US hits Venezuela with oil sanctions to pressure Maduro
By MATTHEW LEE and DEB RIECHMANN
Tuesday, January 29
WASHINGTON (AP) — The Trump administration on Monday sanctioned Venezuela’s state-owned oil company, ratcheting up pressure on socialist President Nicolas Maduro to cede power to the U.S.-backed opposition in the oil-rich nation in South America.
The action means Maduro’s embattled government would lose access to one of its most important sources of income and foreign currency along with around $7 billion in assets of the state-owned company, Petroleos De Venezuela S.A.
Hours after the White House announced the sanctions, Maduro went on state TV and called the U.S. action “immoral, criminal.” In words directed at President Donald Trump, he said, “Hands off Venezuela!”
The sanctions follow the unusual decision by more than 20 countries, including the U.S., to recognize the opposition leader of the National Assembly, Juan Guaido, as the interim president of Venezuela. Maduro was re-elected last year in an election widely seen as fraudulent. The once prosperous nation has been in an economic collapse, with several million citizens fleeing to neighboring countries.
“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,” national security adviser John Bolton said at a White House news conference to announce the sanctions with Treasury Secretary Steven Mnuchin.
Bolton said he expects Monday’s actions against PDVSA — the acronym for the state-owned oil company — will result in more than $11 billion in lost export proceeds during the next year.
Oil production — the lifeblood of Venezuela’s economy — has been collapsing for years. Despite sitting atop the world’s largest reserves, Venezuela currently pumps just a third of the 3.5 million barrels a day it did when the late Hugo Chavez took power in 1999.
The nation’s refining capacity has also declined because of poor maintenance and lack of skilled personnel. That has left it reliant on Citgo, the Houston-based refining arm of PDVSA, to refine the oil and send gasoline back to Venezuela to meet domestic needs.
“They have just lost that source,” said Russ Dallen, managing partner of Caracas Capital, a brokerage company.
Venezuela is very reliant on the U.S. for its oil revenue, sending 41 percent of its oil exports to the U.S. Maduro can divert the roughly 500,000 barrels per day of oil currently being sold to Gulf Coast refineries to markets in Russia, China, India, Malaysia and Thailand.
But processing international financial transactions is hard without going through the U.S. or European banks. Transport costs would also jump because Venezuela’s ports aren’t well-equipped to load supertankers for transporting oil to distant markets.
That means the country, which depends almost entirely on oil exports for hard currency, will be able to purchase even less food and other imports, potentially worsening shortages and deepening its economic collapse.
Outside the PDVSA headquarters in Caracas, office workers lining up to board red company buses were seeking information about the immediate impact of the U.S. sanctions. As he hurried home with his two children, one employee told The Associated Press that the sanctions signaled tough times ahead.
“Things are going to get difficult,” said the man, who refused to identify himself by name because he feared reprisals from the company. “The United States is one of the few buyers who pays for the oil up front, and it’s probably where most of our income comes from.”
Mnuchin said any money that U.S. entities use to buy Venezuelan oil will go into a blocked account in the United States, not the Maduro government.
He said if PDVSA wants to see the sanctions lifted, there would have to be a speedy transfer of control to the interim, U.S.-backed president and a democratically elected government that is “committed to taking concrete and meaningful actions to combat corruption.”
He said the Treasury Department has taken steps to allow refineries to continue importing oil from Venezuela temporarily. Also, he said Citgo will be able to continue importing oil as long as the revenue is sent to the blocked account in the United States.
“This is a country that is very rich in oil resources,” Mnuchin said. “There is no reason why these resources shouldn’t be used for the economic benefit of the people there.”
Mnuchin said he did not expect the sanctions would cause U.S. consumers to see higher prices at gas pumps.
The American Fuel & Petrochemical Manufacturers, which represents 95 percent of the refining sector, has lobbied hard during the past two years against any sanctions that would disrupt imports of Venezuelan oil. The association issued a statement saying it supported the Trump administration’s goal to bring change to Venezuela.
“To that end, we will work with the administration to minimize any unnecessary disruptions or negative impacts to the market and American consumers,” the association said.
