EU bans arms sales to Venezuela, takes aim at officials

Reuters

Reuters

It's nearly impossible for Americans to enter Venezuela on short notice, the government has provided them with no blueprint as a starting point and officials heading the talks have been sanctioned by the Trump administration, making it illegal for Americans to negotiate with them.

As Venezuela spent heavily on social programs under the late President Hugo Chavez, a time when global oil prices soared, its debt skyrocketed to over $120 billion, about half of which is in the form of dollar-denominated bonds.

With those two on the government's committee and no sign of reforms to overhaul a moribund economy, economists are puzzling whether Maduro really wants to refinance the debt.

Britain sold £1.4 million ($1.83 million) worth of arms to Venezuela between May 2010 and March 2017, according to The Campaign Against Arms Trade, which lobbies to end arms sales to repressive governments.

As a result, an official declaration of default may be imminent: according to Bloomberg, ISDA has agreed to review a request to determine whether an event of default has occurred due to delayed principal payments on the Petroleos de Venezuela SA bond that matured Nov. 2.

A top official from the Nicolás Maduro administration said on Monday that the United States is inventing a humanitarian crisis in Venezuela to justify a military intervention. British foreign minister Boris Johnson said the EU wanted to "get Mr Maduro to see sense" through the pressure from sanctions. But the EU has been divided over whom to target.

On the eve of the meeting Maduro tried to send a reassuring message that Venezuela will avoid default despite its mounting financial woes.

Investors had previously said that the potential presence of sanctioned Venezuelan officials in that meeting has raised concerns that joining it could violate sanctions, although Venezuela has promised that no sanctioned personnel would be present.

Maduro's persistence in refinancing and restructuring in difficult situations prompted investors to suspect the president was planning to announce a covert default.

"The European institutions show their lamentable and shameful subordination to the US government", it added. U.S. -based creditors are not prohibited from attending the meeting, but are barred from dealings with officials such as Zerpa and El Aissami.

Representatives of Maduro's government were due to meet investors in Caracas on Monday to discuss renegotiating $60 billion in foreign debt.

Editor's Note: This commentary was originally published by Oilprice.com, 11/09/2017.

Venezuela, which is facing the world's highest inflation rate, has seen widespread food shortages in recent years in part because of its failing socialist revolution. The government's scheming at the climate talks is doing for its national image what whaling has done for Japan.

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