I came across a good piece from the Harvard International Review on Sino-Venezuelan relations. As you may know (or not) China is,and has been, heavily involved in Venezuela the last couple of decades.They are one of the countries that has enabled the Chavistas in both their theft of Venezuela’s treasury and their desire to remain in power as the country has collapsed around them. Those authoritarians do tend to stick together. Here’s a quick look at what they have done and what they may,or may not, do going forward.
Since 2007 China has invested about $67 billion in Venezuela. This represents about 40% of their investments in all of South America. Please note this number doesn’t include the over $60 billion the Chavistas borrowed from China even as oil prices were at all time highs.They invested in major projects like Latin America’s first high speed railway and other infrastructure projects as well as all kinds of joint ventures with the totally inept (at least business-wise) Chavistas. They have all been abandoned now since Hugo Chavez died, Maduro took power, and oil prices are no longer at those lofty levels. As we’ve discussed numerous times, not only did oil prices collapse but oil production under the stewardship of 21st Century Bolivarian Socialism, due to theft,neglect,and mismanagement,has also collapsed from over 3 million bpd(barrels per day) to under 600,000 bpd, the recent increase not withstanding. Those loans,to be repaid in crude oil shipments, still have over $20 billion outstanding.
Some believe the reason the Chinese have not left the corrupt regime of Nicolas Maduro hung out to dry now that all their investments have failed so miserably is a shared political ideology. The Chinese deny any political purpose to their investments.
Sino-Venezuelan relations began when China was still establishing a presence in the region. It’s investment in Latin America grew from $12 billion in 2000 to over $300 billion in 2019. Their support for the Maduro regime is bad for their image on the international stage so right now they’re keeping things at arms length. There have been no new loans to the Chavistas in five years. (It’s not for lack of trying by Maduro who has gone hat in hand to China repeatedly only to be rebuffed) China,obviously, wants it’s $20 billion repaid but it hasn’t shown it’s willing to give the Maduro regime the money needed to rebuild it’s oil infrastructure that the Chavistas have more or less destroyed. Estimates to rebuild their production capacity to pre-Chavista levels are in the $150-$200 billion range. What’s the old saying…”Don’t throw good money after bad”?
China could forgive the $20 billion it’s owed by Venezuela but that’s unlikely as through it’s “Belt and Road Initiative” China has a lot of high-risk loans to other countries in the developing world and doesn’t want to encourage other defaults. For now, China seems content to wait and just keep receiving oil as repayment for the loans. China is still Venezuela’s number two customer even though they don’t pay for the oil. As far as the situation going forward…well,as they say…it’s complicated.
On the Covid-19 front we have the president of the Doctors Guild telling us that vaccinations are decreasing in Aragua state and they have closed vaccination centers.
However, we have Sputnik reporting that Venezuela has received a shipment of 7 million doses of Sputnik Light vaccine, reportedly for booster shots.
Then we have Publishers Weekly, in an article by journalist, William Neuman, telling us that Venezuela is really a consumerist culture. Did you know that at one time Venezuelans were the highest users of personal care products,per capita, in the world? (I know, now they don’t even have food or water) Neuman states that socialist is just branding used by Hugo Chavez then Maduro. Chavez was a demagogic leader who used democracy (when he was riding his populist wave) to undermine the constitutional freedoms of the Venezuelan people. (We here at TFT contend that Maduro is nothing more than an authoritarian dictator)
We also have the Public Ministry telling us that they’re working with the TSJ (supreme court) to remove bottlenecks in the criminal investigative system. Well, they’ve got a long way to go as 98% of crimes in Venezuela go unsolved. It simply isn’t a priority for Chavismo,as evidenced by our reporting on “Twitter Justice” in Venezuela. Nothing has investigative priority until it’s trending on Twitter.
And on the social media front we have Caracas Chronicles telling us that Probox, a digital media watchdog, reports that the Maduro regime had 82.69% of all bots detected in November and was responsible for 77.64% of all tweets. After the suspension of 277 of their fraudulent accounts the Maduro regime’s tweet count was reduced to 14%.
And how’s this for looking out for “the people”? Workers of the National Assembly Union asked the speaker of Maduro’s National Assembly (not the duly elected 2015 National Assembly) to reinstate union leader’s wages which have been suspended.
And in the “election effect” category we have Insight Crime reporting that the election results have impacted the power play between the number one and number two power players in Venezuela. I’ll leave it to you to pick who’s on top. Diosdado Cabello lost some cartel control in Zulia where one of his cohorts was defeated. Maduro,on the other hand, has a new chance to gain more control of the syndicates operating in the “Mining Arc” region of Bolivar state.
And in the ongoing saga of the circling,and now descending, bond vultures we have PDVSA (government owned oil company) still attempting to avoid paying on the defaulted 2020 bonds(among others). They claim the bonds are invalid (although they didn’t say that when they sold them) because they were not issued in compliance with Venezuela law, which requires National Assembly approval. Don’t get me started on the fact that at one time Venezuela actually has three National Assemblies. The court ruled that the bonds were issued in New York therefore it is New York law that applies, not Venezuela law. This according to JD Supra. It’s looking more and more like PDVSA and the Maduro regime will be held liable for payment on these and other defaulted bonds. The question is, what assets will remain to be seized that haven’t already been looted by the Chavistas?
And finally, we have Jamaica Gleaner reporting that even with relaxed price controls and the new dollar policy what cost $100 three years ago now costs $330. Most retailers don’t even post prices in the local currency, the bolivar. I believe that as we go forward, Venezuela businesses will become accustomed to dealing with a real currency and will adjust appropriately away from their hyper inflated bolivar thinking so prices in dollars should level off. At least I hope so.
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