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Venezuelans flee to the US in search of better lives

Hamartia Antidote

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Nov 17, 2013
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http://www.cnn.com/2017/06/11/us/venezuela-asylum-seekers-us/index.html

The decision to come to the United States wasn't an easy one. Carolina, a 33-year-old mother of three, said it was perhaps one of the toughest decisions of her life -- one taken after many sleepless nights in her Barquisimeto, Venezuela, apartment.

Holding back tears, she remembers a night spent on the floor. She huddled with her three kids, praying, as Venezuelan government forces fiercely clashed with protesters outside her apartment walls. In the streets anti-government protesters demanded Venezuelan President Nicolas Maduro step down. Their protests were met with tear gas, water cannons, and rubber bullets. During that night of April 11, three Venezuelans would die in the Barquisimeto area.

"The hardest moments happened on the last days," Carolina said. Carolina is not her real name. She has asked to remain anonymous for fear of retaliation against her family in Venezuela.

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Carolina says she got emotional the first time she visited an American supermarket. One of the first things she bought was candy for her children.

Sitting in a metro Atlanta shopping area, she talks of an entire life left behind. The boutique she owned with her husband. The social events she organized. She remembers her family -- her uncle who's currently recovering from a stroke and her grandmother, in her 80's, who has no one to care for her.

"One day I called her and she told me all she had to eat was rice and butter."

Venezuela has been plagued by food shortages and soaring prices. Inflation levels are in the triple digits. In 2016, the average Venezuelan living in extreme poverty lost about 19 pounds due to the lack of food. Many of its citizens had to skip meals, according to a national poll.

People have demanded president Maduro step down and hold elections. Protests have stretched into a third month, resulting in nearly 70 deaths.

Carolina, her husband and their three kids will soon be joining the growing number of Venezuelans seeking asylum in the United states. Venezuelans are now the top asylum seekers in the US, ahead of citizens from China, Mexico, Guatemala and El Salvador. It's the first time Venezuelans have topped the list.

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Carolina sold her business and her car in Venezuela and used the money to buy plane tickets for her family. The leftover money was rationed out to buy a small car and for a deposit on an apartment.

"We know we are starting from zero" she said, "it is a very difficult time and I have a lot of sadness in my heart for the things I left behind in Venezuela, but for my children, it is all worth it."

Carolina and her family have been in the United States for less than a month. Once they file their asylum applications, Carolina and her husband will then need to wait 150 days before they can request a work permit.

In the meantime, she said she stays up at night talking to her husband about money, and how little of it they have left.

However, Carolina knows her family is lucky to have had the tourist visas that allowed them to come into the US.

His work made him a target

Metro Atlanta area is home to many Venezuelans in the same situation as Carolina.

Arturo and Maria Gonzalez, also not their real names, fled Venezuela after being threatened. Arturo said his work as a television news photographer made him a walking target. They have asked us to conceal their identities to protect themselves and their families.

The Committee to Protect Journalists reports that "more than 100 journalists and media workers have been threatened, harassed, detained, injured, or otherwise obstructed from doing their work in Venezuela since mass protests erupted."

Arturo Gonzalez was a television news photographer for close to 20 years. He and his wife fled Venezuela fearing for their safety.

The Venezuelan government has also taken international TV channels, including CNN en Español, off the air for airing news reports that were unfavorable to the government.

The Gonzalez' came to America eight months ago with one suitcase each, $1,200, and a dream of living a safe and secure life.

"It was a big sacrifice to leave everything." Arturo said, "the sacrifice weighs heavily every day." He adds in the end the security and comfort of living in the US makes the sacrifice worth it.

Arturo speaks of the strong contrast between life in the two countries.

"Here you have at your disposal anything you want to buy. When in reality in Venezuela we would spend hours in line for one product."

Maria recounts that many times after spending hours in line, there would be no products left.

Security threats and food shortages weren't the only things that brought the Gonzalez to the United States.

Maria also had thyroid cancer and after surgery to get it removed, she needed daily medication. She said the acute medical shortages in Venezuela made it so she couldn't get the medicine she needed.

"If I don't have my daily medicine, in one week I would die."

Medical shortages forced them to flee

Maria Gonzalez is not alone.

Walking out of a dialysis center on a sunny Thursday afternoon, you would never guess that Richard Vargas, 47, was on the verge of dying when he arrived in Atlanta just a month ago. Vargas has end stage renal disease and needs dialysis three times a week.

"In Venezuela there was a lot of difficulty for my dialysis treatment. There were no supplies, there was no medicine."

Richard, proudly wearing a Venezuela hat, knows that he wouldn't have survived much longer had he stayed.

