Politics

Venezuela-Colombia border to gradually reopen

Venezuelan President Nicolás Maduro and Colombian President Juan Manuel Santos on 19 December 2016 agreed to gradually reopen the frontier beginning on 20 December. Maduro first shut down the border on 13 December for a 72-hour period to prevent alleged economic attacks from Colombia, and had stated the border would be closed until 2 January 2017. However, Venezuelan Defense Minister Vladimir Padrino López announced via Twitter that the pedestrian crossing, the Simón Bolívar International Bridge between San Antonio del Táchira in Venezuela and Cúcuta, Norte de Santander province, would reopen, followed by the eventual normalization of all border crossings (Efecto Cocuyo). Colombian Communication and Information Minister Ernesto Villegas also took to Twitter to report that the president instructed the Banco Central de Venezuela and Colombia's Banco de la República to discuss a solution to the problem of instability in Venezuela's money supply (Panorama). 

The border reopened after the Colombian Foreign Relations Ministry announced on 19 December it summoned Iván Rincón, the Venezuelan Ambassador to Colombia, to Bogotá to hand Rincón a statement. The declaration expressed the Colombian Government's disagreement with Venezuela's accusations that Colombia has caused economic instability in Venezuela (El Nacional). Santos commented on 19 December that Venezuela's economic problems are not on the Colombian border, and stated he would travel to Cúcuta on 20 December to speak with local authorities (El Nacional). Maduro's decision to blame "cash mafias" and currency exchange houses in Colombian border cities such as Cúcuta for soaring inflation and currency hoarding have led to strained relations with Colombia since 11 December, when Maduro announced that all 100-bolivar notes would be removed from circulation. Maduro has since reversed the policy, and the decision to gradually reopen Venezuela's border with Colombia could help to repair relations with its neighbor and ensure Venezuelans can cross into Colombia for much-needed supplies of food and medicine. 

UN gives Venezuela and Guyana one year to resolve border dispute

United Nations spokesman Stéphane Dujaric announced on 16 December 2016 that the U.N. has given Venezuela and Guyana a one-year deadline to resolve their border dispute. If significant progress is not made by the end of 2017, the new Secretary General António Guterres will send the case to the U.N.'s International Court of Justice (El Universal). Current Secretary General Ban Ki-moon decided to continue the Good Offices process, which began in 1990, for another year, and Guterres is set to elect a new Good Offices envoy to mediate in the dispute shortly after taking office in 2017. Tal Cual noted the territorial dispute intensified in 2015 after ExxonMobil discovered oil fields in the waters off the coast of Guyana.

Public Ministry denounces Lula, others in Operação Lava Jato

The Brazilian Federal Public Ministry on 15 December 2016 denounced former President Lula on corruption and money laundering charges related to the Petrobras corruption scandal (Folha de S. Paulo, Valor). The crimes involve US$22.4 million in eight contracts between the state oil firm and Odebrecht, a major construction firm that has admitted to its involvement regarding bribes and cartel activity in the scandal. Lula stands accused of accepting US$3.7 million worth of land, used for the headquarters of his Instituto Lula in São Paulo, and a penthouse addition to his apartment in São Bernardo do Campo (SP) valued at US$150,000. The Ministry also cited Marcelo Odebrecht, Lula’s wife, and others on money laundering.

Venezuelan legislature to investigate Maduro and Merentes over paper money shortage

Venezuela's Asamblea Nacional (AN) on 19 December 2016 agreed to investigate President Nicolás Maduro and Central Bank President Nelson Merentes to determine their responsibility for violence that broke out following the paper money shortages since 16 December. Opposition Deputy Freddy Guevara noted Article 294 of the Constitution provides for jail sentences in connection with destruction and looting, and stated Maduro should be imprisoned (Tal Cual). The legislative accord demanded the Government to extend the validity of the current money supply, and to take an inventory of damages caused to businesses and residents and send humanitarian aid to Bolívar state, the area of the country that experienced the highest level of looting and violence related to cash shortages (Efecto Cocuyo).

