US steps up pressure on Venezuela

The US administration is stepping up financial and diplomatic pressure on Venezuela's sitting president Nicolas Maduro, days after placing sanctions on state-owned oil company PdV.

US officials are pushing to convince Maduro to capitulate quickly and hand over power to National Assembly speaker Juan Guaidó, whom the US, Canada and most of Latin America recognize as Venezuela's interim leader. But US officials also acknowledge the crucial role of Venezuela's senior military ranks in determining the outcome of standoff between Maduro and Guaidó, who declared himself acting president on 23 January.

President Donald Trump this morning called Guaidó to offer congratulations and support — a conversation timed to coincide with the launch of fresh protests in Caracas and other major cities aimed at compelling Maduro to resign. US secretary of state Mike Pompeo and White House national security adviser John Bolton have warned Venezuelan military and government officials against targeting Guaidó and his supporters.

"It is a very fluid situation that hopefully will be successfully resolved by the Venezuelan people," US director of national intelligence Dan Coats told a Senate panel yesterday. "But the influence of the Venezuelan military on that decision is probably key in what directions it moves."

In addition to coordinating its actions with the National Assembly, Washington has accredited Guaidó's envoy Carlos Vecchio as Venezuela's charge d'affaires in Washington. The White House says all options are on the table to support the National Assembly and protect US citizens and property in Venezuela.

Bolton's possibly inadvertent disclosure of a possible deployment of 5,000 US troops to Colombia during a White House briefing on 28 January created a stir in Bogota, which denied having cooperated in such a plan. Acting defense secretary Patrick Shanahan yesterday said he had not discussed such plans with Bolton, adding that "as the situation in Venezuela evolves, we are there to give (the White House) advice and counsel and support."

Ensuring that the Venezuelan military and National Guard switches allegiance to the new government is important to coordinate the distribution of desperately needed humanitarian aid. But Maduro for now retains the loyalty of senior commanders as the US tightens financial strictures on his government.

Pompeo has certified Guaidó's authority to control Venezuelan government and Central Bank accounts held by the Federal Reserve Bank of New York and US banks. Bolton estimated the value of Venezuelan assets in the US at $7bn, including cash and the value of PdV-owned US refiner Citgo.

Vecchio, speaking at Washington-based think tank Atlantic Council today, said Guaidó nascent government has yet to come up with the personnel and plans to use Venezuela's assets in the US. For now the priority is to "just preserve the assets of the Venezuelan people. If we want to control them in the near future and if we want to increase oil production, Citgo will be a key element for us."

US sanctions have cut off roughly $1bn/month in oil revenue from PdV's US sales — the main source of foreign exchange for Caracas. US refiners have until 28 April to cut off purchases from Venezuela and are required to deposit payments in escrow funds that will be off limits to Maduro-controlled PdV. The Treasury Department also has instructed US banks to reject monetary transfers between PdV and non-US counterparties, which will make it difficult for PdV to find alternative markets.

"My advice to bankers, brokers, traders, facilitators, and other businesses: don't deal in gold, oil, or other Venezuelan commodities being stolen from the Venezuelan people by the Maduro mafia," Bolton said via Twitter today.

The EU said it would recognize Guaidó unless Maduro agrees, by 2 February, to hold new elections. Either way the European countries will work to ensure Maduro steps down, EU ambassador in Washington, David O'Sullivan, said today. Brussels approves of US sanctions and other pressure tactics against Venezuela, he said. "We are on the same page as the US, a rare moment in trans-Atlantic unity."

A prolonged conflict over government control will cause lasting damage to Venezuela. PdV officials expect oil exports to fall in a matter of weeks, leaving Venezuela with little revenue to buy food and medicine.

Such a scenario also will test Washington's resolve to deal with Venezuela as it simultaneously enforces sanctions that are restricting Iran's oil exports. The broad scope of US action reflected a conclusion that it would not have an effect on US gasoline prices, given the broadly supplied global oil market — even if penalties cut off key supplies of heavy, sour crude to the US Gulf coast.

Maduro, while showing no signs of relenting, has taken steps to avoid direct confrontation with Washington. He backed off an order to expel US diplomats in Caracas and now says he is ready to negotiate directly with Trump. The White House has dismissed that prospect.