Lights back on in Venezuela after five-hour blackout

Lights back on in Venezuela after five-hour blackout

By Alexandra Ulmer and Fabian Cambero

CARACAS (Reuters) – A power outage hit parts of the Venezuelan capital Caracas as well as the nearby states of Miranda and Vargas for around five hours on Monday, in what critics said was another sign of the oil-rich nation’s economic meltdown.

Authorities blamed the outage, which began around noon (1600 GMT), on the collapse of an important cable linking a power plant and a transmission tower.

The fault affected some phone lines, parts of the Caracas metro, and the main Maiquetia airport just outside the capital.

Many workers had no choice but to walk home, shops and restaurants closed, and Venezuelans grumbled that another day was disrupted by tumult.

The country is already grappling with the world’s fastest inflation, rising malnutrition, and disease as the state-led economic system grinds to a halt.

“Venezuela has fallen apart,” said David Garcia, 38, as he queued for a hotdog at a stand in the wealthier Chacao neighborhood. He had spent two hours looking for an open restaurant because he could not cook at home.

Venezuela has in recent years suffered frequent blackouts that critics attribute to insufficient investment following the 2007 nationalization of the electricity sector.

“This is a symptom of a country collapsing due to the negligence of those in power,” tweeted opposition lawmaker Tomás Guanipa.

The government has in some cases attributed the blackouts to sabotage or accused critics of exaggerating problems.

Energy minister Luis Motta on Monday tweeted articles on a recent power outage at Atlanta airport in the U.S. state of Georgia, adding: “It happens there too.”

He did not provide details on the magnitude and effects of Monday’s blackout.

Shopkeepers complained that the outage had hurt business.

“It’s a lost day,” said Armindo Gomes, 24, whose Portuguese family runs two bakeries, as he pointed at dough, cheese and meat that should have been refrigerated.

(Reporting by Fabian Cambero and Alexandra Ulmer, Editing by Rosalba O’Brien)

Venezuelan migrants pose humanitarian problem in Brazil

Venezuelan migrants pose humanitarian problem in Brazil

By Anthony Boadle

BOA VISTA, Brazil (Reuters) – Last August, Victor Rivera, a 36-year-old unemployed baker, left his hometown in northern Venezuela and made the two-day journey by road to the remote Amazonian city of Boa Vista, Brazil.

Although work is scarce in the city of 300,000 people, slim prospects in Boa Vista appeal more to Rivera than life back home, where his six children often go hungry and the shelves of grocery stores and hospitals are increasingly bare.

“I see no future in Venezuela,” said Rivera, who seeks odd jobs at traffic lights in the small state capital just over 200 km (124 miles) from Brazil’s border with the Andean country.

Countries across Latin America and beyond have received a growing number of Venezuelans fleeing economic hardship, crime and what critics call an increasingly authoritarian government.

The once-prosperous country, home to the world’s largest proven oil reserves, is struggling with a profound recession, widespread unemployment, chronic shortages and inflation that the opposition-led Congress said could soon top 2,000 percent.

At least 125 people died this year amid clashes among government opponents, supporters and police.

As conditions there worsen, nearby cities like Boa Vista are struggling with one of the biggest migrations in recent Latin American history. With limited infrastructure, social services and jobs to offer migrants, Brazilian authorities fear a full-fledged humanitarian crisis.

In Roraima, the rural state of which Boa Vista is the capital, the governor last week decreed a “social emergency,” putting local services on alert for mounting health and security demands.

“Shelters are already crowded to their limit,” said George Okoth-Obbo, operations chief for the United Nations High Commission on Refugees, after a visit there. “It is a very tough situation.”

He noted the crush of migrants also hitting Trinidad and Tobago, the Caribbean country to Venezuela’s north, and Colombia, the Andean neighbor to the west, where hundreds of thousands have fled.

Not even Venezuela’s government knows for certain how many of its 30 million people have fled in recent years. Some sociologists have estimated the number to be as high as 2 million, although President Nicolas Maduro’s leftist government disputes that figure.

BRAZIL “NOT READY”

Unlike earlier migration, when many Venezuelan professionals left for markets where their services found strong demand, many of those leaving now have few skills or resources. By migrating, then, they export some of the social ills that Venezuela has struggled to cope with.

