Chapter 129: That Time I Fought a Diplomatic War in South America (4)

TL: Skye

In fact, the strategy of advising Venezuela to declare a moratorium came straight out of my own head.

Here was the situation.

After hauling Maduro away, the United States found itself with a headache when Venezuela refused to go according to plan.

They had expected that removing the dictator would naturally bring a pro-American government to power, but reality turned out differently.

His successor, Telsy Rodriguez, came from Maduro's faction, and the fact that their own president had been dragged away only intensified anti-American sentiment among Venezuela's upper echelons.

American oil majors were moving into Venezuela, but frankly, there was no guarantee the country wouldn't pull another Chavez, so Washington chose San Marcos to serve as a buffer.

For our part, San Marcos needed to bring Venezuela over to our side.

Because China was using Venezuela to put pressure on San Marcos.

The surest defense is to take the enemy's weapon away and make it mine, isn't it?

In other words, the needs of both sides lined up perfectly.

Better yet, if everything went well, we could uproot Chinese influence in Venezuela entirely. There was no reason not to do it.

When I explained the plan to Drump over the hotline, he was so delighted he nearly dropped the phone.

Which meant I had to make him promise, repeatedly, not to post anything about it on social media.

Anyway, the core of the strategy was simple.

Venezuela would declare a moratorium and use San Marcos as its gateway into the Blue Team.

Above all, Venezuela had priors.

Back in 2007, Chavez had invoked 21st Century Socialism and seized foreign-owned assets wholesale.

This was the country that had nationalized the assets of American oil companies ExxonMobil and ConocoPhillips overnight.

A country that had already played the "Go ahead, gut me" card once was threatening to do it again. What could anyone do about that?

And with coaching from San Marcos, a veteran of the "Go ahead, gut me" school that had gone fifty years without repaying $300 million, Venezuela would be practically invincible.

Of course, we weren't lending them our name for free.

There was a price.

Every barrel of crude extracted in Venezuela by the American oil majors would be refined by Tortilla Refining.

Venezuela had roughly 300 billion barrels of proven reserves, the largest oil reserves in the world.

‘The crude's lousy, but nobody can touch the volume.’

That only made it better.

The worse the crude, the higher the refining fees.

Refining margins alone would bring in several billion dollars a year.

Considering the size of those reserves, Tortilla Energy had just secured a century's worth of business in one stroke.

‘Not bad compensation for playing figurehead.’

This was why practical gain mattered in diplomacy.

Telsy's answer came a week later.

“Have you been well?”

Telsy's voice over the hotline sounded calmer than it had a week ago.

How should I put it? There was a kind of steel in it, the firmness of someone who had finally made up her mind.

“It sounds like you've reached a decision.”

“Yes.”

After a brief silence, Telsy spoke slowly.

“I'll declare the moratorium, as you suggested.”

A declaration worth tens of billions of dollars.

“However, I have conditions.”

“Go ahead.”

“Food aid must begin on the same day the moratorium is announced. The public will panic when they hear the news. We need to show them that food is already coming in before that happens.”

“It's already prepared.”

That was true. The moment my previous call with Telsy ended, I'd instructed Isabella to have the food transport fleet standing by.

‘This is the sort of thing that has to be prepared in advance.’

“And please take in the refugees gradually. If a million people leave all at once, it will only create more chaos.”

“Of course. We'll take them in gradually over the course of a year.”

“Thank you.”

Telsy's voice trembled slightly. It sounded like the tremor of someone who had just made a decision with her country's fate riding on it.

“You've made a courageous decision. History will remember it as the decision that saved your country.”

“...It wasn't courage. I simply had no other choice.”

I could almost hear the bitter smile through the phone.

Well, she wasn't wrong.

‘Historically speaking, the Blue Team does offer more benefits than the Red Team.’

China used its $60 billion in loans as leverage to take Venezuela's resources on the cheap, while we not only paid a fair price, we even provided food aid.

“I hope I can count on you from here on.”

Her voice carried a hint of desperation, and I answered with confidence.

“They say there is no loyalty between nations in diplomacy, but promises do exist. And San Marcos and I will keep the promise we made to you, Acting President, no matter what happens.”

“...Thank you.”

And with that, the call ended.

I put down the receiver and looked at Isabella.

“It's done.”

Isabella's eyes widened.

“Send out the food transport fleet. And contact the United States and tell them we're moving ahead with Venezuela.”

“I'll take care of it immediately.”

*

Three days later.

The world's news cycle was turned upside down.

[Breaking] Venezuela Declares Sovereign Default — $150 Billion in Foreign Debt Placed Under Moratorium

[Breaking] President Telsy Rodriguez: Venezuela Can No Longer Honor Unfair Debts

[Breaking] Venezuela's Acting President Telsy: China Was an Exploiter

[Breaking] Venezuela Signs Comprehensive Economic Alliance with San Marcos!

International news erupted.

Telsy's address to the nation faithfully followed the scenario Yu-jin had proposed.

“For decades, Venezuela believed China and Russia were our allies. But all they did was take our resources at bargain prices while leaving us deeper in debt. When we were at our most desperate, they were not the ones who extended a helping hand.”

