The unravelling of the post-Chavez regime on Venezuela has been underway at least since the late Hugo Chavez’ body reached room temperature four and a half years ago, and Nicolas Maduro stepped into his shoes. The newest developments include the escape of a key opponent of the regime, and the default both of the sovereign itself and of an important economic asset.
In 2014 Antonio Ledesma organized massive street protests against the Maduro regime. In 2015 the government placed Ledezma under house arrest. On Friday, November 17, 2017, various news outlets reported that Ledesma had escaped safely, by way of Colombia, into Spain. “In Spain today I feel free,” Ledesma reportedly said at the Madrid airport. “Let’s not permit that Venezuela dies in our hands.”
The day before: on Thursday, November 16, a committee of the International Swaps and Derivatives Association had ruled that Venezuela and its state-owned oil company, PDVSA, were formally in default on their bonds. ISDA’s use of the label “default” is no language game: if a sovereign or other covered entity is in default, that fact triggers payments on credit default swaps, governed by standard contracts ISDA has prepared.
The face value of new credit default swaps outstanding on the sovereign bonds of Venezuela comes to about $1.3 billion. The analogous figure for PDVSA is smaller, a ‘mere’ $250 million.
Right Wing View
Ezra Levant, a high-profile Canadian conservative, tweets thus:
“State oil company in Venezuela defaults on its debts. Venezuela has larger oil reserves than even Saudi Arabia. That’s like running out of sand in the Sahara Desert.”
It isn’t just business and state finances that encourage this impression of a state spiraling out of control.
Nikki Haley, the U.S. ambassador to the United Nations, has been pressing the UN to put on its agenda the deteriorating condition in Venezuela, which she has described as “an increasingly violent narco-state.”
One UN office, the High Commissioner for Human Rights, has described Venezuela as the home of an “increasingly critical human rights situation.” The High Commissioner’s report says that authorities have systematically “violated the right of peaceful assembly, mainly by repressing protests, criminalizing individuals who exercise this right and by imposing undue restrictions on this right.”
Left Wing View
On twitter, JP Geonomics says that it is a fallacious claim of the mainstream media that “Venezuela was to default or is defaulting on its debt interest payments. Not true!” On JP’s reading, all that has happened is that Venezuela has untethered its own economy, and debt payments, from the U.S. dollar. But of course to those paying out on their CDS’, that will seem a meaningless distinction.
On another front, the United States has imposed economic sanctions on Venezuela in response to the appearance of electoral fraud on two occasions earlier this year. As of August these involved a ban on trading in the new bonds of the country or its oil company. Maduro said at that time that the U.S. was trying to force Venezuela to default.
Of course it is possible to blame the sanctions themselves for the problems in Venezuela, including the default, and many on the left succumb to that temptation, because it fits nicely into their anti-imperialist narratives. But the timeline really doesn’t work: the dynamic that led to the default well preceded the sanctions.
A Last Word
There are some on social media who have made the important point that Venezuela is not all about Maduro, and that only weak analyses focus entirely on him. In this spirit, we will give the Last Word to Siggon-Kristov, who tweets:
“Both camps [socialist and capitalist] do the same thing [when they] discuss Cuba, Venezuela, Syria, and the DPRK. They play into lazy narratives that reduce an entire country’s politics to a single leader.”