Venezuela’s Perfect Storm for Oil May Be About to Break – By Liam Denning

Venezuela’s Perfect Storm for Oil May Be About to Break – By Liam Denning

“We may be about to see the first sovereign producer to unequivocally fail.”

Map of Venezuela

The oil producer in question is Venezuela, and that assessment comes courtesy of Helima Croft, who is global head of commodity strategy at RBC Capital Markets and formerly worked with both the Council on Foreign Relations and the CIA.

In a global oil market mired in excess inventory and low expectations, Venezuela is the most tangible of wildcards. Its tragic and volatile mix of a failing, oil-dependent economy, political gridlock and simmering unrest is well known at this point.

But things are building to a head, partly due to the relentless logic of the bond market and partly due to the more proprietary logic of U.S. foreign policy.

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  • Rosaliene Bacchus  On July 25, 2017 at 12:45 pm

    In our globalized economic system, there are so many ways to sink a nation. Beware Guyana!

  • Clyde Duncan  On July 26, 2017 at 1:00 am

    CIA Chief Hints Agency is Working to Change Venezuelan Government

    The USA has a long and bloody history of meddling in Latin America’s affairs

    Andrew Buncombe – New York | Independent UK

    The head of the CIA has suggested the agency is working to change the elected government of Venezuela and is collaborating with two countries in the region to do so.

    In one of the clearest clues yet about Washington’s latest meddling in the politics of Latin America, CIA director Mike Pompeo said he was “hopeful that there can be a transition in Venezuela and we the CIA is doing its best to understand the dynamic there”.

    He added: “I was just down in Mexico City and in Bogota a week before last talking about this very issue, trying to help them understand the things they might do so that they can get a better outcome for their part of the world and our part of the world.”

    Mr. Pompeo’s comments, delivered during a Q&A session at a security forum organised by the Aspen Institute think tank, have sparked outcry among supporters of Venezuela’s government.

    President Nicolas Maduro, who was elected in 2013, has denounced Mr Pompeo’s remarks and hit out at the governments of Mexico and Colombia.

    “The director of the CIA said ‘The CIA and the USA government work in direct collaboration with the Mexican government and the Colombian government to overthrow the constitutional government in Venezuela and to intervene in our beloved Venezuela,’” Mr Maduro said in a televised interview, according to TeleSur.

    “I demand the government of Mexico and the government of Colombia to properly clarify the declarations from the CIA and I will make political and diplomatic decisions accordingly before this audacity.”

    The USA, which is currently gripped by allegations that Russia sought to interfere in the 2016 presidential election, has a long history of interfering with democratically elected governments in Latin America, from Chile to Nicaragua, and Argentina to Haiti.

    Pro-Maduro activists shoot at voters in Venezuela

    In Venezuela, it has sought to weaken the elected governments of both Mr Maduro and his predecessor Hugo Chavez, who was briefly ousted in a 2002 coup. Some of the effort has been in distributing funds to opposition groups through organisations such as the National Endowment for Democracy, while some has been in the form of simple propaganda.

    In May 2016 unidentified USA officials told reporters in a background briefing that Venezuela was descending into a deepening “crisis” that could end in violence.

    They said they doubted Mr Maduro was not likely to be able to complete his term, which is due to end after elections in late 2018.

    Mark Weisbrot, co-director of the Centre for Economic and Policy Research in Washington, said that for the past 15 years or so it had been US policy to seek a change of government in Caracas.

    “They have been trying to get rid of this government for a long time and they feel they are getting closer then ever,” he told The Independent.

    The development comes as both Mr Maduro and his country face mounting problems. Against a backdrop of food shortages, soaring inflation and civil unrest, the president has been accused of resorting to mounting authoritarianism. The opposition has called for him to stand down and there have been widespread protests.

    Opponents are furious about his plan to press ahead with a vote for a Constitutional Assembly on Sunday. Critics say the rules of the assembly appear to ensure a majority for Mr Maduro.

