Tag Archives: Venezuela

Venezuela suspends dollar auctions, blames U.S. sanctions

A woman changes dollars for bolivars at a money exchange in Caracas, Febreuary 24, 2015. REUTERS/Carlos Garcia Rawlins

CARACAS (Reuters) – Venezuela on Wednesday temporarily suspended the sale of U.S. dollars through its Dicom auction system, following an announcement last week that it was moving away from the greenback in response to U.S. sanctions.

The United States in August prohibited dealings in new debt from Venezuela and state oil company PDVSA in response to the creation of a new legislative superbody that critics call the consolidation of a dictatorship.

President Nicolas Maduro last week said the crisis-stricken OPEC country would create a basket of currencies to “free” Venezuela from the dollar, using the Dicom auction system.

Upcoming auctions are deferred until “the necessary adjustments are made to our system to incorporate other currencies” and to resolve problems associated with its correspondent bank, Dicom said via its Twitter account.

Dicom as of August was auctioning dollars for 3,300 bolivars. The system serves as a complement to the country’s currency control system that provides greenbacks at 10 bolivars for essential items such as food and medicine.

Dollars on the black market now fetch 22,431 bolivars, according to website DolarToday.com, which is the principal for the black market rate.

Dicom has auctioned only $72 million since it began operations three months ago. Business leaders say this is a fraction of what companies need to pay to import goods, leaving them reliant on the black market.

Economists say the currency controls are the primary driver of the country’s economic dysfunction, which includes triple-digit inflation and chronic product shortages.

Maduro says the country is victim of an “economic war” led by political adversaries with the help of Washington.

(Reporting by Corina Pons and Deisy Buitrago writing by Brian Ellsworth; editing by Jonathan Oatis)

France says Venezuela talks to take place, warns of sanctions

Venezuela's President Nicolas Maduro speaks during a meeting with ministers at Miraflores Palace in Caracas, Venezuela September 12, 2017. Miraflores Palace/Handout via REUTERS

PARIS (Reuters) – Venezuela’s government and opposition will hold a round of talks in the Dominican Republic on Wednesday, France’s foreign minister said on Tuesday, warning Caracas that it risked EU sanctions if it failed to engage in negotiations.

Venezuela was convulsed for months by demonstrations against leftist President Nicolas Maduro, accused by critics of knocking the oil-rich country into its worst-ever economic crisis and bringing it to the brink of dictatorship.

“I was happy to learn that dialogue with the opposition would restart tomorrow in the Dominican Republic,” Jean-Yves Le Drian said in a statement after meeting his Venezuelan counterpart, Jorge Arreaza Montserrat, in Paris.

Venezuela’s Democratic Unity Coalition said it would send a delegation to meet with Dominican President Danilo Medina to discuss the conditions under which dialogue could be held, but denied that any talks as such had begun.

“The invitation by (Medina) does NOT represent the start of a formal dialogue with the government,” the coalition said in a statement. “To begin serious negotiations, we demand immediate concrete actions that show true willingness to solve problems rather than to buy time.”

The statement reiterated long standing opposition demands including the release of political prisoners, respect for the opposition-run congress and measures to ease a crippling economic crisis.

Le Drian said Wednesday’s meeting would involve Medina and former Spanish Prime Minister José Luis Rodriguez Zapatero.

United Nations Secretary-General Antonio Guterres expressed his full support for the talks.

“The Secretary-General encourages the Venezuelan political actors to seize this opportunity to demonstrate their commitment to address the country’s challenges through mediation and peaceful means,” U.N. spokesman Stephane Dujarric said in a statement.

Maduro routinely calls for dialogue with the opposition, but his adversaries see dialogue as a stalling mechanism that burnishes the government’s image without producing concrete results.

In a televised broadcast on Tuesday evening, he voiced renewed support for dialogue and said he was sending Socialist Party heavyweight Jorge Rodriguez to represent the government in the Dominican Republic.

A dialogue process brokered by Zapatero and backed by the Vatican in 2016 did little to advance opposition demands.

Many Maduro critics believe opposition leaders were duped in that dialogue process, and have grown suspicious of Zapatero as an intermediary.

Like fellow-EU member Spain a few days earlier, Le Drian also warned Arreaza that if the situation continued there would be consequences.

