Russia's Stake in Venezuela
by John Helmer - Dances with Bears
February 17, 2019
Moscow - No ambition in Russia runs wider and higher than that of Igor Sechin, 58, chief executive of Rosneft. To help fill the Venezuelan treasury, deter attacks on President Nicolas Maduro, reinforce his army, and show the world he’s the Russian who can defeat both types of war the US is waging against the world – sanctions war and regime-change war – no bill would be too expensive for Sechin to pay.
And if he can do that, he will show that he’s the natural successor of President Vladimir Putin.
In point of cost for Rosneft, the Venezuelan strategy is relatively cheap. For the Russian military, who have created the most powerful army in South America (also a match for Canada ), with a decade of deliveries of air and ground weapons, the Venezuelan front is a fresh tester of American warmaking at low money cost and little risk of Russian casualties.
The combination of Sechin and the Russian General Staff to defend Venezuela is a potent weapon to demonstrate to the world that US threats are bluff.
So, win or lose on the battleground of Venezuela, at home Sechin is showing his Russian allies that he’s their winner in the presidential power contest ahead.
Not everyone agrees.
“Yes, the presidency is a matter of Sechin’s ambition; it’s also a condition for his survival,” comments a source who has known Sechin well.
“As to who his allies are, I am not able to tell because he has managed to come into conflict with everyone around Putin. But if Sechin becomes the Kremlin’s lead on Venezuela, then Sechin will lose his battle for the Kremlin.”
In wartime it can’t be expected that Venezuela and Russia are going to reveal publicly the balance-sheet of the debts between Caracas and Moscow; certainly not how the two plan to evade the sanctions imposed on arms deliveries, introduced by the European Union in November 2017, or the US sanctions and asset seizures which the US (and the Bank of England) introduced on January 28, 2019.
The Russian Finance Ministry refuses to say exactly how much Venezuela currently owes Russia. However, on January 29, Deputy Finance Minister Sergei Storchak (right) confirmed that semi-annual interest payments of $100 million on sovereign debt of $3.15 billion were agreed in November 2017 , and are continuing; repayment of the principal is postponed until 2023.
“We have payments due in September  and March . There are no overdue amounts. The last time the amount [paid] was more than $100 million; the upcoming payment, the same. We have a fixed interest rate.
“When the loan repayment period begins [in 2023], along with interest, part of the debt is extinguished, this is a classic scheme of repayment of the state debt.”
Storchak conceded that following the escalation of US sanctions last month, “there will probably be problems. Everything now depends on the army, on the servicemen, how true they will be to their duty and oath. Another assessment is difficult to give — impossible.”
Russian reporters have been claiming that Venezuelan debts to Russia currently total $17 billion. This is guesswork; it started last year in reports by the Reuters news agency in Caracas.
The officially agreed numbers comprise the debt between Rosneft and Venezuela’s state oil company group, Petroleos de Venezuela, S.A. (PDVSA) of about $5 billion; about $4 billion owed for Russian arms deliveries; $1.5 billion in loan collateral which Rosneft holds in CITGO, the US refinery and retail gasoline subsidiary of PDVSA; and $5.8 billion in obligations which the Maduro Government began negotiating with the Paris Club of government creditors starting last June.
These numbers don’t add up to $17 billion, and the Paris Club number isn’t broken down by creditor country claims. It’s known that the Paris Club aggregate includes $263 million owed to Brazil. How much of the balance — $5.573 billion — is owed to Russia and to China is not reported by the Paris Club. Nor are details of the off-budget financing of some Russian arms deliveries which may make the debt to Russia larger.
Rosneft was asked to clarify how much money it has paid out in loans to the PDVSA group, investments in joint oilfield development projects, and cash advances for future deliveries of Venezuelan oil. The company refuses to answer.
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