By Andrew Martin
The Trump administration is continuing to apply pressure to Venezuela to destabilise the democratically elected government of Nicolás Maduro. It is seeking to install a puppet regime that will be obedient to Washington’s dictates and secure access to its vast oil reserves.
Trump is hoping that Venezuela, weakened economically by both sanctions and the COVID-19 pandemic will descend into a state of civil war. Trump intends to install Washington’s puppet Juan Guaidó, former president of the National Assembly, as the unelected president.
However, US policy of sanctioning the country and attempts to seize control of Venezuelan state-owned CITGO – a United States based oil refiner and distributer – are having the effect of splitting and weakening the same right-wing opposition the US hopes to bring to power.
14 Years of Sanctions
Venezuela is suffering under a series of sanctions imposed unilaterally by the U.S over a period of 14 years under the Bush, Obama and Trump administrations. According to a document published in August by the US Congressional Research Service, the latest extension to the sanctions will extend to a further 150 individuals. The state department has also revoked the visas of 1,000 more Venezuelans. The document notes that sanctions against Venezuela are supported on a bi-partisan basis.
The first sanctions were imposed in 2006 for the apparent crime of not “cooperating fully with United States anti-terrorism efforts”. Commercial sales and shipments of arms to the Venezuelan government were sanctioned by the U.S. The hypocrisy is rank. The CIA has armed paramilitary death squads, provoked several armed incursions and supported two military coup d’états in Venezuela, both of which failed. Venezuela needs to buy arms to defend itself.
The U.S has desperately tried to conjure up an image of Maduro as a Third World dictator and a mob boss that is more consistent with Hollywood fiction, than reality. In 2008, the U.S government accused the Venezuelan government of backing the Lebanese political faction Hezbollah.1 It has repeatedly accused the government of being involved in “Narco-terrorism”.
The most recent of these accusations was on 27 May, when the U.S Drug Enforcement Administration announced that charges had been laid in the Manhattan federal court against Adel El Zabayar, president of the Federation of Arab Associations and Entities of Venezuela.2 Two months prior, the U.S made similar accusations towards 15 current and former Venezuelan officials. The Immigration Customs Enforcement (ICE) agency placed a reward for up to $10 million for information leading to the arrest and conviction of former Venezuelan Vice President Tareck El Aissami. It stated on 27 March:
“The Venezuelan regime, once led [sic] by Nicolás Maduro Moros, remains plagued by criminality and corruption. For more than 20 years, Maduro and a number of high-ranking colleagues allegedly conspired with the FARC, causing tons of cocaine to enter and devastate American communities. Today’s announcement is focused on rooting out the extensive corruption within the Venezuelan government – a system constructed and controlled to enrich those at the highest levels of the government. The United States will not allow these corrupt Venezuelan officials to use the U.S. banking system to move their illicit proceeds from South America nor further their criminal schemes.”
Criminal charges for drug trafficking have also been laid against Maduro, with a $15 million reward for his capture. Trump previously imposed sanctions on almost 200 Venezuelan government officials, including Maduro and his wife, Cecilia Flores and other members of Maduro’s family. Flores is a lawyer and former attorney general and a member of the PSUV. As a member of Venezuela’s congress, she has been outspoken against U.S war crimes, so it’s no surprise she has been targeted. Like others in Maduro’s family, she has been sanctioned to smear the government with allegations of nepotism and corruption.
Sanctions have been extended to heads of government, members of the ruling United Socialist Party of Venezuela (Partido Socialista Unido de Venezuela – PSUV), supreme court judges, leaders of the army and several governors; all of which are accused of corruption. These individual sanctions block the assets and movement of persons that are critical to the functioning of the Bolivarian government. They create diplomatic difficulties and restrict Venezuela’s capacity to seek solidarity and forge commercial agreements that would help restructure its debt and import much-needed food and medicine.
The accusations against the officials of Venezuela’s government are harmful, mostly because they carry the implicit threat of war. They are completely baseless. With 8,500 special agents and intelligence analysts assigned to more than 200 cities throughout the U.S. and more than 60 offices in more than 50 countries around the globe, neither ICE, the Department of Homeland Security, the Drug Enforcement Administration (DEA), the FBI, Europol, INTERPOL, and other local, state, federal, and foreign law enforcement agencies have produced a single shred of evidence to support any accusations of corruption.
