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It might be charges that center around drug trafficking, but it has been a white house that is keenly focused on what happens to oil in Venezuela. For more on the fallout of Maduro's capture, we are joined now by Wilbur Ross. He served as Secretary of Commerce in the first Trump administration. Mister Secretary, thank you so much for joining us this morning, and you oversaw the Commerce Department at a time when economic policy was increasingly becoming a
national security tool. With this latest action in Venezuela, what has changed? Does that become even more apparent as a tool for this administration.
Well, I think it's clear that a lot can be done and should be done to change the economics of Venezuela. I'm going to give you a few data points. They probably have three one hundred billion barrels of oil of proven reserves. At fifty dollars a barrel, that's fifteen trillion dollars of reserves. So in terms of being able to handle the debts that they have, which are substantial but are only one hundred and sixty billion, So compare that to oil reserves will into the trillions. It should not
be that bigger problem. The bigger problem is that because of poor management, poor maintenance, and running out of parts, the oil production has gone down by more than two million barrels a day, a fifty dollars a barrel. That works out to about thirty seven billion dollars a year cost to the economy. Those are huge, huge numbers, especially when you consider the whole population is only around twenty seven million people because some seven million people have fled
the country under Maduro. And it's not just oil. There's a lot else that can be fixed. For example, agriculture is twenty five percent of the land mass of Venezuela, but it's only three percent of the economy and only ten percent of the labor force. And the reason for that is that they don't have fertilizer. Their equipment, tractors and reapers and things are pretty well broken down. They need spare parts. So there's a lot of stuff that
can be proved and improved pretty quickly. Agriculture, for example, could be brought back very very fast. Venezuela had been one of the most verdant soils in all of Latin America, and it was one of the reasons why Venezuela was as popular and as prosperous as it had been. But wilburt, what needs to happen? And they were bringing Colombians in to help on the fields because they didn't have enough workers.
Can I just break in, Wilburn asked, you know, this is your specialty. You made your name before you ran trade policy for commerce at the cabinet level, negotiating for creditors in the biggest names of bankruptcy TWA and Texico and Drexel, Burnham Lambert. Then you obviously became the biggest rest structuring expert or one of them in the US would turn around of massive businesses like US deals. So
this is what you do. What needs to happen for capital to go into Venezuela and do the very same What kind of stability, what kind of rule of law, what kind of sure prerequisites need to be met?
Right? Well, there's a lot that needs to be done in terms of laws. Venezuela has the weakest property rights laws in the whole world, So that has to be fixed so that you have some assurance of private sector continuing ownership. But I think realistically companies going in now, in a relatively complex situation, are probably going to want guarantees against expropriation, and that's not unusual. The US and multinational entities often give expatriation and foreign ext change guarantees. Now,
the debt structure is mind bogglingly complicated. They have about one hundred and sixty billion of debt altogether, counting expatriation claims, counting of funded debt, counting debt for oil, counting everything. Those bonds have been trading in the high teen's low twenties. They could probably be restructured in the thirty to forty cents on the dollar. So in the overall context, that's
not a very big number. And one of the few good things is that the IMF has no exposure to Venezuela, and IMF is entitled to lend up to fifty billion dollars, so they could very well be a source of some funding.
On that point, before we continue, Wilburt because some of the exposure we do understand comes from China and debt owede to Chinese banks. For example, if there is a restructuring of debt in the country, do you expect the US to exert force of who gets priority in the capital stack, does it change where back payments in different restructuring comes from. Just given the geopolitics of the moment between the US and China.
Right well, both the Chinese and the Russians had made loans to Venezuela that are payable at least partly in oil, but oil at very very advantageous prices to them, So they are part of the problem in that they're getting oil very cheaply out of Venezuela in return for debts that otherwise and never going to be paid. Now, the oil that comes out of Venezuela is mostly what we heavy oil, and that requires a slightly different refining process from the American shale oil, which is mostly light oil.
Both China and India have very strong facilities for processing heavy oil because a lot of the Iranian oil that they had been getting also is heavy. And in the US there are a number of refineries in the southern part of the country, particularly the old Sitco refineries, that were established from the very beginning, to handle this oil. So while it is a little bit different and it's a little more costly to refine at anything like fifty dollars a barrel. It's still going to be very very cheap,
I says. The extraction costs in Venezuela, once you've got it up and running and with proper equipment, are going to be very very low.
Can I just ask me over We've only got other natural reasons. We've only got a minute left here, and I want to ask, well.
It has lots of gold, most of which is not being used for lawful purposes.
Well, speaking of lawful I just want to.
Ask transport planes every day flying to Iran with Venezuela and gold fair.
We've only got a minute left, and I just want to ask you about the precedent risk here. Does removing a sitting head of state on criminal grounds create a precedent that we have to live with later? Do other great powers now reserve that right for themselves as well?
Well? The whole situation is very complicated. I'm not close enough to what's happening on the ground to figure out exactly how resolve the political issues. But Secretary Rubio has indicated on other television shows over the weekend that perhaps the ultimate solution to the governance of Venezuela is new elections, and if they are properly supervised, that might well be an answer.
All right, Commer Secretary, I'm sorry to jump in. We are just up again the commercial break. Thank you so much for joining us, though. That is Wilber Ross, former US Commerce Secretary, as we assess the fallout of Nicholas Maduro's capture, who's currently on US soil in New York facing trials