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Oil-for-loan debts cost Venezuela’s PDVSA hard-won India market share

Reuters

By Alexandra Ulmer, Marianna Parraga and Nidhi Verma

CARACAS/HOUSTON/NEW DELHI- Venezuela’s state-run oil company, PDVSA, has spent at least a decade trying to build business ties and boost shipments to refineries in India, where crowds once welcomed the late socialist leader Hugo Chavez with cries of “Viva!”

Now, the ailing firm is being forced to slash sales to its crucial trade partner.

Venezuela has given up the fight for coveted market share in India because of a combination of declining crude production and heavy obligations under oil-for-loan deals with China and Russia, according to internal PDVSA data and two people familiar with the company’s strategy and operations.

Caracas needs the oil to pay debts to China and Russia, key political allies that have together lent Venezuela at least $50 billion in exchange for promised crude and fuel deliveries.

PDVSA and the Venezuelan Oil Ministry did not respond to requests for comment.

In 2013, when Venezuela exports and oil prices were high, PDVSA raked in nearly $14 billion from India, the world’s fastest growing large economy. By last year, after an oil price crash, that figure had plummeted to $2.7 billion, according to a Reuters analysis of the PDVSA data.

That means less cash income for the isolated South American economy, deepening a recession that has left many citizens skipping meals amid food shortages and soaring inflation.

Oil accounts for almost all of Venezuela’s export revenue, and many of Venezuela’s customers pay for oil in kind – with food or medical supplies, for example. India is among the few trading partners that buy large volumes of PDVSA oil with cash.

So lower sales to India’s refineries are further eroding the company’s cash flow – and its ability to pay mounting debts to suppliers and service providers, which have caused delivery delays and cancellations around the globe.

SLIPPING SHARE

The shift stems from a crude production decline of 10 percent last year, to 2.38 million barrels per day (bpd), due to a lack of investment and payment delays to providers.

The falling output means PDVSA could increasingly lose business in India to Iranian, Iraqi and Brazilian companies.

The internal PDVSA data also show that Venezuela – which sits on the world’s largest crude reserves – managed to maintain its place as No. 3 crude supplier to India last year. It delivered about 413,000 bpd, behind only Saudi Arabia and Iraq.

But PDVSA expects shipments to India to drop to 360,000 bpd this year, according to an internal PDVSA report reviewed by Reuters.

Those cuts are already happening: Venezuelan crude exports to India plunged 16 percent in January compared to a year earlier, according to Thomson Reuters trade-flows data.

India has made up the gap with supplies from the Middle East, including imports from Iran that have surged since the lifting of U.S. sanctions last year.

Venezuelan crude is heavy and harder to refine. In a market that is still oversupplied after a two-year glut, higher-quality crude is plentiful and not much more expensive.

“The current quality of Venezuelan crude could incentivize the partner to seek other providers,” PDVSA said in an internal report, in a section on India labeled “threats.”

While India is tapping new sources of crude, the country continues to view Venezuela as an important part of its diversified supply, India’s Oil Minister Dharmendra Pradhan told Reuters.

“We are depending on Venezuela. We have some investments in Venezuela’s exploration and production,” Pradhan said in an interview. “They are going through a temporary crisis, but I’m hopeful they will still be a good partner to our supply chain.”

PASSAGE TO INDIA – VIA CHINA, RUSSIA

Venezuela still has some cards to play in India – the world’s fourth-largest refiner and a country that imports nearly three quarters of its crude.

India wants to diversify oil imports to protect its economy against external shocks, meaning South American shipments can help mitigate the risk of supply disruption from Middle Eastern suppliers.

But India doesn’t necessarily have to buy the Venezuelan oil it wants from PDVSA – it can buy it from Chinese and Russian firms that receive Venezuelan crude as payment for loans.

That means China and Russia can use Venezuelan crude to increase their market share in India at the expense of PDVSA’s declining share.

Chinese firms are already taking some of the Venezuelan crude and selling it to the same Indian refineries that were previously buying the oil directly from PDVSA. Russia is poised to start doing the same.

Such arrangements have been in place for some time but are now accelerating as PDVSA’s production falls. In 2014, for instance, state-run China National Petroleum Corporation started sending Venezuelan crude to India’s Reliance Industries, operator of the world’s largest refinery, according to the PDVSA data.

While CNPC gained a foothold in the Indian market by sending more than 180,000 bpd of Venezuelan crude last year, PDVSA’s direct shipments to Reliance fell by 61 percent between 2013 and 2016.

Russia’s Rosneft, which also receives Venezuelan oil in return for loans, stands to gain, too. Rosneft last year bought a 49 percent share of Indian refiner Essar Oil and is set to replace PDVSA as a supplier of Venezuelan oil to the Vadinar refinery.

VENEZUELA’S “UNION OF THE SOUTH” FALTERS

The loss of Indian sales is a bitter reversal for socialist Venezuela, which pushed hard to open up the distant market as a way to decrease trade ties with the United States – a closer buyer but an ideological foe.

