Venezuela reveals $240B in debt it cannot pay (~$100B more than expected)
euronews.com
euronews.com
The government will be able to leverage that to get the U.S. government to push for far more favorable terms for Venezuela than it ever would have otherwise.
Bribes and oil were the goal. Consolidation of allied dictator was goal. That worked.
It did made germany democratic after wwii. That really happened. But then it has stream of helping dictators and killing democracies while being acting confused when locals did not appreciated it ... and when different violent movements joined the game.
America is even supporting fascists parties all around Europe right now. If they win, it is going to be mainly eu dysfunction. But it will also be true that America actively sponsored fascists and actively undermined democracy in Europe.
> spreading democracy and then finding out those voters want different shades of fascism
Where exactly this happened, really?
Iraq, Egypt, Gaza, Post-Soviet Russia comes to mind among others
Also, contrary to your theory, most of human history people were ruled by non-democratic governments that were deemed legitimate, so I think you are conflating the two
Nobody believes this to be the case. What is more often missed by policy makers is that overthrowing a government supported by the local population is unpopular and will cause blowback. The CIA-supported coup in Iran is a currently relevant example.
> Also, contrary to your theory, most of human history people were ruled by non-democratic governments that were deemed legitimate
That was when people believed in the divine right of kings, so those kings ruled with the consent of the governed. This is no longer the case. Nobody believes in the divine right of dictators.
China possibly expecting something to this effect has recently built up both it's coal and renewables capacity, as well as an extremely large SPR.
All his bullshit market screwing, tariffs, poor diplomacy has pushed everyone right into China's sphere of influence.
Instead of competing with the products China creates, we leave them out of our own market while the rest of the world continues to buy from China.
The stupid as hell war against Iran has eliminated our stocks of munitions, leaving the pacific basically undefended against China. We pulled weapons out of our Pacific allies to go waste them in the desert.
There is no cohesive strategy and China has been preparing for us to cut off their oil for over a decade now, and has made massive strides in the development of independent energy like Solar to protect them.
Competing in terms of production is realistically not an option (Triffin Dilemma, strong currency means exports other than tech/finance are inherently noncompetitive). Competitive exports would require giving up the dollar as a unilateral reserve currency, and China for the reverse reasons, at least for now, does not seem to want the Yuan to be a reserve currency. My personal read is both sides wish for something like the current system to persist but on more favorable terms.
I agree China has been actively taking steps for this scenario, but that they're continuing to make strides seems to indicate it is still an issue. I think we're still in the thick of it before a victor is conclusively decided either way.
But the back-to-back policy disasters are otherwise a good reminder that a broken clock is only right twice a day.
It's almost like people currently in the white house know what they're doing, right? Who would have thought! /s
This includes the war with Iran. Double dipping by fueling the military industrial complex blowing it up, then they'll be influencing who gets the contracts for the $300B secured. It makes no sense from a geopolitical standpoint. It makes perfect sense from the perspective of enriching influential persons.
Of course the US are the all-powerful juggernaut with many levers to pull to use their power. Winning battles is easy. Winning the metaphorical war is harder.
When we can't (Iran), well, it starts looking like they have zero clue what they are doing.
I kinda wonder if the White House has just forgotten about Venezuela - there's not any clear reason they are still under general sanctions.
[1] as I understand it, tar sands are literally what they sound like - the oil has seeped up to the surface, which is essentially a sandy, oily quagmire. https://www.alamy.com/a-hand-full-of-tar-sand-the-tar-sands-...
You mean the looting
An ICE officer has been dispatched to your location
There'd be no point in any kind of boots on the ground invasion when they just did the thing that the invasion would've tried to accomplish.
[1] https://www.pbs.org/newshour/world/cuba-passes-sweeping-free...
Or rather, any goal that is not media and PR management?
It will never work to be a bully without actually producing value long term.
Largest advancements I can see in US lately are LLMs and legalized gambling. They are also defunding science. AND they are making immigration harder which basically seals the deal since they are not capable of producing enough educated people to keep doing what they were doing before.
Also OFC Donald Trump who is a ignorant businessman that specializes in a mafioso industry and is a reality tv personality, is elected president twice.
Maduro himself is unlikely to escape his abduction, but the actual power structures and grassroots opposition to Washington's totalitarianism remains across LatAm.
