Venezuela just defaulted, moving deeper into crisis

 

The South American country defaulted on its debt, according to a statement issued Monday night by S&P Global Ratings. The agency said the 30-day grace period had expired for a payment that was due in October.

A debt default risks setting off a dangerous series of events that could exacerbate Venezuela’s food and medical shortages.

If enough holders of a particular bond demand full and immediate repayment, it can prompt investors across all Venezuelan bonds to demand the same thing. Since Venezuela doesn’t have the money to pay all its bondholders right now, investors would then be entitled to seize the country’s assets — primarily barrels of oil — outside its borders.

Venezuela has no other meaningful income other than the oil it sells abroad. The government, meanwhile, has failed for years to ship in enough food and medicine for its citizens. As a result, Venezuelans are waiting hours in line to buy food and dying in hospitals that lack basic resources.

If investors seize the country’s oil shipments, the food and medical shortages would worsen quickly.

“Then it’s pandemonium,” says Fernando Freijedo, an analyst at the Economist Intelligence Unit, a research firm. “The humanitarian crisis is already pretty dire … it boggles the mind what could happen next.”

It’s not immediately clear what steps bondholders will take. Argentina went through a vaguely similar default, and its bondholders battled with the government for about 15 years until settling in 2016. Every case is different, though.

Related: Venezuela admits it can’t pay all its debts anymore

Venezuela and its state-run oil company, PDVSA, owe more than $60 billion just to bondholders. In total, the country owes far more: $196 billion, according to a paper published by the Harvard Law Roundtable and authored by lawyers Mark Walker and Richard Cooper.

Beyond bond payments, Venezuela owes money to China, Russia, oil service providers, U.S. airlines and many other entities. The nation’s central bank only has $9.6 billion in reserves because it has slowly drained its bank account over the years to make payments.

The S&P default announcement Monday came after Venezuelan government officials met with bondholders in Caracas. The meeting was reportedly brief and offered no clarity on how the government plans to restructure its debt.

The Venezuelan government blames its debt woes — and inability to pay — on a longstanding “economic war” waged by the U.S. More recently, the Trump administration slapped financial sanctions on Venezuela and PDVSA, barring banks in the U.S. from trading or investing in any newly issued Venezuelan debt.

But experts say the socialist Venezuelan regime that has been in power since 1999 bears the brunt of the blame. It fixed — or froze — prices on everything from a cup of coffee to a tank of gas in an effort to make goods more affordable for the masses. For years, Venezuelan leaders also fixed the exchange rate for their currency, the bolivar.

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Myanmar’s Aung San Suu Kyi to Miss UN General Assembly Debate

Myanmar’s de facto leader Aung San Suu Kyi is to miss a key UN debate next week as criticism grows of her handling of a crisis involving the Rohingya Muslim minority.

Some 370,000 Rohingyas have fled to Bangladesh since violence began last month. Whole villages have burned down.

The UN has accused the government of ethnic cleansing.

Myanmar’s military says it is fighting Rohingya militants and denies reports that it is targeting civilians.

The Rohingya, a mostly Muslim minority in Buddhist-majority Rakhine, have long experienced persecution in Myanmar, which says they are illegal immigrants. They have lived in Myanmar, also known as Burma, for generations but are denied citizenship.

The UN Security Council is due to meet on Wednesday to discuss the crisis.

The organisation’s refugee agency says not enough aid is getting through to the Rohingya who have fled to Bangladesh.

On visiting a camp, the UNHCR’s George William Okoth-Obbo said there needed to be a massive increase in help.

Has Aung San Suu Kyi changed her mind?

Ms Suu Kyi had been expected to participate in discussions at the General Assembly session in New York, which runs from 19 to 25 September.

A government spokesman, Aung Shin, told Reuters news agency that “perhaps” Ms Suu Kyi has “more pressing matters to deal with”, adding: “She’s never afraid of facing criticism or confronting problems.”

Another spokesman said Ms Suu Kyi would instead address the nation on TV on 19 September and “speak for national reconciliation and peace”.

In her first address to the General Assembly as national leader in September last year, the former opposition icon defended her government’s efforts to resolve the crisis over the treatment of the Rohingya.

The Nobel Peace Prize winner, who lived under house arrest for 15 years for her pro-democracy activism, is widely seen as the head of government in Myanmar.

Read entire article at http://www.bbc.com/news/world-asia-41250057

Picture from Reuters

Aung San Suu Kyi addressed the UN General Assembly last year

 

Rohingya Refugees Fleeing Myanmar Near 40,000

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Scores of people are reported to have died since Rohingya militants attacked police posts on 25 August.

Subsequent clashes have sent civilians from all communities fleeing.

Many Rohingya are trying to cross the Naf river to reach Bangladesh. On Friday, 16 more bodies were found washed up on the shore.

Their discovery brings the number of people believed to have died in capsized boats to about 40.

Mainuddin Khan, police chief of the Teknaf border town, told AFP news agency that the group included a young girl, and said they “had been floating in the river for a while”.

On Thursday the UN Special Rapporteur on human rights in Myanmar, Yanghee Lee, said the “worsening cycle of violence” in Rakhine was of “grave concern and must be broken urgently”.

‘All space occupied’

UN officials in Bangladesh say 38,000 people have now crossed the border, while cautioning that the figure is an estimate.

“We are seeing lots of makeshifts tents and shelters on the side of the road – every available space is being occupied,” UNHCR regional spokeswoman Vivian Tan told the BBC.

Ms Tan said they had heard tales of people being shot as they tried to cross the border, but that it was not clear who was firing.

Thousands more people are waiting to cross the border, reports say. Ms Tan said border controls appeared to vary from place to place.

Rohingya refugees in Bangladesh