PDVSA’s U.S. shipments have fallen but they remain the biggest chunk of the company’s exports, with the majority going to its U.S. refining unit, Citgo Petroleum.

During his 2005 visit to India, late president Chavez said Venezuela’s oil had been flowing north for too long. Instead, he promised a thriving exchange among developing nations.

“We must launch a new strategy to unite the South!” Chavez, an Indian shawl draped over his shoulders, told cheering university students in New Delhi in 2005.

It took at least two years of negotiations and frequent trips to India by PDVSA’s top executives, but state-run Indian firms finally invested in oil fields and projects in Venezuela.

But Venezuela’s downward spiral has hurt Indian oil companies and frayed bilateral relations, along other PDVSA business partners across the globe.

State-owned ONGC Videsh, for instance, is owed about $600 million in late dividends for the joint crude project San Cristobal with PDVSA.

Under pressure, Venezuela recently began settling those debts by giving ONGC the money it collects from 17,000 barrels per day of crude exports – meaning even more oil is being used to finance debt payments.

But ONGC has also seen production at its San Cristobal field cut in half amid an exodus of talent, shortage of equipment, and theft in Venezuela’s vast Orinoco Belt.

“We have accumulated a very large amount of dividends pending,” Narendra Verma, chief executive officer of ONGC Videsh, told Reuters. “But we have been patiently negotiating with PDVSA.”

If all goes well, the company expects it can recoup the delinquent payments in about three years, Verma said in an interview.

Meanwhile, Venezuela’s efforts to stop the bleeding at PDVSA have yet to show results.

A recent PDVSA board shake-up ushered in political and military figures; Venezuela’s economy is entering its fourth year of recession; and salaries are so low that some PDVSA workers are even selling their uniforms to buy food.

“The relationship with India has hit a ceiling,” said Kenneth Ramirez, a geopolitical oil analyst in Caracas. “That won’t change unless Venezuela’s oil industry undergoes big change.”

(Writing by Alexandra Ulmer and Marianna Parraga; additional reporting by Simon Webb in Houston; Editing by Simon Webb and Brian Thevenot)

Ecuador transgender people vote for first time according to chosen gender

Reuters

By Alexandra Ulmer and Yury Garcia

QUITO/GUAYAQUIL- Ecuadorean transgender people on Sunday voted for the first time according to their chosen gender, in what activists say are signs of progress in the socially conservative and Catholic Andean nation.

In Ecuador, men and women wait in separate lines to cast their ballots, which for years created uncomfortable moments for transgender voters who had to queue up according to their biological sex.

“The rumors would start, and the looks,” said LGBT activist Mariasol Mite, 32, who changed her ID description from “sex: male” to “gender: female” last year.

Fears of harassment were such that voters would sometimes send their brothers or husbands to wait in line until they got close to the booth, according to lesbian, gay, bisexual and transgender activists.

“This year, everything was different,” said Mite, adding that public officials and fellow voters were much more aware of the issue.

After years of lobbying by the LGBT community and despite opposition by Catholic and increasingly powerful evangelical groups, Ecuador passed a law last year allowing people to choose a gender on their identity card.

“This is very important because our rights are being recognized. It hasn’t been easy,” said activist and National Assembly candidate Diane Rodriguez, after voting in the city of Guayaquil close to the Pacific coast.

An estimated 200 people in the country of 16 million have changed their gender on their ID card since the law changed last year, she added.

ECUADOR’S FIRST TRANSGENDER LAWMAKER?

Rodriguez, a 34-year-old psychologist who was born biologically male, is vying to become Ecuador’s first transgender lawmaker as the country renews its Congress as well as chooses a president for a four-year term.

If elected, the leftist ruling party candidate would push for legislation to counter bullying against transgender students, combat discrimination in the workplace, and eventually work towards legalizing gay marriage and adoption.

Rodriguez’ potential election in Ecuador would come on the heels of Venezuela electing its first transgender lawmaker, lawyer and activist Tamara Adrian, in 2015.

Adrian is staunchly opposed to Venezuela’s Socialist government, which is an ally of Ecuador’s own leftist government, but Rodriguez says the two are close despite being politically opposed.

“She’s a partner in this fight,” said Rodriguez. “Beyond the fact that she’s in a right-wing movement… we’re united by the progress of rights.”

(Writing by Alexandra Ulmer; Editing by Nick Zieminski)

Corruption scandals weigh on Ecuador’s leftists ahead of vote

Reuters

By Alexandra Ulmer and Alexandra Valencia

GUAYAQUIL/QUITO – A former oil minister’s accusations that Ecuador’s leftist government is involved in graft at state-run Petroecuador is raising the ire of voters as the ruling party seeks to extend its 10-year hold on power in a presidential election on Sunday.

Carlos Pareja, a fugitive accused of accepting $1 million in bribes to secure Petroecuador contracts for companies, has been tweeting theatrically produced videos that accuse officials of President Rafael Correa’s administration of wrongdoing.

