Opinion Michael Kuczynski | Financial Times

Your editorial “US policy on Venezuela is worsening its agony” (August 21) states, quite correctly, that President Nicolás Maduro’s “key backers — Cuba, Russia, and China — are missing” among the remedies to a dire situation and that, as the Venezuelan opposition said six weeks ago, “equal treatment of all creditors” is required.

Venezuela’s overall gross external debt is somewhere north of $150bn, of which between 15 and 20 per cent are Russian and Chinese claims on the central government in Caracas, as opposed to claims on other entities such as the state-owned petroleum conglomerate PDVSA. (Cuba’s pecuniary claims are negligible.) In total the Chinese stake in Venezuela is probably closer to 40 per cent of the grand total. Its claims are also essentially unsecured, since states can always repudiate claims judged subsequently to have been entered into by regimes acting unconstitutionally.

The domestic opposition to Mr Maduro may seem ineffective, but disaffection is clearly turning to aversion in the regime’s very engine room — the army and PDVSA. Whatever happens to the Maduro regime itself, and whenever it does happen, there is no doubt that there will have to be a debt workout, and this will all wash up at the Paris Club (for private creditors) and at the London Club (for state creditors). The reality is then that “equal treatment of all creditors” is far from guaranteed.

It seems obvious that China, with or without Russia, should act now to secure (or to salvage) whatever it can of its position. How? By seeing to regime change rather than have to endure its consequences.

Michael Kuczynski
Pembroke College,
University of Cambridge, UK

Bron: Financial Times