This is neither a conspiracy theory nor an intuitive analysis but a piece of intelligence: Maduro needed cash to service PDVSA debt -due next Wednesday- and Moscow wanted to help him out by investing in PetroPiar (PDVSA) but was unsure about the “legal mechanism” to protect this investment at the domestic level.
Before getting into detail, let me first talk about how this works. Russia and China, countries with very aggressive extractive policies, have been shaping Venezuela’s legal framework since the beginning of the “revolution”. It first started with mid-ranking officials, organizing investment rounds and signing agreements on behalf of Venezuelan “interests”.
As soon as debts and new investments got bigger, Russia and China required the intervention of high-ranking officials. Rafael Ramirez was the most prominent of these guys, during his tenure in PDVSA and the Ministry of Petroleum & Mining.
At some point, Venezuela’s rulers were asking so much money and so often, that the eastern hegemons would only move forward as long as the president himself was directly involved in the negotiations. For those who did not know why Maduro travels around and then comes back to Caracas talking about loans and multibillion-dollar projects, this is the main reason.
There is also the unoficial side of this process, involving bolichicos and boliburgeses. For example, sometimes the government would appoint an enchufado as the unoficial representative in a business or guisness (corrupt transactions). The enchufado would offer presidential decrees or laws comprising every condition and prerogative investors wished to be included to undertake the transaction -for those interested in this specific topic, check out some decrees and other acts related to “Gran Misión Vivienda Venezuela”.
That changed dramatically after december 6, 2015, when they lost their grip on Congress. Now, the ruling elite has to compromise with the opposition whenever they need congressional approval on relevant matters, including foreign debt and certain joint-ventures. At this moment, such idea (common in a democracy) is unthinkable for the dictator and his bad hombres.
The thing is that the Russians know this very well and, therefore, were not satisfied with a presidential decree to seal the deal of PetroPiar. As result, Miraflores came with a solution, the Supreme Court would render a decision establishing that the legality of oil & gas joint-ventures did not require congressional approval but the Supreme Court’s endorsement. Moscow accepted the proposal.
What went wrong? Russia only wanted a formal document against the potential denunciation of the PetroPiar transaction by the Venezuelan Congress. Instead, the government crossed the line by using the Supreme Court to dissolve Congress in what was later considered as an Auto-Coup.
The Russian negotiators tried to make some money and help Maduro with a lifesaver but their condition became an anchor. Here is the the issue: the moment when the government has nothing to offer but poor guarantees for Russian investments is approaching. Will Russia (this also affects China) stop pouring money into Maduro’s hands, let his regime die and give away its stake in Venezuela?
Russia’s damage control, after this huge mistake, will be important to monitor in coming weeks.