Ayatollah: “There won’t be an investigation?”
Cristina: “No, but after the tango, a little oil . . . OK?”
Faustam fortuna adiuvat
American and Latin American Politics, Society, and Culture.
Ayatollah: “There won’t be an investigation?”
Cristina: “No, but after the tango, a little oil . . . OK?”
. . . who didn’t want to be pardoned.
Taking a cue from the U.S.-Cuba sweet deal (sweet for Cuba, that is), Venezuelan dictator Nicolás Maduro wants to make a deal:
Venezuela’s Maduro would free Lopez if U.S. freed Puerto Rican
Venezuelan President Nicolas Maduro said on Sunday he would only seek the release of jailed opposition leader Leopoldo Lopez if the United States agreed to release a Puerto Rican nationalist currently held in a U.S. prison.
The man in question, Oscar Lopez Rivera, is serving
70 years for seditious conspiracy and a variety of weapons charges as well as the second thwarted escape attempt (which included plans for the use of violence)
in Leavenworth, and,
he is a dangerous terrorist as well as a sociopath, and has never been known to express any regret or remorse. He was a co-founder of a deadly terrorist group, who constructed bombs (their weapon of choice) and trained others in both how to build them and how to use them. He twice attempted to escape from prison, and the latter attempt included plans of violence and murder.
Lopez-Rivera was offered clemency by Bill Clinton in August of 1999 (in a move that was engineered by then Deputy Attorney General Eric Holder) but refused to show remorse.
So, not only is Maduro meddling into Puerto Rican politics again – where he clearly is not wanted, he’s offering to exchange Leopoldo Lopez, an innocent man, for a sociopath terrorist:
“The only way I would use (presidential) powers would be to put (Leopoldo Lopez) on a plane, so he can go to the United States and stay there, and they would give me Oscar Lopez Rivera – man for man,” Maduro said during a televised broadcast.
He bundled up for the occasion:
Chinese President Xi Jinping during his visit and take part in a meeting between China and the Community of Latin American and Caribbean States Jan. 8-9 in Beijing.
Regarding China, read today’s post by David Goldman.
China will be more active in Latin America.
The WSj writes on Dilma Rousseff’s second inaugural. Brazil Leader Starts Term on Shaky Ground
President Dilma Rousseff Promised to Fight Corruption and Fix the Economy During Her Inauguration
After being in office for four years, the numbers are not good:
In an inauguration ceremony that was upbeat but drew sparse applause and little spontaneous celebration by her supporters, Ms. Rousseff extolled her legacy of poverty reduction while outlining a vision to get Latin America’s largest economy back on track.
“We will prove that it is possible to make adjustments to the economy without repealing rights that have been won or betray social commitments,” she said in a speech in Brazil’s Congress attended by cabinet members, foreign dignitaries, allied lawmakers and other officials.
Her pledge came as Brazil confronts flat growth, stubbornly high inflation, ballooning debt and a potentially explosive corruption scandal at state-controlled oil giant Petróleo Brasileiro SA, or Petrobras.
Petrobras is key:
But the darkest cloud on the horizon for Ms. Rousseff might be the fast-moving corruption scandal at Petrobras.
Brazilian prosecutors allege that executives at Petrobras conspired with construction companies to inflate the cost of contracts, skimming off as much as $1.5 billion, by the estimate of Brazil’s budget watchdog, to enrich themselves while funneling kickbacks to Ms. Rousseff’s Workers’ Party and its allies.
Ms. Rousseff hasn’t been implicated in the scandal, and leaders of her party have repeatedly denied allegations of involvement. Police have already filed charges against 36 suspects, including two former Petrobras officials.
There are two things to bear in mind:
1. The enormous amounts of money handled through Petrobras (and the temptation/opportunities for corruption)
2. Brazil’s antecedents when it comes to scandals and prosecutions
Blast from the past: The Economist explains What is Brazil’s “mensalão”?
This is a photograph of a 420,000-gallon oil spill in Ecuador’s Amazonian region in June 2013:
Andrew Ross, writing at The Nation, asks,
Why Is Ecuador Selling Its Economic and Environmental Future to China?
