Guaido's call for military uprising forces a turning point in Venezuela

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      By John R. BaurDirector of Global Portfolio Analysis, Eaton Vance Management

      Boston: The call on Tuesday by Venezuela's "interim president," Juan Guaido, for a military uprising against the regime of Nicolas Maduro, was a high-stakes move with decisive implications for the country. As of this writing, the situation was still fluid, but we see two potential scenarios emerging:

      • If the uprising is successful, Guaido will take over and lead the country out of the economic and political crisis.

      • If the uprising fails, Guaido will be finished as a political force.

      But even if Guaido is successful, the challenges to rebuilding the devastated economy are enormous, and the renewal of investment opportunities will take a long time. In 2017, the government of Venezuela and PdVSA, the state-owned oil company, stopped servicing most of their debt obligations (PdVSA continues to service one bond). The restructuring of defaulted Venezuela and PdVSA debt will be extremely complicated and time-consuming.

      Bottom line: Venezuela's mismanagement of its finances and oil resources has been a major factor in the country's slide into near chaos under the Maduro regime. Even if Guaido prevails under the best-case scenario, the road ahead will still be long and painful.