“They’re leaving because of economic, health and public safety problems, but putting a lot of pressure on countries that have their own difficulties,” said Mauricio Santoro, a political scientist at Rio de Janeiro State University.

International authorities are likening Venezuela’s exodus to other mass departures in Latin America’s past, like that of refugees who fled Haiti after a 2010 earthquake or, worse, the 1980 flight of 125,000 Cubans by boat for the United States.

In Brazil, Okoth-Obbo said, as many as 40,000 Venezuelans have arrived. Just over half of them have applied for asylum, a bureaucratic process that can take two years.

The request grants them the right to stay in Brazil while their application is reviewed. It also gives them access to health, education and other social services.

Some migrants in Boa Vista are finding ways to get by, finding cheap accommodation or lodging in the few shelters, like a local gym, that authorities have provided. Others wander homeless, some turning to crime, like prostitution, adding law enforcement woes to the social challenges.

“We have a very serious problem that will only get worse.” said Boa Vista Mayor Teresa Surita, adding that the city’s once quiet streets are increasingly filled with poor Venezuelans.

Most migrants in Boa Vista arrive by land, traveling the southward route that is the only road crossing along more than 2,100 kms of border with Brazil.

Arriving by public transport in the Venezuelan border town of Santa Elena, they enter Brazil on foot and then take buses or hitch rides further south to Boa Vista.

Staffed only during the day, the border post in essence is open, allowing as many as 400 migrants to enter daily, according to authorities. For a state with the lowest population and smallest economy of any in Brazil, that is no small influx.

“Brazil’s government is not ready for what is coming,” said Jesús López de Bobadilla, a Catholic priest who runs a refugee center on the border. He serves breakfast of fruit, coffee and bread to hundreds of Venezuelans.

Despite a long history of immigration, Latin America’s biggest country has struggled this decade to accommodate asylum seekers from countries including Haiti and Syria. Although Brazil has granted asylum for more than 2,700 Syrians, the refugees have received scant government support even in Sao Paulo, Brazil’s richest state.

A senior official in Brazil’s foreign ministry, who asked to remain anonymous, said the country will not close its borders. Okoth-Obbo said his U.N. agency and Brazil’s government are discussing ways to move refugees to larger cities.

“NOW I CAN SLEEP”

Boa Vista schools have admitted about 1,000 Venezuelan children. The local hospital has no beds because of increased demand for care, including many Venezuelan pregnancies.

In July, a 10-year-old Venezuelan boy died of diphtheria, a disease absent from Roraima for years. Giuliana Castro, the state secretary for public security, said treating ill migrants is difficult because they lack stability, like a fixed address.

“There is a risk of humanitarian crisis here,” she said.

Most migrants in Boa Vista said they do not intend to return to Venezuela unless conditions there improve.

Carolina Coronada, who worked as an accountant in the northern Venezuelan city of Maracay, arrived in Brazil a year ago with her 7-year-old daughter. She has applied for residency and works at a fast-food restaurant.

While she earns less than before, and said she makes lower wages than Brazilians at the restaurant, she is happier.

“There was no milk or vaccines,” she said. “Now I can sleep at night, not worried about getting mugged.”

Others are faring worse, struggling to find work as Brazil recovers from a two-year recession, its worst in over a century.

One recent evening, dozens of young Venezuelan women walked the streets of Caimbé, a neighborhood on Boa Vista’s west side.

Camila, a 23-year-old transsexual, left Venezuela nine months ago. She said she turns tricks for about $100 a night – enough to send food, medicine and even car parts to her family.

“Things are so bad in Venezuela I could barely feed myself,” said Camila, who declined to give her last name.

Rivera, the unemployed baker, one afternoon sheltered from the equatorial sun under a mango tree. He has applied for asylum and said he is willing to miss his family as long as he can wire his earnings from gardening, painting and bricklaying home.

“It’s not enough to live on, but the little money I can send home feeds my family,” he said.

(Reporting by Anthony Boadle. Additional reporting by Alexandra Ulmer in Caracas. Editing by Paulo Prada.)

With opposition split, Venezuela mayoral vote will strengthen Maduro

With opposition split, Venezuela mayoral vote will strengthen Maduro

By Andrew Cawthorne and Leon Wietfeld

CARACAS (Reuters) – Venezuelans vote on Sunday in nationwide mayoral polls boycotted by major opposition parties and likely to help leftist President Nicolas Maduro consolidate power ahead of a probable 2018 re-election bid.

