Venezuela’s opposition has long accused the Bolivarian government of corruption and mismanagement. But with Citgo on the verge of liquidation, Guaidó’s officials are too incompetent — or too devious — to save it.

By Anya Parampil
On August 13, Juan Guaidó, the president of Venezuela’s legally defunct National Assembly, held a press conference in the streets of Caracas to discuss his nominee for the post of Citgo Petroleum Corporation’s CEO.

“We have interviewed Carlos Jorda,” Guaidó announced in a carefully rehearsed intonation, explaining that the candidate to oversee the former Venezuela state-owned oil company would be tasked with “supporting and helping Citgo [safeguard its] assets.”

But there was an irony behind Guaidó’s focus on the protection of assets belonging to Citgo, one that even close observers of the country’s political crisis have missed.

Guaidó’s appointment of Jorda was a violation of corporate procedure, one of several he has made since the United States government recognized him as Venezuela’s president this January. 

Guaidó himself may not even have been aware of the transgression. Yet his actions placed Citgo in extreme peril.

Ever since the late President Hugo Chávez began the process of socializing Venezuela’s oil industry nearly two decades ago, opposition leaders have accused the Bolivarian government of corruption and mismanagement.

Since January, when the Donald Trump Administration froze US accounts belonging to the country’s state oil company, Petroleum of Venezuela (PDVSA), Guaidó officials insisted the move was necessary to protect the company from the government in Caracas and its supposed malfeasance. 

But in a series of exclusive interviews with The Grayzone, members of Venezuela’s opposition have accused Guaidó’s US-based officials of working behind the backs of their compatriots, including of Guaidó himself, in order to set the stage for Citgo’s dissolution.

“The road we’re at right now says ‘Losing Citgo: 5 kilometers,’” engineer and financial expert Jorge Alejandro Rodríguez cautioned in an interview with The Grayzone. “So if you don’t make a U-turn towards recovering Citgo, then we’re just five kilometers away. Five kilometers is close – walking distance.”

In recent years, Citgo has been the target of multiple US lawsuits, filed by debt collectors seeking to appropriate shares from the refinery, a PDVSA subsidiary, as payment for money owed by Venezuela’s government.

This July 29, a US court ruled in favor of one such company, the Canadian mining firm Crystallex, sparking fears Citgo could soon be liquidated to pay back interested parties.

In the months leading up to this decision, according to some members of Venezuela’s opposition, Guaidó’s most senior advisors allowed him to take several actions which, perhaps unbeknownst to the novice politician at the time, ultimately helped strengthen Crystallex’s legal case against Citgo.

“This is a scam being made against Guaidó and against the National Assembly,” alleged Rodríguez (of no relation to Venezuelan government ministers Jorge Rodríguez or Delcy Rodríguez).

Rodríguez has emerged as the most vocal member of Venezuela’s opposition crying foul over decisions made by certain Guaidó officials. He accuses them of “criminal negligence” for their handling of the Crystallex case. 

Most severely implicated is José Ignacio Hernández, the lawyer Guaidó has appointed as his attorney general. Following the US court’s decision, news reports surfaced revealing that Hernández had failed to disclose his prior testimony in the case, on Crystallex’s behalf, during his confirmation process earlier this year.

A potentially massive conflict of interest brewing within the Guaidó shadow regime was thus exposed.

“He was appointed in a fraudulent way,” Rodríguez said of Hernández. “Why did he commit a fraud against Guaidó, and why did he commit a fraud against the National Assembly?”

Rodríguez and others now seek to publicize exactly how Hernández aided Crystallex’s case against Venezuela’s government. 

“It’s a game,” he charged. 

Other players include Guaidó’s US envoy Carlos Vecchio and Ricardo Hausmann the neoliberal Harvard economist serving as Venezuela’s “ambassador” to the Inter-American Development Bank. Both rushed to defend Hernández as soon as his relationship with Crystallex was exposed.

Insulated from scrutiny by a US media that has focused exclusively on uncovering flaws in President Nicolás Maduro’s government, these men could be weeks away from successfully overseeing the liquidation of Citgo, carrying out a daylight heist of Venezuela’s most valuable international asset.

The Crystallex hustle

Citgo’s survival fell into limbo on July 29, when a US Federal Appeals Court upheld a ruling declaring that Crystallex, a Canadian gold mining firm, could seize $1.4 billion worth of the refinery’s shares. The sum was considered compensation for assets expropriated by Venezuela’s government under the late President Hugo Chávez.

The Crystallex ruling caused anxiety among PDVSA’s Guaidó-appointed board, which immediately pledged it would take “all legal measures necessary to challenge the decision.”

Guaidó’s US-based attorney general, José Ignacio Hernández, responded to the ruling on July 31, tweeting: “no creditor can judicially execute on PDVSA properties, including Citgo.” 

Yet Hernández’s interest in the Crystallex case did not begin when he assumed the role of Guaidó’s overseas legal representative in February. According to court documents, he appeared in 2017 as an expert witness in the case, testifying on behalf of Crystallex.

In other words, Hernández had aided Crystallex’s legal case against the government he now claimed to represent.

Hernández neglected to inform Venezuela’s National Assembly of this relationship before it hastily approved his nomination and made him the country’s most powerful legal representative in the eyes of the US court system.

“To me, Mr. Hernández’s acts are unexplainable,” Jorge Alejandro Rodríguez, the financial expert, told The Grayzone. 

Despite his vehement opposition to Venezuelan President Nicolás Maduro, Rodríguez could not overlook Hernández’s deceit. On June 5, he met with lawmakers in Venezuela’s National Assembly to inform them of Hernández’s ties to Crystallex. 

“I am 110 percent against Maduro and against Chávez,” he insisted, adding that “my intention was not to make a scandal out of this, but to make a warning as private as possible.”

