Danes make welfare a hot election issue as cracks show in Nordic model

92-year old Aase Blytsoe, who has dementia, sits in her apartment in Aarup, Denmark, May 28, 2019. REUTERS/Fabian Bimmer

By Jacob Gronholt-Pedersen

COPENHAGEN (Reuters) – The Nordic welfare model, long the envy of many across the world seeking an egalitarian utopia, is creaking.

Aging populations have led to politicians across the region chipping away at the generous cradle-to-grave welfare state for years. In Denmark, next week’s election could prove a turning point as frustrated voters say: No more.

Danes, like citizens of other Nordic nations, have largely been happy to shell out some of the highest taxes in the world, seeing them as a price worth paying for universal healthcare, education and elderly services.

However, spending cuts by successive governments to reduce the public deficit have led to more people paying out of their own pockets for what used to be free.

“We pay very high taxes in Denmark, and that’s alright. But in return, I think we can demand a certain service,” said pensioner Sonja Blytsoe.

Her 92-year old mother, who has dementia, was told by her local council in the central Danish town of Assens that the cleaning of her small apartment at a nursing home would be almost halved to 10 times a year.

Her mother, who lives off her state pension of 9,000 Danish crowns ($1,350) per month, could not afford to pay the roughly 1,000 crowns a month for a private cleaning firm, Blytsoe said.

In an illustration of the simmering public anger at such cuts, the council’s move sparked an outcry on social media that prompted the prime minister to comment on the case in parliament and the decision to be reversed.

The erosion of the welfare state has now become a defining issue in the June 5 general election in a country where people hand over an average 36% of their personal income to the state each month.

Opinion polls indicate Prime Minister Lars Lokke Rasmussen of the Liberal Party will lose power to Mette Frederiksen of the center-left Social Democratic Party.

Frederiksen’s Social Democrats have won popular support by pledging to increase public spending, making businesses and the wealthy pay more toward welfare services through higher taxes, and to partially roll back some recent pension reforms by allowing people who have worked 40 years to retire earlier.

However Rasmussen has accused his rival of being in “the business of selling dreams”.

“Either you’ll leave voters massively disappointed, or leave an enormous hole in the treasury,” he told Frederiksen about her pension plans during a TV debate earlier this year.

DANES GO PRIVATE

The Nordic model has been held up as the gold standard for welfare by many left-leaning politicians and activists globally.

It featured in the last U.S. presidential election campaign, for example, when Democratic candidate Bernie Sanders pointed to Denmark as a model for his vision of an ideal American future.

However the tough choices confronting Denmark are reflected across Nordic nations faced with a generation of baby-boomers creeping into retirement. Voters feeling a rising sense of insecurity are increasingly pressuring politicians to safeguard their cherished welfare model.

In Finland, the Social Democrats came out on top in an April election, for the first time in 20 years, after campaigning on tax hikes to meet the rising costs of welfare.

In Sweden, one of Europe’s richest countries, support for the nationalist Sweden Democrats surged in last year’s election on the back of fears over immigration and welfare.

Nordic countries still top other high-spending OECD countries like the United States, Germany and Japan for public spending per capita on social benefits targeted at the poor, the elder, disabled, sick or unemployed.

Denmark itself spends a higher proportion of its wealth on public welfare than most European countries, at 28% of GDP, behind only France, Belgium and Finland.

But many Danes are distressed at the way things are going following two decades of economic reforms.

Cuts to healthcare services, which include everything from free doctor appointments to cancer treatment, have led to the closure of a quarter of state hospitals in the past decade alone.

A recent survey showed that more than half of Danes don’t trust the public health service to offer the right treatment. As a consequence the proportion of the 5.7 million Danish population taking out private health insurance has jumped to 33% from 4% in 2003, according to trade organization Insurance & Pension Denmark.

Other cuts over the past 10 years have led to the closure of a fifth of state schools, while spending per person above 65 years on services such as care homes, cleaning and rehabilitation after illness has dropped by a quarter.

Since the early 2000s, governments have also pushed through unpopular measures to encourage people to work longer.

They include gradually increasing the retirement age to 73 – the highest in the world – in decades to come from 65 currently, phasing out early retirement benefits and cutting unemployment benefits to two years from four.

Click here for interactive graphics illustrating the pressures on the welfare model: https://tmsnrt.rs/2LYT6ME

SPENDING CONTEST

While the policies have generated economic growth averaging 1.6% since 2010 – above the EU average – and sound public finances, the election could mark a change of direction.

