Fausta's Blog

American and Latin American Politics, Society, and Culture

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Colombia’s pro-FARC land reform

Pres. Santos’s May 29th land redistribution decree is “right out of Cuba’s totalitarian playbook,” writes Mary O’Grady:
Colombia’s Chávez-Style Land Reform. Ranches can be taken if they are not in the social and ecological interest. (emphasis added)

To implement it, the Santos-controlled Congress granted him rule-by-decree powers much like what Chávez got from his National Assembly.

The land reform is the product of those powers and will advance the full FARC takeover of the country’s institutions. As FARC leader Iván Márquez asserted in an October 2012 speech in Oslo, “The concept of land is inextricably linked to territory.” They “are an indivisible whole that go beyond the mere agrarian aspect and touch vital strategic interests.”

Those interests are eventual iron-fisted control of the country. It is why the FARC demanded, in Havana, that the government claim arbitrary powers to expropriate land and redistribute it. Under Mr. Santos’s decree the state will rule on whether there is an illegal concentration of land and local committees will decide when the use of private property is not meeting social or ecological interests. Courts are sidelined; property is taken administratively.

And how does that advance “the full FARC takeover of the country’s institutions”?

The rural areas where FARC has concentrated for transition to civilian life are also areas where there will be new property titling. Those same zones are slated to become congressional districts, where newly-minted FARC politicians, flush with weapons and cash, probably will be the only ones on the ballot.

Read the whole thing.

UPDATE

Here’s Santos yukking it up with his FARC buddies,

“How shameful!
“So much laughter with and homage of terrorists from @JuanManSantos and his administration, while Colombians ask to be heard.”

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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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Nikki Hailey’s human rights op-ed

U.S. ambassador to the UN writes at the WaPo: The U.N. Human Rights Council whitewashes brutality

The president of Venezuela, whose government shoots protesters in the street, recently thanked the international community for its “universal vote of confidence” in that country’s commitment to human rights.

The Cuban deputy foreign minister, whose government imprisons thousands of political opponents, once said Cuba has historic prestige “in the promotion and protection of all human rights.”

How can these people get away with saying such things? Because they have been elected to the U.N. Human Rights Council, whose members are — on paper — charged with “upholding the highest standards” of human rights.

On paper only, since

Venezuela is a member of the council despite the systematic destruction of civil society by the government of Nicolás Maduro through arbitrary detention, torture and blatant violations of freedom of the press and expression. Mothers are forced to dig through trash cans to feed their children. This is a crisis that has been 18 years in the making. And yet, not once has the Human Rights Council seen fit to condemn Venezuela.

Cuba’s government strictly controls the media and severely restricts the Cuban people’s access to the Internet. Thousands are arbitrarily detained each year, with some political prisoners serving long sentences. Yet Cuba has never been condemned by the council; it, too, is a member.

Read the whole thing.

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Venezuela: RCTV shut down 10 years ago

The great Joel D. Hirst remembers RCTV – The Day the Music Died.

Hugo Chávez denied by decree RCTV’s license renewal, not by due process of law. Hirst writes,

Ten years ago now – ten years. Maybe that was when it ended. It certainly was dramatic. Hugo Chavez had just won a landslide re-election in a contest that was free but not fair (a distinction without a difference, thanks Jimmy Carter!). Rapid change was going to begin. 2007 – that was the year; nationalizations of Venezuela’s oil fields, collapsing Chavez’s own tri-color support base into one monolithic political party called – wait for it – the Socialist Party. A referendum on a new constitution that would do away with democracy once and for all. And, some payback. Ending the last public TV station whose editorial line did not bow to the whims of the despot.

Even then I knew this was a crucial moment. I did a podcast and posted on it, knowing democracy was done for in Venezuela. I can’t explain why I knew; maybe it was simple speculation that Chávez would never stop accruing power.

I even remember making the actual podcast from my kitchen table during a very warm evening. This is the only podcast, out of hundreds, that I specifically remember making.

RCTV was closed. Its assets were seized.

A year later, its anchorman was stabbed to death in his apartment.

Cross-posted at WoW!Magazine.

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Venezuela: Nomura was in on the Goldman Sachs bond purchase UPDATED

When Goldman Sachs essentially sent the communist regime a US$2.8 billion lifeline, I said,

As long as someone is willing to be part of the debt pyramid scheme, it’ll continue. Let’s hope it’s not the U.S.

