Venezuela nears default after US imposes sanctions on economy
By
Andrea Lobo
1 September 2017
Washington has moved to dramatically intensify Venezuela’s social crisis by imposing its first direct sanctions on the country’s economy. The measures, imposed as an executive order last weekend, represent a significant escalation of the Trump administration’s calculated stream of sanctions against top officials of the United Socialist Party of Venezuela (PSUV) government, reaching up to President Nicolás Maduro himself and aimed at forcing his downfall.
Trump’s order prohibits Citgo, the subsidiary in the US of Venezuela’s state-run oil company PDVSA, from sending dividends back to Venezuela, and bars transactions of US institutions and individuals involving new debt or shares issued by PDVSA or the government in Caracas. In response, the firm Cantor Fitzgerald announced on Tuesday the first restriction on Venezuelan bonds by a large US finance house.
Three weeks ago, Trump had threatened the possibility of military action against Venezuela in response to the election of a PSUV-controlled constituent assembly; however, his national security advisor H. R. McMaster stated in the announcement of the new sanctions that “no military actions are anticipated in the near future.”
While the trading of oil is still open, Reuters reports that debt refinancing and crude cargos had already begun struggling to find buyers in the United States since July, when sanctions were imposed on PDVSA’s financial vice president.
Other reports indicate, moreover, that US officials are considering banning dollar payments on Venezuelan oil imports or oil imports altogether, which would cut the country’s main source of foreign currency to import food and medical supplies.
Amid its…