Financial Markets Are Not Venezuela’s Enemy
The Guaido administration's loss in a lawsuit over Citgo's assets shows the folly of dragging international investors into the highly polarized conflict of Venezuelan politics.
Message for Guaido: Allies are as important as assets.
Photographer: Gregory Shamus/Getty Images North AmericaOn October 16, Judge Katherine Polk Failla of the Southern District of New York dismissed an attempt by the administration of Juan Guaido, whom the U.S. and 57 other nations recognize as Venezuela’s legitimate leader, to invalidate $1.7 billion in bonds due in 2020 that had been issued in 2016 by Venezuela’s state-owned oil company PDVSA.
The decision has stoked fears that the country may be about to lose Citgo, the U.S. refiner owned by Venezuela’s national oil company, whose shares were used to back the obligation. That outcome is unlikely. Current U.S. sanctions bar the seizure of Venezuelan assets; even if the U.S. Treasury takes the decision to allow it, a negotiated solution between creditors and Venezuela’s interim government to refinance what the country cannot pay at present is within reach.