Mnuchin insisted the sanctions would have only a “modest” impact on U.S. refineries because Venezuelan oil exports to the U.S. have declined steadily over the years, falling particularly sharply over the past decade as its production plummeted amid its long economic and political crisis.
The U.S. imported less than 500,000 barrels a day of Venezuelan crude and petroleum products in 2017, down from more than 1.2 million barrels a day in 2008, according to the Energy Information Administration.
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 percent of U.S. crude imports. Valero and Citgo are among the largest importers of Venezuelan crude.
Associated Press writers Alexandra Olson in New York; Christine Armario in Bogota, Colombia; and Joshua Goodman, Scott Smith and Manuel Rueda in Caracas contributed to this report.
US sanctions add pressure on Venezuela’s embattled Maduro
Tuesday, January 29
CARACAS, Venezuela (AP) — International challenges to the legitimacy of President Nicolas Maduro’s government began to bite harder on Tuesday as the United States handed control over Venezuela’s U.S. bank accounts to opposition challenger Juan Guaido and Russia announced it expects Venezuela to have problems paying its debts.
U.S. Secretary of State Mike Pompeo certified that Guaido, the congressional leader who has declared himself interim president, has authority to take control of bank accounts that Venezuela’s government has in the Federal Reserve Bank of New York or any other U.S.-insured banks.
Pompeo said the certification will “help Venezuela’s legitimate government safeguard those assets for the benefit of the Venezuelan people.”
Guaido has been recognized as the nation’s rightful leader by two dozen nations that contend the re-election of socialist President Nicolas Maduro was a sham, in part because his strongest opponents were barred from running.
Violent street demonstrations erupted last week when Guaido during a massive opposition rally in Caracas declared that he had assumed presidential powers and planned to hold fresh elections, ending Maduro’s “dictatorship.”
The United States, Brazil, Canada, Colombia, Argentina, Peru, Ecuador and Paraguay have officially acknowledged Guaido as the legitimate interim head of Venezuela, while countries including Russia and China back Maduro.
Inside Venezuela, Maduro holds the reins of power with the armed forces still loyal despite an opposition push to lure their support by proposing amnesty for anybody who supports Guaido’s transitional government.
Maduro accuses the United States of leading an open coup to oust him and exploit Venezuela’s oil reserves, the largest in the world.
On Monday, the U.S. hit Venezuela’s state-owned oil company with sanctions aimed at increasing pressure on Maduro to leave office.
Guaido said in an interview with CNN in Spanish on Monday that Venezuela’s opposition-controlled congress had approved a measure asking foreign nations to ensure the country’s assets aren’t “looted” by Maduro.
Meanwhile, Russian Deputy Finance Minister Sergei Storchak told Russian state news agencies Tuesday “there will probably be problems” for Venezuela in paying its debts.
Storchak said Venezuela owes Russia $3 billion, with repayments twice a year of around $100 million, with the next due in March. Russia also has extensive commercial interests in Venezuela, including state oil company Rosneft’s partnership with Petroleos de Venezuela SA, which was placed under U.S. sanctions Monday.
Kremlin spokesman Dmitry Peskov said the Kremlin shares the view of the Venezuelan government that the sanctions are “illegal” and sees them as a tool of unfair competition on part of the United States.
In Spain, state-owned shipbuilder Navantia said it has called back four Spanish technicians from Venezuela who were readying for final delivery a navy patrol ship sold 14 years ago to the Venezuelan government.
A company spokesman said the recall doesn’t change the shipbuilder’s plan to deliver the vessel, which is called Eternal Commander Hugo Chavez. It is the last of eight similar ships that the former Venezuelan leader bought from Spain in 2005 for $1.4 billion.
Venezuela: how Latin American tolerance of illiberalism let a nation slide into crisis
January 25, 2019
Author: Tom Long, Assistant Professor in New Rising World Powers, University of Warwick
Disclosure statement: Tom Long has received funding from the British Council, British Academy/Leverhulme Trust, the US Fulbright Commission, the Truman Library Institute, American University, and the Tinker Foundation, all related to his research on Latin America.
Partners: University of Warwick provides funding as a founding partner of The Conversation UK.
