Archive for the ‘Venezuela’ Category

Venezuela’s president is crafting a disaster

| September 19th, 2014 | No Comments »
Boston Globe

By Ricardo Hausmann

You’re a professor at a university in New England. You have gone on a business trip to the Middle East. At 3 a.m., as you are trying to catch up with your sleep and your jet lag, your daughter calls. She is distraught because President Obama has just gone on national television and spent 10 minutes telling the country that you are a thief and a financial assassin, that you conspire with dark foreign forces to harm the nation. While on his rant, he orders the Prosecutor General and the Attorney General to act against you.

You know that all these accusations are groundless, but it is easy to imagine what would happen next. Before you had a chance to call your lawyer, CNN, Fox News, MSNBC, and CNBC will be calling to ask you to confirm or deny the charge. They’d dig into your background, your Twitter feed, ... Read More

Venezuela default fears add to Latam woes

| September 18th, 2014 | No Comments »
Gulf Times

Despite sitting atop the world’s largest oil reserves, Venezuela’s government is facing mounting concerns about its solvency, prompting a downgrade that has added to Latin America’s recent economic bad news.

Venezuela owes more than $6.4bn in debt payments in October, equal to one-third of its total declared hard currency reserves.

The overall economic picture is also bleak, with Venezuelans hit by chronic shortages of basic goods, annual inflation of more than 60% and a stricken economy that S&P said risked shrinking up to 3.5% this year.

That prompted the ratings agency to lower Venezuela’s rating one notch on Tuesday, to CCC+, taking the South American country deep into “speculative grade” territory.

S&P warned investors that Venezuela faced “at least a one-in-two likelihood of default over the next two years.”

It gave the country a negative outlook, indicating the strong possibility of ... Read More

Venezuela Heads to a Default Reckoning

| September 15th, 2014 | No Comments »
Wall Street Journal WSJ-01


Venezuelan bond prices swooned last week on renewed speculation that the government of President Nicolás Maduro might soon default on as much as $80 billion of foreign debt. The yield on the government bond due in 2022 hit a six-month high of 15.8% on Sept. 9. David Rees of London-based Capital Economics, who last year warned of the risks of falling oil prices to Venezuelan solvency, told Bloomberg News by telephone that “the bond market is finally beginning to wake up.”

That may be true. It’s clear that the foreign exchange that Venezuela earns from oil exports cannot pay its import bills along with debt service. There are dire shortages of industrial and consumer goods as well as services. Something has to give and odds are that allowing the required adjustment to the economy won’t be the government’s first choice.

Yet it is also in the interest of Wall Street ... Read More

Colombia Does Venezuela’s Dirty Work

| September 12th, 2014 | No Comments »

By Mac Margolis

Diplomacy is a coded business, where every tonic syllable counts. So here’s one for Latin American semioticians: How to parse Colombia’s decision to hand over two young Venezuelan fugitive dissidents to the Bolivarian thought police?

One theory: To seal a peace deal with the Revolutionary Armed Forces of Colombia (FARC), Juan Manuel Santos, Colombia’s president, is again pandering to the autocrat next door.

It’s no secret that Venezuela has long been in the corner of the Colombian insurgents, who have been waging terror and mayhem against Colombia’s government for the last half-century, often with a wink and a nod from their Venezuelan patrons. That toxic bond had estranged Colombia and Venezuela for most of the previous decade, with the hawkish Alvaro Uribe pitted against the chief Andean tub-thumper, Hugo Chavez.

Since Santos was first elected in 2010, he has gone out of his way to end the Andean Cold War, infuriating ... Read More

Venezuela Threatens Harvard Professor for Default Comment

| September 12th, 2014 | No Comments »

By Jose Orozco and Sebastian Boyd

Venezuelan President Nicolas Maduro instructed the attorney general and public prosecutor to take “actions” against Harvard Professor Ricardo Hausmann, saying the economist sought to destabilize the country by suggesting the government default on its debt.

Maduro lashed out at Hausmann during a televised address last night, calling him a “financial hitman” and “outlaw” who forms part of a campaign “that has been initiated around the world against Venezuela.” He didn’t specify what actions he had asked the attorney general and prosecutor to take.

Venezuelan bonds tumbled earlier this week after Hausmann co-wrote an opinion piece on Sept. 5 with a Harvard colleague arguing the country should consider defaulting because it had already racked up billions of dollars of arrears with importers. Widespread shortages of everything from toilet paper to medicine have helped fuel the world’s fastest inflation.

