Published by Minyanville

With elections looming next year, the opposition in Venezuela are beginning to unify to present a credible candidate to fight President Hugo Chávez. February 12 has been set  as election date for that candidate. The news was announced this week by opposition umbrella group Democratic Unified Panel (MUD). Critics of Chávez are concerned  that February next year is too late for whoever is chosen to build support against the incumbent president.

“Hundred dollar oil,” according to Reuters is good news for Chávez’s re-election bid, alongside, “a brighter economic outlook and growing popularity.” Last week, the president celebrated the ninth anniversary of his regaining power after a coup against him in 2002. "We are going to wipe them out like never before," Chávez told supporters, gathered outside his presidential palace to mark the anniversary. Most polls put the socialist leader above 50%.

Oil Prices Rise

Venezuelan oil sold by Petróleos de Venezuela (PDVSA) hit $107.30 this week, up $2 from the previous week. This raises the year average to $93.14. The Financial Times  this week, however, expressed concern at Venezuelan authorities’ management of PDVSA funds.

PDVSA is used by the authorities in Venezuela as a cash cow to fund social projects, or “pillaged by the government for political ends,” according to the Financial Times. The state oil company may well be digging its heels in and behaving like a traditional oil company, reinvesting money into business and guarding against contingent liabilities. Nationalization of Exxon Mobil (XOM) is expected to cost PDVSA $3.7 billion; a ruling will be made next month.

A deal was signed by Vietnam and Venezuela to boost petroleum co-operation this week. PDVSA will now formally be involved in expanding the Dung Quat Oil Refinery in Vietnam. PDVSA will also extract the first 50,000 barrels per day from a project with Petrovietnam in the Orinoco region.

Warmer Relations With Columbia

After the announcement that alleged drug-trafficker Walid Makled is to be extradited from Colombia to Venezuela, and following Chávez’s visit to Cartagena, Colombia, earlier this month, the two countries have reached an agreement to restore bilateral agricultural trade. This move allows Colombia to export meat, poultry and dairy products to Venezuela, resuming normal relations with the country after years of animosity.

"I want to emphasize the Colombian government is pleased with the restoration of Colombo-Venezuelan trade, in particular hard currency, agriculture and livestock,” said Colombian agriculture minister Restrepo Salazr.

This is good news for both countries’ economies. Trade was frozen in 2009 as Chávez became angry with then Colombian president Alvaro Uribe’s relationship with Washington. (This was also amid accusations that Chávez was aiding FARC rebels.) Four years ago, in 2007, bilateral trade was at $7 billion, $6 billion of which was made up of Colombian exports. Last year it plummeted to $1.2 billion.

Foreign Currency Brokers Charged

Ten Venezuelan brokers have been formally charged  following accusations of illegally selling foreign currency and conspiracy. Directors of Econoinvest Casa de Bolsa, which was once the country’s largest brokerage, as well as executives at four other brokerages were charged. The companies have since been shut down by the government.

Currency controls were stepped up by Chávez last year. Brokerages were found obtaining foreign currency by swapping bonds for US dollars.

Bank Investigation Requested

An opposition politician in Venezuela has demanded investigation into Banco Industrial de Venezuela. Ramon Muchacho has accused the state-run bank of being badly managed. The US Federal Reserve is fining the bank $1.8m for “unsafe and unsound banking practices.”

Economic Indicators Reported

The CPI figure for March came in at 1.4%, lower than February. Year-to-date inflation was at 27.4%. The central bank reported a 9.9% hike in sales in January compared with the same period in 2010. Gross sales rocketed to 26.44%, with retail sales also up at 5.21%.

Plane Scare Ends Without Tragedy

An Air France jet was forced to make an emergency landing in Caracas this week. No passengers were hurt in the flight bound for Pairs. The Airbus A330 had trouble with its landing gear. The news may cause jitters in those who remember Air France’s 2009 plane crash off Brazil, in which all 228 people on board were killed. Bodies are due to be recovered from the Atlantic imminently.