After years of economic mismanagement and political strife, Venezuela finds itself in the midst of a political, economic, and humanitarian crisis, due in part to an unsustainable loans-for-oil debtor relationship with China.
The heyday of Chavez’s political dominance during the first decade of the 2000s coincided with Beijing’s dramatic upscaling of its commercial and diplomatic relationship with Caracas.
Over the past decade, China has become Venezuela’s key overseas financial lifeline, providing the oil-dependent economy with over $60 billion in oil-backed loans and tens of billions more in other contracts and investment deals.
Ultimately, Venezuela is faced with the choice of defaulting on its loan and oil shipment agreements or further curtailing government spending on domestic social and humanitarian programs in order to service its debts to China and other creditors.
China may view the chaotic status quo in Venezuela as a safer bet for having its loans repaid and ensuring future oil shipments—not to mention preserving its close state-to-state ties—than a transition to a different, possibly opposition-led government.
[ > Carnegie-Tsinghua — 2017 ]