"One week, fifteen days," he estimates, "it was very unlikely that I would have survived without my treatment."

His wife, Jovaera Valero, 46, said the life-saving drugs her husband needed were also hard to come by. The couple did not want to leave, but knew it was impossible to stay.

"It is sad to see your spouse getting worse, slipping through your fingers, and you can't do anything" Valero said.

The couple sold their trucking business to get the money necessary to come to the US and to pay for his costly medical treatment.

Richard said his thoughts remain with his native Venezuela.

"In reality my heart is in Venezuela" he said. "I carry it in my heart."

Future in America

Once families have arrived in the US, all they can do now is wait. They wait for the government to hear their asylum cases and make a decision if they can stay -- or if they need to leave.

Many have sold everything they had back home and came to America in search of a safe heaven.

For now, they are here, rebuilding their lives from ground up. They hope to one day be able to go back to their families and friends-- and to the lives they have left behind.
 
Venezuelan Jews have started migrating to Israel, but not all of them have been welcomed


http://www.businessinsider.com/venezuelan-jews-fleeing-to-israel-turned-away-2017-1


Venezuela's deepening economic and political dysfunction have spurred waves of outmigration in recent years.

In the years since Hugo Chavez took office in 1999, well-off Venezuelans left the country, followed by educated professionals, and, most recently, the youth and middle class.

Now another marginalized group has begun to head for the exits: Venezuelan Jews, who have in the past moved to the US or Panama but have struggled to do so as Venezuela's economic crisis drains more of the country's wealth.

Official Israeli figures cited by The Washington Post list 111 Venezuelan Jews as immigrating to Israel in 2015, or making "aliyah," as it is referred to in Hebrew.

That 2015 total was more than double the number who immigrated in 2012. Official totals for 2016 have yet to be released, but a charity that helps Jews from troubled areas reach Israel told The Post that it helped about 90 people get to the Middle Eastern country.

Venezuela's current Jewish community, mainly Orthodox, is thought to be between 6,000 and 9,000 in number, down from roughly 30,000 in the country around 2000.

Venezuela has a long history of Jewish communities. The oldest such community was a Sephardic congregation in Curacao — a Dutch territory just off Venezuela's Caribbean coast — that dates back to 1651. Since then, Venezuela has, at times, encouraged European migration, and Jewish people were able to integrate with relative alacrity.

Venezuela's recent relationship with Israel, however, has been fraught.

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A Lebanese child shouts slogans near a Venezuelan flag during a protest organized by a leftist group in front of the Egyptian embassy in Beirut against Israel's attacks on Gaza, January 7, 2009. The Arabic writing on the Venezuelan flag reads, "Arab Republic of Venezuela."REUTERS/Ali Hashisho



After moving away from the US in the wake of the 2002 attempted coup against Chavez, Venezuela denounced Israel for the 2006 invasion of Lebanon, which Chavez called a "new Holocaust" against Palestinians and Lebanese.

The governments of Chavez and his successor, Nicolas Maduro, have been quick to condemn Israel went it comes in conflict with neighbors, especially Palestine and Iran, with whom Venezuela has formed close alliances. And their broad rhetoric has been accused of stoking anti-Semitic attitudes and behavior.

"For several years, we have seen anti-Semitic accusations and themes appear in Venezuelan public discourse," Jonathan A. Greenblatt, chief executive of the Anti-Defamation League said in August 2016, in response to anti-Semitic imagery that appeared on a Venezuelan magazine.

"At present, most Venezuelan Jews do not face open discrimination from their neighbors," Daniel Lansberg-Rodriguez, a Foreign Policy contributor and professor at Northwestern, wrote in late 2014. "Even so, a sense of dread and isolation is pervasive among much of the community."

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A man puts up a sign reading "Millions of dead Jews tell you to get out" outside the Iranian embassay during a protest against Iranian President Mahmoud Ahmadinejad's visit to Venezuela, in Caracas, November 25, 2009.REUTERS/Laura Vera



Chavez expelled the Israeli ambassador in 2009, and the two countries still do not have diplomatic relations, which complicates Venezuelan Jews' efforts to relocate.

In the last month, nine such immigrants have found their efforts to move stymied by the resistance of the Israeli government.

Israel's law of return requires Jews of choice who want to relocate to Israel to have been converted in a "recognized Jewish community" with a full-time rabbi and an active synagogue, according to Haaretz.

The nine Venezuelans were converted by a Conservative rabbinical court in 2014, after three years of study. Their hometown, Maracay, does not have a recognized Jewish community, but the group joined a synagogue in the nearby city of Valencia, where the Jewish community is recognized.

Despite that, Israel's Interior Ministry told Haaretz that "during the entire period when they were preparing for their conversion and in the period that followed, they did not belong to a Jewish community."

