By Ian Talley
WASHINGTON -- The Trump administration on Tuesday stepped up its
pressure campaign against the Maduro regime in Venezuela by
blacklisting the trading brokerage owned by Russia oil giant
Rosneft that the U.S. says has been helping Caracas export
crude.
In sanctioning the Swiss-registered Rosneft Trading SA, the
administration warned that anyone caught doing business with
Rosneft's subsidiary risks being sanctioned by the U.S.
Senior administration officials said more sanctions are under
consideration that target other foreign firms aiding the regime of
President Nicolás Maduro and that the White House had not taken the
use of military force as a potential option off the table.
The latest action comes amid concern among some U.S. and
Venezuelan opposition officials that the effort to remove Mr.
Maduro from power risks losing critical momentum, especially after
Maduro sought in January to take control of the National
Assembly.
The legislature is seen as the last independent government
institution in the country, the seat of power for the political
opposition headed by Juan Guaidó and backed by the U.S. as the sole
legitimate government.
The sanctions follow an international tour by Mr. Guáido and
other opposition officials to rally support for a more sanctions,
focusing particularly on enforcement, as the opposition endures
waning domestic popularity.
Support from Russia and other countries that see backing the
longtime ruler as a way of opposing the U.S. has allowed Mr. Maduro
to maintain a grip on power in the face of U.S. sanctions directed
at Venezuela's most important sources of revenue. The
administration had expected that sanctions against oil and gold
sectors would have led to the ouster of the Maduro regime within
months.
Although the previous administration had sanctioned Venezuela,
the Trump White House has taken a more aggressive stance.
In addition to Rosneft Trading, the U.S. blacklisted Didier
Casimiro, a Rosneft board member and president of the trading unit,
complicating his ability to do business outside Russia.
Russian officials blasted the U.S. action and said that the
sanctions won't affect Moscow's business with Caracas.
"Russia categorically does not accept unilateral restrictive
measures by which the United States, striving for global hegemony,
is trying to subjugate the whole world to its will," the foreign
ministry said in a statement.
A person answering the phone at Rosneft Trading in Switzerland
directed requests for comment to its parent company in Moscow.
Rosneft called the sanctions illegal and said that it had been
active in Venezuela since long before the imposition of U.S.
sanctions.
"Rosneft implements projects in Venezuela in strict accordance
with international and national laws," the company said, adding
that it will consider legal options to protect against the
sanctions.
Venezuelan Foreign Relations Minister Jorge Arreaza called the
sanctions against Rosneft Trading "unilateral coercive measures"
that violate his nation's right to trade oil.
Mr. Guaidó celebrated the new sanctions. "This news is a
victory," he wrote on Twitter.
Secretary of State Mike Pompeo said blacklisting Rosneft Trading
SA cuts off Maduro's main lifeline to evade the oil sanctions.
"Those who prop up the corrupt regime and enable its repression of
the Venezuelan people will be held accountable," Mr. Pompeo said in
a Twitter message.
While the U.S. previously has imposed sanctions against Rosneft,
those measures have affected a narrow group of operations. The
Trump administration has refrained from targeting the entire
company because of concerns that could harm many U.S. companies
doing business with Russia's oil giant, according to industry
officials.
Targeting Rosneft would escalate the sanctions campaign against
Venezuela and would by received by Moscow as an aggressive act
against the Kremlin. When the U.S. last sanctioned Rosneft in 2014
for Russia's Ukraine intervention, it carefully tailored the action
to hit only the company's chairman and some corporate bonds.
Underscoring concern about inflaming diplomatic tensions, the
administration took the unusual step of notifying Russia's
government, including Foreign Minister Sergei Lavrov, several days
ahead of the new sanctions, one senior official said. Treasury
seldom forewarns potential targets as it gives them time to protect
assets, undermining the effectiveness of sanctions.
Asked whether U.S. military intervention in Venezuela is an
option, the senior U.S. official said the White House was still
prepared to use force, saying the U.S. had only reached 60% of a
"maximum pressure" sanctions campaign.
"We hope to never have to get to 100 percent of maximum pressure
because we hope that together, with countries throughout the world,
Venezuela will have a democratic transition," the official said.
Mr. Trump previously has threatened military action.
Addressing concerns that penalizing a unit of a global energy
provider could squeeze oil supplies, the senior official said the
U.S. Energy Department has determined that the action wouldn't
destabilize global oil markets.
Rosneft shares trading on the London Stock Exchange initially
fell nearly 5% on the news, but subsequently recovered most of
those losses.
The U.S. Treasury Department said the sanctions give companies a
three-month period to wind down their business with Rosneft
Trading. The sanctions were accompanied by a note clarifying that
blacklisting the brokerage doesn't mean that business with its
parent company is prohibited.
Rosneft has helped Venezuela counter a decline in oil
production, according to U.S. officials, trade records and
analysts. Rosneft Trading handled at least 55 million barrels of
trade for Venezuela's sanctioned state oil company Petróleos de
Venezuela, SA (PDVSA) in the last four months of 2019, and
shipments to West Africa in January, Treasury said.
Almost half of $1.5 billion in Venezuelan crude exported to
India in the nine months after U.S. oil sanctions imposed in 2019
was purchased by an Indian joint venture with Rosneft, according to
a Wall Street Journal analysis of data compiled by trade database
Import Genius.
Elliott Abrams, the U.S. special envoy for Venezuela, said that
besides warning shipowners involved in crude exports, the U.S.
planned discussions with those still buying Venezuelan oil,
including its two biggest consumers, China and India.
Chinese and Indian officials didn't immediately respond to
requests for comment.
U.S. officials accused the Russian company of using dangerous
ship-to-ship transfers on the high seas in an effort to hide its
actions, with their geolocation transponders turned off to evade
detection.
--Ryan Dube in Lima, Peru, and
Georgi Kantchev
in Moscow contributed to this article.
Write to Ian Talley at ian.talley@wsj.com
(END) Dow Jones Newswires
February 18, 2020 18:36 ET (23:36 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.