Now that we are in a proper new age of robber barons in which most states are collectively so weak that they no longer offer effective resistance against large corporations, it’s somewhat easier to refresh how we view states: they are diplomatic fronts for corporations. True it’s also part of every state’s job to do that.
The willingness of some countries particularly the United States to use crisis within a country to accelerate the interests of their own corporations has been well documented in Naomi Klein’s Shock Doctrine from over a decade ago:
But Klein and others like her such as Hardt and Negri, and Chomsky, focussed almost exclusively on the United States.
Why is Maduro able to hold on to power? Who is really in play?
For the answer in Venezuela, we need to look deeper, particularly to Russia and China.
In exchange for modest loans and bailouts over the past decade, Russia now owns significant parts of at least five oil fields in Venezuela, along with 30 years of future output from two Caribbean natural gas fields.
Venezuela also signed over 49.9% of Citgo, its wholly owned company in the United State. This includes three Gulf Coast refineries and a massive web of pipelines – as collateral to Russia’s state-owned Rosneft for a reported US$1.5 billion in desperately needed cash.
Russia is seriously exposed to Venezuela.
Rosneft also funnelled supwards of US$17 billion in loans to the Chavist-Maduro regime over the past decade. It has also gained three million tonnes of oil from 2017 from Venezuela.
Helpfully for all this financial funneling, Russia and Venezuela have a joint venture bank, Evrofinance Mosnarbank, Russia’s 91st largest by assets. The Venezuelan National Development Fund owns 49.99% of the bank. Russia’s state-owned Gazpromban, and the state bank VTB each own 25% of Evrofinance.
So whether Russian public support for Putin’s international interventions falls or not, the Russian state has to prop Maduro up because they simply have too much skin in the game. U.S. sanctions against Russia have crippled its ability to secure financing other than from its own state. This is the state acting with the coldest of commercial calculations.
According to Reuters, Russian private military contractors are now surrounding President Maduro.
Russian President Putin knows that if National assembly President Juan Guaido takes power, those who stood with Maduro will likely be ousted, and Russia’s privileged access to Venezuela’s oil fields will be revoked.
(The closest comparison I can think of is the impact of the Iranian oil nationalisation programme in the early 1950s. British investor confidence was shaken and the Shah of Iran barely survived. In 1979 the government simply nationalised all the banks.)
Then there’s China.
Venezuela has the world’s highest oil reserves, China is the world’s largest oil importer, and China has lent more money to Venezuela than to any other country in the world. An ocean of superlatives.
China gets about 19% of its oil from Russia and Venezuela together.
China has investments in Venezuela estimated to be worth around US $60 billion. As of April 2018 China owns US$23 billion of Venezuela’s foreign debt. That’s about three times the exposure of Russia to Venezuela. Interestingly, China has not followed Russia in accusing the United States of an attempted coup. That tells me that China has cultivated contacts with the opposition and with Venezuelan civil society broadly.
No doubt Russia is going all out against the United States via Venezuela because the degree of U.S. government commercial hostility to Russia through sanctions and military positioning is now so high that Russia simply have less to lose. China, not Russia, is in the middle of a complex trade negotiation with the United States.
Last week, President Trump indicated that Huawei and ZTE – vital Chinese domiciled tech multinationals – could be included in that trade deal.
That is another almighty big reason not to go head to head with the U.S. via Venezuela. China knows that it gains rewards if its companies accede to paying massive fines to United States regulators. ZTE paid the fine, fired its entire board, sucked up the losses, and kept going. I suspect the same thing will happen with Huawei.
There’s still plenty of capacity from the United States to damage Chinese tech firms, and China is playing a careful diplomatic game around it, in part because of its exposure to U.S. intervention in Venezuela.
Venezuela represents the contest of the United States, Russia, and China like no other place on earth.
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