After withstanding massive street protests, international sanctions and dissent within his ruling Socialist Party, the 55-year-old president saw his candidates win a surprise majority in October gubernatorial elections.

Now, with 335 mayorships up for grabs, the socialists seem certain to repeat the feat, helped by opposition abstentionism, which would delight Maduro after the international opprobrium he has faced all year.

The crumbling opposition coalition’s main parties – Justice First, Popular Will and Democratic Action – have opted out of Sunday’s vote, alleging the election system is biased and designed purely to keep a “dictatorship” in power.

“It is crazy not to participate,” said political analyst Dimitris Pantoulas. “The government most likely will have one of the best results in its history … Maduro will be very strong after this election. He has the political momentum.”

The socialists already hold more than 70 percent of Venezuela’s mayorships, and are forecast to increase that share, extending their grip at a grassroots level just as Maduro mulls standing for a second six-year term in the OPEC nation.

Despite presiding over one of the worst economic meltdowns to hit any country in modern history, and with ratings barely half when he was elected, Maduro is enjoying a political upturn after the October gubernatorial vote.

He is the favorite to be the government’s candidate at the 2018 presidential election and could win if the opposition does not re-unite and re-enthuse supporters.

“DON’T THROW IN THE TOWEL”

Despite the boycott by major parties, moderate opposition supporters were still planning to vote on Sunday, arguing that it was the only way to stop the socialists amassing power.

Some of the smaller parties are fielding candidates, fuelling acrimony and in-fighting within the coalition.

“There’s huge frustration at everything that has happened this year … but we cannot throw in the towel,” said one of those candidates, Yon Goicoechea of Progressive Advance party.

Just out of jail for allegedly plotting against Maduro, Goicoechea was running for El Hatillo mayorship outside Caracas. “I can’t say when we will achieve democracy – maybe months, maybe years – but we have to fight with our only weapon: votes.”

The election was taking place at the end of a fourth year of crushing economic recession that has brought hunger, hardship and shortages to Venezuelans. Yet with the opposition in such disarray, Maduro and his allies are buoyant.

“We are going to have a great victory!” said Erika Farias running for a Caracas district mayorship. “We are fulfilling the legacy of our ‘commander’ Hugo Chavez.”

With many Venezuelans angry at both the government and opposition, some independents have registered for Sunday’s mayorship races, though there is still no sign of a third-way presidential candidate.

“The country is demanding an alternative. Mine is a protest campaign,” said Nicmer Evans, running against Farias in the capital’s Libertador district for his recently-founded party, New Vision For My Country.

As well as the mayoral elections, voters in oil-rich western Zulia state were choosing a new governor.

The opposition took that state in the October gubernatorial race but the election was annulled after winning candidate Juan Pablo Guanipa refused to swear loyalty to a pro-Maduro legislative superbody.

Results were expected to start coming in on Sunday evening.

(Additional reporting by Johnny Carvajal and Efrain Otero; Editing by Daniel Flynn and Andrew Hay)

Venezuela’s chronic shortages give rise to ‘medical flea markets’

Venezuela's chronic shortages give rise to 'medical flea markets'

By Anggy Polanco and Isaac Urrutia

SAN CRISTOBAL/MARACAIBO, Venezuela (Reuters) – Venezuela’s critical medicine shortage has spurred “medical flea markets,” where peddlers offer everything from antibiotics to contraceptives laid out among the traditional fruits and vegetables.

The crisis-wrought Latin American nation is heaving under worsening scarcity of drugs, as well as basic foods, due to tanking national production and strict currency controls that crimp imports.

The local pharmaceutical association estimates at any given time, there is a shortage of around 85 percent of drugs.

Sick Venezuelans often scour pharmacies and send pleas on social media to find treatment. Increasingly, however, they are turning to a flourishing black market offering medicines surreptitiously bought from Venezuelan hospitals or smuggled in from neighboring Colombia.

“Here I can find the vitamins I need for my memory,” said 56-year-old Marisol Salas, who suffered a stroke, as she bought the pills at a small stand at the main bus terminal in the Andean city of San Cristobal.