The slick, oily underside of Correa’s “citizens’ revolution.” (emphasis added)
While large swaths of the Amazon Basin remain uncharted, the most telling maps depict the region carved into numbered oil blocks, some of them hundreds of square miles in area. The Pañacocha field, for example, sits in Block 12; the ITT oil reserve is located in Block 43; and Block 57 is where Suárez took me. The blocks are periodically auctioned off as concessions to oil companies, and more and more of them are marked as a Chinese claim or interest. The Chinese extraction sites are remote, but anyone traversing the Amazon waterways, as I did this past summer, will routinely pass boatfuls of Chinese oil workers. At this point, China exercises a near monopoly on Ecuador’s oil—up to 90 percent this year alone—and is fast becoming the dominant player in mining and mineral extraction.
Of course, Ecuador is hardly alone in its growing dependence on Beijing. China committed almost $100 billion in loans to Latin America between 2005 and 2013—$15 billion last year alone, while the World Bank lent a mere $5.2 billion. But many believe that the erosion of sovereignty has been sharper in Ecuador than elsewhere in the region. The terms of its loans from Beijing are not fully transparent, giving rise to the worst suspicions. A March 2014 Amazon Watch report alleged that Petrochina has the contractual right to seize assets from any oil companies operating in Ecuador if the nation does not pay back China in full. A more extreme version of this claim is that the terms of loans include a “sovereignty immunity waiver,” that permits China to seize Ecuador’s own assets if it defaults. One of the administration’s chief critics, Acción Ecológica director Alexandra Almeida, told me that “the agreements with the Chinese are unlike any other. Even with Chevron we knew what we were getting. No one knows that much about the Chinese loans.”
Ross views the situation from the left, saying things such as “On the face of it, Beijing is not as easy to demonize as the infamous Paris Club, which represents the interests of Northern creditors,” and “has no history of ecological debt to Latin America.” But Ross is not blind to the fact that
environmentalists, like the YASunidos, have become Correa’s number-one enemy, labeled by some of his ministers as “enemies of the state.” Recent shifts in the interpretation of the penal code have made it possible to criminalize dissidents as “terrorists,” and domestic repression is growing.
Read the whole thing.
Casey Breznick posts,
A CNBC report on the prospect of a Venezuelan default cited a Capital Economics report stating that a default could be expected by next September or October when $5 billion in debt payments come due. Only an upswing of oil prices to somewhere around $121/barrel would allow Venezuela to balance its budget, according to some estimates. But with OPEC recently slashing its 2015 production levels to a 12-year low in response to decreasing estimated global oil demand and increasing supply via U.S. shale production, a significant oil price increase in the short-term seems highly unlikely. Bloomberg reports that the implied probability of default—derived from complex financial formulas—in the next five years stands at 93%, the highest in the world.
The Devil’s Excrement looks at Maduro’s New Script,
You may laugh all you want at what he says, but I don’t. He is making a very specific narrative out of all this and I am not sure where it is heading. It may be that he just wants to blame the US for the intensification of the crisis in the next few months or simply, that he is preparing the ground in case there is no money to pay international investors. There is a one billion Euro payment in March, which looks doable, but there are much larger maturities in October 2015. But investors have so far believed that Venezuela had a “willingness” to pay, and the action in the markets today indicated some people were losing faith.
It did not help that Bloomberg reported today on a meeting with investors at a New York law firm, which actually took place like ten days ago. This meeting actually ended in a somewhat positive note, as many suggested that Venezuela and PDVSA could not get away with a restructuring below current prices for most bonds, as the oil cash flow would not justify it.
It’s not the gobs of debt monetization, the billions of make-believe-bolivars the Central Bank loans PDVSA leading to an uncontrolled monetary expansion and the collapse of demand for real money balances.
It’s not the opacity in public accounts, the drop in reserves, the commercial default, the implosion in the goods markets, or the fact that you need your kid’s birth certificate to buy her diapers.
It’s not the fiscal deficit at 17% of GDP, or oil at $58 per barrel, or the tapped-out Fonden “sovereign wealth fund,” or the fact that the Finance Minister gives every possible public sign that he’s an idiot.
It’s not that the one regime official who announced a semi-reasonable reform that might have stanched the flow got shifted sideways to a non-economic job.
It’s not the Central Bank’s scandalous subservience to the Executive branch, or the fact that it won’t even dare publish basic inflation statistics.
It’s not that PDVSA has missed every production increase target it’s set for itself since 2003, it’s not that its refineries are badly maintained and barely functional, much less profitable.
It’s not that labour laws make it insane for a worker to waste his time working, and unreasonable as well as that is time he needs to spend queueing for basic consumption goods.
