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<div class="header reader-header reader-show-element"> <font
size="-2"><a class="domain reader-domain"
href="https://theintercept.com/2019/04/18/venezuela-idb-maduro-guaido/">https://theintercept.com/2019/04/18/venezuela-idb-maduro-guaido/</a></font>
<h1 class="reader-title">Secret IDB Proposal Would Give $48
Billion Infusion to Boost Venezuela’s Economy — But Only After
Regime Change</h1>
<div class="credits reader-credits">Rafael Moro Martins - April
17, 2019</div>
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<p><u>The Inter-American</u> Development Bank is quietly
circulating an analysis that foresees an up to $48
billion infusion of capital into the Venezuelan economy
should President Nicolás Maduro be removed from office.
A pair of confidential documents, both called
“Venezuela: Challenges and Opportunities,” outlines a
four-year plan to open the country’s beleaguered economy
to foreign corporations through privatization,
structural reforms, and public-private partnerships.</p>
<p>The documents — slide decks that were obtained by The
Intercept — are circulating in an 11-slide summarized
version and a 27-slide full version, both classified as
“confidential.” The author is marked in the first slides
of both presentations as the bank’s secretary, who is
responsible for organizing discussions between the bank,
governments, and private companies. The presentations,
which are dated March 15, are addressed to executive
directors of the Inter-American Development Bank and IDB
Invest, the bank’s investment arm aimed at lending to
private companies.</p>
<p>Founded in 1959, the IDB offers financing and technical
assistance for infrastructure, health, and education
projects in Latin America and the Caribbean. The bank is
owned by 48 countries: 26 borrowing member countries and
22 nonborrowing member countries. Currently, the five
largest shareholders are the U.S., with 30 percent of
voting shares; Argentina and Brazil, with 11.2 percent
each; Mexico, with 7.2 percent; and Japan, which has 5
percent of voting shares.</p>
<p>The dominant position of the U.S. has raised questions
about the bank’s independence. Indeed, U.S. President
Donald Trump’s aggressive stance on regime change
helped urge IDB officials into pushing the analysis of a
post-Maduro Venezuela, a source told The Intercept.</p>
<p>The Maduro regime has long claimed that the country’s
economic collapse is the result of a capital crunch
driven by sanctions and a coordinated financial assault
by the United States for the purposes of undermining and
overthrowing the socialist government. The emergence of
the IDB-led plan will only heighten those suspicions.</p>
<p>The proposal for international largesse could be a boon
to an incoming administration. If all went according to
plan, the improvements in Venezuelans’ daily lives would
allow opposition leader and self-proclaimed interim
president Juan Guaidó, or another incoming president, to
claim a victory — by benefiting from international
assistance that is being denied to the current
leadership. Meanwhile, Venezuela would be stripped of
its public assets.</p>
<p><u>The IDB documents</u> were supposed to have been
presented at the IDB’s annual meeting from March 26 to
31 in Chengdu, China. Controversy erupted, however,
because the IDB had invited Guiadó’s economic
coordinator and IDB representative, Ricardo Hausmann.
Beijing — the meeting’s host, a Maduro ally, and a
minority 0.004 percent shareholder with the bank — has
not recognized Guiadó’s rule and denied a visa to
Hausmann, a Harvard University economist and Guiadó’s
representative to the IDB. The turmoil <a
href="https://www.reuters.com/article/us-venezuela-politics-china-iadb-exclusi/exclusive-iadb-cancels-china-meeting-after-beijing-bars-venezuela-representative-idUSKCN1R32NU">caused
the cancellation of the China meeting</a> just days
before it was set to occur.</p>
<p>Another source, an IDB insider, told The Intercept that
inside the bank, regime change in Caracas is seen as a
question of when, not if, and many believe that it will
happen soon. Nonetheless, the urgency around the plan
apparently faded after the <a
href="https://www.nytimes.com/2019/03/10/world/americas/venezuela-aid-fire-video.html">highly
publicized failure</a> of a plan by Guaidó and allies
to bring truckloads of “<a
href="https://theintercept.com/2019/02/20/regime-change-we-can-believe-in-the-u-s-agenda-in-venezuela-haiti-and-egypt/">humanitarian
aid</a>” over the Colombian border. The bank leaders,
the source said, had hoped that the convoy would help
trigger Maduro’s downfall. Bank leaders have since
become less optimistic that he will be removed from
power in the near term.<br>
</p>
<p>
The documents do not delve into specifics about where
the full $48 billion investment would come from. The
Intercept arrived at the total number by adding up
subtotals for the three “key recovery areas” listed in
the presentation: “urgent needs of the population,”
“basic infrastructure,” and “institutional reforms.” The
presentation broke down these estimated investments into
two columns: phase one on one side, and annual totals
for phases two and three combined on the other. Because
phases two and three are expected to last for three
years, those annual totals were multiplied by three and
added to the first phase investments, leading to the
grand total of $48 billion. (The slides noted that the
investment levels required for “basic infrastructure”
exclude investments in the country’s “hydrocarbons and
energy sector.”)</p>
<p>Though the slide decks do not state where the money
would come from, $48 billion in loans would likely be
unprecedented in the IDB’s 60-year history. In response
to an inquiry from The Intercept, a spokesperson for the
IDB said, “While I have not seen the document you
mention, by the size of the number, it probably refers
to a much larger lending or assistance package involving
many institutions, not just to IDB-financed operations.
