US urged to impose full embargo on Venezuelan oil

US urged to impose full embargo on Venezuelan oil

Argentine president is first Latin American leader to openly advocate

The Trump administration should dramatically tighten its sanctions on Venezuela by imposing a full embargo on its oil exports to the US, according to Argentine president Mauricio Macri, who said the move would enjoy broad support across Latin America.

President Donald Trump unveiled a series of financial sanctions on Venezuela and members of its government over the summer, including prohibiting any US institutions from lending more money to the country. But he stopped shy of more draconian measures such as a full embargo on Venezuelan oil exports to the US.

Given the worsening situation for Venezuela, the administration should “absolutely” introduce a comprehensive ban on the country’s oil exports to the US, the Argentine president told the FT in an interview in New York on Tuesday evening.

“I think we should go to a full oil embargo,” Mr Macri said. “Things have gotten worse and worse. Now, it’s really a painful situation. Poverty is going up every day, sanitary conditions are getting worse every day.”

The Argentine president is the first Latin American leader to openly advocate such as tough step. But Mr Macri, a centre-right politician who has succeeded in transforming Argentina from an international pariah to one of Latin America’s emerging starlets, said there would be “broad support” across the region for such a draconian measure, despite the hardship it would entail.

“We have been talking about this many times with many people over the past month,” he told the FT.

Venezuela’s economic and financial crisis has deepened lately, with president Nicolás Maduro announcing last week that the country could no longer service its foreign debts, summoning bondholders to talks in Caracas next week to discuss a restructuring. Analysts expect the move to result in a disorderly default in the coming days, which will worsen an already precarious situation.

The US is considered unlikely to block all imports of Venezuelan crude, as that would create significant disruption in its refining industry. US imports of Venezuelan oil have been running at about 800,000 barrels per day, roughly 8 per cent of the country’s total crude imports last year.

Citgo, the US downstream subsidiary of Venezuela’s state oil company PDVSA, is a large buyer of the country’s crude and employs 3,500 people at three refineries in Louisiana and Texas.

In August, senators from states with refineries along the gulf coast wrote to Mr Trump warning that “unilateral sanctions” against Venezuela “could harm the US economy, impair the global competitiveness of our businesses and raise costs for our consumers.”

However, Senator Bill Nelson, the Democratic representative of Florida, on Tuesday wrote an open letter to Treasury Secretary Steven Mnuchin urging him to impose tougher sanctions on the Venezuelan regime, and to also consider banning Venezuelan oil imports.

“PDVSA [the state oil company] should be a source of wealth for the Venezuelan people, but because of the corruption of the socialist government and years of mismanagement, it has become a source of cash for Maduro and his cronies to line their pockets,” Senator Nelson wrote. “I encourage you to seek the support of our European allies in imposing both targeted and sectoral sanctions on the Venezuelan regime, too.”

The Lima Group, a regional block of countries set up this summer to pressure Venezuela into free elections, in late October said that more sanctions might be needed to isolate the regime and hasten a return to democracy.

“If necessary, we must put added pressure on the Maduro regime by taking concrete steps to further isolate it from the international community,” Chrystia Freeland, Canada’s foreign minister, said at the group’s latest meeting in Toronto.

Mr Macri said that the Lima Group was doing a “good job” by putting diplomatic pressure on Venezuela. But “that is all we can do. The United States can domore,” he said. “I would cut off the resources of Maduro and keep them isolated from the rest of the community.”

 

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