Vice President Jorge Glas, the running mate of ruling party presidential candidate Lenin Moreno, is among those targeted in the videos, which are divided into episodes with dramatic music and even a lie detector test.

“He is the ringleader,” Pareja said in a video posted this month, although he has yet to provide specific details.

Glas, who oversaw the oil and infrastructure sectors while serving as strategic sectors minister, has denied any wrongdoing. Pareja has not implicated Moreno, a paraplegic former U.N. envoy on disability.

The saga, coupled with the emerging scandal that Brazilian conglomerate Odebrecht paid $33.5 million in bribes to secure contracts, has transfixed the oil-rich Andean nation of 16 million people and cast a shadow over Sunday’s election.

Correa has slammed Pareja as a corrupt coward who is trying to deflect blame for graft during the construction of the Esmeraldas refinery. Correa says authorities opened a probe as soon as irregular payments were detected.

But the mud-slinging is bad news for Ecuador’s leftist government, analysts say, in a close-fought election that could spill over into an April runoff if Moreno fails to garner enough votes on Sunday.

Driving school director Fermin Olmedo was planning to vote for Moreno but was so turned off by the scandals that he now supports conservative ex-banker Guillermo Lasso.

“There was no control and they were all accomplices,” said Olmedo, 37, in the coastal city of Guyaquil. “They don’t want the truth to come out because it would be a big blow to the government and these elections.”

With polls showing Ecuadoreans now see corruption as one of the top problems alongside the economy and unemployment, Moreno has repeatedly said at campaign rallies that “major surgery” is needed to clean out graft.

But pollsters warn it is tricky to measure how graft is affecting the campaign.

Although Moreno remains the candidate best poised to win the election, his popularity has been slipping: Some 32 percent of Ecuadoreans said this month they would vote for him, down from 37 percent in October, according to top pollster Cedatos.

While the country’s economic downturn is the top issue for voters, corruption has become a growing concern, said Polibio Cordova of Cedatos.

“As Mr. Moreno is the government candidate he is the one who would be affected,” said Cordova, adding that the corruption cases may also have increased the number of undecided voters.

‘WHERE IS THE MONEY?’

Ecuador is the first South American country to hold a presidential election since Odebrecht [ODBES.UL] admitted in a leniency deal in December that it doled out hundreds of millions of dollars in bribes from Peru to Panama to pocket contracts.

Ecuador has not made any arrests, although authorities are investigating.

“Unfortunately the modus operandi of these companies is to give tips to those in charge of managing contracts, and that’s hard to detect,” Correa said during a recent press conference in the coastal city of Manta.

Observers are scrutinizing Ecuador to see whether it will follow Argentina, Brazil, and Peru in swerving right after a decade-long “pink rule” in much of the region.

While Correa brought stability to the politically volatile OPEC nation and launched popular social programs, many are fed up with his confrontational style and rising unemployment.

“These scandals are one more little drop in the glass that was already full,” said systems engineer Ines Cueva, 42, who is torn between Lasso or opposition rival Cynthia Viteri.

Some ruling party supporters, however, are unfazed by the bribery revelations.

“Not all of them are perfect but they have done more than those before them,” said business student Genesis Mariscal, 22, who added that she might have deserted Moreno had the opposition been less “retrograde.”

Disillusioned Correa supporters have little faith in Lasso, whom they see as a stuffy elitist linked to the 1999 financial crisis when hundreds of thousands lost their savings.

Lasso has defended himself saying Banco de Guayaquil, which he presided over for almost two decades, was solid and survived the meltdown.

At a recent rally to support Lasso, who promises thorough graft probes, a man dressed as a rat held up wads of dollars and a sign that read: “Where is the money?”

(Writing by Alexandra Ulmer; Editing by Girish Gupta and Paul Simao)

Ecuador’s paraplegic presidential candidate stirs hope for disabled

Reuters

By Alexandra Ulmer and Alexandra Valencia

QUITO- An aide wheels out Ecuador’s presidential candidate Lenin Moreno, who lost the use of his legs two decades ago, to a stage in a working-class area of the mountainous capital Quito.

Behind him, a woman rapidly translates into sign language his promises of benefits for single mothers and retirees. Rows of wheelchair-bound supporters around the podium cheer on the leftist politician.

Moreno, 63, became paraplegic after being shot in the back during a robbery in 1998. He has put disability at the center of his campaign to be elected president of the poor Andean country on Sunday.

The former vice president and United Nations envoy on disability has vowed to further boost jobs and social benefits for disabled Ecuadoreans.

If he wins, he would be a rare wheelchair-bound head of state and one of the highest-profile disabled leaders since former U.S. President Franklin Roosevelt, who had to use a wheelchair because of polio and died in 1945.

During Moreno’s 2007-2013 tenure as vice president, he helped build a database of disabled people so that they could receive medical treatment tailored to their needs, provided a monthly stipend of $240 for families who take care of a disabled relative, and created a loan program for disabled entrepreneurs in the country of 16 million.

