Venezuela Debt Default? Russia & India to the Rescue!

BarronsRussia is the wild card in Venezuela avoiding a debt default in the coming weeks.

Venezuela most recently made a debt payment, and said the government and the state-controlled oil company Petroleos de Venezuela (Pdvsa) had and will have cash to meet obligations. But it wasn’t specific about where the money would come from to meet $3.6 billion in payments due in October and November. As the Venezuelan government and economy crumble, Pdvsa oil output is in decline, and Russia and Russia’s government controlled Rosneft (ROSN.London) have come to the rescue in debt swaps over the past 18 months that included a promise of a 50.1% stake in Venezuela’s U.S. Citgo refinery operations in the event of default. (For more on that, see our post Russia-Venezuela Citgo Debt: ‘National Security Issue,’ Mnuchin Says).

Russ Dallen, an attorney, publisher and the managing partner at Caracas Capital, rehashed the Russia-Venezuela investing history in a note today, and expanded on how Russia’s tentacles in India have paved the way for more imports of Venezuela’s heavy crude there. Dallen adds: …

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During the last several decades, the United States has invested billions of dollars in trying to help the governments of Latin America and the Caribbean deliver better lives for their citizens. This has meant helping them increase internal security by combating the illicit growing and trafficking in narcotics and the activities of terrorist groups, as well as helping them to shore up their democratic and free market institutions.

Unfortunately, in recent years, continued progress in these areas has been threatened, not least by the elections of radical populist governments in Venezuela, Bolivia, and Ecuador. These governments have instituted retrograde agendas that include the propagation of class warfare, state domination of the economy, assaults on private property, anti-Americanism, support for such international pariahs as Iran, and lackluster support for regional counter-terrorism and counter-narcotics initiatives.

We are a group of concerned policy experts that fear the results of these destructive agendas for individual freedom, prosperity, and the well-being of the peoples of the region. Our goal is to inform American policymakers and American and international public opinion of the dangers of these radical populist regimes to inter-American security.