|The arrest of the board of Citgo Petroleum, the US subsidiary of Venezuela’s State oil company PDVSA, is a tipping point in a struggle at the highest level over the future of a key business for Venezuela’s national wealth.
The imprisonment of Citgo’s company directors results from their involvement in a deal to refinance the company’s debt worth almost US$4 billion involving two US private equity funds. According to a statement by Venezuela’s Attorney General Tarek William Saab, that deal placed Venezuela’s State assets at risk.
The investigative web site La Tabla noted that “the purported deal meant unfavorable conditions for the oil industry and put up the subsidiary itself as collateral in talks which apparently involved the private equity funds Frontier Management Group and Apollo Global Management, the latter regarded as one of the world’s biggest and most aggressive alternative finance corporations.” These financial organizations can certainly be described as “vulture funds”.
A high level US response came in no time. Reuters news agency quoted an unnamed State Department official who criticized the Venezuelan authorities for the arrests, since five of the six people detained hold dual Venezuelan-US citizenship.
The individuals now defended by the United States are:
Reuters quotes their US State Department source saying ““The U.S. Embassy in Venezuela has asked that (Venezuelan) authorities grant consular access to all U.S. citizen detainees in Venezuela. We call on the (Venezuelan government) to do so immediately in accordance with the Vienna Convention on Consular Relations,”
The details of this case are also complicated by its discreet nature. According to Attorney General Tarek William Saab, the Citgo directors had offered strategic information on Venezuela’s oil operations to individuals from US intelligence agencies.
Piecing together the jigsaw
Citgo has been in the news in recent months for various reasons, all involving the US in the context of its economic siege against Venezuela and of this important Venezuelan overseas asset.
Both before and after the sanctions imposed by President Trump, Venezuela’s Citgo had been facing serious difficulties in international systems for the purchase of crude oil to supply its refineries. De facto unofficial oil embargo operations against Citgo have been implemented via the refusal of banking intermediaries to issue short term letters of credit enabling Citgo to buy crude oil in the United States.
President Trump’s August 25th sanctions this year took hostage Citgo’s company dividends, ordering the company not to repatriate its profits to its parent company PDVSA in Venezuela. According to the Fitch Ratings company, Citgo has earned US$2.5 billion in dividends for PDVSA since 2015. In this way President Trump intensified the deterioration in Venezuela’s finances in a context of lost foreign exchange income resulting from the major drop in international oil prices.
In addition, Venezuela’s initiative to restructure its foreign debt set off new attacks from financial institutions attempting to trigger a situation of default for Venezuela’s economy. A few days ago the Standard & Poors ratings agency declared a non-payment by Venezuela. That cleared the way for the US based International Swaps and Derivatives Association (ISDA) to take coercive measures aimed at the probable confiscation of Venezuelan assets overseas, specifically Citgo.
Faced with an dishonest, arbitrary, discretionary declaration by the ISDA that Venezuela hasn’t meant its obligations to bondholders, taking over Venezuela’s assets overseas is a very real possibililty, according to Landon Thomas Jr., a financial analyst for the New York Times. Thomas argues that in the context of the disproportionate reporting of Venezuela’s financial situation, the country is becoming a focus of the vulture funds. Thomas points out that “Venezuela’s oil company has lucrative assets in the United States and Europe that holdout investors could try to seize through a lawsuit in a foreign court if the country stopped paying.”
The strategy of subjugating countries by taking over their resources
The components making up the situation around Citgo suggest a clear US policy dedicated to capturing assets, goods and resources. The means are complex and vary according to context but the common denominator is always the same, namely, the US takes measures to subjugate nation States, taking away their ability to maneuver politically, weakening their defenses and finally taking over their resources.
Recent examples include the invasion of Iraq in 2003, which was the biggest war of plunder for oil of our time. Secondly, the secession of Sudan and the birth via a US sponsored referendum of South Sudan, a vast impoverished region holding most of the oil reserves of the formerly unified Sudan. Now it is a captive region, ripe for takeover by multinational businesses. Also the mercenary invasion and de facto partition of Libya, whose international reserves of over US$200 billion were confiscated, has seen the country’s territory fragmented and its oil assets dispersed.
The threats around Citgo lie in the probable escalation of boycott and suffocation of Venezuela’s economy aimed at removing Chavismo. Hijacking Citgo, a key component of Venezuela’s income, is a large scale operation to weaken Venezuela’s ability to keep its economy going. The details of the case exemplify a repeat of the model of looting applied in the case of Libya and its sovereign reserves. The US no longer needs to occupy a country in order to make off with its strategic wealth. All it needs to do is make sure that wealth can be held captive somewhere within the guts of the US financial and economic system.
That assertion is no exaggeration in the context of US foreign policy as directed by Rex Tillerson, head of the US State Department, ex Chief Executive Officer of Exxon Mobil and an avowed enemy of Chavismo since the legitimate nationalization of that company’s assets in the Orinoco Oil Belt in 2007. Tillerson is also a business leader with antecedents in stealing Venezuelan resources. Right now, Exxon Mobil is carrying out spurious exploration and trial extraction work, effectively as a patron of the Guyanese government, of light crude oil in the coastal part of the disputed Esequibo zone.
President Trump’s government is self-evidently under the influence of the US oil industry. In fact, it represents a conspiracy of open enemies of Chavismo from across US politics, sponsored by multinational oil company interests, as is the case of Congress people like Marco Rubio, Ileana Ros Lehtinen and Bob Menendez, all of them individuals openly advocating hostile measures and intervention against Venezuela.
It has to be said one is not dealing merely with oil industry retaliation. All these actions are part of a range of activities straight out of the US strategic manual and implemented in various ways in different parts of the world.
Infiltrating Citgo’s Board of Directors via “Trojan horses”, now defended by the US State Department, is clearly a way of trying to dismantle Venezuela’s resources by handing them over through pseudo-legal maneuvers to capital interests anxious to dismember Venezuela’s economy, most seriously involving espionage on behalf of the United States. The methods used are very sophisticated but hardly new.
In this way, and in the middle of the most important purge and anti-corruption campaign ever in Venezuela, involving the arrest of more than 50 key officials of PDVSA, the struggle over Venezuela’s assets is well under way on the domestic and overseas fronts simultaneously. This is a surgical operation to protect the heart of Venezuela’s economy, its most sensitive vital point now under attack both inside and outside the country via internal sabotage and foreign financial and legal siege.
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Translated by Tortilla con Sal