Around her, Venezuelans asked sellers for medicine to control blood pressure as well as birth control pills.

“People are looking for anticonvulsants a lot recently,” said Antuam Lopez, 30, who sells medicine alongside vegetables, and said hospital employees usually provide him with the drugs.

Leftist President Nicolas Maduro says resellers are in league with a U.S.-led conspiracy to sabotage socialism and are to blame for medicine shortages.

RISKS

In the middle of a market in the humid and sweltering city of Maracaibo, dozens of boxes full of medicines including antibiotics and pain killers are stacked on top of each other. The packaging is visibly deteriorated: The cases are discolored and some are even dirty.

Doctors warn these drugs — usually smuggled in from Colombia, a few hours’ drive from Maracaibo — pose risks.

“We’ve found that a lot of them have not been maintained at proper temperatures,” warned oncologist Jose Oberto, who leads the Zulia state’s doctors association.

Still, some Venezuelans feel they have no choice but to rely on contraband medicine.

“I had to buy medicine from Colombia, and it worried me because the label said ‘hospital use,'” said retiree Esledy Paez, 62.

But they are often prohibitively expensive for Venezuelans, many of whom earn just a handful of dollars a month at the black market rate due to soaring inflation.

Norkis Pabon struggled to find antibiotics for her hospitalized husband to prevent his foot injury from worsening due to diabetes.

“But the treatment costs 900,000 bolivars ($9.43; twice the minimum wage) and I do not know what to do,” said Pabon, who is unemployed.

(Writing by Corina Pons and Alexandra Ulmer; Editing by Sandra Maler)

Year of protests and crisis in volatile Venezuela

Year of protests and crisis in volatile Venezuela

By Andrew Cawthorne

CARACAS (Reuters) – Even by the volatile and violent standards of recent times in Venezuela, 2017 was an exceptional year, a “perfect storm” of political and economic crisis.

Going into a fourth year of crippling recession, Venezuela’s 30 million people found themselves skipping meals, suffering shortages of basic foods and medicines, jostling in lines for ever-scarcer subsidized goods, unable to keep up with dizzying inflation rates, and emigrating in ever larger numbers.

In unprecedented scenes for the once-prosperous OPEC nation, some citizens survived only by scavenging through garbage.

Demonstrators scuffle with security forces during an opposition rally in Caracas, Venezuela, April 4, 2017. Venezuelan security forces quelled masked protesters with tear gas, water cannons and pepper spray in Caracas after blocking an opposition rally against socialist President Nicolas Maduro. The clashes began after authorities closed subway stations, set up checkpoints and cordoned off a square where opponents had planned their latest protest against the government and the crippling economic crisis. Carlos Garcia Rawlins: “For me that was the day that made a difference, never before had I seen the protesters and police clashing men-to-men and struggling back and forward. From then, the strategy of the police changed and they never faced the protesters so close again.” REUTERS/Carlos Garcia Rawlins/File Photo

Not surprisingly in that context, President Nicolas Maduro’s ruling Socialists – the inheritors of Hugo Chavez’s “21st century revolution” – – lost popularity on the street, and the opposition coalition sensed a chance to unseat them.

The tipping point came in March when the pro-Maduro Supreme Court essentially took over functions of the opposition-led National Assembly. Though the controversial ruling was later modified, it was a trigger and rallying cry for the opposition, which began a campaign of street protests that ran from April to July.

Hundreds of thousands took to the streets across Venezuela, decrying economic hardship, demanding a presidential election, urging a foreign humanitarian aid corridor, and seeking freedom for scores of jailed activists.

Slogans that read “Maduro, murderer!” and “Maduro, dictator!” began appearing on roads and walls around the country. Though the majority of protesters were peaceful, youths wearing masks and brandishing homemade Viking-style shields started turning up at the front of rallies to taunt security forces.

When police and National Guard soldiers blocked marches, youths threw Molotov cocktails and stones. The security forces quickly escalated tactics, routinely turning water-cannons on the protesters and firing teargas into crowds.

Guns appeared on the streets, and on several occasions security officials were caught on camera firing directly at demonstrators. Police were targeted with homemade explosives. Opposition supporters burned one man alive.

The deaths, injuries and arrests mounted. Over the chaotic months, at least 125 people died, thousands were injured and thousands were jailed.

