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Trump administration targets Russian company for allegedly helping Venezuela export oil Trump administration targets Russian company for allegedly helping Venezuela export oil
(about 1 hour later)
The Trump administration directed its “maximum pressure” campaign in Venezuela toward Russia on Tuesday, announcing sanctions against the trading and marketing arm of Rosneft, the state-controlled Russian oil giant that has taken over an increasing share of Venezuela’s own state-owned oil industry and reaped huge profits from exporting its crude.The Trump administration directed its “maximum pressure” campaign in Venezuela toward Russia on Tuesday, announcing sanctions against the trading and marketing arm of Rosneft, the state-controlled Russian oil giant that has taken over an increasing share of Venezuela’s own state-owned oil industry and reaped huge profits from exporting its crude.
Swiss-registered Rosneft Trading has “propped up the [Venezuelan] oil sector and actively tried to evade” existing U.S. sanctions against those doing business with the Venezuelan government of Nicolás Maduro, according to one of four senior administration officials who briefed reporters on the new measures.Swiss-registered Rosneft Trading has “propped up the [Venezuelan] oil sector and actively tried to evade” existing U.S. sanctions against those doing business with the Venezuelan government of Nicolás Maduro, according to one of four senior administration officials who briefed reporters on the new measures.
In recent months, U.S. officials and industry analysts say that Rosneft Trading has been responsible for shipping up to 70 percent of Venezuela’s oil to overseas customers while often engaging in elaborate subterfuge to hide its origin.In recent months, U.S. officials and industry analysts say that Rosneft Trading has been responsible for shipping up to 70 percent of Venezuela’s oil to overseas customers while often engaging in elaborate subterfuge to hide its origin.
The new measures do not cover the parent company, Rosneft Oil Company. Its chairman, Igor Sechin, is a close ally of Russian President Vladimir Putin and has directly supervised the company’s Venezuela operations. Both Rosneft and Sechin are under limited U.S. sanctions related to Ukraine.The new measures do not cover the parent company, Rosneft Oil Company. Its chairman, Igor Sechin, is a close ally of Russian President Vladimir Putin and has directly supervised the company’s Venezuela operations. Both Rosneft and Sechin are under limited U.S. sanctions related to Ukraine.
But U.S. officials said the steps would have a global effect. Although the sanctions directly target only property and interests held in the United States by the trading subsidiary and its chairman, Didier Casimiro, “most banks, whether U.S.- based or not,” look to the U.S. measures “to guide their risk appetite,” one of the officials said.But U.S. officials said the steps would have a global effect. Although the sanctions directly target only property and interests held in the United States by the trading subsidiary and its chairman, Didier Casimiro, “most banks, whether U.S.- based or not,” look to the U.S. measures “to guide their risk appetite,” one of the officials said.
“That means anyone outside the United States engaging in any action, any activity with [Rosneft Trading] … runs the risk of being sanctioned themselves.”“That means anyone outside the United States engaging in any action, any activity with [Rosneft Trading] … runs the risk of being sanctioned themselves.”
In the U.S. embargo on Venezuelan oil, Russia is a clear winnerIn the U.S. embargo on Venezuelan oil, Russia is a clear winner
The sanctions come as the administration campaign to force Maduro from office and replace him with Juan Guaidó, the elected head of Venezuela’s legislative assembly, passed the one-year mark with little apparent progress.The sanctions come as the administration campaign to force Maduro from office and replace him with Juan Guaidó, the elected head of Venezuela’s legislative assembly, passed the one-year mark with little apparent progress.
Sanctions have worsened the effects of years of mismanagement and corruption that have crippled Venezuela’s oil-rich economy, sending millions to neighboring countries as the country has endured severe shortages of food, medicine and other necessities.Sanctions have worsened the effects of years of mismanagement and corruption that have crippled Venezuela’s oil-rich economy, sending millions to neighboring countries as the country has endured severe shortages of food, medicine and other necessities.
The United States and more than 50 other countries, many of them in Latin America, have recognized Guaidó as Venezuela’s legitimate president, but Maduro has retained support from key sectors, including the Venezuelan military.The United States and more than 50 other countries, many of them in Latin America, have recognized Guaidó as Venezuela’s legitimate president, but Maduro has retained support from key sectors, including the Venezuelan military.
