Caracas Chronicles

Photo: El Universal, retrieved.

“The majority of our clients are U.S. based companies, and they have to pay taxes there,” says the lawyer, after making me swear for the ninth time that we wouldn’t publish his name, or that of his firm. “They can’t pay anything in petros, directly or indirectly, because doing so could be considered ‘conspiracy’ under U.S. law so, in practice, you can’t use them to register trademarks and patents. For the moment, we have no solution for this.”

He really looks puzzled. Besides his work as an attorney, he’s a main associate at one of the top five Venezuelan based intellectual property law firms, an area that’s sweating bullets over Maduro’s economic decisions, even in what can be his administration’s last moments. See, since February 1st, all services provided by the SAPI (Venezuelan Autonomous Service of Intellectual Property) and the mandatory payment required to register a brand or patent, are “anchored” to the petro, that fairy-tale currency chavismo says is real.

With the overwhelming crisis, most clients of intellectual property firms in Venezuela are international. Issue being, on March 2018, U.S. President Donald Trump prohibited “U.S. purchases of Venezuelan cryptocurrency,” effectively banning the use of petro, even before the Venezuelan government managed to figure out how to make it work. The Venezuelan INTA (International Trademark Association) has carried out meetings in the last week to discuss possible solutions and, although they’re actively looking for possible agreements, so far they’ve had no luck.

“They can’t pay anything in petros, directly or indirectly, because doing so could be considered ‘conspiracy’ under U.S. law so, in practice, you can’t use them to register trademarks and patents.”

For example, Section 2-B of the executive order issued on March 19th, 2018, provides exceptions to “statutes, regulations, orders, directives or licenses that may be issued pursuant to this order.” When asked about this, the aforementioned lawyer believes his clients’ concern would be “the amount of clients that would have to ask for licenses to buy petros, and how many would be willing to do so.”  

The official notice issued by the Venezuelan Ministry of National Commerce, to which the SAPI reports, specifies that its services will be, from the emission of said notice, “anchored to petro, and its referential value will be established by the national executive power,” meaning, in an arbitrary way, opposite to how cryptocurrencies are supposed to work.

The established value goes like this: one petro equals 36,000.00 bolivars, and 60$. The official exchange rate through DICOM is now 3,297.00 bolivars per US dollar, so if we do some basic math, according to this rate, each petro should be 197,820.00 bolivars, as that’s the official equivalent for 60$. That, or 10.92$, the direct equivalent in the market for 36,000.00 bolivars.

The problem is, of course, that that’s true today. It can’t be an innocent mistake: I’m sure someone in Maduro’s government, maybe an employee from the Central Bank, actually realized that all values are established by someone’s will, not the actual dynamics of economy. Everything depends on what benefits chavismo the most.

The Executive Order against the petro was published on March 19th, 2018, as part of the U.S. government’s sanctions towards Maduro’s regime. It was published by Bloomberg and international press agencies; the official document issued by the Venezuelan government and the SAPI dates from February 1st, 2019.

They issued it knowing the limitations and how it would affect the trademark and patent business in Venezuela. Is this an attempt to give the petro more credibility? Did they assume that Venezuelan based bureaus and their international clients would take the risk of being accused of conspiracy, just to register trademarks and patents in Venezuela?

Just what’s the strategy behind this, if any?