Vultures Circling

 We’ll get started with our next Venezuela : Down The Rabbit Hole segment, “Just The Basics”, in a bit but first…Reuters reports that US District Court Judge Leonard Stark has granted four more creditors, O-1 Glass, Inc., Huntington Ingalls Industries, ACL-1 Investments Ltd., and Rusoro Mining Ltd. the right to seize shares of Citgo, the US refiner that is a wholly-owned subsidiary of PDVSA (Venezuela government-owned oil company) to satisfy debt that is owed them by the Venezuela government.

 They join Canadian miner Crystallex and US oil major Conoco Phillips in the line of creditors who have already been granted permission by the court to seize Citgo shares as well as PDVSA bondholders.

 Citgo, the last remaining asset of PDVSA outside Venezuela that’s really worth anything, is currently protected from seizure by the US Treasury Department but that protection expires this year and if it’s not extended the vultures that are circling will swoop in and that will be the end of Citgo as there is far greater debt owed that the company is worth.

 Horacio Medina, the chairman of the Venezuela opposition-appointed board that controls PDVSA foreign assets, said Venezuela will appeal the ruling. Citgo did not respond to requests for comment.

 Then, in a piece that’s timely considering our Venezuela : Down The Rabbit Hole segment this week is about the collapse of basic services in Venezuela under Chavismo, AP tells us that residents in many areas of Caracas only have running water for several hours a day and some only have water once a week. It’s common for people (those that can afford it) to buy water from “informal” vendors where they are subject to price gouging.

 Part of the problem is that much of the country’s pumping capacity, especially in larger cities, was lost during the massive blackouts of 2019 and has never been restored. I’ll save the discussion of Maduro’s plan in 2019 to restore water for our Down The Rabbit Hole segment. Suffice to say it was not very realistic. It’s worth noting that before Chavismo and 21st Century Bolivarian Socialism over 80% of the country had regular access to fresh water.

 Then we have Rio Times telling us that the President (dictator) of Venezuela and the President of Saharawi Arab Republic  met and signed 11 comprehensive cooperation agreements. After the meeting Nicolas Maduro praised the excellent political, diplomatic, and human relations between the two countries.

 OK, we know the Maduro is fond of hyping the multitude of meaningless agreements it signs (most of them they classify as “historic, strategic” agreements) but come on… the Saharawi Arab Republic… really? (My spell-check doesn’t even recognize these guys)

 In case you didn’t know, the SAR is located in the western part of North Africa and, as you might deduce from the name, Saharawi Arab Republic, is basically just a section of the Sahara Desert. Unlike some desert regions that sit atop oil or mineral deposits this place is just a glorified sandbox.

 So why is Maduro meeting with this guy and having it covered by Venezuela state media? All I can think of is that SAR is a member of the African Union and they support the “Free Alex Saab” movement. You remember him, right? The architect of Maduro’s totally fraudulent CLAP government food program as well as the fraud involving Venezuela’s housing program who is currently in the US awaiting trial on money laundering charges. It’s a bit of a stretch but it’s all I’ve got so…there you have it.

 And we have the EU Observer telling us that Sweden has resumed talks with the EU on tightening visas for countries abusing the EU “visa-free” policy. They specifically mentioned the rise in asylum seekers from Venezuela (51,000), Colombia (43,000), and Georgia (29,000) in 2021. The rejection rate is over 90%.

 Now, let’s head Down The Rabbit Hole…

 Chapter 4/ Just The Basics…

 Once you get past ensuring the safety and security of the population as well as availability of food, (these will be discussed later) there is nothing more basic the government must provide than water and, in the modern world, electric power. You know, the things we take for granted. Turn on the tap and water comes out. Flip the switch and the lights come on. You would assume that a country with an abundance of natural resources including an impressive network of rivers and basically swimming in oil would have no problem providing these essentials. Of course, you would be wrong in the case of Venezuela. Let’s start with power generation and distribution.

 When I first visited Venezuela in the ’90s there were occasional power outages, as is common in third world or emerging market countries. They would last for an hour or maybe a few hours and everyone adjusted to it. It was simply an annoyance. To a foreigner like myself it was actually kinda’ quaint. You know, “Well, there it goes again…” I was in a tourist area so service was better than in some locales and the capital of Caracas had better uptime than rural areas.

 When Hugo Chavez took power one of the things he vowed to fix was the unreliable power grid, which was primarily hydroelectric. With the abundance of fossil fuels and plenty of potential for thermal power generation, not to mention lots of rivers to expand the hydroelectric system, it simply had to be made a priority.

 In 2007 Chavez nationalized the various independent electric companies and combined them into one entity, controlled, operated, and regulated by the government. To great fanfare many projects were announced, primarily thermoelectric and hydroelectric. Natural gas was largely ignored, used for generating power for oil wells or simply burned off. It’s not hard to imagine the frustration of living near Maracaibo, the country’s second largest city and the heart of the oil industry, and seeing the flames of natural gas burning off while you sit in darkness. “Hey! Couldn’t we just use some of that stuff?” With the world’s largest proven oil reserves there is also a vast quantity of natural gas. It’s even more frustrating when you think that Maracaibo was the first city in Venezuela with electric power.

 The prioritizing of hydroelectric and thermoelectric power wasn’t necessarily a bad thing. Better for the environment, right? The problem, as with anything Chavismo- related, came with the implementation. The over $50 billion spent on these projects, much-hyped by the Chavistas, has to date, produced zero, yes ZERO, kilowatts. Billions more dollars were wasted, misallocated, or just disappeared.

 During the Chavez and Maduro years there were several times of crisis where major blackouts occurred and power rationing was put into effect. The primary reason for these was drought causing dangerously low water levels, primarily at the Guri dam which provides the majority of the country’s electric power. During these times the government would point to the Tacoma dam project (Yes, one of those multi-billion dollar, zero kilowatt gems) as the solution. Then the rains would return and everybody would forget about the drought, at least until the next drought. It was also a Chavista favorite to blame the power outages on sabotage by “right-wing terrorists”, CIA plots to “bring down the Revolution”, etc.

 In 2013 and again in 2016 the government was warned about the deficiencies in the power grid and concern over the lack of maintenance. Their willingness to address the issue was typified by their response to union leader, Elio Palacios’ warning that a crisis-level event was imminent. They threw him in jail.

 More tomorrow….

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