Trump tightens Venezuela sanctions after ‘sham’ vote

WASHINGTON - President Donald Trump on Monday tightened financial sanctions against Venezuela following what the US called a “sham” election, making it harder for the government to sell off state assets.

Hours after Nicolas Maduro claimed victory in an election plagued by irregularities and boycotted by the opposition, Trump signed an executive order further tightening financial pressure on the regime.

The White House said the executive order complicates Venezuela’s efforts to sell off financial IOUs known as “accounts receivable.”

Senior US administration officials said the instruments had been used to garner much-needed revenue for the cash-starved regime, but declined to provide more substantive details.

The stern reaction from Washington further ratcheted up the pressure on the leftist Maduro, after the Lima Group’s 14 members, including regional powers Argentina, Brazil and Canada moved to recall their ambassadors in protest at the opposition-boycotted vote.

Addressing cheering supporters outside Miraflores Palace in Caracas, Maduro celebrated his election to another six-year term as a “historic record,” after officials credited him with 68 percent of votes cast, far ahead of the 21 percent for his nearest rival, ex-army officer Henri Falcon.

But with Venezuela’s long-suffering population enduring an economic crisis marked by food and medicine shortages, violent unrest and a mass exodus by hundreds of thousands, the vote was marred by historic 52 percent abstention, and boycotted by the Democratic Unity Roundtable (MUD) opposition coalition as a “farce.” Washington echoed that assessment with Vice President Mike Pence denouncing the vote as a “sham” and “illegitimate,” and brandished the threat of new sanctions. “The United States stands with democratic nations in support of the Venezuelan people and will take swift economic and diplomatic actions to support the restoration of their democracy,” US Secretary of State Mike Pompeo said in a statement  “Until the Maduro regime restores a democratic path in Venezuela through free, fair, and transparent elections, the government faces isolation from the international community.”

Falcon, a loyalist of the late leftist firebrand leader Hugo Chavez who was neck-and-neck with Maduro in pre-election polls, says the vote lacked “legitimacy” and accused the government of vote buying.

“It is obvious that (Maduro) has no popular support and has lost legitimacy,” said opposition deputy Jose Manuel Olivares.

Maduro may have won, but the near future appears bleak as the country faces economic ruin.

The IMF estimates that Venezuela’s GDP will continue to shrink this year, with the inflation rate expected to reach 13,800 percent.

Venezuela has always relied on its oil, but production has dropped to its lowest level in 30 years despite a recent rise in prices.

“The upcoming scenario is clear: political tension and radicalization, repression, massive international rejection, a sharpening of sanctions, and a climax to the economic crisis,” said analyst Luis Vicente Leon.

Maduro, a former bus driver, union leader, foreign minister and Chavez’s hand-picked political heir, has presided over an implosion of the once-wealthy oil producer’s economy since taking office in 2013.

The socialist leader insists Venezuela is the victim of an “economic war” waged by the conservative opposition and external powers including the United States aimed at toppling him.

In his victory speech he vowed to “dedicate myself entirely towards economic recovery.”

But Washington was poised to up the economic and diplomatic pressure on Maduro’s regime - having previously slapped sanctions on the president and his senior aides, and banned US entities from buying any more debt from Caracas or state oil company PDVSA.

Pence warned the United States “will not sit idly by as Venezuela crumbles and the misery of their brave people continues.”

And Pompeo slammed the vote as “choreographed by a regime too unpopular and afraid of its own people to risk free elections and open competition.

“It stacked the Venezuelan courts and National Electoral Council with biased members aligned with the regime. It silenced dissenting voices. It banned major opposition parties and leaders from participating.”

The US market is crucial, as one third of Venezuelan oil exports go to the United States. But Washington has threatened to stop buying Venezuelan oil.

Venezuela’s crippled oil industry lacks investment and its assets are increasingly prey to debt settlements as the country defaults.

Maduro’s win “paves the way for an escalation of US sanctions - possibly on the oil sector - and a messy sovereign debt default and restructuring,” said London-based Capital Economics.

Maduro is placing his trust in allies China and Russia.

Russian President Vladimir Putin congratulated Maduro on his win, but hoped for “national dialogue in the interests of the entire Venezuelan people,” the Kremlin said.

In Beijing, the foreign ministry said the parties should “respect the choices made by the people of Venezuela.”

At his victory rally, Maduro called for a “national dialogue,” even though the opposition said it would step up pressure for “legitimate elections” later in the year.

But the opposition is deeply divided, with Falcon stirring up a hornet’s nest when he left the coalition to run for president.

As for Maduro, his biggest risk is an “implosion” if government officials are cornered and pressed by the international sanctions, Leon said.

 

 

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