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Russia Announces Delivery Of More Supplies To Venezuela’s Military
Russia Announces Delivery Of More Supplies To Venezuela’s Military
Even after repeat threats issued to Moscow from President Trump himself — including recently saying bluntly “Russia has to get out” — the Russian military now appears so unconcerned by such warnings that it’s simply announcing its Maduro support actions ahead of time via state media.
Russian news agency TASS said Friday, citing a military-diplomatic source, that Russia plans to supply Venezuela’s army with more than 16,000 field rations. This after a large Russian state-run arms exporter published a contract related to the re-supply deal. In late March two Russian military planes landed outside Caracas and offloaded equipment and troops to assist the embattled Maduro regime, via the AFP
No doubt the very open publication of the supply deal is aimed at showing Washington that the Kremlin is not going anywhere in terms of its longtime military alliance with Caracas, which was controversially on full display last December when Russian two nuclear-capable “Blackjack” strategic bombers flew to Caracas, and departed soon after amid White House threats and demands.
Russia also likely now feels emboldened given the embarrassing Guaido opposition led failed coup attempt launched but just as quickly fizzling out at the end of April.
The White House, especially through statements of John Bolton and Secretary of State Mike Pompeo gave the full backing of the United States to the called for military uprising. Thus Moscow realizes the US simply doesn’t have leverage on the ground in Venezuela, and boldly announced the following late this week:
On Thursday, Rosoboronexport, Russia’s state-run arms exporter, placed information about purchases of 16,500 field rations to be supplied to Venezuela. The initial cost of the contract is 14.38 million rubles (222,091 US dollars).
“The rations will be supplied in the interests of the Venezuelan army,” the source said.
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Venezuela Leaders Confirm Active Coup Attempt In The Country
Venezuela Leaders Confirm Active Coup Attempt In The Country
Multiple reports say a military coup attempt is ongoing Tuesday morning in Venezuela as an anti-Guaido militia loyal to opposition leader and US-backed Juan Guaidó tries to establish military control of key points across the capital of Caracas and other major cities.
Information Minister Jorge Rodriguez confirmed via social media the government is in the midst of putting down what’s being described as a “small coup” by military “traitors” working with the right-wing opposition.
File photo of Venezuela soldier in Caracas, via AFP
The AP has confirmed ongoing clashes between coup supporters and police inside Caracas, including reports of tear gas being fired, moments after Guaido issued statements in a video calling for a military uprising. Guaido was shown in the video accompanied by detained activist Leopoldo Lopez and surrounded by well-armed soldiers.
The AP has confirmed ongoing clashes between coup supporters and police inside Caracas, including reports of tear gas being fired, moments after Guaido issued statements in a video calling for a military uprising. Guaido was shown in the video accompanied by detained activist Leopoldo Lopez and surrounded by well-armed soldiers.
Crucially, Lopez said he was liberated from captivity where Maduro had put him under house arrest for leading opposition unrest in 2014, and in the video called on all Venezuelans to peacefully take to streets.
En el marco de nuestra constitución. Y por el cese definitivo de la usurpación. https://www.pscp.tv/w/b5gQ9TUwMjc4NDN8MXJteFBlakJydlhLTlWvemxFNY_71g4QomAN12W3ykWFevDO_7lCRAawcIAW …16.8K5:46 AM – Apr 30, 2019Twitter Ads info and privacy
The AP described the video which apparently sparked the subsequent anti-Maduro action in Caracas:
In the three-minute video shot early Tuesday, Guaido said soldiers who took to the streets would be acting to protect Venezuela’s constitution. He made the comments a day before a planned anti-government rally.
“The moment is now,” he said, as his political mentor Lopez and several heavily armed soldiers backed by a single armored vehicle looked on.
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Pompeo Demands Moscow “Cease Unconstructive Behavior” In Venezuela
Pompeo Demands Moscow “Cease Unconstructive Behavior” In Venezuela
As we predicted a number of times before, a proxy war between Russia and the United States appears now heating up in Venezuela — this after over the weekend Russia sent a military transport plane filled with Russian troops commanded by First Deputy Commander-in-Chief of the Land Forces of Russia Gen. Vasily Tonkoshkurov, which landed in Caracas Saturday. We also reported the major development this morning that new satellite images reveal a major deployment of S-300 air defense missile systems to a key airbase south of Caracas.
Russia’s highly visible deployment of a small troop contingency along with a reported 35 tons of cargo has resulted in a direct and firm response from Washington as on Monday morning the US Secretary of State called on Russia to “cease its unconstructive behavior”.Pompeo has been touring the Middle East over the past days. Image source: Reuters
According to Reuters Pompeo conveyed the message directly via a phone call with his Russian counterpart Foreign Minister Sergey Lavrov.
