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Venezuela is in bad shape these days. The economy has tanked, leading to massive inflation, shortages of food, water, medicine and rising social unrest. This turn of events has had repercussions in other countries as well, like India, where a number of major pharmaceutical companies have lost millions due to Venezuela’s inability to pay on what they owe.
Venezuela is a member of OPEC, and one of India’s chief sources for oil, which might end up being that country’s life-line. The two nations are working on a deal to pay back some of what Venezuela owes with oil, allowing the pharmaceutical companies to recoup some of their loses. Unfortunately, thanks to reduced power and resources, Venezuela isn’t able to generate as much crude oil as they usually can, which is going to make the whole process even more difficult.
Those companies took a risk by investing in Venezuela, and sometimes investments don’t pay off. But it’s important that they not simply pull out of the country and instead find ways to continue shipping medicine to a place that desperately needs it. As countries pressure Venezuela to pay its debts, during a time when that is increasingly difficult, things are likely to get worse. As the economy continues its downward spiral, life is going to become even more difficult there, and things like medicine will be needed in even greater numbers.
Plans like this, allowing Venezuela to pay some of its debts at a reduced rate, can help that situation out. Rapid inflation driven by pressure to pay debts that can’t be paid was central to the collapse of the German economy after World War I, which in turn led to the Great Depression. It’s unlikely that the collapse of Venezuela’s economy would have such far-reaching impact, but it’s certainly going to hurt in the region.