Tomorrow, Venezuela’s newly created debt restructuring committee is scheduled to meet with creditors in hopes of renegotiating, or restructuring $69 Billion of Venezuela’s outstanding debt. It is not presently clear just how many creditors will actually be attending the meeting. It is also unknown if the meeting will include frank discussions about restructuring Venezuela’s current debt, or if Venezuelan officials will use the opportunity to simply blame the current economic situation on US sanctions. Quite honestly, it is unclear at this time whether or not a meeting will even take place tomorrow.
As meeting preparations continue this evening rumors of default continue to swirl from Caracas to Wall Street. Venezuelan President Nicolas Maduro has adamantly insisted that his country will never default on its debt. Despite his assurances, speculation is growing that the true purpose of tomorrow’s meeting is to lay the foundation for default. Venezuela’s economic situation is beyond dire. It’s cash reserves are nearly dried up, and US sanctions are making it impossible for Venezuela to refinance its debt. Securing a debt restructure in the current climate is virtually impossible. Therefore, Maduro’s only other option would be to declare insolvency and default on the country’s $150 Billion in debt.
The uncertainty surrounding Venezuela’s economic future is causing anxiety internationally. A default could possibly spark a global financial crisis, although the prospects of this happening are low. There is still a possibility of Russia extending a lifeline and saving the day. Or, at least postponing the inevitable for some time. The two nations are expected to sign a debt restructuring deal later this week that will provide some relief for Maduro’s socialist paradise.
Realistically, however, even Russian assistance might not be enough. After years of political catastrophe, social unrest, and economic disasters, time is truly running out for Venezuela. What happens this week will likely determine its fate whether Maduro is prepared to face the truth or not.
President Trump’s first address to the UN General Assembly came at a point in time when a sizable portion of world leaders have been wondering what shape America First foreign policy will take. They received an answer this morning, and as an added bonus the world was also given an brief glimpse at the pillars of a potential Trump Doctrine. The US President’s speech contained blunt language and was missing the diplospeak and doubletalk that is common in world leaders’ addresses to the General Assembly.
North Korea was the main talking point. First off, to be clear, his referring to Kim Jong Un as ‘Rocket Man’ once again did not belittle, or minimize the urgency surrounding the North Korean nuclear crisis. Trump made it clear that the US will welcome UN efforts to bring an end to North Korea’s nuclear and ballistic missile programs. He followed up by letting it be known that if the crisis continues on its current trajectory, the US may be forced to “totally destroy” North Korea. Trump’s words were not an idle threat, or a rambunctious boasting of US military capabilities. Should North Korea launch an ICBM at US territory successfully, Trump will have no choice but to turn North Korea into the world’s largest sheet of glass. The North’s UN ambassador did not watch the speech in person, unfortunately. He opted to leave the chamber before the US President began speaking.
Iran was also in the crosshairs today. Trump dismissed the nuclear deal between Iran, the US and other world powers. Just as he did on the campaign trail last year, Trump blasted the deal as an embarrassment to the US and hinted that it will be revisited in the future. In fact, the Trump administration is currently reviewing the deal and next month the president plans to announce his intentions with regards to its future.
Venezuela was another target of Trump’s criticism. He hinted of a coming expansion of the already wide economic sanctions now in place on Venezuela if Nicolas Maduro continues to impose authoritarian rule. He did not repeat an earlier threat to consider military action as such a move would not receive support from most Latin American allies of the US. Nevertheless, by affording Venezuela as much attention as North Korea and Iran, Trump made it clear how important the US considers the crisis in Venezuela to be.
World leaders and journalists at home will spend the next week dissecting the speech in an attempt to determine what Trump was saying between the lines. The effort will prove to be an exercise in futility. Today’s address was clear, concise, painstakingly honest, and made an indelible impression on America’s allies and enemies alike.
As Venezuela remains perched on the brink of dissolution and Venezuelan President Nicolas Maduro continues stripping away the last remnants of democracy in the once vibrant land’s government, the United States has decided to begin hitting Maduro where it hurts. On Friday, it was announced that President Trump has signed an executive order imposing new sanctions on Venezuela. These will focus on Venezuela’s outstanding debt which has been a major economic vulnerability for the country. Venezuela, and its state-owned oil company PDVSA, owe international investors upwards of $100 billion. Sixty percent of the debts were issued in the US and are subject to US law. The new sanctions will stop Venezuela from borrowing money from international capital markets. They will also Maduro’s government from refinancing existing debts that are coming due later in 2017, likely setting up a financial crisis for Maduro to contend with in the fall.
The nuclear option for the United States has always been to prevent Venezuela from exporting oil. The chaos such a move could unleash on international energy markets makes it unpalatable to say the least. The sanctions ordered on Friday are a workable alternative to the nuclear option. For example, Citgo, which is PDVSA’s US energy company, can continue to sell gas in the US. However, it cannot send its profits back to Venezuela where it could finance PDVSA, and the Maduro government.
