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If Venezuela’s Nicolas Maduro is ousted, loans from his allies Russia and China would be renegotiated via the creditor group Paris Club, as is customary for bilateral debt negotiations, Ricardo Hausmann, a Harvard economics professor and an advisor to Venezuela’s opposition, told Reuters.
“It is not as if the chapter on bilateral debt says we are going to treat it differently. It is treated differently in international practice through the Paris Club,” Hausmann told Reuters in response to creditors’ concern that debts with China and Russia would be favored over other creditors.
The main committee of Venezuela’s creditors said earlier this month it opposes different treatment of debts owed to Russia and China.
Last week, Hausmann said that “Venezuela’s debt was accumulated in the most unprincipled manner. After Maduro leaves, here are some principles in order to deal with the mess of this horrible legacy. 1-inclusion, 2- reconciliation. 3- equal treatment. 4- sustainability.”
Russia continues to support Maduro’s regime in the political power struggle in the Latin American country sitting on top of the world’s largest oil reserves, while the U.S. and many European nations have recognized Venezuelan opposition leader Juan Guaidó as the legitimate interim president. Russia has stood by Maduro for years and has poured billions of U.S. dollars in Venezuela in the form of loans and oil investments. Russia’s state-controlled oil giant Rosneft has extended US$6 billion in loans to Venezuela’s state oil firm PDVSA. As of December 31, 2018, Venezuela still owed Rosneft US$2.3 billion.
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China is also one of the countries recognizing Maduro as the legitimate president and also has oil-for-loan deals with the regime.
Despite the economic collapse, Venezuela’s crude oil and refined oil products exports rose by 26 percent in June compared to May, thanks to higher shipments under oil-for-loan deals with China.
Venezuela had to seriously reshuffle its crude oil and oil products export destinations earlier this year after the U.S. essentially prohibited Venezuelan oil imports to America. Unable to export its crude oil to the United States, Venezuela is now prioritizing shipments to Asia, especially to China, with which it has struck oil-for-loan agreements and has to repay those with oil to China National Petroleum Corporation (CNPC).
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.