Venezuela today finds itself at the centre of Latin America’s tension between liberal and illiberal forces. These forces are domestic in origin but have powerful international backers. On one side, the United States and a host of Latin American governments have recognised opposition leader Juan Guiadó as the new legitimate president of Venezuela. On the other, Nicolás Maduro clings to power with the backing of Russia and Cuba.
Illiberalism in Venezuela paved the way for an unprecedented humanitarian disaster in the country, spurring today’s contest over Maduro’s legitimacy. Despite the current growing support for Guaidó, for a decade, most Latin American neighbours quietly tolerated Venezuela’s erosion of democracy and markets.
After the Cold War, Latin America embraced the principles of liberal international order perhaps more than any other part of the world. But rising illiberalism now spans the political spectrum. In some cases, has drawn support at the ballot box. Populist legislator Jair Bolsonaro became Brazil’s president in spite of – or perhaps because of – his lack of concern for human rights or the rule of law. Mexico’s president Andres Manuel Lopez Obrador is using questionable “popular consultations” to justify decisions that ignore significant opposition. In Honduras a right-leaning president has extended his power and tolerated violence against social movements. In Nicaragua, a former leftist guerrilla leader has turned authoritarian and is repressing peaceful protests.
A global struggle
Latin America was supposed to be past all this. But patterns there reflect wider challenges to the liberal international order, exemplified by the election of President Donald Trump and the UK’s decision to leave the European Union. The order also seems threatened from the outside by Russian attacks on democracy – and most recently, Russia’s explicit support of Maduro. China, long a major Venezuelan creditor, poses a subtler, but grander, challenge to the existing international rulebook.
Maduro clings to power with the backing of Russia and China.
Discussions of this crisis of confidence in international liberal principles have often ignored Latin America. Comparisons have been made of Trump and Bolsonaro, but democratic backsliding in Latin America is hardly limited to the spread of the populist right and has very little to do with Trump’s rise. As Venezuela’s own history shows, Latin America has experienced both bouts of illiberalism and passionate movements towards democracy and human rights over decades. These should be understood in the context of the fickle relationship between Latin America and the liberal world order.
Almost since independence in the early 19th century, Latin American states have been only partially included in the rules-based, liberal world.
The international rules of the liberal order were only sporadically applied across the continent because great powers, including the United States, granted themselves exemptions to protect their interests in the region. Latin American elites also often found their attempts to be properly included in the development of international law and diplomacy were frequently rebuffed. And when Latin American states got involved in international institutions and global markets, it was often only to entrench the power of elites who practiced illiberal politics and crony capitalism at home.
Powerful states in the liberal world have often gladly ignored this, focusing more on their own economic and political priorities than on whether liberal principles and practices were being upheld domestically within Latin America. This has been exemplified most recently by Bolsonaro, who almost boasts of his illiberalism at home while courting the favour of global markets and business. On the left, Venezuelan largesse dampened the regional response to its democratic decline, until the money ran out and the crisis started spilling over the borders.
Turning a blind eye
Latin America’s experiences shed light on how life at the margins of the liberal international order means that, domestically, the gains of liberalisation are shared narrowly and the commitment to democracy and human rights is often paper-thin. These problems aided the rise of former president Hugo Chávez in Venezuela two decades ago, gradually setting the stage for today’s crisis. As it turns out, similar dynamics are at the core of the liberal international order’s problems today.
Champions of these liberal principles in Latin America should combine the region’s own rich liberal traditions and interstate cooperation to shape international rules about domestic conduct. This liberal tradition was poorly reflected by a new wave of regional organisations during the 2000s that largely served to protect and legitimise incumbents, including Maduro. The region’s leaders would do better to revive the ideals of the collective defence of democracy, with a focus on prevention. They are rooted in the 1907 Tobar Doctrine and the 1945 Larreta Doctrine, which encouraged multilateral engagement with the internal affairs of states which violated human rights or whose governments had come to power through unconstitutional means.
These proposals emphasised regional peer pressure on governments and collaborative responses to undemocratic practices. They must be applied early and consistently to prevent illiberalism’s next crisis, regardless of whether it emerges from left or right.
In Venezuela, this diplomatic pressure and isolation signals an important reversal of earlier tolerance and comity. Regional breathing room allowed Maduro to consolidate his power, dramatically reducing the prospects for peaceful solutions. In the future, preventative regional pressure on illiberal activity would be more effective than turning to punitive actions once disaster is already upon us, as is the case with Venezuela’s suffering millions.