Spokesman Robert Palladino addressed the phone call in the following statement:
The secretary told Russian Foreign Minister Lavrov that the United States and regional countries will not stand idly by as Russia exacerbates tensions in Venezuela.
Palladino added that Pompeo specifically condemned Russian military support for the “illegitimate regime of Nicolas Maduro.”
Pompeo had earlier this month vowed to continue to put “unconstrained” pressure on the Maduro regime after it became apparent that all internal coup attempts by the Juan Guaido-led opposition had failed.
As we reported previously this week’s tensions follows a high-level meeting in Rome last week, during which Russia reiterated a grave warning to the US – Moscow will not tolerate American military intervention to topple the Venezuelan government with whom it is allied – thus it appears Russia is taking no chances with its South American ally.
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Venezuela Military Deploys S-300 Missiles Following Russian Troop Arrival
Venezuela Military Deploys S-300 Missiles Following Russian Troop Arrival
Following the major weekend development of Moscow unambiguously asserting its ‘red line’ concerning potential US military intervention in Venezuela, for which Russia sent a military transport plane filled with Russian troops which landed in Caracas Saturday, new satellite images reveal a major deployment of S-300 air defense missile systems to a key airbase south of Caracas.Image via AMN News
Crucially the Russian An-124 transport plane which touched down in Caracas on Saturday carried no less than Russian General Vasily Tonkoshkurov, identified as chief of the Main Staff of the Ground Forces and First Deputy Commander-in-Chief of the Land Forces of Russia, accompanied by 99 servicemen and 35 tons of cargo.
As we reported the flight came just days after a high-level meeting in Rome last week, during which Russia reiterated a grave warning to the US – Moscow will not tolerate American military intervention to topple the Venezuelan government with whom it is allied – thus it appears Russia is taking no chances with its South American ally.
One of those warnings delivered directly by Russia’s deputy foreign minister Sergei Ryabkov to US “special envoy” on Venezuelan affairs Elliot Abrams is understood to have been that no American military intervention in Venezuela will be tolerated by Moscow.
And just a day following the contingency of Russia troops landing in Caracas, Maduro’s National Bolivarian Armed Forces have reportedly activated S-300 missiles after completing military drills that previously took place in February.
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Venezuela Now 24 Hours In Darkness; Maduro Blames US “Electricity War”
Venezuela Now 24 Hours In Darkness; Maduro Blames US “Electricity War”
Venezuela’s worst ever power outage in recent history has continued since Thursday, as video and photos continue to come out of the cash and resource strapped country showing entire cities blanketed in darkness.
Stretching into day two of the mass electrical shutdown, 23 out of 24 states remain in darkness, according to the AP, in a prolonged situation now reaching crisis levels given reports that hospitals are struggling to keep back-up generators running and many businesses are forced to remain shuttered. Caracas streets Thursday evening, via the AFP/Getty
The nation-wide blackout quickly turned into a blame-game over who’s at fault, with many in the opposition blaming the Maduro government’s mismanagement and notorious corruption, and with pro-regime voices blaming right-wing saboteurs taking orders from the United States.
Caracas has even gone so far to point the finger at Florida Republican Senator Marco Rubio, who only yesterday as part of a Senate Foreign Relations Committee hearing said that the US should promote “widespread unrest” in order to bring down the Maduro government. Though offering no specific proof Caracas officials accused the US and opposition activists of causing “pandemonium” for several days, culminating in the blackout.
President Nicolas Maduro gave brief public acknowledgement of the outage on Twitter, saying, “The electricity war declared and directed by the imperialist United States against our people will be overcome!” and added, “No one can defeat the people of Bolivar and Chavez. Maximum unity patriots!”
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The Coming US-China Proxy War In Venezuela
The Coming US-China Proxy War In Venezuela
China won’t give up on embattled Venezuelan president Nicolas Maduro anytime soon even as the US-led international noose of “delegitimizing” hangs around the socialist strongman, according to government statements released on Friday. Beijing reaffirmed it maintains “normal state-to-state relations” and cooperation between the two sides “shouldn’t be undermined no matter how the situation evolves,” according to press briefing by the Chinese Foreign Ministry. Or rather, we could more simply translate: with billions of dollars in credit on the line, “non-interference” is simply not an option for China.