For Ecuador’s estimated 400,000 people with physical, mental, auditive, or visual disabilities, Moreno is nothing short of a hero.

“He opened the door for us and he keeps opening doors for us,” said Gina Ruiz, a 52-year-old supporter who attended Moreno’s closing rally in southern Quito on Wednesday night.

Ruiz was forced to retire from her job as a teacher because polio eventually left her unable to walk. But thanks to a loan for disabled people, she opened a taxi company that now employs 20 people.

“Now the rest of my compatriots will have these opportunities too,” said Ruiz, beaming from her wheelchair as music and fireworks filled the air and Moreno was whisked away into a car after his speech.

Born in the Ecuadorean Amazon to left-wing teachers, Moreno had a long and difficult recovery process after thieves attacked him while he was out with his wife buying bread. He then choose to “continue living,” according to an official biography, and went on to write a half-dozen motivational books, including one called “Laugh, Don’t be Ill.”

“(I extend) this dark hand, tanned by the sun, a little calloused because of these wheels, but sincere and honest,” Moreno told a crowd of supporters on Thursday.

‘FOOLING ECUADOREANS’?

Moreno’s opponents avoid criticizing his popular pro-disability projects or voicing potential concerns about his health.

But the main opposition candidate, conservative banker Guillermo Lasso, warns Moreno’s promises are untenable in the midst of a recession, low oil prices and high debt. Opponents also criticized the government for paying Moreno’s expenses during his time at the United Nations in Geneva, Switzerland.

“Mr. Moreno is a man with no leadership, no personal initiative, no knowledge of the economy, who pretends to fool Ecuadoreans with his soft voice,” Lasso said in an interview in his hot and humid coastal hometown of Guayaquil this week.

Polls suggest Moreno will edge out Lasso in Sunday’s vote, but he may not pocket enough votes to avoid an April runoff.

Much of the middle class in this country that exports oil, shrimp, bananas and flowers feel their own opportunities have shrunk during a decade-long leftist rule that has put emphasis on the poor.

“Disabled people have rights, but they’re not the only ones,” said physiotherapist Christopher Aulestia, 25, who attended a rally to support Lasso in Guayaquil on Thursday.

“The middle class has been affected by so many taxes, it’s difficult for us to contribute the way we used to,” he said, adding that he also doubted Moreno would follow through on his promises.

In the meantime, Moreno can bank on a 2013 policy that allows nearly 900 disabled and elderly people to vote from home.

“This is wonderful. It’s mutual help, I’m very happy,” said 85-year-old Laura Vasquez, who cannot walk and had not voted in seven years, speaking from her bed below a painting of Jesus Christ after casting her vote on Friday.

(Writing by Alexandra Ulmer; Editing by Girish Gupta and Matthew Lewis)

Ecuador opposition candidate vows to remove Assange, denounce Venezuela

Reuters

By Alexandra Ulmer

GUAYAQUIL, ECUADOR – Ecuador’s lead opposition candidate is offering a sharp break with ten years of leftist rule in the Andean country, vowing to remove Wikileaks founder Julian Assange from the nation’s London embassy, speak out against Venezuela’s socialist government, and likely renegotiate debts with China.

Conservative former banker Guillermo Lasso is the opposition’s frontrunner in Sunday’s presidential election.

Polls suggest ruling party candidate, paraplegic former Vice President Lenin Moreno, 63, will win on Sunday but fall just short of enough votes to avoid an April runoff against Lasso, 61.

With analysts expecting the OPEC country’s disparate opposition to unite behind Lasso in a potential second round, his victory would cement the return of the right in South America after a decade of a strong leftist bloc buoyed by a commodities boom.

In an interview at campaign headquarters in his humid coastal hometown of Guayaquil, Lasso vowed that within a month of taking office in May he would remove Assange from Ecuador’s embassy, where he has been holed up since 2012 to avoid extradition to Sweden over rape allegations.

“Ecuador had no business spending a single cent protecting someone who definitely leaked confidential information,” Lasso said from his 24th-floor office at the headquarter, overlooking the Banco de Guayaquil where he was executive president from 1994 to 2012.

“I will take on the responsibility of inviting Mr. Assange to leave the Ecuadorean embassy at the latest 30 days after the start of our government,” he added on Thursday afternoon.

Lasso also promised he would take a firm stance against the government of crisis-hit Venezuela, which is closely aligned with outgoing president Rafael Correa’s leftist Country Alliance party.

Amid a brutal economic recession, Venezuelan authorities have nixed a recall referendum to remove unpopular President Nicolas Maduro and jailed dissidents.

“We will defend the democracy that the Venezuelan people have a right to,” said Lasso, who is running for president for a second time. “We’ll also demand that political prisoners be freed immediately, like Leopoldo Lopez and many others.”

Ecuador would also advocate that the Organization of American States push for elections in the fellow OPEC nation, Lasso said.

