China’s Venezuela Challenge

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Oil baron J Paul Getty is reputed to have said: “if you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem.” In lending more than $60b over the past two decades, China may have its own problem: Venezuela.

The chronic catastrophe in Venezuela has most likely transitioned to its acute stage. Over the past week Western governments moved to recognize Juan Guaidó, leader of the Venezuelan National Assembly, as interim president. The US, Organization of American States, Brazil, and the majority of Latin American countries have now been followed by members of the European Union. The US has further stepped up pressure, imposing sanctions on Venezuelan oil company PDVSA. 

China, Russia — as well as Bolivia and Cuba — still recognize Nicolás Maduro as president of Venezuela. Our friend at the Wilson Center Benjamin Gedan notes that China is the only one of those in a position to give material support to the Maduro government, and has effectively brought that to a halt. 

Guaidó recognizes the key role that China will play in the future of Venezuela, and that the current Maduro government is hurting their investments. In an interview with South China Morning Posthe says:

China is a fundamental global player with whom we would like to relaunch our relationship based on mutual respect and cooperation. China has witnessed at first hand the plundering of our state resources by Maduro’s government. Its development projects in Venezuela have been equally affected and falling due to governmental corruption and debt default. We are ready to begin a constructive relationship and dialogue with China as soon as possible.

But note that he wants to “relaunch" the relationship. Somethings will have to be included in that relaunching, including debt:

All agreements that have been signed with China following the law will be respected. If previous agreements were signed by adhering to the due process of approval by the National Assembly, my government will accept and honour them.

That reiterates the implicit threat that the opposition National Assembly and its supporters have hinted at before, that debt incurred by the Maduro government *without* National Assembly approval is “odious” and will be repudiated. 

China — while perpetually concerned about the specter of another “color revolution” (「顏色革命」) — for its part iswilling to play ball:


...the Chinese side has been in close communication with all parties in various ways on the situation in Venezuela. We stand ready to work with all parties...

But with protecting its interests — loans, investments, and energy agreements — as the priority:


China-Venezuela relations are normal state-to-state relations... It complies with laws and regulations and should be above any harm no matter how the situation may evolve.

The Chinese government is openly acknowledging discussions with the opposition, and a newspaper seen as wanting to keep Beijing happy is giving Guaidó a prominent perch. Are these signs that the “win win” with Venezuela is based as much on economics as politics?

Happy New Year!

Novam Portam团队祝您及家人阖家欢乐,万事如意,猪年快乐!

The Novam Portam team wishes you and your family a happy family, all the best, happy Year of the Pig!

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