Correction28 Feb 2019
A previous version of this article incorrectly indicated that Chavez and Maduro had sought stronger ties with Iraq. This article has been corrected to state that Venezuelans have sought stronger ties with Iran.
The United States ramped up pressure on Venezuelan President Nicolas Maduro on Monday, issuing new sanctions against the embattled leader’s allies, and encouraging regional leaders to freeze assets of the country’s state-owned oil company.
Vice President Mike Pence made the announcement during a meeting with the Lima Group, a bloc of North and South American countries that have thrown their support behind Venezuelan opposition leader Juan Guaido, who declared himself the country’s interim president last month.
“These men worked to block aid for people in need and suppress peaceful protests, their actions will not go unpunished,” Pence told the group, referring to three Venezuelan border state governors and one member of Maduro’s inner-circle, who the vice president said played a role in this weekend’s violence at Venezuela’s border when the opposition attempted to bring aid into the country.
“In the days ahead … the United States will announce even stronger sanctions on the regime’s corrupt financial networks,” Pence added. “We will work with all of you to find every last dollar that they stole and work to return it to Venezuela.”
Monday’s sanctions follow years of similar moves by the US designed to pressure on Maduro, who enjoys the support of Russia, Turkey and China, among other countries, as well as state institutions including the military. Maduro accuses the US-backed opposition of staging a coup.
Following Guaido’s self-proclamation on January 23, the US also hit PDVSA, Venezuela’s state-owned oil company, with sweeping sanctions designed to result in billions of dollars of last export revenue over the next year, and help “restore … democracy” in Venezuela.
But some experts argue that the US government has no interest in protecting democracy or improving the humanitarian crisis in Venezuela, and is mostly concerned with taking control of the oil market and maintaining US influence in Latin America.
Sanctions on PDVSA
PDVSA – the primary source of income and foreign currency for Maduro’s government, bringing in 95 percent of the country’s export earnings – plays a crucial role in keeping Maduro in power.
In November 2017, Maduro appointed Manuel Quevedo, a former National Guard general, oil minister and the head of PDVSA, despite Quevedo having no experience in the oil sector. Analysts say he won Maduro’s trust by helping to crush anti-government protests in 2014, which resulted in more than 40 deaths and thousands of arrests.
Critics say Maduro has bought the loyalty of the army, handing military men more power in government. Active duty or retired officers make up nearly half of Maduro’s cabinet, and many other hold key posts in sectors such as mining.
The US has long held off on sanctioning Venezuela’s oil sector for fear it would hurt its refiners and raise fuel prices for consumers, but in announcing sanctions on the company in late January, Treasury Secretary Steven Mnuchin said, “The United States is holding accountable those responsible for Venezuela’s tragic decline, and will continue to use the full suite of its diplomatic and economic tools to support interim President Juan Guaido, the National Assembly, and the Venezuelan people’s efforts to restore their democracy.”
The US maintains the sanctions are meant to “help prevent further diverting of Venezuela’s assets by Maduro and preserve these assets for the people of Venezuela.”
The sanctions on PDVSA freeze the company’s assets in the US, as well as prohibits US firms and citizens from conducting business with PDVSA. According to the Treasury Department’s guidance, purchases can be made from PDVSA or its entities until April 28 provided that the payments are made into a blocked account that Maduro’s government cannot access. After that date, no purchases can be made. The sanctions also target key individuals linked to Maduro, including Quevedo.
“We are intent on going after those facilitating Maduro’s corruption and predation,” Mnuchin said.
Mnuchin said the sanctions would be lifted if PDVSA were to transfer control to Guaido or a “democratically elected government”.
For his part, Maduro has called the sanctions a “criminal” act, and told US leaders to keep their “hands off Venezuela”. He accuses Washington of robbing Venezuela of its oil revenues and hurting the Venezuelan people.
‘Countering US hegemony’
According to Lucas Koerner, an editor and political analyst at Venezuelanalysis.com, the US has sought to overthrow the Venezuelan government partly because of the way Maduro and his predecessor Hugo Chavez have used oil as an “instrument of countering US hegemony” in the Western Hemisphere.
Beginning under Chavez, Venezuela helped create multilateral bodies that excluded the US, such as the Community of Latin American and Caribbean States (CELAC), the Bolivarian Alliance for the Peoples of Our America (ALBA), the Union of South American Nations (UNASUR), and PetroCaribe, through which Caracas offers oil at a preferential rate to various countries in Latin America.
