New U.S. sanctions on Venezuela target its ‘dictatorship,’ state oil firm, report

U.S. President Donald Trump signed an executive order that prohibits dealings in new debt from the Venezuelan government or its state oil company in an effort to halt financing that fuels President Nicolas Maduro’s “dictatorship,” the White House said on Friday.

The order is Washington’s biggest sanctions blow to date against Maduro and is intended to punish his leftist government for what Trump has called an erosion of democracy in the oil-rich country, already reeling from an economic crisis.

“These measures are carefully calibrated to deny the Maduro dictatorship a critical source of financing to maintain its illegitimate rule, protect the United States financial system from complicity in Venezuela’s corruption and in the impoverishment of the Venezuelan people,” the White House said in a statement.

Banning trades on new bonds will make it tricky for Venezuela’s ailing state-run company PDVSA [PDVSA.UL] to refinance its heavy debt burden. Investors had expected that it would seek to ease upcoming payments through such an operation, which usually requires new paper be issued.

That could push the cash-strapped company closer to a possible default, or bolster its reliance on key allies China and Russia, which have already lent Caracas billions of dollars.

However, the order protects holders of most existing Venezuelan government and PDVSA bonds, who were relieved the sanctions did not go further. Venezuelan and PDVSA bonds were trading broadly higher on Friday afternoon.

U.S. Treasury Secretary Steven Mnuchin said on Friday that new sanctions imposed against Venezuela were aimed at hobbling the regime of President Nicolas Maduro by restricting the country’s access to U.S. debt and equity markets.

“We urge those within the regime, including those who have been sanctioned, to distance themselves from the violence and the dictatorship,” Mnuchin told reporters at the White House. He said the sanctions were not aimed at “changing leadership” in Venezuela.

White House national security adviser H.R. McMaster said at the same news conference that United States had no plans to take military action in Venezuela, but that President Donald Trump intended to take advantage of “a broad range of … integrated options” in the future.

Venezuela denounces new US sanctions

Venezuela has denounced new US sanctions against it, with its foreign minister saying the US was trying to promote a humanitarian crisis.

Jorge Arreaza also said his country was a victim of “fake news” that exaggerated its economic difficulties.

Mr Arreaza said that the sanctions and “threats” amounted to “uncivilised politics”.

President Maduro would not attend the UN General Assembly in New York next month, he said.

 
REUTERS/BBC