Later Tuesday, Jorge Arreaza, Maduro’s foreign minister, condemned the U.S. move against Rosneft Trading. “The unilateral coercive measures of the US against Rosneft Trading are directed against our oil industry, its workers, and the Venezuelan economy,” he tweeted. “They continue to attack the people of Venezuela, trying to generate suffering and difficulties.”
Guaidó’s opposition movement has lost traction in recent months, as the Trump administration — which still officially refuses to take a military option off the table — has looked for new ways to bolster him. Guaidó secretly left Venezuela last month to build support with a tour of Europe, Canada and the United States, where he was President Trump’s guest at the Feb. 4 State of the Union speech.Guaidó’s opposition movement has lost traction in recent months, as the Trump administration — which still officially refuses to take a military option off the table — has looked for new ways to bolster him. Guaidó secretly left Venezuela last month to build support with a tour of Europe, Canada and the United States, where he was President Trump’s guest at the Feb. 4 State of the Union speech.
Although the sanctioning of Russia’s oil trade in Venezuela has raised the prospect of a spike in global oil prices, an official said that “we’re confident that energy markets will remain stable.” Although the sanctions against Russia’s oil trade in Venezuela has raised the prospect of a spike in global oil prices, an official said that “we’re confident that energy markets will remain stable.”
Secretary of State Mike Pompeo discussed the matter on Friday with Russian Foreign Minister Sergei Lavrov in Munich, where both were attending a conference, one official said.Secretary of State Mike Pompeo discussed the matter on Friday with Russian Foreign Minister Sergei Lavrov in Munich, where both were attending a conference, one official said.
The four officials who briefed reporters Tuesday spoke on the condition of anonymity imposed by the White House.The four officials who briefed reporters Tuesday spoke on the condition of anonymity imposed by the White House.
The new sanctions are part of what one of them called the “Trump Doctrine,” which considers the Western Hemisphere part of “our zone of influence.”The new sanctions are part of what one of them called the “Trump Doctrine,” which considers the Western Hemisphere part of “our zone of influence.”
Its goal is “ensuring … a free and fully democratic” hemisphere, this official said. The United States will “definitely not allow extracontinental actors to subvert democracy … and destabilize our neighbors.”Its goal is “ensuring … a free and fully democratic” hemisphere, this official said. The United States will “definitely not allow extracontinental actors to subvert democracy … and destabilize our neighbors.”
The label evokes the Monroe Doctrine of nearly 200 years ago, when then-president James Monroe warned that the United States would not tolerate further European co­lo­ni­al­ism in the hemisphere. A corollary added by Theodore Roosevelt in 1904 said the United States was justified in using “international police power” to quell unrest in Latin America. The label evokes the Monroe Doctrine of nearly 200 years ago, when President James Monroe warned that the United States would not tolerate further European co­lo­ni­al­ism in the hemisphere. A corollary added by Theodore Roosevelt in 1904 said the United States was justified in using “international police power” to quell unrest in Latin America.
The Monroe Doctrine has been historically controversial in the hemisphere, where many believe it has been used to justify repeated U.S. intervention.The Monroe Doctrine has been historically controversial in the hemisphere, where many believe it has been used to justify repeated U.S. intervention.
In 2017, then-secretary of state Rex Tillerson sparked controversy when he said that U.S. implementation of the doctrine was “clearly … a success.” Early last year, then-White House national security adviser John Bolton used it in reference to Venezuela, saying it referred to the establishment of democracies. In 2017, then-Secretary of State Rex Tillerson sparked controversy when he said that U.S. implementation of the doctrine was “clearly … a success.” Early last year, then-White House national security adviser John Bolton used it in reference to Venezuela, saying it referred to the establishment of democracies.
“In this administration,” Bolton said, “we’re not afraid to use the phrase ‘Monroe Doctrine.’ ”“In this administration,” Bolton said, “we’re not afraid to use the phrase ‘Monroe Doctrine.’ ”
The impact of the new sanctions may make it more difficult for Rosneft Trading and Venezuela’s state oil giant, PDVSA, to move oil. But the Russians have already been taking steps to address that possibility. Previously, for instance, Rosneft Trading was one entity that long shipped Russian oil to the United States. But in December, it was not listed as the trader of any of the 17.2 million barrels of Russian oil and oil products shipped here.The impact of the new sanctions may make it more difficult for Rosneft Trading and Venezuela’s state oil giant, PDVSA, to move oil. But the Russians have already been taking steps to address that possibility. Previously, for instance, Rosneft Trading was one entity that long shipped Russian oil to the United States. But in December, it was not listed as the trader of any of the 17.2 million barrels of Russian oil and oil products shipped here.
