Fausta's Blog

American and Latin American Politics, Society, and Culture

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Venezuela: Did the Minister of Defense back out at the last minute?

I have documented every post on Latin America strenuously, but this post is an exception. I do not have contacts in the country or in any of the other places involved, so please read with caution.

In his Thursday, May 2, 2019 show, Jaime Bayly described that the Minister of Defense for the National Armed Forces of the Bolivarian Republic of Venezuela, General Vladimir Padrino, had agreed to aid Juan Guaidó remove Nicolas Maduro from office.

Who is General Padrino?
In a post three years ago, I mentioned that Padrino, upon taking the job of commanding the country’s entire supply chain possibly “was given the job by Cuban intelligence to keep an eye on Maduro.” Additionally, Nicolás Maduro had declared “All the ministries, all the ministers, all the state institutions are at the service and in absolute subordination” to the head of the armed forces, Defense Minister Vladimir Padrino – including,

a new military-industrial mining, oil and gas company that will rival the state-owned oil company PdVSA.

In other words, Padrino lives up to his name, which means Godfather. His agreement would be crucial for any change to take place.

I must point out that Wikipedia correctly states,

On 22 September 2017, Canada sanctioned Padrino due to rupture of Venezuela’s constitutional order following the 2017 Venezuelan Constituent Assembly election.[6][7] The United States government has also sanctioned Padrino on 25 September 2018 for his role in solidifying President Maduro’s power in Venezuela.[8] Vladimir Padrino López is also banned from entering Colombia.[9]

The Bayly YouTube, in Spanish

Bayly said that Padrino had agreed to having Maduro leave for Cuba and install Guaidó as interim president in exchange for being allowed to keep the fortune he’s amassed over the years and avoiding prosecution by the U.S. The U.S. would also give the new interim administration $20billion to pay Russia for its oil interests in the country.

This was scheduled to take place on May 1st.

But Padrino changed his mind,

ABC Spain reports that General Padrino backed out at the last moment, even when the negotiation had lasted for several months. Bayly claims that Padrino demanded at the last moment to be permanent president.

The right price?

On Sunday May 5th, the Moscow Times published an opinion piece, Putin Is Ready to Give Up Venezuela for the Right Price.
Sergei Lavrov and Mike Pompeo will soon meet in Helsinki to discuss Venezuela’s future.

On May 3, U.S. President Donald Trump called Russia’s President Vladimir Putin to flag American concerns over Russia’s “disruptive role” in Venezuela and stress his country’sdetermination to ensure Venezuela’s return to democratic rule.

The price may involve Ukraine,

For Moscow, a deal of equals on Venezuela where Russia helps the U.S. diffuse the crisis by engineering a constitutional transition, should involve an equally significant concession by the U.S. (on a par with JFK-Khrushchev deal to remove nuclear missiles from Cuba and Turkey) to pressure Kiev into fully implementing the Minsk-2 agreements that would truncate Ukraine’s sovereignty and allow Moscow to retain some degree of control over Kiev’s security policies.
…
Moscow is ready to sell its stake in Maduro, but it is still unclear whether Washington is ready to offer the right price.

Interesting times

If Russia is out of the picture, there’s still the question of China and Iran remaining in the country.

If Maduro leaves, how about Tarek El Aissami, Vice President indicted by the U.S. for drug charges?

Additionally, I doubt very much that Cuba would give up its control of Venezuela’s security services.

This coming week promises to be very interesting indeed.

UPDATE:
Linked by Ed Driscoll at Instapundit. Thank you!
Linked by Da Tech Guy. Thank you!

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Guatemala: The Bitkov case

Guatemalan Attorney General Thelma Aldana, at the urging of the United Nations’ International Commission Against Impunity in Guatemala and the Kremlin, has convicted Igor Bitkov, his wife, Irina, and their 26-year-old daughter, Anastasia, in spite of lack of plausible evidence.

Mary O’Grady describes the Kremlin revenge:

Mr. Bitkov was the owner of the St. Petersburg-based North-West Timber Company (NWTC). In 2005 he borrowed money from a handful of Russian state banks to upgrade some of his factories. Around the same time, a senior executive of one of the banks that lent him money asked to buy 51% of the company, Mr. Bitkov told me from prison through his Guatemalan lawyer Rolando Alvarado last week. He turned down the offer.