Maduro’s speech was “the despotic diatribe of a tropical thug,” Hausmann ... Read More

As Venezuela economy worsens, fears of default

| September 12th, 2014 | No Comments »

By Hannah Dreier

CARACAS, Venezuela (AP) — President Nicolas Maduro is reassuring foreign creditors that Venezuela’s government will make good on a $4.5 billion foreign debt payment due next month.

But economists are uttering the D-word for the first time, noting the inflation-ravaged economy is stumbling with basic goods in short supply and the currency eroding in value.

Maduro has repeatedly said default is not an option. On Wednesday, he reiterated his administration’s commitment to pay “down to the last dollar.”

The subject gained traction in recent days, and even got its own Twitter hashtag, after an article by former Venezuelan planning minister Ricardo Hausmann and Harvard economist Miguel Angel Santos argued that a managed default could help Maduro resuscitate the economy and help his people.

“The fact that his administration has chosen to default on 30 million Venezuelans, rather than on Wall Street, is not a sign of its moral rectitude. It is a ... Read More

Venezuela’s UN Security Council Bid Gains Backing

| September 12th, 2014 | No Comments »
ABC News

By Joshua Goodman

Venezuela’s socialist government has quietly secured the backing of Latin America and the Caribbean to obtain a diplomatic trophy that long eluded the late Hugo Chavez: a seat on the United Nations Security Council.

The unanimous endorsement of Venezuela’s candidacy to represent the region on the Security Council came at a closed-door meeting July 23 in New York, said Amin Cruz, a diplomat at the U.N. from the Dominican Republic, which presided at the meeting.

When Chavez last tried for a seat in 2006, the United States succeeded in torpedoing his campaign. This year, Washington has been mum.

While Venezuela must still muster a two-thirds majority in a secret ballot of 193 member nations at the U.N. General Assembly next month, the lack so far of a rival candidate from the region means the chances of its candidacy being derailed are slim, analysts say.

If it does win a seat, world leaders ... Read More

Venezuela’s annual inflation rises to 63.4%

| September 10th, 2014 | No Comments »

Venezuela’s annual inflation rate has risen to 63.4%, the highest in Latin America, according to official figures published on Tuesday.

The figures are the first released by the central bank since May, which has led critics to accuse the government of withholding data for political reasons.

The poor state of the economy, among other issues, triggered mass anti-government protests earlier this year.

They have since died down, but many continue to grapple with shortages.

The central bank did not publish its scarcity index, a measure of goods that are missing from store shelves, but shortages of basic items such as flour, milk and toilet paper continue to be the bane of many shoppers.

‘Protest slump’

While the bank said that month-to-month inflation had eased in August for the third straight month to 3.9%, the annual inflation rate reached a six-year high.

The government of President Nicolas Maduro blamed the soaring inflation on the ... Read More

Colombia Faces Backlash For Turning Over Venezuelan Activists

| September 10th, 2014 | No Comments »

CARACAS, Venezuela—The expulsion by Colombia of two Venezuelan activists–both of whom were being detained here–has fueled a backlash against Colombia’s government for handing them over to President Nicolás Maduro’s administration.

More than 3,000 young people who participated earlier this year in protests against Mr. Maduro’s government here were jailed, leading to criticism from human rights groups about abuses even after most were released. At least 43 people—the majority of them antigovernment demonstrators—were killed in the protests, in which university students rose up to protest Venezuela’s economic troubles and rampant crime.

Lorent Enrique Gomez Saleh, 26, who leads the Operation Liberation anti-Maduro group, and Gabriel Valles, 27, a member of the organization, were deported from Colombia last week for visa infractions and violating regulations prohibiting foreigners from “participating in activities that threaten public order or national security,” said a Colombian Foreign Ministry statement. Colombian officials went on to say that ... Read More

Venezuelan Rout Deepens as Default Specter Raised: Andes Credit

| September 10th, 2014 | No Comments »

By Sebastian Boyd and Ye Xie

Venezuelan debt traders are beginning to consider the possibility the country may run out of money.

The cost of insuring the country’s foreign-currency bonds against non-payment soared yesterday by the most since the aftermath of Lehman Brothers Holdings Inc.’s collapse in 2008 to 14.25 percentage points, the most expensive in the world. Investors are also demanding the biggest premium in six months to insure the South American nation’s notes over those from war-torn Ukraine.

While most analysts and investors expect Venezuela and its state-owned oil company to make $5.3 billion in bond payments coming due next month, concern is mounting the country may find itself without enough cash to service debt as soon as next year as foreign reserves drop to an 11-year low and oil prices sink. The nation’s notes tumbled yesterday after Ricardo Hausmann, a Venezuelan-born economist at Harvard ... Read More

Hugo Chavez’s Absence Felt on Wall Street Bond Desks

| September 10th, 2014 | No Comments »

Venezuelan bond investors are learning the hard way that Nicolas Maduro is no Hugo Chavez.

