Venezuelan politicians and protesters opposed to socialist dictator Nicolás Maduro blasted Goldman Sachs for buying $2.8 billion in Venezuelan bonds, a deal the financial giant confirmed on Monday. The bonds were sold at 31 cents on the dollar.
Reuters reports that Goldman Sachs insists it did not deal directly with the Maduro regime, instead purchasing the bonds “on the secondary market from a broker.”
However the purchase was made, opposition leaders say it poured hundreds of millions of dollars in hard currency into the collapsing socialist government, propping it up and making Goldman Sachs Group complicit in further human rights abuses.
“By giving $900 million to a dictatorship, they are funding a systematic human rights violator, they are funding immorality and for Maduro to stay in power while he keeps killing people,” Venezuelan student Eduardo Lugo charged at a protest outside the Goldman Sachs headquarters in New York City.
One Venezuelan politician accused Goldman of trying to “put lipstick on a pig” with its defensive statement. Others asked the U.S. Congress to investigate the “immoral, opaque, and hypocritical” deal.
The hypocrisy charge stems from a socialist government making a big-money deal with a veritable avatar of Wall Street capitalism. As Tim Worstall sneered at Forbes, “No doubt this is what both Nicolás Maduro and Hugo Chávez have meant all these years by Bolivarian socialism freeing the people from Yanqui Imperialism.”
Worstall adds charges of breathtaking cynicism to the hypocrisy, noting that Goldman Sachs is essentially gambling that Maduro’s government will fall and be replaced by more responsible leadership, which will find itself under pressure to divert money from post-socialist reconstruction to pay off Goldman Sachs.
He disagrees with analysts who think Goldman is foolish to believe the Venezuelan economy can recover from Maduro and his late mentor Hugo Chávez, noting that however dire it looks right now, Venezuela is still floating on a vast sea of oil.
The bonds were actually issued by the national oil company, PDVSA. The New York Times notes that PDVSA accounts for almost 95 percent of the Venezuelan economy’s dollars and the bonds Goldman bought at a 70 percent discount have a 20 percent return.
Bloomberg Markets speculates that Goldman’s bond buy will become public-relations fuel for the Venezuelan “Hunger Bonds” movement, which has thus far enjoyed limited success at persuading international investors to boycott the Maduro regime.
If nothing else, the Hunger Bonds term – a reference to the popular dystopian book and movie series The Hunger Games – appears to have gained considerable momentum in online discussions. The progenitor of the movement, Venezuelan businessman Jorge Botti, explains that he did not just choose the name as an allusion to the fictional struggle of a young dissident to bring down a totalitarian government, but because the literal hunger of starving Venezuelans is enabling socialist apparatchiks and their business partners to amass fortunes.
It will not be difficult for the Hunger Bonds movement to argue that Maduro is robbing the future of Venezuela to keep his disgusting regime running for a little while longer, by selling bonds at such a steep discount for a quick cash infusion. There is speculation that he already mortgaged much of the country’s future to China with an even bigger bond deal to secure billions of dollars in loans.
“It is apparent Goldman Sachs decided to make a quick buck off the suffering of the Venezuelan people,” said Venezuelan congressional leader Julio Borges. His legislative body is now controlled by the political opposition, so Maduro illegally circumvented them to seal the bond deal. The grimly predictable punch line will come when Maduro finally flees his palace, and much of that Goldman Sachs money leaves the country with him, stuffed in the pockets of hastily-departing “socialist visionaries.”