“CORREA-ERA WASTE”

Lasso would also examine contracts and loans with China, Ecuador’s top creditor since the country defaulted on $3.2 billion in bonds in 2008.

“Opacity has characterized this relationship with China,” said Lasso, saying he would make public the fine print of deals with the Asian giant.

“If there are onerous contracts that affect Ecuadoreans’ interest we will submit them to renegotiation and we will suggest to China the need to sign commercial deals that allow the entry of Ecuadorean products to China without tariffs.”

In addition to producing oil, Ecuador also exports shrimp, flowers, bananas, and cacao. Lasso expects the economy to remain mired in recession this year but grow 1.8 percent next year before reaching 5 percent in 2021 if he is elected.

Only then would he consider issuing more debt on the international market.

“Once we’ve recovered economic growth, we would emit long-term debt at lower interest rates so that with those resources we can, using market mechanisms, repurchase or pay off short-term debt with a high cost,” said Lasso.

“I’m not one of those people who sees debt as separate from the economy.”

Lasso also cast doubt on the Pacific refinery, a multibillion dollar Chinese-backed project that has stalled due to lack of financing.

“I see it as the icon of Correa-era waste. We’re going to analyze it, and I’m warning right now that Ecuador doesn’t have the $13 billion for a project that is questionable in terms of its economic and financial worth.”

(Editing by Jeffrey Benkoe)

Venezuelan girl’s diphtheria death highlights country’s health crisis

Reuters

By Alexandra Ulmer and Maria Ramirez

PARIAGUAN, VENEZUELA – Eliannys Vivas, 9, started to get a sore throat on a Friday last month in this languid Venezuelan town where papaya trees shade poor cinder-block homes.

Five days later, Eliannys was dead, likely a victim of diphtheria, a serious bacterial infection that is fatal in 5 to 10 percent of cases and particularly lethal for children.

Her death and a wider Venezuelan outbreak of diphtheria, once a major global cause of child death but increasingly rare due to immunizations, shows how vulnerable the country is to health risks amid a major economic crisis that has sparked shortages of basic medicines and vaccines.

Eliannys’ story is also one of misdiagnoses and missed signals worsened by government secrecy around the disease. Her family had never heard of diphtheria and local doctors did not immediately suspect it, despite the infection having affected hundreds of people just a few hours away in Bolivar.

After Eliannys was taken to a local hospital, doctors, thinking the disease was asthma, used a sort of inhaler on her.

But the usually chatty girl – “a little parrot,” in the words of her day-laborer father — kept weakening, so doctors transferred her to a larger government hospital once an ambulance became available hours later.

At El Tigre hospital, all the devices to examine throats had broken three years ago, so no one checked her properly, according to a nursing assistant.

“They said it was asthma, asthma, asthma,” said her mother, Jennifer Vivas. But as Eliannys struggled to speak, she was rushed to a third and then a fourth hospital in neighboring Bolivar state.

There, doctors discovered with horror Eliannys suffered from grossly inflamed throat membranes – the classic symptom of diphtheria.

But even the fourth hospital lacked adequate treatment for the infection, so she received only a half dose of antitoxins and no penicillin at all, according to a medical professional who treated her there.

As Eliannys’ airwaves blocked up, she suffered two successive heart failures and died on Jan. 18.

“If the diphtheria diagnosis had been made earlier and she had gotten antitoxins, she would have had a chance of surviving,” the source who treated her said, asking to remain anonymous because the government has banned health professionals from speaking to the media.

DIPHTHERIA RETURNS

Venezuela controlled diphtheria in the 1990s, but it reappeared in the vast jungle state of Bolivar in mid-2016.

At least two dozen children died last year, doctors say, and cases are now thought to have spread to a half-dozen other states.

Shortages of basic drugs and vaccines, emigration of underpaid doctors, and crumbling infrastructure have made it easier for diseases to spread, medical associations said.

Many poor and middle-class Venezuelans also have weakened immune systems because they are no longer able to eat three meals a day or bathe regularly due to product scarcity, reduced water supply and raging inflation.

Government secrecy has compounded the problem.

“The fact people don’t know (about diphtheria) helps the bacteria spread,” said Caracas-based epidemiologist Julio Castro, who has been tracking the diphtheria outbreak and who showed photos sent to him of patients with thick white membranes coating their throat.

The unpopular leftist government of President Nicolas Maduro said in October there were no proven cases of diphtheria and admonished those seeking to spread “panic.”

It has since informed the World Health Organization of 20 confirmed diphtheria cases and five deaths, and emphasized there is a major vaccination drive under way, but has yet to provide a full national picture of the disease’s effects amid a generalized clampdown on data.

The Information and Health Ministries, as well as the Venezuelan Social Security Institute, which is in charge of some drug distribution and hospitals, did not respond to multiple requests for comment about Eliannys’ case and diphtheria more generally.

The only other country in the region with a significant number of confirmed diphtheria cases last year was Haiti with 33, the WHO said in December.

