Authored by Nick Cunningham via OilPrice.com,
Venezuela’s oil production fell by another 100,000 barrels per day (bpd) in March, a devastating blow that will only make the country’s economic crisis worse. Output is expected to continue its downward spiral; the only uncertainty is over the pace of decline.
As Venezuela comes apart at the seams, it will hand over more and more control of its natural resources, and even power over its institutions, to China, according to a new report from the Washington-based Center for Strategic & International Studies.
The report argues that enormous levels of foreign investment may seem beneficial, but that Venezuela’s economic predicament has actually been made much worse by China. Taking advantage of Venezuela’s desperation, China has managed to convince Caracas to sign “one-sided financial agreements” that perpetuate the economic malaise afflicting the country.
Over the past decade, China has sent an estimated $62 billion to Venezuela in one form or another, representing about half of all the money that China has lent to Latin America. For years, Venezuela has been sending oil shipments to China as repayment, and last year it shipped roughly 330,000 bpd to China, sales that earned Caracas little or no revenue.
China’s patience with Venezuela seems to have worn thin. Reuters reported last month that China is likely to roll over a current financing arrangement it has with Venezuela, allowing for lenient repayment terms, but that it won’t lend the Venezuelan government any more money than it already has. China remains Venezuela’s largest debt owner with $23 billion in outstanding debt.
But CSIS argues that China remains a key piece of the puzzle propping up President Maduro’s repressive “narco-regime.” The think tank says that China’s excessive influence is both bad for Venezuela and it also raises security concerns.
China’s hunger for commodities has led to “long-term dependency,” essentially preventing Venezuela – and other commodity-exporting countries in Latin America – from ever developing more sophisticated valued-added sectors of the economy. Venezuela will remain in a colonial-like state, serving as a place for resource extraction for China’s benefit. Indeed, China’s appetite for commodities is only expected to grow.
Moreover, China’s loans to Venezuela are particularly opaque. CSIS says that China has often routed its investment in Venezuela through Hong Kong to undisclosed locations. And oil-for-cash deals are especially difficult to track. Countries that overly dependent on oil exports have historically been prone to corruption, but China’s effort at obscuring the money trail to Venezuela has added “yet another layer to the entrenched corruption of the Maduro regime,” CSIS wrote in its report. “The international community should be skeptical of the seemingly endless amounts of untraceable money pouring into a country with a history of corruption, deep-state narcotrafficking, and without checks and balances.”
That dirty money is then spent on military weapons, rather than food and other essentials for the Venezuelan people. Even as the country crumbles and people go hungry, CSIS says that Venezuela ranks 21st in the world in terms of military expenditures, and first in Latin America. And all that hardware is often put to use against its own people.
Meanwhile, the lack of cash has already resulted in debt defaults. CSIS says that Venezuela has not paid a sovereign bond since September 2017 and is actually in a state of default on 16 sovereign bonds, totaling $1.81 billion in missed payments. Still, up until now, the totals could be miniscule compared to what might lie ahead in the near future – Venezuela has more than $9 billion in bond payments coming due in 2018.
A full-blown debt default would result in a new stage of suffering for the Venezuelan people. It would also leave Caracas with fewer options for selling its oil if creditors around the world try to seize oil shipments. This scenario would also likely result in even greater influence for China and Russia over Venezuela’s resources.
Chinese and Russian state-owned oil companies “will probably market a significant share of PDVSA’s exports and operate an increasing share of its production, guaranteeing the repayment of their loans,” according to March report from the Atlantic Council. In other words, Venezuela will have to more or less hand over its oil to Chinese and Russian companies if it wants to sell any oil on the international market at all.
Unfortunately, there are few good options. The U.S. is reportedly considering sanctions, although it is unclear when or what form those might take. While there is an urge to do something, sanctions would likely only deepen the misery in Venezuela, with uncertain odds of affecting change. Moreover, what is clear is that U.S. sanctions could knock even more oil production offline, significantly raising the odds of default, and potentially opening up Venezuela to more control by China.
Comments
The miracle of socialism and central planning ;-)
Then we best take some prime property in the South China Sea
In reply to The miracle of socialism and… by nmewn
Yeah, makes sense. They do a financial deal together and we respond with an invasion. Muracah!!!!
