Oh Citgo!

Your briefing for Saturday and Sunday, August 27-28, 2017. Translated by Javier Liendo.


This past Friday, the United States imposed financial sanctions on the Venezuelan government, banning specific transactions between the Venezuelan government and PDVSA with all U.S. persons or any counterpart in the U.S. territory. They banned the purchase of all new bond issues, of the Venezuela 2036 sovereign bond, of debt issues with maturity greater than 90 days by PDVSA, and dividend payments to the Venezuelan government (or entities it controls). The exceptions to these sanctions, called licenses, allow for the import and re-export of medicines, medical equipment and agricultural commodities and include “provisions allowing for a 30-day wind-down period; financing for most commercial trade, including the export and import of petroleum; transactions only involving Citgo; dealings in select existing Venezuelan debts; and the financing for humanitarian goods to Venezuela.” The White House’s statement says that sanctions are calibrated to “deny the Maduro dictatorship a critical source of financing to maintain its illegitimate rule,” protect the United States financial system from complicity in Venezuela’s corruption and in the impoverishment of the Venezuelan people, and allow for humanitarian assistance.


Early reactions

Foreign minister Jorge Arreaza condemned the sanctions and claimed before the UN, that they answer to an uncivilized and aggressive policy that violates sovereignty, so he demanded respect for the principles of international law, saying that we’re a free and democratic country and that they’ll strive to solve this through dialogue, but urging the UN to condemn the sanctions.

Then, he and Rafael Ramírez and foreign minister for 5 minutes Samuel Moncada got an escrache:

He explained that Nicolás won’t attend the UN’s General Assembly set for September 19th because “he’s too busy with gubernatorial elections, working on economic matters and with the ANC.” On the other hand, Delcy Rodríguez blamed lawmakers Julio Borges, Freddy Guevara and Henry Ramos Allup for the sanctions, claiming that they even requested them in writing and cautioning them about the Truth Committee’s judicial power.

And the US retorted

The US ambassador to the UN, Nikki Haley, said that her country won’t allow Venezuela to turn into a dictatorship and left the door open for new financial and diplomatic measures against the Venezuelan government, saying that these sanctions send “a clear message to the Venezuelan people and a clear message to Maduro.”


Crystallex won

Several analysts said that Trump’s sanctions were bland, so the real financial blow to Nicolás was that Canadian mining company Crystallex managed to get an order from an American court to seize Venezuelan government funds deposited in Bank of New York Mellon Corp. account. The measure is the result of Crystallex’s long dispute to collect $1,4 billion from the government in compensation for the nationalization of a gold mine operated by the company until 2008. Although the documents don’t state the amount of money in that bank account, Reuters says: “The company’s aggressive legal gambit shows the risks that Venezuela faces in moving funds through the U.S. financial system, which is crucial for the country to pay its bondholders, amid increased pressure from the United States.”

Remember that at least 20 companies seek to collect compensation for the expropriations performed by el finado and Nicolás.


Military actions

The White House security advisor, lieutenant general H.R. McMaster, said that the US wasn’t planning on taking military actions against Venezuela in the near future, but that president Trump is taking advantage of a wide range of options, anticipating the possibility that Venezuela’s situation grows worse: “In terms of military options or other options, there is no such thing anymore as only a military option or a diplomatic option or an economic option, we try to integrate all elements together,” said McMaster.

But in case they were planning such a thing, The Armed Forces’ Strategic Operation Command chief Remigio Ceballos claimed that 200,000 soldiers and 900,000 militia will participate in this weekend’s military drill, dismissing a classic foreign invasion from the US and betting for what he called a “false alarm at the border.”

Human Rights

The IACHR expressed its concern for the massacre of 37 inmates in Amazonas Judicial Detention Center and urged the State to investigate and clarify the circumstances in which it took place, and identify and punish those responsible. Yesterday, traveling prosecutor general Luisa Ortega Díaz said that she felt unsafe because she knows the regime has sent thugs to kill her. It’s been five years since the tragedy at the Amuay Refining Complex, an explosion that killed 47 people and injured another 130. There’s been no establishing of any responsibilities, much less, punishment.


Nicolás’ reaction

Surely, if chavismo wasn’t in power, Venezuela “would be in the worst economic situation in its history.” He tried to blame Friday’s economic sanctions for our economic crisis, as if recession, inflation and scarcity had started with the White House statement.

Insisting on comparing this situation with Cuba’s, he said that these sanctions were a financial and economic “blockade”, so he invited the holders of Venezuelan bonds and American companies that buy Venezuelan oil to meet with him in order to find solutions.

He mentioned default several times as a foreign scheme (instead of a self-inflicted risk) and said that he felt the pain of having paid $65 billion in 24 months, as if chavismo hadn’t sought major debt in the midst of the financial boom.


Gimme my money!

According to Maduro, Trump shut down Citgo down by banning it from transferring dividends to PDVSA, although Venezuela’s FX controls have prevented multinational companies to do just that for years, which is a crucial fact for understanding why so many have ceased operating in the country. “Who could say that Venezuela is a dictatorship?” he asked before claiming that there’s freedom of the press, freedom of expression and freedom of transit here, scarcely a day after forcing two Colombian networks and two iconic Caracas radio stations off the air.

He announced municipal elections for the first quarter of 2018 and the presidential election for December, with a catch: “Or when the ANC decides.” He did a lousy job at pretending that he’s strong, that his government still has economic capacity, because he can pick and choose his oil clients. He asked the TSJ and the ANC to open a “historic trial for treason” against all those who requested sanctions against Venezuela.

After a career-spanning 40 years, El Trabuco Venezolano and its conductor Alberto Naranjo were acknowledged with the title of Cultural Heritage for their contribution to national culture. Conatel pulled the radio station 92.9 FM from the air. Yes, “tu efe eme, noventa y dos punto nueve,” speaking of culture.

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  1. A couple of months ago in discussion of Venezuelan government debt, I posted that the real debt includes expropriated properties, not just from multinationals, but from Venezuelan companies and individuals. Lands have been seized, factories, buildings, and there are damages to those. Airlines alone are apparently owed a total over $3,000,000,000 dollars. That’s a LOT of money!

    I still cannot figure out justifications for the prices of houses in Venezuela. Some I’ve seen listed for sale have prices comparable to suburbs here in the U.S.. I couldn’t afford many of those Caracas listings (I’m not rich), and the environment down there is “unattractive” (have no idea how I’d ever land a job and keep it). One clue is that real estate will hold its value during hyperinflation, so people put their bucks in properties, but the mortgage interest rates must by sky-high.

    If CC would run a piece on hipotecas and tasa de interes it would be an interesting look on the inside of the economy. Maybe some data on automobile purchases, availability, consumer durables, even club memberships for the well-to-do, like Puerto Azul, Caraballeda, CCC. Prices of apartments in the east. Not be be “classist” but the upper 10% are the people who probably exert the biggest pound-for-pound influence on things, and they are the ones under pressure, not knowing, probably, when their jobs might disappear – e.g. Luisa Ortega Diaz, but also the guys at GM, Clorox, Smartmatic, etc…

  2. You did not make an reference about the price that that exporter get for each kilogram of cocaine (in U.S. dollars – not worthless Bolivars).

    And by-the-way, has Harvey impacted the trade.

  3. Those videos of the reserves of the pueblo or whatever, training for the invasion were hilarious. So pathetic.

    And that military special forces guy zip lining right into the back of that car? oh my goodness.

  4. Those weapons are very likely to end in the hands of the criminal gangs that harrass the people.

    Expect malandros to start stealing people at grenade-point, or outright exploding whole houses with bazookas to loot what’s left.


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