Judge Leonard P. Stark of the U.S. District Court in Wilmington, Deleware approved the seizure of Citgo, the Venezuelan state’s external asset that sells their oil in North America in a ruling yesterday. While it is unclear what exactly this ruling means it is likely going to further rip control of Citgo from Petróleos de Venezuela SA (PdVSA), the parent company in Caracas.
The legal complaint against Citgo was filed by a now-defunct Canadian company, Crystallex International Corporation, which was suing Venezuela for a voided contract for mining rights in the country that Caracas. The contract, worth $1.4 billion was canceled after the Venezuelan government nationalized the Crystallex gold mining operations in 2008.
While this has nothing to do with PdVSA, Citgo was targeted by Crystallex because it was the largest Venezuelan asset they could get access to. Crystallex won an original case against the state of Venezuela in 2011, but Caracas failed to pay the judgment handed down by the trade tribunal.
This is not the only case currently open of North American corporations suing Venezuela for “unearned profits.” Just earlier this year, US oil company ConocoPhillips also tried to seize PdVSA assets in the Carribean.
While Judge Stark’s ruling stipulated that “Crystallex and PDVSA shall meet and confer and, no later than August 16, 2018, submit a joint status report providing their position(s) as to how this case should now proceed,” it is unlikely there will be a solution reached. While it is very likely Caracas would rather pay their debt and be done with these arbitrations, their options to resolve this case are extremely limited.
Despite whatever Caracas may wish they could do to stave off the bloodthirst North American corporations, there isn’t much they can do without access to capital and the global marketplace. While Citgo is exempted from the US sanctionson Venezuela, PdVSA is not which has had adverse effects on Citgo’s operations.
Among the US sanctions placed on Venezuela earlier this year over “human rights concerns” were restrictions on “all transactions related to, the provision of financing for, and other dealings” with PdVSA.
Even prior to these sanctions, PdVSA was already cut off from foreign investment and customers and had US banks refusing to issue letters of credit to investors seeking to invest in Venezuelan oil even before this year. Under previous sanctions targeting PdVSA’s Finance Vice President Simon Zerpa business had already basically been cut off since no investment could come into the company without going through the Finance department.
Without this capital coming in, PdVSA has taken a huge hit, and despite sitting on one of the world’s largest oil reserves, has become one of the worst performing oil companies.
The government in Venezuela does not deny that there has been economic mismanagement in the past, and they will tell you they are constantly making economic reforms to cope with sanctions. Yet none of this may ever truly be enough with the country’s largest industries cut off from the global market.
Venezuela has also become a target of oil politics. Countries like Venezuela have suffered over the last few years, primarily due to lower prices but, more recently, the problem has been manipulation of the oil markets by countries like Saudi Arabia. The Saudis have recently sought to decrease the amount of oil for sale on the global market to bring prices back up. Clearly, “not selling oil” is not an option for Venezuela right now, yet the pressure to do so on poorer oil-producing nations is always there from the quotas set by the Organization of the Petroleum Exporting Countries (OPEC).
According to Washington, these sanctions are meant to weaken the government of Nicolas Maduro by targeting the leadership that supports him. While it is unclear how exactly stripping the country of millions of dollars in tax revenue will hurt anyone but average Venezuelans but that doesn’t seem to be on Washington’s mind.
In fact, concern for the people isn’t even on the mind of Venezuela’s own opposition, which often calls for more economic war on Caracas. Rather than be concerned for their countrymen, the opposition uses instances like this to score political points against Maduro. The opposition will likely do the same after this most recent development and blame the loss of Citgo on Maduro and attempt to use this as another piece of evidence in their case for regime change.
Venezuela does have massive amounts of unpaid debt but their options for paying this off are extremely limited when the oil company in question can barely stay in business, to begin with. On top of Citgo and PdVSA’s finances being in shambles, Caracas is not even allowed to borrow money from any of the western banks. While real allies of the Venezuelan people like China – who have made loans to Caracas – and Russia – who restructured Caracas’ debt to them – the United States, Wall Street, and their cronies in Miami and Bogota have stacked the deck against Venezuela.
The Seizure of Citgo just shows, once again, that Washington’s plan all along was to “get back” Venezuela’s resources that they think Chavez “stole” when he gave the wealth back to the people of Venezuela.
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