Jan 28, 2019

U.S. sanctions Venezuela's state oil company in push for regime change

Venezuelan President Nicolás Maduro. Photo: Yuri Cortez/AFP/Getty Images

The Trump administration has announced sanctions on Venezuela's state-owned oil company, PDVSA, in an attempt to undercut Nicolás Maduro's regime and boost his rival for power, National Assembly President Juan Guaidó.

Why it matters: The Trump administration is using all economic and diplomatic levers at its disposal in a push for regime change in Venezuela. The White House is hoping that if it deprives Maduro of cash, the Venezuelan military will have no reason to stay loyal to him. A source briefed told me: "The implications are huge because it will be difficult for Maduro to find another refiner of Venezuelan oil with any speed to keep cash flowing."

The latest: National Security Adviser John Bolton made the announcement in the White House briefing room on Monday afternoon alongside Treasury Secretary Steven Mnuchin:

"We have continued to expose the corruption of Maduro and his cronies, and today's action ensures they can no longer loot the assets of the Venezuelan people. We expect... that today's measure totals $7 billion in assets blocked today plus over $11 billion in lost export proceeds over the next year. We also today call on the Venezuelan military and security forces to accept the peaceful democratic and constitutional transfer of power."

Between the lines: More than 20 countries have followed the U.S. in recognizing Guaidó as interim president, due to his status as the highest-ranking official to have won a free election. Maduro has portrayed the situation as a U.S. effort to intervene in Venezuela. There had been concerns that sanctioning Venezuela's oil exports would both strengthen that argument, and deepen the economic crisis.

The economic impact, per the AP:

  • "Venezuelan oil exports to the U.S. have declined steadily over the years. ... Still, Venezuela has consistently been the third- or fourth-largest supplier of crude oil to the United States, and any disruption of imports could be costly for refiners. In 2017, the most recent year that data were available, Venezuela accounted for about 6% of U.S. crude imports."
  • "Venezuela is very reliant on the U.S. for its oil revenue. The country sends 41% of its oil exports to the U.S. Critically, U.S. refiners are among the few customers that pay cash to Venezuela for its oil. That's because Venezuela's oil shipments to China and Russia are usually taken as repayment for billions of dollars in debts."

Sen. Marco Rubio, who has taken a hawkish stance on Venezuela and played a key role in the Trump administration's policy, said: "The Maduro crime family has used PDVSA to buy and keep the support of many military leaders. The oil belongs to the Venezuelan people, and therefore the money PDVSA earns from its export will now be returned to the people through their legitimate constitutional government.”

What to watch: Bolton reiterated today that military force is possible, saying: "The president has made it very clear on this matter that all options are on the table." He also said the U.S. is "now as prepared as we can be" to protect diplomats in Caracas. The State Department has moved some personnel out of the country, but not complied with Maduro's demand that they all leave the country.

Go deeper: Trump mused about "military option" in Venezuela with Graham

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