Frederiksen says she will increase public spending by 0.8% per year over the next five years – the equivalent of 37 billion Danish crowns in 2025 – to buttress welfare.

“The reason you can’t agree to spend the money needed to keep the current (welfare) level is that you want to set aside money for tax cuts,” she told Rasmussen during the TV debate.

Frederiksen is however bound by a 2012 law not to allow a public deficit of more than 0.5% of GDP, much stricter than EU rules setting the ceiling at 3%.

Her message about increased spending is nonetheless going down well with the public, along with a tougher stance on immigration which has also helped her win voters from the anti-immigration Danish People’s Party.

Rasmussen has argued that an acceptable level of welfare can be achieved in part by technological advances and letting more private players into areas like health and elderly care.

But this month, in a change of tack to address voters’ concerns, he announced a new plan to raise public spending by 0.65% a year – almost the same rate as the Social Democrats.

‘NOT ENOUGH PEOPLE’

With government debt at 49% of GDP, way below the OECD average of 111%, and a budget close to being balanced, there is room to raise welfare spending, according to economists.

However Jan Stoerup Nielsen at Nordea said certain election promises, such as those by both candidates to come up with 1,000-2,000 new nurses, were unrealistic at a time of record high employment of 2.77 million, or 97% of those able to work.

“The problem is that there’s not enough people,” he added. “There is not much politicians can do at the moment. You can say you want a thousand new nurses in the hospitals, but they are nowhere to be found,” he added.

He warned more public spending risked overheating the economy and hurting growth down the line if more people shifted from the private to public sector.

Pensioner Blytsoe said that when her mother’s services were curbed, she did her best to tidy up the apartment when she visited, but refused to do the regular cleaning previously offered by the state.

“If I did that, the municipality would’ve achieved their goal to cut costs and make us fill the gap.”

(Reporting by Jacob Gronholt-Pedersen; Editing by Pravin Char)

Venezuelan migrants pose humanitarian problem in Brazil

Venezuelan migrants pose humanitarian problem in Brazil

By Anthony Boadle

BOA VISTA, Brazil (Reuters) – Last August, Victor Rivera, a 36-year-old unemployed baker, left his hometown in northern Venezuela and made the two-day journey by road to the remote Amazonian city of Boa Vista, Brazil.

Although work is scarce in the city of 300,000 people, slim prospects in Boa Vista appeal more to Rivera than life back home, where his six children often go hungry and the shelves of grocery stores and hospitals are increasingly bare.

“I see no future in Venezuela,” said Rivera, who seeks odd jobs at traffic lights in the small state capital just over 200 km (124 miles) from Brazil’s border with the Andean country.

Countries across Latin America and beyond have received a growing number of Venezuelans fleeing economic hardship, crime and what critics call an increasingly authoritarian government.

The once-prosperous country, home to the world’s largest proven oil reserves, is struggling with a profound recession, widespread unemployment, chronic shortages and inflation that the opposition-led Congress said could soon top 2,000 percent.

At least 125 people died this year amid clashes among government opponents, supporters and police.

As conditions there worsen, nearby cities like Boa Vista are struggling with one of the biggest migrations in recent Latin American history. With limited infrastructure, social services and jobs to offer migrants, Brazilian authorities fear a full-fledged humanitarian crisis.

In Roraima, the rural state of which Boa Vista is the capital, the governor last week decreed a “social emergency,” putting local services on alert for mounting health and security demands.

“Shelters are already crowded to their limit,” said George Okoth-Obbo, operations chief for the United Nations High Commission on Refugees, after a visit there. “It is a very tough situation.”

He noted the crush of migrants also hitting Trinidad and Tobago, the Caribbean country to Venezuela’s north, and Colombia, the Andean neighbor to the west, where hundreds of thousands have fled.

Not even Venezuela’s government knows for certain how many of its 30 million people have fled in recent years. Some sociologists have estimated the number to be as high as 2 million, although President Nicolas Maduro’s leftist government disputes that figure.

BRAZIL “NOT READY”

Unlike earlier migration, when many Venezuelan professionals left for markets where their services found strong demand, many of those leaving now have few skills or resources. By migrating, then, they export some of the social ills that Venezuela has struggled to cope with.

“They’re leaving because of economic, health and public safety problems, but putting a lot of pressure on countries that have their own difficulties,” said Mauricio Santoro, a political scientist at Rio de Janeiro State University.