Rodríguez told The Grayzone he made a “strong recommendation” that lawmakers remove Hernández from his powerful position, and cautioned them that Guaidó’s US-based representatives were poised to squander Citgo entirely.

He claims that while serving as Guaidó’s top prosecutor, Hernández made several decisions which ultimately enabled, if not entirely ensured, Crystallex’s victory against the government he supposedly worked for.

“I told the lawmakers: ‘I don’t give this [case] more than a couple of months,’” Rodríguez said, describing his June 5th meeting. “It’s not like I had a crystal ball or anything, but once you see the case and the things that Hernández did, or allowed the National Assembly to do, you can see that it was of such a benefit to Crystallex, that for the judges it became a clear case.”

Jose Ignacio Hernández’s alter ego

To win its lawsuit against the Venezuelan government, Crystallex had to persuade a judge it had the right to seize Citgo’s shares through a legal concept known as “alter ego.” 

In business law, alter ego is described as “lifting the corporate veil,” or proving the “instrumentality” of a company. It is the doctrine through which a court determines that a private corporation, such as Citgo, merely serves as cover for an individual or group, in this case the Venezuelan government.

Only by “lifting the corporate veil” and proving Citgo to be an “instrument” of the Venezuelan state could Crystallex justify seizing assets belonging to the private, US-based corporation as compensation for money owed by the government in Caracas.

In the Crystallex case, that task was left up to a 43-year old Venezuelan lawyer and professor of administrative law. He filed a sworn declaration in US court in April 2017, arguing his country’s government had used PDVSA, Citgo’s majority shareholder, “as a political tool to achieve its domestic and international objectives.” 

That expert testimony was delivered by none other than Guaidó’s future prosecutor, José Ignacio Hernández. 

At the time of Hernández’s testimony, Citgo was shielded from accusations of instrumentality by several layers of separation between Venezuela’s government and the management of the company’s day-to-day operations. 

Under Venezuelan regulations, the president of the republic only appointed the board of PDVSA. Members of the board in turn selected the board of the company’s Delaware subsidiary, PDVSA Holding, which then chose the board of Citgo Holding. Finally, this subsidiary appointed the board of Citgo Petroleum. 

That whole chain of command was upended in February of this year when Venezuela’s National Assembly directly appointed not only an ad-hoc PDVSA board, but the top executives of all three  subsidiaries as well.

Under Guaidó’s leadership, the National Assembly placed a government hand smack in the middle of three private US-based corporations, essentially proving Crystallex’s alter ego case for them. 

Critics like Rodríguez say that, as Guaidó’s attorney general, it was up to Hernández to prevent the National Assembly from appointing Citgo’s board and thereby jeopardizing Venezuela’s defense in the Crystallex case. 

“It was absolutely unacceptable for him to proceed with the appointment, no matter what the National Assembly would have said,”  Rodríguez contended. “You are the attorney general. You have duties. You can’t do something that goes against the [rules] of the nation… If somebody in the whole world knew that that was wrong, it was him.”

Crystallex capitalized on the error within a matter of weeks, introducing a court filing which lambasted “the Guaidó-led National Assembly’s complete disregard for corporate formalities in reappointing the boards of PDVSA’s subsidiary” arguing its failure to follow procedure was “hardly a sign of [the subsidiaries] independence from government control.”

By allowing Venezuela’s National Assembly to illegally appoint the board of PDVSA’s subsidiaries, Hernández helped prove a crucial aspect of Crystallex’s case against the Venezuelan government.

“It was not until Hernández did what he did, or allowed the Assembly to do what it did, that it became so clear for the Delaware courts to say: ‘Ok, it makes no sense to keep Crystallex waiting,” Rodríguez explained.

Caught in yet another lie

Following the July 29 court ruling in favor of Crystallex, José Ignacio Hernández’s past relationship with the company finally surfaced in Venezuelan media. 

On July 31, Venezuelan Attorney General Tarek William Saab announced a criminal investigation into Hernández, accusing the lawyer of “a conflict of interest that violates all judicial ethics” and “treason toward his fellow citizens.”

Hernández dismissed the allegations as “false” later that same day, telling TV Venezuela he had recused himself from the Crystallex case back in March.

Yet Crystallex was not the only corporation battling Venezuela’s government that had turned to Hernández for expert testimony. According to documents filed with the World Bank’s arbitration court, the US glassmaker Owens-Illinois also retained Hernández as an expert witness in its case against the Venezuelan government in 2013. 

The World Bank ruled in favor of Owens-Illinois in May of 2015, determining Venezuela’s government owed it $371 million for the 2010 nationalization of two plants belonging to the Ohio-based company. 

Like Crystallex, Owens-Illinois eventually set its sights on Citgo in order to collect the payment. 

On February 11, 2019, Owens-Illinois filed a fresh lawsuit against Venezuela’s government, PDVSA, and its US-based subsidiaries. The crux of its complaint was familiar: while PDVSA Holding, Citgo Holding, and Citgo Petroleum were “nominally Delaware corporations,” in reality they were “alter egos, and mere instrumentalities of Venezuela itself”.

Two days later, Guaidó’s National Assembly announced appointments to the board of PDVSA and its three subsidiaries. 

Like Crystallex, Owens-Illinois appeared to benefit from Hernández’s failure to ensure that Venezuela’s National Assembly followed proper procedure in its management of PDVSA and Citgo. 

Hernández was asked about his testimony on behalf of Owens-Illinois in an interview with Hispano Post. “I was not a lawyer for the company, nor did I promote their interests,” he claimed.

When Hispano Post pressed the lawyer about any payment he might have received from the company, Hernández rejected the suggestion as “absolutely false.” Owens-Illinois “made a payment, which was not for me, but for the law firm in which I was a partner at that time,” he insisted.