Brazil sends committee to assist 37 citizens trapped at Venezuelan border

A delegation from the Brazilian state of Roraima was sent to the Venezuelan border on 19 December 2016 to assist 37 Brazilian citizens who were trapped in Venezuela. The Brazilians, the majority of whom hailed from Roraima and Amazonas states, were stuck at the border city of Santa Elena de Uiarén following President Nicolás Maduro's extension of the border closure between Venezuela and Brazil until 2 January 2017 (El Nacional). According to Claudio Bezerra, Brazilian Vice Consul in Santa Elena de Uiarén, the Brazilians requested help due to cash and food shortages after Maduro ordered the 100-bolívar bill taken out of circulation (El Universal). The Brazilian Foreign Relations Ministry announced later on 19 December that the Venezuela-Brazil border will be opened once per day for Brazilians to cross back into Brazil, but did not state how long the border would stay open per day (O Globo).

Mercosur coordinators meet in Montevideo over Venezuela impasse

Representatives from Mercosur are set to meet in Montevideo on 16 December 2016 to discuss Venezuela's invocation of the Olivos Protocol, a conflict resolution mechanism, as Venezuela refuses to accept its 2 December suspension from the bloc. Venezuelan Foreign Minister Delcy Rodríguez stated on 15 December that Venezuela does not recognize the 14 December handover of the Mercosur rotating presidency to Argentina, and claimed she was physically assaulted upon arrival at the Argentine Foreign Ministry on 14 December to attend a summit to which Venezuela was not invited (Tal Cual). Uruguayan Foreign Minister Rodolfo Nin Novoa weighed in on the incident and said that entering the Ministry by force was a serious action from a diplomatic perspective (Globovisión). Nin Novoa confirmed Venezuela is suspended from Mercosur and stated Venezuela had four years to incorporate 1,159 Mercosur regulations, but still has 200 rules left to adopt into Venezuelan law (Panorama). 

Senior Mexican and Chinese officials meet

Mexican Foreign Secretary Claudia Ruiz Massieu met with Chinese State Councilor Yang Jiechi in Mexico City on 12 December 2016 and pledged to strengthen ties between the countries in various aspects (Aristegui). Yang Jiechi also met privately with President Enrique Peña Nieto to he reviewed the agenda of issues regarding the bilateral relationship (Aristegui and Excelsior). The encounter was a follow up from a meeting held in September 2016 between Peña Nieto and Chinese leader Xi Jinping which formalized the creation of the China-Mexico investment fund featuring over US$50 million in various projects. Official figures showed trade between the two nations reached US$74.9 billion at the end of 2015 (Excelsior).

Ecuador's Constitutional Court rules in favor of commercial trade agreement with EU

Ecuador’s Constitutional Court issued a verdict and ruled in favor of the commercial trade agreement signed with the European Union, arguing the trade agreement does not violate the rights established by the Constitution. (Andes, 12 December 2016). After the favorable ruling by the Constitutional Court, it is expected that the Executive will send the trade agreement documentation to the National Assembly for ratification. Foreign Trade Minister Juan Carlos Cassinelli said the European Parliament is scheduled to vote on the ratification of the trade agreement on 13 December (El Comercio).

Salvadoran president denies judge’s accusations of armed forces participating in threats

Salvadoran Judge Rodolfo González announced on 10 December 2016 that he and three other judges of the Constitutional Court would present evidence to the Attorney General connecting the governing party and armed forces to protests where judges were threatened (La Prensa Grafica). President Salvador Sánchez Cerén, the Commander-in-Chief of the Armed Forces (FFAA), denied that the FFAA had an agenda to attack the Court and accused the Court of trying to destabilize the FFAA (El Diario de Hoy). Defense Minister David Munguía Payes denied giving orders for FFAA members to participate in marches, as the judges suggested (El Diario de Hoy). González said he would present proof that state vehicles assigned to Frente Farabundo Martí para la Liberación Nacional (FMLN) party members were present at the protests. Furthermore, the judges referenced pamphlets and posters circulating calling for their death with photos of their faces (La Prensa Grafica). Attorney General Douglas Meléndez has ordered an investigation into the alleged death threats. Additionally, the government and FMLN accused the magistrates of blocking state financing and pushing the government into a liquidity crisis.