    But Reuters said that Mr Maduro, 54, insists it is the only way to empower the people and bring peace after four months of anti-government unrest that has killed more than 100 people and further damaged the economy.

    The question to Mr Pompeo was asked last week by businesswoman Vanessa Neumann, who said she had dual USA and Venezuelan citizenship, and who said “regime change looks to be – we hope – imminent or spiralling down”.

    She added: “I’m interested in your open assessment on American interests in or threats from Venezuela and which of course has Russian, Iranian, et cetera, interests, and for the region.”

    He responded: “I am always careful when we talk about South and Central America and the CIA, there’s a lot of stories.

    “So I want to be careful with what I say but suffice to say, we are very hopeful that there can be a transition in Venezuela and we the CIA is doing its best to understand the dynamic there, so that we can communicate to our State Department and to others.”

    The CIA did not immediately responded to queries. The governments of Mexico and Colombia have yet to comment on Mr Maduro’s remarks.

    A State Department spokesperson declined to say if the US was seeking to change the government of Venezuela. In a statement, the spokesperson added: “The United States joins nations across the hemisphere and calls upon the government of Venezuela to live up to its commitments to hold free, fair, and credible elections immediately, provide for the immediate and unconditional release of all political prisoners, and tend to the humanitarian needs of the Venezuelan people.”

    The statement added: “We call for the government of Venezuela to suspend the National Constituent Assembly. The Venezuelan people spoke in overwhelming numbers in the opposition-organised referendum on 16 July. Their voices must not be ignored.

    “We are prepared to take strong and swift economic actions if the Government of Venezuela election moves forward on 30 July with a Constituent Assembly.”

  • Clyde Duncan  On July 26, 2017 at 6:48 pm

    Venezuela’s Deadline

    The opposition has until Sunday before President Nicolas Maduro’s regime begins rewriting the constitution.

    J. Weston Phippen | The Atlantic

    Venezuelan President Nicolas Maduro will take the first step at the end of the week to reorganize the government. Voters will select a constituent assembly to rewrite the constitution, and because the opposition has refused to participate, the outcome likely means the end of the opposition-led National Assembly, the only remaining institution outside Maduro’s grasp.

    On Wednesday, the opposition began a 48-hour strike, one of the last desperate steps it can take before Venezuela becomes a Cuba-style dictatorship.

    Maduro has been plotting this move possibly since last October, when his Socialist government shut down a recall referendum, a constitutional right developed by Hugo Chavez, Maduro’s predecessor and political mentor.

    He has definitely had the move in mind since at least March, when he tried to dissolve the National Assembly through the country’s supreme court — a move he later reversed amid international outcry.

    Sunday’s vote would elect 364 members of the constituent assembly; the remaining 181 would be elected by members of seven different sections of society, including students, farmers, and businesspeople.

    This system, even if the opposition weren’t boycotting, favors government supporters, because it gives equal weight to sparsely populated rural areas that are more likely to favor Maduro’s government.

    But after the near collapse of the Venezuelan economy, the scarcity of basic staples like food and medical supplies, Maduro is deeply unpopular with the country’s 20 million voters, 85 percent of whom are reportedly against redrafting the constitution.

    This week’s hard deadline puts the opposition in a tough spot. Once the constituent assembly is created, the opposition will likely lose all legitimate political power. So in the following days the opposition must strike a balance between putting enough pressure on Maduro, and making sure the country doesn’t descend into mass violence.

    The coalition of opposition groups, called the Democratic Unity Roundtable (MUD), has planned massive protests for months. Many times these have turned violent, and about 100 people have been killed in clashes with national guard troops.

    The protests have helped fuel criticism of Maduro, but they haven’t yet swayed the president. The largest repudiation of the government came July 17 when the country held a non-binding, opposition-organized referendum vote.