Yet public court documents revealed that Owens-Illinois made a $163,720 payment for the legal expertise it received from Hernández. The filing did not cite any law firm. Instead, it specifically named “José Ignacio Hernández” as the recipient of the money.

Hernández’s public statements regarding Owens-Illinois were not the only aspects of his story directly contradicted by official court documents.

“I never analyzed the alter ego thesis nor its merits,” Hernández told Hispano Post, regarding the nature of his Crystallex testimony. He claimed that his court declaration was limited to interpretations of Venezuelan law.

Yet Crystallex characterized his contribution to its case quite differently. In a March 2019 court filing the company stated that “before assuming his current position, José Ignacio Hernández—Special Counsel to the Venezuelan National Assembly tasked with evaluating creditor claims against Venezuela—provided expert testimony supportingCrystallex’s alter ego arguments.”

Once again, Guaidó’s top prosecutor appeared to be caught in a lie. 

Whether Hernández received any payment from Crystallex in exchange for his testimony remains unknown. However, the court documents offer support to those like Jorge Alejandro Rodríguez, who have described Hernández’s actions as a “conflict of reputation.”

“As a lawyer he made statements that were in favor of Crytallex’s position, so as a lawyer, he cannot change his mind,” Rodríguez explained to The Grayzone. 

How could Hernández claim to represent the legal interests of the Venezuelan government if he had previously aided its sworn enemies in court?

When Rodríguez took that question to Venezuela’s National Assembly, lawmakers confirmed they had not been made aware of Hernández’s questionable relationships during the lawyer’s rushed confirmation hearings earlier this year.

In fact, according to Hernández’s own account, he only disclosed the compromising information to one person. In an interview with Hispano Post on August 9, Hernández said that he had revealed his relationship with Crystallex to one member of Guaidó’s shadow administration several months prior.

“When my name started to float as general prosecutor, I spoke with Ambassador Carlos Vecchio,” Hernández maintained, “and I prepared him a memo in which I informed him that until December 2018, I was a partner at a law firm, then I quit and told him of the cases which I knew of, and that I had been an independent witness in cases that were problematic, like that of Crystallex.”

As news of Hernández’s “problematic” dealings publicly surfaced, Vecchio – the ExxonMobil lawyer-turned-Venezuelan opposition leader – suddenly emerged as one of his most prominent defenders. 

A growth lab for Venezuela’s US-backed opposition

Hausmann and Vecchio at a IHS Markit conference, with an empty chair signifying Guaido

Hours after Venezuela’s Attorney General opened a criminal investigation into Hernández’s relationship with Crystallex, Guaidó’s US-based officials launched into a chorus of praise for their embattled colleague.

“In my professional career I have never worked with someone more capable, more hardworking, more dedicated, more knowledgeable about legislation, and more honest than Attorney General Hernández,” vowed Ricardo Hausmann, Guaidó’s ambassador to the Inter-American Development Bank.

Hausmann is the neoliberal Harvard economist previously exponed in the Grayzone for raking in fees from big banks and repressive and theocratic governments while attacking banks that work with Venezuela’s elected government.

Hausmann proclaimed on Twitter: “The attacks against him are based on lies and false conflicts of interest.”

The economist continued with the rousing defense of his friend, referring to Hernández by a nickname: “Venezuela must thank Nacho a lot for his contributions to the decisions of the National Assembly since 2015, for the many legal decisions of the Presidency of Juan Guaidó, [and] for his defense of more than 40 lawsuits against the Republic. Thanks Nacho.” 

Guaidó’s US envoy, Carlos Vecchio, seconded Hausmann’s glowing endorsement, tweeting, “quite so, Ricardo Hausmann. The Attorney General has been an honest professional who has contributed greatly to protect our assets and join efforts to cease usurpation.”

Hausmann and Vecchio’s defense of Hernández came as no surprise, as the bond between the three men extended far beyond their service in Guaidó’s shadow administration.

The three officials were each affiliated in various capacities with Harvard’s Kennedy School of Government, an elite training ground for future leaders of US-backed political movements across the globe. Vecchio completed a masters degree on the dime of the US government at the Kennedy School in 2000, the same year that Hausmann joined the university as a professor of economics. 

Hausmann currently runs The Growth Lab, an offshoot of Kennedy’s Center for International Development (CID) that “works to understand the dynamics of growth and to translate those insights into more effective policy making in developing countries.” Hernández works directly under Hausmann at The Growth Lab, having enjoyed a CID fellowship since 2017. 

CID’s  funders include The US International Trade Commission (USTR), MasterCard, and George Soros’ Open Society Foundation. The CID also receives support from the Center for Global Development, a think tank chaired by Clinton-era Treasury Secretary Larry Summers which is itself backed by the Gates Foundation, Exxon Foundation, and the Ford Foundation.

For his part, Hausmann insisted to The Grayzone, “Guaidó and his team will do everything they can to prevent the loss of CITGO that is in danger because of the recklessness of Chavez and Maduro. Making Guaido, Jose Ignacio Hernandez or me responsible for the vulnerability in which Maduro has put all assets abroad is absurd. If we wanted to lose CITGO, inaction would be enough.”

He added, “The idea that I want to liquidate Citgo is ridiculous and false.”

When this reporter followed up by asking Hausmann about Guaidó’s decision to appoint the board of PdVSA’s subsidiaries and Hernández’s involvement in the Crystallex case, Hausmann blocked them on WhatsApp.

But Venezuela’s Harvard boys were not the only voices of support Hernández found among Guaidó’s top US officials. In case anyone still questioned the lawyer’s honesty, Guaidó’s representative at the Organization for American States, Gustavo Tarre, penned a long letter touting the fact he had once worked closely with Hernández’s father as a testament to his character. 