Bolivian, Colombian, and Brazilian prosecutors join in LaMia crash investigation

Attorney Generals from Colombia and Brazil arrived in Santa Cruz, Bolivia on 7 December 2016 to meet with Bolivian Attorney General Ramiro Guerrero investigate the circumstances of the LaMia crash. The commission of attorneys decided to arrest the airline's General Manager, Gustavo Vargas Gamboa, after raiding the company's offices (Los Tiempos). The LaMia plane crash took place on 28 November and left 71 dead near Medellín, Colombia. Among the dead were members of the Brazilian soccer club Chapecoense. In Bolivia, attorneys are investigating the crimes of breach of duty and threats against security from a means of transport. Several of the accused also include Celia C., a Bolivian aviation authority employee who noticed irregularities in the flight, but failed to report them to her superiors. In Colombia, officials have also initiated charges against airport operators for culpable homicide (La Razón).

Venezuelan government confiscates almost four million toys

The Venezuelan government's Bureau of Fair Prices (SUNDDE) announced on 9 December 2016 it confiscated almost four million Christmas toys from toy company Kreisel, which the SUNDDE accused of hoarding and marking up prices. SUNDDE President William Contreras stated the toys had been hoarded for over three years at three Kriesel warehouses (La Patilla). Contreras also announced that two Kreisel executives were arrested and that the Venezuelan government will distribute the Christmas toys to poor children (El Nacional).

Venezuela closes border with Colombia for 72 hours

Venezuelan President Nicolás Maduro announced on 12 December 2016 the border with Colombia will be closed for 72 hours. According to Maduro, the measure is intended to prevent "cash mafias" from transporting 100-bolívar bills from Colombia to Venezuela (Tal Cual). Maduro stated government officials already seized 64 million bolívares along the border, and said Venezuelan Defense Minister Vladimir Padrino López and Colombian Defense Minister Luis Carlos Villegas were coordinating their respective armies to combat cash mafias on both sides of the border (Panorama). The President added the Right in Venezuela is behind the cash mafias, and Interior Minister Néstor Reverol claimed an NGO hired by the U.S. Treasury Department was responsible for the outflow of 300 billion bolívares from Venezuela (Panorama). 

Maduro's announcement of the temporary border closure is adding to the daily chaos in the country, as Venezuelans are facing long lines at banks to exchange or deposit their 100-bolívar bills in compliance with a presidential decree on 11 December. The President ordered Venezuelans to turn in six billion notes, which represent 47.55 percent of the nation's money supply, within a 72-hour period beginning on 13 December (Efecto Cocuyo). Maduro last decreed a closure of the border on 28 August 2015, citing paramilitary activity in the region, and the border was reopened partially on 8 July 2016, allowing thousands of Venezuelans to cross into Colombia to seek food and medicine, which are scarce in Venezuela (Globovisión). Maduro is again militarizing the border area and contributing to tensions with Colombia with his call for involvement from the Venezuelan and Colombian armies. Furthermore, by accusing alleged cash mafias of manipulating the bolívar, Maduro is attempting to foist the blame for rampant inflation and fiscal mismanagement onto unknown criminals, NGOs, the Venezuelan opposition, and the U.S. government, exposing his government's desperation and lack of control over the economy.

Venezuela and China strengthen industrial relations

The China-Venezuela industrial, scientific, and aerospace sub-committee, led by the China-Venezuela High-Level Commission, met in Caracas on 14 December 2016 to strengthen bilateral industrial relations. Vice President for Social Development Jorge Arreaza stressed the importance of maintaining strong bilateral relations and highlighted China's support for the production of automobiles, housing materials, telephones, and computers in Venezuela (Globovisión). During the meeting, Venezuela and China agreed to 672 new projects, 131 of which are linked to President Nicolás Maduro's Bolivarian Economic Agenda. The nations also signed an agreement for China to provide Venezuela with a heavy cargo transport fleet to increase the government-run Grand Supply Mission's logistical capacity to distribute food by one third (El Universal).

