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A Crackdown in Caracas

Last week, Caracas mayor Antonio Ledezma received an unexpected visit from the Venezuelan political police. After being taken into custody from his office without a warrant, Ledezma was charged with conspiring to overthrow the government of President Nicolás Maduro. He is now being held in the Ramo Verde military prison, where Leopoldo López and several other opposition leaders are also in detention. (The photo above shows Ledezma supporters demonstrating outside the headquarters of the domestic intelligence service in Caracas on Feb. 19.) Ledezma’s imprisonment marks a dangerous new watershed for Venezuela’s escalating political and economic crisis, one whose solution becomes more difficult to visualize with each passing week. The polarization in the country, caused by the government’s harsh treatment of the opposition, makes it practically impossible for Venezuelans to address their country’s challenges on their own. The tragedy is that there seem to be no honest brokers left to help usher […]

Posted On : Published By : Tom Whipple
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Venezuela Still Seen Defaulting to Deutsche Bank: Andes Credit

(Bloomberg) — With oil prices ticking up and new financing commitments, cash-strapped Venezuela is persuading traders and analysts alike to back away from calls the country will default this year. But not everyone is buying it. Deutsche Bank AG and Jefferies LLC still see Venezuela running out of money to pay debt in 2015. They’re the only ones out of 10 firms surveyed by Bloomberg, which included Goldman Sachs Group Inc. and Credit Suisse Group AG. While the country has raised almost $5 billion in the past month and oil has jumped 21 percent from an almost six-year low, Deutsche Bank’s Armando Armenta says that’s still not enough. Venezuela needs $32 billion to finance itself this year, according to his estimates. “The financing gap that they are facing for this year with current oil prices is just too large,” Armenta, the bank’s New York-based economist, said by telephone. “I […]

Posted On : Published By : Tom Whipple
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Amid a Slump, a Crackdown for Venezuela

CARACAS, Venezuela — For a glimpse into Venezuela ’s economic disarray, slip into a travel agency here and book a round-trip flight to Maracaibo, on the other side of the country, for just $16. Need a book to read on the plane? For those with hard currency, a new copy of “50 Shades of Grey” goes for $2.50. Forget your toothpaste? A tube of Colgate costs 7 cents. Quite the bargain, right? But for the majority of Venezuelans who lack easy access to dollars, such surreal prices reflect a tremendous currency devaluation and a crumbling economy expected to contract 7 percent this year as oil income plunges and price controls produce acute shortages of items including milk, detergent and condoms . “I’ve seen people die on the operating table because we didn’t have the basic tools for surgeries,” said Valentina Herrera, 35, a pediatrician at a public hospital in […]

Posted On : Published By : Tom Whipple
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Caracas Mayor’s Arrest Rallies His Supporters

CARACAS, Venezuela—The arrest of one of the government’s leading critics here by armed state agents has angered the opposition, which rallied in protest Friday as condemnation mounted, much of it coming from former regional leaders and human-rights groups. “It’s becoming clearer every day that we’re living in a dictatorship,” Mitzy Capriles, wife of this capital city’s mayor, Antonio Ledezma, said in an interview a day after intelligence-service commandos broke down her husband’s office door and took him into custody. The 59-year-old Mr. Ledezma—one of the few remaining conservative lawmakers whose career survived the rise of late leftist firebrand Hugo Chávez in 1998—was charged in court Friday to face charges of conspiracy to “organize and execute violent acts,” against the government, state prosecutors said. Attempts to contact a lawyer for Mr. Ledezma weren’t successful. The attorney general said Mr. Ledezma, who leads an antigovernment movement, was also suspected of coordinating […]

Posted On : Published By : Tom Whipple
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Caracas Mayor Arrested on Sedition Accusation, Plunging Venezuela into New Crisis

Photo Supporters of the mayor of Caracas, Antonio Ledezma, demanded his release on Thursday. Credit Ariana Cubillos/Associated Press Photo Mr. Ledezma was accused by President Nicolás Maduro of plotting with the United States to overthrow him. The State Department issued a statement saying, “Venezuela’s problems cannot be solved by criminalizing dissent.” Credit Carlos Garcia Rawlins/Reuters CARACAS, Venezuela — A new political crisis convulsed Venezuela on Friday over the arrest of the Caracas mayor, one of the country’s top opposition figures, accused by President Nicolás Maduro of abetting what he called an American plot to overthrow the government. Supporters of the mayor, Antonio Ledezma, quickly mobilized protests over his arrest — which they called a kidnapping — which was carried out without warning Thursday night. Human Rights Watch and other advocacy groups demanded Mr. Ledezma’s release, and hundreds of demonstrators gathered in a Caracas plaza to protest. But Mr. Maduro, whose […]

