The Trump administration slapped new sanctions Monday against Venezuela’s state-owned oil company in its latest effort to push out President Nicolás Maduro and install new leadership under National Assembly chief Juan Guaidó.
“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 told reporters at the White House.
The sanctions prevent any dealings by PDVSA with U.S. companies unless under special conditions. Treasury Secretary Steven Mnuchin said any sales to the United States would go into a blocked account that would be inaccessible to the Venezuelan government. Mnuchin said that if Guaidó succeeds in forming a government, the money would go to him.
Venezuela’s oil sector accounts for as much as 70 percent of the Maduro government’s income. The new sanctions cut most of that off, blocking the majority of oil sales to the United States in stages.
The sanctions also prohibit the sale by U.S. companies of about 3.5 million barrels of oil and other refined oil products to Venezuela, such as naphtha, which is used to thin the tar-like heavy oil so that it can flow through more than 60 miles of pipelines from the Orinoco oil belt for export.
“The path to sanctions relief for PDVSA is through the expeditious transfer of control to the interim president or a subsequent democratically elected government who is committed to taking concrete and meaningful actions to combat corruption,” Mnuchin said.
The announcement comes after months of debate among the White House, National Security Council and departments of State, Commerce and Treasury over what steps to take after last week’s recognition of Guaidó as the legitimate leader of Venezuela.
The sanctions could be seen as a win for the White House, which has long pushed for stronger oil sanctions against resistance from other agencies whose top officials feared a worsening of an already perilous humanitarian crisis in Venezuela.
But the White House was bolstered by international support, which gave the Trump administration the cover it needed to take stronger measures against Maduro.
Bolton said the United States would block $7 billion in assets and Venezuela would lose $11 billion in exports through the action.
But some in the diplomatic community expressed reservations about the measures.
Benjamin Gedan, who was National Security Council director for South America during the Obama administration, said it’s hard to imagine that PDVSA, still controlled by Maduro, will continue shipping oil to the United States, but that he may be able to find new buyers, “which raises the possibility that the United States will have deployed its most potent policy tool only to see Maduro remain in power.
“Who wouldn’t want to deprive the Venezuelan government of its lifeblood, which it uses to purchase the loyalty of the country’s corrupt political and military elite?” Gedan said. “But this step will undeniably increase human suffering, and it is not clear it will dislodge Venezuela’s dictatorship.”
Guaidó announced Monday the transfer of Venezuelan accounts to “legitimate authorities...to prevent the looting from continuing.” Control of the accounts and assets will be approved by the National Assembly, he said on Twitter.
Guaidó also announced his government will be naming new boards of directors for CITGO (the U.S. refining subsidiary of PDVSA) and PDVSA to start “recuperating our industry, currently going through a dark period.”
When asked during the news conference whether Trump would consider taking military action in Venezuela, Bolton repeated a frequently used administration line that “all options are on the table.”
A notepad he was holding during the briefing appeared to have a handwritten line: “5,000 troops to Colombia.”
When asked about an unverified photo of the notepad, a White House spokesperson said: “As the President has said, all options are on the table.”
U.S. companies have until March 29 to wind down operations with PDVSA. Chevron Corporation, Halliburton, Schlumberger Limited, Baker Hughes and Weatherford International are authorized through a general license to continue operations in Venezuela until July 27, 2019. And transactions involving PDV and CITGO, PDVSA subsidiaries in the U.S., are authorized until July 27. But any payments that correspond to PDVSA must be made into a blocked, interest-bearing account located in the United States.
U.S. banks will also be allowed to reject indirect transactions (in third countries) involving PDVSA.
Mnuchin also said that there were exceptions considered to avoid impacting humanitarian efforts in the country. Americans in Venezuela will be allowed “to purchase refined petroleum products for personal, commercial, or humanitarian uses from PDVSA.”
The hope is oil sanctions will be the final step needed to finally drive Maduro from office and allow the United States and international allies to help opposition leaders inside Venezuela rebuild the once oil-rich nation and restore democratic institutions.
Trump administration officials say they stand ready to provide Guaidó financial and humanitarian assistance.
On Friday, Secretary of State Mike Pompeo announced that Elliot Abrams, a State Department and National Security Council veteran who served in the Reagan and George W. Bush administrations would lead the administration’s response as the new special envoy for Venezuela.
Pompeo said Thursday that the U.S. government is prepared to dispatch more than $20 million in humanitarian aid to help Guaidó cope with the severe food and medicine shortages “and other dire impacts of their country’s political and economic crisis.”
Bolton said the United States is investigating how Venezuelan government money and resources in the United States can be seized and transferred to Guaidó.
The administration has long threatened taking stronger oil measures despite pressure from the U.S. oil industry, which warned that it would mean higher gas prices for American motorists.
Administration officials have outlined various options to McClatchy over the last year that range from a full embargo, prohibiting any Venezuelan oil being sold in the United States or a certain amount, sanctioning the state oil company, PDVSA and blocking sale of oil-related products to Venezuela.
Florida lawmakers applauded the Trump administration’s decision to sanction Venezuela’s state-run oil company.
“Maduro’s criminal family has used PDVSA to buy and maintain the support of many military leaders,” Sen. Marco Rubio said in a statement.
“The oil belongs to the Venezuelan people and, therefore, the money that PDVSA obtains from its export will now be returned to the people through its legitimate constitutional government.”
Rubio, a longtime proponent of sanctions and an embargo on Venezuelan oil until Maduro steps down, said the money for Venezuelan oil from U.S. refiners will eventually end up in the hands of Juan Guaido’s nascent government.
Miami Rep. Mario Diaz-Balart, who met with the president last week on Venezuela, said the sanctions will protect the country’s oil from “further plundering.”
“These sanctions will cripple the state-owned oil sector, preventing the regime from funding global terrorism, narcotrafficking, and repression against its own people,” Diaz-Balart said in a statement. “The Chavez-Maduro regime has exploited and illegally stolen the oil-rich country’s resources for far too long, and the sanctions will also protect it from further plundering. I commend the Trump Administration once again for today’s bold leadership in standing with the people of Venezuela and opposing their oppressors of the Maduro regime. Time is running out for the Chavez-Maduro regime, and those responsible for these crimes will be held accountable.”
Carol Rosenberg contributed to this report.