to move promptly to arrest the deep humanitarian crisis, restore the country’s shattered economy, and deal with gargantuan legacy debts. All three efforts must be attempted simultaneously. None will be easy.
First, the settlement should be as comprehensive as possible. Maduro and his predecessor, Hugo Chávez, managed to incur liabilities to an astonishingly diverse group of creditors: banks, bondholders, unpaid suppliers, arbitration award holders, expropriated investors, and various others. Unlike most of the sovereign debt workouts over the last 40 years, this will not be a restructuring of exclusively bond indebtedness or commercial bank loans.
The Venezuelan people, multilateral supporters of Venezuela’s economic recovery, and Venezuela’s other commercial creditors will all insist that this culling process be carried out efficiently and transparently. In any exercise of this kind, the preferential treatment given to one category of claimant necessarily results in a proportional disadvantage to all the other claimants. The inter-creditor rivalry and resentment engendered by such discrimination could be fatal to a comprehensive debt-restructuring program of the type that Venezuela must soon undertake.
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