With nearly $37 billion loaned to Venezuela since 2008, China (via its China Development Bank) had long been a source funding for the socialist country. It was easy to see how a partnership between the two would be mutually beneficial, as China would have a closer relationship with the country that as of 2015 supplied 4%-5% of its oil import needs, while Venezuela would have a virtual piggy bank to fund projects such as infrastructure.
One project the two countries partnered on was touted as South America’s first high speed train. The Tinaco-Anaco Railway, a $7.5 billion project that was supposed to have a consortium of Chinese companies display to the world their engineering and construction capabilities. A glorious 300 mile long railway was to be built in Venezuela, moving 5 million passengers and 9.8 million metric tons of cargo a year, at speeds of up to 135mph. Today, however, the project is dormant. All that ended up on display, however, is simply a broken down arch that is at the entrance of the railroad workers complex. A symbol of both a failed Venezuelan state, and a carefree China lending program.
AP explains
It was once billed as a model of socialist fraternity: South America’s first high-speed train, powered by Chinese technology, crisscrossing Venezuela to bring development to its backwater plains. Now all but abandoned, it has become a symbol of economic collapse — and a strategic relationship gone adrift.
Where dozens of modern buildings once stood, cattle now graze on grass growing amid the rubble of the project’s gutted and vandalized factory. A red arched sign in Chinese and Spanish is all that remains of what until 16 months ago was a bustling complex of 800 workers.
That’s when the project’s Chinese managers quietly cleared out.
As with many unfinished politically motivated projects dotting Venezuela — government critics call them “red elephants” — the decaying infrastructure contrasts with the railway’s promising beginnings.
A decade ago then-President Hugo Chavez dreamed up the Tinaco-Anaco railway as a way to populate the plains and attract development from long-dominant coastal areas. Stretching 300 miles (468-kilometers), it was intended to move 5 million passengers and 9.8 million metric tons of cargo a year at speeds up to 135 miles (220 kilometers) per hour.
Chavez turned to China, one of his closest ideological allies, for engineering and financing for the project, part of a $7.5 billion deal that has made Venezuela the world’s top recipient of Chinese loans. A consortium of state-run companies led by China Railway Group Ltd, the world’s largest train maker, was tasked with carrying out construction.
But completion is four years overdue, and work, when it happens at all, has slowed to a crawl. At one barracks facility visited by The Associated Press, half a dozen workers huddled under the shade of a giant cement mixer, while two shirtless managers lounged at a control panel smoking cigarettes.
Nowhere are the project’s declining fortunes more visible than in Zaraza, a sweltering crossroads town of 75,000 where what used to be an arena-sized factory churning out concrete railroad ties was located. In government news reels from 2013, the complex can be seen towering over manicured lawns and outdoor basketball courts where Chinese and Venezuelan workers socialized.
Shortly after the last Chinese managers left in January 2015, a mob of local residents — some of them armed — ransacked the site and hauled away everything of value. First to go were power generators, computers and air conditioners on the back of pick-up trucks. Vandals then tore apart dozens of buildings to scavenge for metal siding, copper wiring and ceramic tiles, some of which are now on sale at roadside stalls.
Jesus Eduardo Rodriguez, who owns and lives on the sprawling ranch where the factory was built, said the plundering lasted two weeks.
Several witnesses who declined to be named for fear of reprisals said the looting took place in plain view of National Guard troops, who they allege were on the take and working in collaboration with the town’s pro-government mayor, Wilfredo Balza, which is why the incident never garnered media attention.
Balza did not return repeated phone calls and text messages seeking comment and was said to be unavailable when AP journalists visited City Hall.
“They destroyed everything,” said Rodriguez, who eventually moved giant cinder blocks to cut off road access to the derelict property, which had become a haven for criminal gangs. “We just came to the house and almost cried, watching what they were doing.”
E-mails to China Railway in Beijing went unanswered and the company didn’t comment despite phone calls and two visits to its office in Caracas
In a poetic turn of events, just as Goldman Sachs was trying to capitalize on Venezuela’s failing economy, China was starting to walk away from it. While China has been working with Venezuela on restructuring debt, with oil prices continuing to struggle, a default may be imminent given what is taking place in the country today.
It remains unclear what the vampire squid’s current exposure to the failed Latin American state is, but it would be safe to say say that Goldman unloaded all its risk long before most realized how terminal Venezuela’s endgame truly was.
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