From 2005 to 2007 NWTC revenues grew by 30%, according to company financial statements. In 2007 Sberbank valued the company at $428 million. By 2008 he’d repaid 71% of the loan, along with interest due. NWTC was worth 2.7 times the remaining $158 million owed. Nevertheless, Mr. Bitkov says, in April 2008 the banks demanded that he immediately repay the balance.

He couldn’t comply and the company was forced into bankruptcy. Mr. Bitkov alleges that the bankruptcy administrator sold NWTC’s assets at fire-sale prices to entities controlled by various executives of the banks.

The Bitkovs feared for their lives and fled the country.

And that was only the beginning of their woes. Read the rest here.

This case raises many questions. For instance, I do not understand why the whole family is persecuted – after all, they lost all their assets. Why is the UN involved in this? What was the banks’ initial involvement?

And on and on. Should we just look at this as another instance of the long reach of tyranny and corruption?

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Russia bails out Venezuela

It’s official:

Russia threw a lifeline to Venezuela on Wednesday, restructuring the more than $3 billion it is owed by its economically and politically troubled South American ally.

As Steve Hanke predicted last week,

What Russia gets for its money is anyone’s guess.

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Venezuela: Default brings upside for Maduro?

Venezuela faces epic default as China and Russia pull the plug

“Maduro can’t restructure the debt because nobody in the world trusts his government,” said Julio Borges, the head of the National Assembly.

However (emphasis added),

“Russia and China have incentives to provide financing just for oil investment, so that they are able to get the oil repayments,” Monaldi said in an email. “If Venezuela was able to successfully restructure the debt with bond holders that would make it more attractive for Russia and China to help, but giving them more money just to pay bond holders is unlikely to happen.”

The WSJ on the benefits of being a deadbeat:
Venezuela Debt Crisis May Offer Political Upside for Maduro. Stopping payments on debt threatens economy but could increase funds earmarked for needed imports (emphasis added)

Mr. Maduro announced plans on Friday to convene bondholders in Caracas on Nov. 13 to negotiate a debt restructuring on the country’s foreign debt, estimated at between $100 billion and $150 billion. However, investors said that U.S. sanctions that restrict financial institutions from investing in new debt instruments issued by Venezuela’s authoritarian government make a deal unlikely, triggering a messy and prolonged default.

By stopping payments on the debt, Mr. Maduro could double the funds he has earmarked for imports next year by holding back on some $1.7 billion in bond interest payments due in the remainder of 2017 and about $9 billion in 2018, according to Eurasia Group, offering relief—albeit brief—for a fast collapsing economy plagued by galloping inflation and chronic food shortages.

Why next year? Because of presidential elections. Even with rampant vote rigging, there’s still a facade to be kept.

Related:
A debt restructuring that’s really a default that’s really a giant money laundering operation

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Who wanted to meet with the Russians? Bill Clinton

Hillary was Secretary of State back then, but the State Department dragged its feet for a week or two, and apparently Bill decided to not meet with the 15 Russians on his list.

Rather, Bill cut to the chase.

Read my post, Who wanted to meet with the Russians? Bill Clinton.



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The original Russia collusion story: Hillary’s uranium deal

Hillary, Obama, the Dept. of Justice blocks a witness, Rosenstein, Mueller, Comey, and Russia Russia Russia: John Solomon and Alison Spann report that in 2009 the FBI uncovered Russian bribery plot before Obama administration approved controversial nuclear deal with Moscow, Rosatom’s purchase of Uranium One.

And these are not the only players in the case. Last year I posted on the Clinton’s Colombian Fondo Acceso partner Frank Giustra, whose mining company merged with three Kazakhstan mining companies, after which it was acquired by Rosatom. Guess who authorized that.

Read my post, The original Russia collusion story: Uranium.



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Real news: Russia is arming Venezuela

Noisy Room and Memri have the story:

In April of this year, Maduro’s Defense Minister paid an interesting visit to Moscow. Vladimir Padrino Lopez the Defense Minister, would meet his Russian counterpart, Sergey Kuzhugetovich Shoygu, at the Conference on International Security,

In his speech at the conference, Padrino López expressed Venezuela’s concern over the cooperation agreement signed between Venezuela’s neighbor Colombia and NATO, in order to fight “organized crime.” “NATO has a sad history of warlike actions in the past… NATO is an organization with high operational character and a history of aggression,” he stressed.[6]

Not much is known for Shoigu, the man who is supposed to lead Russia after Putin steps down as president.

