Venezuela needs to extract its oil much more than what it needs Citgo.

Sir, Colby Smith and Gideon Long report that “Venezuela has long been fearful of missing a payment on Citgo’s debt — the country’s only bond not yet in default — since it could mean losing control of Citgo the jewel in the crown of PDVSA’s foreign assets” “Venezuela sanctions leave refiner’s future in doubt” August 13.

Let us be clear, in terms of helping Venezuelan’s being able to eat and buy medicines, which is what they most need right now, it is not Citgo that is worth the most, it is what it can extract in oil and sell in the markets, because that’s where the real money is. Moreover, if creditors would lay their hands on Citgo, they would most certainly love to continue refining Venezuelan oil.

Sir, what’s the worth of Citgo if Venezuela does not sell to it its oil in very favorable conditions? If I was a creditor that had my possibilities to collect based on Citgo, I would be very nervous about hearing a “Hear it is, take it!” 

And that might be why they so anxiously try to convince Juan Guaidó that he can´t afford to lose it. Personally I would, as I have many times said say “good riddance”. 

Why on earth are government bureaucrats running a normally very low margin’s refinery operation?

Sir, in 2000 I ended an interview in the Daily Journal in Caracas with: “I still can't understand the economic reasons for having bought and kept Citgo. There is evidence in the reports that it's being subsidized by PDVSA. And, for those who argue so much in favor of privatizing PDVSA, I challenge them to first make an IPO for Citgo, subject to their obligation to purchase oil products at market prices."

So, legitimate President Guaidó, don’t ever think of paying $913, in late October, to holders of a bond maturing in 2020 issued by PDVSA, which is backed by a majority stake in Citgo.

@PerKurowski

Venezuela’s undernourished children urgently need a huge public debt into oil extraction conversion plan

Sir, Colby Smith and Robin Wigglesworth report that Venezuela’s “opposition government plans to hold all its foreign creditors to the same terms no matter the kind of debt held, which public entity issued it, and whether or not the creditor had previously gone to a courthouse and received a judgment.” But also “Claims connected to the alleged corruption of the Chávez or Maduro regimes will be excluded” as will be those presenting “pricing inconsistencies or pending arbitration claims [until] would investigated further” “Venezuela’s opposition sets out debt restructuring plans” July 4, 2019.

On that I agree, 100%. And Venezuela presents a golden opportunity for the citizens of the world, to be able to reach a clear definition on what should be considered odious credits, and to agree on their consequences.

But, what I do not see yet, is the real understanding that Venezuela’s most urgent problem is not debt restructuring, it is that its people are dying and foremost that its young are growing up undernourished.

Let’s face it; no matter how much humanitarian aid can come to Venezuela, the problems with lack of food, medicines and basic day to day needs will not be solved, until sufficient oil extraction generates sufficient oil revenues. And of course until sufficient oil extraction generates sufficient oil revenues, neither will there be enough money to pay off creditors.

So all my gut instincts, acquired by having actively and frequently participated in large debt restructurings in the private sector, but also by having promoted and completed projects of Venezuelan public debt to equity conversions into industry and tourism projects, tells me the following:

Venezuela needs to sit down with its creditors, today, and come up with a plan of how to convince qualified oil extractors to put their money into Venezuela and begin extracting oil as fast as possible. Of course for that to happen there would have to be a reasonable agreement on how to share the net oil revenues between oil extractors, creditors and the Venezuelan citizens.

I do not mention the Venezuelan government since I am convinced that the only way we Venezuelans can end up living in a nation, and not in somebody else’s business, is to have our government work exclusively with what we citizens provide it with by means of taxes. And because I have learned to utterly dislike redistribution profiteers, of all sorts.

That said of course I understand the need for some type of transition agreement, like a period in which more and more of those net oil and other natural resource revenues are turned over by the government to citizens. Like reaching 100% of it in ten years.

Sir, here's a tweet I have been sending out now and again for about two years: “So Venezuelans can eat quickly, hand over Pdvsa (and Citgo) to Venezuela’s creditors quickly, to see if they put all that junk to work quickly, to see if they collect something quickly, and pay us Venezuelans, not the bandits, our oil royalties quickly.

https://perkurowski.blogspot.com/2017/06/a-simple-but-complex-question-from.html”

PS. Instead of oil production I prefer to use the term oil extraction, since I feel that to be more respectful and grateful to that hand of the providence that placed oil under Venezuelan land.

PS. “Living in somebody else’s business” was how a woman from a Uganda described to me in 2013, her and our case.

https://theoilcurse.blogspot.com/2013/04/we-oil-cursed-citizens-we-do-not-live.html

@PerKurowski

Remittances that help family and friends to survive, sadly, usually, help keep in power those who forced migrants to leave their homelands.