It’s not that the investment climate has been so shitty for so long, and the profit repatriation picture so bleak, no one sane even considers putting money into Venezuela.
Nope. It’s none of that. According to Maduro, it’s all a conspiracy, led by some flunkie sitting at a cubicle at Moody’s, someone who for some weird reason has decided to mess with his revolution. That’s why it’s expensive for Venezuela to borrow.
Earlier this week I mentioned that Venezuela needs to sell its oil between $150-$200/barrel in order to break even. While the country’s economy is increasingly dependent on oil revenues since oil accounts for 95% of all exports, Venezuela ships cut-rate oil to Cuba and 13 other countries. For the last year, Venezuela’s had to cut back:
For a decade, the 13 beneficiaries of Venezuela’s largess have depended deeply on the oil to finance social spending and infrastructure, and rewarded Caracas with diplomatic support on the international stage, regional diplomats said in interviews.
Even as Venezuela pledges to continue the program, the country’s oil exports to the countries fell about 20% through October compared with the same period last year, says ClipperData LLC, a New York data tracker. And last year, Venezuela’s cut-rate oil exports declined 15% from 2012, the International Monetary Fund says.
Petrocaribe may become a thing of the past, which curtails Venezuela’s influence at the OAS and the UN,
The program has cost Venezuela $22.1 billion, with Petrocaribe countries accumulating more than $11 billion in debt through 2013, said Mr. Piñon, basing his calculations on PdVSA data.
In return, Venezuela got loyal allies that voted with Venezuela at the United Nations, the Organization of American States and at other regional bodies, diplomats and officials from four countries said.
Let’s hope the US State Department recognizes this as an opportunity, especially as Russia and Iran widen their scope in our hemisphere.
But I doubt they will.
It wasn’t enough to break her nose on the floor of the National Assembly, now Venezuela indicts opposition leader Machado, alleging plot to kill Maduro; she has not been arrested yet.
Watch her response, translated by Global Post,
We know what’s going on in Venezuela.
Our country is collapsing. It’s total chaos. And those clinging to power and are responsible for this situation have decided to respond by repressing and persecuting.
They’re trying to silence everybody, from union members to journalists, tweeters, mayors, human rights defenders, anyone of us who fights for truth.
Today that’s what I’m charged for. They accuse me of a monstrous crime that everyone in Venezuela and the world knows is a big lie.
They charge me because I tell it like it is. Because I tell Maduro every day that he must resign. …
… Because we denounce the corruption and the abuse. Because we accompany the students and workers in their protests and their demands.
They charge me because we are organizing a formidable citizens platform … to carry out the urgent transition to democracy in peace.
Many ask me, why am I turning myself in?
I’ll respond with what I told my own children when they asked me the same question.
I am not turning myself in. I am presenting myself to defend the truth.
What’s the option? Flee, keep quiet, give up?
Our only option is to fight. It’s to confront lies with the truth, because truth always prevails.
The weapon these dictatorial regimes have for remaining in power is the fear they sow in citizens.
… In Venezuela the people are rebelling. We are an enormous majority that wants profound change.
Pain and anguish unite us, but so do our dreams and our democratic convictions.
That’s why it’s time to fight and go forward. My message to all right now is: Rise up, because we are going to succeed.
The trending Twitter hashtag is #YoEstoyConMariaCorina (#IAmWithMariaCorina).
Juan Cristobal Nagel is Live-blogging Maria Corina’s day
Earlier today I posted some questions on Venezuela and the falling oil price
Post title changed.
Tom Bemis looks at Breakevens for most major oil-producing countries (emphasis added)
A widely used measure of the impact of oil prices on major producers’ governments is the fiscal breakeven price. That’s “the average price at which the budget of an oil-exporting country is balanced in a given year,” according to Standard & Poor’s. Estimates of fiscal breakeven prices can vary considerably based on a variety of factors including actual budget expenditures, and differences in oil production forecasts.
In most cases, the oil price necessary to balance the budgets of major oil producing countries is above $100 a barrel in 2015, according to data from Citi Research’s Edward Morse.
Venezuela, already facing serious fiscal woes and rampant inflation, needs oil at $151 a barrel next year to balance its budget, according to the data.
Iran, which has yet to agree to curb development of nuclear weapons and heavily subsidizes gasoline for its citizens, needs oil at $131 a barrel.
