For Venezuelan Regime, the Party’s Over
For Venezuelan Regime, the Party’s OverWith intensifying unrest and the Maduro regime fighting a losing battle for survival, it appears that Hugo Chávez’s ‘Bolivarian revolution’ will outlive him by about a year.
Venezuelan President Nicolás Maduro is fighting a losing battle to salvage his regime, and student demonstrations that will continue today are only one of his problems. As details of his government’s bankruptcy are made public, his political base will continue to splinter. And as he follows Cuban advice to use brute force against peaceful demonstrators, the nationalist military will find the growing violence intolerable. In short, Maduro’s condition is terminal.According to a source in Venezuela’s Central Bank, the country’s international reserves have dwindled to $21 billion — less than half the reserves of Colombia, an economy of the same size. Worse yet, $12 billion of Venezuela’s dwindling reserves is in the form of gold that is claimed by China as security for more than $30 billion in loans made in the last two years. Because Venezuela is not keeping up with oil deliveries to service that Chinese debt, the gold cannot be touched.
Another $7.5 billion of the reserves is in the form of bonds issued by Argentina, Bolivia, Cuba, and Nicaragua, a source in the Central Bank told me. Apparently that amount used to be held in U.S. Treasury bonds, but the regime traded these for useless paper from some of the region’s most insolvent countries. These bonds cannot be liquidated for cash because they are worth less than their face value, making their sale illegal under Venezuelan law. Thus, what is left in the bank is less than a half-billion dollars, which would cover the cost of about two weeks worth of imports. So shortages of essential goods will worsen in the days ahead.
After nearly two decades of mismanagement and corruption, oil production is faltering and over-subscribed — committed to domestic consumption and China, and international giveaways to Cuba, the leftist party in El Salvador, and the Caribbean. Sources say that Rafael Ramirez, the president of the Venezuelan state energy company PDVSA, will have to terminate these giveaways. He also will continue to shortchange China in order to generate revenue by maximizing oil sales to the United States. However, this scramble for cash is both inadequate and unsustainable in meeting Venezuela’s needs.
So, history will record that a revolution dedicated to “Socialism of the 21st Century” disintegrated for lack of U.S. greenbacks.
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