Vultures Circling Lower
We’ll head Down The Rabbit Hole in a few but first…We’ve been telling you for a while that creditors have been lining up to get a piece of Citgo. Well, the vultures are now circling lower. Reuters reports that the US will not block a court auction of shares in in Citgo’s parent company PDV Holdings, according to Justice Department officials.
This paves the way for the potential seizure by creditors of Venezuela’s most prized foreign asset. The US Treasury has blocked such actions in the past but now will “not take enforcement action” to halt the auction or a negotiated settlement.
Robert Pincus, a court-appointed official, met with Justice Department and US Treasury and proposed starting the sales process Sept. 5th with the highest bid reviewed by the court in June, 2024. The court has retained investment banker Evercore to assess market demand and conduct the sale.
Bond holders have been preparing for this for quite some time as well as creditors with claims against the Venezuela government, some of whom already have arbitration awards. The total claims well exceed the value of Citgo, which is a wholly owned subsidiary of PDVSA (Venezuela government-owned oil company) and when they defaulted on their bonds years ago (some of the bonds had Citgo specifically named as collateral) they put Citgo at risk. That risk has become reality.
It’s been a long time coming and the process will take a while but it looks like it’s finally over for Citgo.
Then we have Delfi telling us that more Venezuelans of Lithuanian descent have arrived in Vilnius, Lithuania, according to the foreign ministry. The resettlement program has been running since 2019. More proof that the Venezuela migrant crisis is impacting countries everywhere.
And speaking of migrants, CIS tells us than CNN reported US Border Patrol detention facilities have exceeded capacities by a factor of four at the Southwest border.
A Border Patrol sector chief explained that in the first two weeks of April there were 1,700 Venezuelans entering illegally. In the last eight days there were 15,000. Many have grown impatient with the Biden administration’s “CBP One” app to schedule interviews as appointments are hard to come by.
Then we have News AM reporting that Paraguay’s President-elect, Santiago Pena, announced he plans to restore diplomatic relations with Venezuela.
Pena added that “Our voice will always be the voice of the defense of the Venezuelan people.” He officially takes office in August so we still have time for him to learn that the Maduro regime, the government he wants to recognize, is the enemy of the Venezuelan people.
And we have Bloomberg reporting that Venezuela President (dictator), Nicolas Maduro, asked Venezuelans to “resist” as he skipped an increase to the minimum wage and announced additional food stamps instead.
“Sooner or later we’ll get to the full recovery of wages, but right now, we have to resist, and resist strongly”. Maduro said he would increase the Cestaticket to $40 per month.
Let’s pause for a second to explain this…Cestaticket is the Maduro regime’s version of food stamps but the distribution is not cut and dried. Minimum wage earners get either the Cestaticket or, as is very common, employers may choose to provide a daily meal for employees in which case they do not receive the Cestaticket. By increasing the Cestaticket the regime gets out of paying the $40 per month to a lot of people.
The minimum wage is currently about $5 A MONTH !!! This is down from $28 A MONTH when it was last increased about a year ago. Remember, the UN metric for extreme poverty is just under two dollars per day…so the increase a year ago got them to earning about half that and now is only five bucks A MONTH!!!
He also announced a one-time “war bonus”, another reference to the “economic war” being waged against “The Revolution”, of $20. Thousands marched in the streets of Caracas protesting for wage increases.
Now, let’s go Down The Rabbit Hole…
Chapter 9 continued…
…The escalation of malaria cases is also quite concerning. Malaria was completely eradicated in Venezuela cities in 1961 and nationwide in 1980. There were 406,289 cases of malaria in 2017 and an estimated over 600,000 in 2018. Given the government’s unwillingness to release information, most people believe these numbers to be low.
There is good news/ bad news regarding the benefit of “The Mining Arc” for the government. The bad news is there is more revenue in illegal gold than in revenue that actually finds it’s way into the government coffers so this won’t be the financial savior the regime hoped it would be. The good news for them is that it does keep some members of the military happy. The trade is lucrative enough that top military officers need to be rotated so they can share in the $800,000 a month in bribes.
Summary : Typical of any Chavismo project “The Mining Arc” has very little upside and a whole lotta’ downside. The government earns a few bucks although nowhere near what they need. A limited number of military officers are mollified although again nowhere near what they need. All those international companies needed to make this a viable enterprise will never materialize. Nobody wants to partner with the Chavistas and the military’s lack of desire to control the area will keep reputable operations from participating. By the numbers, in 2003 mining accounted for 0.79% of GDP. Since Chavismo made it a “priority” in 2016 mining now represents 0.28% of GDP.
What is being done to the Pemon people and the environment is the real story of “The Mining Arc”. In the words of US President, Joe Biden, when he was Obama’s VP, “This is a big fucking deal!” Any gold sold by BCV, Venezuela’s central bank, as well as any sold by Venezuela state-owned companies, should be considered the same as “Blood Diamonds”. In the words of Def Leppard…”baby I’m not, Fuh Fuh Fuh fooling”…
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