The Trump administration is sanctioning Venezuela’s state-owned oil company, adding significant pressure on President Nicolás Maduro to step down and transfer power to the US-backed resistance leader who is challenging his claim to the presidency.
But some worry the move could backfire — angering Maduro and giving him all the more reason to cling to power.
Venezuela is currently in the midst of a political standoff between two men who both claim to be the legitimate president of Venezuela: Nicolás Maduro, who was reelected president in May 2018, and opposition leader Juan Guaidó.
Guaidó claims the 2018 election was rigged and that he, as the head of the National Assembly (the country’s legislative body), is now the rightful president according to the country’s constitution.
The United States has officially recognized Guaidó as Venezuela’s interim president and called Maduro’s claim to the presidency “illegitimate.” But Maduro has responded with defiance, and has so far shown no sign of stepping down.
These sanctions are an attempt to change Maduro’s mind about that.
Based on an executive order President Donald Trump issued on Monday, the US Treasury Department has enacted financial penalties on Petroleos de Venezuela (PdVSA), the behemoth state-owned oil and natural gas company that provides the country with thousands of jobs and billions in revenue.
Maduro uses the enterprise to reward his cronies and buy loyalty. For instance, he offers top members of Venezuela’s military a stake in the energy giant.
The sanctions are intricate, but basically they boil down to this: All PdVSA assets — like cash and property — in the US are frozen. Any cash earned in transactions with the United States will be held in an inaccessible account until Maduro transfers control of the company over to a democratically elected leader or Guaidó. However, refineries can still import Venezuelan crude as long as the profits don’t go to Maduro’s regime.
The Trump administration’s goal, then, is clear: hurt one of Maduro’s greatest sources of power, thereby reducing his ability to keep paying off loyalists. That may ultimately lead to defections in his official support and cause him to step aside.
The United States “will continue to use the full suite of its diplomatic and economic tools to support Interim President Juan Guaidó, the National Assembly, and the Venezuelan people’s efforts to restore their democracy,” Treasury Secretary Steven Mnuchin said in a Monday statement announcing the move.
This may all seem good in theory. And indeed, Maduro critics like Sen. Marco Rubio (R-FL), who has championed the Trump administration’s hardline stance toward the Venezuelan leader, applauded the effort.
All property & interests of PdVSA are now blocked & U.S. persons are generally prohibited from engaging in transactions with them. #Venezuela’s oil belongs to the Venezuelan people & the money for oil will now go to them through the legitimate government of @jguaido— Marco Rubio (@marcorubio) January 28, 2019
But in practice it’s possible that the move could backfire — and potentially compel Maduro to hold on to the presidency.
That’s because one of his greatest excuses for his country’s economic woes is that America is to blame — and now may strengthen his argument.
The PdVSA sanctions will “royally piss off Maduro” — but may not do much else
One US official familiar with the sanctions decision, who spoke to me on the condition of anonymity in order to speak frankly, said the move will do little more than “royally piss off Maduro.”
Another official it essentially gives Maduro even more ammunition to say that the US aims to orchestrate a coup against it.
If the economy tanks even further than it already has, the Venezuelan leader can blame the US sanctions and perhaps regain some favor among elites — particularly the military leadership — whose support he needs in order to remain in power.
Maduro needs a good scapegoat. Millions have fled the country due to the crippling economic downturn. Inflation is through the roof. Hunger rates have skyrocketed. And diseases once thought eradicated from Venezuela have sparked a new health crisis. Unsurprisingly, all of this and more has made Maduro an unpopular leader.
While there’s no doubt Maduro may now find less money to raid from the oil giant’s coffers for his own benefit, it will also hurt everyday Venezuelans. After all, the company provides steady jobs (for those who can get them) and revenue for the country’s social programs. But a lack of reliable money coming in from the US could further devastate the already economically wrecked nation and its people.
“It puts everyone’s safety at risk,” the first official said.
The sanctions decision, then, might make sense in the short term. But if Maduro holds on, and uses the new sanctions to bolster his argument that America is to blame for the problems he inflicted on his country, then the move may backfire spectacularly.