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Brazil's Senate approves spending cap constitutional amendment

The Senate approved on 13 December 2016 a constitutional amendment that will limit the growth of the federal budget to the previous year’s rate of inflation for the next 20 years, effecting a spending freeze at the federal level (Folha de S. Paulo, Globo G1). Healthcare and education, the two areas that receive largest shares (which are fixed by federal law) of federal spending after social security (Previdência), are also subject to the spending cap. The amendment passed with 53 votes in favor, less than expected but more than the necessary 49 (three-fifths majority of the 81 senators). The measure had previously been approved by the Chamber of Deputies and in a first-round, preliminary vote in the Senate. The measure now moves to President Michel Temer to be signed. However, the government has noted the amendment will only be effective if the social security reform bill currently contested in Congress is passed as well.

The amendment has been met with controversy: while the current administration sees the measure as critical to controlling spending and bringing Brazil back into good international financial standing, many see the measure as regressive or simply “kicking the can down the road.” Polling by Datafolha on 13 December 2016 showed that 60 percent of Brazilians are against the amendment, and protests erupted throughout the country surrounding the vote (Folha de S. Paulo). The austerity measure intends to reign in government spending so that public debt level does not continue to increase (it is currently 70 percent of GDP, much higher than the 45 percent average of countries at the same state of development as Brazil). The amendment provides optionality for the sitting President to revise the baseline of the measures in its tenth year, which would be 2025. However, opponents of the amendment in both Congress and the constituency believe it will block necessary investment in education and infrastructure, while others find it mathematically improbable that the federal government will be able to adhere to the measure’s provisions for more than a few years.

Argentina assumes Mercosur presidency despite objections from Venezuela

During a Summit in Buenos Aires on 14 December 2016, Argentina assumed the rotating presidency of Mercosur despite objections from Venezuela, which was suspended from the bloc on 2 December but refuses to recognize Mercosur's decision. Although Paraguayan Foreign Minister Eladio Loizaga stated on 13 December that Venezuela was not invited to the Mercosur summit, Venezuelan Foreign Minister Delcy Rodríguez arrived at Argentina's Foreign Ministry, accompanied by Bolivian Foreign Minister David Choquehuanca (Tal Cual). Argentine Foreign Minister Susana Malcorra stated during a press conference that she met with Rodríguez, Choquehuanca, and Uruguayan Foreign Minister Rodolfo Nin Novoa before the Mercosur Summit (Panorama). Malcorra reiterated that Venezuela has not adopted over 200 regulations required to become a full member of Mercosur, but noted she and Rodríguez will meet again on 15 December to hold a dialogue over Venezuela's relationship with the bloc (Globovisión). 

Maduro orders 72-hour closure of border with Brazil

Venezuelan President Nicolás Maduro, on 13 December 2016, ordered a 72-hour closure of the Venezuela-Brazil border to combat smuggling of paper bills into Brazil. According to Brazil's Roraima state Venezuelan consulate representative José Martínez the border crossing from Pacaraima to Santa Elena de Uairén in southern Venezuela would close from 13 to 15 December (Globo). Maduro ordered a temporary shutdown of the border with Brazil after closing the border with Colombia for 72 hours starting on 12 December, citing activity from "cash mafias" that seek to destabilize the Venezuelan economy (Infobae). 

Public Ministry indicts Lula, son for influence peddling and money laundering

The Federal Public Ministry (MPF) indicted former President Lula da Silva and his son Luiz Cláudio Lula da Silva on charges of influence peddling, money laundering, and criminal organization on 9 December 2016 (Globo G1). The MPF made the announcement after investigations pointed to the involvement of Lula, his son, and the owners of a consulting firm in irregular transactions made by the federal government to purchase 36 Gripen military jets. According to the MPF, the crimes were committed between 2013 and 2015, after Lula’s mandate as president. The MPF suspects that Lula promised to use his influence in the federal government to benefit automotive clients of consulting firm M&M by way of government purchases. In return, Mauro Marcondes and Cristina Mautoni, owners of M&M, agreed to pay US$747,836 to Lula's son’s business, LFT Marketing Esportivo (Folha de S. Paulo). The indictment was made as a part of Operação Zelotes, a probe into corruption in federal, state, and municipal governments.

