Washington, Guaidó and the Billion-Dollar Circus

With the US-backed "interim presidency" not going away, VA's Ricardo Vaz looks at the implications for Venezuela's foreign assets.


On January 3, close to midnight, the expired, opposition-controlled National Assembly (AN) voted to extend its own term and the Juan Guaidó “interim presidency” for yet another year. While there may be doubts about continuing with an experiment that has no prospects of suceeding, there are in fact several billion reasons for these US surrogates to remain in place.

The eternal “interim” government

This outcome was far from certain in recent months. With Guaidó’s self-proclamation and initial enthusiasm far in the rearview mirror, the opposition’s cherished tradition of cannibalistic infighting became ever more present. Corruption scandals and bitter name-calling made the rounds on social media.

Leaders like Henrique Capriles were openly calling for Guaidó’s head while mocking the “interim government” by likening it to a video game. A sector of the opposition managed to twist the hardliners’ arm and run in the November 21 mega-elections. The gamble was clear: get a respectable number of elected governors and mayors and Guaidó’s post would be under even more pressure.

But it did not work out, which forced the warring parties into a kind of détente. Guaidó needed the other forces, mainly the so-called G4 (Democratic Action, Justice First, A New Era and his own Popular Will) to keep up the parliamentary charade. And his rivals, lacking a suitable replacement, needed the “interim” show to go on because that is also the gateway to generous funding (more on this later).

Still, it was not smooth sailing. The Justice First party led a charge to make Guaidó as powerless as possible by reforming a very fancy-sounding “transition statute.” This led to a lot of behind-the-scenes struggling, with delayed AN Zoom sessions, claims that the move was “unconstitutional,” supposed consultations with jurists and a lot more.

The legal minutiae in Wonderland are a detour. Future historians with an interest in US-backed, self-proclaimed “interim presidencies” will surely sort it out. In the end, the stronger opposition parties did manage to strip down some of the “bureaucracy” in the Guaidó apparatus, like getting rid of a “government center” led by the right-wing leader’s mentor, Leopoldo López. They also secured a bigger AN weight in appointing boards for opposition-controlled companies.

Sanctimonious statements notwithstanding, the changes are not as much about transparency and accountability as they are about opposition leaders demanding a bigger share of the proverbial pie. But at the end of the day Guaidó’s shorter leash on the domestic front is much less relevant than the strings that are pulled from Washington.

The Washington conundrum

Towards the end of the Trump presidency there was a well-established consensus that Washington’s Venezuela policy had failed. Among DC talking heads some argued for escalating things, others called for a reset. Yet Venezuela has proven to be a straightjacket for the Biden administration.

One year in, the White House’s new tenant has done virtually nothing to change course from his predecessor, especially the deadly and wide-reaching sanctions program. An alleged December expiration date for the Guaidó experiment came and went. The support for this pretend administration is far from enthusiastic, with officials simply stating that there are “no plans to stop recognizing Guaidó” or something similar, but the truth is that policymakers found nothing better than kicking the can down the road.

One reason is that “success” does not necessarily mean regime change, at least in the short term. There are midterms coming and a Florida battleground. A new strategy, though saner and with better prospects in the long run, would mean admitting defeat. It would inevitably end up portrayed as a sign of weakness and lead to an even more likely Democratic party defeat in the gusano heartlands.

And so, for all the uneasiness at the opposition shenanigans, the show must carry on. In fact, the progressive muting of the calls for Guaidó to disappear is connected to Biden greenlighting the “interim” apparatus’ term extension. There is no fiber in the mainstream opposition’s body that is ready to defy Washington’s wishes.

The continued existence of an imaginary parallel government that has become a mere punchline in Venezuela might seem like a byzantine concern if billions of dollars were not at stake. And the US’ decision whether (or when) to pull the plug on Guaidó’s stunt will determine who gets the bounty.

No business like a self-proclaimed “interim government”

The January 2019 self-proclamation had recognition from the US and allies that was as immediate as it was absurd. This decision implied that a number of Venezuelan assets held abroad were seized and in some cases handed to the “interim government.” For Guaidó and his Popular Will party, the smallest of the opposition factions, this was like winning the lottery. The main reason for extending the stunt indefinitely is to keep a hold of these resources.

One high-profile case has been the US $1.7 billion worth of gold deposited in the Bank of England that the Maduro government is eager to rescue and put to much-needed use. British courts have been playing judicial ping-pong, looking to avoid dangerous precedents until the situation solves itself.

