We’ll get to our Down The Rabbit Hole segment in a sec but first…Reuters reports that the president of Venezuela’s (Maduro’s) National Assembly, Jorge Rodriguez, announced Venezuela will not allow EU electoral observers for the 2024 presidential elections saying they are “representatives of an archaic, murderous, imperial Europe.”

 It couldn’t have anything to do with the EU condemnation of the Maduro regime banning the leading opposition candidate for the election, Maria Corina Machado, from holding public office for 15 years could it?

 Or could it be that the last time the Chavistas allowed an EU electoral observation mission for a vote in Venezuela (2021) the mission found that, while the electoral situation in Venezuela had improved since 2018 (an election considered by many to be the most fraudulent in the history of the country), conditions in the country did not meet the basic international standards for free and fair elections?

 FYI, the 2021 elections were also monitored by the Carter Center who also found that Venezuela did not meet conditions for free and fair elections.

 The Maduro regime did, however, get accolades from Russia in 2021 for the integrity of their electoral process. I guess with Maduro’s 5% approval rating the best path to victory for the Chavistas is keeping everyone in the dark.

 Then we have Business Wire reporting that the US Third Circuit Court of Appeals affirmed a prior US District Court order granted to Canadian mining firm, Gold Reserve. The district court issued a judgement in favor of Gold Reserve (twice) and against Venezuela for $996 million.

 The company says they’re open to amicably resolving all pending issues with Venezuela. Could that be because this thing dragged on so long that they would be in the back of the line for the proposed auction of Citgo shares, Venezuela’s last foreign asset that’s really worth anything?

 Let’s head Down The Rabbit Hole…

 Chapter 1/ continued…

 …Well, you guessed it! That’s exactly what happened.

 The biggest factor to the failure of this and basically every area of the Venezuela economy and society was the massive borrowing campaign the Chavistas embarked upon. I know it sounds crazy. With all that oil money rolling in why would you be borrowing $60 billion from China and more from Russia? The only thing I can think of is the infamous trifecta of greed, corruption, and a lust for power combined with a healthy dose of economic ignorance.

 Nothing lasts forever. Other oil-dependent economies have sovereign wealth funds or “rainy day” funds, if you will. Keep your debt low and with the cushion of your wealth fund you will be fine no matter what happens. The massive borrowing by the Chavistas took away all their “wiggle room” and mortgaged their future. But, who cares about a rainy day when the sun is shining?

 The sun shone brightly for a while and spurred on by the widespread support of the populace the Chavistas pushed the envelope even further. They ran up a $6 billion tab with the pharmaceutical companies and expropriated various companies that would later be needed to support the healthcare sector. As is the norm, when private companies are expropriated by governments their production drops precipitously, if they are fortunate enough to not go out of business all together.

 Now comes the real killer. With all the oil money rolling in and all the borrowed money available the Chavistas didn’t use that money to fund Barrio Adentro. Instead, they diverted funds from existing hospitals guaranteeing their deterioration. Since it happened over time nobody really cared. The sun was still shining. Who cares about an incubator that doesn’t work. “We have lot’s of ’em. Just throw that one in a storeroom and we’ll fix it later.”

 As all this was happening there was another situation developing. Many of the Cuban doctors used their participation in the Barrio Adentro program as an escape mechanism. They came to Venezuela from Cuba where they earned very little and found that due to the terms agreed upon by the two governments they would earn even less. Can you say “indentured servitude”? Very quietly their ranks thinned ( those without family members remaining in Cuba as de facto “hostages”) as they would visit other South American countries and simply not return. “What’s the big deal? There’s 25,000 of ’em…who cares if a few go missing? The sun is shining and it’s a beautiful day?”

 THEN IT BEGAN TO RAIN!

 Shortly after the death of Hugo Chavez from cancer (it’s worth noting that Chavez chose to have his cancer treated in Cuba and not Venezuela) the price of oil fell off a cliff from well over $100 a barrel to under $30. When you receive over 96% of your revenue from oil…THAT’S A PROBLEM!

 By this time even the extraordinarily well-constructed national oil company was falling victim to Chavista policies and production fell by roughly a million bpd (barrels per day). Again, when you receive over 96% of your revenue from oil… THAT’S A PROBLEM!

 In the first year and a half of Maduro’s tenure the Chinese complied with his requests to borrow more money and loaned him another $10 billion. After 2015 they told him there would be no new money and all funds from Russia were arms and oil related. Since none of their other allies really had any money there would be no more borrowing… THAT’S A PROBLEM!

 More tomorrow….