International authorities are likening Venezuela’s exodus to other mass departures in Latin America’s past, like that of refugees who fled Haiti after a 2010 earthquake or, worse, the 1980 flight of 125,000 Cubans by boat for the United States.

In Brazil, Okoth-Obbo said, as many as 40,000 Venezuelans have arrived. Just over half of them have applied for asylum, a bureaucratic process that can take two years.

The request grants them the right to stay in Brazil while their application is reviewed. It also gives them access to health, education and other social services.

Some migrants in Boa Vista are finding ways to get by, finding cheap accommodation or lodging in the few shelters, like a local gym, that authorities have provided. Others wander homeless, some turning to crime, like prostitution, adding law enforcement woes to the social challenges.

“We have a very serious problem that will only get worse.” said Boa Vista Mayor Teresa Surita, adding that the city’s once quiet streets are increasingly filled with poor Venezuelans.

Most migrants in Boa Vista arrive by land, traveling the southward route that is the only road crossing along more than 2,100 kms of border with Brazil.

Arriving by public transport in the Venezuelan border town of Santa Elena, they enter Brazil on foot and then take buses or hitch rides further south to Boa Vista.

Staffed only during the day, the border post in essence is open, allowing as many as 400 migrants to enter daily, according to authorities. For a state with the lowest population and smallest economy of any in Brazil, that is no small influx.

“Brazil’s government is not ready for what is coming,” said Jesús López de Bobadilla, a Catholic priest who runs a refugee center on the border. He serves breakfast of fruit, coffee and bread to hundreds of Venezuelans.

Despite a long history of immigration, Latin America’s biggest country has struggled this decade to accommodate asylum seekers from countries including Haiti and Syria. Although Brazil has granted asylum for more than 2,700 Syrians, the refugees have received scant government support even in Sao Paulo, Brazil’s richest state.

A senior official in Brazil’s foreign ministry, who asked to remain anonymous, said the country will not close its borders. Okoth-Obbo said his U.N. agency and Brazil’s government are discussing ways to move refugees to larger cities.

“NOW I CAN SLEEP”

Boa Vista schools have admitted about 1,000 Venezuelan children. The local hospital has no beds because of increased demand for care, including many Venezuelan pregnancies.

In July, a 10-year-old Venezuelan boy died of diphtheria, a disease absent from Roraima for years. Giuliana Castro, the state secretary for public security, said treating ill migrants is difficult because they lack stability, like a fixed address.

“There is a risk of humanitarian crisis here,” she said.

Most migrants in Boa Vista said they do not intend to return to Venezuela unless conditions there improve.

Carolina Coronada, who worked as an accountant in the northern Venezuelan city of Maracay, arrived in Brazil a year ago with her 7-year-old daughter. She has applied for residency and works at a fast-food restaurant.

While she earns less than before, and said she makes lower wages than Brazilians at the restaurant, she is happier.

“There was no milk or vaccines,” she said. “Now I can sleep at night, not worried about getting mugged.”

Others are faring worse, struggling to find work as Brazil recovers from a two-year recession, its worst in over a century.

One recent evening, dozens of young Venezuelan women walked the streets of Caimbé, a neighborhood on Boa Vista’s west side.

Camila, a 23-year-old transsexual, left Venezuela nine months ago. She said she turns tricks for about $100 a night – enough to send food, medicine and even car parts to her family.

“Things are so bad in Venezuela I could barely feed myself,” said Camila, who declined to give her last name.

Rivera, the unemployed baker, one afternoon sheltered from the equatorial sun under a mango tree. He has applied for asylum and said he is willing to miss his family as long as he can wire his earnings from gardening, painting and bricklaying home.

“It’s not enough to live on, but the little money I can send home feeds my family,” he said.

(Reporting by Anthony Boadle. Additional reporting by Alexandra Ulmer in Caracas. Editing by Paulo Prada.)

With opposition split, Venezuela mayoral vote will strengthen Maduro

With opposition split, Venezuela mayoral vote will strengthen Maduro

By Andrew Cawthorne and Leon Wietfeld

CARACAS (Reuters) – Venezuelans vote on Sunday in nationwide mayoral polls boycotted by major opposition parties and likely to help leftist President Nicolas Maduro consolidate power ahead of a probable 2018 re-election bid.

After withstanding massive street protests, international sanctions and dissent within his ruling Socialist Party, the 55-year-old president saw his candidates win a surprise majority in October gubernatorial elections.