    The vote asked three questions, most importantly if people rejected creation of the new assembly. More than 7 million people — of 20 million voters — voted and nearly all favored the opposition’s stance. The symbolic vote was a show of force against chavismo, as the political movement founded by Chavez is known, but it also set up the opposition’s next move: the creation of a parallel government.

    Last week, MUD opposition lawmakers appointed 13 supreme court judges and 20 substitutes judges. Again, it was purely symbolic. But it has so far been one of the most radical moves by MUD.

    The current supreme court justices were named on the fly in 2015 right before chavistas ceded the National Assembly to a two-third opposition majority. These judges have acted as Maduro’s cudgel, and have also lent a veil — however thin — of democracy to his orders.

    The government hasn’t taken the appointment of this parallel government lightly.

    Juan Jose Mendoza, president of the supreme court’s constitutional chamber, said the opposition was “undertaking crimes against the independence and security of the nation, in particular, in terms of crimes – of treason … .”

    Most recently, it’s rumored the government arrested Angel Zerpa, one of the opposition-appointed justices. The idea of the parallel may have no true power, but it was largely done to appease the more radical elements of MUD, who are pivotal if the opposition wants to oust Maduro.

    David Smilde, a senior fellow at the Washington Office on Latin America (WOLA), told me there’s constant worry within MUD that more radical elements will break off if they feel tactics aren’t working.

    “Their idea of fighting the government is shutting down the whole city,” Smilde said of the radical contingent. The reason the recent opposition force has been more successful than in the past, specifically in 2014, is because MUD hasn’t splintered.

    Three years ago, Leopoldo Lopez led radicals to the streets in protest while Henrique Capriles and the more moderate element largely dismissed the marches as a mistake.

    Going forward this week, and undoubtedly in the weeks to come, if the constituent assembly is formed, cohesion between these groups could determine the outcome in Venezuela.

    Last week the opposition’s 24-hour strike was mostly successful. Many city centers shut down, and MUD said 85 percent of the country participated. Maduro called its effect minimal, saying, “Today, work triumphed.”

    But what the oppositions risks in a protracted economic siege against the government is alienating the country’s poor. The opposition is seen as a mostly middle-class revolt, and many of the country’s poor were once — if they’re still not now — supporters of chavismo because of its populist appeal and emphasis on social programs.

    But much of the country is in dire economic shape, and many people can’t risk losing their jobs. “It’s unfair,” Maria Sandoval, a 27-year-old medical secretary told the Associated Press. “The government jails the people who protest and those who are protesting are caging the rest of us.”

    This same feeling could be intensified if, in the coming days, more radical elements of the party take to what’s called guarimba, a tactic used in the past of tearing up whatever is around on the street and blockading neighborhoods.

    This could also be the regime’s best weapon, handed to it by the opposition. In the past, MUD supporters have stationed themselves at these, almost like checkpoints, shaking down people who don’t support the shutdown. But not everyone can participate in strikes, especially the poor.

    A contributor to the Caracas Chronicles, a Venezuelan news and analysis site, wrote recently about the need to “overcome the guarimba instinct” by saying:

    “We need to keep protesting. But we also need protests to work. We need every Venezuelan on board for the long run if we expect to build the inclusive, fair and democratic nation we are protesting for.”

    Destroying property and setting fire to barricades could also lend the government the excuse it needs to unleash soldiers on protesters. And in that fight, the guns win.

    Many analysts marked July 30 as the Zero Hour, the time when either MUD or Maduro would prevail.

    But as that date nears, people are thinking about the weeks after. Much hope is being placed in the international community. Smilde, from WOLA, said that if all the countries in the Americas could speak with one voice it may cause Maduro to take a step back.

    Previously, when Maduro tried to abolish the National Assembly through the court, it was international reaction that was partly credited with creating pushback within his own party. But so far, the Organization of the American States has failed to pass a unanimous rebuke of Maduro.

    For now, outside forces aside, the opposition’s best hope may be to focus on sticking together, and to keeping relative peace on the streets.

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