Demonstrators march during the so-called “mother of all marches” against Venezuela’s President Nicolas Maduro in Caracas, Venezuela, April 19, 2017. Carlos Garcia Rawlins: “That day was one of the biggest rallies up to then. There were thousands of people trying to find their way to the office of the state ombudsman after gathering in more than two dozen points around Caracas. But as in previous rallies, they were blocked by the National Guard. Waving the country’s yellow, blue and red flag and shouting ‘No more dictatorship’ and ‘Maduro out,’ demonstrators clogged a stretch of the main highway in Caracas. I remember the desperation of the people trying to escape the tear gas and not having space to run because there were so many.” REUTERS/Carlos Garcia Rawlins/File Photo

Global opinion hardened against Maduro. Amid the extraordinary daily events, gangs burst into the National Assembly and beat up opposition lawmakers. The nation’s best-known jailed opposition leader, Leopoldo Lopez, was released from prison and placed on home arrest to the joy of his supporters, then taken back to jail, then allowed home again, all in a matter of days.

Venezuelans grew accustomed to navigating around barricades and burning streets as they tried to get to school and work. Some days, the country virtually shut down.

By the end of July, many opposition supporters feared for their lives and protest numbers dwindled. Maduro said he was defeating a U.S.-backed coup attempt and authorities held an election, which the opposition boycotted, for an all-powerful Constituent Assembly charged with imposing order on the country.

Having failed to block the Constituent Assembly, the protests fizzled out, leaving opposition supporters nursing their wounds and planning their next moves.

They decided to tackle Maduro at the ballot-box in regional elections in October, but that backfired badly when they lost most of the governorships despite polls showing they would win. The opposition alleged fraud, but their complaints did not get traction and Maduro cemented his authority.

In November, Venezuela said it planned to renegotiate its entire foreign debt, adding another dimension to the deepening national crisis.

(See http://reut.rs/2AdRQ0Q for related photo essay)

(Reporting by Andrew Cawthorne; Editing by Toni Reinhold)

Venezuela systematically abused foes in 2017 protests: rights groups

Venezuela systematically abused foes in 2017 protests: rights groups

CARACAS (Reuters) – Venezuela “systematically” abused anti-government protesters this year, two rights groups said on Wednesday, including through beatings, firing tear gas canisters in closed areas and forcing detainees to eat food tainted with excrement.

Unpopular leftist President Nicolas Maduro faced four months of near-daily protests asking for early elections, humanitarian aid to combat food and medicine shortages, respect for the opposition-led congress, and freedom for jailed activists.

Demonstrators say heavy-handed National Guard soldiers clamped down on their right to protest, while Maduro says his administration faced a U.S.-backed “armed insurgency.”

More than 120 people died in the unrest, with victims including demonstrators, government supporters, security officials, and bystanders.

In a joint report, New York-based Human Rights Watch and Venezuela-based Penal Forum documented 88 cases between April and September, from excessive use of force during marches to protest against arbitrary detentions. Around 5,400 people were detained, with at least 757 prosecuted in military courts, the report said.

“The widespread vicious abuses against government opponents in Venezuela, including egregious cases of torture, and the absolute impunity for the attackers suggests government responsibility at the highest levels,” said Chilean lawyer Jose Miguel Vivanco, Americas director at Human Rights Watch.

Venezuela’s Information Ministry did not respond to a request for comment.

ELECTRIC SHOCKS, BEATINGS

In one case cited, intelligence agents allegedly hanged a 34-year-old government critic from the ceiling and gave him electric shocks as they interrogated him. The man, whose name was not revealed, was ultimately released and left Venezuela.

In another case, a 32-year-old detained during a protest in Carabobo state was allegedly beaten for hours by National Guard soldiers who also threatened to rape his daughter. He said officials also fired tear gas into his cell.

Others interviewed recounted being handcuffed to a metal bench, hit with sticks, and witnessing a man being raped with a broomstick. At least 15 detainees in Carabobo said officials forced them to eat human excrement mixed in with uncooked pasta.

The government failed to acknowledge such violations, the report said, adding that instead officials “often downplayed the abuses or issued implausible, blanket denials.”

Maduro’s government says Human Rights Watch is in league with a Washington-funded conspiracy to sabotage socialism in Latin America. Rights activists are in league with the opposition and compliant foreign media, officials say, and downplay opposition violence, including setting a man on fire during a demonstration and targeting police with explosives.

