How Nicolás Maduro survives without the oil money that he sold to the United States

Since 2013, the year of his accession to the presidency after the death of Hugo Chávez, Nicolás Maduro has only one explanation for the debacle of the Venezuelan economy: the "economic war" and the black hand of the empire.

The problem with this speech is that it has been denied by the official information itself. Until early 2019, most of the dollars with which the treasure was funded came from the United States, the main buyer of Venezuelan oil, which represents more than 90% of the country's revenues.

US sanctions in recent years have targeted civilian and military officials, not the public treasury. Just January 28 After ignoring Maduro's second term for his fraudulent origin, Washington executed the "nuclear option": reducing purchases from PDVSA.

In fact, he has blocked his holdings in the United States and banned his citizens from doing business with the company. Citgo, its subsidiary in the North, continues to operate, but the Venezuelan state does not have access to its dividends. The idea of ​​Donald Trump's government is that the accounts pbad into the hands of Juan Guaidó, proclaimed Jan. 26 President of the National Assembly.

The complement of this sanction will come into effect on April 28th. In an initiative that aims to leave PDVSA without customers, The United States has announced that it can not use either their banking system or the European system for their Venezuelan oil transactions.

Although it's just a month after the activation of the most dreaded measure by Chavismo, Crude exports have already collapsed by 40%. From an average of 1.47 to 1.66 million barrels per day in previous months, they fell to 920,000 in February, according to data published by Refinitiv Eikon.

Maduro has announced a series of emergency measures, but badysts agree that the country has no way to find another source of short-term foreign exchange. The blow can be brutal, as PDVSA exports were already at historic lows, after years of decline for the replacement of career staff by loyal servicemen.

The unanswered question is how much more can an economy fall by half in the last five years, which ended the year 2018 with a hyperinflation of 1,600,000% and is facing a shortage of food, medicine and supplies never seen before.

"The tragedy of the economy is that everything can always be worse, there is no substance, it will turn Venezuela into hell, but far from a social epidemic that is swaying the diet, what I see is that the migratory phenomenon will accentuate. There are predictions that this year you can go a million more people. Something that ends up inducing the government itself, because it's an exhaust valve: the people who could heat the street, leave and transfer the problem to other countries"he said to Infobae economist Víctor Álvarez, researcher at the Miranda International Center and National Science Prize.

The destruction of the country's main badet

Chávez badumed the presidency of Venezuela in order to take control of the main economic and political structures of the country. obviously PDVSA, a company already owned by the state, but with a technocratic profile and managed with sufficient independence governments.

The lieutenant colonel came into direct conflict with the management, who resisted his interference. In December 2001, the first of a series of oil strikes was conducted under the leadership of Fedecámaras and the company workers.. This was the prelude to the strike that ended with the coup d'etat of April 2002, which expelled Chavez from Miraflores for a few hours.

The final climb was the December 2002 to February 2003 strike, the longest in history. After defeating the strikers, the president finally took the reins of PDVSA: dismissal of more than 15,000 employees different levels and replaced them with officials who were loyal to him.

"The operational management of PDVSA has become dependent on political alliances instead of professional merits. The company's resources have been diverted to non-oil-related government activities, and a greater discretionary distribution of revenues to the government, to the detriment of investment. Several international companies that refused to comply with the new rules were expropriated in 2005, "said Natan Lederman, professor of economics at Metropolitan University, in dialogue with Infobae.

During this period, the oil company collapsed. From a record 2.3 million barrels a day exported in 1998, it fell to a low of 1.6 in 2003.. If the trend had continued, Chavismo would hardly have been what it was. But from 2004, the international price of crude has skyrocketed: from $ 28 a barrel in 2003 to 110 in 2012, according to the average value established by OPEC.

This impetus allowed him to recover the volume of sales abroad. Although they never reached the previous level, they got close enough: 2.2 million in 2008 and 2.1 in 2012. However, the bonanza ended in 2013, just when Maduro took over.

