Friday, 23 April 2010

The Chinese pawn broker and Venezuela or "espero que usen vaselina"

The Venezuelan government had announced some days earlier that it was getting Chinese investments for 20 billion dollars. I wrote about that here and Miguel wrote much more extensively about the same subject here. Today we can read in Spanish an interview with Ramírez, the Red Baron of PDVSA. In today's Venezuela, the public has hardly any access to information about the big deals Chavismo closes with foreign powers. We can only hope to get some bits of information from the Venezuelan regime when it feels like doing it.

Basically, in clear text, these are some of the items we get from the article (some is very clear, some just needs a little bit of between-the-lines reading):

  • Chavismo gets "20 billion dollars" to be paid in oil and oil products
  • Venezuela will have to give 100000 oil barrels per year for that (at least this year, but I don't think it will get "better" for us)
  • Venezuela would be thus sending up to now a total of 200 thousand barrels of oil to pay loans to China (as there were already 2 credits for 8 billion "dollars")
  • Those 20 billions are not supposed to be for oil projects (for which PDVSA needs money as Miguel wrote); the regime is currently deciding "in what programmes to use the money" (which means they basically are running out of money and what to be sure they have enough for the September elections)
  • As Miguel had found out, the Chinese will be giving 50% of the amount in dollars and 50% in yuan
  • Ramírez said that they are getting those yuan because Venezuela "has the strategy of not depending too much on dollars". Ramírez also said the yuan is a freely convertible currency, which is half the truth (or a third of the truth, we will actually get the 2/3). Now I wonder what happens if the yuan gets revalued as the US is expecting. What are we going to pay? Ramírez also says "nuestra alianza es ahora con China". This goes along the line of Chávez, who said the commitment was done because his system and political views were here to stay as the Chinese ones. So basically we go now from US dependency to Chinese dependency. Great.

The PDVSA baron also talked about the nationalization of service companies. He said the government would pay "when we are ready" and that those companies, having problems with their workers, "even own us money". In clear text: the government still does not have money for them, so it will just threaten them in order to make them stop bothering.

The Venezuelan government is currently receiving several times the amount of petrodollars governments in the nineties were getting from oil exports and yet it is pushing Venezuela into more and more debts. I am sure the regime will have money aplenty for this year's elections, just like in 2004, even if the nation will have to pay for it very dearly.

And what is the opposition doing? They have no clue.

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  1. Hola Kepler,

    Nice article, but if they use the money for the campaign there will be more damage in the economy.

    There is already a debt for 2 billion dollar (February 2010)

    They need to do also something (investments energy) about the electricity and also the food.
    There are more and more empty shelves in the supermarkets.

    Maybe a wild guess, but should it be possible that the elections will be postponed?

    There is not enough money at this moment. And... the support for Chavez is not that great.


  2. Alpha, your guess is as good as mine.

    We don't know the details of the agreements, but you see already we are committing a lot of oil for a lot of years. What does the Venezuelan government get for that? They can pay some debts, import again more cheap food, distribute mattresses, etc.

    Ramírez's words were that they were still discussing where they would put the money. Obviously, they did not know if they would get that amount until recently.
    Now they want to see how to better spend it to remain still in power for the short term...luego ya verán.

    Look, unless oil prices increase again dramatically for many months, they better organize the elections this September than next year.

    They can still pull some tricks: more fraud in rural areas, here and there, threats, inhabilitations. Last but not least, they can always decide to emasculate the National Assembly if they see they lose too much.

    They are still in a difficult situation, but Chavistas can "count" on people like Ledezma, Salas, the UNT blokes, Allup,
    Borges, the what's-his-name student who fought in Valencia because "he had earned the candidacy", etc. Those people are still acting as selfish protocaudillos with no program, no proposal. Chavez is even worse, but Chavez has the petrodollars...or at least now the Chinese food/toys/cars to come for the many barrels of oil.

    The 20 billion dollars (half in yuan) will be bad for the economy, but they will buy some votes and minds.

  3. How much is their OPEC export quota per year?
    Isn't that exactly the kind of imperialism they have allways dreamt to fight against...
    More sooner than later they will be out of this Government job, but the debt services will remain there.

  4. 20.000.000 mil / (100 mil barels a day * 365 days * 10 years) = 54,8 $ per baril.

    Venezuela will need quite a few major oil price downturns in the 10 years to come, to make this a good deal.

  5. Imperialism according to the encyclopaedia of Chavismo is "any power that even hints about human right abuses in Venezuela". That goes for the USA and the EU.
    China has a long-standing tradition of absolute discretion, no matter what. To be frank: the EU is very quite about Saudi Arabia, Egypy, etc and the EU is also rather silent about Libya and many other countries. Still, they do spend some minutes "showing concern for" certain issues (attrocities). China? As silent as it can get.

    In a previous post I highlighted what Chávez said about the deal: this deal is done knowing both the Venezuelan and the Chinese current governments and political systems are here to stay (more or less that is it)

    Yes, we will have to pay for a long time.

    Good calculations. I don't know the yuan part of the deal will turn out to be counted at the end. Unlike what Ramirez said, those yuan ain't freely convertible.


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