CTH has a strong sense that when the final analysis on Venezuela’s ongoing socialist struggle is written, some years from now, the geopolitical strategy used by the Trump administration will be taught in political science classes. [Backstory Here]
As a result of horrific socialist policies, primarily driven by using oil production to maintain it’s socialist governance, Venezuela is under massive debt and desperate for cash. The United States was one of the few remaining cash purchasers of Venezuela oil before U.S. Secretary of Treasury Mnuchin imposed sanctions.
Previously China and Russia purchased Maduro’s oil, however their current purchases are/were all made as offsets, repayments, for prior loans. China and Russia already own 49% of Venezuela’s state oil company PDVSA. Venezuela repays China and Russia with oil, but Venezuela needs cash revenue. It doesn’t generate additional revenue for Maduro if China and Russia purchase more oil, it only pays down the Venezuelan debt.
Venezuela needs money. However, if anyone engages in restructured debt or further loans or bond holdings to Maduro they run the risk of running afoul of Secretary Mnuchin’s sanctions which could have a downstream effect of freezing their own banks and international financial systems from engagement with U.S. banks.
Secretary Mnuchin is open to softening the sanctions provided that Venezuela’s opposition party, the people under the regime, agree to such measures. That approach provides the genuine democratic reformers leverage, and, more importantly, forces Maduro to their table. It’s a really interesting dynamic.
CARACAS, Venezuela (AP) — Cash-strapped Venezuela will launch into a discussion Monday with foreign investors about rescuing itself from crushing debt incurred during better times for the oil-rich country. Investors eager to be paid back, however, worry that confusion clouds the meeting.
[…] The Trump administration has sanctioned a growing list of Venezuelan officials, including the government’s top two debt negotiators, Economy Minister Simon Zerpa and Vice President Tareck El Aissami, who is accused of being a major drug trafficker. Washington has also barred U.S. companies from lending new money to Venezuela because of human rights abuses committed during months of anti-government protests and Maduro’s efforts to squash the opposition.
But in a sign the Trump administration might be willing to soften its stance, the Treasury Department said last week that it would consider allowing Americans to deal in new debt if any restructuring plan was backed by Venezuela’s opposition-controlled congress, whose authority has been steadfastly ignored by Maduro’s government. (read more)
The sanctions against Venezuela, while targeted, are only one small outcropping of a much larger geopolitical strategy that U.S. President Trump has initiated for the past ten months with jaw-dropping success:
From OPEC (Saudi Summit) to the EU and Baltic States (Poland Pre-G20); to North African energy development via President Macron (Libya and Mali); to walking away from the Paris Climate agreement; to discussions with Theresa May on a bilateral trade deal; to massive shipments of coal to U.K. and France; to closing a deal to deliver Ireland massive amounts of Texas LNG; to our own internal U.S. energy production policy with pipelines, Oil, Coal and Liquified Natural Gas (LNG) etc.
In addition to driving our own energy production, President Trump has used all of those “allied” relationships to ramp up production of energy products and international pressure via lowered global energy prices.
The bigger part of the ‘big-missed-picture‘ was how that energy strategy impacted adversaries like Russia, Iran, China and, in this example, Venezuela; while simultaneously supporting the larger America-First economic and geopolitical goals.
President Trump thinks seriously long-term, and really BIG picture.
Global energy, mostly oil, fuels the expansionist and interventionist structure that builds the very foundation of our geopolitical adversaries’ ability to continue their global influence. Diminish the influence of energy, as an enabling system for authoritarian expansion, and president Trump puts the squeeze on the financial resources of those looming nations dependent on energy as income.
Most of our current geopolitical adversaries: Russia, Iran and China are dependent on high energy prices. Secondly, the downstream economic adversaries, Venezuela, Cuba etc. are dependent on high energy prices to maintain their economic position and alliances. As examples: China (as a geopolitical influence agent), and Mexico (as a NAFTA trade parasite), hold adverse interests to the U.S. on trade policy.
President Trump, by pressuring lowered global energy prices, has fractured the foundation of energy producing nations to influence geopolitical strategy; Trump has diminished their most powerful tool.
As a consequence, economic adversaries like China are put into a position of having to spend more money, directly, to aid their allies and to maintain their influence. The primary revenue China spends comes from their access to sell products in U.S. markets.
Restrict China’s access to U.S. markets via trade policy and Trump is restricting their revenue; while at the same time using energy policy to force them to spend more to retain their influence.