Published On: Tue, May 29th, 2018

Minister Blok: Bankruptcy PdVSA is a realistic option

BlokTHE HAGUE - A bankruptcy of the Venezuelan state oil company PdVSA is a real option. This is what Minister Blok writes in a letter addressed to the House of Representatives in preparation for the Wednesday debate with the parliamentary committees for Foreign Affairs and Kingdom Relations.

The minister also confirms in the letter that the European Union is considering, following the US and the so-called Lima group, to proclaim additional punitive measures against the Venezuelan government. The immediate cause is the way in which President Nicolás Maduro has been re-elected. This was discussed at the Foreign Affairs Council held yesterday in Brussels. Blok reports on the outcome in his letter: “The EU states that the election process and the elections are not credible and calls on the Venezuelan authorities to hold new elections according to internationally recognized standards. The EU is also considering additional measures that do not affect the Venezuelan people.”

Blok writes about the situation of PdVSA: “Venezuela suffers a severe economic crisis (anticipated fall in GNP -15%), and very high inflation figures. Inflation was already more than 2000% in 2017, and the IMF estimates that the inflation rate has now increased to 13,000% on an annual basis. The accumulation of problems at state-owned oil company PdVSA, including corruption, collapsed production, major staff turnover and financial problems make the economic situation even more difficult and a possible bankruptcy a real option. Outstanding debts are still paid very slowly and more and more creditors are trying to get their money through seizures. The recent seizures by ConocoPhillips on PdVSA assets in the Caribbean parts of the Kingdom illustrate this. Approximately 90% of Venezuela's income comes from oil exports. Because Venezuela has to a large extent dependent on import for all kinds of goods including food, made possible by a high oil price, hardly invested in the diversification of its own economy.”

The ever worsening situation in Venezuela is of great concern. On the economic, social, humanitarian and political level, the country is slipping further and further. The election victory of May 20 fits into a series of elections with which the Maduro government has strengthened its grip on the elected institutions but at the same time has lost its legitimacy and support among the population. A solution to the deep political, economic and humanitarian crisis seems far away. The run-up to these elections was controversial. Intensive negotiations between the government and opposition about the preconditions, including the balanced composition of the electoral council, the restoration of the functioning of the national parliament, the opening of a humanitarian channel and the release of political prisoners, came to nothing in February 2018.

Following the failed negotiations, the National Electoral Commission decided that an important part of the opposition should not participate in the presidential elections. The entire opposition coalition then decided to boycott the elections with the exception of Henri Falcon, who previously had close ties with Chavismo, becoming the only challenger of the incumbent president.

The European Union and other members of the international community (such as the US and the Lima group) have vainly called on the Venezuelan authorities several times in the run-up to the elections to allow political parties to participate on equal terms, to reform the electoral commission, to reach the opposition on an election calendar and to comply with all international standards. The lack of this did not allow the participation of independent international observation missions. The attendance rate of 46% determined by the electoral commission is the lowest in decades. Maduro won 68% of the vote against 21% for Falcon. Falcon did not recognize the election results due to unlawful elections.

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