Since replacing his late mentor in April 2013, Maduro has overseen the worst bond returns in emerging markets, with the country’s dollar debt posting a loss of 8.7 percent. That’s a complete reversal of the Chavez presidency, when the nation’s debt gained 16 percent annually over 14 years, generating a total return of 692 percent that dwarfed the 387 percent earned on developing-nation debt, data compiled by JPMorgan Chase & Co. show.

At first glance, it’s hard to see what exactly changed: Maduro, like Chavez, is a self-proclaimed socialist who has followed his predecessor’s model of spending the nation’s oil wealth on a wide array of social programs and ramping up state intervention in the economy. A closer look, though, reveals a president who lacks the kind of political clout and popular ... Read More

Venezuela to charge two opposition activists deported from Colombia last week

| September 9th, 2014 | No Comments »
The Miami Herald

By Jim Wyss

Venezuela on Monday said two activists who were deported from Colombia last week would be facing charges for failing to register with authorities every 21 days.

In a statement, Venezuela’s Public Prosecutor said Lorent Saleh and Gabriel Valles, who were deported from Colombia on Thursday and Friday, had violated the terms of a settlement they reached in 2010 when they were detained for participating in “violent protests” in the city of Valencia, the capital of Carabobo state.

Venezuela’s public prosecutor said both men had outstanding arrest warrants for failing to check in with authorities.

Saleh is a well-known student activist and the president of the Operación Libertad civil-rights group. He had been living and studying in Colombia since February but was deported on Thursday after Colombian authorities said he had been involved in political work that violated the terms of his visa. Valles, who was ... Read More

Venezuela defaults on its citizens, but not its bonds

| September 9th, 2014 | No Comments »
Financial Times

When Argentina’s Senate recently passed a “price fixing law” to curb inflation following its sovereign debt default, the government attacked critics who accused it of turning the country into a Venezuela. Instead, it seems, Venezuela may be turning into an Argentina.Last week, one of Venezuela’s most distinguished economists suggested Caracas should default on its foreign bonds. Given that Venezuela’s more than $100bn of hard currency debt accounts for a chunk of emerging market indices, this would be a major market event.

What makes the idea more attention-grabbing, though, is that the economist who suggested it was not a tub-thumping leftist from Caracas. It was Ricardo Hausmann, head of Harvard’s Center for International Development and a former chief economist of the Inter-American Development Bank.

Mr Hausmann, who is Venezuelan and occasionally advises the opposition, argues that the socialist government of President Nicolás Maduro has already defaulted on its citizens. ... Read More

Colombia hands over 2 student leaders to Venezuela amid protests on both sides of border

| September 8th, 2014 | No Comments »
US News & World Report


BOGOTA, Colombia (AP) — Colombia has deported two Venezuelan student activists, drawing criticism on both sides of the border by groups who fear they’ll be unjustly prosecuted for their political views.

Lorent Saleh, whose arrest had been sought by President Nicolas Maduro’s government, was handed over to Venezuelan authorities Thursday night after he was detained for overstaying and violating the terms of his visa. Fellow Venezuelan Gabriel Valles was expelled on Friday though his visa remained valid. Both are members of the activist group Operation Liberty, which is critical of the Venezuelan government.

Saleh can be seen loudly protesting Colombia’s decision in a video of the handover shot with a cellular phone by a fellow activist.

“(Colombian) President Juan Manuel Santos is negotiating and handing over the students,” Saleh shouts as he is ushered from a white van parked on ... Read More

Venezuela’s Press Crackdown Stokes Growth of Online Media

| September 8th, 2014 | No Comments »
Wall Street Journal WSJ-01 By EZEQUIEL MINAYA CARACAS, Venezuela—Angel Alayon’s blog, with its serious political analysis, drew a few dozen readers when he started five years ago. This year, the economist has seen unique monthly visitors more than double, to 239,000—the kind of growth that has become typical recently in this news-starved nation.

Venezuelans aren’t simply following the global trend from traditional to online news media. They have been forced to find alternatives as newspapers and broadcasters struggle with state efforts to control coverage, media watchdog groups say.

