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Venezuela arrests brownie and croissant bakers in ‘bread war’

A saleswoman sells bread at a bakery in Caracas, Venezuela March 17, 2017. REUTERS/Marco Bello

CARACAS (Reuters) – Venezuela this week arrested four bakers making illegal brownies and other pastries as President Nicolas Maduro’s socialist government threatens to take over bakeries in Caracas as part of a new “bread war”.

Maduro has sent inspectors and soldiers into more than 700 bakeries around the capital this week to enforce a rule that 90 percent of wheat must be destined to loaves rather than more expensive pastries and cakes.

It was the latest move by the government to combat shortages and long lines for basic products that have characterized Venezuela’s economic crisis over the last three years.

The ruling Socialist Party says pro-opposition businessmen are sabotaging the OPEC nation’s economy by hoarding products and hiking prices. Critics say the government is to blame for persisting with failed polices of price and currency controls.

Breadmakers blame the government for a national shortage of wheat, saying 80 percent of establishments have none left in stock.

During this week’s inspections, two men were arrested as their bakery was using too much wheat in sweet bread, ham-filled croissants and other products, the state Superintendency of Fair Prices said in a statement sent to media on Thursday.

Another two were detained for making brownies with out-of-date wheat, the statement added, saying at least one bakery had been temporarily taken over by authorities for 90 days.

“Those behind the ‘bread war’ are going to pay, and don’t let them say later it is political persecution,” Maduro had warned at the start of the week.

The group representing bakers, Fevipan, has asked for a meeting with Maduro, saying most establishments cannot anyway make ends meet without selling higher-priced products.

(Writing by Andrew Cawthorne; Editing by Randy Fabi)

Venezuela Congress begins measuring inflation amid cenbank silence

People queue to deposit their 100 bolivar notes, near Venezuela's Central Bank in Caracas, Venezuela December 16, 2016. REUTERS/Marco Bello

By Corina Pons and Brian Ellsworth

CARACAS (Reuters) – Venezuela’s opposition-led congress has started publishing the country’s inflation rate based on its own data collection, as the government of President Nicolas Maduro remains silent about the crisis-stricken nation’s soaring consumer prices.

The legislature has enlisted economics students to collect price data in five cities and asked former central bank employees to process it using the central bank’s methodology, said legislator Jose Guerra, an economist and former researcher at the bank.

Their measurements show prices rose 741 percent in the 12 months to February, 20.1 percent last month alone and 42.5 percent in the first two months of 2017.

Venezuela’s most recent official inflation figures, released last year, showed prices rising 180.9 percent in 2015.

“We’re not trying to substitute the central bank. We are filling the vacuum left by the central bank as a result of it not publishing the figures,” Guerra said in an interview.

The central bank did not immediately respond to an email seeking comment.

Venezuela’s economy has been in free fall since the 2014 collapse of oil prices, which left the socialist economic system unable to maintain an elaborate system of subsidies and price controls that functioned during the oil boom years.

Maduro says his government is the victim of an “economic war” led by political adversaries with the help of Washington.

The government has kept quiet about fundamental economic indicators including economic growth and balance of payments amid an increasingly dire panorama of swelling supermarket lines and worsening shortages.

The absence of inflation figures has everyone from workers to business owners unable to make basic economic calculations.

“Workers don’t know what their salary is, companies don’t know what their costs are,” Guerra said. “There’s no way to calculate the real interest rate. There’s no way to calculate the real exchange rate.”

He said the project already has drawn the interest of Wall Street banks, which are closely monitoring the country’s economy on concerns it could default on its high-yielding dollar bonds.

Measuring inflation is unusually complicated in Venezuela, because consumer products as well as hard currency fetch vastly different prices depending on whether or not they are distributed to the socialist economy’s subsidy system.

Consumers can sometimes obtain basic goods at low-cost prices by waiting for hours in supermarket lines but increasingly have to buy such goods from smugglers on informal markets for more than 10 times the officially mandated prices.

