Chavez Needed a Bailout – So He Made One Up!

James M. Roberts / April 21, 2010

Last weekend President Hugo Chavez announced with great fanfare that Venezuela’s state-owned oil company, Petroleos de Venezuela SA (PDVSA), had signed an agreement with China National Petroleum Corporation (CNPC) to develop part of the Orinoco heavy crude area for which they had given Venezuela a $20 billion loan.

As usual with Venezuela and China, there is far less here than meets the eye.  After clearing away all of Chavez’s bombast, the true picture emerges:  China Development Bank is said to have agreed to come up with the money, but a bank official indicated there was no information available on the project.  A genuine agreement to exchange oil for loans must include a schedule of the proposed transfer of funds and return oil shipments, plus a volume of oil shipments which implicitly constitutes a price. Not only is that information not publicly available, it apparently is not available to the bank that is obligated to lend the $20 billion.

Nevertheless, U.S. and global media dutifully (and uncritically) reported Chavez’s announcement of the $20 billion loan from the People’s Republic of China.  Also reported were Chavez’s dubious claims that China had previously provided a murky $12 billion “bilateral investment fund” to Venezuela as well as an earlier $8 billion loan to build infrastructure. (more…)