* Colombia's new guy boasted of strapping fireworks to cats, and married his wife when she turned 18 and he was almost 30.
and what happens after is right-wing government in power of the country for the next N years
If the US normalize their relation¹, a totalitarian government will have a much harder time there.
1 - As in "relates to it like a normal country". Treating it like an extractivist colony won't do.
The legal term is odious debt and it has a long history of debt taken out by dictators being forgiven once the dictator has been removed.
The IMF will normally make a ruling on this as to if the debt is odious or not but given how a few big hedge funds that normally go after discounted debt have recently dumped a chuck of Venezuela's debt the writing is on the wall as they say.
I'm not a government credit expert but what analysts are saying to expect 60-75% of the debt to be restructured, not forgiven, in terms of a 50% hair cut.
The debts owed to oil companies secured by oil infrastructure is less likely to be written off as Venezuela will need foreign help to rebuild their oil infrastructure form these same companies, giving them a fair bit of leverage here:)
Every 10 years or so Argentina defaults on it's debt. The next day banks/hedge funds line up to loan it money again.
The ways of finance are mysterious.
> The country has defaulted on external sovereign debt nine times since independence: in 1827, 1890, 1951, 1956, 1982, 1989, 2001, 2014, and 2020. Three of those defaults occurred since the year 2001.
https://maseconomics.com/argentinas-recurrent-defaults-a-cas...
>The ways of finance are mysterious.
James Grant's Bagehot and Liaquat Ahamed's 1873 both talk about how, no matter how often South American and Middle Eastern countries in the 1860s and 1870s defaulted on their debt, European investors lined up to loan them more money. (In especially egregious cases like Egypt, British and French experts took important jobs at the insistence of the lenders to curtail the extravagant spending; while corruption decreased, the experts were very well-paid.)
The same applies to some business and personal debt: Sometimes good loans go bad; life has risk; sometimes it's obvious ahead of time. Either way, both parties take on the risk and both are responsible for the outcome. When the creditor is significantly more sophisticated/capable than the debtor - as an extreme example, a credit card company extending credit to someone addicted to gambling - I think the creditor is much more responsible. Another example is Wall Street banks extending credit blindly to real estate investment, causing the 2008 recession.
In government finance, it's a very well-known, well-used tactic for wealthy countries or banks to extend credit to other countries that are unlikely to pay it off (due to limited revenue or competence), eventually giving the creditor significant control of the debtor country. The West used to do it effectively and probably intentionally; China has been doing it more recently. The debtor is starved for capital and won't turn it down; eventually they can't pay and another country has their finger on a trigger at all times: they can call in the loan and bankrupt the debtor at will.
And when the Chinese noticed their money was being basically stolen they stopped giving loans, fortunately.
It seems like China or Russia would expect to be paid not in dollars, but in Oil Wells and Refineries. Why would they accept restructuring of the debt instead of repo'ing the assets?
Because a number of those assets are still owned by other countries that paused FDI due to Trump's Venezuela sanctions in 2018-19.
For example, India was Venezuela's largest oil exporting customer following Maduro's election with it's state-owned (ONGC, Indian Oil, Oil India) and private sector (Reliance) majors being given sweetheart extraction deals that India had to freeze due to sanctions.
Brazilian players like J&F Group also did the same thing with Venezuela's ONG industry as did Spanish players like Reposol.
Now that the Venezuela sanctions regime is over, those assets which were continued to be owned by those countries are being restarted by those countries.
The biggest winners of Maduro's capture was basically Brazil, India, and Spain as their companies were able to restart operations minimizing China's near monopoly in Venezuela after the expanded sanctions regime kicked off in 2018 while being nimbler than American players who essentially have to start from scratch.
So where is all their money going right now into the middle-east?
Is the President taking a cut?
Investigations in 2027 are going to be bonkers
Venezuela's economy has been a disaster for many years.[b] Surely I'm not the only one wondering:
Where did all that borrowed money go? If any of it had been spent to buy goods and services inside Venezuela, it would have led to at least some business formation and activity. Instead, there's only been business destruction and constant crisis. It's kind of incredible that the country has nothing to show for all the money it borrowed.
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[a] https://www.ft.com/content/b7f25ca2-827c-40f9-ab1a-57067d8ec... (paywalled)
Perhaps him being in custody will lead to some of the money being found and returned.
