainty increases, unemployment is forecast to increase to about 30% in 2018, also the highest and followed by South Africa’s 28% and Greece’s 21%. The Bolivarian Republic is not current with most of its key economic statistics, leaving economists scant data to crunch. Venezuela’s debt is growing, and it is increasingly unable to make interest payments. Printing money is no longer an option which it has already done. (Financial Tribune:;

Cash shortages here are expected to worsen
Cash shortages are expected to worsen here, despite efforts by Venezuela’s Banking Association and the Bank Superintendent’s office. Currency exports, obsolete ATM’s and the absence of decisions by monetary authorities are causing the crisis. The Central Bank issued 289.3 million new VEB 500 and VEB 1000 bills, and data shows the amount distributed was VEB 393.322 billion, which is only 60% of cash required in July. There seems to be no end in sight for the shortages, which are expected to worsen. More in Spanish: (El Universal,

Fears of a big Venezuela default subside
Investors are gaining confidence that Venezuela will make its next big bond payments. Notes from the state oil company that mature in November climbed to 94.5 cents on the dollar Wednesday, a three-year high, while amortizing bonds due in 2020 rose to their highest price since they were issued last year. There’s a US$ 985 million payment due Oct. 27 for the 2020 bonds, and US$ 1.2 billion due Nov. 2 on the securities maturing next month. While investors assign a 99% probability to Petroleos de Venezuela SA defaulting sometime in the next five years, according to credit-default swaps trading, optimism on the near term has been growing as the government assures investors it will pay. (Bloomberg:


Buchheit calls for post-Maduro Venezuelan debt standstill

Any incoming regime in Venezuela replacing President Nicolas Maduro will have to consider how to gain temporary relief from paying its creditors without giving them legal grounds to accelerate their outstanding debts, according to legal experts. One solution will be to create “some form of temporary standstill on creditor actions”, according to Lee Buchheit, partner at law firm Cleary Gottlieb, and Mitu Gulati, law professor at Duke University. Venezuela is struggling to service debts with a combined face value of US$ 63 billion after a collapse in oil prices left it with dwindling revenues and a huge fiscal shortfall. Talks are already being carried out bilaterally between Venezuela and its sovereign creditors, China and Russia, which are owed US $37.2 billion between them, but policy-makers in the country still face complex challenges to find a long-term solution. (Reuters,


Politics and International Affairs

US hopes Maduro regime will allow Venezuela to “speak up and decide” in regional elections
US Under Secretary of State for Political Affairs Thomas Shannon says the Maduro regime must allow the people to “speak up and decide” in Venezuela’s upcoming regional elections next Sunday. He also said the United States and Spain have joined in a “special association” in favor of the people of Venezuela, and that both governments have clearly “condemned repression that feeds the Venezuelan political crisis”. He said both the U.S. and Spain are promoting dialogue as a way out of the ongoing crisis here, within the European Union and the Organization of American States, “pressing on behalf of the Venezuelan people’s right to self-determination and not for the government’s own perpetuation”. He called on the European Union “to do more” in sanctioning the Maduro regime for “violating democratic rules”, More in Spanish: (El Nacional:

Is Venezuela a dictatorship? A key election will offer clues.
Venezuelans go to the polls this Sunday in state elections seen as a test of President Nicolás Maduro’s willingness to share power. But with polls showing the ruling socialists at risk of landslide losses, the authoritarian government appears to be falling back on a trifecta of tactics.  Two and half months after the creation of a super congress that gave the government nearly absolute power, Maduro has called the vote for state governors clear evidence that democracy remains alive here. Nevertheless, opposition leaders are decrying a dirty campaign by the Venezuelan government, which President Trump has denounced as a “socialist dictatorship.” State media is airing almost round-the-clock supportive coverage of pro-government candidates, while portraying their challengers as hypocritical and inept. All candidates, meanwhile, are being limited to four minutes of political ads per day on independent networks that now survive by self-censoring. Food baskets are being doled out to hungry voters at pro-government rallies. In a move seen as purposely misleading, the ballots for Sunday’s election will include a host of candidates who lost in the primaries and are not supposed to be running. This week, the government abruptly announced it would relocate a number of voting centers for “security reasons.” Opposition leaders said the move involved 205 locations in heavily anti-government districts in 16 states. That, critics say, amounts to manipulation and confusion. In Vargas, a coastal state just north of Caracas, for instance, the brother of opposition candidate Jose Manuel Olivares was detained last week by intelligence police for allegedly stealing a car — a charge his family denies. While stumping for votes, the candidate is often shadowed, he said, by state agents. Winning candidates from the opposition will likely find their powers restrained. Maduro has said that all governors will come under the authority of the Constituent Assembly, a government-controlled super congress created in a July vote marred by allegations of massive fraud. That body is likely to make life tough for any governor who is not in line with Maduro. Yet the vote is still seen as a key test. If turnout is high, polls suggest the opposition could capture governorships in up to 19 of Venezuela’s 23 states. Analysts are watching to see whether the government faces allegations of vote rigging, similar to those that emerged during the July election. Despite the polls, Maduro last weekend said his party is “expecting a historic success.” Given their strategy of subordinating governors to the government-controlled assembly, authorities might risk little by allowing a clean vote — while gaining much from the optics. The government may be calculating that such an event could defuse international pressure and appease its domestic opponents. Maduro is deeply unpopular, in part due to a severe economic crisis brought on by declining oil prices and what many view as government mismanagement. Recent polls show the president's approval rating at 23%. But opposition leaders have also lost support due to infighting and alleged disorganization. Some critics have pilloried them for even participating in the state elections, arguing the move is validating the government and playing into Maduro’s hands. Still, the election is an important bellwether for the opposition, which has largely failed to sustain the large-scale street protests that rocked the nation earlier this year. The activists’ concern now is that government tactics — and a general sense of helplessness among voters — may depress turnout on Sunday. (The Washington Post:


Mexico confirms it will join talks between Maduro regime and pro-democracy coalition
Mexican Foreign Minister Luis Videgaray has showed the Mexican Senate a letter from Venezuela’s Foreign Minister Jorge Arreaza inviting Mexico to be a part of the group of countries that will accompany possible talks between the Maduro regime and the pro-democracy MUD coalition. Jorge Rodríguez, who heads the regime’s team in proposed talks, claims that a cohabitation agreement will emerge after Sunday’s regional elections. More in Spanish: (Noticiero Venevisión,;


Opposition denies Maduro’s claim of progress in dialogue

The negotiator for the Venezuelan opposition in the process of developing a dialogue with the government of President Nicolas Maduro said on Tuesday that the president’s claim that negotiations have progressed 95% is totally false – the fact is they are losing ground. “Once again we must contradict the government. Political negotiations have not moved forward – they are losing ground every day,” opposition lawmaker and negotiator Luis Florido told the press in a statement. Florido said that Maduro’s remarks and those of the Venezuelan ambassador to the Dominican Republic, Jesus Uzcategui, are untrue, and since the government has not complied with the conditions required by the opposition, the dialogue is going nowhere. “From the MUD (opposition coalition) we repeat that... rather than the exploratory process being completed, it has gone backwards, because they took away our electoral guarantees by not allowing us to substitute candidates and they’re trying to get away with electoral fraud,” he said. (Latin American Herald Tribune,


DATANALISIS director says democratic movement could gain 13-16 gubernatorial seats

José Antonio Gil Yepes, director of the DATANALISIS polling firm says that the pro-democracy movement could gain 13-16 governorships in Sunday’s upcoming elections, in addition to the 3 it currently controls out of a total of 23 states. He said some United Socialist Party candidates “will emerge ahead of the regime”, because he said: “The regime could lose with a margin of 84-16 which is President Nicolas Maduro’s approval rating over the past 4 months”.  He said abstention by disappointed opponents would not significantly lower the traditional rate of 40-50%. Gil added that 78% of the population distrusts the National Elections Council, and called the current voting system “obsolete”. (2001:


BARCLAY’S: Venezuela: Obstacle course
Doubts over the competitiveness of elections in Venezuela are keeping the country’s outlook uncertain. The October 15 regional elections are therefore an important test in this regard. The most recent DATANALISIS poll shows the opposition has a strong lead, with more than twice the number of voting intentions than the government. There are 14 states in which polls suggest the opposition has an unassailable lead, which could make manipulating the outcome hard. Conditions favor the government in just three states. The remaining six states have a bias towards the opposition, but the outcome will depend on turnout and the ability of the opposition to overcome the obstacles imposed by the government. In any case, the opposition could obtain sizeable gains. More important than the number of states will be which states each side wins and the distribution of the national vote, which would be an indicator for a potential presidential election in 2018. (SEE ATTACHED BARCLAY’S REPORT)