Now, with 335 mayorships up for grabs, the socialists seem certain to repeat the feat, helped by opposition abstentionism, which would delight Maduro after the international opprobrium he has faced all year.

The crumbling opposition coalition’s main parties – Justice First, Popular Will and Democratic Action – have opted out of Sunday’s vote, alleging the election system is biased and designed purely to keep a “dictatorship” in power.

“It is crazy not to participate,” said political analyst Dimitris Pantoulas. “The government most likely will have one of the best results in its history … Maduro will be very strong after this election. He has the political momentum.”

The socialists already hold more than 70 percent of Venezuela’s mayorships, and are forecast to increase that share, extending their grip at a grassroots level just as Maduro mulls standing for a second six-year term in the OPEC nation.

Despite presiding over one of the worst economic meltdowns to hit any country in modern history, and with ratings barely half when he was elected, Maduro is enjoying a political upturn after the October gubernatorial vote.

He is the favorite to be the government’s candidate at the 2018 presidential election and could win if the opposition does not re-unite and re-enthuse supporters.

“DON’T THROW IN THE TOWEL”

Despite the boycott by major parties, moderate opposition supporters were still planning to vote on Sunday, arguing that it was the only way to stop the socialists amassing power.

Some of the smaller parties are fielding candidates, fuelling acrimony and in-fighting within the coalition.

“There’s huge frustration at everything that has happened this year … but we cannot throw in the towel,” said one of those candidates, Yon Goicoechea of Progressive Advance party.

Just out of jail for allegedly plotting against Maduro, Goicoechea was running for El Hatillo mayorship outside Caracas. “I can’t say when we will achieve democracy – maybe months, maybe years – but we have to fight with our only weapon: votes.”

The election was taking place at the end of a fourth year of crushing economic recession that has brought hunger, hardship and shortages to Venezuelans. Yet with the opposition in such disarray, Maduro and his allies are buoyant.

“We are going to have a great victory!” said Erika Farias running for a Caracas district mayorship. “We are fulfilling the legacy of our ‘commander’ Hugo Chavez.”

With many Venezuelans angry at both the government and opposition, some independents have registered for Sunday’s mayorship races, though there is still no sign of a third-way presidential candidate.

“The country is demanding an alternative. Mine is a protest campaign,” said Nicmer Evans, running against Farias in the capital’s Libertador district for his recently-founded party, New Vision For My Country.

As well as the mayoral elections, voters in oil-rich western Zulia state were choosing a new governor.

The opposition took that state in the October gubernatorial race but the election was annulled after winning candidate Juan Pablo Guanipa refused to swear loyalty to a pro-Maduro legislative superbody.

Results were expected to start coming in on Sunday evening.

(Additional reporting by Johnny Carvajal and Efrain Otero; Editing by Daniel Flynn and Andrew Hay)

Venezuela’s chronic shortages give rise to ‘medical flea markets’

Venezuela's chronic shortages give rise to 'medical flea markets'

By Anggy Polanco and Isaac Urrutia

SAN CRISTOBAL/MARACAIBO, Venezuela (Reuters) – Venezuela’s critical medicine shortage has spurred “medical flea markets,” where peddlers offer everything from antibiotics to contraceptives laid out among the traditional fruits and vegetables.

The crisis-wrought Latin American nation is heaving under worsening scarcity of drugs, as well as basic foods, due to tanking national production and strict currency controls that crimp imports.

The local pharmaceutical association estimates at any given time, there is a shortage of around 85 percent of drugs.

Sick Venezuelans often scour pharmacies and send pleas on social media to find treatment. Increasingly, however, they are turning to a flourishing black market offering medicines surreptitiously bought from Venezuelan hospitals or smuggled in from neighboring Colombia.

“Here I can find the vitamins I need for my memory,” said 56-year-old Marisol Salas, who suffered a stroke, as she bought the pills at a small stand at the main bus terminal in the Andean city of San Cristobal.

Around her, Venezuelans asked sellers for medicine to control blood pressure as well as birth control pills.

“People are looking for anticonvulsants a lot recently,” said Antuam Lopez, 30, who sells medicine alongside vegetables, and said hospital employees usually provide him with the drugs.

Leftist President Nicolas Maduro says resellers are in league with a U.S.-led conspiracy to sabotage socialism and are to blame for medicine shortages.

RISKS

In the middle of a market in the humid and sweltering city of Maracaibo, dozens of boxes full of medicines including antibiotics and pain killers are stacked on top of each other. The packaging is visibly deteriorated: The cases are discolored and some are even dirty.