In reply to Then we best take some prime… by topspinslicer
Jews or Chicoms what a fucked up choice. A good example of why you stay the fuck out of debt.
In reply to Yeah, makes sense. They do… by Rothbardian in…
No matter what anyone thinks about Venezuelas leadership or methods, their current predicament is almost entirely the fault of the US. They've had their Jackals and Economic Hitmen in there destroying things for a long time now.
The goal was simple; get that oil. All of it. Venezuela didn't want to just give it up to the US, so the US does what it does when it wants something that the other party won't give them.
China and a few other countries are using the same playbook.
In reply to Jews or Chicom what a fucked… by Fiat Pirate
Don't be silly. This is the result of Chavez, Maduro and cronies looting billions of dollars from Venezuela. It's the latest perfect example of socialism in practice.
In reply to No matter what anyone thinks… by Nameshavebeenc…
"China has managed to convince Caracas to sign 'one-sided financial agreements' that perpetuate the economic malaise afflicting the country."
How does the author know that?
Did he see the agreement? Of course, he didn't.
JUST China-bashing.
Because THE DEEP STATE lost control of Venezuela.
In reply to Don't be silly. This is the… by Pernicious Gol…
When Maduro is hanging from a lamppost, the new government will declare the China deals illegal and tell Xi and his boys to fuck off. What will China do then, try to project power into the Western Hemisphere? lmfao! Good luck with that one.
In reply to "China has managed to… by beepbop
I believe it is best for us to learn to speak Mandarin.
It wouldn't be a bad idea to start looking Chinese, too.
In reply to When Maduro is hanging from… by The_Juggernaut
Oh gosh dammit -- it's those bungling Chinese again. They are hopelessly stupid, and they always screw up everything they attempt to do.
This is just another pathetic Chinese screw-up. I actually feel sorry for them. (The "sarc" tag is, of course, for the benefit of the intellectually impaired.)
In reply to When Maduro is hanging from… by The_Juggernaut
China slips the big dick into their commie buddies, and Russia tries to make it a DP.
In reply to Oh gosh dammit -- it's… by bluez
yep
In reply to No matter what anyone thinks… by Nameshavebeenc…
This is what happens when you let negroids and their cousins run an entire country.
In reply to Jews or Chicom what a fucked… by Fiat Pirate
Negroids followed by Chinese. Below the rock bottom.
In reply to This is what happens when… by Richard Chesler
Every time I see someone blame political leanings I think 'what a well indoctrinated plebe'.
In reply to The miracle of socialism and… by nmewn
Exactly... those are just labels for the usual patterns of rule.... authoritarian.... in the West, it is hidden behind the facade of 'democracy'... but look at our imperial actions, same as our Great Game parents across the Pond... Russia is different, but looks similar, but they just went through their national "Dark Night of the Soul"....
China is still in empire mode.. and looking to get back into expansion phase, taking over the helm of global ship of state... but the Chinese model is different in that they seem to implement a more Bismarkian economic policy of carrot and stick... they prefer not to get involved domestically in any country if they can help it. That is their historical pattern... even in Tibet... they held if for a couple of centuries, but internal weakness combined with British imperial reach took it away for about the same amount of time until they could grab it back after WW2.
China wants Venezuela as a good customer, not a competitor, that is how we should see them... they will take the helm by choice, but prefer, in Art of War style, to stay in the shadows as much as possible, which fits the global SG game... but the OWO is on the way out... as the SG preps their NWO game... CHina is late to the party.
In reply to Every time I see someone… by Savvy
No one can help your faulty thinking so you are in trouble.
In reply to Every time I see someone… by Savvy
Regardless of sales pitch this is the best the political criminals can do https://www.youtube.com/watch?v=rQmxm1YSrF8
In reply to No one can help your faulty… by TuPhat
Greed killing the planet and its inhabitants.
Human suffering and for what?
In reply to The miracle of socialism and… by nmewn
Chinese and Russian bases in Venezuela and the country gets up undisturbed.
I want the Panama Canal back too
In reply to Chinese and Russian bases in… by researchfix
Fake news.
Maduro is CIA, so was Chavez.