Vecchio covers for Hernández amid more accusations of “fraud”

In his own attempt at damage control, Hernández turned to TV Venezuela, a Miami-based news network.

 “I recused myself from this case in March of 2019,” Hernández  told the network on July 31.

While Hernández produced no public evidence to support that claim, he circulated a letter supposedly proving the recusal to allies among Venezuela’s opposition. 

This letter was signed by Hernández and obtained by The Grayzone (it is embedded in full at the bottom of this article).

The letter states the lawyer had “decided to recuse [himself] from conversations which could begin with Crystallex” due to “an independent expert testimony” he provided the company “in one of the lawsuits [it] maintained against the State.”

Dated March 13, the document inspired a wave of criticism from skeptics who accused Hernández of deceiving Guaidó and the country as a whole. 

Dissenters included fellow members of Venezuela’s opposition like Jorge Alejandro Rodríguez, who initially alleged the letter was falsified. 

Rodríguez was so incensed with what he believed was a gigantic fraud that he initiated an analysis of the document’s metadata.

In an interview with Union Radio, Rodríguez declared that based on his investigation, the document had been created not on March 13, as it said, but on the afternoon of July 31 – the same day it was sent out.

“It is a shame and an embarrassment,”  Rodríguez thundered to the anti-Maduro radio host, Vladimir Villegas.

Guaidó officials accounted for the inconsistency by claiming the document’s metadata merely reflected the time that they had converted it into a PDF for circulation among Venezuela’s opposition, not the date it was actually written. 

Yet according to normal government practice, a document carrying such importance would typically have to be signed as a hard copy and stamped with the date and time it was received. If Guaidó’s team had been following proper procedure and keeping record according to Venezuelan law, Vecchio should be able to easily verify its submission– but has yet to do so.

Still regardless of its authenticity, Rodríguez views the letter as meaningless.

“It says nothing,” Rodríguez told The Grayzone, stating that Hernández’s so-called recusal was limited. “He’s not inhibiting himself from anything, he’s just saying that he will not participate in the conversations with Crystallex,” he said.

“Government issues call for respect of the law; they call for transparency, and that is not being done,” Rodríguez added. 

In a televised interview, the opposition lawmaker Oscar Ronderos pledged full support for Hernández if he could produce additional evidence proving he had properly recused himself from the US court overseeing the case. Hernández has yet to accept the offer.

What’s more, the letter made no mention of Hernández’s role in the Owens-Illinois case, which is still in litigation. 

Most bizarrely, Hernández did not address the recusal to his boss and the supposed president, Juan Guaidó – as any attorney general would typically do – but to Guaidó’s Washington envoy, Carlos Vecchio, instead. 

Exactly when, if ever, Guaidó was made aware of Hernández’s dealings remains a mystery.

“The fraud of Mr. Hernández is against Guaidó and the National Assembly,” asserts  Rodríguez. “Vecchio has backed Hernández in all situations, and that is something I also do not understand.”

While it is impossible to verify the motivations of Vecchio and Hernández, an explanation of the process through which Citgo would be used to pay back interested parties like Crystallex and Owens-Illinois offers troubling clues. 

Scavenging off Citgo’s corpse

When a court rules that one corporation like Crystallex can seize shares belonging to another like Citgo Holding in order to pay back debt, the shares are not directly transferred from company to company. Rather, the court decides what amount of the indebted company’s assets must be sold off in order to repay the claimant. 

If the court allows Crystallex to move ahead with its right to seize Citgo, a decision which observers expect could come in early September, it will then initiate the process of liquidating $1.4 billion worth of the company’s assets. 

Yet Crystallex is not the only vulture looking to scavenge the corpse of Citgo. The refinery currently faces several similar lawsuits, including the one from Owens-Illinois. The Crystallex precedent may help resolve these cases. 

“[The Crystallex case] has a lot of implications because it completely opens the door to the whole list of companies that are suing PdVSA,” cautioned Rodríguez.

Lawmaker Oscar Roderos, a former judge, notes as many as 43 cases against Venezuela’s government could be impacted by the Crystallex decision.

On top of pending legal fights, a $913 million payment to Citgo’s US bondholders is due October 27. If Citgo defaults on the loan, creditors could then cash in on their whopping 50.1% stake in the company.

Taken together, these interests threaten to liquidate the majority of Citgo Holding’s assets, providing a boon to oil giants such as British Petroleum, Shell Gasoline, and ExxonMobil – the former employer of Vecchio.

If Citgo is liquidated, competing industry titans will have the chance to expand their share of the oil market through the purchase of Citgo’s assets in a firesale overseen by the court. 

“They’re auctioned,” Rodríguez explained, referring to Citgo’s assets.

As The Grayzone previously reported, Guaidó’s US representative Carlos Vecchio is a former functionary of the US oil industry. Vecchio spent the vast majority of his career working as a top lawyer for ExxonMobil, entering politics only after Chavez booted the company from Venezuela.

“I was not aware of any of his relationships, and I was quite annoyed when I read [the Grayzone’s reporting],”  Rodríguez said. “Not that I criticize anybody for working for Exxon, but to me this sounds like the lawyers of Standard Oil Company of New Jersey, 100 years back, writing Venezuelan laws. For me it’s no fun, it’s unacceptable.”

Vecchio’s intimate ties to the oil industry help remove the mystery behind his consistent covering for Hernández. Indeed, it is not hard to imagine a scenario in which Vecchio’s former employer, Exxon, could benefit from Citgo’s liquidation. 

Yet Vecchio, Hernández, and other Guaidó officials publicly maintain that protecting Citgo is paramount. In their effort to secure the company, they have relied on their most loyal ally, the Trump White House, and its weapon of choice: unilateral financial sanctions.

Within days of the Crystallex ruling, PdVSA’s Guaidó-appointed chair, Alejandro Grisanti, announced on Twitterthat Venezuela’s opposition had requested an executive order from Trump “to protect the country’s assets on American soil”. 

