US Tightens the Noose on Venezuela: Will the Coup Succeed?

Excerpt

US Tightens the Noose on Venezuela: Will the Coup Succeed?

Washington's efforts to remove the Venezuelan government, an imperialist coup attempt, proceed apace. On 26 January, the US announced sanctions on PDVSA and seized assets from the Venezuelan oil company. This is a very serious blow to the Venezuelan economy and government. It is clear that the Trump administration thinks it has a window of opportunity and it is going in for the kill.

However, so far, the coup attempt has not managed to get any support from the armed forces and the latest opposition street protest was a flop. What are the perspectives for this imperialist aggression and how can it be effectively combatted?

The announcement by the US Treasury of further sanctions on PDVSA and the seizing of its assets in the US was a major step in the campaign to remove the Venezuelan government. This is a measure that Washington had so far shied away from because of its negative impact on US refiners. The United States imports about 500,000 barrels of oil a day from Venezuela. The new sanctions prohibit US individuals and companies from transacting with PDVSA, or if they do so, payments will go to an escrow account, which is outside of its control. Considering the total oil production is 1.1 million b/d, the impact is very serious. It is possible that some Venezuelan crude oil will still flow into refiners in the US by means of third parties, but at least 200/300,000 b/d will have to find other buyers. The estimated cost of this is about US$11bn for the rest of the year. In addition, the US seized PDVSA assets in the US worth US$7bn. It also made clear that these assets would be put at the disposal of the “legitimate interim president” whom they recognise, Juan Guaidó.

Death by sanctions

The sanctions are designed to cause maximum damage, “to make the economy scream”, as Nixon said when he ordered the CIA to prepare the overthrow of Allende in Chile. A large proportion of PDVSA’s shipments of oil, to China and Russia above all, are not paid in cash but rather as repayments of loans from these countries. Therefore, between 80 and 90 percent of PDVSA’s cash income comes from sales to the US. Already, PDVSA has announced that any customers bound for the US waiting for their tankers to be loaded need to pay in full and in advance for cargo, or the orders will not be fulfilled. That’s a defensive measure, which will have to be followed by a transfer of oil sales to other customers in the next days and weeks. That is a process which will take its time. Venezuela mainly produces extra-heavy oil, which not all refineries can handle.

An even potentially more damaging impact of the sanctions is on Venezuelan imports of fuel and naphtha from the US, which it uses to refine the extra-heavy oil into a more saleable product. Venezuela currently relies on the US for 80 percent of these imports, which it would have to source from African countries, which are much further away, or it would be forced to sell unrefined extra-heavy crude oil at a lower price. This is aggravated by the fact that two of the country's main refineries, El Palito and Puerto la Cruz are almost paralysed and CRP is only working at minimum capacity.

To add to the impact of the sanctions, US National Security Advisor, John Bolton issued a provocative statement on January 30 implying that the approved US sanctions applied beyond the US borders, which technically is not the case:

Companies like the Spanish Repsol, which are not directly affected by these sanctions, are reportedly reconsidering their options. In the last three months of 2018, Repsol had been importing 53,000 b/d in an oil-for-debt agreement. The FT reported that “Some suspect the US Treasury has intentionally muddied the waters to scare off alternative buyers of Venezuelan oil as Washington ramps up pressure on Mr Maduro”.

Significantly, Bolton was at the press conference where the sanctions were announced, carrying a legal pad with “5,000 troops to Colombia” scribbled in it. Some have said this shows how stupid he is. While that is certainly an element in the equation, a more plausible explanation is that the pad was shown deliberately with the aim of sending a threatening message to Maduro: resign or else. The message was also aimed at the Venezuelan army, implying that, if they continue to support the president, they may face invasion by the US. At the same time as Bolton was waving his legal pad at the press conference, there was a report of a visit by Major General Mark Stammer, commander of the U.S. Army South, to Colombia, where he is supposed to be reviewing plans to face “mutual threats” on the border with Venezuela.

Military provocation and imperialist pressure

Reports in Venezuela cited a small number of paramilitary operatives having already crossed the border from Colombia. Though these reports cannot be confirmed, they are perfectly plausible. Everyone knows that any provocation or military aggression against Venezuela is likely to come from Colombia, which has a right-wing government completely aligned with Trump, where there are US military bases and which has for a long time shown an extremely belligerent attitude against the Bolivarian Revolution.

Military intervention is certainly not the first item on the agenda of this coup and it will not be without serious risks. Washington is proceeding according to a pre-established plan, which starts with diplomatic pressure and continues with economic sanctions designed to cripple the economy. To the US sanctions, we have to add the withholding (in fact a seizure) of US$1.2bn worth of gold by the Bank of England, a decision we now know was taken after lobbying by Mike Pompeo and John Bolton weeks ago, well before Guaidó declared himself president. Guaidó has now lobbied the UK government to put these assets at his disposal.

Read more here

All the views expressed in, and at the source of, this article may not necessarily reflect those of T.E.A. Watchers.
Click article heading to go to article source.