The allegations against the Venezuelan government are incredible, especially considering the US Drug Enforcement Administration (DEA) itself admits that 92% of cocaine comes into the U.S from Columbia. The majority is transported via Pacific routes or through Mexico – not Venezuela.
It’s important to recognise that the U.S only started using indictments after their strategy to offer inducements for government officials to flip over to the opposition failed. This was once a preferred strategy. The U.S think-tank, the Washington Office on Latin America stated in June 2019:
“At WOLA we have been consistently concerned about the potential for targeted sanctions to raise the ‘exit costs’ of Venezuelan political elites. As David Smilde put it in his 2017 testimony to the Senate Foreign Relations Committee, we’ve argued that there is a risk that once an individual is sanctioned their incentives to support a transition could be reduced—instead giving them incentives to go down with the ship.”
The article argues the intention of the U.S state department was more or less for high ranking officials to defect and provide information that could lead to their comrades’ capture. The individual sanctions were tied to monetary rewards for those who gave themselves up. But as the article admits, almost comically, “there are reasons for figures in Chavismo to be skeptical of off ramps”. Most likely because of that “off-ramp” would be solitary isolation at the U.S military prison at Guantanamo Bay.
Targeting Venezuela’s Gold and Oil
Venezuela has suffered from severe economic contraction and hyperinflation. Its economic success has always been dependent on global oil prices. Oil accounts for 98% of export revenues. The drop in the price of oil has severely impacted on Venezuela. These problems have been exacerbated by sanctions.
Sections of the right-wing in Venezuela and abroad often state that the sanctions are only on individuals, so are symbolic. This often gets repeated by the liberal left and even socialists in Western countries such as Australia, who claim Venezuela’s economic problems are primarily caused by the policies of its Bolivarian government.
However, according to an April 2019 report by the Center for Economic and Policy Research by Mark Weisbrot and Jeffrey Sachs, Economic Sanctions as Collective Punishment: The Case of Venezuela, 40 000 people have died as a result of sanctions since August 2017.
The report stated:
“The sanctions reduced the public’s caloric intake, increased disease and mortality (for both adults and infants), and displaced millions of Venezuelans who fled the country as a result of the worsening economic depression and hyperinflation. They exacerbated Venezuela’s economic crisis and made it nearly impossible to stabilize the economy, contributing further to excess deaths. All of these impacts disproportionately harmed the poorest and most vulnerable Venezuelans. Even more severe and destructive than the broad economic sanctions of August 2017 were the sanctions imposed by executive order on January 28, 2019, and subsequent executive orders this year; and the recognition of a parallel government, which as shown below, created a whole new set of financial and trade sanctions that are even more constricting than the executive orders themselves.”
The sanctions severely limit the ability of the Maduro government to buy food or medicine. It has not, for example, been able to buy insulin since 2017, leading to thousands of deaths. There are power outages and general economic hardship for most people living in Venezuela.
Trump’s presidency has marked a shift from individual to sectoral sanctions. In March 2018, Trump imposed sanctions that prohibit trading in Venezuela’s digital currency, the petro (₽) and the purchasing of Venezuelan debt. In February this year, the U.S imposed sanctions on Venezuela’s state-run airline Conviasa saying it was being used to “shuttle corrupt officials around the world”.
Sanctions have also extended to Venezuela’s gold. The U.S treasury department sanctioned Minerven, Venezuela’s state-run mining company in March 2019. The US, along with its allies, has sought to seize Venezuela’s gold.
With the oil industry hit hard by sanctions, Venezuela, which has some of the largest reserves in the world, needs to use its gold to raise hard currency. Turkey, the U.A.E and Russia have been the biggest buyers. John Bolton, Trump’s former national security adviser justified sanctions on gold as if it had been stolen by “Maduro’s mafia”.
The Venezuelan government has $1.2 billion worth of gold in the Bank of England (BoE). This gold has been seized by the English central bank at the urging of the U.S State Department. Despite Maduro’s government having an ambassador in London and Britain having an ambassador in Caracas the UK High court ruled the seizure was legal.
However, the most damaging of all sanctions are those that apply to the state-owned oil company, PDVSA, the Venezualan central bank and the government itself.
