The arrest of Venezuelan President Nicolás Maduro has prompted warnings that a new government may refuse to recognize debts deemed odious or illegitimate.

By Ning Haizhong and Yi Ru for the Epoch Times

Go to the publisher’s website here to read the original article in Chinese.

Summarized by Probe International

The recent arrest of Venezuelan President Nicolás Maduro has raised concerns about the future of Venezuela’s substantial debt to China, which has been primarily incurred through oil-backed loans. As China expresses shock and condemnation over the arrest, analysts suggest that the massive sums lent to Venezuela may now be at risk of being written off, especially if a new government refuses to recognize these debts as legitimate.

Since 2007, Venezuela has relied heavily on “oil-for-loans” agreements with China, borrowing more than $60 billion, making China its largest creditor and ensuring a steady supply of discounted oil, The Epoch Times writes. Despite U.S. sanctions and a restructuring of Venezuela’s debt, estimated at $150–170 billion, China has continued to import Venezuelan crude through unofficial channels, accounting for a significant portion of its oil imports. However, experts warn that China’s access to Venezuelan oil may become unstable, with predictions that most Venezuelan exports could revert to the U.S. in the near future, potentially increasing China’s oil import costs and undermining its strategy of securing cheap energy through crisis exploitation.

“The U.S. has effectively closed off Beijing’s loopholes in the energy black market—first by cracking down on Iran last year, which affected Iranian crude exports to China, and then by targeting Venezuela,” Su Tzu-yun, the director of the Institute for National Defense Strategy and Resources at Taiwan’s Institute for National Defense and Security Research, told The Epoch Times.

In addition to mocking the Chinese Communist Party (CCP) for its anxiety over losing both a political ally in Venezuela and access to cheap oil, the news outlet notes Chinese bloggers on Weibo are questioning the fate of Venezuela’s debt to China, with some suggesting that a new Venezuelan government might refuse to recognize the debt. This situation highlights the concept of “odious debt,” where debts incurred by a regime that does not serve the interests of the people may not be enforceable by a successor government.

American analyst David Huang told The Epoch Times that while a change in government shouldn’t automatically void these agreements, comprehensive renegotiations are likely. If the new government seeks closer ties with the West and sanctions relief, it may re-evaluate contracts made under Maduro to ensure they align with public interest, leading to a complex and contentious process which could further jeopardize Beijing’s access to Venezuelan oil and its financial investments in the country.