US should impose an embargo on the purchase of Venezuelan oil until democracy is restored

The Hill:
Talking to reporters, a senior Trump administration official explained that “all options are on the table,” including an outright embargo on the sale of crude oil, on which Maduro’s besieged government is heavily dependent. Paired with sanctions on individual human rights abusers, an oil embargo has the best chance of reversing the Maduro regime’s behavior. The U.S. government should supplement these moves with aid to the Venezuelan people, who have suffered terribly under Maduro, and who would also feel the impact of an embargo.

The Trump administration recognizes the need to uphold the democratic ambitions of the overwhelming majority of the Venezuelan people. Thus, Trump’s “swift economic actions” may also include sanctions against Petróleos de Venezuela, S.A (PDVSA), Venezuela’s state oil company. With an average of 700,000 barrels a day being exported from Venezuela to U.S., sanctioning PDVSA would slash Venezuelan government income by 75 percent. For this reason, an oil embargo would provide the best opportunity to end Maduro’s despotic advances and cut-off corrupt Venezuelan officials from continuing to steal from their most lucrative source of revenue.

The Maduro regime has been intent on avoiding default, but with only $10 billion in reserves against approximately $140 billion in debt to foreign creditors, Venezuela has limited options. If its constant stream of revenues from PDVSA was reduced, the country’s currency crisis would be exacerbated and would bring Venezuela’s government closer to the precipice of default.
As Venezuela’s crisis worsened in the past months, state oil company PDVSA used 49.9 percent of its holdings in its wholly-owned U.S. subsidiary CITGO as collateral for a loan from Kremlin-linked Rosneft. The potential for Rosneft to own CITGO, a likelihood if PDVSA defaults, it would “expose critical U.S. infrastructure to national security threats.” The controversy over a U.S. based entity potentially being owned by a Russian oil company has posed serious legal questions for U.S. policymakers.

Alongside the threat of Venezuela becoming increasingly indebted to countries that don’t share U.S. interests — such as Iran, Russia and China — Russia’s direct involvement in “critical” U.S. energy infrastructure is a serious economic and national security threat. If these countries continue to bankroll Maduro’s increasingly authoritarian regime, they will enable his regime to further support drug trafficking and terrorism in the region.
The US would probably also need to provide food aid to deal with Venezuelan refugees fleeing to neighboring countries.  The US also needs to have a plan for any Russian takeover of CITGO.  It is possible that CITGO might also face boycotts from US consumers.


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