(Writing by Brian Ellsworth; Editing by Alexandra Ulmer and Bill Trott)

Carnival party over, Brazil returns to reality of political crisis

A reveller from Mangueira samba school performs during the second night of the carnival parade at the Sambadrome in Rio de Janeiro, Brazil February 28, 2017. REUTERS/Pilar Olivares

By Anthony Boadle and Lisandra Paraguassu

BRASILIA (Reuters) – Carnival revelers were still dancing in the streets of Brazilian cities on Wednesday but for President Michel Temer’s government it was back to the reality of mounting corruption allegations that threaten its survival.

“Out with Temer” was a frequent chant against the unpopular president during the annual celebrations across a country hit by record unemployment and fed up with its political leaders.

On Wednesday afternoon the jailed former CEO of Brazil’s biggest engineering group, Marcelo Odebrecht, was questioned by a judge investigating donations made to Temer’s 2014 campaign, when he was the running mate for leftist leader Dilma Rousseff, who was impeached last year.

A source with access to Odebrecht’s deposition said he confirmed an illegal payment to Rousseff’s campaign manager Joao Santana, but added that he could not say if the then-president or her running mate knew about it.

Odebrecht said former finance minister Guido Mantega negotiated under-the-table donations for the 2014 campaign that totaled 300 million reais, but he denied they were bribes to obtain government contracts, the source said.

Odebrecht, who is seeking leniency to lower a 19-year sentence for corruption and money-laundering, said Temer did not directly request a donation at a dinner in 2014, though the matter was discussed in a general way.

The massive investigation into bribery and political kickbacks, dubbed Operation Car Wash, threatens to bring down members of Temer’s inner circle and has generated political uncertainty that is undermining business confidence and prolonging Brazil’s two-year recession.

Electoral court judge Herman Benjamin is seeking to determine if a 10 million reais ($3.2 million) contribution allegedly sought by Temer was paid from graft money, as claimed by another Odebrecht executive in plea bargain testimony.

Temer has said the donation was legal and duly registered, but Benjamin could recommend annulling the Rousseff-Temer ticket, which would lead to the president’s removal and election of a new leader by Congress if it is upheld by the full court.

The graft scandal endangers Temer’s efforts to push unpopular austerity reforms through Congress aimed at curbing a growing budget deficit that cost Brazil its investment grade credit rating in 2015.

“The President’s biggest challenge now is to prevent the Car Wash investigation paralyzing his reform agenda in Congress,” a Temer aide told Reuters, requesting anonymity because he was not authorized to speak about the government’s worries.

The crisis will deepen in the next few weeks when Brazil’s top prosecutor Rodrigo Janot will ask the Supreme Court to make public plea bargain statements of 77 Odebrecht executives who are expected to name up to one-third of Brazil’s federal lawmakers for taking kickbacks.

Among the politicians at risk is Temer’s chief of staff, Eliseu Padilha, who is on medical leave after prostate surgery but will have to face questions about a package of 1 million reais he allegedly requested as part an undeclared contribution from Odebrecht.

A lawyer and longtime friend of Temer’s, José Yunes, has approached prosecutors to confirm the package was handed over at his office for Padilha but that he had no idea that it contained cash, leaving the chief of staff in a difficult position.

(Reporting by Anthony Boadle; Editing by Andrew Hay)

Brazil’s worst-ever recession likely extended into fourth quarter

Shoppers walk in a mall in Refice, northeast Brazil, May 5, 2010. REUTERS/Bruno Domingos

BRASILIA (Reuters) – Brazil’s economy probably contracted for an eighth straight quarter at the end of 2016, offering further proof that Latin America’s largest economy has been in its worst recession ever, a Reuters poll showed on Friday.

Gross domestic product probably shrank 0.4 percent in the fourth quarter from the third after seasonal adjustments, according to the median forecast of 16 economists. Brazil’s GDP contracted 0.8 percent in the third quarter.

Brazil’s economy is expected to have contracted 3.5 percent in 2016, after a decline of 3.8 percent in 2015. Brazil has never experienced such a long and deep period of recession, at least since records began more than a century ago.