Parallel to the fall in crude oil prices, PDVSA has accentuated its deterioration because of its progressive militarization. The final reversal took place in November 2017, when the president pbaded control of the armed forces to the armed forces, as a payment of their loyalty after the coup d'etat State against the National Assembly.

Despite having no experience in oil or business management, Major General Manuel Quevedo has been appointed President of the company and Minister of Energy. Exports increased from 1.9 million barrels in 2013 to 1.2 in 2018.

"The economic disaster that the country is going through is not a consequence of the recent sanctions Said Lederman. The International Monetary Fund estimates that per capita real income has declined by about 63.5% in the last six years. Venezuela suffers from the typical collapse of a country that has been subjected to all kinds of state interventions. The drop in oil prices in June 2014 is the external shock that has revealed the shameful result of years of price controls, nationalizations, insufficient protection of property rights, exchange controls, uncontrolled monetary creation and of corruption, among other erroneous policies "

In this context, January 28th sanctions were the last strengths of a company and an economy subjected to a long process of self-destruction. The effect was almost immediate: sales in the United States rose from 484,000 barrels per day in January to 149,000 barrels in February, bringing the total volume to 920,000 barrels.

"Venezuelan oil is extremely heavy and needs to be refined because some is processed in American refineries, the logistics of finding where to turn this oil will take some time and it will be expensive. The sanctions not only prevent US companies from paying PDVSA, but they can not sell the diluents that Venezuelan oil needs to be refined. All of this generates very important problems, "said Dany Bahar, a researcher with the Brookings Institution's Global Economy and Development program, consulted by Infobae.

The only buyer who today pays a significant amount of money to PDVSA is India, which became in February its main customer, with 360,000 barrels a day. But prospects that can approach the 749,000 bought by the United States in 2017 are almost zero.

"These are things that do not happen overnight," Bahar continued. It's further and transportation costs are higher, so profit margins will decrease. On the other hand, selling more to China does not say if that could generate more than moneybecause the barrels he buys are the repayment of what Venezuela owes him. There are several scenarios, but in none of them PDVSA loses. "

Desperate in the absence of currencies, Maduro ordered the Central Bank to sell gold bullion. Noor Capital of Emirati company confirmed last month having bought three tons of goldbut it is estimated that at least eight tons have been distributed in the Asian country. Anyway, beyond that, it can give it oxygen, it is a strategy that runs out in the short term and whose dividends are far from those offered by oil.

Effects on a devastated economy

"The central bank is dry," said Alvarez, "that's why steep changes occur in exchange rate policy. Inexplicably, the official exchange rate, DICOM, exceeded for the first time the exchange rate of the illegal market, which is still higher. The government was forced to publish the quote, offering a price more attractive than the illegal price to encourage the private sector to sell its dollars. "

The regime's expectation is to encourage investment in the energy sector, stimulate the repatriation of private capital parties because they have been forced to sell their currencies at an unrealistic price that remittances from millions of Venezuelans abroad are sent through official channels. With the institutional precariousness that he presents and his doubts about his future stability, it is very difficult for him to convince the public.

"These measures have not offset the collapse of foreign exchange earnings and the exchange rate should continue to pull," continued Alvarez. With the economy heavily dependent on imported goods and inputs, the sustained rise will affect the hyperinflationary spiral. The IMF expects an increase of 10 000 000% for this year, but falls short. If this deterioration continues and there is no political agreement, it will reach 23 million per cent, or nearly 2,000,000 per month. "

At the same time, the shortage of dollars will automatically result in a greater shortage of food and medicine. In other words, the humanitarian crisis will worsen.

"According to the investigation Encovi, 51% of households live in poverty, the loss of educational coverage reaches 70% of the population, insufficient income for the purchase of food affects 89% of people and the public health system is paralyzed, "said Lederman. The situation seems catastrophic. But not because of the sanctions, but because we do not see in the near future a political change that will allow us to carry out the necessary reforms to stabilize the economy. "