Maduro again says elected governors must pledge allegiance to his ANC

President Nicolas Maduro has again said all governors elected next Sunday must be subordinate and pledge allegiance to his sham “National Constitutional Assembly” (ANC). He said those who do not will not be able to exercise their authority. He claimed all those who vote will be validating the ANC, “because it called up these elections”. The MUD pro-democracy coalition immediately called a press conference to reply to Maduro’s claim, saying: “People do not vote to endorse the ANC, they vote because it is their Constitutional right to do so”.(2001:;


Exiled Attorney General says rule of law no longer exists in Venezuela

Venezuela’s Attorney General Luisa Ortega – deposed by the sham National Assembly - said on Tuesday in Bogota that the rule of law and democracy no longer exist in her country. “I want you to know that in Venezuela there exists neither rule of law nor democracy nor any freedom … In Venezuela there is a breakdown in the constitutional order,” Ortega added during a conference on human rights in Colombia, organized by the Political Science, Government and International Relations Faculty of Rosario University. (Latin American Herald Tribune,


Opposition magistrates holed up in Chile residence flee Venezuela: source

Five magistrates named by the opposition-run congress who had been holed up in the Chilean ambassador’s residence to avoid arrest fled in the early hours of Monday and escaped over the border to Colombia, a source said on Tuesday. The Chilean Foreign Ministry said in a statement that Elenis Rodriguez, Luis Marcano, Jose Nunez, Beatriz Ruiz, and Zuleima Del Valle had left the premises on Monday, but did not offer further details. “Relatives came to get them at 5 a.m. yesterday. They escaped via (the Colombian border city of) Cucuta,” said the source close to the five, who have been granted asylum by the Chilean government. (Reuters,


Venezuelans are told their expired passports will be valid for another two years
Venezuelans have been told expired passports are valid for another two years because they have run out of paper and ink to print new ones. President Maduro has signed an emergency decree to extend their validity because of chronic shortages at the national passport agency. At least a million Venezuelans have been waiting months for new documents and cannot travel in the interim. Demand for travel documents is at a record high as Venezuelans seek to escape from political crisis and deep recession. (The Daily Mail:

Thousands are fleeing Venezuela by two-lane border bridge
For weeks, Venezuelans have been flocking by the busload to San Antonio del Táchira, a border town of some 62,000 residents, fleeing as President Nicolas Maduro consolidates autocratic power. The Simon Bolivar International Bridge is the avenue for an outpouring unprecedented in the history of this oil-rich nation. Crowds stream toward the bridge, attended by street hawkers selling juice, fried pastries and bus tickets and men who ferry their meager possessions to a new life. According to Colombia’s migration authority, the number of foreigners entering Cucuta, the first major city across the bridge, more than doubled this summer. Over 50,000 came in August, up from 22,700 in June. The numbers don’t reflect dual nationals returning to their homeland, or thousands simply crossing into Colombia without passing official checkpoints. Named after the South American hero who freed both nations from Spanish rule, the Simon Bolivar International Bridge was a once major commercial artery. Now, lanes once filled with trucks bearing potatoes, onions and lettuce are reserved for pedestrians trundling handcarts, laden with shopping bags and even walking their dogs along with them. As almost a dozen airlines have pulled out of the country, the bridge has become a concrete bottleneck for the masses fleeing this crisis-torn land. Most Venezuelans stay in Cucuta only long enough to have their passport stamped and catch a ride. Those who arrive late have taken to sleeping in parks or bus stations. Church groups have been doling out food to weary travelers or those who simply cross for the promise of a free meal. Border security has been reinforced, temporary visas are being issued, but the growing exodus has the Colombian government contemplating “refugee camps” if Venezuela’s crisis spirals completely out of control. Few predict an end to Venezuela’s exodus soon. The United Nations has urged governments across Latin America to issue temporary protections to Venezuelans, yet many who are leaving seem unconcerned about permission. (Bloomberg:


No visas, bad jobs: Venezuelan emigrants reluctantly return home

Early last year, Leandro Colmenares sold his car and his apartment and fled Venezuela’s profound economic crisis, joining a wave of emigration to other Latin American countries. Colmenares, a medical equipment repairman, first set up in Panama with US$ 7,000 in hand. When he could not get a visa and struggled to find work, he ended up with odd jobs like painting houses and doing electrical wiring for US$ 25 a day. He then tried his luck in Colombia, where he again took odd jobs, mostly cooking. He opened a small cafe with other Venezuelans but it failed.And once again, he could not get a visa. Crushed and having run out of money, Colmenares decided in February he had no choice but return to Venezuela empty-handed and by bus - one of an apparently growing number of Venezuelan emigrants forced to go home after failing to start a new life elsewhere in Latin America. (Reuters,


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.