MORE ILLNESS AHEAD?

Doctors think diphtheria first spread from the rough-and-tumble illegal gold mines in Bolivar state, which is attracting poor Venezuelans as the minimum monthly wage languishes around $30.

After Eliannys’ family was forced to start skipping dinner in December, her father, Tulio Medina, decided to work in Bolivar’s yucca and yams plantation where he made more money but might have brought the infection home.

The disease has already spread to capital Caracas, where doctors say a 32-year-old mother died last year, and could yet affect more states.

With the Venezuelan pharmaceutical association estimating that roughly 85 percent of drugs are unavailable at any given time and in light of the short supply of vaccines, doctors are bracing for further increases in illnesses like malaria, pneumonia and tuberculosis.

Venezuela’s rate of immunization with the pentavalent vaccine, which protects children from five major infections including diphtheria, had slipped to 78 percent between January and November 2016, according to Health Ministry figures leaked to former Health Minister José Felix Oletta and seen by Reuters.

“At this rate, we’re going to see more illnesses, more deaths, more doctors leaving the country,” said pediatrician Hugo Lezama, the head of Bolivar’s doctors association, who himself earns only a handful of dollars a month.

“Those of us who stay are going hysterical trying to perform miracles so our patients don’t die.”

(Writing by Alexandra Ulmer; Editing by Christian Plumb and Matthew Lewis)

Venezuela’s Maduro seen bolstering grip on PDVSA after shake-up

Reuters

By Alexandra Ulmer

CARACAS- PDVSA’s new senior executive line-up includes a Venezuelan navy rear-admiral, Hugo Chavez’s former Twitter manager and a leader of the late leftist president’s failed 1992 coup.

The selections, announced as part of a sweeping executive shakeup of Venezuela’s struggling state oil company on Sunday, suggest former President Chavez’s unpopular successor Nicolas Maduro is strengthening his grip on the enterprise that powers the OPEC country’s economy.

Maduro said the overhaul was aimed at stamping out corruption at the company that oversees the world’s biggest oil reserves and has been linked to major bribery cases in the United States.

PDVSA [PDVSA.UL] President Eulogio Del Pino, a Stanford-educated engineer, was kept on, but most of his top executives, several with long oil careers, were removed.

With little to no oil industry expertise on their resumes, the replacements draw heavily from Venezuela’s political and military arena at a time when PDVSA’s production has tumbled to a two-decade low and the company is struggling with export delays and refinery outages.

“If it was very bad (before), with these people who have no experience it’s going to be even worse,” said Francisco Ibarra, an economist with Caracas think-tank Econometrica. “I don’t know how much worse.”

To be sure, PDVSA’s outgoing executives were also openly pro-government, and the oil industry has declined significantly under their watch.

But current and former PDVSA employees, consultants and executives at foreign companies are privately expressing worries the new heads have scant knowledge of the oil industry.

Maribel Parra, for instance, a rear admiral whose career has largely been in the armed forces, will run the newly created executive vice-presidency with no apparent experience in the energy sector.

Ismel Serrano, tapped to run the key commerce and supply division, was identified in a state TV interview as a coordinator of Chavez’s widely followed Twitter account and has since worked under Tareck El Aissami, the former governor of Aragua state whom Maduro appointed as vice president earlier this month.

Guillermo Blanco, appointed to lead the refinery division, was a captain who participated in Chavez’s failed coup in the 1990s and went on to work in the Oil Ministry.

Maduro also created two new external board positions, tapping members of PDVSA’s worker-led “strategic socialist plan.”

‘REDDER THAN RED’

Critics say PDVSA has grown increasingly political, mismanaged and corrupt since Chavez was elected in 1998.

The former lieutenant colonel purged PDVSA’s ranks in response to a crippling strike in 2002-2003, firing thousands and replacing them with loyalists. Rafael Ramirez, the former oil czar, famously vowed the company would be “redder than red” and sent workers to state rallies.

He was replaced in 2014 by Del Pino, a low-profile technocrat, suggesting that depressed oil prices and operational problems were pushing PDVSA to adopt a more pragmatic stance.

But Del Pino has struggled to overhaul the company, crippled by Venezuela’s strict currency controls that stymie imports and PDVSA’s mandate to fund welfare programs.

PDVSA denies the mismanagement allegations, saying there is an international right-wing media campaign aimed at sullying its reputation.

The company says it drives social progress in Venezuela and that it is moving to clean up corruption that has long plagued the oil-rich country.

PDVSA did not respond to a request for comment about the leadership changes.

With Venezuela’s economy in a tailspin, industry players worry that a more compliant PDVSA might increase cash transfers to the government.

“This change means more political control,” an executive at a foreign company in Caracas said.

The shuffle comes after Maduro added Socialist Party allies to the central bank and economic vice presidency, which his political rivals say are also signs of consolidating power.

