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US, EU diverge on timing for Venezuela's new govt. recognition



By Argus


Petroleumworld 01 28 2019

US secretary of state Mike Pompeo today called on Washington's partners to sever ties with sitting Venezuelan president Nicolas Maduro's government. But European powers are urging a pause before recognizing Juan Guaidó as Venezuela's acting president.

"We hope every nation will join us in recognizing Guaidó and join us in disconnecting their financial systems from the Maduro regime," Pompeo said following a hastily called UN Security Council session to discuss the crisis in Venezuela. Pompeo did not detail how the US plans to fulfill its pledge to direct state-owned PdV's US oil sales revenue to Guaidó's self-declared interim government.

France, Germany, Spain and the UK said they would recognize Guaidó if Maduro does not convene new elections in eight days.

Moscow denounced both the US decision to recognize Guaidó's authority and the EU call for new elections. Venezuelan foreign minister Jorge Arreaza, speaking at the UN Security Council today, described Maduro's May 2018 re-election as legitimate and rejected the EU's demand for a fresh vote.

Washington's delay in diverting US-based Venezuelan assets and oil revenue to Guaidó may reflect a faster-than-expected pace of events on the ground in Caracas, where Guaidó's 23 January public declaration of interim presidency so far has not been directly challenged by Maduro. Guaidó is calling for more mass street demonstrations next week.

The US administration has prepared for the possibility of a fierce crackdown, warning US refiners of a possible embargo on Venezuelan crude imports in such a scenario.

Guaidó has announced plans for management changes at PdV and its US-based refining subsidiary Citgo. But he also acknowledged that gaining control of the Venezuelan state's offshore assets will take time because his government does not control the state bureaucracy and has yet to develop an administrative infrastructure to manage the assets.

In a statement yesterday, a US Treasury Department spokesman said the US will "use its economic and diplomatic tools to ensure that commercial transactions by the Venezuelan Government, including those involving its state-owned enterprises and international reserves, are consistent" with the recognition of Guaidó´s interim presidency.

Venezuela's external creditors are waiting in the wings, most hoping for a comprehensive debt restructuring. Almost all of the debt of the Venezuelan government and PdV is currently in default.

Among prominent creditors is former Canadian mining firm Crystallex, now owned by New York-based hedge fund Tenor Capital Management, which is pursuing a $1.4bn arbitration claim through US courts that is targeting Citgo.

Guaidó´s team has starting making informal overtures to bondholders and other creditors.

The immediate focus of the crisis is on the US embassy in Caracas. Maduro ordered US diplomats to leave by this weekend, but Pompeo said they will remain to conduct relations with Guaidó's government. "President Donald Trump and I fully expect that our diplomats will continue to receive protections provided under the Vienna Convention. Do not test the US on our resolve to protect our own people," Pompeo said.

In a statement this afternoon, Venezuela's foreign ministry said US diplomatic personnel had pulled out of the embassy in Caracas in the agreed time, and Venezuelan diplomats had withdrawn from the US. "Both governments agreed to negotiate the establishment of Interest Offices in each capital" for a period of 30 days. The US State Department did not immediately respond to a request for comment on Venezuela's assertion, but it seems unlikely that Washington would agree to negotiate with a government it no longer recognizes.

Venezuela's senior military ranks that control parts of the oil industry, smuggling and illegal mining have declared their support for Maduro, but middle and lower ranks in armed forces and security services are splintered.

Venezuela´s military attache in Washington today defected from the Maduro camp, and announced his allegiance to Guaidó.


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