Caracas exploring Chinese, Russian payment systems

: Crude oil, Oil products
19/07/17

Venezuela's government is holding talks with Russian and Chinese central banks on adopting alternative financial services systems that would facilitate evasion of US sanctions aimed at removing Venezuelan president Nicolas Maduro.

Caracas is currently hampered from carrying out international financial transactions because they are routed through Belgium-based financial services provider Swift, which is the standard global system.

The sanctions have dealt a sharp blow to Venezuela's national oil company PdV as it struggles to buy and sell oil and equipment.

The US started levying financial sanctions on Venezuela in August 2017, and since then Washington has gradually tightened them. In April 2019, the US sanctioned Venezuela's central bank, a move that took full effect for US banks on 17 May. In late January 2019, the US also imposed oil sanctions on PdV.

According to Venezuelan government officials, the central bank parties are currently discussing the advantages of adopting China's CIPS and Russia's SPFS systems as potential alternatives to Swift.

The discussions seek "to neutralize the impact of US financial sanctions that are hindering PdV's ability to export and import oil, and conduct financial transactions including collecting and paying debts, and transferring funds internationally without fear of seizure by the US government," a presidential palace official told Argus.

CIPS and SPFS are designed to operate autonomously without the need for US corresponding banks or pass-through accounts. The more established CIPS system was set up in 2015 to facilitate Chinese banking activities abroad and promote the rise of the yuan. The less advanced Russian system works mostly within Russia.

The two alternative payment systems are seen as immune to US government pressures aimed at forcing US and non-US banks to stop doing business with Venezuela and other sanctioned countries, including Iran and Russia, a central bank official in Caracas said.

If the US expands sanctions, Venezuela will "probably will quickly adopt both the SPFS and CIPS payments systems because most of PdV's oil exports and imports are now with Russian and Chinese clients and suppliers," the palace official said.

Venezuela's effort to bypass the western banking system is likely to face the same obstacles as did Iran, a fellow sanctioned Opec member that has tried and failed to establish steady and reliable alternative channels for financial transactions, which are mostly carried out in US dollars.

Government in exile

The central bank talks are taking place as Venezuela's US opposition sets up a parallel central bank board in exile in anticipation of eventually taking power in Caracas. Juan Guaido, the National Assembly speaker whom the US and over 50 other countries recognize as interim president, is campaigning for Maduro to step down and make way for a transition government. Maduro, who is supported by Russia, China, Turkey and Cuba, has refused to leave so far. Negotiations brokered by Norway in Barbados this week have not broken the impasse, although a tentative deal to hold elections in nine months is on the table.

The new five-member ad hoc central bank board of directors appointed by Guaido includes economist and former central bank president Ruth de Krivoy, current Harvard University research fellow Ricardo Villasmil, veteran private banking executive Manuel Rodríguez, and former central bank managers Nelson Lugo and Guaicoima Cuius.

The parallel board has been tasked with administrating Venezuelan international assets, mainly PdV's US refining subsidiary Citgo, which is already managed by a parallel board appointed by Guaido. The new bank board will also advise Guaido's ad hoc solicitor general Jose Ignacio Hernandez in preparing to restructure more than $150bn of foreign debt owed by the Venezuelan government and PdV.

Local Russian and Chinese diplomatic officials confirmed official contacts between their respective central banks and Venezuela's central bank, but declined to comment on any discussions.

The US administration prevailed on Swift last year to stop providing services to the Iranian central bank and private banks in Iran that were placed on the US sanctions list. Iran is working with the EU to develop an alternative financial intermediary system.

Washington has vowed to block attempts by Iran and other countries to find ways to bypass the effect of US financial sanctions, except for trade in food and medicine. There is no such exception for Venezuela so far.

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24/11/20

Denmark tops 'climate change performance index'

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Cop: Countries join fossil fuel subsidy phase-out group

24/11/19

Cop: Countries join fossil fuel subsidy phase-out group

Baku, 19 November (Argus) — Colombia, New Zealand and the UK today joined a Netherlands-led international coalition focused on phasing out incentives and subsidies for fossil fuels. They made the announcement at the UN Cop 29 climate summit in Baku, Azerbaijan. The coalition was first formed at Cop 28 in December last year. Member countries that sign up to the coalition commit to publish an inventory of their fossil fuel subsidies a year after joining, and to develop a plan to phase them out. Countries agreed at Cop 26, in 2021, to phase out inefficient fossil fuel subsidies, and reaffirmed this a year later at Cop 27. G20 members first pledged in 2009 to do the same. But global fossil fuel consumption subsidies hit over $1.2 trillion in 2022 and more than $600bn in 2023, IEA data show. "We truly feel that this is something we should tackle at a European level as well", EU energy commissioner Wopke Hoekstra said today. "This is something the next Commission will push; this is something I will personally push", he added. New Dutch climate and green growth minister Sophie Hermans admitted that phasing out fossil fuel subsidies is a "sensitive topic", but that the country is working on a plan. The first step is to make transparent which fossil fuels subsidies are in countries' systems, she said. The coalition now has 16 members — Austria, Antigua and Barbuda, Belgium, Canada, Costa Rica, Denmark, Finland, France, Ireland, Luxembourg, the Netherlands, Spain and Switzerland, as well as the three countries that joined today. Four members have made their national inventory of fossil fuel subsidies transparent — Belgium, France, Ireland and the Netherlands. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

G20 mayors call for $800bn/yr to address climate change

24/11/19

G20 mayors call for $800bn/yr to address climate change

Rio de Janeiro, 19 November (Argus) — Mayors from G20 countries are asking for at least $800bn/yr in investments by 2030 to tackle the effects of climate change. "We need better and faster access to international financing to ensure infrastructure that supports the socioeconomic security of our communities," Rio de Janeiro's mayor Eduardo Paes said. The joint statement from nearly 60 mayors and urban leaders was drafted during the Urban20, a G20 forum that includes leaders from major cities worldwide, and was delivered to Brazilian president Luiz Inacio Lula da Silva. The statement will also be delivered to other G20 members during the ongoing G20 summit in Rio de Janeiro. Climate change is one of the main topics being debated at the G20 summit. Brazil, which holds the G20 presidency this year, has set the energy transition as one of its goals for the year. The group reaffirmed its support for the Paris Agreement climate goals , saying it "fully subscribes" to the Cop 28 deal struck last year, which included language on transitioning away from fossil fuels. Urban investments such as low-emission transport, clean energy, and climate-resilient infrastructure can "significantly reduce emissions" and boost economic growth, according to the statement. The funding could unlock around $23.9 trillion in returns by 2050, it said. The $800bn/yr would cover around 20pc of urban climate finance needs and "serve as a catalyst for additional private sector funding," according to the Global Covenant of Mayors for Climate and Energy, a non-government organization for climate leadership that comprises over 13,000 cities worldwide. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Progress on actions to cut emissions uncertain

24/11/18

Cop: Progress on actions to cut emissions uncertain

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Cop: G20 momentum key to Cop climate finance outcome

24/11/18

Cop: G20 momentum key to Cop climate finance outcome

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