Before we head Down The Rabbit Hole we have a few items from the news feed. First up we have Bloomberg reporting than PDVSA (Venezuela government-owned oil company) is lobbying various Caribbean Island governments to negotiate terms for cash payments for oil. It looks like the good old days of Petro Caribe, where Venezuela sent member countries regular shipments of oil with little or no money down and and very favorable terms, financing the balance at 1% interest, are over. This is despite Nicolas Maduro’s proclamation that Petro Caribe was back. Petro Caribe also provided funding for social programs and various projects in member countries, paid for by Venezuela.
This shouldn’t surprise anyone as they already backed out of the oil for debt reduction deal they had with Europe in return for sanctions relief. They told European countries that after the initial shipments to Eni (Italy) and Repsol (Spain) they would have to pay cash in advance for future cargoes. It just confirms what we’ve said over and over again. The Maduro regime is broke and has no oil to spare. For the EU countries, The Caribbean Island nations, and anybody else it’s “Cash Only”.
Then we have Rio Times telling us that Nicolas Maduro has affirmed that Venezuela is heading toward growth and diversification of it’s economy. “No one stops Venezuela”. He claimed that Venezuela produces 80% of it’s food consumption. Usually numbers provided by Chavismo are double the real figures if they’re trying to play up something positive and half the real numbers if they’re trying to downplay something negative. In this case, the last number we saw on food production in Venezuela was 40%. Don’t forget, the massive rice growing and production complex, named after Hugo Chavez and said to be one of the largest in the world, never produced a single bag of rice. At the grand opening they displayed all the pallets of rice out front while in the back workers, unable to use the automated equipment that was supposed to be there, filled the bags by hand from cargoes of imported rice.
BCV (Venezuela Central Bank) says economic growth for Q1 (Why are we just now getting 1st quarter numbers? Isn’t it October?) was 17.4 % and predicts Q2 growth to be 18.7%. The last number we saw was 7% growth…but after 8 years of recession under Nicolas Maduro any growth at all is a positive sign. BCV also says inflation has been 50% for the last 12 months. The best number we saw was 167%. Again, after an unbelievably long 4 year bout of hyperinflation I guess that’s not too bad, whatever the real number is.
Then we have Reuters telling us that Venezuela opposition leader and President of the parallel government, Juan Guaido, is asking for a consult on expanding Chevron’s operating license in Venezuela over concerns it may not be legal under Venezuela law. We’re not sure if that’s applicable as the law in Venezuela under the Maduro regime is whatever Nicolas Maduro says it is and is always ratified by TSJ (Venezuela Supreme Court). Maybe Juan Guaido is just trying to insert himself into the process?
And we have some good news…kinda’. BN Americas reports that Telefonica, Spanish parent company of Venezuela telecom provider, Movistar, says the company plans to invest $270 million in Venezuela over the next two years to upgrade it’s network and services. Currently they have 4G service in only 57 of 335 municipalities.
Then we have Rigzone reporting that the Biden administration announced there has been no change in US sanctions policy toward Venezuela. The more they deny the more I think there’s something going on. It’s like NFL coaches getting the dreaded “vote of confidence” from the team’s owner. It usually leads to a firing.
And the Jamaica Gleaner tells us that Saint Vincent and The Granadines Prime Minister, Ralph Gonsalves, says approximately 23,000 barrels of oil will arrive in the country before the end of October from Venezuela, “Assuming everything goes to plan”. Hmmm…Is this that Petro Caribe restart? He doesn’t say anything about recurring shipments nor payment nor financing. Venezuela is already struggling to meet it’s obligations to China, last month’s exports to Cuba were 36,000 bpd, down from 81,000 bpd, and they have to supply Cuba… but maybe they can squeeze out 23,000 barrels to Saint Vincent as a PR move to show the Maduro regime really is restarting Petro Caribe?
Let’s head Down The Rabbit Hole….
Chapter 2 continued…
…The sanctions kept ratcheting up, now including the banking sector and more individuals. It was a measured approach designed to have an effect on the Chavistas and their irresponsible behavior while minimizing the effect on the general population. At each step along the way Maduro steadfastly refused to do anything for the people of Venezuela and they continued to die in ever increasing numbers.
Finally the US had to make a choice.Continue with the plan as is and watch as the death toll mounted and the migration infected (literally) the entire region or sanction PDVSA, the government-owned oil business, thereby negatively impacting 96% of the Maduro regime’s revenue (at least the legal revenue). The idea behind this strategy was if Maduro, who at the time had a 13% approval rating (it’s now down to 5%), couldn’t afford to buy the loyalty of the military he would be forced to step down. These sanctions were not levied until 2019.
When the sanctions were announced the Chavista regime bemoaned the fact that they wouldn’t have the much needed revenue to provide food and medicine for it’s people and the Chavistas were the first to use this number of 40,000 deaths caused by US sanctions. Now this number is being tossed around by all the usual suspects, supporters of the Maduro regime or those blindly wedded to socialist ideology. So let’s recap…
For more than six years the Maduro regime had opportunity after opportunity to change policy and redirect funding to provide food and medical assistance to the Venezuelan people. They did basically nothing while the death toll continued to mount. Finally (maybe as a result of sanctions and international pressure) in 2019 the Maduro regime allowed a shipment of humanitarian aid to enter the country by the Red Cross. ONE SHIPMENT! Other humanitarian aid shipments continued to be blocked or confiscated solely to profit the Maduro regime and doing nothing for the people. (Can you tell I get a little worked up about this?) There was some aid allowed coming from Russia and China but that was administered by the Chavistas and primarily became a corruption mechanism or an extortion tool for political support.
There was subsequently another round of major protests and an uprising/ coup attempt/ prelude to civil war, depending on who you talked to. There were five more protesters killed,over 300 wounded, and about the same number of arrests with more arrests promised.
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