The US has sanctioned the Russian state-owned Rosneft oil company and four shipping companies for transporting Venezuelan oil. Cuba’s state oil company has also been sanctioned by Trump. These are most obviously damaging because they restrict Venezuela’s ability to export oil which is its major source of revenue.
The sanctions do not comply with international or maritime laws. However, any shipping company that transports Venezuelan oil is prohibited from trading with either the U.S or with and any other country that supports the sanctions. Any vessel owner or shipping company that doesn’t comply with the sanctions is blacklisted and must run the risk of the U.S seizing vessels and their cargo. Several vessels owned by PDVSA have already been seized and the government is trying to negotiate their return.
The sanctions on PDVSA restrict the Venezuelan government’s access to U.S equity markets, limiting their ability to refinance debt. Venezuela has the largest proven oil reserves in the world and these are managed by PDVSA. The government has often used PDVSA to gain access to foreign financial markets, currency exchange and to fund the country’s social programs. The company cannot make any transactions with U.S citizens and its property in the U.S including the CITGO has been frozen, removing a major source of funding for the Venezuelan government. The sanctions also mean that Venezuela cannot sell any assets it owns in the U.S, which might also allow it to restructure its debts.
The sanctions against the central bank are also serious. They cut the government off from the main means of global trade – U.S dollars. Its ability to conduct international transactions is severely restricted. In August Trump further ratcheted up sanctions declaring a complete embargo against the Venezuelan government. Domestic and foreign entities that engage with the Venezuelan government can also be sanctioned.
The US policy has several objectives. One is to de-legitimise the Maduro government. Sanctioning any individual member of the government tarnishes it with the brush of corruption, criminality and malfeasance. The second is to sharpen political tensions in a way the right-wing opposition can take advantage. Thirdly, they provide an opportunity to seize Venezuelan assets and gain control of Venezuela’s oil and other resources.
Successive U.S governments from George W. Bush onwards have increased sanctions to such an extent, it’s obvious they wish to collectively punish the Venezuelan people for choosing a government that’s not to Washington’s liking. The sanctions go far beyond any sort of “symbolism”. The real intent appears to be to wreck the country, destroy the morale of anyone who supports the government and weaken the ability of its armed forces to resist military invasion – as was done to Iraq before it was invaded by the U.S.
The accusations of criminality are not just a pretext for more sanctions but are a pretext for possible invasion and military coups. In an interview with CBNC in March 2019, when asked if the U.S intended to militarily intervene in Venezuela, US secretary of state Mike Pompeo responded, “…every option was on the table”.
The seizure of CITGO and other sanctions have caused critical shortages of fuel. They have cut PDVSA from much-needed revenue to maintain its oil infrastructure. As a result its production and refining capacity is limited. The new sanctions are particularly harmful because they prohibit the importation of diesel fuel or additives to produce diesel. PDVSA had commercial arrangements in place to trade crude oil for diesel with global energy corporations, Repsol, Reliance and Eni. Venezuela has large amounts of petrol and diesel in reserve, but the sanctions will impact its ability to replenish those stocks.
On 14 August the U.S announced that it had seized 1.1 million litres of petrol from four Greek-owned ships headed from Iran to Venezuela. The U.S has not described how they intercepted the ships, but it was most certainly a brazen act of piracy. It later emerged that the ship operators were based in the United Arab Emirates, Oman and the UK.
On 4 September the U.S Justice Department announced it had taken control of three Iranian websites that were being used to arrange a “multi-million fuel shipment to Venezuela. All three websites now display the U.S flag and a notice that the domains are now in the hands of the U.S.
Trump, indecisive, incompetent and full of contradictory impulses, has escalated tensions with Iran, which has termed its relationship with the U.S as “neither war nor peace”. This has led to Iran and Venezuela forming a strategic trade relationship that is vital for the survival of both countries.
Shortages of diesel will have a massive impact on all forms of economic activity in Venezuela, which relies heavily on trucks, buses and other forms of private transport. The sanctions will impact agriculture, likely causing food shortages and prevent people from attending work. Venezuela’s freight rail infrastructure is lacking with less than 700km of rail line and only its relatively modern urban rail network is electrified. Hospitals too rely on diesel-powered back-up generators and much of Venezuela’s electricity supply in western parts of the country is provided by diesel-power generators.
