What it means for Russian business, the aggravation of the crisis in...

What it means for Russian business, the aggravation of the crisis in Venezuela

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Photo: Manaure Quintero/Bloomberg

The Supreme court of Venezuela refused to the Parliament the right to remove President Maduro, however, the opposition is going to seek his resignation. RBC understood as the aggravation of the situation will affect the interests of Russian companies

On Monday evening, January 9, the Venezuelan national Assembly proclaimed President Nicolas Maduro “has left his post because of failure to perform duties”. Controlling the Parliament, the opposition believes the President personally responsible for the acute political and economic crisis, and the resolution called on the President to resign. However, a legally binding document was not.

After a few hours of voting in the Assembly, the Supreme court of Venezuela called the attempts of the Parliament to send the President to resign is not relevant to the constitutional powers of the deputies. The Constitution did not provide for impeachment of the President, but the President can be removed by holding a referendum. The opposition in October, adopted a plan of actionthat should lead to the departure of Maduro.

The opposition of the court

In the last parliamentary elections in December 2015, the opposition coalition the “Roundtable of democratic unity” (MUD) received 67% of the vote and immediately began preparing a referendum on Maduro offset. Collected in support of the plebiscite of the signatures were rejected by the Supreme court, and in October deputies approved the new initiatives, such as the condemnation of Maduro as a “usurper”, and appealed to the international criminal court to investigate against the judges of the Supreme court, which the opposition believes the President’s supporters.

After the vote, 9 January, the Chairman of Parliament Julio Borges said that without a referendum, the resignation of Maduro can not be achieved.

The resolution was the last attempt to go the way of the referendum. The fact that on 10 January 2017 start for the last two years of office, Maduro, and the laws of Venezuela the resignation of the President in the last two years of his work leads not early voting, but a simple transfer of power to the Vice President. Six-year presidential term, Maduro is counted not from the date of early elections in April 2013 and from the date of the inauguration of his predecessor, Hugo Chavez (10 January 2013). Chavez died of cancer two months after the next inauguration.

Now the prospect of a referendum on the resignation, taking into account the resistance of the Supreme court, rather vague, says a leading researcher of the Institute of Latin American Academy of Sciences Emil Dabagyan. However, according to experts, the appointment of Maduro 4 Jan new Vice-President says that the President wants to insure even in case of their removal from power by legitimate means, through a referendum.

Vice President of Venezuela on 4 January is Tarek El Assami — young politician of Lebanese descent, former interior Minister in the Cabinet of Chavez. In 2014 and 2015 El Assami was a hero of the investigations, The Wall Street Journal, according to which he has close ties with the Islamic fundamentalists (Hezbollah and Hamas), the governments of Iran and Cuba and drug dealers. The Spanish El Pais notes negative image of El-Assami among the opposition. The prospect of his coming to power can keep them from further steps against Maduro, emphasizes the publication.

The origins of El-Assami and its international relations are unlikely to play a leading role in policy El-Assami, if he govern the country, says Dabagyan. A staunch follower and disciple of Chavez, the new Vice President will definitely follow the perennial course of Chavez — Maduro, “which has already exhausted itself, clearly illustrated by the severe crisis and shortage of funds,” said RBC expert.

“No extra actions”

According to Russian customs statistics, Russian exports to Venezuela weapons and ammunition, electric generating sets, motor vehicles of special purpose, complex mineral fertilizers and oil products. Main imports — ethylene glycol, rum, and cocoa beans and seeds. Countries are implementing several joint projects in the field of construction, banking, production and engineering.

According to the Federal customs service (FCS) of Russia, the Russian-Venezuelan trade in dollar terms plummeted the last few years. If in 2013 the trade turnover reached $2.45 billion in 2014 to $1.22 bln, and in 2015 — only $385 million Trend continued last year: January—March 2016, the turnover amounted to $98,2 million (versus $121.4 mln in the same period of 2015). The growth of Russian exports in 2015 to the previous year occurred only at grenades and cameras, trade of all other commodity groups (from fertilizers and petrochemicals to small arms and motors) has declined.

Russian KAMAZ in 2012 became the supplier of chassis for bus factories Caroserias. To comment on the influence of the political situation in Venezuela on the project, the company refused. VTB and Gazprombank are also waived in 2011, together with the Venezuelan Fonden was founded by JSC “Evrofinance Mosnarbank” for the financing of joint projects. Assets of the Bank amounts to 53 billion rubles., capital — 12 billion rubles.

“Inter RAO UES” together with PdVSA (the state oil company of Venezuela) plans to build a plant running on petroleum coke, natural gas, coal and using the “hydro potential”. This allows you to replace existing diesel power plant and to direct the released volumes of oil products on the market. “Inter RAO” I doubt that the political environment can have a negative impact on the Venezuelan projects. “We have a valid contract with subsidiaries of PdVSA, which continues to be performed. The political situation in Venezuela recently crowded, but it is more important to us economic stability, which in the case of Venezuela depends largely on oil prices. Therefore, we do not think it will have any significant, strong effect,” said a company spokesman Vyacheslav Leonov.

“Gazprom Neft” is developing oil block “Junin-6” together with Rosneft and PdVSA. To comment on the situation at the time of this writing, the company was unable.

Rosneft, jointly with PdVSA in developing the Junin-6 field, Carabobo-2 North and Carabobo-4 West to the Orinoco river basin. “Rosneft” conducts long-term work in Venezuela and considers this country as a strategic activity and an outstanding resource base for oil production, said RBC press-Secretary of “Rosneft” Mikhail Leontyev. He said that the agreement to work in this country is based on international law. “The company operates in Venezuela in normal mode and not taking any urgent action in connection with recent political developments in the country”, — said Leontiev.

Problems for investment

Despite the optimistic views of the companies cooperating with Venezuela, some experts describe the situation more discreetly. “Whether our companies to operate there, the question, of course, very controversial. Even if you can, it will create a lot of problems in terms of investment process,” said the portfolio Manager of the GL Asset Management Sergey Vakhrameev.

In his opinion, the potential to destabilize the Venezuelan government, could adversely affect the payback period of projects. “Various factors, including the negative, the investors are already laid, for example, shares of “Rosneft”. Many investors and analysts have been skeptical about. That this investment is inefficient, the market has already guessed, now it’s just another confirmation,” added Vakhrameev.

In turn, Dabaghyan sure that the diplomatic and business interests in Russia, the situation has not changed. On the one hand, a change of foreign policy of Caracas have not been forthcoming. On the other — Moscow is important to maintain in the face of Venezuela’s key partner in the Western hemisphere: these interests intersect poorly with the social instability in the country. “Finally, even if hypothetically the opposition comes to power, it is unlikely to tear down the current international context. She has other priorities — the solution to domestic economic problems”, — stressed Dabagyan.