US Green Lights UN’s Venezuela Fund in Boost to Negotiations

(Bloomberg) — The US government has assured the United Nations that contributions to its humanitarian fund for Venezuela will be safe from seizure by creditors, a reversal that could allow the relief effort to begin operating as soon as this month, according to eight people with knowledge of the dealings.

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The Biden administration’s decision to green light the New York-based fund, which resulted from an agreement struck last year between Venezuelan leader Nicolas Maduro and opposition representatives, could provide a spark to stalled negotiations over the South American nation’s years-long political crisis ahead of presidential elections next year.

The administration earlier this month notified the UN in an official cable that the fund will be allowed to operate within the US financial system without fear that it will be vulnerable to lenders seeking debt repayments, the people familiar with the situation said.

The US is willing to work with banks that hold Venezuelan assets — some of which will feed the fund — to ensure their safe transfer, the people said.

Venezuela defaulted on a $60-billion debt pile in 2017 and owes billions of dollars in unpaid commercial loans and arbitration awards.

Different types of creditors have since targeted offshore assets frozen by US sanctions as they seek to collect debts owed by the government and state-owned oil firm PDVSA. The country’s main offshore asset, Citgo Petroleum, is at high risk as creditors like Crystallex and oil giant ConocoPhillips push courts to force the sale of its parent company’s shares so they can collect arbitration awards for the expropriation of their Venezuela assets.

The Biden administration last year told the UN that it could not ensure that funds would be safe from creditors, Venezuelan government leaders have said. The State Department did not respond to a request for comment.

The White House in recent months has sought to kick start renewed talks between Maduro’s government and Venezuela’s opposition over improved electoral conditions for the 2024 presidential vote. The fund has been a key reason why those negotiations have stalled after their initial restart last November.

Part of a broader humanitarian agreement reached during those talks, it is intended to finance electricity, water, health and education projects in Venezuela. But access to frozen assets proved more complicated than expected, leading to delays and accusations from Maduro that the opposition had broken its promises.

Read More: US to Lift Sanctions Only If Venezuela Returns to Democracy

The UN remains engaged in efforts to implement the agreement, said Farhan Haq, a spokesperson for the UN secretary-general. The humanitarian deal “has the potential to support millions of vulnerable Venezuelan people,” Haq said.

The first contributions to the new fund are likely to come from Venezuelan accounts in Europe, the people said.

But it will likely take months to begin dispersing funds, and it remains unclear whether Maduro will return to the table. The Venezuelan leader has also conditioned future negotiations on further easing of sanctions and the release of Alex Saab, a top ally who has been imprisoned in the US since 2021.

Neither the Venezuelan Information Ministry nor the head of the government delegation responded to requests for comment.

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