There's no doubt Maduro enjoyed some taste of the froth, but this is a silly oversimplification.
They also spent billions to influence the elections of the other countries of the region. Chavez was also giving away oil for free in exchange of political support abroad. He even gave free oil for the buses of London because the mayor at the time was in good relations or something.
Venezuela was allegedly planning to invade a resource rich neighbor before the Trump administration’s actions, as part of a long standing territorial dispute, and I think that was partly so Maduro could keep the support of the population but also partly to deal with the financial problems. So their leaders definitely knew these issues were building up.
Venezuela has also been estimated to owe $10bn-$20bn to China in debts that Caracas previously paid from oil exports but is believed to have stopped servicing, about $6bn to Russia, and $4bn to development banks” (FT).
Whether the form was debt issuance or unpaid accounts payable, the rest actually was borrowed.
It's kind of an "impressive accomplishment" in my view.
It matters by whom it was lent. Caracas telling China to fuck off is pretty easy right now. Less so if it’s an American investor.
If anyone has an outline of to whom the other hundreds of billions are owed, I’d be curious to see it.
Me too. That's one of my questions. The other questions I have are about the shocking misuse of funds.
Their crude is really only valuable to a handful of countries, the US being the main one. They could really not afford to have worsening relations with the US right as the fracking boom took off.
As their domestic industry shrank, they had to import more and more resources from other countries.
Where did it go? They stole it.
This is a very large debt load and extremely difficult to pay off.
“Investors have previously estimated that Venezuela also owes $30bn-$50bn to oil companies and trade creditors for unpaid invoices and more than $20bn in legal claims awarded to companies after Chávez’s regime expropriated their property.
Venezuela has also been estimated to owe $10bn-$20bn to China in debts that Caracas previously paid from oil exports but is believed to have stopped servicing, about $6bn to Russia, and $4bn to development banks”
But notice that one of the first acts of the new government was to pass laws handing Venezuala's most valuable asset by far, their oil, to foreign companies. Imagine the US, Russia, Norway, or Saudia Arabia doing that. Even if that wasn't a politically disasterous idea - one with a proven track record worldwide - it's hardly the top need of the Venezualan people. They don't seem to be people served by the new government - the Venezualans aren't the people who put the government in power, for one thing.
Control over countries and their oil, including via debt, an old, well-established strategy, long used by the West. It's been abandoned until Trump has seemingly returned to it - as if the oil companies are hoping to relive their most powerful era.
Notice also that Trump's attacks have been on the leading oil producing countries outside US influence: Venezuala and Iran, and Nigeria. (Yes, the first two are also long-term political enemies - you might consider that the oil, inability of US to control them, and enemy status might not be coincidental.)
[0] https://www.ft.com/content/b7f25ca2-827c-40f9-ab1a-57067d8ec... - quote stolen from another comment
Before the 2018 sanctions and after the American expropriation in the 2000s, the biggest foreign players in Venezuela's ONG industry were Spanish (Reposol), Indian (ONGC, Indian Oil, Oil India, Reliance), Chinese (Sinopec, CNPC), and Russian (Rosneft).
The Spanish and Indian players kept operations at a minimum during the sanctions regime, but quickly scaled up after Maduro was captured.
Lesson for the rest of the world is: you go against the USA, prepare to suffer.
Of course, s/USA/China/ or s/USA/Russia/ above in a few years time.
And who do you think was extracting oil these years there? Chevron is one of them.
Don't bother. It's hopeless. They're obsessed with Orange Man Bad and won't listen to anyone who might actually know something about a topic they've been preprogrammed about.
The funniest thing to watch after the Maduro operation was the endless stream of leftist Redditards (but I repeat myself) rushing to /r/vzla to denounce Trump/USA/imperialism/fascism/capitalism, then backing away slowly <https://giphy.com/clips/hamlet-the-simpsons-homer-bushes-O4B...> once they realize how massively supportive the subreddit is of getting rid of Maduro.
Or, as a post in the /r/buenosaires subreddit put it regarding exiled Velezuelans celebrating in that city, "The left demonstrating at the U.S. embassy and progressivism militating against intervention in networks while Venezuelans celebrate at the obelisk is the best postcard of the transformation of progressivism into an intellectual bubble on the margins of common sense."