Venezuelan creditors, what if from now on oil belongs in equal parts to the citizens and not to the government?

I refer to Jonathan Wheatley’s and Robin Wigglesworth’s “Venezuela’s Russian debt tangle heightens risk of default” June 10.

Sir, had Venezuela not have had oil, there would be no so much financing of its plain lousy governments.

Equally, had the oil in Venezuela belonged to Venezuelan private citizens and not to the government of turn, its governments would not have had access to as much credit.

Venezuela’s current constitution states: “Article 12: Mineral and hydrocarbon deposits of any nature that exist within the territory of the nation, beneath the territorial sea bed, within the exclusive economic zone and on the continental shelf, are the property of the Republic, are of public domain, and therefore inalienable and not transferable.”

What if there was a change in the constitution to: “Article 12: Mineral and hydrocarbon deposits of any nature that exist within the territory of the nation, beneath the territorial sea bed, within the exclusive economic zone and on the continental shelf, are the property in equal shares of all Venezuelan born and alive citizens, and therefore inalienable and not transferable.”

Then all the oil revenues would belong to Venezuelan citizens and be distributed to them by means of an oil revenue sharing mechanism.

Then those who current creditors of Venezuela, and who must have been perfectly aware of how lousy its government was by only looking at the risk premiums paid, would have those risk premiums to reflect the reality of the risks of lending to such lousy governments as Venezuela’s

In such circumstance could a tanker that carries oil owned by all the Venezuelan private citizens be embargoed?

Would a judge order that embargo knowing that, as a direct result of it, many Venezuelan citizens, old and young, with real names and faces, would then die because of lack of food and medicines?

http://perkurowski.blogspot.ca/2014/04/creditors-of-venezuela-read-our.html

@PerKurowski

Is it ethical to expect high yields, no matter what? Like on a bond issue to finance a concentration camp?

Sir, Elaine Moore writes “More than 40 people have been killed in street protests [in Venezuela] involving supporters and opponents of the government”, “Unholy EM debt trinity tempts with high yields” May 13. And any investor who has done any reasonable due diligence on Venezuela would now that is only a small part of the tip of the iceberg, as Venezuela’s constitution, not the least on public debt issues, is blatantly and continuously being violated.

And so I ask, if an investor buys the Venezuela May 2023 bond yielding 12.5%, and Venezuela later, thanks to its oil has the money to repay, should he have the right to collect on his full yield expectations, independently of what the Venezuela government might be doing to its citizens?

As far as I am concerned, as a Venezuelan, I will do whatever I can for these investors not be able to collect on their juicy risk premiums. In other words I will try my utmost, to make their risk perceptions come true… and then some.

Has this issue not much more to do with ethics than with portfolio returns? I am of course by no means implying it is the same… but, what if in similar low interest rate environment, there had been a 10 year bond issue offering a 12.5% return in order to finance the construction of an Auschwitz type concentration camp… to be repaid with whatever could be confiscated and extracted from its victims?

Should all we citizens around the world not hold investors, and especially those investments banks who arrange the primary issues, to some higher ethical standards for our own mutual good?

Do we not really need ethic ratings more than credit ratings? 

More than sovereign credit ratings we might need sovereign ethic ratings.

Sir, last week in an Op-Ed I published in Venezuela titled “Creditors of Venezuela, read our Constitution!” I wrote: “In the same way there are international conventions that help foreign investors to collect what governments duly owe them, there should be agreements that help citizens not to be saddled with the payment of debts incurred by governments who violate their constitutions.”

That is exactly what should happen to those that Michael Holman refers to in “Investors in corrupt ‘new Africa’ repeat old errors”, April 9.

Neither creditors nor investors should receive any help to enforce their commercial rights if it can be proven they did not fulfill their moral duties of making reasonable sure human rights violations and acts of corruption were present. More than sovereign credit ratings we might need sovereign ethic ratings...and to make these count.