Sure enough,
Japanese investment bank Nomura admits part in Goldman Venezuelan bond deal

A Japanese investment bank has admitted it was part of a controversial deal with Goldman Sachs to buy Venezuelan government bonds.Nomura Securities said it also bought about $100m worth of the bonds last week, according to Reuters reports.
. . .
Reuters reported that Nomura said its purchase had cost $30m.
Goldman said its asset-management arm acquired the bonds “on the secondary market from a broker and did not interact with the Venezuelan government”.
. . .
Even at 31 cents on the dollar, Nomura is taking a risk buying the bonds. In November, its own head of Latin America fixed-income strategy, Siobhan Mordan, warned investors: “The bottom line for bondholders is not if, but when is the timing for debt default?”

When? When the debt pyramid collapses, that’s when.

Ellen Wald posts,

Goldman Sachs, apparently, was unaware that: 1) Historically, when a political party is forced out through revolution, coup, or other extralegal means, the new government does not always pay the debts incurred by the old one, and 2) It is strategically beneficial to the opposition party in Venezuela to deny payment to Goldman Sachs.

Wald assumes the current regime can be ousted, Maduro or no Maduro. For the time being, that’s unlikely.

I hope I’m wrong.

UPDATE
About the pyramid,
WSJ:

Nomura was approached by the same intermediary, the London subsidiary of a small broker, Dinosaur Merchant Bank Ltd., some of the people said.

Goldman bought the bonds for an emerging-market fund it manages on behalf of outside investors. Nomura bought the bonds through its broker-dealer, which will seek to sell them to clients at a higher price in the coming weeks, the people said.

Buyer beware.

UPDATE, Friday June 2,
Goldman’s Venezuela Bond Trade Wasn’t Reviewed by Top Executives

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Back from Orlando

You can stay away from the headlines but sometimes the headlines stay with you: Read my post, Back from Orlando.



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Venezuela: Goldman Sachs bought PDVSA bonds

$2.8 billion worth:

Goldman Sachs Bought Venezuela’s State Oil Company’s Bonds Last Week. Sale comes as embattled government of President Maduro struggles to raise funds

The New York-based bank’s asset management division last week paid 31 cents on the dollar, or about $865 million, for bonds issued by state oil company Petróleos de Venezuela SA in 2014, which mature in 2022, according to five people familiar with the transaction. The price represents a 31% discount on the trading Venezuelan securities maturing the same year.

The investment comes as Mr. Maduro’s detractors lobby hard to block Western financial institutions from doing transactions that support the cash-strapped government, which has been accused by the U.S. and other countries of widespread rights abuses.

Apparently GS is betting that a change in government would double the bonds’ value.

Good luck with that.

This move is peanuts in GS’s $40 billion emerging markets amount out of the $1.3 trillion the asset management branch manages, but Frank Muci at Caracas Chronicles calls it Meth Finance: “It’s like ripping out the electric wiring from the walls of your own house to sell the copper and get your next crystal meth fix.”

The Wall Street Journal’s Kejal Vyas and Anatoly Kurmanaev report that Venezuela’s Central Bank struck a financing deal so bad last week it makes PDVSA’s swap and Fintech’s repo look harmless by comparison.

The government raised $865 million cash by selling $2.8 billion in previously untapped PDVSA bonds held by the Central Bank. The central bank got just 31 cents on the dollar for the bonds from Goldman Sachs’s asset management arm.
. . .
in return for $865 million now, the government committed to dishing out a total of $3.65 billion through 2022, split between $2.8 billion in principal and $756 million in interest. It’s unbelievable. The government now has to fork up the $865 million three times over by 2022 to make good on the $2.8 billion in bonds —and has to pay a crippling $756 million interest on top of that.

The deal has an “internal rate of return” of 48%. That means this is equivalent to taking out a loan at 48% interest… in dollars!

As long as someone is willing to be part of the debt pyramid scheme, it’ll continue. Let’s hope it’s not the U.S.

Previously, the plan by Venezuela and Syria to circumvent Western sanctions on the Middle Eastern nation and ship its crude oil to Aruba to refine it and then market it internationally, including in the U.S., didn’t work.
As you may recall, Caracas, Syria and Iran had secret flights without passport controls, flight manifests and other documents for years among the three countries. It’s unclear whether the flights ceased. Venezuela continued to issue official passports and visas to Syrians and Iranians.

Still, some of the money ends up in Miami,
Controversial Venezuelan tax collector enjoys luxury life in Miami. Numerous ex-officials of the Venezuela’s socialist government have set up businesses and residences in the United States, despite repeatedly blaming Washington for the country’s current political and economic crisis. Ten years ago Jose Cedillo played a major role in targeting opposition TV stations.

UPDATE

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