Venezuela debt: US, Russia and China play for high stakes

The government simply wants to survive. It fears that bondholders, which only want to be paid, could seize its exported oil cargos in the event of a default, cutting off Caracas from its sole source of revenue. Then there are the superpowers. Washington wants to curtail an increasingly rogue regime, implicated in global drugs trafficking, that sits on $15tn of oil reserves only a three-hour flight from the US. Moscow, meanwhile, seeks to parlay Caracas’ distress into a stronger foothold in the Americas. China’s interests are more commercial: having loaned $60bn to Caracas over the past decade it wants continued access to Venezuela’s vast energy reserves.  Adding to the complexity are the house rules; there may not be any. All of Venezuela’s foreign bonds are governed by New York law. But the presence of Russia and China at the table further complicates a restructuring that will be least partly be conducted outside the IMF or the Paris Club of creditors. More…