The Battle for CITGO
PDVSA has majority ownership of CITGO, a petroleum company based in the U.S that refines Venezuelan heavy crude oil and distributes petrol. CITGO, the most valuable of PDVSA’s assets, had a net income of $246 million in 2019 and is currently valued at $10 billion. With 5% of US refining capacity, it is the eighth largest oil refiner. It employs 5,300 workers across three major refineries and 4,500 petrol stations around the country.
Although Venezuela’s heavy crude oil is expensive to refine, the U.S considers it valuable as it decreases US dependency of lighter oil from the Middle East. The access CITGO has to U.S markets makes it a strategic energy asset. As it is also Venezuela’s main supplier of petroleum, control of CITGO determines the energy security of Venezuela.
The sanctions have cut off CITGO from receiving Venezuelan heavy crude oil. CITGO’s petroleum refineries based in the Gulf of Mexico are exclusively designed to process heavy crude oil, principally from Venezuela. They have now had to adapt to different grades of crude oil from a variety of sources including Africa and other Latin American countries by re-engineering some of their refineries. In turn, CITGO has not been able to export refined petrol to Venezuela.
Control of CITGO, Venezuela’s most valuable foreign asset was transferred to Guaidó by the U.S state department shortly after he declared himself president. It now has a parallel board of directors and alternate CEO Carlos Jorda and Chairwoman Luisa Palacios. The US has intervened repeatedly over the last year to ensure that the Guido maintains control of Citgo Petroleum Corporation, Citgo Holding and PDV Holding. The sanctions prevent PDVSA from foreclosing CITGO, which, if the Venezuelan government can’t retain control, it may be prepared to do to revive its oil sector.
It was expected that CITGO would finance Guaidó’s so-called interim government but its income has fallen drastically. The company now faces many different legal challenges from multinational corporations and Venezuelan creditors.It has been unable to pay back creditors and suppliers. It owes $1 billion to bondholders. But given its assets are frozen, who pays? The U.S state department wishes to extract these debts from PDVSA, but there has yet to be a settlement in court. Palacios insists the debt belongs to PDVSA.
While the sanctions currently prevent CITGO from providing revenue to Venezuela – a complete loss of Venezuelan ownership would be an even higher level of attack – and would also have severe implications for Venezuelan politics. Rosneft, the Russian oil company holds a major share in CITGO. The U.S government may also worry that if CITGO goes into receivership, Rosneft could gain a critical piece of energy infrastructure on U.S soil.
The carve-up of CITGO is not a desirable outcome, even for the most extreme right-wing political factions and mercenary adventurers around Juan Guaidó. The Venezuelan people rightly believe CITGO belongs to them and have no trust that the opposition will hold these assets in trust. It is widely perceived that Guaidó is enriching himself at the expense of Venezuelan people. He has been implicated in corruption scandals involving money laundering and members of his Popular Will party have misappropriated money from USAID that was supposed to support deserters from Venezuela’s military. His standing in Venezuela and internationally is now at rock bottom.
Neo-conservative, Elliot Abrams one of the architects of the 2nd Iraq war and the Iran-Contra scandal clearly explains how holding onto CITGO presents a delicate problem for US imperialism. When he was acting as U.S Special Envoy to Venezuela, Abrams wrote to the District Court in Deleware – which is presiding over the CITGO case – to prevent its sale:
“Critical to U.S. foreign policy, the United States assesses that the domestic legitimacy of the interim government under Guaido would be severely eroded were a forced sale of CITGO to take place while the illegitimate Maduro regime still attempts to cling to de facto power in Caracas. The efforts by creditors to enforce judgements against Venezuela by taking immediate steps toward a conditional sale of PDVSA’s U.S.-based assets, including PDVH and CITGO, are detrimental to U.S. policy and the interim government’s priorities. Should these assets be advertised for public auction at this time, the Venezuelan people would seriously question the interim government’s ability to protect the nation’s assets, thereby weakening it and U.S. policy in Venezuela today… Its loss through a forced sale in a U.S. court would be a great political victory for the Maduro regime, which has already claimed the United States and Guaido are conspiring to ‘steal’ CITGO. The impact on Guaido, the interim government and U.S. foreign policy goals in Venezuela, would be greatly damaging and perhaps beyond recuperation.”