“These bodies are part of a broader effort to limit Washington’s influence in the region and support progressive governments, for example, in Bolivia, Ecuador, Honduras and El Salvador,” Koerner told Al Jazeera.
It is also no secret that Chavez and Maduro have angered the US by seeking stronger economic relations with Iran, China and Russia.
Although the US historically had close relations with Venezuela, a major oil supplier, ties sharply deteriorated, first under Chavez and then Maduro, both virulent critics of what they called Washington’s “imperialistic” economic and foreign policy.
In 2002, the administration of former US President George W Bush supported a failed military coup against Chavez, who was removed for two days before returning to power as an “anti-imperialist hero”.
For more than a decade, the US has used sanctions against the Venezuelan government and nearly 100 individuals in response to what the US has called activities related to terrorism, drug trafficking, trafficking in persons, anti-democratic actions, human rights violations and corruption.
In announcing the sanctions against PDVSA in January, the US Department of Treasury cites a 2014 to 2015 currency exchange scheme created launder up to $1.2bn.
In October 2018, Abraham Edgardo Ortega, PDVSA’s former executive director of financial planning, pleaded guilty to one count of conspiracy to commit money laundering for his role in the scheme.
The sanctions on PDVSA will result in more than $11bn in lost export revenue and block about $7bn in assets, US National Security Advisor John Bolton said when announcing the sanctions in late January.
Bolton said that “now is time to stand for the democracy and prosperity in Venezuela”.
But some analysts say the sanctions against PDVSA will only worsen the harsh economic situation many Venezuelans face, and may risk solidifying support behind Maduro.
Food and medicine shortages have driven more than three million Venezuelans to flee the country in one of Latin America’s largest-ever migrant exodus, which has put a strain on neighbouring countries. Colombia currently shelters more than one million Venezuelans.
Venezuela’s inflation could reach 10 million percent this year, up from 1.3 million percent in 2018, according to the International Monetary Fund.
The economic crisis is largely rooted in the government’s failure to diversify its exports, as well as the mismanagement of the country’s energy assets. When oil prices dropped in 2014, the oil-reliant country went from being one of the richest countries in Latin America to one of the poorest.
Maduro denies that Venezuela is facing a humanitarian crisis, only a political and economic war led by the US.
Former United Nations special rapporteur and international law expert, Alfred de Zayas said that US sanctions are “economic warfare”, that have compounded a worsening humanitarian crisis and led to needless deaths.
“Their sole purpose is to make Venezuela’s economy fail and to force regime change,” De Zayas told Al Jazeera.
‘Propaganda used by Maduro’
Meanwhile, the opposition says the country’s humanitarian problems are the result of corruption and years of mismanagement by both Chavez and Maduro.
Rosmit Mantilla, a Venezuelan opposition leader who supports the US measures, said that the sanctions aren’t “ideological”.
“They only block the personal accounts corrupt officials who stole from ordinary Venezuelans, and trafficked drugs,” he told Al Jazeera. “The idea that sanctions are causing more Venezuelans to go hungry is propaganda used by Maduro. They exclusively target the people who have usurped power in Venezuela and I believe the sanctions will pressure them to accept elections.”
Mantilla said the opposition and many Venezuelans are grateful for the $20m pledge in aid from the US.
“We need humanitarian aid while we focus on securing democratic changes,” said Mantilla.
But Koerner said, “$20m is a drop in the bucket compared with the $11bn in [expected] revenue losses, caused by the sanctions.”
He added that “it’s cynical for the US to announce its humanitarian efforts, while recklessly destroying what little is left of the Venezuelan economy.”
Koerner also said that “the crushing economic sanctions that Trump ratcheted up in late January … risk solidifying support behind President Maduro, as the population increasingly perceives the illegal US embargo as the primary cause of their deepening immiseration”.
Venezuela’s military has so far blocked shipments of foreign aid from crossing the border with Colombia, with Maduro labelling the aid a “political show” and a cover for a US invasion.
De Zayas, the former UN special rapporteur, said that if Washington’s immediate interests are the well-being of the Venezuelan people, it should lift the sanctions.
“If we want to help Venezuela, we need to let the country buy and sell like anyone else,” he added.
Source: Al Jazeera