The following day, Trump announced that he was considering a full embargo of the country.

Deadly sanctions: a cause to celebrate

On August 5, Trump signed an executive order to place a total blockade and economic embargo on Venezuela. White House National Security Advisor John Bolton praised the move as the harshest measures taken against a country in the Western hemisphere for over thirty years.

In Venezuela, hundreds of thousands of civilians poured into the streets nationwide to denounce the lethal effects of the blockade. While Venezuelan citizens braced for more suffering, Guaidó’s representatives cheered the escalation against their country.

“Venezuela’s opposition on Tuesday celebrated a sweeping U.S. sanctions order… saying the measure would protect Venezuela-owned U.S.-based refiner Citgo from seizure by creditors,” reported Reuters, citing sources close to Guaidó.

The Washington Post, meanwhile, pointed out that although US media was preoccupied with the embargo, there was actually “nothing about trade with Venezuela in the new U.S. measure, whose entire focus is on freezing Venezuelan government assets in the United States.”

In theory, the asset freeze complicated any attempt to seize Citgo’s shares, leading the Post to argue it was designed as “a desperate, last-ditch effort by the Trump administration to keep Guaidó and the opposition from losing any hope of controlling Citgo”.

For his part, Hernández called characterizations of the executive order as an embargo as “misinformation.” He stated that “what this Executive Order prohibits is a company taking control of Venezuela’s assets… this is the asset protection measure we were requesting.”

However, some experts believe the measures are insufficient to protect Citgo. 

“The executive order, in my opinion, changed basically nothing,” Francisco Rodríguez (of no relation to Jorge Alejandro Rodríguez), a Venezuelan economist and former advisor to opposition candidate Henri Falcon told The Grayzone.

Francisco Rodríguez explained that US-based assets impacted by the measure had already been frozen as a result of previous sanctions.

He interpreted the measure as a “change of posturing in the US… essentially a change in their communication strategy.”

If Guaidó’s team truly wished to protect Citgo and other assets belonging to the Republic, other voices among Venezuela’s opposition like Jorge Alejandro Rodríguez have advocated an executive order which includes “all the legal terms to say that Venezuela’s assets cannot be sold, liquidated, or seized.”

“If the legal mandate was ‘to protect Venezuelan assets for the future recovery of Venezuela,’ then it would be a totally different ballgame,” explained Rodríguez. “That’s why I have deeply criticized [Guaidó officials], and why I find their behavior totally irresponsible.”

What’s more, the final authority with regard to sanctions is the Treasury Department’s Office of Foreign Asset Control (OFAC), which has the ability to waive sanctions requirements under any circumstances. 

“Let’s say you are the judge and you have to get Crystallex paid,”  Rodríguez posited. “What do you do? You go to OFAC and say, ‘Ok, I have these guys named Exxonmobil, Valero, Shell, BP, and Marathon – large corporations – and I’m auctioning these shares in a couple of weeks, and I need OFAC’s permission to proceed.”

Precedent implies that OFAC could approve an exception for debt collectors like Crystallex. On May 21, 2018, OFAC issued a waiver affirming the right of PdVSA’s bondholders to foreclose upon Citgo if Venezuela’s government were to default on their loan, suggesting Crystallex may be afforded the same privilege. 

Guaidó officials made a $71 million interest payment to creditors earlier this year, leading critics to slam PdVSA’s Guaidó-appointed executives for appeasing bondholders rather than investing the money in Venezuela. Hernández responded by claiming sanctions prevented them from using the money for anything else.

“What that means is that they got authorization from OFAC to make the payment,” Francisco Rodríguez explained, “what that’s telling you is that– if you take [Hernández’s] words at face value– the US government is only allowing them to use the money to pay bondholders, but its not allowing them to use the money to address Venezuela’s humanitarian crisis.”

“Paying the bondholders, from my point of view, was criminal,” asserted Jorge Alejanadro Rodríguez.

According to Francisco Rodríguez, there appears to be a split between the interests of the US Treasury Department, which would like to see creditors paid off, and the White House, which recognizes the negative impact Citgo’s loss would have on their dream of regime change in Venezuela. It is hard to envision how Guaidó, an inexperienced and previously unknown opposition figure, could recover politically if the country lost its most valuable international asset under his watch.

Protecting Citgo “would be in the best interests of the whole,” said Jorge Alejandro Rodríguez, “but there might be particular interests, specific interests, working for that not to happen.” 

He suggested that the interest could be, for example, a “large corporation saying: ‘it’s us, this is what we want to do. And I don’t care if the whole of US interests in Venezuela get screwed. I am going to get the best cut [of Citgo].’ Basically you are killing the cow because you want to eat the tenderloin.”

Running Venezuela’s “government” through WhatsApp

Seven months since the US recognized Juan Guaidó as President of Venezuela, the young politician has yet to win control of any tangible government ministry or assemble anything close to resembling a proper cabinet. 

Instead, Guaidó has leaned on a group of far more experienced, well-connected operatives to serve as his representatives in the US. His blind faith has provoked fellow members of Venezuela’s opposition to warn that he may soon land on face-first on catastrophic failure.

“I have not been able to reach him on this issue,” Jorge Alejandro Rodríguez said of Guaidó. He said that he had also admonished Venezuelan lawmakers not to leave the country’s interests “in the hands of Mr. Hausmann, who has been away from Venezuela for twenty five to thirty years, Mr. Hernández, who left the country ten years ago, and Mr. Vecchio, who left the country” in 2015.

“I am more pessimistic as days pass by, but I do keep alive in my heart the hope that some people will come to their senses, people like Guaidó,” the veteran financial analyst reflected. “I hope he realizes it before we definitely and finally lose [Citgo].”