Posted On : Published By : Tom Whipple
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Big Investors Exit Petrobras as Corruption Scandal Drags On

SÃO PAULO—Some big international investors have been selling shares in Brazil’s state-run oil company Petróleo Brasileiro SA, or Petrobras, as the company faces the biggest crisis of its history amid corruption allegations. Investors including Soros Fund Management LLC, which invests for billionaire investor George Soros and his family; BlackRock Fund Advisors; and Fidelity Management Research Co., cut their stakes in the Brazilian company in the fourth quarter, when the corruption scandal gained force. “Big international investors prefer to stay away from Petrobras because the uncertainty surrounding the company is huge. So they’ve opted to take a conservative path until they see a clearer scenario for the company,” said João Pedro Brugger, a portfolio manager at Leme Investimentos, based in Florianopolis. Mr. Brugger said his company owns shares in Petrobras as part of a portfolio matching Brazil’s Ibovespa stocks index. Soros slashed its stake in Petrobras by 60% to 2 […]

Posted On : Published By : Tom Whipple
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Rising Gasoline Prices Defy Global Oil Rout: Corporate Brazil

(Bloomberg) — Brazilians are paying more to fill their gas tanks even as oil’s 49 percent rout in the past year drives down prices from New York to Tokyo. Gasoline in Sao Paulo climbed 9.9 percent in the past three months to 3.26 reais a liter, or about $4.50 a gallon, at the start of February, the most recent figures available, according to data compiled by Bloomberg. The price fell 31 percent to $2.06 a gallon in the U.S. and 23 percent to $5.51 in Europe in the period. “We’re swimming against the tide,” Pedro Paulo Silveira, chief economist at brokerage TOV Corretora, said in a telephone interview from Sao Paulo. “The fact is that consumers are in a complicated situation in Brazil.” Brazilian consumers and companies can expect to pay more for all energy this year, from natural gas to electricity. Petroleo Brasileiro SA, the state-run oil producer […]

Posted On : Published By : Tom Whipple
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Pemex cuts budget by $4 billion

The board of Petroleos Mexicanos (Pemex) has approved a $4-billion budget reduction for 2015, an 11.5% decrease compared with the previous expenditure program authorized by Mexico’s Congress. Pemex says the cuts, which come amid lower oil prices , are imperative in achieving financial targets set by Congress. Two thirds of the company’s $36.3 billion budget—$24.6 billion—will be allocated toward the company’s investment plans. The remaining one third will go toward operating activities and meeting labor and pension obligations. Pemex says its budget formulation process considered a $79/bbl average price for the Mexican crude oil export basket to estimate annual revenues and to set a corresponding ceiling on expenditures. Deferred spending for downstream activities includes refinery revamps and clean fuels projects involving ultra-low sulfur gasoline and diesel ( OGJ Online, Feb. 18, 2015 ). The board has instructed management to meet with contractors and renegotiate long-term deals that were made […]

Posted On : Published By : Tom Whipple
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Venezuela Squanders Its Oil Wealth

National Guard monitor a supermarket in Caracas, on Feb. 3, 2015. (Bloomberg) — By packing bags for $1 a day and with tips at a Caracas supermarket, Luis has managed to save up for a Japanese sports motorbike. His secret? Getting hold of scarce food before it hits the shelves. Luis offers preferential access to detergent, milk and sugar to his clientele of about 100 diplomats at a Centro Madeirense shop in the south of the capital. In return, they offer him occasional work as a handyman or courier and loan him money during dry patches. “Times are tough. We have to spin to survive,” Luis, 30, said in an interview in Caracas last month. “We have to be creative with the opportunities at hand to make ends meet.” Price controls have emptied stores of most goods, while the world’s highest inflation has pushed what is available beyond the […]

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Severe Drought Pushes Brazil’s Largest City Toward Water Crisis

SÃO PAULO, Brazil — Endowed with the Amazon and other mighty rivers , an array of huge dams and one-eighth of the world’s fresh water, Brazil is sometimes called the “ Saudi Arabia of water ,” so rich in the coveted resource that some liken it to living above a sea of oil. But in Brazil’s largest and wealthiest city, a more dystopian situation is unfolding: the taps are starting to run dry. As southeast Brazil grapples with its worst drought in nearly a century, a problem worsened by polluted rivers, deforestation and population growth, the largest reservoir system serving São Paulo is near depletion. Many residents are already enduring sporadic water cutoffs, some going days without it. Officials say that drastic rationing may be needed, with water service provided only two days a week. Behind closed doors, the views are grimmer. In a meeting recorded secretly and leaked […]

Posted On : Published By : Tom Whipple