The White House has put a possible oil embargo against Venezuela back on the table as Trump administration insiders debate how to respond to Venezuela's planned April elections, already dubbed by Washington as “illegitimate.”
The White House, National Security Council, State Department, and Treasury Department among other agencies are studying and talking with advisers about a range of options to help drive President Nicolas Maduro from office. That includes a full embargo, prohibiting any Venezuelan oil being sold in the United States, or blocking sale of oil related products to Venezuela, according to U.S. administration officials and advisers.
The administration is also considering sanctions against Diosdado Cabello, who is seen as Venezuela's second most powerful leader and head of the ruling socialist party, noting that Canada has already sanctioned the former military chief for human rights violations.
“The message is we will continue to ratchet up the pressure until the Maduro regime is removed and Democracy is returned to Venezuela,” a senior administration official told McClatchy.
The possibility of significant upheaval in the oil markets is serious enough that Secretary of State Rex Tillerson, speaking in Austin, Texas, raised the possibility of tapping U.S. oil reserves in the United States to help soften the possible impact.
Trump already has proposed selling part of the reserve, which is now 700 million barrels, and Tillerson said the endowment could be used to help regional partners and offset U.S. business losses affected by Venezuelan oil sanctions.
“Since they were already going to sell it, they can actually use that oil to get to the refineries who are going to suffer dislocation because of an oil embargo on Venezuela,” said Russ Dallen, a managing partner at the investment bank Caracas Capital Markets, that tracks Venezuelan oil shipments and advises U.S. officials on Venezuelan matters.
Trump has an “escalatory road map” that aides have drawn up that outlines the available economic and individual sanctions meant to strangle Venezuela’s economy. But Trump, so far, has stopped short of applying the so-called “nuclear option” – oil sanctions – that could starve the oil-dependent Caracas government of desperately needed cash during a spiraling economic and humanitarian crisis.
The administration has sharpened its rhetoric toward Venezuela over the last several weeks, from hinting at more sanctions to virtually guaranteeing significant consequences should Maduro's government in Caracas continue to dismantle the South American country's democratic institutions.
It's a shift that reflects an administration coming to terms with the likelihood that Maduro is engineering a way to remain in power for the foreseeable future despite driving the oil rich nation to the brink of economic collapse.
“Come April 22, when we expect Maduro to get re-elected because he will cheat the system and there won’t be anyone running against him, we have six more years of Maduro and that is when the United States will have to make a determination how far we want to take sanctions,” said the senior administration official.
Venezuela set a presidential election for April 22 after mediation talks between the leftist government and an opposition coalition collapsed. Opposition leaders plan to boycott what they see as a sham election to re-elect Maduro.
The Trump administration leaders are weighing whether the long term benefits of various oil measures outweigh what is hoped would be temporary pain to the Venezuelan people, who are already suffering. The administration is making the same calculations as it relates to temporary harm to American financial interests in order to reach longer term national security objectives.
The United States has already slapped sanctions on more than 50 current and former officials and bars U.S. financial institutions from dealing with Venezuelan debt.
The senior administration official told McClatchy the sanctions are working by making it “harder for the regime to access money, to leave the country, to continue their influence.”
Trump has taken a personal interest in this crisis and is “understandably impatient” for greater progress in Venezuela, said Benjamin Gedan, who was National Security Council director for Latin America during the Obama administration. But Gedan said taking drastic step such as an embargo could creative divisions among U.S. allies in the region and Europe. It could also escalate the migrant crisis into the hemisphere.
Maduro has already weathered “unimaginable economic chaos” and could survive a U.S. boycott by sending oil to other countries, such as to a Russian-owned refinery in India, Gedan said.
“There is also an unspoken fear of a worst-case scenario, imposing oil sanctions that deprive the United States of its most potent leverage but do little to dislodge Maduro," Gedan said.