The Trump administration on Monday imposed sweeping sanctions on Venezuelan state-owned oil firm PDVSA, the toughest U.S. financial measure so far against Venezuelan President Nicolas Maduro.
The sanctions were announced to ratchet up pressure against Maduro and demonstrate U.S. support for Juan Guaido, the Venezuelan opposition leader who proclaimed himself interim president last week and was immediately recognized by the United States and a host of other countries.
“We have continued to expose the corruption of (Venezuelan President Nicolas) Maduro and his cronies and today’s action ensures they can no longer loot the assets of the Venezuelan people,” U.S. national security adviser John Bolton told reporters at a White House briefing.
PDVSA is OPEC nation Venezuela’s largest source of revenue and owns U.S. refining arm Citgo Petroleum, Venezuela’s most important foreign asset.
U.S. officials said the sanctions on PDVSA were intended to prevent Maduro’s government from siphoning off funds from the oil company.
Bolton said Monday’s announcement would block $7 billion in PDVSA’s assets “plus over $11 billion in lost export proceeds over the next year.”
Until now, President Donald Trump had held off on targeting Venezuela’s vital oil sector. Washington has been mindful of the potential to deepen the hardship of the Venezuelan people and hurt U.S. companies and American consumers.
In an apparent effort to minimize negative fallout in the United States, Treasury Secretary Steven Mnuchin said Citgo in the United States would be able to continue to operate provided funds go to a blocked account.
He said oil supplies were sufficient to ensure no significant impact on U.S. gas prices in the short term.
Even though the Venezuelan military has shown no sign of abandoning Maduro, Bolton said: “Our assessment based on numerous contacts on the ground is 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.”
Countries around the world have recognized Guaido as Venezuela’s rightful leader, and the United States vowed to starve Maduro’s administration of oil revenue after he was sworn in on Jan. 10 for a second term that was widely dubbed illegitimate.
Maduro says the United States is promoting a coup against him and promised to stay in office, backed by Russia and China, which have bankrolled his government and fought off efforts to have his government disavowed by the United Nations.