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China Trying to Keep Its Venezuelan Pound of Flesh
Venezuela's President Nicolas Maduro (R) with Chinese President Xi Jinping (L) at the Great Hall of the People on January 7, 2015 in Beijing, China. (Andy Wong-Pool/Getty Imgaes)

China Trying to Keep Its Venezuelan Pound of Flesh

Walter Russell Mead

China helped make Venezuela one of the unhappiest places in the world, aiding and abetting a suicidal government bent on wrecking the oil industry and destroying the country’s chances for peace and prosperity. Now that food has vanished from the grocery stores, violence stalks the streets, and the ruling ‘party’ is collapsing into an ugly nest of armed factions, China suddenly has a new worry: it lent billions of dollars to enable Venezuela’s despoilers. When they fall, will their successors honor China’s debts? The FT has more:

China is renegotiating billions of dollars of loans to Venezuela and has met with the country’s political opposition, marking a shift in its approach to a nation it once viewed as a US counterweight in the Americas. […]

Beijing has also sent unofficial envoys to hold talks with Venezuela’s opposition, in the hope that if President Nicolás Maduro falls his successors will honour Chinese debts, sources on both sides of the negotiations told the Financial Times. Its recognition of Mr Maduro’s fragile position and the rising clout of the opposition, led by Henrique Capriles, is another sign that the diplomatic noose is tightening around Caracas’s socialist government.

“One fact we shouldn’t overlook is that Venezuela really doesn’t have the money,” said Guo Jie, a Latin America expert at Peking University. “I think there will be a rational solution for both parties, be it loan repayment extension or a loan restructuring.”

Venezuela is only one of the places where China’s lenders have held their noses and lent money to or bought concessions from some of the worst governments in the world. This strategy worked pretty well for a while, but the costs are mounting. Many of the debtors have bad credit and bad business plans so they can’t repay what they borrow (or they just choose not to). Moreover, concessions to Beijing made by a corrupt and hated regime will often be repudiated by angry nationalists when regime change comes. China is getting an ugly reputation both for extending loans to bad actors and then trying to claw them back from the people the dictators robbed and oppressed. That image won’t help Beijing’s cause.

Europe and the United States did many of these terrible things during and after colonialism, but over time, the West learned painful lessons. We still have far to go, and as we saw seen during the Cold War—and again during the War on Terror—sometimes you don’t have as much choice as you wish you did. However, the West has been cleaning up its act for some time now, not so much out of superior virtue as from bitter experience.

As Chinese representatives meet with the Venezuelan opposition, trying to salvage a little honor and a little money from a very ugly policy, Beijing will start working its way up the learning curve. It takes more than money and ambition to be a successful global player.

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