The decision has spurred frustration and criticism from a number of people from across Judaism's denominations.

Documentation provided to the Jewish Agency — recommendations from which the Israeli Interior Ministry typically bases its immigration-eligibility decisions on — confirmed that the nine Venezuelans had joined the community in Valencia. In this case, it appears that the ministry disregarded the agency's recommendation, and the chairman of the agency is reportedly considering intervening.

During a special Israeli parliament session at the end of December, at which American rabbis were present, Israel's government was rebuked for its decision.

"These nine individuals underwent conversions that were 100 percent in line with the Law of Return, and I am saying that as an Orthodox rabbi," said Asher Lopatin, a modern Orthodox rabbi, according to Haaretz. "They must be allowed to come to Israel."

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Israeli policemen detain a protestor during an anti-racism protest in Tel Aviv, June 3, 2015. The shirt reads "Part of solving the problem is to talk about it - Racism."REUTERS/Amir Cohen



Race and ethnicity and their relation to Israel's immigration decisions have been a controversial topic. The country has approved less than 1% of the asylum applications it's received since signing the UN Refugee Convention 60 years ago.

Israel has also been resistant to granting asylum to African refugees, about 60,000 of whom have entered the country since 2005 — former Interior Minister Eli Yishai said Israel's intention was to "make their lives miserable."

"Sadly it is all too common that issues of race and denominational affiliation play into the decisions made by the Interior Ministry," Andy Sacks, a rabbi and director of the Conservative movement's Rabbinical Assembly in Israel, said, according to Haaretz. Sacks also said the Israeli prime minister's office ignored his requests to intervene.

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Israeli Interior Minister Aryeh Deri.© AFP Gali Tibbon



Reuven Hammer, a rabbi and former president of the International Rabbinical Assembly of the Conservative movement, told Haaretz the ministry's decision indicated a "hidden agenda" against non-Orthodox converts.

The current interior minister, Aryeh Deri, is the chairman of the ultra-Orthodox Shas party.

Orthodox rabbis have spoken out against the decision, with one calling it a "dangerous precedent" during a meeting at the Israeli parliament and another telling Haaretz that the Venezuelans' conversions were valid and that they should be allowed to immigrate.

"These people, regardless of the denomination of their conversions, decided to unite their destiny to that of our people," Daniel Askenazi, an Orthodox rabbi and spiritual leader of the Jewish community in the western Colombia city of Barranquilla, told Haaretz. "It is our duty as Jews to raise our voices and demand that the State of Israel ... expedite the adsorption of these people."
 
Venezuelan economy collapsed in 2015; corruption was norm and political immaturity of Hugo Chavez was the final nail in the coffin. These realities forced the US to cut down its exports from Venezuela by half and Chinese investment was not sufficient to rescue Venezuelan economy from subsequent collapse.

Venezuela is a good case study for those states that underestimate the importance of a sound foreign policy.
 
Venezuelan economy collapsed in 2015; corruption was norm and political immaturity of Hugo Chavez was the final nail in the coffin. These realities forced the US to cut down its exports from Venezuela by half and Chinese investment was not sufficient to rescue Venezuelan economy from subsequent collapse.

Venezuela is a good case study for those states that underestimate the importance of a sound foreign policy.

Well there's a couple of issues. Chavez/Maduro came to power with the impression that the rich were taking all the money at the expense of the poor. So he took power and decided to dole out all the extra money to the poor. Which in itself isn't bad but it went straight to his head.

Soon he started nationalizing companies because he thought they were making only certain people rich. Next thing those companies had morons (his friends) replacing the key people who kept those companies profitable. They went down in quality.

When oil prices fell the disaster started. No money to give to the poor. No rich company people to point the finger at. Companies with idiots at the helm.

Now the country is far worse off than any time the so called rich people were taking advantage of people...even when oil prices were not high.
 
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http://foreignpolicy.com/2017/06/06/venezuelas-road-to-disaster-is-littered-with-chinese-cash/

Venezuela’s Road to Disaster Is Littered With Chinese Cash
Politicized loans left the socialist South American country trapped under a mountain of Chinese debt — but now others want to sign up for Beijing's "generosity."

gettyimages-684238836.jpg

The Venezuelan and Chinese economies seem like they could hardly have less in common. The Venezuelan government of Nicolás Maduro has looted the state-run oil company Petróleos de Venezuela (PDVSA) to pay for the “Bolivarian revolution,” the socialist movement begun under the late leader Hugo Chávez. With oil prices down, the country is unable even to repair rigs or pay workers to generate income, and the government now faces the prospect of a mass uprising. Meanwhile, half a globe away, China’s gleaming malls stand in stark contrast to Venezuela’s empty shelves.

