Venezuela is now the riskiest country in the world. This damning-yet-not-completely-unexpected development is not unrelated with what is happening in Buenos Aires.
Argentina, who for years has been the international financial community’s “enemigo público número uno,” has lost a string of court battles in the World Bank’s ICSID arbitration court. They have even lost battles in US courts. As you would expect, the Kirchners have repeatedly scoffed at the rulings because, you know, tenemos patria, che.
The reason? They need money from the World Bank!
Yes, those proud Argentines who have long scorned the international community have now realized that … they need the international community. In fact, Argentina is negotiating a US$3 billion credit line from the same institution it once defaulted. Hence, the markets have responded by rallying to Argentine bonds. The mere hope of rationality in economic policy has made Argentine risk drop. Now, Argentina is viewed as less risky than Venezuela.
This makes one wonder what will happen when Venezuela has to face reality and beg the IMF for cash, something which may be coming down the pipes, if the grapevine is to be believed.Caracas Chronicles is 100% reader-supported. Support independent Venezuelan journalism by making a donation.