English court OKs partial privatization of PDVSA

Quico says: So, it turns out English courts have no jurisdiction over the PDVSA/ExxonMobil pissing match. They’ve just lifted the preliminary asset freeze on PDVSA, handing chavismo a massive propaganda win and a chance to sell anything and everything PDVSA owns abroad. Effectively, it took an English judge to authorize the privatization of a big chunk of PDVSA.

My guess is that that’s what we’re about to see. Cuz, remember, the whole point of freezing PDVSA assets abroad was so that, in case the international arbitration case over the Faja contracts went ExxonMobil’s way, they’d have some way to collect damages. Of course, that arbitration is ongoing at the International Chamber of Commerce in New York, but it isn’t expected to reach a decision for another 3 years or more. Plenty of time for PDVSA to get rid of any asset Exxon might want to move on in case (hypothetically) they got awarded something at arbitration.

For now, the whole case looks like a big miscalculation on Exxon’s part: its current status is no chivo, no mecate. And for a Venezuelan government finding it increasingly hard to meet its import bill, the chance to raise a few billion bucks by privatizing PDVSA’s foreign holdings is excellent news.

Such a sale would add a few more months of viability to the macroeconomics of populism, and would put off the thoroughly inevitable adjustment that little bit longer…at the cost, bien sur, of decapitalizing the state that little bit more.

Calls for a bit of marginal analysis, this one: on the margin, what is the impact of one additional stripe on a tiger?