But Venezuela’s ruinous state has more to do with China than one might think — specifically, with Chinese President Xi Jinping’s plan for expanding China’s global influence through financial diplomacy. Venezuela’s collapse is about to serve as an object lesson on that plan’s high costs for China’s erstwhile partners — and ultimately for China itself.

Within a few years of Chávez assuming power in 1999, China, seeing in the new leader an ideological ally, began increasing lending to Venezuela. By 2006, the Chávez regime’s debt levels had become worrying enough that then-World Bank President Paul Wolfowitz, referring to Venezuela, noted that “there is a real risk of seeing countries which have benefited from debt relief become heavily indebted once more.”

Officially, lending from Beijing comes without strings or concerns about nonfinancial matters. The reality is more nuanced. No one doubts Beijing cares little for niceties such as human rights, environmental protection, and anti-corruption when working abroad. Until recently, even geopolitical flag planting was relatively unimportant to Chinese technocrats.

But there was still a hard-edged focus on Chinese interests. The driving motivation of Chinese investment and lending since 2000 has been an obsession with opening up new export markets and securing access to natural resources. China’s interests in gaining friends in the Western Hemisphere while securing access to oil overlapped with Venezuela’s interest in diversifying its customer base away from the United States. But that overlap of interests doesn’t mean China has ever offered any sort of discount on its loans. China lent at exorbitant rates to Venezuela. Now, China refuses to renegotiate those debts, even as the South American country’s economy and oil industry crater.

From 2007 to 2014, China lent Venezuela $63 billion — 53 percent of all its lending to Latin America during this time. There was an important catch to this largesse; to guarantee repayment, Beijing insisted on being repaid in oil. With most lending agreed to when oil hovered at more than $100 a barrel, as it did for most of 2007-2014, it seemed a good deal for both sides. However, when oil dropped to close to $30 a barrel in January 2016, this caused Venezuela’s price tag for serving its debt to explode. To repay Beijing today, Venezuela must now ship two barrels of oil for every one it originally agreed to.

If Venezuela collapses and Maduro departs unceremoniously, China faces a large risk of diplomatic and financial blowback. Opposition politicians are well aware that China propped up the ruinous Maduro rule. A new Venezuelan government could well refuse to honor the Maduro-era obligations entirely and look to Washington for support instead. That would be both economically and politically embarrassing for China, which in the past has been a vigorous supporter of the right to default — as long as the debts were owed to the West.

But a Venezuelan default could have consequences far beyond Caracas and Beijing. As part of its Belt and Road Initiative (BRI), China is planning to extend the same kind of deal it made with Venezuela to many more countries around the world. By leveraging its financial strength and expertise in infrastructure, China saw an opportunity to push its influence farther afield, winning friends and securing assets at the same time.

America’s abdication of its historical leadership role under Donald Trump has made it easier for China to push this grand geostrategic vision, especially after the Barack Obama’s administration’s failure to follow up the much-hyped “pivot to Asia” with real substance. Many Asian countries talk quietly, and some openly, about craving greater U.S. engagement in the region rather than quiet surrender to Beijing’s dominance. But if the choice is a risky deal with Beijing or no deal at all with the West, many have shown that they will choose the former.

Venezuela collapsed thanks to a malevolent dictatorship pushing disastrous economic policies aided by a benefactor willing to extend near bottomless credit. This same toxic mix is present throughout many of the countries receiving large amounts of Chinese lending under the BRI. Worried about stagnating economies, autocrats around the world see an opportunity to drive growth by borrowing from China to fund white elephant projects regardless of the long-term consequences.

While China may argue that it makes investment decisions on a purely commercial basis, its history with Venezuela argues otherwise. That has been confirmed by the problems that have already cropped up in BRI-related projects. In the short time since 2016, we’ve already seen major debt problems from Chinese infrastructure projects in Sri Lanka and Pakistan. China negotiated a swap of its debt for a 99-year leasehold in a Sri Lankan port project along with surrounding business park development interests. China provided emergency funding to Pakistan over the past year to stave off a potential currency crisis but still plans to invest $52 billion over the next few years in infrastructure projects.

Beijing likes to cite the Marshall Plan when talking about the BRI, but its deals are far more shrewd and self-serving. The BRI scheme isn’t offering concessionary lending or international aid but market-based lending rates with high-interest loans. The borrower countries then have to use Chinese firms, inputs, and workers to build out their railways and ports. China is making the loans not out of a long-sighted vision of a better global order, as its boosters like to claim, but from a calculation of the financial incentives it needs to keep its own over-indebted firms afloat and their workers working.