“China has maintained close communication with all parties through different ways,” a ministry spokesperson said in response to question about whether China has had contact with National Assembly leader Juan Guaido. “We are ready to work with all parties to promote peace talks, and create favorable conditions for the proper settlement of the Venezuelan issue,” the ministry added.
But then there’s the not so minor issue of China over the past decade lending over $50 billion to Caracas as part of an oil-for-loan agreements program. It underscores just how quickly what appears a new White House full court press for regime change could bring Washington again into indirect conflict with both China and Russia. And in total Venezuela owes “more than $120 billion just to China and Russia” FOX reported this week.
A new Wall Street Journal report outlines what’s at stake, and the mounting costs for Beijing:
When China hatched the first of a series of oil-for-loans agreements with Venezuela in 2007, it seemed like a perfect match. Venezuela had the world’s biggest oil reserves; China was poised to become the biggest energy consumer.
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Venezuelans Face Gasoline Shortages
Venezuelans Face Gasoline Shortages
Cars, motorcycles and buses wrapped around Caracas’ gas stations earlier this week as oil production and refining becomes increasingly erratic in the former petro giant.
The fuel shortages have expanded across the country as Petroleos de Venezuela SA’s refineries run at the lowest rates seen this year amid a lack of crude oil and as Cardon, the country’s largest refinery, is still shut after an Oct. 15 blackout. In total, the state-run oil company’s five refineries are operating at less than a quarter of their capacity.
While the situation is nationwide, shortages tend to be less frequent in the capital, where the government is trying to prevent growing unrest. The gasoline lines are one more element adding to Venezuelans’ daily plight, which includes scarce basic goods amid hyperinflation, regular power outages and lack of public transport.
Despite the government’s efforts, a number of gas stations have closed in Caracas this week, forcing drivers to bounce between stations before forming in line at those still open for service.
Gas prices are still the among the cheapest in the world in Venezuela. The black market rate earlier this month was less than one cent per gallon. If you’re low on cash, pump attendants often accept snacks as payment. President Nicolas Maduro has yet to increase prices after vowing to do so at the end of September.
Venezuela’s Oil Ministry and PDVSA officials declined to comment.
The Time Has Come: Venezuela May Be In Default In Under 48 Hours
The Time Has Come: Venezuela May Be In Default In Under 48 Hours
This past weekend, Venezuela failed to make $237 million in bond coupon payment, blaming “technical glitches” when in reality it simply did not have the money (or wish to part with it). Adding the $349 million in unpaid bond interest accumulated over the past month as of last Friday, that brings Caracas’ unpaid bills to $586 million this month, just days before the nation must make a critical principal payment. And, as BofA sovereign debt analyst Jane Brauer writes, while the bank’s base case assumption is that Venezuela will make its debt service payments this year, “the probability of a short term default has increased substantially with coupon delays” and it could come as soon as this Friday, when an $842 million PDVSA principal plus interest payment is due, and which unlike typical bond payments does not have a 30 day grace period but instead is followed by a second $1.1 billion PDVSA coupon on Nov 2, also without a 30 day grace period.
As Brauer writes, Venezuela has been in as similar situation of payment uncertainty in the recent past, with bond prices plummeting right before a big payment. For example, just before a big principal payment was due in April 2017 Venezuela received a $1bn loan from Russia just one week before the due date. At that time Ven 27s dropped 16% in a month (from $52 to $45) and recovered completely within a month. Ven 27 has fallen to $35, as Venezuela has demonstrated that it will be a challenge to make all payments on time. The difference between now and April is that coupon payment delays then came after, not before the payment.
Meanwhile, Venezuela has managed to redefine the concept of payment “on time” which now means “by the end of the grace period”
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Venezuela Is Down To Its Last $10B As Debt Payments Loom
Venezuela Is Down To Its Last $10B As Debt Payments Loom
Venezuela’s central bank is down to its last $10.5 billion in foreign reserves, according to the institution’s most recent report on the country’s financials.
Over the remainder of 2017, Caracas needs to fund $7.2 billion in debt payments – an amount that it can only meet if oil prices spike far higher than the ongoing boosts caused by OPEC’s output reduction agreement.
Current reserves stand 66 percent lower than levels in 2011, when the government held $30 billion in foreign currencies to spend on loan repayments and other official business.
“The question is: Where is the floor?” Siobhan Morden, head of Latin America fixed income strategy at Nomura Holdings, told CNN Money. “If oil prices stagnate and foreign reserves reach zero, then the clock is going to start on a default.”
Venezuela’s financial report for 2016 stated that roughly $7.7 billion of the remaining $10.5 billion in foreign reserves had been preserved in gold. Last year, in order to fulfill debt obligations, Caracas began shipping gold to Switzerland.