The recession has left nearly 13 million people unemployed and caused a record number of bankruptcy filings. It also contributed to the ousting of former President Dilma Rousseff last year and to the low approval ratings of her successor, President Michel Temer.

The fourth-quarter GDP numbers will be released on March 7.

Leading indicators have suggested the economy is finally emerging out of recession in the first quarter of 2017, Finance Minister Henrique Meirelles told Reuters earlier this week. The central bank has been cutting interest rates at a rapid pace as inflation falls, which is expected to help boost growth.

The recovery, however, is expected to be very slow. The median expectation of economists in a weekly central bank survey projected a GDP expansion of 0.5 percent in 2017.

Although this recession has been the deepest in Brazil’s history, it has not been as dramatic as other crises in the country’s turbulent economic past. Previous downturns were often marked by debt crises, capital flights, hyperinflation and mass migration, none of which happened during the current recession.

Brazil’s economy probably shrank 2.2 percent in the fourth quarter from a year before, according to the poll.

(Reporting by Silvio Cascione; Editing by Matthew Lewis)

Brazil set to keep aggressive pace of rate cuts to salvage economy

A view of Brazil's Central Bank in Brasilia, Brazil, September 15, 2016. Picture taken September 15, 2016. REUTERS/Adriano Machado

By Alonso Soto

BRASILIA (Reuters) – Brazil’s central bank will likely maintain its aggressive pace of interest rate cuts on Wednesday despite some calls to further step up monetary easing to rescue an economy mired in recession.

The bank’s 9-member monetary policy committee, known as Copom, will likely cut its benchmark Selic rate <BRCBMP=ECI> by 75 basis points to 12.25 percent, according to all but one of the 54 economist surveyed by Reuters last week.

Unions and business groups have demanded a cut of 100 basis points to reduce some of the world’s highest borrowing costs, which they say could undermine a still feeble recovery.

A rapid drop in inflation, which could end the year below the 4.5 percent official target, has strengthened the case for a bolder rate cut after the bank surprised markets by cutting more than expected at its last meeting.

The recent appreciation of the real currency <BRBY> has analysts betting on more aggressive rate cuts ahead.

“We think there is a growing case for a bolder cut of 100 basis points– if not now, then at the next policy meeting,” economists with BNP Paribas wrote in a note to clients.

Central bank chief Ilan Goldfajn has signaled policymakers would maintain the current pace of rate cuts, but that future monetary easing would hinge on the approval of austerity reforms to ease inflationary pressures.

Brazil’s recession, the worst in its history, has left millions unemployed and bankrupted hundreds of companies, raising pressure on Goldfajn to lower rates.

Facing a grueling fiscal crisis President Michel Temer is relying on falling interest rates to exit a recession that threatens to stretch into a third year.

However, the sharp drop in inflation has sparked a debate inside his administration over whether the government’s 2019 inflation target, decided in June, should be set at a lower level. That could slow the pace of monetary easing.

Brazil introduced an inflation rate target in 1999. The current 4.5 percent goal was first adopted for 2005, originally with a tolerance margin of plus or minus 2.5 percentage points. In 2015, the government narrowed the range to plus or minus 1.5 percentage points.

(Reporting by Alonso Soto; Editing by Andrew Hay)

Yemen war erases decade of health gains, many children starving: UNICEF

By Stephanie Nebehay

GENEVA (Reuters) – Yemen has lost a decade’s worth of gains in public health as a result of war and economic crisis, with increasing numbers of children succumbing to malnutrition, the United Nations’ Children’s Fund (UNICEF) said on Tuesday.

An estimated 3.3 million people, including 2.2 million children, across the Arab peninsula’s poorest country are suffering from acute malnutrition, and 460,000 under the age of five have severe acute malnutrition, the agency said.

The most severe form leaves young children vulnerable to life-threatening diarrhoeal diseases and respiratory infections.

“What worries us is the severe acute malnutrition because it is killing children,” Meritxell Relano, UNICEF representative in Yemen, told Reuters in Geneva.