For the reasons Abram’s outlines, it is not just the Bolivarian government and its supporters that are opposed to the sanctions. Prominent members of Venezuela’s right-wing opposition – seeking to maintain some support for themselves – have spoken out. Francisco Rodríguez, economist and director of the U.S registered think-tank, Oil for Venezuela Foundation, characterised the sanctions as “clearly (a U.S) electoral measure” that “will cost lives”.
Guiadó, on the other hand, has continually supported sanctions. Speaking to journalists in February this year he stated they are “the free world’s tools to confront regimes (that) violate human rights, torturers, and murderers.”
Sanctions fail to prevent aid from reaching Venezuela
Although U.S sanctions are biting hard, Venezuela has on occasion been able to defy them. Several ships from Iran have made it to Venezuela without the U.S intervening. According to an advisory from the US state department issued on 14 May, shipping companies have also used covert means to ship oil and other commodities. These include disabling or manipulating the automatic identification systems on vessels, ship-to-ship transfers at sea, physically altering shipping identification and falsifying cargo and vessel documents. Although the U.S has not presented any evidence of this, it may be an admission that the sanctions are not having their desired effect.
The sanctions against Venezuela have forced the country to form stronger ties with Russia, Iran, China and Turkey. These countries have deepened economic ties, investing in energy, natural resources and basic heavy industries in Venezuela. They have provided a lifeline to its oil industry and supplied much-needed stocks of food, medicine and hard currency. This is enabling Venezuela to achieve numerous breakthroughs.
Venezuela, for the first time since Trump imposed sanctions on PDVSA in January 2019, is now shipping its oil. As of the beginning of this month a Russian flagged vessel, the Maximo Gorki a large crude carrier departed from PDVSA’s Jose terminal carrying 2 million barrels of oil. It is expected to arrive in Singapore in mid-October. PDVSA has been able to sell this oil via two separate agreements, one for the sale of the crude oil and one for the freight contract. The customer owns the oil the second the tanker left the port removing PDVSA from the liability of U.S intervention.
Russia and China have provided military hardware and technical advice. While most European nations supported Guiadó’s attempt to usurp power in Venezuela, cracks are beginning to show. In February this year, the newly elected centre-left coalition in Spain led by Pedro Sanchez downgraded their relationship with Guiadó, referring to him as an “opposition leader” and reportedly held a meeting with Maduro’s vice president, Delcy Rodríguez at the Madrid airport of Barajas. Portugal has recognised Maduro’s government as the “de-facto authority” which they’ve dealt with to resolve commercial issues. Germany has not accepted Guiadó’s ambassador and many other European nations also recognise Maduro as the “de-facto government”.
The isolationism of the U.S and its menacing trade relationship towards Europe has provided an opening to give some modest relief to Venezuela as the U.S alienates its allies. What used to be a list of more than 50 nations that recognised Guiadó is now down to 30.3
In August, both Spain and Portugal, with the coordination of UN agencies, sent 73 tonnes of donated supplies by air including medicine, vaccines, PPE and water purification kits. The aid was received by Venezuela’s foreign affairs deputy minister for Europe, Yvan Gil who has toured Europe detailing the hardships the people of Venezuela are facing and expressing their right for self-determination. He has personally delivered letters of protest to all the European nations that have refused to recognise the legitimacy of the Maduro government.
So far Venezuela has received 1,500 tonnes of aid during the pandemic. It has also received the help of 200 doctors from Cuba who have been sent to the medical missions, Barrio Adentro, a social mission that provides comprehensive healthcare to the poorest of people.
The failure of the sanctions presents serious contradictions for U.S policy in Venezuela. Because the current policy has failed to topple Maduro, it is experienced by the Venezuelan people mostly as a permanent attack on their living conditions. It acts to make both Trump and any Venezuelan’s who support US policy very unpopular. The recent round of sanctions could cause a loss of $10 billion a year from the already decimated oil industry.
