Perhaps this is one of the first articles you’re reading about the debt crisis in Venezuela. It won’t be the last. The situation there is bad and will get worse.

Venezuela has accumulated at least $120 billion in debt. Of that, $60 billion is foreign-owned bond debt. On November 2, the state-run oil company, Petroleos de Venezuela (PDVSA), failed to make a $1.12 billion bond payment. Last week, the Venezuelan electric company, Corpoelec, didn’t make a $28 million interest payment. On Sunday, President Nicolas Maduro said the payments would be made and that Venezuela would never default on its debt. He also called for creditors to attend a meeting this week in Caracas to start negotiations to restructure the country’s debt.

He predicted that 414 representatives of investment banks would attend, or 91 percent of the holders of the country’s bonds. But, according to news reports, less than 100 attended and the meeting ended after a half hour. Many creditors stayed away because of sanctions imposed by the United States.

On August 25, President Trump signed an Executive Order that imposed sanctions on Venezuela for undermining democracy, corruption, and human rights violations. The sanctions prohibit US banks from buying bonds and negotiating with Venezuela. Americans also cannot trade new debt issued by Venezuela or PDVSA.

The US has also sanctioned 40 Venezuelan officials and frozen the assets of 10. Two of the sanctioned officials are the leading negotiators for the restructuring. One is Finance Minister Simon Zerpa, who has been sanctioned for corruption. The other is Vice President Tareck El Aissami, who has been sanctioned by the US for drug trafficking. The US Treasury Department has called him a drug kingpin. Americans cannot have any contact with him.

In addition, on Tuesday, the US Ambassador to the United Nations, Nikki Haley, referred to Venezuela as “an increasingly violent narco state that threatens the region, the hemisphere and the world.” Also this week, the foreign ministers of the European Union agreed to an arms embargo against Venezuela.

President Maduro blames the US for its predicament. But, his comments aside, if Venezuela keeps making bond payments, then holders likely won’t negotiate a restructuring. If Venezuela defaults, then holders likely will attach accounts receivable and seize Venezuela’s oil assets, perhaps including its US refinery, Citgo.

PDVSA has the world’s largest oil reserves. But Venezuela loaded up on debt when oil prices were $100 a barrel. The current crisis began three years ago when oil prices dropped significantly and a default became a possibility.

Meanwhile, Russia has been supporting Venezuela by restructuring its loans. But this alone won’t remedy the situation. According to the International Monetary Fund, inflation in Venezuela will hit 2,350 percent in 2018. Food shortages plague the country’s 30 million citizens. Its poverty rate is now at 82 percent. Ambassador Haley told the United Nations that many families live on $8 a month. The currency, the bolivar, is worth less than a tenth of a US penny.

In short, Venezuela is rich in oil reserves but has devastating political, social, and economic problems. It has too much debt and likely will have trouble negotiating a resolution while the current US sanctions are in place. Where this will lead in the coming years is uncertain. But, based on current circumstances, the prognosis is grim. Stay tuned.