That’s going to come with hard costs for China. Reports indicate that Chinese officials expect to incur significant losses from their loans to South and Central Asian countries that can’t necessarily pay them back. Consider Sri Lanka, which effectively defaulted on a $2 billion loan from China but subsequently received an offer for an additional $32 billion from Beijing to fund infrastructure projects. There are also good reasons to think Pakistan won’t be able to absorb China’s large investment inflows without triggering inflation, thus undermining its ability to repay the loans.

Officially, China plans to invest $5 trillion over the next 10-15 years in the BRI. If this amount actually materializes in practice, it represents a major sum, even for China, whether in absolute terms or relative to GDP. That means that even relatively small defaults could have a serious cost, economically and politically.

There’s no surer way for China to lose goodwill worldwide than to provide large amounts of ruinous lending that pushes developing countries to financial ruin. Sri Lanka has seen widespread protests and riots over Chinese debt. Meanwhile, Beijing has been leaning on the Venezuelan opposition not to default on the existing debts. All this is already having reputational costs for China. Having witnessed the consequences of Beijing’s lending in Venezuela, Sri Lanka, and Pakistan, other potential borrowers seem to have cooled on the possibility of borrowing from Beijing — or at least to be more discerning of the risks.

Large-scale lending projects without a focus on their economic viability and the repayment capacity of the borrowers are hardly the soundest basis for financial diplomacy of the sort China is attempting to practice. At best, it will lead to mutual suspicions and tensions between lender and borrower. At worst, it will prove financially ruinous for countries burdened with debts they cannot repay in foreign currency they do not possess. Unless China’s lending gets smarter, it may find that nobody’s interested in the money it has to offer.
 
http://foreignpolicy.com/2017/06/06/venezuelas-road-to-disaster-is-littered-with-chinese-cash/

Venezuela’s Road to Disaster Is Littered With Chinese Cash
Politicized loans left the socialist South American country trapped under a mountain of Chinese debt — but now others want to sign up for Beijing's "generosity."

gettyimages-684238836.jpg

The Venezuelan and Chinese economies seem like they could hardly have less in common. The Venezuelan government of Nicolás Maduro has looted the state-run oil company Petróleos de Venezuela (PDVSA) to pay for the “Bolivarian revolution,” the socialist movement begun under the late leader Hugo Chávez. With oil prices down, the country is unable even to repair rigs or pay workers to generate income, and the government now faces the prospect of a mass uprising. Meanwhile, half a globe away, China’s gleaming malls stand in stark contrast to Venezuela’s empty shelves.

But Venezuela’s ruinous state has more to do with China than one might think — specifically, with Chinese President Xi Jinping’s plan for expanding China’s global influence through financial diplomacy. Venezuela’s collapse is about to serve as an object lesson on that plan’s high costs for China’s erstwhile partners — and ultimately for China itself.

Within a few years of Chávez assuming power in 1999, China, seeing in the new leader an ideological ally, began increasing lending to Venezuela. By 2006, the Chávez regime’s debt levels had become worrying enough that then-World Bank President Paul Wolfowitz, referring to Venezuela, noted that “there is a real risk of seeing countries which have benefited from debt relief become heavily indebted once more.”

Officially, lending from Beijing comes without strings or concerns about nonfinancial matters. The reality is more nuanced. No one doubts Beijing cares little for niceties such as human rights, environmental protection, and anti-corruption when working abroad. Until recently, even geopolitical flag planting was relatively unimportant to Chinese technocrats.

But there was still a hard-edged focus on Chinese interests. The driving motivation of Chinese investment and lending since 2000 has been an obsession with opening up new export markets and securing access to natural resources. China’s interests in gaining friends in the Western Hemisphere while securing access to oil overlapped with Venezuela’s interest in diversifying its customer base away from the United States. But that overlap of interests doesn’t mean China has ever offered any sort of discount on its loans. China lent at exorbitant rates to Venezuela. Now, China refuses to renegotiate those debts, even as the South American country’s economy and oil industry crater.

From 2007 to 2014, China lent Venezuela $63 billion — 53 percent of all its lending to Latin America during this time. There was an important catch to this largesse; to guarantee repayment, Beijing insisted on being repaid in oil. With most lending agreed to when oil hovered at more than $100 a barrel, as it did for most of 2007-2014, it seemed a good deal for both sides. However, when oil dropped to close to $30 a barrel in January 2016, this caused Venezuela’s price tag for serving its debt to explode. To repay Beijing today, Venezuela must now ship two barrels of oil for every one it originally agreed to.

