Crisis in Venezuela

IMG-20171115-WA0007.jpg(belated post) I talked to Deutsche Welle and Bloomberg Turkey recently about the economic crisis in Venezuela. The interviews followed a “selective default” on part of the country’s debt obligations. Since then, there has been another round of purges and politically motivated crackdown, followed by military takeover of management, of key Venezuelan agencies and state-owned enterprises. This time, the target is CITGO, the Venezuela-owned (albeit heavily mortgaged) oil refining and gas distributing company that is familiar to many in the United States. The purge is highly unlikely to arrest the country’s falling oil production (one of the stated goals) after two decades of neglect and under-investment. Meanwhile, Venezuela is running out of liquid reserves and has fewer overseas assets to offer as collateral. It has already promised away much of its reduced oil production in exchange for earlier loans, which eats into the cash that it can generate. Its non-oil exports are negligible, and despite the import crisis, domestic production of basic goods has been hollowed out.

Earlier comment below the jump:

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