Venezuela could face an oil imports ban from the U.S.
Trump administration raises pressure on Caracas over plan to re-write constitution
Petroleumworld 07 19 2017 / Watch video below
The White House has not ruled out banning imports of Venezuelan oil after Donald Trump vowed to impose “strong and swift” economic sanctions if President Nicolás Maduro did not abandon plans to rewrite the constitution to tighten his grip on power.
The Trump administration has been debating how to respond to Mr Maduro's plan to create a “constituent assembly” — to rewrite the constitution — on July 30. After 7m Venezuelans on Sunday rejected the plan in an opposition-sponsored referendum, Mr Trump called the Venezuelan president “a bad leader who dreams of becoming a dictator” and said he would “not stand by as Venezuela crumbles”.
Experts say the White House has a range of options, including putting sanctions on more members of the regime and cutting diplomatic relations. The most drastic step would be to sanction part of the country's oil industry or limit imports of Venezuelan crude.
Asked whether a ban on oil imports was possible, one senior US official stressed that the White House was keeping “all options are on the table” in terms of sanctions. “We have not made final decisions but we have a pretty good idea of the direction we are heading,” said the official who did not rule out imposing sanctions before July 30.
The official added the Trump administration had not taken a position on whether Mr Maduro should be sent into exile. Juan Manuel Santos, the Colombian president flew to Cuba on Sunday, in an effort to convince Havana to back a regional effort to solve the crisis in Venezuela that has left dozens of people dead over three recent months.
Responding in a live broadcast on state television on Tuesday night, Mr Maduro said: “If Donald Trump and his lobby of advisers have dared to say ‘constituent assembly no!' we, from the Venezuela of [Simon] Bolívar, say to Washington: ‘constituent assembly yes, yes, yes!'”
He said he would activate the country's National Defence Council, a sort of politburo headed by the president himself, but did not say what, if any, actions it would take.
Moises Rendon, an expert at CSIS, a Washington think-tank, said Mr Trump was putting a higher priority on Venezuela than the Obama administration because it was “sliding into one of the worst humanitarian crises in the history of the region”.
He said the US could target officials such as Diosdado Cabello, the second-in-command of the ruling Socialist party, and could release information showing Venezuelan officials were complicit in drug trafficking. In February, the US sanctioned Tareck El Aissami, the Venezuelan vice-president, and called him a drug king pin.
Mark Feierstein, White House national security council director for Latin America during the Obama administration, said Mr Trump had “gone further” to hit Venezuela by implementing some actions that had been prepared before they came to power.
“The dynamic has changed a lot. Maduro is so much weaker than he was a couple of years ago,” said Mr Feierstein. “The regional rejection of him is somewhat stronger with new governments (in Argentina, Brazil and Peru) taking a stronger position”.
Polls suggest three-quarters of Venezuelans oppose the creation of a constituent assembly. Until recently, most of the opposition has come from inside Venezuela — from ordinary citizens, activists and even the attorney-general. The crisis has risen up the international agenda recently with the Organisation of American States, most major Latin American countries, and now the EU and US telling Mr Maduro to back down.
Marco Rubio, the Florida Republican senator, said the constituent assembly was “a fraudulent vote to turn Venezuela into a Cuban model of governance”. He said he had discussed the situation at a meeting in the White House on Monday and was sure that the Maduro regime would face tough consequences if it proceeded. “There will not be another dictatorship in the western hemisphere,” he said over Facebook Live.
Mr Feierstein said it was unclear whether Mr Trump would do more than sanction individuals, saying there has been “an aversion to taking actions beyond individuals because of the risk of exacerbating an already extreme humanitarian crisis”.
Dany Bahar, fellow at the Brookings Institution, said the most extreme step would be to stop buying Venezuelan oil. He said that would dramatically reduce government revenues and make it harder to continue to make payments to foreign holders of Venezuelan bonds. “It would increase the likelihood that they would default,” said Mr Bahar. “If they default it is going to make it much harder for them to stay in power.”
Sanctions on Venezuela's oil industry could have significant impact in the US. Citgo, the refining and marketing group owned by Venezuela's national oil company PDVSA, has about 6,000 locally owned fuel stations in the US that employ 46,000 people. It also has three refineries and 50 fuel terminals in the US.
PDVSA is an important supplier of oil to the US, which in the first four months of this year imported about 720,000 barrels per day of Venezuelan crude. Since Venezuelan oil tends to be heavier, it is not easily replaced by the lighter crude produced from US shale fields.
The American official said the Trump administration had examined the impact that various sanctions would have on the domestic US economy, and said it would “only make tough decisions” if they were considered necessary for foreign policy reasons.
While the White House has stepped up pressure on Venezuela, there is apprehension in Brussels about the prospect of US involvement. The preference is for Venezuela's regional neighbours to exercise their influence. “We believe in Latin American regional help, but [we're] not talking about the US,” said one European diplomat.
Federica Mogherini, EU foreign policy chief, has called on Latin American countries to create a “group of friends” acceptable to the Venezuelan government and opposition that would help broker a settlement. “The region is diverse enough to offer many different participants to such a group and we would be more than happy to support such a regional process with all our means,” she said on Monday.