With speculation that the US may (or may not) be sending troops in Latin America, ostensibly to “advise” on any possible military unrest in Venezuela, moments ago the US state department raised its Travel Advisory to Venezuela to “Level 4: Do Not Travel” due to crime, civil unrest, poor health infrastructure, and arbitrary arrest and detention of U.S. citizens. This follows the January 24, advisory in which the Department ordered the departure of non-emergency U.S. government employees and family members “due to ongoing political instability.”
Separately, in what many saw was a warning not so much to Venezuela as to the US which yesterday implemented what amounts to an effective oil blockade of the Latin American nation, the Russian Ministry of Finance said that it expects Venezuela to make its next scheduled debt repayment to Moscow on schedule at the end of March.
Hours earlier, Russia’s deputy finance minister Sergei Storchak said that he expected Venezuela to have problems repaying its debts to Moscow in comments made after Washington imposed sanctions on Venezuela’s state oil firm. The finance ministry issued a separate statement later on Tuesday, saying it still expected a payment of over $100 million to be made on time.
“No changes in the agreement have been introduced and correspondingly Venezuela must fulfill the obligations it has taken upon itself to the creditor,” the ministry said.
Also on Tuesday, Russia repeated its criticism of the U.S. stance on Venezuela, describing the latest sanctions against the government of President Nicolás Maduro as illegitimate. Russian President Vladimir Putin’s spokesman, Dmitry Peskov, said the new U.S. measures blocking all U.S. revenue from Venezuela’s national oil company were the latest example of Washington using economic sanctions to further U.S. commercial interests. The Kremlin has leveled similar criticism against U.S. sanctions on Iran and Ukraine.
“You know the consistent attitude of Moscow toward such actions, which our American colleagues are taking more and more frequently,” Peskov said. “We believe that in most cases, this is an instance of unfair competition.”
Russian officials have continued to insist that Maduro is Venezuela’s legitimate president and offered to mediate, along with Iran, among “responsible political forces” in the country. But they have not offered details about any specific new help that Russia would be willing to provide to Maduro.
Meanwhile, while Russia has repeatedly warned it does not accept US interference in Venezuela’s affairs, the question is what the country’s other major foreign creditor, China, will say… or do. As one of Venezuela’s biggest trade partners and creditors, China, has already opposed foreign interference in Venezuela’s affairs, saying the US will bear responsibility for sweeping sanctions it imposed.
As reported previously, China has provided $50 billion in loans to the Latin American country over the past decade. Through loans and outbound direct investments, Beijing has poured funding into Venezuela while many other countries backed off from doing business with the cash-strapped nation.
Caracas has been gradually paying off that debt with oil shipments, but has struggled to fulfill its commitments because of falling production. It still owes Beijing about $20 billion.
According to Caracas Capital, Venezuela has not paid a sovereign bond since December 2017, and is now in default on 16 sovereign bonds and coupons totaling $1.81 billion. Now, with a new US package of sanctions in place, China’s multi-billion dollar lending as well as investments and business ties with countries like Russia, India, Turkey and others, have all been put at risk.
Even so, and despite the ongoing crisis in Venezuela, New Delhi and Caracas have been continuing their joint investments in the energy sector. India is one of the largest buyers of Venezuelan crude, with over 400,000 bpd procured by Indian companies. The firms had plans to boost crude purchases from Venezuela in the future.
Venezuela is one of the major crude exporters in Latin America and its oil revenues account for about 98 percent of export earnings, according to OPEC. However, oil output fell 33,000 barrels daily from November and hit a new low in December, with 1.15 million barrels per day produced in contrast to more than 2 million in 2017.
Venezuela’s partner in the Middle East, Turkey was also maintaining close ties with Caracas despite the sanctions and international pressure. According to RT, the sides were working on a deal to ship tons of gold to refine and certify in the Turkish city of Corum this year (although should the Bank of England refuse to hand over Venezuela’s gold to the Maduro regime, this agreement may need to be adjusted).
Caracas has been exporting its gold to Turkey for safekeeping since the beginning of last year. Statistics show that Turkey imported $900 million in gold – about 23.6 tons – from Venezuela in the first nine months of 2018. According to Mehmet Ozkan, a former Turkish official who worked on bilateral relations with Venezuela until last year, the main objective was to refine the raw metal and create a capital inflow to Venezuela, likely in the form of services because of US sanctions that prohibit financial institutions from dealing with Venezuela in dollars.