Doctors warn these drugs — usually smuggled in from Colombia, a few hours’ drive from Maracaibo — pose risks.

“We’ve found that a lot of them have not been maintained at proper temperatures,” warned oncologist Jose Oberto, who leads the Zulia state’s doctors association.

Still, some Venezuelans feel they have no choice but to rely on contraband medicine.

“I had to buy medicine from Colombia, and it worried me because the label said ‘hospital use,'” said retiree Esledy Paez, 62.

But they are often prohibitively expensive for Venezuelans, many of whom earn just a handful of dollars a month at the black market rate due to soaring inflation.

Norkis Pabon struggled to find antibiotics for her hospitalized husband to prevent his foot injury from worsening due to diabetes.

“But the treatment costs 900,000 bolivars ($9.43; twice the minimum wage) and I do not know what to do,” said Pabon, who is unemployed.

(Writing by Corina Pons and Alexandra Ulmer; Editing by Sandra Maler)

Checks for free: a Mexican plan to combat poverty

Checks for free: a Mexican plan to combat poverty

By Anthony Esposito

MEXICO CITY (Reuters) – An opposition alliance in Mexico wants to launch a universal basic wage to combat the poverty that blights the lives of almost half the population, touting an experimental reform discussed globally as a solution to job losses from automation.

The center-right National Action Party and center-left Party of the Democratic Revolution are running on a joint ticket with the leftist Citizens Movement (MC) for next July’s presidential election, and the income plan is a key part of their manifesto.

Officials inside the alliance say details of the plan are still being worked out, though its contours are emerging.

A basic income of 10,000 pesos ($537) per year for everyone, including children, could be provided by consolidating funds from federal, state and municipal welfare programs, Jorge Alvarez, an MC congressman working on the plan told Reuters in a recent interview.

“If you multiply that by four or five, which is the typical size of a Mexican family, you get an annual income of 40,000 to 50,000 pesos per family, Alvarez said, adding that providing the income to children could be conditional on school enrollment.

Home to the richest man in Latin America, Carlos Slim, Mexico is laden with oil and minerals, boasts a large manufacturing base and has the world’s 15th biggest economy. But poverty has remained stubbornly stuck above 40 percent of the population for decades.

Government social development agency Coneval defines poverty as a person living on no more than 2,925 pesos a month in cities and 1,892 pesos in rural areas. The agency also takes into account other factors like healthcare and education.

Getting to 40,000 or 50,000 pesos per family could be achieved “without increasing taxes,” Alvarez said.

Still, the Organization for Economic Cooperation and Development argues that providing an unconditional basic income to everyone of working age would do little to combat poverty if not funded by extra taxes.

The idea of universal basic income has gained currency due to the increasing robotization of the workforce. Finland is running a pilot project to test whether unconditional payments could serve as a plausible alternative welfare model.

Mexico has seen job growth in recent years thanks to a manufacturing boom, and could face a smaller workforce as robots take over more tasks.

Swiss voters rejected a basic income plan in a referendum last year, while the defeated Socialist candidate in France’s presidential election this year, Benoit Hamon, championed it, saying it would be funded by a tax on robots that replace human labor.

Mexican gross domestic product was worth $1.046 trillion in 2016, according to the World Bank, but some 53.4 million Mexicans, or 43.6 percent of the population, live below the poverty line, according to Coneval.

($1 = 18.6239 Mexican pesos)

(Editing by Dave Graham and Jonathan Oatis)

China confident Venezuela can handle debt issue

China confident Venezuela can handle debt issue

BEIJING (Reuters) – China’s Foreign Ministry reiterated on Thursday that it believes Venezuela has the ability to handle its debt issue, after the oil-rich country started making interest payments on bonds following a delay that had threatened to trigger a default.

Venezuela has borrowed billions of dollars from Russia and China, primarily through oil-for-loan deals that have crimped the country’s hard currency revenue by requiring oil shipments to be used to service those loans.

On Wednesday, Venezuela won easier debt terms from Russia, as well as a vote of confidence from China – two countries that could provide a lifeline as Caracas seeks to keep its deeply depressed economy solvent.

Asked whether China was concerned that the debt would not be repaid, Chinese Foreign Ministry spokesman Geng Shuang told a regular news briefing that China-Venezuela financial cooperation was proceeding as normal.

“We believe that Venezuela’s government and people have the ability to properly handle their debt issue,” Geng said.