If Venezuela collapses and Maduro departs unceremoniously, China faces a large risk of diplomatic and financial blowback. Opposition politicians are well aware that China propped up the ruinous Maduro rule. A new Venezuelan government could well refuse to honor the Maduro-era obligations entirely and look to Washington for support instead. That would be both economically and politically embarrassing for China, which in the past has been a vigorous supporter of the right to default — as long as the debts were owed to the West.

But a Venezuelan default could have consequences far beyond Caracas and Beijing. As part of its Belt and Road Initiative (BRI), China is planning to extend the same kind of deal it made with Venezuela to many more countries around the world. By leveraging its financial strength and expertise in infrastructure, China saw an opportunity to push its influence farther afield, winning friends and securing assets at the same time.

America’s abdication of its historical leadership role under Donald Trump has made it easier for China to push this grand geostrategic vision, especially after the Barack Obama’s administration’s failure to follow up the much-hyped “pivot to Asia” with real substance. Many Asian countries talk quietly, and some openly, about craving greater U.S. engagement in the region rather than quiet surrender to Beijing’s dominance. But if the choice is a risky deal with Beijing or no deal at all with the West, many have shown that they will choose the former.

Venezuela collapsed thanks to a malevolent dictatorship pushing disastrous economic policies aided by a benefactor willing to extend near bottomless credit. This same toxic mix is present throughout many of the countries receiving large amounts of Chinese lending under the BRI. Worried about stagnating economies, autocrats around the world see an opportunity to drive growth by borrowing from China to fund white elephant projects regardless of the long-term consequences.

While China may argue that it makes investment decisions on a purely commercial basis, its history with Venezuela argues otherwise. That has been confirmed by the problems that have already cropped up in BRI-related projects. In the short time since 2016, we’ve already seen major debt problems from Chinese infrastructure projects in Sri Lanka and Pakistan. China negotiated a swap of its debt for a 99-year leasehold in a Sri Lankan port project along with surrounding business park development interests. China provided emergency funding to Pakistan over the past year to stave off a potential currency crisis but still plans to invest $52 billion over the next few years in infrastructure projects.

Beijing likes to cite the Marshall Plan when talking about the BRI, but its deals are far more shrewd and self-serving. The BRI scheme isn’t offering concessionary lending or international aid but market-based lending rates with high-interest loans. The borrower countries then have to use Chinese firms, inputs, and workers to build out their railways and ports. China is making the loans not out of a long-sighted vision of a better global order, as its boosters like to claim, but from a calculation of the financial incentives it needs to keep its own over-indebted firms afloat and their workers working.

That’s going to come with hard costs for China. Reports indicate that Chinese officials expect to incur significant losses from their loans to South and Central Asian countries that can’t necessarily pay them back. Consider Sri Lanka, which effectively defaulted on a $2 billion loan from China but subsequently received an offer for an additional $32 billion from Beijing to fund infrastructure projects. There are also good reasons to think Pakistan won’t be able to absorb China’s large investment inflows without triggering inflation, thus undermining its ability to repay the loans.

Officially, China plans to invest $5 trillion over the next 10-15 years in the BRI. If this amount actually materializes in practice, it represents a major sum, even for China, whether in absolute terms or relative to GDP. That means that even relatively small defaults could have a serious cost, economically and politically.

There’s no surer way for China to lose goodwill worldwide than to provide large amounts of ruinous lending that pushes developing countries to financial ruin. Sri Lanka has seen widespread protests and riots over Chinese debt. Meanwhile, Beijing has been leaning on the Venezuelan opposition not to default on the existing debts. All this is already having reputational costs for China. Having witnessed the consequences of Beijing’s lending in Venezuela, Sri Lanka, and Pakistan, other potential borrowers seem to have cooled on the possibility of borrowing from Beijing — or at least to be more discerning of the risks.

Large-scale lending projects without a focus on their economic viability and the repayment capacity of the borrowers are hardly the soundest basis for financial diplomacy of the sort China is attempting to practice. At best, it will lead to mutual suspicions and tensions between lender and borrower. At worst, it will prove financially ruinous for countries burdened with debts they cannot repay in foreign currency they do not possess. Unless China’s lending gets smarter, it may find that nobody’s interested in the money it has to offer.
I can imagine this happening in Sri Lanka. It's as messed up as Venezuela and only a matter of time until shit shits the fan. Chinese loans were taken to build stupid shit in forests out of nowhere with no real economic gain and now even the government doesn't know to whom they owes money to. Total disaster .
 
http://foreignpolicy.com/2017/06/06/venezuelas-road-to-disaster-is-littered-with-chinese-cash/

Venezuela’s Road to Disaster Is Littered With Chinese Cash
Politicized loans left the socialist South American country trapped under a mountain of Chinese debt — but now others want to sign up for Beijing's "generosity."

gettyimages-684238836.jpg

The Venezuelan and Chinese economies seem like they could hardly have less in common. The Venezuelan government of Nicolás Maduro has looted the state-run oil company Petróleos de Venezuela (PDVSA) to pay for the “Bolivarian revolution,” the socialist movement begun under the late leader Hugo Chávez. With oil prices down, the country is unable even to repair rigs or pay workers to generate income, and the government now faces the prospect of a mass uprising. Meanwhile, half a globe away, China’s gleaming malls stand in stark contrast to Venezuela’s empty shelves.