Bank accounts have been frozen, except those in the US which the Treasury Department uses to fund the interim administration’s “budgets.” According to its own parallel “central bank,” the Guaidó bureaucracy pays itself some $10 million a month. Add “humanitarian aid” funds to that and the amounts managed by the US-backed opposition allegedly run over $3 billion since Guaidó burst on the scene.

With foreign-based corporations the situation was much different, because they meant easier plundering opportunities as well as cushy jobs for relatives and other incompetent acolytes. A case-in-point is Monómeros, a very lucrative Colombia-based agrochemical producer which has all but been run to the ground. The Colombian government has taken control of the stricken firm while opposition leaders trade blame and feign surprise. A former Guaidó “diplomat” in Colombia accused the anti-government leaders of treating Monómeros like a “piñata,” constantly looking for get-rich-quick schemes for them and their associates.

But the crown jewel of Venezuelan assets is CITGO, US-based oil subsidiary worth $8 billion which has its fate all but sealed. Canadian miner Crystallex and US oil corporation ConocoPhillips want to claim CITGO shares as compensation for $1.4 and $2 billion international arbitration awards, respectively. Holders of the PDVSA 2020 bond are also waiting in the wings after sanctions meant servicing debt was no longer possible for Caracas. A number of other corporations that have won lawsuits or other bondholders are likely to tag along in a fire sale.

From incompetence to collusion?

The dire CITGO situation has been compounded by the outrageous actions of the “interim government.” It has failed to appear in court or easily surrendered in what is becoming a pattern. But the situation with ConocoPhillips goes even further.

On September 15, a court document claimed that Guaidó had reached an agreement with the oil giant concerning the outstanding $1.3 billion debt. The supposed deal was denied and struck from the report, begging the question of how a court-appointed “special master” would have reached that conclusion by mistake.

Weeks later, Guaidó’s legal team was declared in default after failing to show up in a US court to litigate a separate, massive $9.7 billion ICSID award to ConocoPhillips. With feigned outrage, the opposition leader’s team claimed there was no point in spending money on legal fees when there was a promising ongoing ICSID appeal in motion (1). Yet soon after the World Bank’s tribunal suspended proceedings because the “interim government” again failed to meet its responsibilities.

These sordid episodes suggest way more corrupt collusion than helpless incompetence. There are further elements that add weight to this. José Ignacio Hernández, who served as Guaidó “special prosecutor” for a while, was a consultant for Crystallex in its lawsuit against Venezuela. And perhaps more damningly, ConocoPhillips has Alberto Ravell as lead counsel in the case. This is the son of Guaidó’s communications director, Alberto Federico Ravell. It all stays in the family!

The looming endgame

At the moment, it is the Treasury Department keeping the corporate sharks at bay. Long-term regime change goals require short-term sacrifices for corporations. Transactions involving the PDVSA 2020 bond are forbidden until January 21, and the ban will in all likelihood be extended for six more months, while all attempts to seize Venezuelan assets require special permission from the Office of Foreign Assets Control (OFAC).

A Crystallex letter requiring a license to execute a court-mandated sale of CITGO shares provided an interesting glimpse into what might come. In its reply, OFAC denied the request but pledged to revisit it in the first half of 2022 once the “interim government” expired. With its artificial extension, this decision will likely be pushed back as well.

But it is a matter of “when” and not “if” at this point. The continued existence of the “interim presidency” circus seems more and more like smoke and mirrors to ensure that Venezuelan assets, CITGO above all, end up in the right corporate hands. So the Venezuelan people and government will succeed in defeating this prolonged coup attempt but they will still see these assets plundered on top of all the damage caused by sanctions.

As for Guaidó, it is not an outlandish bet that he will land a cushy corporate gig (non-executive board member at ConocoPhillips?) or run a pointless corporate-funded freedom-promoting NGO for the services rendered. A multi-billion dollar heist, only done in broad daylight and in the name of “democracy.”

(1) This unconvincing position led many to ask why the Guaidó lawyers did not make the same promising case before the US court. There was also plausible speculation as to whether the supposed Guaidó-Conoco agreement was not as much a formal arrangement as a wink-wink deal that the opposition would stand aside in the other case.

Cover illustration by Utopix’s Daniel Duque (@duquedand).