Venezuelan bond prices have been on a roller-coaster over the past 10 days, as President Nicolas Maduro called investors to debt restructuring talks, while pledging to keep honoring the country’s obligations.

But S&P Global Ratings declared it in selective default on two of its sovereign bonds early this week after it failed to make the coupons within a 30-day grace period.

On Wednesday, the country’s Economy Ministry said it had started transferring $200 million in interest payments on those bonds, which mature in 2019 and 2024.

(Reporting by Ben Blanchard, Writing by Michael Martina; Editing by Richard Borsuk)

Venezuela offers chocolates but little else to creditors

Venezuela offers chocolates but little else to creditors

By Deisy Buitrago and Brian Ellsworth

CARACAS (Reuters) – Venezuela’s socialist government gifted chocolates to creditors on Monday, but offered no firm proposals at a brief meeting in Caracas that left investors without a clear understanding of the government’s strategy to renegotiate $60 billion in debt.

President Nicolas Maduro confused investors this month with a vow to continue paying Venezuela’s crippling debt, while also seeking to restructure and refinance it.

Both restructuring and refinancing appear out of the question, however, due to U.S. sanctions against the crisis-stricken nation. A default would compound Venezuela’s dire economic crisis.

Monday’s short and confused meeting, attended by senior Venezuelan officials blacklisted by the United States, gave no clarity on how Maduro would carry out his plan, bondholders and their representatives who participated said afterwards.

That means Venezuela remains with the dilemma of whether to continuing paying debt at the expense of an increasingly hungry and sick population, or defaulting on creditors and burning its bridges to the global financial system.

“There was no offer, no terms, no strategy, nothing,” said one bondholder, leaving the meeting that lasted a little over half an hour at the ‘White Palace’, departing with a colorful gift-bag containing Venezuelan chocolates and coffee.

But bond prices maintained last week’s rally, with one investor saying there was relief the meeting did not include a default announcement.

Nearly $300 million in late interest payments on three bonds – PDVSA 2027, Venezuela 2019 and Venezuela 2024 – was also due on Monday after 30-day grace periods ended. But bondholders appeared unconcerned at the delay, which was due in part to increased bank vigilance of Venezuela transactions.

“My expectation is that the coupon payments will come through as well,” said Jan Dehn, Head of Research at Ashmore Investment Management. “We know that these delays exist and why they exist.”

About 100 investors, including some bondholders from New York and lawyers representing creditors, entered the ‘White Palace’ via a red carpet and were greeted by a poster of Maduro’s predecessor Hugo Chavez at the entrance of the meeting room inside.

SANCTIONS OVERSHADOW MEETING

Chief debt negotiators Vice President Tareck El Aissami and Economy Minister Simon Zerpa – on U.S. sanctions lists for drug and corruption charges respectively – attended the meeting for half an hour.

They met with some bondholders, while others stayed out of the room on concerns about penalties for dealing with officials sanctioned by Washington.

El Aissami told creditors that Deutsche Bank may soon cut off some financial services to Venezuela, participants said.

Deutsche declined to comment.

He read a statement protesting unfair treatment by global financial institutions, including U.S. President Donald Trump’s sanctions aimed at preventing Venezuela from issuing new debt.

“Now Maduro can say: ‘I showed goodwill, the bondholders showed goodwill … but unfortunately because Uncle Sam is not playing ball we can’t (refinance)’,” said Dehn, who did not attend the meeting.

“I’m not hugely surprised nothing’s come out of that meeting.”

Separately, the European Union approved economic sanctions and an arms embargo on Venezuela on Monday, although it has yet to name who will be subject to the sanctions.

Markets continue to remain optimistic that Venezuela will service its debts, noting it has made close to $2 billion in payments in the past two weeks, albeit delayed.

Bond prices were up across the board on Monday, with the benchmark 2022 notes issued by state oil firm PDVSA [PDVSA.UL] rising 3.3 percentage points.

The economic implosion has already taken a brutal toll on Venezuelans. Citizens are suffering from malnutrition and preventable diseases because they cannot find food and medicine or cannot afford them because of triple-digit inflation.

The sight of poor Venezuelans eating from garbage bags has become a powerful symbol of decay. It contrasts sharply with the era of Chavez, when high oil prices helped fuel state spending.

Halting debt service would free up an additional $1.6 billion in hard currency by the end of the year. Those resources could be used to improve supplies of staple goods as Maduro heads into a presidential election expected for 2018.