To regain its vitality, the liberal international project in Latin American and elsewhere must ensure that the economic, social and political gains of the international order are available consistently and to everyone. Latin Americans need not look abroad for solutions to this crisis of international order, but to their own liberal heritage.
Transforming the Dream into Reality
by Robert F. Dodge, M.D.
This past week witnessed two significant and connected events. We remembered and celebrated the visionary champion of civil rights, social and economic justice and nuclear disarmament, Dr. Martin Luther King, Jr at the outset and finished the week with the unveiling of the Nuclear Doomsday Clock. Dr. King realized the interconnectedness of these issues and that you could not have one without each of the others.
This week our government is reopening as our Progressive Caucus prepares to do the people’s work proposing a “Green New Deal,” building a carbon-free economy while providing social and economic justice to workers in this new economy. Yet, as Dr. King acknowledged in 1959, “What will be the ultimate value of having established social justice in a context where all people, Negro and white, are merely free to face destruction by strontium 90 or atomic war?” There is no racial, social, economic or environmental justice as long as this threat exists.
And yet today, the world faces an even greater threat of nuclear war fueled by Trump’s withdrawal from the Iran nuclear deal, threatened withdrawal from the INF Treaty and by the new arms race initiated by the United States plan to spend over $1 trillion in the next three decades to rebuild and enhance our entire nuclear arsenal. This plan has been duplicated by every other nuclear nation, not wanting to fall behind in the mythological idea of “nuclear deterrence.”
The Bulletin of Atomic Scientists unveiled their nuclear Doomsday Clock last week, leaving the setting at two minutes till midnight with midnight being nuclear apocalypse. This “new abnormal” declared by the group emphasized the increasing existential threats to our planet of climate change and nuclear war. Climate change continues to march ahead increasing scarcity of natural resources and thus increasing global conflict and mass human migration as witnessed in our first climate war in Syria.
Recognizing the connection between climate change and nuclear war and the failure of global leaders to take the necessary immediate and appropriate action, the Clock remained steady at two minutes till midnight, the closest it has been since the height of the Cold War and its inception in 1947. In their announcement they highlighted that citizens can make a difference by demanding efforts to stop our addiction to fossil fuels and simultaneously demanding nuclear weapons abolition. Working with movements like 350.org and Back from the Brink, each of us can support the necessary actions to realize these aims.
Seemingly oblivious to current science about the dangers of even a limited regional nuclear war threatening the entire planet outlined in the Nuclear Famine Report, our elected officials blindingly move forward in this arms race. From this point forward, any politician who invokes the potential use of nuclear weapons or the statement “all options are on the table” must be looked at as a “nuclear dinosaur,” truly ignorant of, uninformed about, or in denial of the consequences of any nuclear war.
Speaking at the conference, the Bulletin’s executive chair, former California Governor Jerry Brown said, “The blindness and stupidity of the politicians and their consultants is truly shocking in the face of nuclear catastrophe and danger. The probability is mounting that there will be some kind of nuclear incident that will kill millions, if not initiating a nuclear exchange that will kill billions. It’s late and it’s getting later, and we have to wake people up.”
Ultimately, there is no greater social, economic, health or environmental threat to our communities, all children and the world than the constant real and present threat of nuclear war either by intent, miscalculation or accident. This threat is heightened today by the vulnerability induced by cyber terrorism. It is not possible to have a “Green New Deal” in a nuclear-threatened world. We must demand our leaders take the immediate and necessary action necessary to prevent further climate change and abolish nuclear weapons. This remains the only option to protect our future and that of future generations.
The Progressive Caucus in the House of Representatives is positioned to take the lead on these issues and realize the connection—if only they will. We the people must inform and support them as we help build the political will transforming the dream into a reality for a just, environmentally sustainable and peaceful nuclear-free tomorrow.
Robert Dodge writes for PeaceVoice, is a family physician practicing in Ventura, California, is the Co-Chair of the Nuclear Weapons Abolition Committee of National Physicians for Social Responsibility. PSR received the 1985 Nobel Peace Prize.