Fri. Apr 26th, 2019

The IMF wants but can not in Venezuela

El FMI quiere pero no puede en Venezuela

Almost four months after the start of the regime change operation that the Administration Trump intends to carry out in Venezuela, international support is fractured. This was confirmed last week at the assembly of the International Monetary Fund (IMF) and the world Bank. While the new oil embargo and the constant power cuts make a dent in the already punished Venezuelan economy, the IMF insists that it is willing to help the country.

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Preparations have already been made to provide financing to Venezuela, whose hyperinflation rate is now six or seven digits, its external debt is equivalent to 200% of GDP - a large part in suspension of payments - and whose economy has suffered a devastating contraction , due to the collapse of oil prices, economic mismanagement, corruption and US sanctions. According to the calculations of Torino Capital in New York, the decline in GDP since 2013 will reach an incredible 65% this year, the deepest depression in history.

It is calculated in Washington that would require a rescue plan for some 60,000 million dollars, some 53,000 million euros. But, without the installation of a new government, the IMF can not do anything. And Washington's plan to force a regime change in Caracas With sanctions, he has run into multiple problems.

Venezuela's debt is 200% of GDP, which has fallen 65% since 2013

First, however catastrophic the embargo may be for the suffering Venezuelan population, it is unlikely that the coup de grace will be given to the Government of Nicolás Maduro in the desired period. Moreover, there is not enough support in the shareholding of the IMF and the World Bank to give new financial support to the daring assault on the power of Juan Guaidó, the self-proclaimed president of Venezuela.

The managing director of the IMF, Christine LagardeHe acknowledged at the end of the assembly last week that nothing has been done on the thorny issue of deciding whether the IMF will recognize Guaidó as legitimate president instead of Nicolás Maduro. "When deciding what is the legitimate authority in Venezuela, our partners have to make a decision," he said. At this time, despite the fact that the United States is the only country with veto over Fund decisions, China, Russia and, more ambiguously, the European Union They have slowed the Trump Administration's attempts to achieve the institutional recognition of Guaidó.

The IMF was chastened in its relationship with Venezuela after being "willing to work" with the businessman's government Pedro Carmona in 2002, after a brief coup d'état against Hugo Chavez. Hours later, Chávez regained power and the Fund had to eat his words. A meeting on Venezuela convened this week by the US Treasury - attended by the Spanish Minister of Economy, Nadia Calviño- does not seem to have opened any door to find a solution to the impasse. "No specific decision on recognition has been raised [de Guaidó]"Calviño said at a meeting with the media held in Washington.

In Washington it is estimated that the country needs about 53,000 million euros

The same thing happens with the World Bank. Although its new president, the neoconservative David Malpass, announced during the assembly that the powerful Development Bank -Historically a weapon of US foreign policy- "will be deeply involved in Venezuela", its shareholders do not agree on which of the two "governments" they will support.

The global geopolitical pulse already expressed in the Venezuelan crisis can be seen in the differences in positions between, on the one hand, the IMF and the World Bank, and, on the other, the Inter-American Development Bank (IDB), which provides financing to promote growth in Latin America. The IDB does recognize Guaidó. Ricardo Hausmann, a prestigious Venezuelan economist and professor at Harvard University, was appointed in March as Venezuelan governor representing the parallel government of Guaidó.

Why is the IDB and the IMF not? The answer is obvious. Although the 53 countries that have recognized Guaidó are often cited, the IMF has 189 member countries. "China has a lot of influence over African and Asian countries, so it is impossible for the IMF to recognize Guaidó while China is against it," said a senior official at one of the multilateral institutions. This is coupled with the ambiguity of the European Union regarding Guaidó. Although most European countries have recognized the young leader, the EU as a whole is not defined. In the IDB, on the other hand, the United States and the countries of the Western Hemisphere are in charge, which, after turning to the right in Latin America in recent years, have given Guaidó the support it needs.

China is against recognizing the opposition leader and the EU as a whole is not defined

Single Mexico, Uruguay and some countries of Central America and the Caribbean they oppose the regime change operation in Venezuela designed in Washington. The confrontation, however, has hurt the IDB's attempts to give Asia a greater role in its development aid policies in the region. The next IDB meeting had to be held in China in May, but it was suspended due to the incorporation of Hausmann to the board of governors.

The Chinese government, which had refused to grant a visa to Hausmann, explained the decision to suspend the meeting due to the insistence of "a group of countries" in recognizing Guaidó, "who was not elected." The operation to place the representative of Guaidó in the IDB was developed through the Government of Mauricio Macri in Argentina, an IMF client who signed a huge rescue plan last year. Because of all this, Venezuela is beginning to become a high point of the crisis of multilateralism.

Under pressure from Washington, the IMF has denied the access of the Nicolás Maduro government to 400 million dollars belonging to the Venezuelan State deposited in the IMF in the form of special drawing rights. According to the regulations of the Fund, a government must have the recognition of half of the member countries to be able to access their rights.

Without political solutions and with the new embargo on oil, a humanitarian crisis is feared

Meanwhile, the new oil embargo begins to turn the crisis into a catastrophe. According Sergi Lanau, Catalan economist International Finance Institute in Washington, "the new sanctions will have a strong impact on the oil sector and crude exports could easily fall 40% this year." This will directly impact the imports of essential goods purchased with the foreign currency generated by the sale of crude oil. Likewise, Lanau estimates that the value of imports will fall to 15,000 million dollars this year, five times less than in 2012.

"A protracted political and economic conflict can turn the humanitarian crisis into a humanitarian catastrophe," said Francisco Rodríguez, the Venezuelan economist who advised opposition candidate Henry Falcón in last year's elections boycotted by Guaidó. Despite the collapse of Maduro's popularity in the polls - already around 15% -, only 32% of Venezuelans support sanctions on the oil sector.

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