Trump’s regime has been unable to assert U.S supremacy over Venezuela. The right-wing opposition in Venezuela is increasingly divided and fractured. The more aggression the U.S shows the more isolated it becomes and the more Trump’s government is seen as a rogue administration. Reeling from the disasters of the wars in the Middle East the U.S cannot put together another “Coalition of the Willing” to wrest control of Venezuela militarily, nor is it likely to risk the potential explosion of opposition inside the United States that a military invasion of Venezuela would threaten to provoke.
However, there are sections of the right-wing opposition in Venezuela that are calling for U.S military intervention. María Corina Machado, national coordinator of the right-wing Vente Venezuela criticised Guiadó for the many “lost opportunities” to remove Maduro arguing a foreign invasion would’ve been constitutionally valid. In a public letter directed to Guiadó she stated:
“I always suggested to you that the departure of the Maduro regime required building an option of force. You have consistently refused to approve Article 187.11, which would be part of the legal framework for international support and an unequivocal message, both to our international allies and to the regime itself.”
However, like some other opposition figures, she has broken with Guiadó’s boycott of the upcoming National Assembly elections. Opposition participation will legitimise these elections.
US Neo-conservatives are divided over military intervention in Venezuela. Abrams rejected Machado’s appeal. In a press conference with Colombian TV station NTN24 and other outlets, Abrams said her remarks reminded him of iconic Colombian writer Gabriel García Marquez and
“the famous magical realism…what it seems to us the opposition needs to do is the very hard work of organizing opposition under a very repressive and brutal regime, and Maria Corina, seems to me, is calling for a kind of magical Plan B that is going to solve all of the problems of Venezuela, and who is going to do the solving? Foreigners who intervene. I don’t think that’s a sensible response to the problem that Venezuela faces and to the need for the opposition to be united.”
In the absence of any better options, the U.S has used the pandemic and its effects in Venezuela to put its propaganda machine into overdrive. The Centre for Strategic and International Studies (CSIS), a regime-change think-tank published an August 5 briefing Venezuela: Pandemic and Foreign Intervention in a Collapsing Narcostate. It accused Venezuela of being “bound to unleash millions of refugees”, alleges the Venezuelan government is directly controlled by Cuba and is being propped up by “extorting remittances”, “illegal mining and cocaine”.
The pandemic does present difficulties for Venezuela as hundreds of thousands are returning home from neighbouring countries Ecuador, Columbia and Brazil. These countries have been ravaged by the virus and present bleak economic prospects for Venezuelan migrant workers. Maduro locked down the country on 17 March preventing much of the devastation that covid-19 has inflicted on the rest of the region. The CSIS document noted the timing of the U.S federal election, suggesting regime change in Venezuela will be a campaign priority for Donald Trump.
Venezuela’s limited resources mean it will require much more aid if it is to overcome both U.S imperialist intervention and the pandemic. International solidarity is more important than ever.
1. Hezbollah is the Lebanon based quasi-state military force whose political wing – Loyalty to the Resistance Bloc – is elected to the Lebanese parliament. In 2006 Hezbollah fought a 34-day war and eventually defeated an Israeli ground invasion of Southern Lebanon. This was the first defeat of the Israeli Defence Force by any neighbouring country and helped tip the balance of forces against Israel and the US.
2. El Zabayar is accused of working with Maduro and distributing cocaine and weapons in coordination with terrorist organisations. The accusations are based on El Zabayar’s alleged support for the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia – FARC), Hezbollah and Hamas. he is also accused of being a member of the Cártel de Los Soles, or “Cartel of the Suns” which has been involved in the trafficking cocaine to the US, and acting as a go-between for Hezbollah and Hamas to recruit agents that could carry out terrorist attacks in the U.S. He is also accused of fighting on behalf of Bashar al-Assad in Syria. Zabayar stated through his Twitter account that he was ready to face the charges if the U.S removed sanctions against Venezuela. “If the US Government agrees to lift all sanctions against Venezuela in exchange for turning me over to my US executioners, whom I accuse as the true narco-terrorists. My life is nothing for the sacred homeland”.
3. Albania, Australia, Bahamas, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Estonia, Georgia, Guatemala, Haiti, Honduras, Hungary, Israel, Kosovo, Latvia, Lithuania, Panama, Paraguay, Peru, Republic of Korea, Saint Lucia, Ukraine, the United Kingdom and the United States.