How does the Maduro Government plan on paying back the debts it owes to other countries and banks?
Guyana Threat: Yes, the threat has escalated significantly.
In May 2025, Venezuela announced “sham elections” to appoint officials for the disputed Essequibo region, and in March 2025, a Venezuelan gunboat entered Guyana’s waters. The primary reason is the massive oil discovery in the region, which Venezuela views as a solution to its economic collapse.
Venezuela’s plan to elect officials to govern a large section of Guyanese territory amounts to “a full-frontal assault on Guyana’s sovereignty and territorial integrity” and threatens regional stability, President Irfaan Ali has warned [1]. Guyana, a former British and Dutch colony, has administered the area for decades; it covers two-thirds of the country and is home to 125,000 of its 800,000 citizens. Georgetown maintains that its borders were set by a legally binding 1899 arbitration ruling, while Venezuela insists the land belongs to it based on boundaries from the Spanish colonial era.
Tensions escalated sharply in late 2023 after President Nicolás Maduro held a referendum seeking approval to turn the region into a Venezuelan state. Following the vote, he threatened to partially annex the area by force and vowed to organise elections there, further intensifying the long-running territorial dispute [1].
Colonial roots of the Essequibo dispute
The Essequibo conflict dates back to the early 19th century, when Venezuela challenged the territorial boundaries Britain inherited after taking control of former Dutch colonies in 1814 [2]. Britain consolidated Essequibo, Demerara and Berbice into British Guiana in 1831, but Venezuela argued the Essequibo region historically belonged to the Spanish Viceroyalty of New Granada, which once covered parts of modern Venezuela, Colombia, Panama and Ecuador.
Arbitration and renewed tensions
In 1899, the long-running dispute went to international arbitration, resulting in the Paris Arbitral Award that granted Essequibo to British Guiana. The boundary was formally demarcated in 1905, and the issue remained dormant until the 1960s. As Guyana neared independence, Venezuela declared the award invalid, reviving the dispute and challenging Guyana’s territorial rights.
Why the issue escalated again
Tensions surged after ExxonMobil’s major oil discoveries in the Stabroek Block in 2015. With more than 30 finds amounting to an estimated 11 billion barrels of crude, the region’s economic value changed dramatically, turning a historical border disagreement into a high-stakes geopolitical confrontation [2] [1].
Debt Repayment Plan:
The Maduro government’s plan is currently paralyzed. While Maduro often announces “restructuring” decrees, they are legally impossible to execute because US sanctions prevent American bondholders from negotiating with his administration. Currently, the “plan” relies on limited oil-for-debt swaps with allies (like China) and waiting out the sanctions, while Western investors are now buying bonds solely on the bet of regime change.
Venezuelan debt has surged this year, drawing renewed attention as investors speculate on a potential turnaround. Buying the country’s bonds remains one of the riskiest bets in global markets, with any real payoff depending on Venezuela’s ability to enter serious negotiations with creditors. For that to happen, investors believe a credible political partner—one that shows commitment to financial reintegration and respect for the rule of law—is necessary, something the current government has not demonstrated [3].
Ultimately, investors are wagering on a major shift in U.S.–Venezuela relations that would enable Caracas to rejoin international financial markets [3]. This would require significant U.S. sanctions relief, cooperation from the American banking sector, and backing from global financial institutions to support what will be an expensive and complex process.
Resolving the debt is essential for restoring international financing and repairing relations with Western governments. Despite high expectations ahead of last year’s elections, the Maduro administration made only limited moves toward reengaging with markets—reportedly hiring an investment bank and holding lobbyist meetings in London. Hopes for progress were short-lived, as the disputed election outcome halted any momentum toward a resolution under Maduro [3].
In a nutshell:
The United States’ launch of Operation Southern Spear marks the peak of a long-escalating confrontation with Venezuela, expanding from recent US strikes on drug-trafficking boats to a major military buildup near Venezuelan waters. Though framed as a campaign against “narco-terrorists,” the operation reflects decades of deteriorating US–Venezuela relations, beginning with tensions under Hugo Chávez and deepening as Washington imposed sanctions, rejected Nicolás Maduro’s elections as fraudulent, backed opposition leader Juan Guaidó, and targeted Venezuelan officials and the state oil company for corruption and narcotrafficking.
Maduro, in turn, strengthened ties with Russia, China, Iran and Cuba as US pressure intensified across the Obama, Trump and Biden administrations. Trump’s second term has further escalated the standoff—labeling Venezuelan criminal groups as terrorist organizations, revoking oil licenses, deporting suspected gang members, and deploying the largest US regional force since the Cuban Missile Crisis—while Venezuela has mobilized militias and fortified key sites, leaving both countries in a state of heightened military alert .
References:
[1] Guyana president decries Venezuela’s plan to hold elections ‘in our territory’ – May 23, 2025, theguardian.com
[2] Essequibo Territorial Dispute: Venezuela’s 2025 Challenge to Guyana’s Oil-Rich Region – October 16, 2025, discoveryalert.com.au
[3] What Polymarket and the Venezuelan Debt Surge Reveal About the Conflict – October 17, 2025, caracaschronicles.com
[4] How Venezuela’s Maduro became Washington’s most persistent hemispheric adversary – December 1, 2025, fdd.org
For all the latest updates, download PGurus App.
- Did Venezuela threaten its neighbor Guyana? If so, why? - December 9, 2025
- PSU banks write off loans worth Rs.6.15 lakh crore in the last 5.5 years - December 8, 2025
- How much money is the state of California spending on illegal immigrants each year? - December 8, 2025
