The International Monetary Fund (IMF) dismissed a request from Venezuela for a $5bn emergency loan to combat the spread of the coronavirus, but China may be preparing to step in to help.
The IMF says it cannot consider Venezuela's request for aid because there is "no clarity" on recognition of Venezuela's government among its members.
Venezuela's foreign ministry under President Nicolas Maduro petitioned the IMF for the emergency loan in a 15 March letter.
Most Western countries do not recognize Maduro as Venezuela's legitimate president. Escalating US oil and financial sanctions on Venezuela are aimed at forcing out Maduro in favor of Juan Guaido, the speaker of the opposition-controlled National Assembly who enjoys Western recognition as interim president. But his skeleton administration is mostly in exile, and Maduro maintains control on the ground.
The IMF loan request was widely seen as a non-starter anyway because Venezuela has not provided credible data to the Washington-based organization in many years.
Venezuela is especially vulnerable to widespread contagion. The official caseload of 36 is a dire underestimate, health experts say.
Although US sanctions do not preclude the purchase and supply of humanitarian aid, they have accelerated the decline of the Opec country's national oil industry. Venezuela's international cash reserves have dwindled to only around $1bn, so it cannot pay for medical supplies and equipment, a central bank official says.
China and Russia, the Maduro government's main international patrons, have rejected aid requests, a presidential palace official tells Argus. But a Chinese diplomat in Caracas left the door open for a lifeline. "More financial aid is not possible for now, but this could change going forward depending on how the crisis evolves," the official said.
As the virus has waned in China, Beijing is stepping up overseas assistance, with experts dispatched to US-sanctioned Iran, Iraq and Italy. On 11 March, China's foreign ministry said the government would "send medical specialists to more countries and regions in need."
Two days later, China's foreign ministry urged the US to immediately lift sanctions on Venezuela. "At this critical juncture where all governments and people across the world are fighting the pandemic, the US is still stubborn in sanctioning Venezuela, showing not the least respect for humanitarianism."
Oil-backed debt
China has some $16bn in outstanding oil-backed loans to Venezuela. Since mid-2019, Chinese state-owned oil companies stopped directly lifting Venezuelan crude, but independent refiners in Shandong province have picked up Venezuelan feedstock through other suppliers, including Russian state-controlled Rosneft's trading arm that is now subject to US sanctions as well. Another Rosneft unit, TNK, also came under US sanctions earlier this month. China's state-owned CNPC remains a key partner of its Venezuelan counterpart PdV, effectively running the PetroSinovensa heavy crude blending joint venture at PdV's Jose complex.
The White House is showing no sign of easing its sanctions policy, instead supporting Guaido's latest uphill effort to independently channel in urgently needed aid.
Despite its commitment to the sanctions, the US administration's overwhelming focus is the rapid spread of the deadly virus at home. The USNS Comfort, a hospital ship that last docked off Colombia to help Venezuelan refugees last year, is now expected to deploy off New York City harbor. The state of New York has more recorded cases than all of Latin America, according to official data.
Inside Venezuela and at the lawless border with Colombia, desperation is rising as the government cracks down on anyone outdoors who is not wearing a mask, even though masks are scarce. Rioting and looting broke out on the Colombian side of the northern border overnight. Two food trucks allegedly bound for Venezuela were looted.
Colombia last week closed seven border crossings with Venezuela, but a myriad of informal routes are nearly impossible to plug.
Brazil has now also closed its border with Venezuela.
