Before we head Down The Rabbit Hole we have a few news items.First up we have Daily Coin reporting that the Russia disconnection from the SWIFT banking system as part of the sanctions levied may cause problems for Venezuela. We’ve covered the Maduro regime’s desire to have closer ties to Russia in return for Putin’s economic lifeline thrown their way. That relationship may not be all upside as in the banking world…it’s all connected.

 Example : If PDVSA (government owned oil company) has money in a Russian bank that’s under sanction they can’t use that money to pay a supplier via bank transfer with a bank in Mexico,Switzerland,Turkey, etc. since they all use the SWIFT system for transfers.

 Another issue is the collapse of the ruble down to about one cent on the dollar. The losses for the Venezuela government and individuals could be gigantic if they have accounts in Russian banks that would be denominated in rubles.

 An interesting side note in the article was that the cryptocurrency community still won’t accept Maduro’s fraudulent cryptocurrency, el Petro.It’s not independent which is crucial for a cryptocurrency.Most cryptocurrencies have a free floating market rate while the rate of el Petro is arbitrarily set by BCV (Venezuela Central Bank). In short, despite Maduro’s desire to make money out of thin air nobody wants to touch el Petro.

 And while we’re talking banking. Caracas Chronicles had a good piece on the many problems face by the Venezuela banking sector in recent years. A key component is the capital requirements they must maintain on deposits as mandated by the government which determines their flexibility to make loans. Back in 2014 the capital requirement was 21.4% and it got as high as 93% which meant that they basically could only loan out 7% of deposits…not much huh? Today it stands at 73% which,although better than 93%, is still the highest in the world.In the years from 2017 – 2021 loans pretty much disappeared as the requirements kept getting higher.

 Internal credit is what stimulates business and spending. In 2020 internal credit by GDP was 95% in Panama, for example.In Venezuela it was 0.05%. So, in Panama business was happening, loans were happening, and in Venezuela nothing was happening. The projection is for Venezuela’s rate to increase this year to 1.15%, way up fro 0.05% but still not much activity.

 The risk of a foreign currency loan while still doing business in the local currency is also an issue. If you are one of the few able to get a loan in Venezuela and let’s say you borrowed $100,000. That money would be transferred to your account in bolivares (the local currency) so now the exchange rate is part of the equation. Recently the bolivar has been pretty stable at about 4.5 bolivares / dollar for the last four months so that $100,000 would be 450,000 bolivares. If the exchange rate went up to 9 bolivares / dollar, which in prior years would be optimistic, then instead of paying back the loan with 450,000 bolivares 900,000 would be required. According to Leonard Bunisk’s Bank Risk Qualifier, a healthy financial landscape like the pre- Maduro years is still decades away.

 As we’ve covered here since the start of the Russian invasion into Ukraine, Nicolas Maduro and other Chavistas have been supporting Putin’s move and blaming the whole situation on the US and EU. The Guardian reports that Maduro referred to the invasion of Ukraine as a “special military operation.”

 And in a “Curb Your Enthusiasm” moment we have Air 101 reporting on the UN vote to condemn the Russian invasion into Ukraine. The vote was 141 – 5 so only 5 countries went on record as backing Putin. Conspicuously absent from the five, even after all the proclamations of support, was Venezuela, they abstained. So much for “full support.” I guess Maduro is still angling for that sanctions relief.

 And we also have Maduro speaking remotely to the UN – OHCHR (Office of High Commission on Human Rights). He wants the world to know that Venezuela’s actions on the Human Rights Council (position expiring soon) were aimed at protecting, promoting, and guaranteeing Human Rights and fundamental freedoms. He went on to stress that (according to him) Venezuela has been the target of 502 unilateral coercive measures to destroy it’s economy, destabilize it’s democracy, and put an end to the inclusive social model established by the Bolivarian Revolution. Uhhh…OK Nicolas. You do know that nobody believes a word you’re saying…right?

 Then we have Epoch Times reporting that the CIA is exercising the State Secrets Privilege to conceal it’s connection to former Venezuela General Cliver Cordones. He’s accuse of narco- terrorism and conspiracy with Maduro and other top Chavistas as well as FARC in a plot to ship large quantities of cocaine to the US. According to his defense team, Cordones is cooperating with the DOJ (Department Of Justice) in the US so he wouldn’t be jailed in Colombia where members of Venezuela Intelligence could get to him. Probably a wise move.

 And then we have Frank Muci, in a piece in Caracas Chronicles, saying that sanctions need an off-ramp. They are not an end in themselves and that applies to Russia as well as Venezuela. While I agree with him that there needs to be a purpose or goal related to the sanctions generally the reason for the instituting of the sanctions  in the first place is to effect a behavioral change in authoritarian regimes. Unfortunately authoritarians are, by their nature, reluctant to do so.

 And we have FX Empire telling us that PDVSA has assigned a 2 million barrel cargo of crude to ONCG of India as well as a 1 million barrel cargo to the firm Maurel and Prom as payment for debt. They still need approval of US authorities to make this happen but it’s a positive sign that they might actually be interested in paying off at least some of their massive debt. We’ll see…

 Now let’s head Down The Rabbit Hole….

 The Pemon fare no better when they travel to the towns to sell whatever gold they are able to mine or trade it for basic goods. The municipalities in “The Mining Arc” have homicide rates that far eclipse the rate in Caracas, considered the world’s most violent major city.

 Somewhat lost in the 2019 drama of Juan Guaido attempting to get humanitarian aid across the Colombian border was the attack on the Pemon when they attempted to let aid in from Brazil. Members of the military killed three people and wounded dozens more in the confrontation.

 Besides the exploitation and oppression of the Pemon people, what the Chavistas are also complicit in is the severe damage to the environment both on legally protected traditional Pemon land and the land and rivers surrounding it.

 Outside the area officially designated as “The Mining Arc” and the Orinoco river are the Carrao river and others as well as the Imataca, the Yapacana and El Caura National Parks and the Canaima National Park (famous as the inspiration for Arthur Conan Doyle’s “The Lost World” and home to species found nowhere else in the world). Oh, and did I mention that the Canaima region is the home of Angel falls, the highest waterfall in the world? The areas bordering the designated “Mining Arc” are being encroached upon as tends to happen with these things. It’s not just the mines themselves but the environmental damage done by deforestation and pollution. In 2017 blood tests done on residents along the three area rivers showed 60 times the maximum allowable levels of mercury, used in metals processing.

 More tomorrow….