The two rights groups said there were cases of protesters hurling rocks and Molotov cocktails at security forces, but that abuses by authorities went far beyond attempts to quell unrest.

(Reporting by Leon Wietfeld; Writing by Alexandra Ulmer; Editing by Susan Thomas)

Venezuela’s indigenous Warao decamp to uncertain future in Brazil

Venezuela's indigenous Warao decamp to uncertain future in Brazil

By Anthony Boadle

PACARAIMA, Brazil (Reuters) – An indigenous tribe that journeyed hundreds of kilometers to flee the economic crisis in Venezuela has been trapped in limbo near the border in Brazil, after it was moved off the streets of the Amazon city of Manaus.

Driven by hunger and illness from their traditional homeland on the Orinoco River delta in northeastern Venezuela, more than 1,200 members of the Warao tribe migrated to northern Brazil to live and beg on the streets.

Brazilian authorities, nongovernmental organizations and churches have helped provide temporary shelter on the border, but the Warao’s future remains uncertain. The tribe insists it will not return to Venezuela, where a deep recession has led to shortages of basic goods under President Nicolas Maduro’s socialist government.

“The children were dying in Venezuela from illness. There was no medicine, no food, no help,” said Rita Nieves, a cacique, or chief, of the matrilineal Warao.

Members of the tribe are still making the arduous journey. Nieves was wearing her best clothes to cross back into Venezuela to bury a 3-month-old Warao baby that had just died in its mother’s arms on the 1,000-km (620-mile) bus ride to Brazil.

“We are staying here because things have not changed in Venezuela,” she said, sitting in a warehouse turned into a living space for 220 Warao in the small border town of Pacaraima.

Children played among dozens of hammocks hanging from metal structures erected by U.N. refugee agency UNHCR. Outside, women cooked broth on wood fires and men sat listening to their shaman talk about the virtues of the moriche palm used to weave baskets and hammocks, as he puffed on a straw cigar.

The Warao have lived for centuries on the Orinoco delta, but some began to leave when fish supplies were depleted by the diversion of the waters to deepen shipping lanes for Venezuelan iron ore and bauxite exports.

Many went to Venezuelan cities to sell craftwork and beg on the streets. However, when the economy tipped into crisis, they began moving to Brazil last year, often just walking across the border without documents.

“They were already begging in Venezuela, but those who gave them money are themselves asking for help today,” said Sister Clara, a missionary from Brazil-based humanitarian organization Fraternidade that runs two shelters for the Warao.

“Who in today’s crisis in Venezuela is going to buy Warao arts and crafts?” she said.

SLEEPING UNDER OVERPASS

Around 500 Warao arrived on the streets of Manaus last year, where they begged from drivers and sold craftwork at traffic lights.

Many slept under a highway overpass until city authorities stopped the begging and moved them into shelters they did not like.

Some then traveled down the Amazon to Santarem and Belem, while others returned to frontier towns, from which they can go back and forth to their delta homeland when they raise enough money.

“They started staying here, sleeping in the streets, and caused a humanitarian emergency,” said Pacaraima social services secretary Isabel Davila.

The town provided an abandoned warehouse with toilets, showers and a kitchen, built with funding from the Mormon church.

Like a similar shelter in the nearby city of Boa Vista that houses 500 Warao, these are temporary landing places, where the Warao can live while they get documents to legalize their status so they can find work, Davila said.

But Chief Rita has no plans to move. Pacaraima’s mayor promised land to grow crops and materials to make Warao craft work, she said, and she wants the Warao children to learn Portuguese.

Half of the land in Roraima state is reserved for indigenous peoples, but an attempt to ask local communities to cede territory to the Warao met with a firm rebuttal.

“We think they might be here for a decade,” said Danusa Sabala, a spokeswoman for Brazil’s Indian affairs office FUNAI, which sees no short-term solution for the Warao.

Ramon Gomez, a Warao chief in the Boa Vista shelter, said their ancestral homeland in the delta was “finished” and the situation in Venezuela was deteriorating rapidly.

“When … this President Maduro took over, everything ended, food, medicine,” Gómez said. “We will be here until Venezuela changes. It will get worse before it gets better.”

