US Escalates Tensions; Imposes New Sanctions on Venezuela

The US has sought to escalate tensions with the Bolivarian Republic of Venezuela by imposing a fresh round of sanctions targeting the economy of the Latin American country.

US President Donald Trump issued an order on Friday (25 August), prohibiting US institutions from dealing in new bonds and equity shares issued by the Government of Venezuela and Petroleos de Venezuela SA (PDVSA), the Venezuelan state oil company.

The order also bans “dealings in certain existing bonds owned by the Venezuelan public sector, as well as dividend payments to the government of Venezuela”. This would mean that Citgo, the US subsidiary of PDVSA, would be banned from sending dividends back to Venezuela.

Through the new sanctions, the US is hoping to prevent the Venezuelan government from raising funds from the American financial market.

Venezuelan President Nicolás Maduro said that the sanctions are illegal, and that the first to suffer will be US investors.

While recognising that the sanctions will mean sacrifice for the Venezuelan people, Maduro said that they also open up the opportunity for a new era of independence. "On this day begins the stage of post-domination by the United States, with Venezuela again at the centre of this struggle for dignity and liberation.”

According to Maduro, 62 percent of the Venezuelan government bonds are held by US investors, 12 percent by investors in UK, and another 6 percent in Canada. Trump has burnt their investments. The decision will cost the jobs of American citizens, he said.

Unlike previous sanctions which target individuals, the new round of sanctions target the Venezuelan economy itself.

"We'll have to endure sacrifices but we must safeguard the country and sovereign motherland in order to break the blockade," Maduro said.

Venezuelan foreign minister Jorge Arreaza denounced the sanctions as “one of the worst aggressions against Venezuela in recent years”.

“These types of sanctions show that the US wants to rule over the continent. We will never accept this”, Arreaza said.

But the ban on US institutions getting involved in any new debt sales by Venezuela will probably have little short-term impact on the country’s finances, Financial Times reported. Venezuela has effectively had little access to international bond markets for some time, the paper said.

Maduro said that a preliminary analysis shows that the new sanctions would lead to a halt in oil exports to the US. "We will have no problem selling our oil to other markets", he said.

Meanwhile, The Miami Herald has admitted that Luisa Ortega Diaz, the former Prosecutor General of Venezuela who was fired by the National Constituent Assembly, is on US payrolls. Ortega had condemned the Venezuelan government for resisting coup attempts against itself, and tried to block the July 30 elections to the Constituent Assembly. Dismissing her was among the first decisions taken by the Constituent Assembly after it was elected.

She fled Venezuela along with her husband last week, and travelled to Brazil on Tuesday. There is intense speculation that she would ultimately seek asylum in the United States.

“Ortega, a longtime government insider who became chief prosecutor in 2007, is likely safeguarding some of the administration’s most damning legal secrets. And she’s thought to be working with U.S. law enforcement at a time when Washington is ratcheting up sanctions on Caracas”, said the paper.

According to The Moon of Alabama, “word is that Ortega's husband was blackmailed by the U.S. after he was involved in large illegal transactions”.

Venezuela is seeking an international arrest warrant for Ortega, who is being investigated on charges of breach of duty, corruption, and extortion.

US Secretary of State Rex Tillerson had recently threatened regime change measures against the democratically elected government of Venezuela. CIA Director Mike Pompeo had also made similar threats against the country in July.