Between Fighting or Losing Citgo

After the Maduro regime made a deal it can't back, the National Assembly struggles to keep Citgo for Venezuela; chavismo creates more parallel authorities and a new, odd plan with minery.

Photo: YouTube, retrieved.

Juan Guaidó says it’s possible to lose Citgo (the Venezuelan oil company in U.S. territory) because of Pdvsa’s 2020 bond debt, and Nicolás mortgaged the country’s assets in a debt worth $130,000 million. On Tuesday, the National Assembly approved an agreement rejecting the illegal debt of the 2020 bonds; the first agreement was approved in September 2016, before the bonds were issued. Why today? Because in a few days, the trial will begin in the U.S. to protect Citgo Holding Inc., and ratifying their rejection is a previous step to denounce the bond’s illegality, before October 27th, when bondholders expect a payment of over $900 million. The thing surrounding the 2020 bond is that Nicolás gave 50,1% of Citgo’s capital as a guarantee, meaning: if he doesn’t pay (which he didn’t,) Venezuela loses Citgo. The opposition’s argument is that the contract signed by Pdvsa is a contract of national public interest and should have been authorized by the National Assembly, a requirement that Nicolás’s didn’t respect. 

Is Paying the Punishment? 

The whole argument’s weak spot is a payment of interests done last April. Deputy Elías Matta said that this payment was made “bajo protesto” (judicial mechanism to pay without recognizing the bond’s legal validity,) to avoid an embargo on Citgo, specifying that they won’t make the next payment because it’s “illegal.” Economist Ricardo Hausmann backed Matta’s explanation adding that, in April, “they weren’t prepared to go to trial” but they are today. Special attorney general José Ignacio Hernández published a document stating that the payment bajo protesto allowed for a strategy that protects Pdvsa’s rights: “If that payment hadn’t been made, the risk of losing Citgo would have been high.” In any case, the already announced payment default in October opens the compass for bondholders to take control of Citgo. 

Other AN Agreements 

The AN session was long and intense. It included debates about Venezuelans’ migratory status and the university autonomy crisis. The National Assembly approved an agreement where Venezuelans who have fled the country are granted the “refugee in all the region” status, based on the Cartagena Agreement, which states that all citizens who escape fearing for their lives, safety or freedom are refugees. The agreement exhorts the international community to recognize the crisis of Venezuelan refugees. The National Assembly also agreed to reject the TSJ sentence ordering the elections of university authorities, they created a commission to appoint a special comptroller and authorized Juan Guaidó to appoint the ad hoc board of the Corporación Venezolana de Petróleo (CVP.) Oh! And a Psuv deputy saltó la talanquera: Sandra Castillo, from Portuguesa. 

Insufficient Salary 

Caretaker President Juan Guaidó reiterated on Tuesday that the minimum wage increase is insufficient: “That salary isn’t enough for an egg carton and half a kilo of cheese,” he said, adding that neither Clap boxes nor any other chavista initiative has alleviated the complex 

humanitarian emergency and have only worsened “a great corruption scheme.” Guaidó said that for the crisis to end, the usurpation in Miraflores has to end. Chavismo’s appointee for announcing the new minimum wage, Francisco Torrealba, said that with this salary, Venezuelans can buy all the products in Clap boxes and if they can’t, “at least they’ll buy more things.” He acknowledged that the new increase isn’t enough to alleviate the economy’s problems and he said that the crisis will end when “those behind the economic war” are defeated. Luis Vicente León, Datanálisis director, said that Nicolás’s government “lost control of the economy” emphasizing that this increase doesn’t solve the problem and the minimum wage’s loss of purchasing power will be immediate, because “bolivars and dollars lose their value” here. Luis Vicente also said that 78,5 % of Venezuelans want political change: “There’s no doubt that the majority of the population opposes Maduro.” 

A Little More Economy 

The IMF estimates that in Venezuela, inflation will reach 200,000 %  by the end of 2019, the economy will contract by 35 %; the GDP will drop at least  10 % compared to 2018, and inflation will reach 500,000 % in 2020. Very much like its last reports, the IMF highlighted Venezuela’s complex humanitarian emergency and the devastating impact of recession. India’s main private refinery, Reliance Industries, started importing Venezuelan oil again and said that they’ll pay with diesel, an exchange that doesn’t violate U.S. sanctions. “With this exchange agreement, Reliance gets cheap oil, which will increase its refining margins,” explained the company’s spokesperson. Nayara Energy will use another method: supplying oil to Russian oil company Rosneft, in exchange for Venezuelan oil. 

Bloomberg’s investigation about the Swiss bank Compagnie Bancaire Helvétique SA (CBH) and the remarkable Venezuelan clients that have hidden their money there is truly interesting: Naman Wakil, who benefited from his bond to former Food Minister Carlos Osorio; former Treasurer Alejandro Andrade; businessman Raúl Gorrín, and siblings Luis and Ignacio Oberto. The figure will make you cry:  “In Venezuela, economists estimate that at least $385,000 million from public funds were lost to corruption from 2003 to 2015.” 

ILO Recommendations 

Fedecámaras and independent unions demanded the regime to follow the ILO’s recommendations. Ricardo Cusanno said that these recommendations depend on Nicolás’s political will “and the way they act regarding the productive system and workers, if this doesn’t happen, there are other ways like the ICJ,” he said. He added that the solution to the problem isn’t leaving the ILO, as some spokespeople from chavismo have said, because that would increase the vulnerability of workers’ rights. About the minimum wage increase, he said that the regime has violated the law, and tripartite policies for building a minimum wage without consensual macroeconomic policies to back it. The ILO’s Surveying Commission report will be taken to the National Assembly for its necessary debate. It’s a document that summarizes the violations perpetrated by chavismo regarding labor. 

Gold and Petros 

Nicolás’s variety show was a meeting with governors and “state protectors.” They pretend to have proposals to improve their governments, proposals so many and so great that Nicolás decided to approve them through something he called the Plan Minero Tricolor: “I’ll hand over a gold mine in process and with productive capacity to each government of bolivarian states to produce resources in exchangeable currency.” He also assigned a million petros bimonthly to each chavista state government. In the states controlled by the opposition, (Merida, Tachira, Anzoategui and Nueva Esparta), he decided to create the Corporaciones de Protección Social y Económicas, “to serve the people directly” and assured that if people didn’t have protectorates in those states, “they’d be orphaned.” 

Movements on the Board 

Diosdado Cabello said from China that young Venezuelans will train there to create a new economic model, advised by the Communist Party. Also, they’ll strengthen military agreements with China to guarantee maintenance and seal “the possibility of improving our weaponry.” OAS Secretary General Luis Almagro asked the international community to apply sanctions against Nicolás’s regime. “Stronger sanctions against the Venezuelan dictatorship is crucial, and sooner or later this matter will have to be taken to the UN Security Council, which can apply stronger measures.” Before he starts his mandate as Europe’s High Representative for Foreign Affairs on November 1st, Josep Borrell started an official visit to Cuba on Tuesday to strengthen cooperation. 

Many human rights NGOs are asking to reject Venezuela’s candidacy to the UN Human Rights Council and highlighted that electing Venezuela would be an insult to millions of citizens affected by the crisis, when this is the first Latin American country that’s being investigated by said council. The election will take place on Thursday. Venezuela competes against Brazil and Costa Rica.

Naky Soto

Naky gets called Naibet at home and at the bank. She coordinates training programs for an NGO. She collects moments and turns them into words. She has more stories than freckles.