Venezuela’s Sovereign Debt Restructuring: The Elephant in the Room

Abstract

Dealing with Venezuela’s sovereign debt crisis is very different than it was during the 1980s and 1990s. The problem is much larger than oil prices; the entire economy has collapsed, including PDVSA. But beyond oil, there is politics. The government in Venezuela is an internationally sanctioned kleptocracy, ruling a country in grave social and humanitarian crisis, despite its possession of abundant natural resources, and regime change is not at all certain. Therefore, there are legal as well as reputational hazards, and moral and ethical considerations in Venezuela’s debt crisis. This article analyzes possible political scenarios, including the prospect of a transitional scenario within the current regime, for their impact on all forms of sovereign debt restructuring.