Francisco Rodríguez, who ran Venezuela’s equivalent of the Congressional Budget Office between 2000 and 2004, believes the Citgo crisis is symptomatic of a wider problem. He hopes that Venezuela’s National Assembly puts in a greater effort to ensure transparency from Guaidó and his overseas team.

“I have advocated that the National Assembly take its oversight role seriously here,” he explained, describing Guaidó’s administration as “a very odd government” due to the lack of internal and external control mechanisms that are commonplace in normal governing bodies.

“It’s a government that is subject to absolutely no control. They’re not controlled by any judiciary,” he said. “There is no budget, no accountability and no oversight.  These guys are running the Venezuelan government on WhatsApp chats and gmail accounts.”

According to Francisco Rodríguez, even what he describes as “mainstream opposition” parties with a “more moderate background,” such as Democratic Action and A New Era, are deeply concerned about the risk of potential misdealings within the Guaidó regime.

 “It’s not an issue of honesty, it’s an issue of incentives,” he stated. “If you put in a government with absolutely no oversight over its management of resources, you’re bound to have corruption scandals emerge.” But unfortunately, he said, their desire for accountability is restricted by opposition “hardliners” who accuse all critics of simply “playing Maduro’s game.”

Whether or not Crystallex, Exxon, or another group of creditors and corporations emerge as the big winner, if Citgo is liquidated there will be only one loser: the Venezuelan people.

Venezuela failed "aid" concert fake numbers

U.S. is trying to overthrow the Venezuelan government sending seudohumanitarian aid which was not requested and it is not accepted. In fact, US interests aim at the huge petroleum and gas fields and other mineral resources of the country. They organized a concert which was not very succesful and inflated the attendance numbers.

D.A.

200,000 or 10,000? WaPo deletes inflated Venezuela Aid Live attendance figure from its website

Modeled on Live Aid, Richard Branson's charity concert was meant to unite the world behind the cause of delivering aid to Venezuela (which its government doesn't want). But the endeavor would look vainglorious if few turned up.

The hastily planned five-hour affair at a Colombian-Venezuelan border crossing was scheduled to start at 11am local time on Friday – a workday. This wasn't a masterstroke of event logistics, even if many of the biggest Latin American stars, presidents, and opposition leader Juan Guaido, were due on the expensively assembled rotating stage.

The entire mainstream Western media dutifully covered the event as a success, even before it happened, unquestioningly repeating claims of 250,000 people attending and $100 million being raised in 60 days, although it was not clear how these figures were arrived at.

'Tiny fraction'

On the day, the narrative continued unchanged. Colombia, whose President Ivan Duque joined Guaido on stage, reported that 317,000 people attended the gig. This was a wonderfully precise figure considering there were no tickets and people came and went at will.

The Washington Post was a little more cautious, giving a figure of 200,000. But perhaps oddly, considering all the pre-concert hype, most media outlets gave no estimates at all, concentrating on the revolutionary calls and platitudes of peace coming from the stage.

This was a wise move. The Live Aid concert in London at Wembley in 1985, recently recreated for the Queen biopic 'Bohemian Rhapsody,' was attended by 72,000, and was made iconic by the swooping overhead shots of the overfilled stadium.

With a crowd three, or perhaps four times bigger, one would have expected truly impressive vistas of the endless masses to emerge, yet the majority of the camera angles were close-ups or shots taken from behind the backs of the audience, just a few rows back.

Dan Cohen, the RT reporter on the scene, said that at 11am only a "tiny fraction" of the announced crowd was present – likely no more than 10,000.

Using the few available aerial shots taken throughout the day, and some standard crowd calculations for the occasion, alternative news site Moon of Alabama estimated an attendance of about 18,000.

Even if these are conservative numbers, and one imagines that some in the audience popped in for just a few songs to be replaced by others, there is no evidence whatsoever to suggest that hundreds of thousands were present.

The Washington Post, which had not attributed its original estimation to any source, edited the number out of the later drafts of its article, without making any acknowledgement of the correction. The original can still be found in saved screenshots and cached copies, while the number still freatire in other articles.

Regime change songs

While it is tempting to do online detective work to expose published untruths, the failure of Venezuela Aid Live was not about the numbers. That people did not come, or that newspapers exaggerated, were all symptoms – not causes.

However naive or vain the participants or inefficient the spending of its donations, the original Live Aid was at its heart driven by a genuine desire to do good for those suffering in Ethiopia.

The altruism of Aid Live was less self-evident.

Here is an event created by Guaido and Richard Branson, a man with no obvious ties to Venezuela, but a friend to Davos elites of all stripes, who loves to play holiday host to the Blairs and the Obamas. It was an extravaganza for which an exact funding breakdown has still not been made public. It was staged in tandem with the violence-inciting aid caravans the following day.

The most respectable charities in the world, including the UN, Red Cross and Oxfam, have distanced themselves from the entire Western-backed "aid" initiative in Venezuela, bemoaning its "political tone," while adding that "humanitarian action needs to be independent of political, military or other objectives." None of the slogans for regime change shouted off the stage on Friday are likely to have brought them on side.

Reproduced from:

https://www.rt.com/news/452358-venezuela-aid-concert-branson-numbers/

Hands off ‘our hemisphere’ or Venezuela pays the price: US Senator warns Russia.

The US staked a claim on half the world, as Senate Armed Services Committee chair Jim Inhofe said Washington might have to intervene in Venezuela if Russia dares set up a military base not just there, but “in our hemisphere.” “I think that it could happen,” Inhofe (R-Oklahoma) told a group of reporters on Tuesday. “You’ve got a guy down there that is killing everybody. You could have him put together a base that Russia would have on our hemisphere. And if those things happen, it may be to the point where we’ll have to intervene with troops and respond.”  Should Russia dare encroach on the US’ neck of the woods, Inhofe said: “we have to take whatever action necessary to stop them from doing that.”