“Because of the crumbling health system, the conflict and economic crisis, we have gone back to 10 years ago. A decade has been lost in health gains,” she said, with 63 out of every 1,000 live births now dying before their fifth birthday, against 53 children in 2014.

Children and pregnant and lactating women are most heavily affected by the malnutrition crisis in the northern province of Saada, in the coastal area of Hodeida and in Taiz in the south, she said.

UNICEF mobile teams aim to screen more children and reach 323,000 severely malnourished children this year, up from 237,000 last year, Relano said, adding that partner agencies would target the rest.

The Yemeni conflict, which pits a Saudi-led Arab coalition against the Iran-allied Houthi movement, has left more than half of the country’s 28 million people “food insecure”, with seven million of them enduring hunger, the United Nations has said.

Jamie McGoldrick, the top U.N. aid official in the country, told Reuters on Friday that Yemen has roughly three months’ supply of wheat left to draw from, leaving the country exposed to serious disruption as a central bank crisis cuts food imports and starvation deepens.

Relano said UNICEF had made progress in delivering supplies of energy-rich foods for severely malnourished children.

“We managed to bring supplies into the country. We have 50 percent in the country secured for this year,” she said.

UNICEF is seeking $236.5 million for Yemen this year, as part of its overall appeal of $3.3 billion to help women and children in 48 countries.

(Reporting by Stephanie Nebehay; Editing by Gareth Jones)

Venezuela opposition slams ‘desperate’ Maduro state of emergency

By Alexandra Ulmer and Corina Pons

CARACAS (Reuters) – Venezuela’s opposition on Saturday slammed a state of emergency decreed by President Nicolas Maduro and vowed to press home efforts to remove the leftist leader this year amid a grim economic crisis.

Maduro on Friday night declared a 60-day state of emergency due to what he called plots from Venezuela and the United States to subvert him. He did not provide specifics.

The measure shows Maduro is panicking as a push for a recall referendum against him gains traction with tired, frustrated Venezuelans, opposition leaders said during a protest in Caracas.

“We’re talking about a desperate president who is putting himself on the margin of legality and constitutionality,” said Democratic Unity coalition leader Jesus Torrealba, adding Maduro was losing support within his own bloc.

“If this state of emergency is issued without consulting the National Assembly, we would technically be talking about a self-coup,” he told hundreds of supporters who waved Venezuelan flags and chanted “he’s going to fall.”

The opposition won control of the National Assembly in a December election, propelled by voter anger over product shortages, raging inflation that has annihilated salaries, and rampant violent crime, but the legislature has been routinely undercut by the Supreme Court.

“A TIME BOMB”

Protests are on the rise and a key poll shows nearly 70 percent of Venezuelans now say Maduro must go this year.

Maduro has vowed to see his term through, however, blasting opposition politicians as coup-mongering elitists seeking to emulate the impeachment of fellow leftist Dilma Rousseff in Brazil.

Saying trouble-makers were fomenting violence to justify a foreign invasion, Maduro on Saturday ordered military exercises for next weekend.

“We’re going to tell imperialism and the international right that the people are present, with their farm instruments in one hand and a gun in the other… to defend this sacred land,” he boomed at a rally.

He added the government would take over idled factories, without providing details.

Critics of Maduro, a former union leader and bus driver, say he should instead focus on people’s urgent needs.

“There will be a social explosion if Maduro doesn’t let the recall referendum happen,” said protester Marisol Dos Santos, 34, an office worker at a supermarket where she says some 800 people queue up daily.

But the opposition fear authorities are trying to delay a referendum until 2017, when the presidency would fall to the vice president, a post currently held by Socialist Party loyalist Aristobulo Isturiz.

“If you block this democratic path we don’t know what might happen in this country,” two-time presidential candidate Henrique Capriles said at the demonstration.

“Venezuela is a time bomb that can explode at any given moment.”

(Writing by Alexandra Ulmer; Editing by Alistair Bell)

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