US sanc­tions on Venezuela’s oil in­dus­try de­bated

The Star Early Edition - - BUSINESS REPORT / INTERNATIONAL - Girish Gupta and Matt Spetal­nick

THE TRUMP ad­min­is­tra­tion is con­sid­er­ing pos­si­ble sanc­tions on Venezuela’s vi­tal en­ergy sec­tor, including state oil com­pany PDVSA, se­nior White House of­fi­cials said, in what would be a ma­jor es­ca­la­tion of US ef­forts to pres­sure the coun­try’s em­bat­tled left­ist gov­ern­ment amid a crack­down on the op­po­si­tion.

The idea of strik­ing at the core of Venezuela’s econ­omy, which re­lies on oil for some 95 per­cent of ex­port rev­enues, has been dis­cussed at high lev­els of the ad­min­is­tra­tion as part of a wide-rang­ing review of US op­tions, but of­fi­cials said it re­mains un­der de­bate and ac­tion is not im­mi­nent.

The of­fi­cials, speak­ing on con­di­tion of anonymity, said the US could hit PDVSA as part of a “sec­toral” sanc­tions pack­age that would take aim at the Opec na­tion’s en­tire en­ergy in­dus­try for the first time.

But they made clear that the ad­min­is­tra­tion is mov­ing cau­tiously, mind­ful that if such an un­prece­dented step is taken it could deepen the coun­try’s eco­nomic and so­cial cri­sis, in which mil­lions suf­fer food short­ages and soar­ing in­fla­tion. Two months of anti-gov­ern­ment un­rest has left more than 60 peo­ple dead.

An­other com­pli­cat­ing fac­tor would be the po­ten­tial im­pact on oil ship­ments to the USs, for which Venezuela is the third largest oil sup­plier after Canada and Saudi Ara­bia. It ac­counted for 8 per­cent of US oil im­ports in March, ac­cord­ing to US gov­ern­ment fig­ures.

“It’s be­ing con­sid­ered,” one of the of­fi­cials said, charg­ing that aides to Pres­i­dent Don­ald Trump have been tasked to have a rec­om­men­da­tion on oil sec­tor sanc­tions ready if needed. I don’t think we’re at a point to make a de­ci­sion on it. But all op­tions are on the ta­ble. We want to see the bad ac­tors held to ac­count.”

The US de­lib­er­a­tions on new sanc­tions come against the back­drop of the worst protests faced yet by so­cial­ist Pres­i­dent Ni­co­las Maduro, who crit­ics ac­cuse him of hu­man rights abuses in a clam­p­down on the op­po­si­tion.

Since Trump took of­fice in Jan­uary, he has stepped up tar­geted sanc­tions on Venezuela, including on the vice pres­i­dent, the chief judge and seven other supreme court jus­tices. He has pressed the Or­gan­i­sa­tion of Amer­i­can States to do more to help re­solve the cri­sis.

While Trump has taken a more ac­tive ap­proach to Venezuela than his pre­de­ces­sor Barack Obama, he has so far stopped short of dras­tic eco­nomic moves that could hurt the Venezue­lan peo­ple and give Maduro am­mu­ni­tion to ac­cuse Wash­ing­ton of med­dling.

The two ad­min­is­tra­tion of­fi­cials said the US is also pre­pared to im­pose fur­ther sanc­tions on se­nior of­fi­cials it ac­cuses of cor­rup­tion, drug traf­fick­ing ties and in­volve­ment in what crit­ics see as a cam­paign of po­lit­i­cal re­pres­sion aimed at con­sol­i­dat­ing Maduro’s rule.

But broad mea­sures against the coun­try’s vi­tal oil sec­tor – for which the US is the big­gest cus­tomer – would sig­nif­i­cantly ratchet up Wash­ing­ton’s re­sponse. The US has im­posed sec­toral sanc­tions against Rus­sia’s en­ergy, bank­ing and de­fence in­dus­tries over Moscow’s in­volve­ment in Ukraine’s sep­a­ratist con­flict.

The of­fi­cials de­clined to spec­ify the mech­a­nisms un­der con­sid­er­a­tion and said the tim­ing of any de­ci­sion would de­pend heav­ily on de­vel­op­ments on the ground in Venezuela.

Pos­si­bil­i­ties could in­clude a blan­ket ban on Venezue­lan oil im­ports and pre­vent­ing PDVSA from trad­ing and do­ing busi­ness in the US, which would have a se­vere im­pact on PDVSA’s US re­fin­ing sub­sidiary Citgo.

A more mod­est ap­proach, how­ever, could be to bar PDVSA only from bid­ding on US gov­ern­ment con­tracts, as the Obama ad­min­is­tra­tion did in 2011 to pun­ish the com­pany for do­ing busi­ness with Iran. Those limited sanc­tions were rolled back after the 2015 in­ter­na­tional nu­clear deal with Tehran.

The Venezue­lan gov­ern­ment and PDVSA did not re­spond to re­quests for com­ment.

The grounds for pos­si­bly sanc­tion­ing PDVSA would be “to claim that they’re cor­rupt, for ex­am­ple, or that they’re abusers of hu­man rights in­di­rectly,” said one of the of­fi­cials, with­out giv­ing fur­ther de­tails. “That’s enough. We have the le­gal author­ity to do that right now if we like,” the of­fi­cial said. – Reuters

Photo: AP

Wuilly Arteaga plays a vi­o­lin dur­ing clashes with se­cu­rity forces in Cara­cas, Venezuela. “He’s a hero,” said Paolo Lena, a Cara­cas busi­ness­man who do­nated to Areaga the vi­o­lin. Protests against pres­i­dent Ni­co­las Maduro are tak­ing place ev­ery day.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.