(Writing by Alexandra Ulmer; Editing by Christian Plumb and Cynthia Osterman)

Venezuela’s Maduro oversees military drill to guard ‘socialist fatherland’

Reuters

By Alexandra Ulmer

CARACAS- His finger on a rifle trigger and wearing an olive green hat, President Nicolas Maduro on Saturday oversaw military exercises in crisis-wrought Venezuela, which he says is under threat of imperialist” invasion due to its oil wealth.

More than half a million soldiers and civilians were deployed in the drill. State television broadcast footage of soldiers camouflaged as bushes shouting “socialist fatherland!” while commanders brandished Russian-made military equipment.

“We’re ready to defend our land, inch by inch, neighborhood by neighborhood, street by street,” said Maduro during a drill in Miranda state.

Opponents of the unpopular Socialist leader scoff he is delusional and say his administration should be focused on stocking empty supermarkets and pharmacies amid brutal shortages in the recession-hit OPEC nation.

“You are PATHETIC, Nicolas Maduro,” tweeted opposition lawmaker Armando Armas, adding the drill was a “pantomime.”

The opposition is trying to remove Maduro, a former bus driver and union leader, but authorities have quashed chances of an early presidential vote. Seen as key powerbrokers in the volatile country, the military’s top brass has firmly backed Maduro’s “21st century socialism,” although most soldiers are also suffering from Venezuela’s economic recession.

Many were deployed across the country of 30 million on Saturday, with exercises that included protecting Venezuela’s coastal oil refineries or practicing urban defense. State television promoted the hashtag #TimeToDefendTheFatherland.

But for many Venezuelans struggling to eat three meals a day amid what is thought to be the world’s steepest inflation, the exercises fell flat. And after a week in which authorities rounded up several opposition politicians amid accusations of coup-plotting, some Venezuelans saw a darker subtext to the show of military force.

(Reporting and writing by Alexandra Ulmer; Editing by David Gregorio)

Venezuelans scramble to ditch largest bill ahead of surprise removal

By Alexandra Ulmer and Girish Gupta

Reuters

Venezuelans hastily dumped the country’s 100-bolivar bill, the largest denomination, on Monday after the government said it would be pulled from circulation as the crisis-wracked nation suffers what is believed to be the world’s highest inflation.

Socialist President Nicolas Maduro said the withdrawal of the bill – worth just 2 U.S. cents on the black market – was needed to reduce contraband of the banknotes on the Venezuela-Colombia border.

The 100-bolivar note will be removed in 72 hours as of Tuesday, state media said on Monday, with new, higher-denomination bills due on Thursday.

Despite heavy printing of the 100-bolivar bills – 2.3 billion this year alone out of 6.1 billion in total – they are in short supply. Moreover, Venezuela’s shaky telecoms network means card readers often collapse.

Luis Volcanes, 36, had for six weeks withdrawn cash every day but on Monday ran around with a big brown envelope trying to deposit that same money, only to find cash machines at four banks in a row were not working.

“This seems crazy, like the government did this on a whim. I don’t know what I’m going to do,” Volcanes said as people trickled in and out of a bank in Caracas, complaining none of the machines worked.

One man unable to deposit money yelled, “This is total chaos!”

Adding to the aggravation, Monday was a bank holiday, meaning there were no tellers. Venezuelans have 10 days to exchange the notes at the central bank.

While many business were not accepting 100-bolivar bills, or warning they would only do so on Monday, poor people living day to day could not afford to reject cash.

“I’ll take everything you can give me to eat today,” said taxi driver Jose Manuel Henrique, 49, whose cash income goes entirely to feeding his two children. Still, Henrique, a former supporter of late socialist leader Hugo Chavez, was annoyed.

“The government can’t get anything right. This wasn’t thought out.”

PAIN WITH NO GAIN?

Authorities on Thursday are due to start releasing six new notes and three new coins, the largest of which will be worth 20,000 bolivars, less than $5 on the streets.

Maduro, a former bus driver and union leader elected after Chavez’s death in 2013, said Colombian shoppers and organised criminals were buying up the 100-bolivar bills to go on a spending spree in Venezuela, worsening shortages of basics such as flour and antibiotics.

Venezuela is heaving under its third straight year of recession, pushing millions to skip meals and medical treatment.

Many others are increasingly travelling to Colombia to find supplies. But shops across the border on Monday were displaying signs that they would not accept 100-bolivar bills, bringing business to a halt and sending Venezuelans home empty-handed.

Later on Monday night, Maduro announced in a televised broadcast that he would close the porous border for 72 hours to stem what he said was contraband of notes.

His government also says Machiavellian businessmen are hoarding goods and bloating prices to sabotage socialism.

Interior Minister Nestor Reverol on Monday added that criminals were hoarding 100-bolivar bills in places such as Switzerland and Ukraine as part of a financial attack on Venezuela.

He showed photos of stacks of bolivar bills but presented no further evidence.

Economists scoff at the official line, pointing instead at strict currency controls and price fixing that hurt imports and reduce incentives for production. They said Maduro’s measure will do nothing to improve product supply.

