Venezuela

President Donald J. Trump has signed an Executive Order imposing strong, new financial sanctions on the dictatorship in Venezuela.

Venezuela, once one of the wealthiest countries in South America, is now one of the most corrupt and poorest, with its 82% of its people living in poverty. The recent attempt at elections proved the country to be at the helms of corruption and fraud, with Maduro at the lead once more.

The  White House Press Secretary issued the statement  today as follows:
The Maduro dictatorship continues to deprive the Venezuelan people of food and medicine, imprison the democratically-elected opposition, and violently suppress freedom of speech.”

In taking action against Maduro and the corruption far too prevalent in Venezuela, the President’s Executive Order and the actions taken by the Treasury Department will hope to mitigate the financial foothold of this regime, and in doing so “economically isolat[e] the Maduro dictatorship”.

New economic sanctions

The new sanctions prohibit dealings in new debt and equity as issued by the Venezuelan government and its state oil company. Further, it forbids “dealings in certain existing bonds owned by the Venezuelan public sector, as well as dividend payments to the government of Venezuela”. This includes no new debts with a maturity greater than 90 days, and no new debts for the government of Venezuela with a maturity greater than 30 days. A senior administration official stressed that this is not a prohibition on secondary market training on the vast majority of pre-existing bonds, but only covers two bonds. The general license further discussed below allows bonds that were purchased prior to the Executive Order to be traded in.

To mitigate some of these impacts, the Treasury Department will issue general licenses that will allow for certain transactions. For example, provisions will allow for a “wind-down period”, with 10 business days being allowed to unwind dealings. The sanctions will also not affect humanitarian efforts, as exports and important concerning humanitarian assistance (agriculture, medicine, etc.), will be allowed.

The sanctions will allow for petroleum exports and imports. “Don’t want to rush in and use our influence in an irresponsible manner”. The goal is to restore democracy, “more room to maneuver”, implying that not all sectors have been targeted by sanctions at this time to leave opportunities in the future. This implies that the U.S. hopes to not escalate tensions too much, and in allowing petroleum trade to continue, they will leave a large portion of the Venezuelan economy unscathed.

Will Venezuela turn to Russia and China?

Further, when questioned about whether these sanctions would push Venezuela to look to countries like Russia and China for economic support, a senior administration official said that Trump’s firm stance and applications of sanctions “continues to demonstrate U.S. Resolve in restoring democracy in Venezuela.” He said this should give both those countries a pause before they further deepen their engagement in the region, and in turn, should have a “dissuasive” effect on their engagements.

When asked about the implications of this in the border market or a possibility of a government default in Venezuela, a senior administration official said, “Maduro and his consistent mismanagement and corruption is what’s providing Venezuela ever closer to default”. He reiterated that America would not participate or contribute to this activity.

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