Politics

Trump Hits Venezuela with Sanctions but Spares Oil Industry

Administration says goal is to prevent regime from using U.S. financial markets to finance debt

President Donald Trump on Friday hit Venezuela with stiff new sanctions that attempt to cut off the dictatorial regime from the U.S. financial system, but the penalties spare the increasingly chaotic country’s most important source of foreign revenue: oil.

The sanctions announced Friday are the fourth round of penalties designed to prod Venezuelan President Nicolás Maduro to free political prisoners and hold free elections. Previous sanctions targeted 30 Venezuelan officials, including Maduro himself.

Senior Trump administration officials said they wanted to escalate pressure on Maduro but exempted the oil industry, including Venezuelan-owned Citgo in the United States.

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“Obviously, the U.S. has a lot of influence over the Venezuelan economy,” an administration official told reporters. “But it doesn’t mean that we want to go rush in and use our influence in an irresponsible manner. Our goal is to pressure Maduro and apply that pressure so that he understands that we’re serious and understands that we’re on the side of the people of Venezuela. The goal here is for the restoration of democracy to be brought about to Venezuela.”

Venezuela has plunged into chaos in recent months as the economic and political situation grows more dire. Maduro has jailed opposition leaders and recently created the Venezuelan Constituent Assembly to usurp the power of the country’s democratically elected legislature.

“This is immensely more than Obama ever did in two terms.”

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“This order demonstrates more clearly than ever that the United States will not allow an illegitimate dictatorship to take hold in the Western Hemisphere at the expense of its people,” National Security Adviser H.R. McMaster said at Friday’s White House briefing.

A senior administration officials told reporters that Maduro has made his intentions clear.

“Maduro has chosen to embrace dictatorship more fully … This further demonstrates the regime’s disregard for the will of the Venezuelan people,” the officials said. “The Venezuelan government is starving its people, imprisoning the democratically elected opposition, and violently suppressing freedom of speech.”

Maduro and his allies, the official said, have “demonstrated clear intent to rely on repression and corruption to maintain power.”

Ana Quintana, the lead policy analyst for Latin America and the Western Hemisphere at The Heritage Foundation, told LifeZette that the sanctions — particularly if they trigger a debt default — have a good chance to force the country’s ruling elite to feel the same economic pain that regular people have been feeling for years.

“This is immensely more than [former President Barack] Obama ever did in two terms,” she said.

Trump ordered six specific restrictions on Venezuela:

  • Prohibiting Americans from extending new debt with a maturation period of longer than 90 days to Venezuela’s state-owned oil company, Petróleos de Venezuela.
  • Prohibiting Americans from extending new debt with a maturation period of longer than 30 days for the rest of the Venezuelan government.
  • Prohibiting Americans from offering new equity for the government of Venezuela.
  • Prohibiting transactions involving certain bonds previously issued by Venezuela, although those restrictions do not apply to trading of the vast majority of Venezuelan bonds on the secondary market.
  • Prohibiting payments of dividends or other profit to the Venezuela government by any U.S.-based entity owned by that government, including Citgo.
  • Prohibiting the purchase of any securities from the Venezuelan government, other than bonds with short maturation dates specified earlier.

The sanctions include a “wind-down period” of 10 business days to allow Americans engaged in now-prohibited transactions to draw down activities. Humanitarian assistance also will be allowed to continue.

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Quintana said it is smart not to target the oil industry, which could hurt the U.S. economy and cost American jobs. It is better to hold the threat of oil industry sanctions as leverage, she said.

“I don’t think that we should … go after the oil industry because that is the ultimate economic penalty that we have,” she said. “After that, then what?”

Vice President Mike Pence telegraphed Friday’s action during a speech Wednesday at Our Lady of Guadalupe Catholic Church in Doral, Florida.

“You may be assured,” he said. “Under the leadership of President Donald Trump, the United States of America will continue to bring the full measure of American economic and diplomatic power to bear until democracy is restored in Venezuela.”

(photo credit, homepage image: Jsnake17; photo credit, article image: Jamez42)

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