How the Chinese made the V's situation much worse? Or, should you say Chinese made US's situation in V much worse, correct? I know your English is good. Please don't blend things up. There's no such bullshit as US is holy and everyone else is evil.
i'm sure china will take care of the environment in venezuela as well as the do in their own country. lolz
The new Sinclair logo will be two coolies skinning a live dinosaur.
In reply to i'm sure china will take… by buzzsaw99
LOL! "Ownership" is a funny thing...
Remember, when fraud is the status quo, posession (and maintaining possession) is the only "law".
Echoes of Iran in the Shah era. Only now it's China not Britain.
The US only has itself to blame, weakening Venezuela with sanctions until China swoops in and grabs the ante off the table.
jeezus...
The bus driver is owned by the Chinese. Who is surprised?
Taking advantage of Venezuela’s desperation, China has managed to convince Caracas to sign “one-sided financial agreements” that perpetuate the economic malaise afflicting the country.
Just take out China and put in the US and European countries. They don't give a shit, they are just worried that China will have another foothold into this country and control of it's oil.
Perhaps China should show Venezuela the correct way to run a socialist regime. Perhaps Venezuela will then start to flourish like China already has.
Sure, the first thing the Chinese would do is kill everyone who is noy Chinese AND of oligarchal birth. You are aware of Chinese history I hope.
In reply to Perhaps China should show… by mailll
Two words: Cultural Revolution.
In reply to Sure, the first thing the… by LawsofPhysics
Sure, sure...
Good luck with that!
In reply to Two words: Cultural… by DisorderlyConduct
They are geniuses...just like Wile E. Coyote...Splat!
In reply to Perhaps China should show… by mailll
Mmmm.... stir fry empanadas! Yummy!
Fortune cookie say you will die alone and poorly dressed.
So, they are complaining about colonial rape by the Chinese? Does anybody read history any more? Pot, kettle, black...
West Venezuela Company
In reply to So, they are complaining… by Sean7k
You must have flunked Postmodern Theory 101. Non-Europeans cannot commit colonialism. Instead they "share."
In reply to So, they are complaining… by Sean7k
https://www.captaincooksociety.com/home/detail/we-have-lost-our-father
In reply to You must have flunked… by Pernicious Gol…
A little history:
https://www.zerohedge.com/news/2014-09-25/venezuelas-gold-appears-be-st…
The saga of the incredible shrinking American penis continues....
The rate of shrinkage will rapidly increase after Mexico elects a Gringo-hating Marxist as President on July 1st and the Russians and Chinese are invited by Mexico to start conducting joint military exercises along the Texas border.
Imagine the irony of Russia and China setting up nukes in Tijuana and Chihuhua and Cuba and Venezuela. Imaging we get what we give to Russia in Ukraine and Eastern Europe.
In reply to The saga of the incredible… by Boogity
“The international community should be skeptical of the seemingly endless amounts of untraceable money pouring into a country with a history of corruption, deep-state narcotrafficking, and without checks and balances.”
I thought this was about Venezuela, not the USA?
Even the Chinese Communist Party acknowledges socialism doesn't work.
Another oil producing country that will use the Petro Yuan.
Bye bye Petro Dollar!
Corruption doesn't end in Latin America.
Bush sent a hit squad to oust Chavez
Now socialist death squads which are what we think of as community organizations are rulng the country.
The United States has some of those.
http://www.powerlineblog.com/archives/2017/04/socialist-death-squads-ru…
Author, shitty author!
You lost me with your hypocrisy.
Why can't China and Russia do what the US has always done?
And why does it have to be anyone doing it? Rationalizing wrong action by citing other wrong action is certainly not an argument.
It's just too bad that there's no one that is not out to fuck them. Including their own leaders. They're just riding this out till the cash dries up.
In reply to Author, shitty author!… by scaleindependent
It comes as no surprise that Maduro's Venezuela is teaming up with the part of world that still isn't free.
Venezuela appears for the first time as "not free" country report of Freedom House organization attributed the new category to "the combination of extreme economic mismanagement and heavy-handed Government" of President Nicolas Maduro.
Funny thing is, China has given up on Marxist policies.
And the Falklands are something blah blah. I'm sorry. I admit it. I never really read any of that... ^_^
In reply to It comes as no surprise that… by BritBob
Pagination