It is almost three times what the IDB approves in a
single year.”</p>
<p>Two sources with direct knowledge of the proposal — one
in the U.S. and one in Brazil — confirmed the
authenticity of the documents, and a third source told
The Intercept that the plan exists. All three sources
requested anonymity to discuss the proposal because of
fears of professional reprisal.</p>
<p>The Intercept is declining to publish the documents out
of concerns over source protection.</p>
<p>A parallel business forum to the China summit —
coordinated by IDB Invest, formerly known as the
Inter-American Investment Corporation — was also
canceled. CEOs of major companies had been invited to
attend, including electrical giants such as the
U.S.-based AES Corporation and Italy’s Terna;
construction firms like South Korea’s DOHWA Engineering
and Mexico’s ICA; and energy players like Colombia’s
Terpel and Canadian Solar. (An IDB spokesperson told The
Intercept that the 2019 annual meeting has not yet been
rescheduled and that the business forum will no longer
take place.)</p>
<p>In March, the IDB was the <a
href="https://www.france24.com/en/20190316-idb-first-multilateral-lender-recognize-envoy-venezuelas-guaido">first
multilateral international organization to recognize
Guaidó</a> as interim president, less than two months
after Trump did.<br>
</p>
<p>
Hausmann, who served as the <a
href="http://apps.hks.harvard.edu/faculty/cv/RicardoHausmann.pdf">IDB’s
first chief economist</a> from 1994 to 2000 and more
recently <a
href="https://www.hks.harvard.edu/faculty/ricardo-hausmann">consulted</a>
for the bank, was instrumental in formulating the
analysis circulated to the executive directors of the
IDB and IDB Invest, according to one of The Intercept’s
sources. (Hausmann did not respond to a request for
comment.)</p>
<p>Over the past several months, Hausmann has been making
public remarks about the need for international loans
and investments in Venezuela to spur its economic
recovery in the wake of Maduro’s fall. Speaking to <a
href="https://www.economist.com/briefing/2019/01/31/how-venezuelas-economy-can-recover-from-the-maduro-regime">The
Economist</a> last January, he said Venezuela would
need a loan in excess of $60 billion over three years.
In another interview with the <a
href="https://news.harvard.edu/gazette/story/2019/02/harvard-expert-tries-to-make-sense-of-venezuelas-collapse/">Harvard
Gazette</a> a few days later, Hausmann said the
reconstruction effort would “involve international
financial assistance, probably a significant program led
by the International Monetary Fund.”</p>
<p>Hausmann’s involvement with Guaidó’s purported interim
government suggests that he is optimistic about the
collapse of Maduro’s government — a view that at this
time has not yet been borne out by events.</p>
<p>On April 11, Hausmann spoke before an assembled group
of international finance ministers brought together by
U.S. Treasury Secretary Steve Mnuchin. “Today, the
Ministers reviewed steps taken since January to increase
financial pressure on the Maduro regime and additional
steps to support the democratically elected National
Assembly and Interim President Guaidó,” Mnuchin said in
a <a
href="https://home.treasury.gov/news/press-releases/sm651">statement</a>.
“The Ministers then discussed plans for future economic
support of Venezuela. We welcomed to this discussion Dr.