Odebrecht executive cites Temer, dozens of other politicians for bribery and illicit campaign funds in plea deal

Cláudio Melo Filho, former Vice President of Investor Relations at Odebrecht, the embattled construction firm under investigation for its involvement in bribery and cartel activity in Operação Lava Jato, cited dozens of politicians in a testimony as a part of a plea deal on 9 December 2016 (Folha de S. Paulo, Valor). Melo Filho said the company paid politicians to influence the passage of a bill that would provide tax concessions to producers of ethanol and the chemicals industry, allowing Odebrecht to save on taxes. The list of politicians includes President Michel Temer, to whom Melo Filho said the firm paid nearly US$3 million in bribes and illicit campaign funds, Chief of Staff Eliseu Padilha (US$1.2 million), Geddel Vieira Lima (minister under both Temer and Lula, US$1.75 million), former President of the Chamber of Deputies Eduardo Cunha (US$3.4 million), current Chamber President Rodrigo Maia (US$178,000), Senate President Renan Calheiros (US$1.8 million), Senator and leader of Temer’s government in Congress Romero Jucá (US$5.7 million), and Jaques Wagner (minister under Dilma Rousseff, US$6.1 million). Melo Filho stated Romero Jucá may be considered the front man for the solicitations. Many of the politicians have denied the accusations, including Temer (Valor). 

The accusations will have significant consequences for the Temer administration, which took power after the opening of the impeachment process of Dilma Rousseff in May 2016, finalized in August 2016. The Temer administration began with low public support, and polls from 7 December show a sharp decrease in support for the new administration. Datafolha, Folha de S. Paulo’s polling service, revealed that 63 percent of Brazilians want Temer to resign so the country may hold a direct presidential election. Temer would need to resign by 31 December 2016 for this to be possible under Brazilian law. Datafolha reported that 51 percent disapprove of the administration, up from 31 percent in July 2016. The testimony also comes as new economic data from the Brazilian Central Bank has continued to revise down growth projections given at the start of the new administration’s mandate. With low support and mounting evidence of corruption, on top of weak economic growth and fragmented support in Congress, the administration’s mandate has become even more complicated.

Maduro to speak with Santos about resale of Venezuelan currency in Colombia

Venezuelan President Nicolás Maduro announced on 8 December 2016 he will speak with Colombian President Juan Manuel Santos on 9 December about the resale of Venezuelan currency in Colombia. During an event to commemorate former President Hugo Chávez, Maduro stated he will urge the Colombian government to punish those who smuggle bolívar bills to Colombia for later resale (El Nacional). Maduro said the lack of paper money in Venezuela led to a cyber-attack on 2 December that caused a partial shutdown of the country's electronic banking system. According to Maduro, Venezuelan bills were stolen at Cúcuta and Maicao, Colombian cities on the border with Venezuela (Globovisión).

Venezuela and Russia sign economic and military cooperation agreements

During the twelfth meeting of the Venezuela-Russia Intergovernmental Commission in Caracas on 6 December 2016, the two countries signed economic and military cooperation agreements. Venezuelan President Nicolás Maduro stated that after meeting in person with Russian Deputy Prime Minister Dmitry Rozogin and speaking over the phone with President Vladimir Putin, the leaders agreed Russia will provide Venezuela with its wheat supply in 2017 (Globovisión). Maduro reiterated wheat mafias are causing shortages, warned the Venezuelan Bakery Federation he will take legal action against the organization, and added Russian imports will end the scarcity of flour and long bakery lines (Tal Cual). Maduro also announced that in 2017, Russia will bring agricultural specialists to Venezuela, as well as modern anti-missile air defense systems, and artillery and infantry units (Efecto Cocuyo).