If the name sounds familiar, Shoigu is the guy who said in 2014 that Russia intends to install military bases in Vietnam, Cuba, Venezuela, Nicaragua, the Seychelles, Singapore and several other countries.

In Venezuela, Maduro depends on Russia, Iran and Syria for financial and strategic backing.

The opposition to Mr. Maduro also is up against an array of international antidemocratic forces. The cabal is run by Cuba on the ground but backed financially and strategically by Iran, Russia and Syria. These countries have been preparing for many years for a conflict that would establish Latin America’s “new world order.” They would also welcome the inevitable refugee crisis.
. . .
Russia supplies arms to Venezuela. In November the Kremlin sent new aviation and air-defense technology to Caracas. Reuters reported in May that Venezuela now has “5,000 Russian-made MANPADS surface-to-air weapons,” representing “the largest known stockpile in Latin America.”

Read also Memri‘s May 2017 analysis of Russia-Venezuela relations.

Meanwhile, here in the U.S. the major media outlets carry on with a RussiaRussiaRussia narrative for which there is  no evidence.

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Venezuela’s $1 billion in the red with Russia

LAHT reports on the tangled web they weave:
Russia Confirms Venezuela Defaulted on $1 Billion, and caused Russia to amend its federal budget. Worse yet,

Compounding the severity of the situation, the September 2016 Protocol (see below), was a renegotiation of Venezuela’s debt default to Russia last year. The September 2016 Renegotiation was the second restructuring of the debt — the first having taken place in September of 2014.

In the 2016 Protocol, Russia and Venezuela had agreed to restructure the Venezuelan debt of $ 2.84 billion, with a new schedule of payments $530 million through 2019-2021. The other $2.2 billion of the debt was to be repaid by Venezuela within five years, with the first payment due on March 31, 2017. The Audit Committee action suggests that Venezuela failed to make even the renegotiated payment due in March.

Russia loaned Venezuela $4 billion in December of 2011 to finance Russia’s supply of industrial products to Venezuela, mainly defense products, including 92 T-72 tanks, 24 Sukhoi fighter jets, S-300 anti-aircraft missile systems, 15 Mi-35m combat helicopters, 20 Mi-17-1B multipurpose helicopters, 3 Mi-26T transport helicopters, in addition to guerrilla-favorite Kalishnikov rifles.

According to the 2016 Protocol, Venezuela had used $2.8 billion and began falling into arrears in 2015.

The September 2016 Protocol lists the cause of Venezuela’s default as a “liquidity crisis.”

At the end of 2013 Russian companies sold weapons to Venezuela for $ 2.65 billion and those Russian companies were paid by Moscow under the credit agreement. By April 2015, the Russian Ministry of Finance added another $962 million in finance, giving Venezuela $3.6 billion in credits for the purchase of Russian products.

According to the documents, Venezuela regularly paid the loan until 2015.

PDVSA is behind on shipments of crude and fuels under oil-for-loan deals with China, too.

Russia’s been throwing good money after bad, perhaps in the hope that its investment in Citgo may pay off. As you may recall, Venezuela mortgaged 49.9% the Citgo refineries in the U.S. to Russia’s state-controlled oil company Rosneft for $1.5 billion. (The other half of Citgo is serving as as collateral to bondholders, in case you wondered.)

Following that transaction,
1. Canadian gold miner Crystallex launched a suit against Rosneft and PDVSA’s bondholders to get CITGO back. Venezuela owes Crystallex $1.4 billion for the 2011 unlawful expropriation of Las Cristinas gold mine,
and
2. Treasury Secretary Steven Mnuchin, who heads the Committee on Foreign Investment in the U.S. (CFIUS), confirmed to Senator Bob Menendez during testimony that there would be a CFIUS review of the Rosneft – Venezuela Citgo transaction.

Russia’s top oil producer Rosneft will get 70,000 barrels per day of oil exports this year from Venezuela under a loan deal involving U.S. firm Citgo, according to Venezuela’s oil minister at a forum in St. Petersburg. where he also stated,

PDVSA has been discussing five new joint projects with Rosneft, including Petropiar, and is hoping to clinch the deals soon.

“Good luck with that.”

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