The drastic fall in oil prices in 2014 and widespread corruption have both caused an economic meltdown in the South American country, where citizens had become accustomed to imported goods paid for by fossil fuel revenues.
President Nicolas Maduro has resorted to opening the country’s border with Colombia to allow Venezuelans to purchase necessary medical and day-to-day supplies.
Venezuelan state-run oil company PDVSA’s default is probable, according to the ratings agency Fitch, which cited the oil giant’s weak liquidity position and high amortization scheduled for 2017 as the causes of the default problem last month.
“Should oil prices remain around current levels, average recovery may lead to additional future defaults to further reduce obligations and allow for necessary transfers to the government,” said Fitch’s senior director Lucas Aristizabal.
The company has projected that its oil production will maintain its 23-year-low in 2017.
Venezuela Runs Out Of Electricity, Will Shut Down For A Week, El Nino Blamed
Venezuela Runs Out Of Electricity, Will Shut Down For A Week, El Nino Blamed
Or at least that’s how Maduro described the situation in a “thundering” speech to supporters at what he called an “anti-imperialist” rally in Caracas last Sunday.
Meanwhile, thousands of demonstrators held counter-rallies calling for the President’s ouster. Maduro angered the opposition – which dealt Hugo Chavez’s leftist movement its worst defeat at the ballot box in history in December – last month when he used a stacked Supreme Court to give himself emergency powers he says will help him deal with the country’s worsening economic crisis.
“Now that the economic emergency decree has validity, in the next few days I will activate a series of measures I had been working on,” he said, following Congress’s declaration of a “food emergency.”
Needless to say, Maduro’s “measures” didn’t do much to help the situation on the ground, where Venezuelans must queue in front of grocery stores and where 90% of medicine is scarce.
Venezuela is the world’s worst performing economy and barring a sudden (not to mention large) spike in crude prices, the country will in all likelihood default this year as 90% of oil revenue at current prices must go towards debt service payments.
But that hasn’t deterred Maduro, who has vowed to remain defiant in the face of (loud) calls for his exit. “Let them come for me,” he bellowed on Sunday. “I will hang on to power until the final day.”
Maybe so, but one place that’s not “hanging onto power” is the Guri Dam, which supplies more than two-thirds of the country’s electricity. As The Latin American Herald Tribune writes, the dam “is less than four meters from reaching the level where power generation will be impossible.”
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Venezuela isn’t looking too hot
Venezuela isn’t looking too hot
If anarcho-capitalists should move to Somalia, then socialists – especially, “social democrats” — should move to Venezuela. The country is a complete disaster. But don’t take my word for it, read what a Caracas homemaker said after she tried to buy three cans of sardines and was ordered to put one back due to food rationing: “This is a disaster.”
Food shortages, rising prices, inflation, corrupted incentives, and rampant crime are all symptoms of a primordial problem: socialism. Just because the Socialist Party was democratically elected does not mean that the economic calculation problem has been solved. It’s as if the gods needed one more example to shove down the throats of Western leftists. Economic chaos, food rationing and a complete break down of the social order aren’t lessons of a misguided dictatorship of the proletariat, but a fundamental reality of socialism, whether democratic or not.
Democracy is just an insidious form of communism and the Venezuelan December 6th legislative elections won’t likely loosen the power the Socialists hold over the judiciary and government watchdog agencies. But since street protests led to more state violence, the Venezuelan people have retreated to a electoral solution.
Like Canada, where government workers prefer to vote for the party that offers more tax-funded goods, it’s assumed that in Venezuela, the government-controlled TV and radio stations will convince enough people to vote for the Socialists.
Pollster Luis Vicente Leon said that over 16 years in power, first Chavez and now [President Nicolas] Maduro have mastered the electoral arts. “They fiercely control the institutions and the money which allow them to become stronger through electoral engineering even when their support is flagging,” Leon wrote in the Caracas daily El Universal.
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Brain-Drained
Brain-Drained
Venezuela: Real Wages Collapse amid Continuing Crack-Up Boom
While the crack-up boom in Venezuela continues, real wages in the country have have utterly collapsed. The bolivar is still trading close to 700 to the US dollar on the black market, and the Caracas stock index keeps making new all time highs in nominal terms almost every day. Ironically, Venezuela’s currency is called the “bolivar fuerte” (VEF), i.e. “the strong bolivar” ever since it has been “reverse split” 1 for 1,000 in January 2008.
Image via designlimbo.com
As an aside, the stock market has likewise been subject to a reverse split of 1 for 1,000 about a year ago – pre-split the index would now be trading at a cool 15.5 million points.