(Additional reporting by Sebastian Rocandio and Nacho Doce; Editing by Daniel Flynn and Jonathan Oatis)

China confident Venezuela can handle debt issue

China confident Venezuela can handle debt issue

BEIJING (Reuters) – China’s Foreign Ministry reiterated on Thursday that it believes Venezuela has the ability to handle its debt issue, after the oil-rich country started making interest payments on bonds following a delay that had threatened to trigger a default.

Venezuela has borrowed billions of dollars from Russia and China, primarily through oil-for-loan deals that have crimped the country’s hard currency revenue by requiring oil shipments to be used to service those loans.

On Wednesday, Venezuela won easier debt terms from Russia, as well as a vote of confidence from China – two countries that could provide a lifeline as Caracas seeks to keep its deeply depressed economy solvent.

Asked whether China was concerned that the debt would not be repaid, Chinese Foreign Ministry spokesman Geng Shuang told a regular news briefing that China-Venezuela financial cooperation was proceeding as normal.

“We believe that Venezuela’s government and people have the ability to properly handle their debt issue,” Geng said.

Venezuelan bond prices have been on a roller-coaster over the past 10 days, as President Nicolas Maduro called investors to debt restructuring talks, while pledging to keep honoring the country’s obligations.

But S&P Global Ratings declared it in selective default on two of its sovereign bonds early this week after it failed to make the coupons within a 30-day grace period.

On Wednesday, the country’s Economy Ministry said it had started transferring $200 million in interest payments on those bonds, which mature in 2019 and 2024.

(Reporting by Ben Blanchard, Writing by Michael Martina; Editing by Richard Borsuk)

Venezuela offers chocolates but little else to creditors

Venezuela offers chocolates but little else to creditors

By Deisy Buitrago and Brian Ellsworth

CARACAS (Reuters) – Venezuela’s socialist government gifted chocolates to creditors on Monday, but offered no firm proposals at a brief meeting in Caracas that left investors without a clear understanding of the government’s strategy to renegotiate $60 billion in debt.

President Nicolas Maduro confused investors this month with a vow to continue paying Venezuela’s crippling debt, while also seeking to restructure and refinance it.

Both restructuring and refinancing appear out of the question, however, due to U.S. sanctions against the crisis-stricken nation. A default would compound Venezuela’s dire economic crisis.

Monday’s short and confused meeting, attended by senior Venezuelan officials blacklisted by the United States, gave no clarity on how Maduro would carry out his plan, bondholders and their representatives who participated said afterwards.

That means Venezuela remains with the dilemma of whether to continuing paying debt at the expense of an increasingly hungry and sick population, or defaulting on creditors and burning its bridges to the global financial system.

“There was no offer, no terms, no strategy, nothing,” said one bondholder, leaving the meeting that lasted a little over half an hour at the ‘White Palace’, departing with a colorful gift-bag containing Venezuelan chocolates and coffee.

But bond prices maintained last week’s rally, with one investor saying there was relief the meeting did not include a default announcement.

Nearly $300 million in late interest payments on three bonds – PDVSA 2027, Venezuela 2019 and Venezuela 2024 – was also due on Monday after 30-day grace periods ended. But bondholders appeared unconcerned at the delay, which was due in part to increased bank vigilance of Venezuela transactions.

“My expectation is that the coupon payments will come through as well,” said Jan Dehn, Head of Research at Ashmore Investment Management. “We know that these delays exist and why they exist.”

About 100 investors, including some bondholders from New York and lawyers representing creditors, entered the ‘White Palace’ via a red carpet and were greeted by a poster of Maduro’s predecessor Hugo Chavez at the entrance of the meeting room inside.

SANCTIONS OVERSHADOW MEETING

Chief debt negotiators Vice President Tareck El Aissami and Economy Minister Simon Zerpa – on U.S. sanctions lists for drug and corruption charges respectively – attended the meeting for half an hour.

They met with some bondholders, while others stayed out of the room on concerns about penalties for dealing with officials sanctioned by Washington.

El Aissami told creditors that Deutsche Bank may soon cut off some financial services to Venezuela, participants said.

Deutsche declined to comment.

He read a statement protesting unfair treatment by global financial institutions, including U.S. President Donald Trump’s sanctions aimed at preventing Venezuela from issuing new debt.

