Jan 23, 2019

Venezuela enters uncertain new phase

Venezuela's National Assembly leader Juan Guaidó and President Trump. Photos: Federico Parra, Kevin Dietsch/Getty Images

Venezuela has entered an uncertain new phase, with President Trump and Canadian Prime Minister Justin Trudeau joining 7 South American countries in endorsing regime change vs. Nicolás Maduro.

Maduro responded Wednesday by cutting off relations with the U.S. and giving American diplomats 72 hours to leave the country. On Wednesday evening, Secretary of State Mike Pompeo issued a statement saying that the U.S. "does not consider former president Nicolas Maduro to have the legal authority to break diplomatic relations with the United States or to declare our diplomats persona non grata."

Flashback: "The regional Organization of American States ... said [earlier this month that] its member nations voted 19-6, with eight abstentions, to not recognize the legitimacy of Maduro's government," per CNN.

Maduro's response: “I am the only president of Venezuela. ... We do not want to return to the twentieth century of gringo interventions and coups d’etats." (NYT, citing Venezuelan news outlet Diario La Verdad)

More from the White House:

  • A senior administration official told reporters: “If Maduro and his cronies choose to respond with violence ... all options are on the table for the U.S. in regard to actions that can be taken, both diplomatic and economic.”

The big picture: Latin America is shifting to the right, as Axios' Dave Lawler and Jonathan Swan noted earlier today.

  • Brazil, Paraguay, Colombia, Argentina, Peru, Ecuador and Chile have all recognized Guaidó as Venezuela's new president.
  • Right-wing Brazilian president Jair Bolsonaro said yesterday at the World Economic Forum in Davos that his election and those of like-minded leaders were a sign that “left-wing ideology will not prevail in the region.”
  • Paraguayan President Mario Abdo Benítez was more direct, saying: “Anything that will help liberate Venezuela has our support,” including recognizing Guaidó as president.

Between the lines: Markets are loving the news, Axios' Dion Rabouin reports.

  • "The country’s sovereign bond maturing in 2027 rallied to its highest level since June. That’s notable considering that the 2027 bond, and all but one of Venezuela’s other bonds, have been in default since November 2017. U.S. economic sanctions make it impermissible for the country to pay or for investors to collect.
  • “There’s a tremendous rally happening with expectation that regime change leads to eventual restructuring of these bonds,” said a fund manager from a major firm who asked not to be identified because he’s not permitted to discuss Venezuela’s debt.
  • “The market is pricing in Maduro’s exit as closer than we previously thought.”

Go deeper: Photos from the scene in Venezuela

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