Wider U.S. sanc­tions on Venezuela risk hit­ting both coun­tries

Miami Herald - - FRONT PAGE -

com­pli­ca­tions for the Trump ad­min­is­tra­tion as it tries to fo­cus on Iran and North Korea.

“It’s com­pli­cated,” said David L. Gold­wyn, who was a top State Depart­ment en­ergy envoy in the Obama ad­min­is­tra­tion. Tough sanc­tions could lead to a de­fault on their bonds and a col­lapse of in­ter­nal in­vest­ment and oil pro­duc­tion,” he added. “Other im­pacts could in­clude civil un­rest, refugee flows across their bor­ders, and a cut­off of Venezue­lan fi­nan­cial sup­port to Cuba and Haiti that could lead to mi­gra­tion flows to the United States.”

There is also the po­ten­tial for col­lat­eral dam­age to the United States.

Any trade em­bargo could raise ga­so­line prices, cost jobs in the oil patch and dampen prof­its for sev­eral ma­jor re­fin­ers. A de­crease in Venezue­lan ex­ports could raise global oil prices, bol­ster­ing the economies of Rus­sia and Iran just as Wash­ing­ton pre­pares to ratchet up sanc­tions on those coun­tries.

In brief­ings, ad­min­is­tra­tion of­fi­cials would not spec­u­late on what would come next, but they em­pha­sized a menu of op­tions. Trump, in a state­ment last week, said “the United States will not stand by as Venezuela crum­bles.”

The im­me­di­ate con­cern is over Maduro’s plan to hold an elec­tion this week­end for a Con­stituent As­sem­bly that would cir­cum­vent the op­po­si­tion-con­trolled Congress and write a new con­sti­tu­tion. The new as­sem­bly, which is de­vised to be dom­i­nated by groups that sup­port the regime, would pre­sum­ably con­sol­i­date more con­trol in the hands of the pres­i­dent.

The es­ca­lat­ing street vi­o­lence and hunger in Venezuela are threat­en­ing to spread. Tens of thou­sands of Venezue­lans have al­ready fled the coun­try, height­en­ing so­cial pres­sures. The coun­try’s plum­met­ing econ­omy has added pres­sure on a re­gion strug­gling with low com­mod­ity prices.

For now, the United States is tread­ing cau­tiously in its ap­proach to Venezuela.

As a first step, the ad­min­is­tra­tion this week froze as­sets of, and in­sti­tuted a ban on travel visas for, 13 in­flu­en­tial Venezue­lans, in­clud­ing elec­toral, mil­i­tary and cor­rec­tional of­fi­cials. One of them is Si­mon Zerpa, vice pres­i­dent of fi­nance at Petroleos de Venezuela, known as PDVSA, which could com­pli­cate re­la­tions be­tween the state oil com­pany and U.S. play­ers in Venezuela that are al­ready strug­gling to get paid for ser­vices. The move fol­lows sim­i­lar sanc­tions im­posed by the Trump ad­min­is­tra­tion on Venezuela’s vice pres­i­dent, Tareck El Ais­sami, and eight mem­bers of its Supreme Court.

Maduro has re­peat­edly said that Trump’s past sanc­tions against his govern­ment are ev­i­dence of U.S. im­pe­rial- ism and that cur­rent threats will not be heeded. If Trump “has dared to say ‘no’ to the Con­stituent As­sem­bly, we tell him ‘yes, yes, yes’ — the Con­stituent As­sem­bly will go ahead — Con­stituent As­sem­bly now more than ever,” Maduro said re­cently.

More con­se­quen­tial would be fu­ture sanc­tions to limit U.S. oil com­pa­nies and ser­vice com­pa­nies from op­er­at­ing in Venezuela or to limit the abil­ity of the Venezue­lan na­tional oil com­pany to en­gage in bank­ing ac­tiv­i­ties in the United States or trade with U.S. com­pa­nies. That sce­nario would ef­fec­tively end Venezue­lan oil ex­ports to the United States and pro­hibit PDVSA from im­port­ing the U.S. light oil used to di­lute its heavy crude for trans­port through pipe­lines and pro­cess­ing.

Such moves, at least in the short term, could re­sult in a col­lapse in pro­duc­tion of the oil that Venezuela de­pends on to get the for­eign cur­rency it needs to buy food and to ser­vice its debt.

“It will put PDVSA on its knees and al­most cer­tainly lead to de­fault,” said Fran­cisco J. Monaldi, a Venezue­lan oil ex­pert at Rice Uni­ver­sity in Hous­ton.

In the United States, a cut­off of Venezue­lan oil im­ports would force Chevron, Valero En­ergy, Phillips 66 and other re­fin­ers to re­place heavy crude with im­ports from places like Kuwait and Saudi Ara­bia, pro­duc­ing higher tanker costs.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.