The decision has been likened to Indian Prime Minister Narendra Modi’s move on Nov. 8 to scrap large banknotes in a bid to flush out cash earned through crime, which led to long bank queues and is expected to take a toll on the economy.

In Venezuela, there also were logistical concerns about how authorities would remove the more than 6 billion 100-bolivar bills in circulation, nearly half of all coins and notes, and whether replacement bills were ready.

But some Venezuelans – about one in five of whom still support Maduro – saw a ploy by the opposition to fan fear.

“This is a sensible decision but all change brings uncertainty,” said Carlos Paez, 54, a private security guard.

At least one shop owner threw his hands up in frustration.

Lucio Colombo, 47, who sells gifts and snacks in Caracas’ wealthy Chacao district, has asked clients to pay in cash for the last two weeks because his credit card reader no longer works.

“So how do I get paid now?” he asked. “I was thinking of bringing my laptop so people can pay me by transfer – or I could just go on holiday. They are forcing me to stop working.”

(Reporting by Alexandra Ulmer and Girish Gupta in Caracas; Additional reporting by Anggy Polanco in San Antonio, Venezuela and Andreina Aponte in Caracas; Editing by Bill Trott and Alan Crosby)
widestass.com

In intimate ally Venezuela, tears and cheers over Castro’s death

Reuters

By Alexandra Ulmer

CARACAS- Venezuela’s ruling socialists mourned former Cuban leader Fidel Castro, while opposition hardliners exulted over the death of a man they call a dictator who helped wreck the economy and whose country has for years got an easy ride with subsidized oil.

The two leftist Latin American governments became intimate allies under Castro and his younger disciple, the late Venezuelan leader Hugo Chavez, a relationship buttressed by generous oil shipments from the OPEC country to the Communist-run island in return for thousands of Cuban doctors, teachers, sports trainers and security advisers.

But that economic lifeline to Cuba ebbed in recent years as Venezuela, in the throes of a brutal economic crisis that has seen millions skipping meals, has cut back on the subsidized crude.

Venezuela used to send Cuba some 100,000 barrels of oil per day, but data seen by Reuters showed a 40 percent decline in crude shipments in the first half of the year compared with 2015 and that could fall further amid a production slump.

After Chavez died of cancer in 2013 following treatment in Cuba, the special personal relationship between the two governments cooled, too.

Chavez’s successor, Nicolas Maduro, and Raul Castro, who took over from his older brother in 2008, do not have as strong a connection.

Indeed, Maduro seemed caught out when Raul Castro, considered a pragmatist, announced he was seeking to mend ties with their shared “imperialist” enemy, the United States, in 2014.

Still, there are no public signs of fissures, and Maduro on Saturday hailed the leader whom the Latin American left has held up as one of the ultimate political icons.

“Comandante Fidel Castro has passed into immortality,” an emotional Maduro told broadcaster Telesur early on Saturday, adding that he had spoken to Raul Castro. “It’s a big blow for all the world’s revolutionaries. Our thoughts go out to the noble people of Cuba, heroic, courageous.”

Tweeting pictures of Castro and Chavez in military fatigues or embracing, Maduro added the leftist rallying cry, “Hasta la victoria siempre” (“Until victory, always”).

Venezuela decreed three days of public mourning, cancelled a music festival in Caracas, and state television dedicated a special program to Castro, publicized with the slogan “Honor and Glory to Fidel.”

NEW ERA?

Some in Venezuela’s opposition rejoiced over the passing of 90-year-old Fidel Castro at a time when South America is shifting right after a decade of a strong leftist bloc buoyed by a commodities boom.

The opposition itself is seeking to remove unpopular Maduro via a recall referendum and, although authorities have quashed the vote, some activists saw Castro’s death as an auspicious sign.

“We’re definitely in a change of era, dictatorship is dying,” tweeted opposition lawmaker Juan Guaido.

Opposition activists say that while Chavez and Castro may have set out with good intentions to fight the region’s deep economic inequalities and elite politicians, they turned into tyrants.

Hard-line Venezuelans are convinced Havana sends orders to Caracas and bemoan rampant food and product shortages they say have turned their country into “Cubazuela.”

In what has become Cuba’s flagship presence in Venezuela, thousands of doctors work in neglected Venezuelan communities, where they are widely praised by low-income patients, although they have become hate figures for the opposition, who see them as modern-day slaves providing low-quality care. Some have fled from Venezuela to the United States, via Colombia.

Venezuela’s hyperactive social media scene was filled with tongue-in-cheek memes, including one showing Chavez and Fidel Castro reunited in hell.

The Venezuelan opposition slammed the government’s ode to Castro.

“For Venezuelans, the real mourning is for: The young that government-led raids and crime kill, the babies that bacteria assassinate in hospitals… Those who die due to food shortages, those who die due to medicine shortages,” said opposition coalition leader Jesus Torrealba.

(Editing by Andrew Cawthorne and Jonathan Oatis)