A wave of repression in Venezuela

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Find Barclays Brief wherever you get your podcasts. Good morning from the Financial Times. Today is Wednesday, January 7th, and this is your FT News Briefing. It's a new year, but concerns about overvalued AI stocks are not going away. And the Venezuelan government's crackdown on dissent is widening. Plus, China is watching what is happening in South America with great interest. Venezuela was one of its staunchest allies in the region and I think it's really more that geopolitical impact.

That's more important in this case than the economic impact. I'm Mark Filippino, and here's the news you need to start your day.

Leading asset managers are preparing for the risk that the AI bubble bursts. A bunch of investors told the FT they're either reducing their positions in U.S. tech stocks or betting against them. There are worries that U.S. tech shares have become overvalued. For example, the chip giant NVIDIA is clocking in at 46 times its earnings. People are concerned about the huge investments in AI and its infrastructure without a clear idea on how to actually profit from the technology.

Things in Venezuela are deteriorating in the days after the U.S. ousted President Nicolas Maduro. The Venezuelan government is being temporarily led by Maduro's vice president, and the government's been cracking down on any show of support for the authoritarian leader's removal. Michael Statt is the FT's Latin America editor, and he joins me now. Hi, Michael. Hi, Mark. So, Michael, what is the situation on the ground like now? I'd say there's a sort of tense calm, Mark, at the moment in Caracas.

It's maybe only half the level of normal activity. People are still very frightened to go out and about in their business. They were obviously very scared by the US strikes on Saturday night, but they were also scared by the repression that's come afterwards. They're quite uncertain about what's going to come next. And then you've got the regime's security forces deployed, some of these gun-toting, motorcycle riding.

paramilitaries who are going around intimidating people. So it's a very dark mood, really, at the moment. And as I mentioned, this is under Delcy Rodriguez, Maduro's former deputy, and now the country's new leader. There's this big crackdown on journalists in Caracas and Venezuela more broadly. Is there a reliable source of information flowing from the country given how large this crackdown is?

It's difficult to get a full picture of what's going on, Mark, not least because Venezuelan media are heavily controlled by the government. I was talking to someone who works in Venezuelan media the other day. he told me that state television is extraordinary. They're barely referring to anything that's happening. They're sort of pretending that almost nothing has happened. And journalists are very constrained in what they can do.

Foreign correspondents based outside the country are not able to enter at the moment. So there's only very limited information and there's a lot of reliance on what's being posted on social media, on calling contacts and sources inside the country to try to piece together a picture of what's going on.

been the international response to this crackdown in venezuela i think there's dismay and some disbelief mark because One hoped that when Maduro was overthrown, it would usher in a new era for Venezuela, which would be one in which there were more freedoms, there was some kind of transition, there was some talk of greater democracy.

And at the moment, it is, of course, only a few days after, but at the moment, what we're seeing is a renewed repression, no talk of elections, no talk of freedoms, quite the opposite. In fact, there was this emergency decree from the new government. on Sunday night, published on Monday, which threatened anybody who celebrated Maduro's ouster. Security forces checking people's WhatsApp messages, people frantically deleting them to not fall foul of that.

I think internationally and abroad, there's a lot of dismay that so far Maduro's ouster has not led to any kind of new dawn at all. It's led just to another wave of repression and a regime that looks rather like the one that was there before. Given that, what are you watching out for in the coming days? I think the key thing we're watching for is whether the new government led by Delcy Rodriguez can consolidate its authority.

Delsi Rodriguez and her brother Jorge, who leads the National Assembly, have a lot of political clout. They know the business community. They run the economy between them. He runs the National Assembly, the political links, but they don't have hard power. They've not run the security forces or the army historically, and they need now the support of the security forces and the army in order to run the country. The army minister, Padrina López...

pledged his loyalty to Delsi in a telegram message. We've not heard anything really from Diosdado Cabello, who's the other man we'll want to watch closely. He's the hard man, the interior minister who controls the security police. and this network of national paramilitaries. So his moves in the next few days are going to be crucial. Is he on board with Delcy? Is he on board for this American agenda? Or is he going to try and do his own thing? Thanks, Michael. That's the FT's Michael Stott.

our Latin America editor. Thank you, Mark.