And Russia, whose seizure of Crimea and continuing aggression towards Ukraine has raised tensions throughout Europe and inspired western financial sanctions, needs oil at $107 for a chance of getting its finances in order.
Venezuela’s future? ‘Barbarity and people looting’One analyst at Nomura recently estimated that Venezuela may need oil prices to hit $200 a barrel to balance its budget. (The precise figure is difficult to determine, because Venezuela doesn’t disclose as much economic data as other countries do.)
It seems as if President Maduro really believed that OPEC would cut production after he sent Ramirez to visit a few countries, including Russia, who happens not to be a member of OPEC. But as most analysts expected, OPEC did not cut production and scheduled the next meeting for next June, bringing a lot of people back to reality, including Maduro. It was only after Ramirez reportedly left the meeting “red faced”, that it sunk in that maybe Plan A was not going to work. Thus, Maduro switched to Plans B and C. Plan B is to “hope” that oil prices bounce back and plan C was to send Minister of Finance Marco Torres to Beijing to see if he can get some money there. Plan D was to name a commission to cut salaries and luxurious expenses. Yeah, sure!
I have been arguing with a bunch of friends about the probability that Torres will come back with a significant loan, which I peg to be around 0.00001, but they seem to think it is somewhat higher. You see, they actually believe that Venezuela has something to offer the Chinese, like oil or oil fields. But the reality is that Venezuela has little to offer at this time and the Chinese know it, so that Minister Torres is very likely to come back empty handed.
Caracas Chronicles (emphasis added):
Keystone XL Isn’t a Threat to the Environment; It’s a Threat to Venezuela
The whole idea that if you stop Keystone XL, somehow less oil is produced and consumed is infantile: the question isn’t “how much?” it’s “where from?” (And if you think exploiting the Orinoco Belt is less environmentally dicey than piping oil through Nebraska, there’s a mountain of coke in Jose I’d like to sell you.)
If the Venezuelan government had the bandwidth to think longer term – which it manifestly doesn’t – it would grasp Keystone XL as a key strategic threat. The main reason anyone would want to take Canadian oil to the Gulf Coast is because that’s where the refineries that can handle crappy, high-sulphur, high-tar content crude are. And the whole reason they’re got built there in the first place is to handle Venezuelan crude. This is why KeystoneXL is such an important piece of the North American Energy Independence puzzle: it’s what it takes to shut Venezuela out of the North American market.
Of course, a government that’s long made it positively a policy goal to shift Venezuelan production away from the U.S. may not be able to register that as a threat. Ideology is always going to prevail with them. But that’s only the umpteenth policy mistake the Venezuelan government made today before breakfast.
Even in a post-Keystone XL future where Venezuela doesn’t have access to North American energy buyers, Venezuela will find buyers for its oil, of course. It’s just that it will have to ship that oil further to get it to refineries that will need to be reconfigured (or built from scratch) to handle it, and each part of that costs money: money Venezuela could use for any of the thousand pressing and growing policy problems going unaddressed right now.
The Communist regime in Venezuela finances itself and its parasites, including Cuba, through oil proceeds, all the more reason to approve KXL.
Linked to by Dustbury. Thank you!
From commenter Kermit,
Venezuela is importing oil as a direct result of its disastrous refinery fires a year ago. What is being imported is light sweet crude to act as diluent when blended with the very heavy crude oil so that it can be pumped from the fields to the terminals/refineries.
Without fully functioning refineries/upgraders, no diluent is being made (kind of like diesel)
Also being imported is diesel and gasoline.
There is severe ship congestion since terminals are not set up to receive the crude oil and refined products. Long waiting times (meaning a lot of extra cost in demmurage to shipowners)
Venezuela’s average oil-export price last week fell to $72.80 a barrel, the lowest in four years, pushing the yield on the country’s benchmark bonds to almost 19 percent for the first time since the global financial crisis. Oil accounts for 97 percent of foreign exchange income, which the country needs to pay about $28.5 billion of bond principal due in 2016.
To defend oil prices, Maduro said he sent the country’s foreign minister to five oil producers, including Mexico and Russia, to drum up support ahead of the Nov. 27 meeting of the Organization of the Petroleum Exporting Countries, which Venezuela co-founded. Back in the late 1990s, Venezuela ended a slump in oil prices by cutting production along with other OPEC and non-OPEC producers.
To rumors of selling refineries, Caracas Chronicles says, Go bold, go big