In 2008, Hugo Chavez Frias began an ambitious partnership with the People’s Republic of China. CV Shipping was founded with the intent of strengthening the relationship between the two countries. For China, it was a sweet deal that meant a stronger political hold in South America.
It would also mean that the Venezuelan government would be beholden to them for support in exchange for what China undeniably needed more of: cheap oil. The company was meant to export Venezuelan oil to China, and some other locations.
Twelve years later, it seems the once ambitious relationship has not quite worked out the way the two countries had hoped. Although, undoubtedly, China got the better end of the deal.
Diario Las Americas writes:
While China has become a kind of “financial lifeline” for Maduro, it is clear that its priority is to take care of its business and trade relations. Despite its political support for the dictatorship, China has decided to guard against imminent financial sanctions. However, it (Venezuela) still has to deal with the regime’s multi-million dollar debts to the Asian country.
A study done by Kiel Institute for the World Economy puts Venezuela in an uncomfortable position with China, with the country owing some twenty billion dollars to the Chinese government. A debt that exceeds a quarter of its own GDP. Venezuela is the country in the Americas that owes the most to The People’s Republic of China.
This relationship has undoubtedly become strained by Venezuela’s rapid economic collapse and the mismanagement of its state-owned oil industry: PDVSA.
US sanctions, intended to put pressure on Venezuela’s dictatorial regime, accelerated the decay of the business relationship between the South American country and China. The sanctions put on PDVSA, left its vessels without insurance, which led to millions of dollars in losses for CV Shipping. This forced its parent company, PetroChina, to place CV Shipping in bankruptcy.
As a result of the losses, Venezuela has not been able to pay its dues to China, resulting in PDVSA’s three largest oil tankers being taken by China.
- PetroChina Co Ltd, which had been state-run Petroleos de Venezuela’s partner in the Singapore-based joint venture CV Shipping Pte Ltd, took control of the three tankers between January and February, according the documents from a Singapore court reviewed by Reuters.
Once a gem when it came to oil production and exporting, Venezuela is now importing oil from its political ally, Iran (who has been receiving immense pressure from the United States).
Just last week, the US seized four Iranian oil ships with 1.1 million barrels of fuel intended for Venezuela.
The sanctions and the pressure coming from the United States are meant to put the Venezuelan dictatorship under duress. President Trump has taken a harder stance on Venezuela than previous US administrations. He has even been quoted saying that the only way he will meet with Nicolas Maduro was to negotiate his exit from the Venezuelan government.
So far, the pressure seems to be working, because Maduro and the Venezuelan regime depend on their international support to remain in power.
However, only time will tell.