But Venezuela’s ruinous state has more to do with China than one might think — specifically, with Chinese President Xi Jinping’s plan for expanding China’s global influence through financial diplomacy. Venezuela’s collapse is about to serve as an object lesson on that plan’s high costs for China’s erstwhile partners — and ultimately for China itself.

Within a few years of Chávez assuming power in 1999, China, seeing in the new leader an ideological ally, began increasing lending to Venezuela. By 2006, the Chávez regime’s debt levels had become worrying enough that then-World Bank President Paul Wolfowitz, referring to Venezuela, noted that “there is a real risk of seeing countries which have benefited from debt relief become heavily indebted once more.”

Officially, lending from Beijing comes without strings or concerns about nonfinancial matters. The reality is more nuanced. No one doubts Beijing cares little for niceties such as human rights, environmental protection, and anti-corruption when working abroad. Until recently, even geopolitical flag planting was relatively unimportant to Chinese technocrats.

But there was still a hard-edged focus on Chinese interests. The driving motivation of Chinese investment and lending since 2000 has been an obsession with opening up new export markets and securing access to natural resources. China’s interests in gaining friends in the Western Hemisphere while securing access to oil overlapped with Venezuela’s interest in diversifying its customer base away from the United States. But that overlap of interests doesn’t mean China has ever offered any sort of discount on its loans. China lent at exorbitant rates to Venezuela. Now, China refuses to renegotiate those debts, even as the South American country’s economy and oil industry crater.

From 2007 to 2014, China lent Venezuela $63 billion — 53 percent of all its lending to Latin America during this time. There was an important catch to this largesse; to guarantee repayment, Beijing insisted on being repaid in oil. With most lending agreed to when oil hovered at more than $100 a barrel, as it did for most of 2007-2014, it seemed a good deal for both sides. However, when oil dropped to close to $30 a barrel in January 2016, this caused Venezuela’s price tag for serving its debt to explode. To repay Beijing today, Venezuela must now ship two barrels of oil for every one it originally agreed to.

If Venezuela collapses and Maduro departs unceremoniously, China faces a large risk of diplomatic and financial blowback. Opposition politicians are well aware that China propped up the ruinous Maduro rule. A new Venezuelan government could well refuse to honor the Maduro-era obligations entirely and look to Washington for support instead. That would be both economically and politically embarrassing for China, which in the past has been a vigorous supporter of the right to default — as long as the debts were owed to the West.

But a Venezuelan default could have consequences far beyond Caracas and Beijing. As part of its Belt and Road Initiative (BRI), China is planning to extend the same kind of deal it made with Venezuela to many more countries around the world. By leveraging its financial strength and expertise in infrastructure, China saw an opportunity to push its influence farther afield, winning friends and securing assets at the same time.

America’s abdication of its historical leadership role under Donald Trump has made it easier for China to push this grand geostrategic vision, especially after the Barack Obama’s administration’s failure to follow up the much-hyped “pivot to Asia” with real substance. Many Asian countries talk quietly, and some openly, about craving greater U.S. engagement in the region rather than quiet surrender to Beijing’s dominance. But if the choice is a risky deal with Beijing or no deal at all with the West, many have shown that they will choose the former.

Venezuela collapsed thanks to a malevolent dictatorship pushing disastrous economic policies aided by a benefactor willing to extend near bottomless credit. This same toxic mix is present throughout many of the countries receiving large amounts of Chinese lending under the BRI. Worried about stagnating economies, autocrats around the world see an opportunity to drive growth by borrowing from China to fund white elephant projects regardless of the long-term consequences.

While China may argue that it makes investment decisions on a purely commercial basis, its history with Venezuela argues otherwise. That has been confirmed by the problems that have already cropped up in BRI-related projects. In the short time since 2016, we’ve already seen major debt problems from Chinese infrastructure projects in Sri Lanka and Pakistan. China negotiated a swap of its debt for a 99-year leasehold in a Sri Lankan port project along with surrounding business park development interests. China provided emergency funding to Pakistan over the past year to stave off a potential currency crisis but still plans to invest $52 billion over the next few years in infrastructure projects.