“The Russians knew this was coming and they’ve already started taking steps for sanctions avoidance,” said Russ Dallen, a managing partner at Caracas Capital Markets, a financial and consulting firm that tracks Venezuelan oil. “This is a chess game, and the Russians are good at chess.”“The Russians knew this was coming and they’ve already started taking steps for sanctions avoidance,” said Russ Dallen, a managing partner at Caracas Capital Markets, a financial and consulting firm that tracks Venezuelan oil. “This is a chess game, and the Russians are good at chess.”
Globally, Rosneft could seek to get around the measures by using companies and its subsidiaries other than Rosneft Tradingfor marketing and sales. Some of the largest remaining clients for Venezuelan oil, including India and China, have in the past proven unwilling to cede to U.S. demands that they stop. Globally, Rosneft could seek to get around the measures by using companies and its subsidiaries other than Rosneft Trading for marketing and sales. Some of the largest remaining clients for Venezuelan oil, including India and China, have in the past proved unwilling to cede to U.S. demands that they stop.
Even before U.S. sanctions, Venezuela’s oil production had slipped to levels not seen since the 1940s. By making its biggest client — Rosneft Trading — “radioactive,” and by suggesting that the United States would target other companies that seek to ship Venezuelan oil, the new measures are likely to at least further complicate Venezuela’s already flailing energy sector.Even before U.S. sanctions, Venezuela’s oil production had slipped to levels not seen since the 1940s. By making its biggest client — Rosneft Trading — “radioactive,” and by suggesting that the United States would target other companies that seek to ship Venezuelan oil, the new measures are likely to at least further complicate Venezuela’s already flailing energy sector.
Dallen and others said the United States may now seek to target other companies that do business directly with Venezuela’s oil sector. Those including Spain’s Repsol and U.S.-based Chevron, which has been continuing operations despite sanctions through a renewable license issued by the Treasury Department. Dallen and others said the United States may now seek to target other companies that do business directly with Venezuela’s oil sector. Those include Spain’s Repsol and U.S.-based Chevron, which has been continuing operations despite sanctions through a renewable license issued by the Treasury Department.
“It would not surprise me if they go after Repsol and Chevron,” Dallen said.“It would not surprise me if they go after Repsol and Chevron,” Dallen said.
The Venezuelan opposition — which estimates that the oil sector still provides the Maduro government with 25 to 30 percent of its annual cash flow — hailed the U.S. sanctions, calling them another step toward the economic, diplomatic and financial isolation of Maduro. The Venezuelan opposition — which estimates that the oil sector still provides the Maduro government with 25 percent to 30 percent of its annual cash flow — hailed the U.S. sanctions, calling them another step toward the economic, diplomatic and financial isolation of Maduro.
“Russian oil company Rosneft Trading S.A. has been sanctioned for being an accomplice of the dictatorship. This news is a victory!” Guaidó tweeted. “Whoever supports the dictator, whoever they are, wherever they come from, must bear the consequences.”“Russian oil company Rosneft Trading S.A. has been sanctioned for being an accomplice of the dictatorship. This news is a victory!” Guaidó tweeted. “Whoever supports the dictator, whoever they are, wherever they come from, must bear the consequences.”
Leopoldo Lopez, Guaido’s second-in-command who has sought asylum in the Spanish Embassy in Caracas, said the opposition-controlled National Assembly would also be looking into the possibility of annulling Rosneft’s existing contracts in Venezuela, a step that could put Russian interests in Venezuela in legal jeopardy if Maduro is forced out. Leopoldo López, Guaidó’s second-in-command who has sought asylum in the Spanish Embassy in Caracas, said the opposition-controlled National Assembly would also be looking into the possibility of annulling Rosneft’s existing contracts in Venezuela, a step that could put Russian interests in Venezuela in legal jeopardy if Maduro is forced out.
Lopez said other foreign companies that do business with the Maduro government — including Repsol, Chevron and India’s Reliance — should be “take note” of the sanctions on Rosneft Trading.” López said other foreign companies that do business with the Maduro government — including Repsol, Chevron and India’s Reliance — should be “take note” of the sanctions on Rosneft Trading.
Faiola reported from Miami.Faiola reported from Miami.