CARACAS, Nov 13 (Reuters) - Venezuela opens talks with creditors on Monday to renegotiate a crippling debt that has left once-prosperous citizens sifting through garbage to find food, as the OPEC nation seeks to avert a default that would plunge its economy into deeper uncertainty.
President Nicolas Maduro's government has summoned investors who hold some $60 billion in junk bonds to Caracas in a desperate bid to shore up public finances that have been squeezed by the unraveling of the socialist economy.
Investors broadly said they planned to skip the meeting because of concerns about U.S. sanctions on senior Venezuelan officials, worries about security in violence-torn Caracas, and generalized confusion about what Maduro hopes to achieve.
Markets were optimistic on Friday that Venezuela would continue to service its debt despite the odds, noting that Maduro's government had made close to $2 billion in payments in the past two weeks, albeit delayed.
"The country that has paid the greatest amount of debt per capita is called Venezuela," Maduro said during his weekly Sunday broadcast, insisting the country was the victim of an "economic war."
But many say Maduro's promise to restructure and refinance debt rings hollow at a time when U.S. sanctions make both options all but impossible, and that his government may be paving the way for a default despite promises to the contrary.
The 2 p.m. (1600 GMT) meeting will be held in the ornate "White Palace" building across the street from the president's office in downtown Caracas.
The economic crisis has already taken a brutal toll on Venezuelans, who increasingly suffer from malnutrition and preventable diseases because they cannot find food and medicine or cannot afford them because of triple-digit inflation.
The sight of poor Venezuelans eating from garbage bags has become a powerful symbol of decay. It contrasts sharply with the era of late socialist leader Hugo Chavez, when high oil prices helped fuel state spending and even the most humble citizens could travel abroad or buy the latest cellphone.
'NOTHING TO SAY TO THEM'
Sanctions by the administration of U.S. President Donald Trump, in response to accusations that Maduro's government has undermined democracy and violated human rights, block U.S. banks from acquiring newly issued Venezuelan debt.
The sanctions do not prohibit investors from attending. But they are blocked from dealings with dozens of officials including Vice President Tareck El Aissami and Economy Minister Simon Zerpa, both of whom are part of the debt commission.
Maduro said this month he wanted to speak with creditors about restructuring, but also vowed to continue making payments - leaving investors baffled.
"If they're going to continue paying, I don't have anything to say to them," said one bondholder who asked not to be identified. "It's when they say they're going to stop paying that I'd have reason to talk to them."
It is not clear how default would affect the struggling population, in part because the impact would depend on the government's strategy and the response of creditors.
Halting debt service would free up an additional $1.6 billion in hard currency by the end of the year. Those resources could be used to improve supplies of staple goods as Maduro heads into a presidential election expected for 2018.
That strategy could backfire if it is met with aggressive lawsuits.
A default by state oil company PDVSA, which issued about half of the country's outstanding bonds, could ensnare the company's foreign assets such as refineries in legal battles - potentially crimping export revenue.
Bondholders would have fewer options if Venezuela rather than PDVSA defaults.
But the consequences of a default by the country could still be significant, said Mark Weidemaier, a professor of law at the University of North Carolina at Chapel Hill, an expert on international debt disputes and resolution.
Creditors could seek to block shipments of goods from leaving the United States for Venezuela or seize payments for those goods, Weidemaier said in a telephone interview.
"The real impact that a creditor can have in a sovereign default is to make it complicated for a government to engage in foreign commerce," he said. "Companies may have to use complicated transaction structures to prevent seizures, which is going to make them wary of doing business with Venezuela." (Additional reporting by Deisy Buitrago; Editing by Peter Cooney)