The fake news said Trump was compromised by Russia, yet here Trump is, undermining Russian interests once again. The Kremlin response sounds pretty serious too…
President Trump started a Tuesday morning twitter storm with a tweet warning that Maduro will be “willing to negotiate” after the US starves his teetering regime of badly needed funding via the sanctions that were levied earlier this week.
Trump then spoke with Juan Guaido, on Wednesday, for what appears to be the first time. A readout of the call revealed that Trump “congratulated” Guaido on his “historic assumption of the presidency of Venezuela,” and promised to keep in regular contact to “support Venezuela’s path back to stability.”
Roughly two dozen countries have recognized Guaido as the legitimate ruler of Venezuela, and a handful of European nations have demanded that Maduro either commit in the coming days to holding free elections or they too will officially recognize Guaido.
The conversation followed a crackdown by the country’s Supreme Court, which banned Guaido from leaving the country. Given Russia and China’s demands that the US refrain from interfering in Venezuela, President Xi and President Putin aren’t going to like this.
After decrying US sanctions against Venezuela’s state-run oil company PDVSA as “illegal” and enforcing “unfair competition”, a Kremlin spokesman has reiterated that Russia is prepared to use “all mechanisms available to us“ to defend its economic interests in Venezuela – interests that are closely tied to the Maduro regime.
Russia has extended billions of dollars of loans to PDVSA, mostly via oil firm Rosneft. The company has extended $6 billion of loans which must be repaid in crude by the end of the year. Data from S&P Global Platts shows that as of November 2018, Venezuela had a $3.1 billion outstanding loan to repay to Rosneft.
Rosneft also has five joint upstream projects with PDVSA in Venezuela. Peskov said that Russia is still assessing the potential impact of the PDVSA sanctions for Moscow.
According to analysts briefed by Platts, whatever becomes of Maduro, Rosneft likely won’t be cut off from Venezuelan oil because the country has abundant reserves, and oil is practically the only ‘hard currency’ it can access. An analyst at a Western bank estimated that Rosneft assets in Venezuela are equivalent to some $2.5 billion, plus another $2.5 billion in crude supplies owed for the loans.
“The worst-case scenario – which is unlikely to materialize – under which Rosneft loses all the money it invested in Venezuela, would be biting but not critical for the company, with quarterly free cash flow at over $4 billion,” the analyst told Platts.
Meanwhile, the US has warned that the “path to relief” for PDVSA is via the “expeditious transfer of control” to opposition leader Juan Guaido, which the US insists should be followed by Democratic elections.
Though the Kremlin has denied the reports, rumors about the presence of 400 Kremlin affiliated mercenaries in Venezuela make more sense given how much money is at stake.