Ricardo Hausmann, whom Interim President Guaidó has
designated as coordinator of his economic advisors.”</p>
<p>Mnuchin said after the meeting that <a
href="https://www.reuters.com/article/us-imf-worldbank-venezuela-funds/venezuela-new-government-could-get-10-billion-in-trade-financing-mnuchin-idUSKCN1RP0PK">$10
billion in international financing</a> to spark trade
would be made available to Venezuela once a new
government came to power.</p>
<u>The IDB documents</u>
<p> provide an overview of Venezuela’s socioeconomic
disaster under Maduro, describing a free fall in nearly
every indicator from maternal mortality to soaring
hyperinflation. The documents highlight that private
investment represented a mere 0.7 percent of an already
low gross domestic product in 2017 and that oil
production fell by 60 percent over 12 years, reaching
the lowest levels since 1949.</p>
<p>The oil factor has been crucial. Venezuela is home to
the largest proven crude oil reserves in the world,
which accounts for 92 percent of the government’s
revenue. In 2011, oil was trading at over $100 per
barrel but crashed in recent years. “Faced with
declining external liquidity, the government has applied
measures to ration hard currency and cut imports since
2013,” the full slide deck reads, noting that Venezuela
produces only 25 percent of the food it needs.</p>
<p>Through the tragedy, the IDB sees a business
“environment with opportunities,” particularly “abundant
natural resources (minerals and oil)”; “commitment of
support from the international community”; and a
“resilient private sector committed to recovery.” The
bank estimates that, with an annual investment of $14
billion, oil production could surpass 3 million barrels
per day by 2029. By last December, the country was
extracting 1.1 million barrels per day, according to
data from the Organization Petroleum Exporting
Countries.</p>
<p>The focus on ramping up oil production runs counter to
many international institutions’ warnings about climate
change. The United Nations Intergovernmental Panel on
Climate Change has said the world economy <a
href="https://www.vox.com/2018/10/8/17948832/climate-change-global-warming-un-ipcc-report">has
12 years</a> to move rapidly in the opposite direction
— cutting down its reliance on fossil fuels.</p>
<p>Under current law, the Venezuelan state oil company
PDVSA must have <a
href="https://oilprice.com/Latest-Energy-News/World-News/Guaido-Set-To-Open-Venezuelas-Oil-Sector-To-Private-Firms.html">a
majority stake</a> in all oil projects, a hurdle to
foreign investment.</p>
<p>The United States, for its part, has always been keenly
interested in Venezuelan oil. “That’s the country we
should be going to war with. They have all that oil and
they’re right on our back door,” Trump <a
href="https://www.vox.com/world/2019/2/20/18233394/mccabe-trump-venezuela-war-oil-lawrence">reportedly
said</a> in a private conversation in 2017, according
to a book by former Acting FBI Director Andrew McCabe.
U.S. oil giants Exxon Mobil and ConocoPhillips filed
billions in arbitration claims when Maduro’s predecessor
Hugo Chávez expropriated their Venezuelan operations in
2007. If Maduro were to fall, it would offer an
opportunity for them and others to re-enter the
Venezuelan market.</p>
<p>Notably, the IDB documents obtained by The Intercept
lay out what the bank calls “priority actions”:
eliminating obstacles for private companies, financing
international trade, and establishing new legislation to
re-privatize government-owned companies.</p>
<p>The proposed infusion of cash laid out in the IDB plan
would serve as a carrot to induce foreign governments
and business leaders to support the U.S.-led push to
overthrow Maduro. The plan calls for $4.5 billion in the
first year to repair basic infrastructure, such as
electricity, water supply, and transportation. The
figures, the bank stresses, do not include “private
investments in the oil and energy sectors.”</p>
<p>The infusion of capital would have three specific
goals, the documents say: “stability,” with the
normalization of food stocks and health and education
services; “execution” of basic infrastructure repairs;
and institutional reforms aimed at “reversing the brain
drain.” Professionals have been fleeing the country in
droves and a recent nationwide blackout was likely
exacerbated by the exodus of expertise needed to keep
basic government services running.</p>
<p>Although it includes $11.5 billion for humanitarian
aid, such as food distribution to 25 million people and
unconditional cash transfers to 17 million, the bulk of
the plan is based on the well-known neoliberal
prescription adopted throughout Latin America during the
1980s and 1990s, with <a
href="https://www.researchgate.net/publication/5172959_The_Washington_consensus_A_Latin_American_perspective_fifteen_years_later">dubious
results</a>.</p>
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