The Trump administration is meeting with executives from U.S. oil majors today to discuss its strategy for Venezuela. In addition to today's meeting, sources tell the FT that President Donald Trump has also called for a talk with Chevron, ExxonMobil and ConocoPhillips for Friday. Chevron is the only U.S. oil company that operates in Venezuela.

Experts are warning that the South American country's oil production will collapse unless Washington halts its naval blockade, and Chevron is in talks with Venezuela's state oil company about shipping some of the stranded crude to U.S. refineries. Speaking of oil, China has been Venezuela's most important oil buyer and one of its closest international backers. The two countries have deep economic and geopolitical ties.

Now, the U.S. capture of President Nicolas Maduro could have big implications for China's policy in the region. I'm joined now by the FT's Beijing Bureau Chief, Joe Lei. Hi, Joe. Hi. First off, Joe, can you give us a sense of... how geopolitically and economically entwined China and Venezuela are? Yeah, so China's been very close to Venezuela since Hugo Chavez came to power at the start of this century and over the past 25 years.

including under Maduro. China's really been a key sort of backer of the regime. It's invested in infrastructure projects in Venezuela and also, of course, in the oil industry. around about $60 billion in loans over this time. The two have also had a fairly chequered history. Venezuela's economic problems and the collapse under Maduro has meant that it hasn't really...

been able to repay a lot of the loans. And China's had to reschedule some of those loans and tweak and ease the terms of repayment. But they remain very close. How has Beijing responded to... the U.S. military intervention in Venezuela. With outrage, generally condemning the raid and saying that the US is violating international law and it's spoken about the UN Charter and Chinese state media has had caricatures of the US as violating every principle.

possible of the international rules-based order. And it has been quite an interesting contrast, actually. China's condemnation of the US action, if you compare that to the way it reacted to... Russia's invasion of Ukraine. China's never actually condemned the invasion of Ukraine, but in this case, it's been very, very outspoken because obviously, you know, in the case of Venezuela, this is an ally of China and Russia.

Whereas Russia's invasion of Ukraine was China's ally invading another country. Joe, what kind of impact will U.S. involvement in Venezuela have on China's economy? Any? The impact economically for China won't be that great. We don't really know how many loans are still outstanding in China and what value that those loans have. But we think it's probably around about $10 billion.

And the way that these loans have been repaid in the past is in exchange for oil. So Venezuela has essentially paid China back with barrels of oil. And Trump has signalled that... Venezuela could continue perhaps to sell oil to China. So it's not as though China will be completely blocked off from this trade. But China does lose one of its key client states in the region. So it's worked very hard.

to gain a strong foothold, not only in Venezuela, but also in South America. And its trade has absolutely boomed with countries such as Brazil and Colombia and even Mexico. The loss of Venezuela in this sense is a blow to China. Venezuela was one of its staunchest allies in the region. And I think it's really more that geopolitical impact.

That's more important in this case than the economic impact. Yeah, tell me a little bit more about how this is going to affect Chinese geopolitics. I think Beijing in the near term won't change its policy, but it will be hedging a lot more. If you look at the oil industry, although China accounts for most of Venezuela's oil exports, imports from Venezuela are not significant for China. It's around about 5% or something like that. It's not a very big number.

But as the US becomes more assertive in the energy industry, China will have to look more carefully at its energy security. So for instance, China does import a lot of oil from Iran. Will the US become more assertive? in terms of controlling Iran's exports. This is something that will be occupying the minds of Chinese policymakers. Joe Lei is the FT's Beijing Bureau Chief. Thanks so much, Joe. Thanks very much.

You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News briefing. Check back tomorrow for the latest business news. Want to turn your timeline into a fast lane? Digital twin it to outpace the field with fast and confident decisions. Transform the everyday with Siemens.

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