FPI / February 21, 2020
By Paul Crespo
Ostracized and considered illegitimate by the United States and most of Latin America and Europe, Venezuela’s Maduro regime has had one constant supporter — Russia.
This support has included everything from symbolic visits by Russian bombers to reported security assistance via Russian state-connected mercenaries from the Wagner Group. Though Vladimir Putin has enjoyed poking at the U.S. in its own backyard, Russia’s motivation in Venezuela has not been entirely political or strategic.
Now, the U.S. is pressuring Russia over its support of Venezuela and socialist dictator Nicolas Maduro.
This week the Trump administration announced sanctions on Rosneft Trading, a subsidiary of Russian oil conglomerate Rosneft. Senior administration officials framed the new sanctions as a warning not only to Rosneft but to Russia.
As noted by Axios, these U.S. officials described the measures as part of its “maximum pressure” campaign that is “50-60 percent” implemented but will continue to increase if Maduro refuses to step down.
As Eli Lake argues in Bloomberg, “In exchange for taking the risk of defying existing U.S. sanctions on Venezuelan oil, Russia pressured the Maduro regime to sell its oil to Rosneft at below-market prices and to prioritize paying off debts to the company.”
Elliott Abrams, the U.S. special representative for Venezuela, estimates that in the last year Venezuela has paid off $1.8 billion worth of debt to Rosneft.
According to The Washington Post, Russian firms, primarily Rosneft, handled an estimated 70-80 percent of Venezuela’s oil exports. Those revenues help the Maduro regime stay in power and keep key officials and military officers loyal.
Axios reported that one administration official described Rosneft Trading as the “gravest violator” of U.S. restrictions on conducting business with the Maduro regime. Another official described a “growing and increasingly central role of Rosneft in the affairs of Venezuela, particularly in the last year.” Rosneft’s chairman, Didier Casimiro, was also sanctioned. All U.S. assets belonging to the company or Casimiro will now be frozen, striking a hard blow to the Maduro regime.
Lake adds that until now “Russia has paid no real cost for helping to bring Venezuela’s sanctioned oil to the international market.” “For the last year, President Donald Trump’s pressure campaign against Venezuela’s dictator has had a loophole. Now it is about to close.” Eric Farnsworth, vice president of the Council of the Americas, reportedly told Lake that the new sanctions on Rosneft signal to Russia that it should not be offering more loans to Maduro because presumably Maduro’s debts to Rosneft will be fully paid off this quarter.
Meanwhile, Abrams is promising to increase pressure against Maduro in coming weeks and months. Some analysts believe this added pressure could include indictments of Venezuelan officials and a crackdown on U.S. allies such as Turkey and Dubai that have enabled the illicit sale of the country’s gold.
While there had been news reports that Trump had grown frustrated with the stalemate in Caracas, and he might relax U.S. policy against Maduro, any doubts about the President’s commitment to regime change in Caracas were quashed earlier this month when Venezuela’s Interim President, Juan Guaido received a bipartisan standing ovation at Trump’s State of the Union address. That was quickly followed by additional U.S. sanctions on Venezuela’s state airline, and now the sanctions against Rosneft.
As Lake argues, all this “sends a message to Maduro and his regime: Any hopes that Trump is interested in cutting a deal or softening U.S. strategy are misplaced.
Rosneft may still attempt to defy the new U.S. sanctions. But the company’s aid to Maduro is not merely political or altruistic. The price for selling Venezuela’s toxic oil just went up.”