But the strategy could backfire if met with aggressive lawsuits. A default by PDVSA, which issued about half of the country’s outstanding bonds, could ensnare the company’s foreign assets such as refineries in legal battles – potentially crimping export revenue.

(For a graphic on ‘Venezuela’s economy’ click http://tmsnrt.rs/2pPJdRb)

(Additional reporting by Corina Pons in Caracas and Dion Rabouin in New York; Writing by Andrew Cawthorne; Editing by Andrew Cawthorne, Frances Kerry and Rosalba O’Brien)

Russia, China, others boycott U.S. meeting at U.N. on Venezuela

Russia, China, others boycott U.S. meeting at U.N. on Venezuela

By Michelle Nichols

UNITED NATIONS (Reuters) – Russia, China, Egypt and Bolivia boycotted an informal public United Nations Security Council meeting on Venezuela on Monday organized by the United States, saying the 15-member body should not be involved in the situation.

“The issue is about meddling with the internal domestic affairs of Venezuela,” Russian U.N. Ambassador Vassily Nebenzia told reporters, adding that he hoped the country could settle its issues peacefully without any external interference.

U.S. Ambassador to the United Nations Nikki Haley told the meeting: “The fact that the (Venezuelan) government would go so far as to try and get people not to show up to a meeting is guilt. And that’s unfortunate.”

Venezuela is suffering from a harsh economic crisis and President Nicolas Maduro’s government has clamped down on the opposition, jailing or otherwise barring from office many dissenting leaders and activists.

Dozens of people have died in violence since the opposition began a sustained wave of protests in April. Met by rubber bullets, water cannon and tear gas fired by the National Guard, the protesters say the crisis demands an early presidential election that they are sure Maduro would lose.

His popularity has been pounded lower by triple-digit inflation and acute food and medicine shortages.

“We received pressure from regional partners not to have this meeting,” Haley said. “This goal is not to degrade anyone. This is not to humiliate a region. This is only to lift up the region.”

Uruguay’s Deputy U.N. Ambassador Luis Bermudez attended the U.N. meeting, but said his country did not believe the situation in Venezuela was a threat to international peace and security.

Venezuela’s U.N. Ambassador Rafael Dario Ramirez spoke to reporters as the meeting was being held, flanked by Nebenzia, Chinese Deputy U.N. Ambassador Wu Haitao and Bolivian U.N. Ambassador Sacha Sergio Llorentty Soliz.

“The meeting is a hostile and clearly interfering act of the United States that undermines the principle of sovereignty of a member state of the U.N.,” Ramirez said. “We condemn this act of political manipulation.”

European Union foreign ministers approved economic sanctions, including an arms embargo, on Venezuela on Monday, saying regional elections last month marred by reported irregularities had deepened the country’s crisis.

The United States has also imposed targeted sanctions on top Venezuelan officials.

The U.N. Security Council also met behind closed doors in May, at Washington’s request, to discuss the crisis in Venezuela.

(Reporting by Michelle Nichols; Editing by James Dalgleish)

Venezuelan crisis spawns boom in gambling

Venezuelan crisis spawns boom in gambling

By Andreina Aponte

CARACAS (Reuters) – “The Whale”, “The Dog” or “The Zebra”?

Players line up beside a small kiosk in a poor neighborhood to choose animals in a lottery game that has become a craze in Venezuela even as the oil-rich country suffers a fourth year of brutal recession.

It seems more and more Venezuelans are turning to gambling in their desperation to make ends meet amid the country’s unprecedented economic crisis.

Though more people lose than win overall, the illusion of a payday has become more alluring as Venezuelans endure the world’s highest inflation, shortages of basics from flour to car batteries, and diminished real-term wages.

Among multiple options from race courses to back-street betting parlors, the roulette-style “Los Animalitos” (or the Little Animals) is currently by far the most popular game on the street.

“Most people I see playing the lottery are unemployed, trying to make a bit extra this way because the payouts are good,” said Veruska Torres, 26, a nurse who recently lost her job in a pharmacy and now plays Animalitos every day.

Torres often plays more than a dozen times daily at the kiosk in Catia, spending between 5,000-10,000 bolivars, but sometimes making up to 50,000 or 60,000 bolivars in winnings – more than a quarter of the monthly minimum wage.

When that happens, she splits the money between buying food and diapers for her baby boy, and re-investing in the lottery.

The Animalitos game, whose results appear on YouTube at scheduled times, is hugely popular because it goes through various rounds, holding people’s interest, and provides more chances to win than most traditional betting options.

