Russia just gave Venezuela a big break on debt payments. It’s the latest sign that the two nations are deepening ties as the Trump administration cracks down on Venezuela.
The Kremlin announced that it had agreed to restructure $3.15 billion of debt payments that Venezuela owes Moscow. Russia’s finance ministry is spreading the payments out over the next 10 years with “minimal” payments in the first six.
It’s unclear if that’s the total amount Venezuela owes Russia. One analysis published by Harvard Law Roundtable from September put the total sum at over $9 billion, but government officials haven’t clarified what the total is.
The debt relief couldn’t come at a better time for Venezuelan President Nicolas Maduro. American ratings agencies, such as S&P Global, declared Venezuela and its state-run oil company, PDVSA, in default this week.
Despite the help from Russia, Venezuela’s debt woes won’t go away anytime soon. It owes over $60 billion just to bondholders. Its central bank only has $9.6 billion left. Venezuela has slowly drained its reserves in recent years to make debt payments.
A default could trigger a dangerous series of events that would ultimately exacerbate Venezuela’s humanitarian crisis, which is marked by severe shortages of food and medicine.
But for now, President Vladimir Putin continues to make life a little easier for Maduro. It’s a trend that’s ratcheted up this year after China, once a major lender to Venezuela, has shown no interest in giving Maduro more money.
In October, Putin and Maduro met in Moscow, and some foreign policy experts see Putin’s investment as a geopolitical attempt to build influence in Latin America, a region where the U.S. once held complete sway. President Trump has slapped several tariffs on Maduro and his government. Maduro calls Trump an “emperor” waging an “economic war.”
Beyond the desire to get paid back, Russia’s state-run oil company Rosneft has a vested interest in Maduro’s government. Last December, Roseneft took a nearly 50% stake in Citgo, a U.S.-based oil company that’s owned by Venezuela’s energy giant, PDVSA, as collateral for a $1.5 billion loan to Maduro’s government.
Venezuela’s oil minister said in October that he’s in talks with Moscow for a potential swap, exchanging Rosneft’s stake in Citgo for Russian ownership of Venezuelan oil fields. He did not give further details on the plan. Reuters first reported the potential swap.
The Russia-Venezuela ties raised eyebrows when Citgo made a $500,000 donation to President Trump’s inauguration committee. The donation occurred on December 22, 2016, according to Federal Election Commission records released in April. News outlets first reported on Russia’s stake in Citgo the very next day — December 23.
At a time when Venezuela faces mass shortages of basic food and medicine, the Citgo donation was equal to what Pepsi, Verizon and Walmart combined had donated to the inauguration committee.
