[LINK] "Venezuela Expanding Military Influence Over Oil and Mining"

[rfmcdonald]

None of this, described by Bloomberg's Nathan Crooks is good, not the feared collapse of PDVSA and certainly not the establishment of the Venezuelan military as intimately involved in the country's economic life.

Venezuela President Nicolas Maduro moved to increase the military’s involvement in the country’s oil and mining industries with the creation of a new state company that will report to the Defense Ministry.

The military company was authorized to participate in a range of oil services and mining activities including the maintenance of wells and drilling rigs, transport and the commercialization of chemicals, according the official gazette dated Feb. 10 and distributed Friday. It didn’t specify how it would work with state driller Petroleos de Venezuela SA. The Oil Ministry declined to comment.

The decree fueled speculation that the armed forces are increasing their activity in the economy as Maduro battles an opposition-controlled Congress and the oil-dependent country heads closer to defaulting on its foreign debt amid near 12-year-low crude prices. Venezuela’s benchmark dollar bond fell to a record low on Friday, even as oil surged the most in three weeks.

“In 2016, one of the scenarios we’re expecting is the increased militarization of the country,” Rocio San Miguel, director of Caracas-based, non-profit security researcher Citizens’ Control said. “It’s a means to satisfy the military sector. Without doubt, it’s a gesture of loyalty to the revolution.”

[. . .]

“I think that they are setting up a vehicle in case they have to strip PDVSA of its assets in a default or bankruptcy,” he said in an e-mailed response to questions. “The state can take away the rights to the oil, gas and resources of PDVSA at any time, leaving it largely worthless to creditors and protecting Venezuela’s ongoing cash generation from oil sales from PDVSA creditors.”