Sir, Gideon Long (and Vanessa Silva) report “Migration has also helped Mr Maduro to stay in power. The UN estimates that 2.3m people — 7 per cent of the population — have left Venezuela since 2015. Many are prominent opponents of the regime and while their voices are still heard from exile, they are no longer in Caracas orchestrating protests.” “Venezuelans display resilience in face of hyperinflation” August 25.

But how many millions Venezuelans are kept alive by the remittances from their emigrant family members or friends? Several millions? So that clearly helps the Maduro government to hold on to power much more than the absence of some prominent (but also until now quite ineffective) opponents.

Fifteen years ago I served as an Executive Director in the World Bank. My Chair also represented nations from Central America like El Salvador and Honduras, which had millions of migrants working abroad, primarily in the United States, and from where with great sacrifices, they constantly sent their families vital monetary assistance.

As much as I admired these emigrants, I abhorred knowing that their remittances were also helping to keep in power those who were basically responsible for them having to emigrate.

For instance if we assume that migrant workers remit 20% of what they earn, then according to remittance data supplied by the World Bank, in 2008 and with respect to Honduras, we could calculate Honduran migrants gross earnings abroad, representing 122% of Honduras GDP. And so, in economic terms, where is really Honduras?

Time and time again I push for the idea that, as a minimum minimorum thank you for providing their homelands with these lifelines, the migrants should at least have an important representation in their respective general assemblies. That way they could at least try to change the realities so as to be able to go back to their homelands, before they forgot these. “No remittances without representation”.

We often hear about the dangers that brain-drain could represent for these countries. I always thought heart-drain to be much worse menace.

@PerKurowski

What’s 100% political correct has not even to be close to real feelings on Main Street

Sir, Gideon Long strangely thinks it is important to quote one obscure member of an unconstitutional assembly that represents perhaps less than 15% of Venezuelans with “If you think of invading us we’ll make [the] Vietnam [war] look small,” and then to describe that this member’s shouts “earned him a rapturous standing ovation”. “Trump threat ‘lets Maduro blame US for his woes’” August 14.

To reaffirm the validity of that Long refers to a poll in which “9 per cent of respondents felt the crisis would only be resolved by foreign military intervention”.

Suppose instead a poll asking: “If foreign military intervention was the only way to get rid of the current regime, (as Long quotes a Venezuelan woman believing) would you approve of it?” The way I read the feelings in my homeland (albeit from a foreign land), that question would be responded affirmative by a majority of Venezuelans.

Of course if that would happen, once the necessity has been removed, Venezuela’s Main Street would most probably, sort of thanklessly, again align itself to more political correct attitudes and blame Yankee imperialism for much. C'est la vie! 

PS. The way Gideon Long transmits information about Venezuela makes me think he might be one of those who can't resist a lefty talking purty.

@PerKurowski

Sadly Bolivar did not free Venezuela from its natural resource curse

Sir, Gideon Long writes about the immense significance Simon Bolívar has for all Venezuelans. “Bitter enemies invoke spirit of Bolívar as vote looms” July 27.

As a Venezuelan I can only agree with most of it but, unfortunately, in October of 1829, Bolivar ordered the continuance of what had been decreed in 1783 by Carlos III of Spain, namely that all precious metals and “juices of the earth” reserves belonged to the Republic.

With that Bolivar guaranteed the Venezuelan governments would not depend exclusively on the citizens and that, sooner or later, some would capture the government to steal it blind.

If we Venezuelans are to gain real independence all our net oil revenues have to be shared out entirely to the citizens.

Had that been achieved earlier, the current disaster would not have had a chance to happen.

It is a great tragedy that freeing Venezuela from the curse of centralized oil revenues is still not on the agenda of anyone the most important opposition leaders.

@PerKurowski

With the Venezuelan bonds purchase, has Goldman Sachs committed an act punishable under Foreign Corrupt Practices Act?

Sir I refer to Robin Wigglesworth’s and Gideon Long’s “Goldman hit by ‘hunger bond’ storm after Venezuela deal” June 2.

There are plenty of persons currently in jail in the US because of acts committed against the Foreign Corrupt Practices Act (FCPA). You can read about many cases in http://www.fcpablog.com

Goldman Sachs, has just handed over about US$865 million cash to the notoriously corrupt and human rights violating government of Venezuela, in order to obtain $2.8billion Venezuelan bonds, which according to some calculations seen, if repaid, would provide GS with about a 48% internal rate of return.

So, has Goldman Sachs, de facto, unwittingly, committed the mother of all corruptions acts punishable under the FCPA? 

http://perkurowski.blogspot.ca/2017/05/goldman-sachs-lloyd-blankfein-should.html

@PerKurowski