{
  "id": "R45072",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R45072",
  "active": true,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 585203,
      "date": "2018-01-10",
      "retrieved": "2018-10-24T13:13:31.516132",
      "title": "Venezuela\u2019s Economic Crisis: Issues for Congress",
      "summary": "Venezuela\u2019s Economic Crisis: Overview\nVenezuela is facing a political crisis under the authoritarian rule of President Nicol\u00e1s Maduro, who appears to have continued to consolidate power over the political opposition in recent months. Underpinning Venezuela\u2019s political crisis is an economic crisis. Venezuela is a major oil producer and exporter, and the 2014 crash in oil prices, combined with years of economic mismanagement, hit Venezuela\u2019s economy hard. Venezuela\u2019s economy has contracted by 35% since 2013, a larger contraction than the United States experienced during the Great Depression. Venezuela is struggling with inflation, shortages of food and medicine, substantial budget deficits, and deteriorating living conditions with significant humanitarian consequences. \nIn response to the Maduro regime\u2019s increasingly undemocratic actions, the Trump Administration imposed sanctions restricting Venezuela\u2019s access to U.S. financial markets in August 2017, increasing fiscal pressure on the government. In November 2017, the Venezuelan government announced it would seek to restructure its debt. The government and the state-oil company, Petr\u00f3leos de Venezuela, S.A. (PdVSA), subsequently missed key bond payments, leading credit rating agencies to issue default notices. Debt restructuring is expected to be a long and complex process, and it is unclear whether Venezuela will make coming debt repayments. The outlook for the economy is bleak; the Economist Intelligence Unit forecasts the Venezuelan economy will contract by 11.9% in 2018.\nImplications for U.S. Economic Interests\nThe political crisis in Venezuela and low oil prices have contributed to a contraction in U.S.-Venezuela trade. Venezuela is a relatively minor trading partner of the United States; the contraction in bilateral trade is more consequential for Venezuela, for which the United States is its largest trading partner. In response to the political and economic instability, several large U.S. companies have left Venezuela or curtailed operations there. \nU.S. investors holding Venezuelan and PdVSA bonds could face substantial losses if Venezuela suspends payment or seeks an aggressive restructuring of its debt. Bondholders are in the early stages of organizing to enter restructuring negotiations and/or pursue legal challenges against the Venezuelan government. Venezuelan dollar-denominated bonds were issued under New York law, and bondholder lawsuits seeking repayment would take place in U.S. courts. Legal challenges could result in the seizure of Venezuela\u2019s assets in the United States, such as CITGO (whose parent company is PdVSA), oil exports, and cash payments for oil exports. \nVenezuela\u2019s precarious fiscal position also raises concerns for U.S. energy security. In 2016, Venezuela\u2019s state oil company PdVSA secured a loan from the Russian state-oil company Rosneft. PdVSA used 49.9% of its shares in CITGO as collateral. If PdVSA defaults on its Rosneft loan, it is not clear whether Venezuela\u2019s portion of CITGO ownership would be transferred to Rosneft. Reportedly, Rosneft is negotiating to swap its collateral in CITGO for other PdVSA assets.\nLooking Ahead\nCongress is considering providing humanitarian aid to Venezuela through nongovernmental organizations. If the Maduro government or a new government in Venezuela engages in a significant reorientation of policy, U.S. policymakers may be interested in providing broader economic support to rebuild Venezuela\u2019s economy. Policymakers might explore how the international community, particularly the International Monetary Fund (IMF), could provide an international financial assistance package, and whether debt incurred by the National Constituent Assembly, widely viewed as an illegitimate legislature, should be enforced. If the Maduro regime stays in power and does not reorient its policies, the United States may revisit its policies and potentially pursue harsher sanctions.\nFor additional information on Venezuela from CRS, see CRS Report R44841, Venezuela: Background and U.S. Policy; CRS In Focus IF10230, Venezuela: Political and Economic Crisis and U.S. Policy; and CRS In Focus IF10715, Venezuela: Overview of U.S. Sanctions.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": true,
      "formats": [
        {
          "format": "HTML",
          "encoding": "utf-8",
          "url": "http://www.crs.gov/Reports/R45072",
          "sha1": "3eb46d7e8054a18a47046495b9b60356a5012d14",
          "filename": "files/20180110_R45072_3eb46d7e8054a18a47046495b9b60356a5012d14.html",
          "images": {
            "/products/Getimages/?directory=R/html/R45072_files&id=/0.png": "files/20180110_R45072_images_28d2807c098044894a7a18935a34eae1c74867c6.png"
          }
        },
        {
          "format": "PDF",
          "encoding": null,
          "url": "http://www.crs.gov/Reports/pdf/R45072",
          "sha1": "88f5bf384340fb1f00372b5a6c2894ae85f54842",
          "filename": "files/20180110_R45072_88f5bf384340fb1f00372b5a6c2894ae85f54842.pdf",
          "images": {}
        }
      ],
      "topics": [
        {
          "source": "IBCList",
          "id": 4923,
          "name": "International Financial Markets"
        },
        {
          "source": "IBCList",
          "id": 4938,
          "name": "Major Economies & U.S. Trade Relations"
        }
      ]
    }
  ],
  "topics": [
    "Foreign Affairs",
    "Industry and Trade"
  ]
}