Telsy stared into the camera.

“The country that extended the hand of a true friend to us was San Marcos, across the Caribbean.”

The screen changed. Footage appeared of the food transport fleet departing from Libertad Harbor.

“President Yu-jin Choi of San Marcos accepted nearly 180,000 of our unemployed citizens, allowing us to overcome our immediate crisis. Even before today's moratorium declaration, he had already prepared food for our people, and he has also promised to take in one million refugees. China, however, did nothing. Therefore, this government will repudiate the loans owed to China and establish comprehensive economic cooperation with San Marcos.”

The Venezuelan public was divided.

Some people were frightened by the very word moratorium.

“Doesn't a moratorium mean we're bankrupt?”

“The country... has gone under?”

“Things are already bad enough. What's going to happen now...”

Others, meanwhile, took it in stride.

“It's not like things can get any worse, right?”

“Exactly. Reality's already hell. What's supposed to change?”

“I don't care. I just want to eat until I'm full.”

But before long, those reactions converged into one. No, they had no choice but to.

“They say the government's handing out food for free!”

“Why? How?”

“I heard San Marcos sent aid?”

As word spread, relief began to spread faster than fear of bankruptcy.

Of course it did.

To starving people, food mattered more than ideology.

And Telsy didn't stop there.

Two days after declaring the moratorium, the Venezuelan government went one step further.

[Venezuelan Government Announces Complete Freeze on Chinese Capital Within the Country!]

[Assets of Chinese State-Owned CNPC and Sinopec's Venezuelan Branches Seized!]

[Acting President Telsy: “Assets Accumulated Through Unfair Deals Belong to the People”]

The international community was stunned.

The moratorium alone had been radical enough, yet Venezuela had now frozen Chinese assets inside the country as well.

CNPC and Sinopec were China's largest state-owned oil companies, with billions of dollars' worth of assets in Venezuela, including refining facilities, crude oil drilling equipment, and transportation infrastructure.

And Telsy froze all of it.

Nor did it stop at freezing the assets.

News soon emerged that the Venezuelan National Asset Management Committee was considering the nationalization of Chinese corporate assets.

It was the exact same playbook Chavez had used to nationalize the assets of ExxonMobil and ConocoPhillips in 2007.

The only difference was that America had been on the receiving end back then, while this time, it was China.

Telsy's logic was simple.

“Chinese companies took Venezuelan crude for less than half the international market price. In other words, these were not fair transactions, but exploitation. Assets accumulated through exploitation cannot constitute legitimate ownership. Therefore, the government will reclaim these assets for the Venezuelan people.”

Legally speaking, the argument was full of holes.

Under international law, unilaterally freezing and seizing the assets of foreign companies violated investment protection agreements, and Venezuela was highly likely to lose before the International Arbitration Court.

But Telsy was hardly in a position to care about that.

What reason did a country that had already declared a moratorium have to worry about international law in the first place?

Venezuela had already been shut out of international financial markets. It had nothing left to lose.

In fact, the reason for taking such an extreme approach was simple.

Consider it from China's perspective.

Its $60 billion in Venezuelan debt had already been thrown into jeopardy by the moratorium, and now the assets of Chinese companies were being seized as well.

What options did China have left?

A military response? With the United States watching like a hawk, China couldn't exactly send in a fleet.

More economic sanctions? What good would more sanctions do against a country that was already bankrupt?

International arbitration? Sure. But Venezuela had already gone all-in on "Go ahead, gut me". The odds were high that it would simply ignore the ruling.

In the end, negotiation was the only option left.

And when a debtor nation takes an extreme position at the negotiating table, the creditor ends up at a disadvantage.

After all, borrow a little money and the creditor holds the upper hand. Borrow a fortune and the debtor does.

This, too, was a strategy San Marcos had coached them on, as a veteran of moratoriums that had once whittled Russian debt down to one-eighth of its original value.

Go to extremes.

Make it ugly.

Freeze Chinese assets, and if necessary, nationalize them.

Then wait.

China would eventually have no choice but to come to the negotiating table, and once negotiations began, Venezuela could get a huge portion of its debt written off.

It would be difficult to have the entire $60 billion forgiven, but wiping out more than half was entirely possible.

If the remainder could then be converted into long-term installments spread over several decades, the burden would effectively disappear.

In other words, the debtor's ultimate weapon.

And the moratorium wasn't the only strategy Yu-jin had coached Telsy on.

“Once the moratorium is declared, there's a high chance public security will collapse and the chaos will spiral out of control. There's also no telling what Chinese spies might try to do while taking advantage of the confusion.”

“...Is there a way?”

“There is.”

“What is it?!”

“Declare martial law.”

“......”

Yu-jin had also coached her on the best way to bring Venezuela's internal chaos under control in one stroke.

And Telsy...

[Effective midnight tonight, martial law is hereby declared. Anyone who disrupts public order will be arrested immediately, and all foreigners must obtain a residence permit without delay. Any foreign national found remaining in the country without a residence permit will be deported immediately. However, as the primary purpose of this martial law is to secure public order, the legislature will continue to operate normally, and the press will not be shut down...]

trusted him completely.

*****

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