Today, the hotly anticipated meeting between Tareck El Aissami’s Debt Restructuring Committee and Venny and freshly flown-in PDVSA Bondholders went down in Palacio Blanco just across the street from the Presidential Palace in Caracas. It had its very own #TropicalMierda red carpet. Reports suggest the only productive thing that came out of the meeting was the rum-tasting experiences organized for the select few afterwards. CC had its very own mole there and we’re telling you how it went down.

In spite of the previous announcement that no OFAC sanctionées would be present, El Aissami and Finance Minister/PDVSA CFO Simón Zerpa were in fact in attendance, which motivated some early defections (oh, to be a fly on that wall).

El Aissami chaired the meeting and read a prepared statement parroting the usual propaganda lines about the economic blockade by the US and the illegal OFAC sanctions. He bitched about the decision by Citibank and Deutsche Bank to close several of the Republic’s accounts, and the difficulties this creates for the government when making payments. He talked vaguely about a new “sustainable ” payment schedule based on the UN Resolution of Sovereign Debt Crises, Restructurings and Resolution Mechanisms. “We need to work together to get the sanctions lifted,” said Tareck at one point, finally hinting at one real reason the meeting actually needed to happen.

“We need to work together to get the sanctions lifted,” said Tareck at one point, hinting at the one real reason the meeting actually needed to happen.

There was just nothing said here that hasn’t been said on VTV a thousand times before.

The meeting and the government’s “proposals” were as serious and carefully crafted as Miss Venezuela’s wishes for world peace.

After Shrödinger’s Default drama of the last two weeks (and with the grace period for several overdue coupons expiring today) the government’s only proposal is a propaganda gabfest delivered by a Drug Kingpin, and let’s take a moment to remember most of the attendees are forbidden to do business with him. You’d call it shocking if it wasn’t all so very what’d-ya-expect?

It’s easy to underestimate just how dire the absence of minimally competent technocratic figures has become within chavismo. Even if the government wanted to restructure, it just doesn’t seem like there are people in that team with the capacity to lead a highly complex negotiation like that. They just gathered together investors from all over the world and trundled them into Palacio Blanco to dish out propaganda. because dishing out propaganda is all they know how to do.

They say they’ll keep paying but if that’s true, why would anyone negotiate with them? As things stand, the next time a payment is late bondholders who attended the meeting (and, even more so, the ones who did not) will be heading to the nearest court to sue the hell out of them.

13 COMMENTS

  1. “We need to work together to get the sanctions lifted,” said Tareck at one point, finally hinting at one real reason the meeting actually needed to happen.”

    Tereck has personal reasons to get the sanctions lifted – like half a billion dollars (in his name) in American banks, impounded and gone forever.

    But surely there was SOMETHING mentioned of substance, some strategy proposed for restructuring, some agenda for decelerating bond payments, some SOMETHING. Did Terek field any questions? How many showed up, how long was the meeting and did they all slog down to Venezuela only to be harangued at by another Chavismo blowhard?

    Wonder what was the general impression of the visitors? Wonder if Chavismo knows just how hot the water is they are now treading.

  2. “Reports suggest the only productive thing that came out of the meeting was the rum-tasting experiences organized for the select few afterwards. CC had its very own mole there and we’re telling you how it went down.”

    Oh man, you’re tickling my ass with a feather here!!!

    Pre-Hugo, I did marketing work for Santa Teresa for wholesale distribution in the states, to get their foot in the door in bars and on liquor store shelves. (They’re the ones who paid for my condo in Macuto.)

    Well, I parted ways with ST just prior to Stupido’s arrival, but I tried to follow this huge company’s interaction with the incoming dictatorship, and I’m simply amazed that Santa Teresa was never touched. Not even mentioned, like Polar and so many others.

    How can this be? Why would the Chavistas not nationalize this company? Who does ST know? Who does ST pay?

    And of course, the reason they haven’t been touched is because they’re paying the right amounts to the right people.

    Santa Teresa was headed by Alberto Vollmer at that time, and I assume the Vollmer family has owned this rum hacienda for generations.

    So when I hear of a rum tasting for Venezuelan rums…and with so few Venezuelan distillers…Santa Teresa HAD to have been represented there!

  3. People that were opposed to any foreign intervention will regret their stance when the lawyers for international financial institutions go after the Money owed by the government.
    A military intervention would have been accompanied by humanitarian aid and the installation of a (presumably) credible government.
    Vulture funds and their lawyers only focus on recovering as much money as possible. There will be nobody charged with making sure that funds used for humanitarian needs will be separated from the assets marked for seizure.
    Nobody really knows how the default will play out. Other countries have defaulted, but I can’t think of one that relied on a single export to fund everything and one that needed to import almost everything for businesses and consumers.
    Bloomberg is also reporting that Venezuelan oil production is below 2 million bpd.
    Growing the economy to pay off debt is impossible.
    This will not be like any bankruptcy we are used to in the US, where businesses are allowed to borrow after filing bankruptcy to continue operations and reorganize. With the exception of Chinese and Russian support, there is no place for the government to go to borrow any additional money.
    The US banking system reaches all over the world. Any bank that is subject to US regulations, no matter where they are located is banned from doing business with people on the sanctions list. I don’t even know if the people on the sanctions list can be involved in hiring a US law firm to represent the government in US courts. That is where the majority of the asset seizure activity will be focused.
    Uncharted waters.

  4. “it just doesn’t seem like there are people in that team with the capacity to lead a highly complex negotiation like that. ”

    I affirm this out of the experience my father had as a Peruvian Economist during the 70s with Velasco’s left wing dictatroship and then Alan Garcia – APRA’s, populist government. He dealt with default and hyperinflation.

    The non military chavistas in power deny the existence of the problem through the ‘economic war’. They have stubbornly wished the problem away while they applied their bunk Stalinist / Podemista ideology. Moreover, they are oblivious of the ‘weapon of mass destruction’ that hyperinflation is.

    Then there is dealing with the ‘highly complex negotiation’ which the military wing by training and experience are plainly incompetent. Ellos dan ordenes y punto. This is far from what is needed.

    So el Gorilato brings economic hell fire over Venezuela.

  5. Moreover, they are oblivious of the ‘weapon of mass destruction’ that hyperinflation is.
    ——

    Not for long … unless someone can explain how this will not be the inevitable fallout of where their economic policies had led them. They’ve been able to keep kicking the can down the road but –

    I used “end game” so many times per the Chavistas that I won’t go there. How they keep surviving astonishes me.

    • Me too. Reason would have it that this is the end, but Chavismo surprises us all the time with the depths they will plumb.

      The game is with the military now. The thing is that they will be slow to react, and the suffering will prolong more than it should. Looking at history, we see that all dictatorships ultimately folded and conceded defeat giving the steaming mess to civilians.

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