“Now Maduro can say: ‘I showed goodwill, the bondholders showed goodwill … but unfortunately because Uncle Sam is not playing ball we can’t (refinance)’,” said Dehn, who did not attend the meeting.

“I’m not hugely surprised nothing’s come out of that meeting.”

Separately, the European Union approved economic sanctions and an arms embargo on Venezuela on Monday, although it has yet to name who will be subject to the sanctions.

Markets continue to remain optimistic that Venezuela will service its debts, noting it has made close to $2 billion in payments in the past two weeks, albeit delayed.

Bond prices were up across the board on Monday, with the benchmark 2022 notes issued by state oil firm PDVSA [PDVSA.UL] rising 3.3 percentage points.

The economic implosion has already taken a brutal toll on Venezuelans. Citizens are suffering from malnutrition and preventable diseases because they cannot find food and medicine or cannot afford them because of triple-digit inflation.

The sight of poor Venezuelans eating from garbage bags has become a powerful symbol of decay. It contrasts sharply with the era of Chavez, when high oil prices helped fuel state spending.

Halting debt service would free up an additional $1.6 billion in hard currency by the end of the year. Those resources could be used to improve supplies of staple goods as Maduro heads into a presidential election expected for 2018.

But the strategy could backfire if met with aggressive lawsuits. A default by PDVSA, which issued about half of the country’s outstanding bonds, could ensnare the company’s foreign assets such as refineries in legal battles – potentially crimping export revenue.

(For a graphic on ‘Venezuela’s economy’ click http://tmsnrt.rs/2pPJdRb)

(Additional reporting by Corina Pons in Caracas and Dion Rabouin in New York; Writing by Andrew Cawthorne; Editing by Andrew Cawthorne, Frances Kerry and Rosalba O’Brien)

Russia, China, others boycott U.S. meeting at U.N. on Venezuela

Russia, China, others boycott U.S. meeting at U.N. on Venezuela

By Michelle Nichols

UNITED NATIONS (Reuters) – Russia, China, Egypt and Bolivia boycotted an informal public United Nations Security Council meeting on Venezuela on Monday organized by the United States, saying the 15-member body should not be involved in the situation.

“The issue is about meddling with the internal domestic affairs of Venezuela,” Russian U.N. Ambassador Vassily Nebenzia told reporters, adding that he hoped the country could settle its issues peacefully without any external interference.

U.S. Ambassador to the United Nations Nikki Haley told the meeting: “The fact that the (Venezuelan) government would go so far as to try and get people not to show up to a meeting is guilt. And that’s unfortunate.”

Venezuela is suffering from a harsh economic crisis and President Nicolas Maduro’s government has clamped down on the opposition, jailing or otherwise barring from office many dissenting leaders and activists.

Dozens of people have died in violence since the opposition began a sustained wave of protests in April. Met by rubber bullets, water cannon and tear gas fired by the National Guard, the protesters say the crisis demands an early presidential election that they are sure Maduro would lose.

His popularity has been pounded lower by triple-digit inflation and acute food and medicine shortages.

“We received pressure from regional partners not to have this meeting,” Haley said. “This goal is not to degrade anyone. This is not to humiliate a region. This is only to lift up the region.”

Uruguay’s Deputy U.N. Ambassador Luis Bermudez attended the U.N. meeting, but said his country did not believe the situation in Venezuela was a threat to international peace and security.

Venezuela’s U.N. Ambassador Rafael Dario Ramirez spoke to reporters as the meeting was being held, flanked by Nebenzia, Chinese Deputy U.N. Ambassador Wu Haitao and Bolivian U.N. Ambassador Sacha Sergio Llorentty Soliz.

“The meeting is a hostile and clearly interfering act of the United States that undermines the principle of sovereignty of a member state of the U.N.,” Ramirez said. “We condemn this act of political manipulation.”

European Union foreign ministers approved economic sanctions, including an arms embargo, on Venezuela on Monday, saying regional elections last month marred by reported irregularities had deepened the country’s crisis.

The United States has also imposed targeted sanctions on top Venezuelan officials.

The U.N. Security Council also met behind closed doors in May, at Washington’s request, to discuss the crisis in Venezuela.

(Reporting by Michelle Nichols; Editing by James Dalgleish)