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U.S. cuts Venezuela’s biggest source of revenue: oil exports

“The United States is holding accountable those responsible for Venezuela's tragic decline.”

by Tim Hume
Jan 29 2019, 12:42pm

Getty Images

The Trump administration slapped sanctions on Venezuela’s state-owned oil company Monday — the latest move in its bid to oust embattled leader Nicolas Maduro.

The sanctions against Petroleos de Venezuela, S.A. (PdVSA), parent company of the U.S.-based Citgo, mean that the proceeds of U.S. purchases of Venezuelan oil will flow into blocked accounts.

The funds would only be released when power is transferred to Juan Guaidó, who the U.S. and more than 20 countries recognize as Venezuela’s legitimate interim president.

“The United States is holding accountable those responsible for Venezuela's tragic decline,” said Treasury Secretary Steve Mnuchin.

“PdVSA has long been a vehicle for embezzlement, for corruption for Venezuelan officials and businessmen. Today's designation of PdVSA will help prevent further diversion of Venezuela's assets by Maduro, and will preserve these assets for the people of Venezuela where they belong.

The state oil company is Venezuela’s largest source of revenue. The sanctions, effective immediately, are expected to cost Maduro $11 billion in lost export revenue, and block him from seizing $7 million in proceeds over the next year, according to White House national security adviser John Bolton.

Announcing the measures at the White House briefing, Bolton reiterated his call for the Venezuelan military to drop its support of Maduro and recognize Guaidó.

“We also, today, call on the Venezuelan military and security forces to accept the peaceful, democratic and constitutional transfer of power," Bolton said, claiming that “the rank and file of the Venezuelan military is acutely aware of the desperate economic conditions in the country and we think they look for ways to support the National Assembly government.”

In response, Maduro accused the United States of trying to steal Citgo, and said his government would take legal action.

READ MORE: Here’s where we stand with Venezuela’s political crisis

Venezuela is deeply reliant on the U.S. for its oil revenue, supplying the country with about 500,000 barrels a day, more than 40 percent of its total oil exports. As Venezuela is one of the top four crude suppliers to the U.S., Washington had until now resisted targeting the country’s oil sector to avoid the risk of raising oil prices for American consumers.

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With handwritten notes on a legal pad, National Security Advisor John Bolton listens to questions from reporters during a press briefing at the White House January 28, 2019 in Washington, DC. (Win McNamee/Getty Images)

Shortly before the sanctions were announced, Guaidó, the president of Venezuela's National Assembly who declared himself acting president last week with the backing of the U.S. and other Western governments, said the assembly would appoint new directors to PdVSA and Citgo.

Announcing the sanctions, Bolton added that Washington was keeping all options on the table over the crisis.

Among those options could be the deployment of 5,000 U.S. troops to neighboring Colombia — at least, according to notes scribbled on a yellow pad that Bolton carried during the briefing.

The notepad, snapped by press photographers, carried two handwritten entries — one an apparent reference to welcoming peace talks with the Taliban in Afghanistan, the other reading: “5,000 troops to Colombia.”

Asked about the note, the White House referred to recent statements that “all options are on the table” regarding Maduro, although Pentagon officials said they were yet to receive orders to deploy to Colombia, the Washington Post reported. The U.S. has cooperated closely with Bogotá and its military for years.

It’s not clear if Bolton’s note was accidental or intentional. But on Monday night he doubled down on the implicit threat of military action, tweeting: “We continue to pursue all paths to disconnect the illegitimate Maduro regime from its sources of revenue and ensure that interim President Guaidó and the Venezuelan people have the resources and support they need to bring democracy back to Venezuela.”

Guaidó said Monday he was prepared to consider amnesty for Maduro and military leaders if they recognized his administration.

While countries including Argentina, Australia, Brazil, Canada, Chile, Colombia, Ecuador, Paraguay and Peru have also recognized Guaido as president, other powers including Russia, China, and Turkey are continuing to back Maduro.

Speaking to CNN en Español, the 35-year-old Guaidó said he was hoping to win the backing of the armed forces, a critical powerbroker in the political standoff wracking the country, which has so far shown no sign of abandoning Maduro.

“We are ready to do what is necessary to see democracy,” Guaidó said.

Cover image: National Security Advisor John Bolton and Treasury Secretary Steve Mnuchin answer questions from reporters during a press briefing at the White House January 28, 2019 in Washington, DC. (Win McNamee/Getty Images)

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Nicolas Maduro
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