US Mulls Sanctioning Venezuelan Oil as 'Economic War' Continues

The Trump administration is debating imposing sanctions on Venezuela’s oil sector, while Washington has raised “concerns” about U.S. firms giving a “financial lifeline” to the South American nation.

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Reuters reported Sunday that the White House could hit Venezuela’s vital oil and energy sector, including state-run oil company PDVSA, with a number of different sanctions, including the possibility of a blanket ban on Venezuelan oil imports — imports that the United States heavily relies on.

Since President Donald Trump took office in January, he has stepped up targeted sanctions against Venezuela, including against the vice president, the chief judge and seven other Supreme Court justices.

While Trump officials hem and haw over the move that would further incapacitate the Venezuela’s economy, other senior officials are raising concern about U.S. firms’ Venezuela investments.

After Goldman Sachs Group Inc. came under fire for purchasing US$2.8 billion of state oil company bonds, one official told Reuters, “We’re concerned by anything that provides a lifeline for the status quo.”

Last week, Venezuela’s right-wing opposition-controlled National Assembly threatened not to pay the PDVSA bonds purchased by Goldman Sachs through a third party broker.

The National Assembly’s head, Julio Borges, one of the most prominent opposition leaders in the country, claimed that in purchasing the bonds, Goldman Sachs was “extending a lifeline” to a “dictatorship” and funding “human-rights abuses.”

In response, Venezuelan Vice President Tareck El Aissami announced on Thursday that the government would be launching a lawsuit against him, condemning Borges’ attempt to cut off Venezuela from legal and transparent international investments.

“The deal with Goldman provides a desperately needed boost to Venezuela’s shrinking international reserves, which had fallen to US$10 billion amid stagnant global crude prices,” Venezuela Analysis reported.

Borges’ threats against Goldman Sachs are the latest in what the government has dubbed an “economic war” waged by international financial institutions and the right-wing opposition.

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Last month, the National Assembly president sent over a dozen letters to various international banks requesting that they cut off all transactions with the Venezuelan government and state enterprises. The letters threatened that doing business in Venezuela “would be engaging in crimes, and that such contracts would be legally and morally unacceptable.”

This isn’t the first time the United States has pushed for sanctions against PDVSA. In 2011, the Obama administration punished the company for doing business with Iran, a country toward which the United States and its allies have long been hostile.

PDVSA and government officials have accused international financial institutions in the past of working in favor of right-wing groups to destabilize the country and its key economic driver, the oil sector.

What the Venezuelan government has called an “economic war” on the country parallels the financial destabilization targeting the socialist government of President Salvador Allende in Chile in the early 1970s ahead of the CIA-backed military coup that ousted him from office in 1973. The U.S.-backed economic warfare sought to weaken Chile by “making the economy scream,” as then-President Richard Nixon put it in orders to the CIA, in order to topple the Allende government.

Since taking office, Trump has continued a policy of U.S. hostility toward Caracas, including by meeting with opposition figure Lilian Tintori, wife of jailed opposition leader Leopoldo Lopez, in the White House in February.

The U.S. has also backed a campaign in the Organization of American States that President Nicolas Maduro's government has slammed as attempted intervention. Top Venezuelan officials have accused the body of violating Venezuela’s sovereignty and have therefore initiated the process to withdraw from it.

After the most recent OAS meeting last week, Bolivian President Evo Morales strongly condemned the regional body and specifically OAS secretary general, Luis Almagro, warning that, “If not physically, he wants to politically eliminate the anti-imperialist presidents and governments" of Latin America.