Some of the ‘Wildcards’ in the US’ Involvement in Venezuela: The ICRG Risk Governance Board Meetings

PRS’ risk governance board is holding its monthly meetings to review the ICRG ratings that are coming in for January.  One of the questions that came up – which I allueded to in a previous note – dealt some of the wildcards in the US’ involvement in Venezuela.  Here is a brief summary:

1/ There is a contradictory situation in relation to who has the authority to control Venezuela’s overseas oil assets and enter new multi-billion dollar contracts.  There are diplomatic and legal considerations.  For example, the US is attempting to ‘run’ Venezuela through Maduro’s former deputy, but a core of US policy since 2019 has been the recognition of the 2015 National Assembly.

If the US shifts recognition to the Rodríguez regime to facilitate oil deals, it risks invalidating years of legal arguments that allowed the 2015 Assembly to control billions in extraterritorial assets, such as Citgo.

2/ Another major wildcard is the unprecedented plan for American control of oil sales, as the WH intends to see Venezuela crude via ‘US controlled accounts’ to ensure the funds are used for reconstruction as opposed to being susceptible to corrupt practices. Inter alia, without formal and permanent changes to the sanctions regime (in addition to larger governance issues affecting the investment climate), major investors (Exxon) will be unwilling to commit the $100 bn being requested. 

There’s more obviously, but this is a very interesting set of issues for both academics and practitioners alike.

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CHRISTOPHER MCKEE, PHD CHIEF EXECUTIVE

Christopher McKee is PRS’ CEO and Owner. An international political economist, global investor, entrepreneur, and author, Chris received his PhD from Queen’s University (Canada) and has been involved in the field of geopolitical risk, limited recourse financing, and private sector development for the past 25 years.