The next move for the Trump administration will be centered around diplomacy. The US has to make certain that nations like China, and Russia do not step in to fill the financing void that US sanctions will create. More importantly, Maduro needs to be informed that fiscal collapse can be headed off by restoring Venezuela’s democratic institutions. Washington has hinted at this possible scenario, but so far Maduro has not reacted to it. For his part, Maduro has launched a counterattack against US sanctions, and it is aimed at a domestic audience. “All they’re trying to do to attack Venezuela is crazy,” he said on Friday. “With the efforts of our people, it will fail and Venezuela will be stronger, more free, and more independent.”
In essence, Maduro has brought a knife to a gunfight. He is fighting an economic battle with nothing more than stale socialist rhetoric. Behind the scenes, he is likely hoping for intervention by China or Russia to keep his socialist paradise from going down the tubes completely. If that doesn’t come about, Maduro and Venezuela will be dangerously short on options and time.
Venezuela and Nicolas Maduro are making headlines once more. Early on Sunday morning armed men in military uniforms released a video calling for Venezuelans to rebel against President Maduro and his party. A short time later, a military base near Caracas was attacked. According to the government the attack was repelled and the assault force suffered casualties. It was also revealed that the surviving attackers made off with some weapons. Judging from news reports, and information from independent sources, an attack did take place. Who the attackers were affiliated with is another question entirely. The same is true for the motivations and affiliations of the men on the video. Post-referendum news coming out of the country has to be taken with a grain of salt.
The situation in Venezuela is quite fluid at the moment and Maduro and his government have an agenda to promote. Altering the political narrative to place the opposition in a villainous light would be beneficial. Some of the facts coming out of Caracas seem to back the theory that Maduro’s government is behind this morning’s events. The attack on the military base does not appear to have come as a surprise. It was defeated quickly and with relative ease. The Venezuelan defense minister has stated that the men captured this morning during the attack have already confessed to being under contract by ‘right wing Venezuelan activists who are connected to foreign governments. Powerful members of the ruling socialist party were very quick to put out statements denouncing the attack and affirming their support for Maduro. The release of these statements appears to have been coordinated for maximum effect.
The timing of the attack on the military base and the video release raise even more questions. For the duration of the Venezuelan crisis the opposition has been hobbled by disorganization, and a consistent lack of initiative. It has not lacked passion though. The emergence of an anti-Maduro movement in the military would’ve likely come before last week’s referendum. Acting now, after the assembly has been formed, is essentially locking the barn door after the horse has escaped.
The timing of these events is extremely beneficial for the government and ruling party. The video conveniently paints a belligerent challenge to the government. The failed attack underscores a need for swift, decisive action to nip the ‘threat’ in the bud. The constituent assembly has justification to provide the tools needed for Maduro to expand the arrests of opposition members, and infringe on the constitutional rights of Venezuelans in the name of national security.
What’s happening in Venezuela is a text book example of a ruling party consolidating its hold on the government with no intention of relinquishing control anytime soon. Sunday’s actions did not stem from a desperate attempt to jump start the opposition and invigorate them It stemmed directly from Maduro’s desire to tighten his grip on power. His fingerprints are all over Sunday’s events, not the opposition’s.
Democracy is all but dead in Venezuela.
Just under two days remain until Venezuela’s national vote to elect delegates for a Constituent Assembly to rewrite the country’s constitution. The world is watching events in the embattled South American nation closely, and many diplomats around the world are cognizant that Sunday’s vote could be the death knell for democracy in Venezuela. The once vibrant state is on a path that could make it the next Cuba, and there is little the outside world can do about it at this point.
Venezuelan President Nicolas Maduro has ordered measures to ensure that the vote takes place with minimal domestic obstruction. The government announced Thursday night on state-run media a complete ban on demonstrations across the country for the next five days. The hope is that a ban will curtail opposition activity around the time of Sunday’s vote. On Sunday, Venezuelans will choose the delegates for the Constituent Assembly which will go about replacing the nation’s current constitution. Maduro’s opponents view the assembly as a move to effectively cement the president’s grip on power. There is no timeframe for remaking the constitution, it can theoretically take years. While it is underway, national elections would be cancelled, meaning next year’s presidential elections will not take place. This alone will give Maduro an extended stay in power until a new constitution guarantees him a leader-for-life status.
The US is beginning to take serious measures in regards to the situation in Venezuela. The State Department issued a travel warning on Thursday night. Dependents of US embassy staff in Caracas have been ordered out of the country, and restrictions on the movement of US diplomats around Caracas and the rest of the country were put into place. Earlier this week, President Trump announced a new round of sanctions on 13 Venezuelan officials. There is speculation that this is simply a precursor to a more comprehensive sanction program that will be put into place if Maduro goes forward with Sunday’s vote. Trump has stated that the US will not “stand by as Venezuela crumbles.”