“There was a kind of journalism we weren’t seeing in Venezuela, something more profound and reflective,” said the 42-year-old Mr. Alayon, explaining the appeal of

Internet media and social-networking sites in Venezuela added a greater number of users per capita than any other Latin American country in the 12 months ending in June, according to the Virginia-based market researcher, comScore, which tracks computer use. The growth came despite a ... Read More

Rubio Asks Reid to Bypass Landrieu on Venezuela Sanctions

| September 4th, 2014 | No Comments »
Roll Call

By Niels Lesniewski

Sen. Marco Rubio wants Majority Leader Harry Reid to bypass one of his vulnerable incumbent Democrats in a bid to impose sanctions on Venezuela.

The Florida Republican sent a letter to Reid calling for the Nevada Democrat to use his prerogatives as leader to get a sanctions bill to the floor. Sen. Mary L. Landrieu, D-La., opposed granting unanimous consent to advance the measure before the August break.


“You were quoted in July saying that you support bipartisan legislation to sanction the Venezuelan officials responsible, yet in the two months since, the heart wrenching stories of savage violence from the Maduro government have worsened while Congressional action has only stalled,” Rubio wrote in Thursday’s letter to Reid. “Just last month, as the Senate was about to pass the sanctions bill that unanimously passed the House, Maduro’s regime found a way to influence our legislative process. Even though the legislation would have ... Read More

Miami conference: Better roads to improved ports creates business opportunities in Latin America

| September 4th, 2014 | No Comments »
The Miami Herald

Some 450 government and business leaders from 28 countries have gathered for the two-day Trade Americas & ConnectAmericas Expo — an opportunity to explore ways to bridge Latin America’s infrastructure gap.

But speakers at the conference, which was organized by the Inter-American Development Bank and Latin Trade Group, said that with growing populations — the region is expected to have 700 million people by 2030, more people moving into the middle class and globalization, most countries’ infrastructure is woefully inadequate.

Relatively brisk economic growth in Latin America in recent years also has “revealed the need to improve infrastructure,” said Bernardo Guillamon, the IDB’s manager of outreach and partnerships.

Even ... Read More

Venezuela’s economy: The death of pragmatism

| September 3rd, 2014 | No Comments »
The Economist

IT WAS billed as a “big shake-up”. With Venezuela immersed in its most severe economic crisis since 2003, President Nicolás Maduro´s announcement of a major restructuring of his government raised hopes that he might have a plan to tackle the problem. Instead, on September 2nd Mr Maduro ruled out any “capitalist” solution, declared his economic policy “successful” and sidelined the only cabinet member proposing substantial change.

Rafael Ramírez, chairman of the state oil corporation and vice-president for the economy, had argued for a unified exchange rate, reducing the money supply and raising the domestic price of petrol. After months of dithering, the president finally gave his answer by moving Mr Ramírez to the foreign ministry and splitting his super-portfolio into three separate jobs, none of them in the hands of a political heavyweight.

Venezuela is in trouble. Such trouble, in fact, that the central bank (BCV) ... Read More

Sanctions on Venezuela are a matter of human rights

| September 3rd, 2014 | No Comments »
The Advertiser

As Americans, we are blessed to live in a place where we can speak freely about our beliefs, challenge the direction that our country is being led in, and peacefully protest against those who are in power. But we also know this is a universal right, and America has always defended the ability of people everywhere to exercise it.

In Venezuela, however, what began this past February as peaceful demonstrations against the government of Nicolas Maduro soon turned into a bloodbath. Thousands of innocent Venezuelans have been jailed, injured or killed for protesting a failed regime plagued by unprecedented scarcity of food and basic goods, widespread crime and high murder rates, and limited economic opportunities. Because Maduro and his predecessor, Hugo Chavez, have worked hard to weaken the country’s democratic institutions, fed up Venezuelans took to the streets en masse, only to face bullets, tear gas and brutal beatings.

To crack down ... Read More

Venezuela reshuffle dashes hopes of a change of direction

| September 3rd, 2014 | No Comments »
Financial Times

By Girish Gupta in Caracas

Hopes that Venezuela would take a more pragmatic turn were dashed in a cabinet reshuffle on Tuesday night in which oil and economic tsar Rafael Ramírez lost his top jobs, one of which has been filled by a cousin of the late president, Hugo Chávez.

Mr Ramírez was removed as the country’s oil minister and as head of state oil company Petróleos de Venezuela (PDVSA), a role he had held for a decade. His position as vice-president for the economy has also been axed.

The country’s top economic role, the newly created vice-presidency of economy and finance, is to be held by Rodolfo Marco Torres, a former brigadier-general and participant in Chávez’s failed 1992 coup attempt against the then government.

“We must begin a new stage in the revolution,” said President Nicolás Maduro during a three-hour televised speech on Tuesday.

Mr Ramírez, who will become foreign minister, was ... Read More

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