The cheapest ticket costs just 100 bolivars – a quarter of a U.S. cent at the black market currency rate, and more than 10 times less than that at the official exchange level.

“It helped me a lot,” said Eduardo Liendo, 63, of a timely win. He recently lost his house and lives in a car in Caracas’ Propatria neighborhood, but had a successful punt on the Animalitos, choosing the dog figure after his own had died.

There is no hard data on betting figures, and the government’s betting regulator did not answer requests from Reuters for information. But those behind Venezuela’s gambling businesses, run by a mixture of private companies and local regional authorities, said trade was booming, with lines longer and busier than ever – because of, not despite, the hard times.

“In a crisis like the one we’re going through, people drink and gamble more to escape from reality,” said psychologist Rosa Garcia from the rural state of Barinas.

The latest scarcity in Venezuela is cash – as authorities cannot produce enough notes to keep up with dizzying inflation – so many bars, shops and betting parlors have quickly switched from cash to electronic transactions to keep money flowing.

That has hit the Caracas hippodrome, where cash is still king. But thousands still go there at weekends, pushing against fences in front of the sand track to cheer their horse on as salsa music booms in the background.

(See http://reut.rs/2A2eOEB for a related photo essay)

(Reporting by Andreina Aponte; Additional reporting by Francisco Aguilar in Barinas and Ricardo Moraes in Caracas; Writing by Andrew Cawthorne; Editing by Frances Kerry)

Major Venezuelan opposition parties to boycott local polls

Major Venezuelan opposition parties to boycott local polls

By Andreina Aponte and Andrew Cawthorne

CARACAS (Reuters) – Three of Venezuela’s largest opposition parties vowed on Monday to boycott mayoral polls later this year in protest at an election system they say is biased in favor of President Nicolas Maduro’s ruling socialists.

The multi-party Democratic Unity coalition has had a tough 2017, first failing to bring down Maduro in four months of protests that led to 125 deaths, then losing surprisingly to the Socialist Party in a gubernatorial election earlier this month.

That has left the opposition weakened and divided, and Maduro strengthened, despite growing foreign pressure on his government over alleged rights abuses and corruption, and an unprecedented economic crisis that has millions skipping food.

Three heavyweight movements in the opposition – Justice First, Popular Will and Democratic Action – announced on Monday they did not trust the government-leaning election board sufficiently to participate in the municipal polls in December.

Justice First leader Julio Borges, who also heads the opposition-led congress, said authorities cheated in the 2013 presidential election, denied Venezuelans a recall referendum last year, and rigged the Oct. 15 gubernatorial vote.

So instead of going into another “manipulated” vote, the opposition should focus on demanding reforms to the election board in anticipation of next year’s presidential poll, he said.

“The objective remains getting Nicolas Maduro out of power, and in this struggle, the world is with us,” he told reporters.

To the surprise of some, the Democratic Action party also joined the boycott. Its candidates won four governorships in October’s vote and then infuriated many opposition supporters by swearing loyalty to a pro-Maduro legislative superbody.

MADURO: ‘BALLOTS, NOT BULLETS’

Opposition supporters have been split over participating in elections this year. Some say it is the only way to show they are a majority and undermine Maduro, while a growing number argue there is no point in fighting a “dictator” via a system rigged in his favor.

They are pinning their hopes on international action, including U.S. sanctions against Maduro’s government.

Maduro, whose personal popularity has plunged since his 2013 election due to food shortages and runaway inflation, said “sabotage” and “insurrection” were being planned against the mayoral votes.

“I declare myself in battle,” the 54-year-old successor to Hugo Chavez said in a meeting with governors on Monday.

“Those who attack the election system must pay.”

Opposition leaders say the government has long been rigging elections by gross abuse of state funds in favor of socialist candidates, and dirty tricks such the last-minute moving of vote centers in opposition areas for the October ballot.

They have also presented some allegations of ballot-rigging.

However, Maduro insists Venezuela’s system is entirely trustworthy and impossible to hack. It has received international praise in the past, although it was slammed over July’s vote for the Constituent Assembly superbody.

Maduro says the street protests earlier this year were a mask for a U.S.-backed coup plot, and accuses opponents of wanting to oust him by undemocratic means.

“Venezuelans want ballots, not bullets,” said Maduro.

(Writing by Andrew Cawthorne; Editing by Alexandra Ulmer and Rosalba O’Brien)