Beijing likes to cite the Marshall Plan when talking about the BRI, but its deals are far more shrewd and self-serving. The BRI scheme isn’t offering concessionary lending or international aid but market-based lending rates with high-interest loans. The borrower countries then have to use Chinese firms, inputs, and workers to build out their railways and ports. China is making the loans not out of a long-sighted vision of a better global order, as its boosters like to claim, but from a calculation of the financial incentives it needs to keep its own over-indebted firms afloat and their workers working.

That’s going to come with hard costs for China. Reports indicate that Chinese officials expect to incur significant losses from their loans to South and Central Asian countries that can’t necessarily pay them back. Consider Sri Lanka, which effectively defaulted on a $2 billion loan from China but subsequently received an offer for an additional $32 billion from Beijing to fund infrastructure projects. There are also good reasons to think Pakistan won’t be able to absorb China’s large investment inflows without triggering inflation, thus undermining its ability to repay the loans.

Officially, China plans to invest $5 trillion over the next 10-15 years in the BRI. If this amount actually materializes in practice, it represents a major sum, even for China, whether in absolute terms or relative to GDP. That means that even relatively small defaults could have a serious cost, economically and politically.

There’s no surer way for China to lose goodwill worldwide than to provide large amounts of ruinous lending that pushes developing countries to financial ruin. Sri Lanka has seen widespread protests and riots over Chinese debt. Meanwhile, Beijing has been leaning on the Venezuelan opposition not to default on the existing debts. All this is already having reputational costs for China. Having witnessed the consequences of Beijing’s lending in Venezuela, Sri Lanka, and Pakistan, other potential borrowers seem to have cooled on the possibility of borrowing from Beijing — or at least to be more discerning of the risks.

Large-scale lending projects without a focus on their economic viability and the repayment capacity of the borrowers are hardly the soundest basis for financial diplomacy of the sort China is attempting to practice. At best, it will lead to mutual suspicions and tensions between lender and borrower. At worst, it will prove financially ruinous for countries burdened with debts they cannot repay in foreign currency they do not possess. Unless China’s lending gets smarter, it may find that nobody’s interested in the money it has to offer.

LOL couldn't we argue the same for Obama's "successes" being undone by orangeman?

China doesn't interfere in the political matters of a nation. They invest money and hope for a good return. They understand the risks associated with monetary investment. Can we say the same for US political and economic interference in other nations?
 
LOL couldn't we argue the same for Obama's "successes" being undone by orangeman?

China doesn't interfere in the political matters of a nation. They invest money and hope for a good return. They understand the risks associated with monetary investment. Can we say the same for US political and economic interference in other nations?

LOL! When the people of Venezuela find out Maduro has probably sold a large chunk of the country's gold reserves to China there is going to be such a huge backlash it is going to spread to all of South America.

I can imagine this happening in Sri Lanka. It's as messed up as Venezuela and only a matter of time until shit shits the fan. Chinese loans were taken to build stupid shit in forests out of nowhere with no real economic gain and now even the government doesn't know to whom they owes money to. Total disaster .

Well time will tell. So far it looks like other than the 99 year lease you guys haven't been cleaned out.
 
LOL! When the people of Venezuela find out Maduro has probably sold a large chunk of the country's gold reserves to China there is going to be such a huge backlash it is going to spread to all of South America.



Well time will tell. So far it looks like other than the 99 year lease you guys haven't been cleaned out.

That is your American imagination doing the talk. LOL at probably. You come back and make these claims when they are proven to be facts.

You still haven't answered my question. Orangeman has done a U-turn on Obama's policies. Where does that put America among its allies? The last time I checked, Germany and France couldn't rely on America anymore.
 
You still haven't answered my question. Orangeman has done a U-turn on Obama's policies. Where does that put America among its allies? The last time I checked, Germany and France couldn't rely on America anymore.

What does this have to do with this thread on Venezuela? Why are you trying to change/derail the topic?

2015 http://money.cnn.com/2015/10/29/news/economy/venezuela-selling-gold/index.html
Venezuela is running out of cash and selling its gold

2016 http://real-agenda.com/venezuela-sells-gold-pay-bills/
Venezuela sells its gold to pay the Bills
 
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What does this have to do with this thread on Venezuela? Why are you trying to change the topic?

Feeling the heat already? LOL

So let's talk about Venezuela. You like to imagine that China has stolen Venezuelan gold by buying it up? LOL Even if this is true (which it is not) at least China paid for it unlike your country that likes to impose puppet regimes in foreign lands. The reason why Venezuela and many South American countries revolt against US interference in the first place. You really do wonder why US standing in many South American nations has been historically low?
 

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