in

Is the End Near in Venezuela?

Walls close in on Maduro

In Venezuela, there has been bad news pretty much every day for the last few years. However, as the crisis rolls on without end, the walls are beginning to close in on the Maduro government:

Today, the worst case – for Venezuela’s president – was confirmed, when the Times reported that the Bank of England has “refused to release the gold bars” worth just over $550 million to President Nicolas Maduro.

According to the Times, the reason the BoE has refused release is due to its insistence that standard measures to prevent money-laundering be taken — “including clarification of the Venezuelan government’s intentions for the gold.”

“There are concerns that Mr. Maduro may seize the gold, which is owned by the state, and sell it for personal gain,” the newspaper said.

Separately, as we reported on Monday, an official told Reuters that the repatriation plan has been held up for nearly two months due to difficulty in obtaining insurance for the shipment, needed to move a large gold cargo: “They are still trying to find insurance coverage, because the costs are high,” an official told Reuters.

As we reported on Monday, Venezuela’s gold located at the BoE was previously used as collateral until last year, backing loans up to several billion dollars from global banks.

The country’s remaining gold reserves are a critical source of funding for the Venezuelan government, which struggles to raise cash day to day. Furthermore, Chevron is now seriously contemplating a pullout in Venezuela, which would collapse what is left of the oil industry:

Now, executives at the last U.S. oil major in the country are debating whether it may be time to get out, according to people familiar with their deliberations.

Chevron’s dilemma is both moral and commercial. It hopes to hang on and outlast President Nicolás Maduro, as it did with his late mentor Hugo Chávez and other rulers. The California-based giant long enjoyed close relations with the socialist regime that controls the world’s largest oil reserves, and has earned big money in Venezuela—about $2.8 billion between 2004 and 2014, according to cash-flow estimates by analytics firm GlobalData .

The company is aware a pullout could trigger a collapse of the government’s finances, because a significant chunk of its scarce hard currency comes from joint operations with Chevron.

Yet by staying in the country as its economic and humanitarian crises deepen, the company risks damage to its reputation by being seen as supporting an authoritarian regime sanctioned by the U.S. government. It also isn’t making much money here anymore.

By staying in Venezuela, Chevron risks exposing itself to legal penalties under U.S. anti-corruption laws, some analysts say. Chevron said it “abides by a strict code of business ethics under which the company complies with all applicable international, U.S. and Venezuelan laws.”

Some analysts believe other Western companies operating in Venezuela, such as France’s Total or Norway’s Equinor, might feel pressure to follow a departure or partial exit by either Shell or Chevron. At the same time, according to GlobalData, those that stay might be able to gain access to new fields or renegotiate contracts for better terms. Chinese or Russian companies such as PAO Rosneft could be beneficiaries of any such departures in the long run, analysts say.

Doomberg

Written by Doomberg

I am Doomberg, one of the original founding members of Sparta Report, and have been here since the beginning. I am an insatiable news junkie and enjoy reading and writing about the US territories, the Caribbean, video games, smartphones, and of course conservative politics in general.

I also really like pictures of gas stations and claim full responsibility for the silly gas station motif. I'm presently trapped behind enemy lines in a blue state with no hope of escape! The ride never ends.

What do you think?

7 points
Upvote Downvote

When the Caravan Arrives, What Happens? PART DEUX!

UPDATE: Middleton Elementary School Kerfuffle