As opposition leader Juan Guaido vies for power, the Russian government has stuck by President Nicolas Maduro. Russia has not, however, promised military aid to Maduro, and Russian diplomat Alexander Shchetinin said on Monday that Venezuela has not requested military aid from Moscow.

After Guaido declared himself interim president of Venezuela last month, US President Donald Trump immediately recognized Guaido as Venezuela’s legitimate leader. Since then, the US has pledged humanitarian aid to Guaido, called on Venezuela’s military to support him, and slapped Maduro’s government with fresh economic sanctions. Maduro has denounced Washington’s sponsorship of Guaido as a “vile”coup attempt but nevertheless called for talks with the opposition leader. The US has outright rejected taking part in any discussions with Maduro.

The US has stopped short of deploying troops to Venezuela, despite Trump and national security adviser John Bolton both saying the option is “on the table.” Speaking on Tuesday, Inhofe agreed and suggested that Trump could launch a military operation in Venezuela without Congressional authorization.

“I don’t think it’s necessary,” he said. “If there is a threat that reaches the threshold of the president having the ability, the constitutional ability of deploying troops, then that’s an unknown. We don’t know right now.”

Reproduced from:

https://www.rt.com/news/451383-venezuela-military-intervention-russia/

Indigenous peoples of the Upper Orinoco: the Yanomami

  

About 20 years ago I had the opportunity to tour the upper Orinoco and its affluent-connection with the Amazon basin: Caño Casiquiare. In that place inhabits one of the most numerous nations of the South American tropical jungles. the Yanomami, whose villages I had the opportunity to visit ..

At that time they were threatened by the "evangelization" of the "New Tribes" and other evangelical sects. In recent years, this religious colonization was considerably reduced both in Venezuela and in Brazil. We will see how they are affected by the political changes in those two countries.

  

The world of the Yanomami

  

For the Yanomami, "urihi", the jungle land, is not a mere inert space of economic exploitation (what we call "nature"). It is a living entity, inserted in a complex cosmological dynamic of exchanges between humans and non-humans. As such, it is currently in danger from the blind predation of "whites". In the vision of the leader Davi Kopenawa Yanomami: 

"The forest-land can only die if it is destroyed by the whites, then the streams will disappear, the earth will be burned, the trees will dry up and the stones of the mountains will be broken by the heat." The spirits xapiripë, who live in the sierras and they stay playing in the jungle will end up fleeing, their parents, the shamans, will not be able to call them to protect them anymore The earth-jungle will become dry and empty The shamans will not be able to stop the smoke-epidemics and the beings evils that make us sick, in this way, everyone will die. " 

                                    Yanomami village

The Yanomami form a society of fishermen, slash-cultivators and, in addition, gatherers and hunters of the rainforest of the north of the Amazon region whose contact with the national society is, in most of its territory, relatively recent.

Its territory covers, approximately, 192,000 Km2, located on both margins of the border of Brazil with Venezuela, in the Orinoco-Amazon interfluvial region (tributaries of the right bank of the Branco River and left of the Negro River). They constitute a cultural and linguistic group composed of, at least, four adjacent subgroups that speak languages ​​of the same family (Yanomae, Yanõmami, Sanima and Ninam). The total Yanomami population, in Brazil and Venezuela, was estimated at almost 26,000 people in 1999.

In Brazil, the Yanomami population was 12,795 people, spread over 228 communities (census of the Fundação Nacional de Saúde-Fundación Nacional de la Salud - 1999). The Yanomami Indigenous Land, which covers 9,664,975 ha (96,650 km²) of tropical forests, is recognized for its importance in terms of protection of Amazonian biodiversity and was approved by a presidential decree on May 25, 1992.

Crisis in Venezuela

Venezuela's last presidential election has done nothing to end the country's profound political, economic, and social crisis.

Inflation is spiralling out of control, oil production is plummeting, foreign assets have been seized, there are serious shortages of food and medicine, tens of thousands are fleeing the country, and the incumbent government of Nicolas Maduro has increasingly weakened the country’s democratic instruments to cling to power.

The natural question in a country that boasts the world's largest proven oil reserves is, how did it come to this? Many have latched on to a simple answer: socialism. But is it really that simple?

Oil prices and policies

The underlying causes of Venezuela's hydra-headed crisis are economic, relating especially to oil and the foreign currency that it brings into the country.

The proximate cause of the recent turmoil is undoubtedly the 70-percent drop in oil prices in 2014, but the same problems that got exacerbated at that point were already in evidence five years earlier. And then, as now, they were fostered by poor policy choices.

Grave shortages are due largely to weak local production combined with a lack of foreign currency for imports, both of which relate to mismanagement of the local currency (the bolivar).

Essentially, in an attempt to prevent capital flight and currency collapse while also protecting local producers and enforcing labour law, Maduro's predecessor Hugo Chavez introduced controls on access to foreign currency. Subsidies and price controls were also implemented for many food items in order to keep them affordable to the poor, and an extremely generous subsidy on gasoline was maintained.

But since the bolivar was overvalued, local products became less competitive abroad, whereas foreign products became cheaper at home, thereby reducing demand for national produce. This effective subsidy on purchasing dollars spurred already strong demand from those keen to avoid inflation or devaluation of the local currency.

Many businesses and individuals were also willing to pay a premium to circumvent controls, either to avoid bureaucratic trade barriers or to safeguard the value of their capital, and a currency black market sprang up to cater for this demand. Where black-market dollars became part of the cost structure of basic goods, the profit margin between the cost of production and state-controlled prices narrowed or disappeared entirely, causing further damage to local production.

Beyond undermining local businesses, these policies also created opportunities and incentives for corruption, which grew in attractiveness in step with economic distortions, creating a vicious cycle.

