Guaidó prepares to ask for active protection at the UN and save Citgo

September 19 2019, 5:43 pm

The president in charge, Juan Guaidó, prepares to ask for protection of UN assets as an option to prevent creditors from taking control of the US refiner Citgo, the country's most important asset abroad, said a lawmaker and two other sources .

The sources argued that the proposal is in the initial stages and warned that this point would not be addressed in the UN General Assembly next week.

Economists and lawyers have cited that the UN Security Council protected Iraq's assets abroad after the US invasion in 2003 to allow the economy to recover before creditors tried to collect billions of dollars for unpaid debts. in the Saddam Hussein era confiscating property.

The tactics of the Guaidó team are due to the fact that by the end of October they have to pay 913 million dollars of the bond of the state oil company PDVSA that expires in 2020 and that has more than half of the shares of the US subsidiary of the industry, Citgo.

"We are working on the issue of asset protection at the United Nations," said Carlos Valero, an opposition legislator who is part of the Foreign Policy Commission of the National Assembly, in an interview. "In the hands of the administration of Guaidó, Citgo is not going to lose."

An opposition source who asked to remain anonymous said the team had begun to raise the idea of ​​the protection of UN assets for Citgo to diplomats. Another source added that a United Nations resolution had long been seen as an option.

Getting the Security Council to approve a measure for Venezuela would be a challenge. Russia and China, two permanent members of the body, are allies of President Nicolás Maduro and have not recognized Guaido.

The opposition assumed control of Citgo earlier this year after Guaidó, president of the Congress of opposition majority, invoked articles of the Constitution to declare himself interim president arguing that the re-election of Maduro in 2018 was illegitimate. Guaidó has been recognized as a legitimate boss by dozens of countries, including the United States.

Washington's sanctions against Venezuela, which seek to push Maduro out of power amid the economic collapse of the OPEC nation, limit government operations with bonds. Since 2017 Venezuela has defaulted on the cancellations of a large part of the external debt, but kept up to date the payments of the PDVSA title 2020 to not lose Citgo.

Neither PDVSA nor the Venezuelan Ministry of Information responded to requests for comments. Maduro has in the past accused the opposition of wanting to "steal" Citgo.

Although the opposition made an interest payment of $ 71 million from the 2020 bond in May, it is not clear if the Guaido team would have access to the funds frozen in accounts abroad for the October commitment. Citgo has said it will not finance the payment using its cash reserves.

US investment fund T. Rowe Price held informal talks with the Guaido team to finance the payment, but said it would not make a formal proposal until the ban on negotiating Venezuelan bonds, part of Washington's sanctions, is lifted. Guaido’s team also asked the White House to issue an executive order to protect Citgo, but there is still no response.

A decree issued in August freezes the assets of the Venezuelan government in the United States and suspends trials against Citgo, but does not permanently eliminate the rights of creditors to seize it, Valero added.

The idea of ​​a Security Council resolution to protect Citgo was proposed in an academic document written at the end of last year by Lee Buchheit, a veteran sovereign debt restructuring lawyer who has become an advisor to the opposition. In the document, Buchheit wrote that Russia and China, countries that have lent billions of dollars to Venezuela, should support the resolution because “in case of overthrow of the Maduro regime, both countries should wish to foster a friendly relationship with the new administration".

But the Russian oil company Rosneft has a right of retention of 49% of Citgo's shares for a loan granted to PDVSA. Washington's reluctance to protect Citgo with a decree may mean that it is unwilling to support that resolution. Conservative groups have warned Trump not to interfere in that matter.

Reuters