Don't blame the USA if you're in debt to China

It's convenient to blame the Gringos, but who do you blame if you're main creditors have nothing to do with them? 

While external factors do affect a nation's economic output, projecting the responsibility for a massive economic collapse on other nations is an indicator of incompetent leadership. Those thinking that you can explain away internal economic collapse by blaming sanctions, the IMF, or "neoliberalism" should at least try to explain why some of the following trends have occurred. 

And by the same token, the act of commenting on and highlighting the failures of the "Bolivarian Revolution" of Hugo Chávez and his successor Nicolás Maduro should not be construed as an endorsement of military intervention in Venezuela, nor indeed supporting the economic sanctions against the country. Criticism and observation of any nation's behaviour is essential to keeping it accountable to its own citizens as well as to its neighbours and trading partners.

So let's discuss what the truth is about Venezuela by looking at the numbers:

• Between 2013 and 2017 Venezuela's economy shrunk by 35% and per capita income is 40% lower than it was then. Despite this, the nation's government continues to print money.
• Economic sanctions are, in the opinion of may opponents and supporters of the Venezuelan government an inappropriate way to deal with the country that actually helps crystallize its efforts to paint its failures as being the result of foreign persecution. I happen to agree that sanctions are the wrong way to deal with a country that is already failing all on its own. However, by the time Barack Obama slapped sanctions on Venezuela in 2015 its economy was already in free fall for two years and was getting worse.
• As early as January 2015 Ricardo Hausmann of the London Financial Times was warning that Venezuela's debt to China was a massive $45 billion by that year. As the Maduro government continued to be delinquent on these debts Beijing gave them a grace period during which they could continue to pay back the loan interest with cash, but could not borrow any more money. So essentially Venezuela has dug itself into a toxic loan situation from which it cannot borrow itself out. In 2015 Venezuela was estimated to have an external debt of $113 billion and with the collapse of its GDP as mentioned above the chances of digging itself out are increasingly slim

The defender's of the Maduro government consistently show their ignorance of what really has led to the collapse of the country's economy: The seizure of private property from the wealthy and the emigration of two elements of the population: the wealthy and the skilled workers. Much of this is a result of Chávez's meddling in the operations of PDVSA:

• In 2002 following Chávez's appointment of a university professor with no industrial experience to head PDVSA, an industrial strike commenced that led to him firing 22,000 employees overnight. Four thousand of those fired ended up working overseas.  
• Under Chávez Venezuela moved in 2007 to nationalize assets owned by Exxon Mobil and ConocoPhillips ($4.5 billion) after they could not come to an agreement on a contract for several oil extraction projects there. This triggered a lawsuit that was settled in arbitration awarding ConocoPhillips $2 billion in assets of Petroleos de Venezuela S.A. (PDVSA), the state-owned oil conglomerate of Venezuela. 
• As a result of PDVSA's inability to pay the $2 billion award ConocoPhillips has seized products belonging to the company from its refinery in Curacao.
•  While promising to boost PDVSA's output by 1 million barrels per day (bpd), Venezuela's Oil Minister in June 2018 failed to explain how that would be accomplished given the company's output has fallen by 800 thousand bpd since 2016 largely due to a work force that is underpaid and rapidly shrinking due to resignations and desertions. 
• In March 2018 video surfaced of workers in the cafeteria at PDVSA and the Oil Ministry's headquarters demonstrating and being beaten back by the Bolivarian National Guard (GNB) in full riot gear. 

• In the year 2017 alone 25 thousand PDVSA employees resigned, and have not been replaced as they are a skilled workforce. Oil worker union representatives have even discussed how Oil Minister General Manuel Quevedo, himself of the GNB, has enforced a harsh line against workers for criticizing management or the government and workers are quitting en masse in order to migrate to neighbouring Colombia.
• In a sign of just desperate Venezuela's leadership has become, they have attempted to cut deals using it's national crypto-currency the Petro, including one granting India a 30% discount on oil purchases that was declined.

Nicaragua is a second-hand victim of Venezuela's oil dependency.

When he came to power in 1998 Hugo Chávez was at the helm of what was called the marea rosa (pink tide) of South and Central American states that rejected the neo-liberal post-Cold War order and engaged in social democratic or democratic socialist expansions of the welfare state. This was appropriate given the interventionist foreign policy of the United States in nations like Guatemala (1954) and Chile (1973) among others. The embrace of authoritarian dictators of the right in these countries did not deliver economic prosperity for the majority of people in Latin America. Therefore, aside from Chávez the "pink tide" engulfed the following countries: Brazil (2003), Bolivia (2006), Ecuador (2007), Honduras (2006), Perú (2006), Uruguay (2005), and Argentina (2003). 

Nicaragua, once the home of the Sandinista Revolution of 1979-91, reelected former president Daniel Ortega Saavedra in 2007, and he has been president since then. Nicaragua has been the poorest nation in Central America going back to the 1960s and despite having a population roughly equal to El Salvador, it's economy is only half the size of its smaller neighbour's even today. 

• Nicaragua is, unlike Venezuela or Brazil, small and poor in natural resources. Once Ortega was elected, Chávez began to fund his government to the tune of $1.6 billion over the first four years. 
• More specifically, the Venezuelan-led alliance of Caribbean and states known as Petrocaribe included Nicaragua in a plan to provide oil at preferential payment rates. This alliance led to the purchase of assets related to refinery and storage by PDVSA in many of these nations. As part of this agreement Nicaragua received 27 thousand barrels a day of oil. However, the continuing implosion of PDVSA and its associated companies has led to the downfall of Petrocaribe to the point where Nicaragua's main oil imports are now from the USA, not Venezuela. There simply is not enough oil being extracted to fulfill PDVSA's commitments to its commercial partners and Petrocaribe at the same time.
• In 2015 a strategic analysis indicated that declining Venezuelan aid to Nicaragua since 2010 put many of Ortega's policies of expanding social safety nets at risk. This is confirmed by the prediction made by La Prensa last year that the Nicaragua Institute for Social Security (INSS) would have a deficit of 2.228 billion Cordobas ($71 million). Lo and behold the country erupted in riots this year that have continued since April and have now claimed the lives of 215 people.

Please note that this reality undercuts the narrative put forward by the supporters of Maduro and Ortega: Why would the USA need to overthrow a government that currently buys most of its oil from them?

When the pink tide came to Latin America in the late 1990s, leaders like Chávez promised to care for the millions of invisible people in their countries forgotten by the decades of a Cold War that was not fought for their benefit. Nowadays, they throttle the future survival of many of the same invisible people under the guise of an "economic war". But the economic war has no victory plan. How can Venezuela explain the long-term benefit of seizing a $100 million General Motors plant in July 2017 and nationalizing when ultimately instead of seizing the means of production all they have done is brought them to a halt? The Venezuelan experiment is nearing its end, and rather than blame the Chávez and Maduro government's reckless policy of borrowing from China with, its supporters will continue to fight an imaginary economic war for which their is no strategy, no goal, and no winner.