The black market rate of the “strong” bolivar (VEF) – 1 USD now buys nearly 700 VEF – click to enlarge.
Meanwhile, Venezuela has the highest sovereign CDS spreads in the world. Below is a chart of Venezuela’s annual default probabilities based on 5 yr. CDS spreads at a 40% recovery assumption:
Venezuela: annual sovereign default probability from 5 year CDS spreads at an assumed recovery rate of 40% (which may prove to be a generous assumption) – click to enlarge.
Venezuela’s Economy Loses its Best People
The great successes of socialism in Venezuela aren’t confined to increasing shortages of basic goods, a collapsing currency and extremely high sovereign CDS spreads.
Businesses are confronted with a mixture of sharply rising input costs and price controls and as a result are unable to pay their employees wages that can even remotely balance the sharp losses in the bolivar’s purchasing power. As Reuters reports, skilled workers have been hit the worst:
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The Reason for Hyperinflation-phobia
The Reason for Hyperinflation-phobia
The New York Times can be forgiven for blaming the empty shelves in Caracas to the plunge in oil. However, a raging hyperinflation cleared the cupboards before the price of oil was cut in half. William Neuman’s front page story illustrates what the NYT does best, making economic tragedies personal.
Laboratory assistant Mary Noriega must stand in line for hours with 1,500 others just to buy food, “as soldiers with side arms checked identification cards to make sure no one tried to buy basic items more than once or twice a week.” Ms. Noriega has had to barter with neighbors to put food on the table.
In Thomas Mann’s epic short story describing life in Weimar, Germany, “Disorder and Early Sorrow,” the woman of the house, Frau Cornelius, similarly tries to keep food on the table,
The floor is always swaying under her feet, and everything seems upside down. She speaks of what is uppermost in her mind: the eggs, they simply must be bought today. Six thousand marks a piece they are, and just so many are to be had on this one day of the week at one single shop fifteen minutes’ journey away.
Paul Cantor, in his analysis of Mann’s story, “Hyperinflation and Hyperreality: Thomas Mann in Light of Austrian Economics” points out “how one government intervention in the economy immediately leads to others. Having produced scarcities in the market with their inflationary policies, the authorities introduce new regulations to try to deal with the irrationality they themselves created.”
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Thousands march against Venezuelan president
Thousands march against Venezuelan president
Protesters rally against sky-high inflation and shortages of food in Caracas, demanding President Nicolas Maduro resign.
Thousands of protesters have marched in the Venezuelan capital banging pots and pans over shortages of food and demanding an end to President Nicolas Maduro’s term in office.
Demonstrators poured on to the streets of Caracas on Saturday rallying against sky-high inflation and shortages of food and consumer goods.
Opponents say Venezuela’s economic crisis is a consequence of 15 years of socialist policies, begun by Maduro’s predecessor Hugo Chavez, who ruled from 1999 to 2013 before his death from cancer.
“Maduro must step aside for Venezuela to be able to unite in a national reconstruction process,” opposition leader Maria Corina Machado, a deposed politician who was jailed after deadly riots last year said.
“The government needs to be changed urgently,” Machado argued, at what opposition activists called the “March of Empty Pots.”
“I am protesting because in my country there is nothing, no food, no nourishment, no medicine,” protester, Maria Carolina Nolia told the Associated Press news agency.
Maduro is facing a dismal 22-percent approval rating, and three quarters of the population oppose his government, recent polls show.
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China to invest $20bn in struggling Venezuela
China to invest $20bn in struggling Venezuela
China has agreed to invest more than $20bn in economic, social, and oil-related projects in Venezuela, as the country struggles from a financial crisis brought on from falling oil prices.
President Nicolas Maduro said on Wednesday he was seeking to strengthen ties with Chinese banks after meeting Chinese President Xi Jinping in Beijing, a week after Caracas announced it was in a recession.
“We have wrapped up over $20bn in investments during the course of this day’s work,” Maduro told Venezuela’s official AVN news agency.
The sweeping investment deal covers a wide range of areas including technology, housing and urban planning, AVN said.
Maduro, however, did not say whether the latest investments include new loans for the cash-strapped OPEC member, or if the investments were part of an existing oil-for-loans deal between Venezuela and China.
Beijing has extended $42bn in long-term loans to Venezuela, $24bn of which has been paid out so far, according to Venezuelan officials.
Xi said that China, the world’s second-biggest economy which has been bolstering its diplomatic and economic reach in South America – had agreed to “strengthened cooperation”.
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