US sanctions on Venezuela’s oil industry debated
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