A couple more notes on that CITIC-Petropiar privatization deal I wrote about in Foreign Policy.
1. I find it jaw-droppingly bizarre that at this point the only two Spanish language publications to have picked up the story are…PanfletoNegro and El Chigüire Bipolar. Seriously, how easy is it to pull the wool over Venezuelan journalists eyes? Just by burying the deal in a pile of other sino-venezuelan deals, the government managed to get the entire journalistic profession to simply miss it. Really.
2. It’s still hard to say what pushed PDVSA to make such a strange decision. The most encouraging interpretation is that they got mugged by reality. After years of pushing for investment deals with foreign majors on terms that no sane counterpart could accept, PDVSA is finally waking up to the simple mathematical fact that nobody is going to lend them the 240 billion bucks they need to develop the Faja del Orinoco. They need private capital in the mix if they’re ever going to come close to the massive figures needed in the Faja.
What’s remarkable about that is precisely that PDVSA is allowing itself to be mugged by reality rather than going for the tried-and-true ostrich-strategy.
Because the Venezuelan government’s usual reaction to overwhelming evidence that its preferred approach to a given problem is not working is simple stonewalling and denial. They approve a new apartment rental law that sees literally the entire legal rental market disappear overnight? Hell if they’re going to acknowledge it! They adopt an “inflation anchor” that leaves them with the world’s higher inflation? Psssssh, not if they know it. Their attempts at battling “hoarding” leads to deepening shortages? Maybe, but they’ll never admit it.
The really remarkable thing about Petropiar is that they seem to be siding with an actual solution over simple mindless denial. That never happens…