The wider the gap between the official and black-market exchange rates, the greater the incentive to get hold of cheap official-rate dollars and resell them on the black market ("currency arbitrage"). The wider the gap between the prices of oil or foodstuffs in Venezuela and neighbouring countries, the greater the incentive to smuggle these products across the border for resale.

Differences in price are captured privately at the state's expense while producing nothing, which in turn leaves fewer resources available for the everyday business of running the country.

When the former finance minister Jorge Giordani resigned in protest of Maduro's mishandling of the economy, he estimated that between 2003 and 2012 a truly incredible $300bn was lost to currency arbitrage alone. In the short term, Chavez - unlike Maduro - prevented this problem from spiralling out of control by devaluing the local currency when official and black-market rates began to diverge significantly.

But in the long term, he placed his faith in a socioeconomic "about face". This transformation was premised on the power of a social economy that would use alternative forms of organisation, such as cooperatives and self-managed factories, to revive local production and provoke an empowering cultural shift towards active social engagement and solidarity.

But massive state investment in nationalised and self- or co-managed industries bore little fruit. And even though the number of cooperatives exploded, in practice they were often as inefficient, corrupt, nepotistic, and exploitative as the private sector that they were supposed to displace.

Inasmuch as these were statist policies of 21st-century socialism, we might indeed say socialism is to blame. But there is more to it.

Capitalism, culture, and context

First, it is important to realise that Chavez chose to call his transformative project "21st-century socialism", but Venezuela's economy remained market-based and private-sector dominated throughout his time in office. Though the social economy and the public sector were heavily promoted - including through nationalisation - the private sector was expected to remain dominant, and it did. A centrally planned socialist economy like Cuba's was neither the aim nor the reality. Second, part of the problem was always that oil-rich, hyper-consumerist Venezuela was the last place you would expect socialism to blossom - and these characteristics caused grave problems for the government.

The crucial role of oil in the international capitalist system makes oil-price volatility a central player in Venezuelan development, as Maduro has discovered to his cost.

But more importantly, the sheer value of oil provokes the "resource curse" in undiversified economies like Venezuela's. With boom-time windfalls favouring exchange-rate shifts that make other exports uncompetitive, "petromania" leads to lavish public spending, while distorted incentives undermine ethics, entrepreneurship, and efficiency throughout the state and wider society.

As Al Jazeera's insightful documentary The Battle for Venezuela explains, this is nothing new. On the contrary, Venezuela's formation as a state and as a society was intimately linked to the oil industry, and this is reflected in its politics. 

Oil, opposition, and obstacles to development

Long before Chavez took office in 1999, there were two Venezuelas: "the Venezuela that benefits from oil, and the Venezuela that remains in the shadow of the oil industry" as veteran Venezuela analyst Miguel Tinker Salas puts it.

The benefiting elite, from which the core of Venezuela's opposition emerged, rightly recognised that Chavez's promise to redistribute the oil wealth to the marginalised majority was sincere. But they also instinctively understood that Chavez wanted to rewrite the national narrative without the rich, white, educated, Western-facing elite as its heroes, thereby also robbing them of the social status that reproduced and ring-fenced their material wealth.

It is this cultural threat that explains the ferocity and durability of elite rage and obstructionism: staging the 2002 coup even though Chavez's democratic legitimacy was undoubted and then organising a devastating, management-led oil strike at a time when his economic policy remained more reformist than radical.

By his own account, it was the implacability and intransigence of this elite, bequeathed to him by Venezuela's capitalist history, that drove Chavez towards the idea of a more radical 21st-century socialism in 2005.

by Matias Vernengo

https://www.aljazeera.com/indepth/opinion/socialism-blame-venezuelas-crisis-180530095418091.html

Venezuela or the curse of petroleum

D.A.

Venezuela is the country with the largest oil reserves in the Americas. According to official figures for 2011, the country's certified reserves are 287,000 million barrels.

Despite the abundance of this important and strategic natural resource, Venezuela is experiencing a strong political and economic crisis with profound social effects.

The relatively easy availability of financial funds from oil led to Venezuela to not developing productive agricultural infrastructure to meet the needs of its 30 million inhabitants. This was also applied to many industial activities, both agroindustrial and pharmaceutical.

To this we must add the vulnerability of oil refining due to the fact that several PDVSA refineries are in the USA.

Apart from the political problems, which are very important, the Venezuelan crisis has its roots in the absence of effective plans to reduce dependence on imported products,

The oil resources

The deposits on which the oil extraction was based historically are located in the west, mainly in the basin of Lake Maracaibo and surroundings. The oil in these western watersheds is conventional and lightweight. The reserves of these basins are superior to 70,000 million barrels.

There are also important reserves in the eastern region, particularly in the Orinoco basin. There the quality of the oil is heavy and extra heavy with abundant sulfur. This basin contains 200,000 million barrels that would constitute 75% of the total reserves of the country.

In addition to the oil reserves previously mentioned, Venezuela has significant gas reserves estimated to amount to 8.287 billion cubic meters.

Despite these resources, the country, which was politically dependent on the US for decades and was permeated by deep episodes of corruption and social inequality, entered into a process of socialization and nationalization of the economy and political alignment with other Third World nations. in open opposition to the policies of the USA, This position earned it several sanctions that were deeply felt in the local economy and the quality of life of the population worsened. Today Venezuela is a tense society, it is very difficult to obtain agreements between the different protagonists and sectors, which is taken advantage of by various international political forces, including the USA, which have intensified the existing sanctions, Today they assumes an undisguised strategy of blockade, hindering the exploitation and export of oil resources.

Reproduced from the book "Geology and Geopolitics of Oil and Natural Gas", Danilo Antón, Piriguazú Ediciones