“I reminded him of the risk of European sanctions and the need to rapidly see evidence from Venezuela that it is ready to relaunch negotiations with the opposition and engage in a sincere and credible process,” he said.

 

(Reporting by John Irish in Paris and Diego Ore and Brian Ellsworth in Caracas; Additional reporting by Michelle Nichols at the United Nations; Writing by Brian Love and Andrew Cawthorne; Editing by Leigh Thomas and Sandra Maler)

 

Venezuela Supreme Court has staged effective coup: jurists’ group

FILE PHOTO: People walk in front of the building of Venezuela's Supreme Court of Justice (TSJ) in Caracas, Venezuela June 28, 2017. REUTERS/Marco Bello/File Photo

GENEVA (Reuters) – Venezuela’s Supreme Court has progressively dismantled the rule of law, becoming an instrument of President Nicolas Maduro’s government in what amounts to a coup against the constitutional order, an international human rights group charged on Tuesday.

The International Commission of Jurists (ICJ) said the top court had undermined human rights and infringed the Constitution through a series of rulings since December 2015.

In two rulings in March 2017, the Supreme Court of Justice “effectively claimed legislative powers for itself, depriving the National Assembly of its Constitutional powers and granting sweeping arbitrary powers to the executive,” it said.

“These decisions amount to a coup d’état against the Constitutional order and have ushered in a new reign of arbitrary rule,” Sam Zarifi, ICJ Secretary General, said in a statement.

Judges on the Supreme Court are mainly from the ruling Socialist Party and/or former officials of the government of Maduro, the Geneva-based jurists’ group said.

Maduro denies accusations of a power grab, saying his actions – including the creation of an alternative constituent assembly that has granted itself lawmaking powers – are aimed at restoring peace after months of protests and violence.

Zarifi said the Supreme Court of Justice “has issued its decisions based on political considerations and ideological and party loyalties to the executive power”.

The ICJ report, “The Supreme Court of Justice: an instrument of executive power”, was issued on the sidelines of the U.N. Human Rights Council which began a three-week session on Monday.

U.N. human rights chief Zeid Ra’ad al-Hussein said on Monday that Venezuelan security forces may have committed crimes against humanity against protesters and called for an international investigation.

(Reporting by Stephanie Nebehay; Editing by Mark Trevelyan)

Venezuela’s Maduro seeks debt negotiations after U.S. sanctions

FILE PHOTO: Venezuela's President Nicolas Maduro speaks during a meeting at Miraflores Palace in Caracas, Venezuela August 25, 2017. Miraflores Palace/Handout via REUTERS

By Deisy Buitrago and Corina Pons

CARACAS (Reuters) – Venezuelan President Nicolas Maduro has invited bondholders to unspecified “negotiations” over the country’s foreign debt in coming days, in response to recent U.S. financial sanctions.

With Venezuela deep in recession and its currency reserves at their lowest in more than two decades, the Maduro government and state oil company PDVSA have to pay about $4 billion in debt and interest during the rest of 2017.

“All bondholders are invited to various rounds of negotiations over the next few weeks,” the president said in a speech late on Thursday to the new Constituent Assembly.

He reiterated Venezuela would keep honoring debt, but said he wanted to talk with bondholders affected by sanctions recently imposed by U.S. President Donald Trump.

Maduro said Vice President Tareck El Aissami, already under U.S. financial sanctions over drug trafficking allegations, and Finance Minister Ramon Lobo would coordinate talks and some “bilateral conversations” with bondholders had already begun.

In the same speech, Maduro said Venezuela would seek to “free” itself of the U.S. dollar and “implement a new system of international payments” using currencies such as the yuan, yen, rupee, euro and ruble.

The president did not, however, specify whether paying in a different currency was an option his government wanted to discuss with bondholders.

The Washington-based Institute of International Finance, which represents large banks and financial institutions, said it was advising a group of holders of Venezuelan bonds.

“This informal group will take note of the Venezuelan announcements and discuss how to proceed,” IIF Executive Managing Director Hung Tran told Reuters. The group was made up of bondholders from the United States and elsewhere, he said.

Tran said Venezuela could not change the currency of bonds without agreement by all or a large majority of holders.

Last month, Trump, who brands Maduro a “dictator,” signed an executive order that prohibits Americans from dealing in new debt issued by the Venezuelan government or PDVSA.

That could complicate any debt refinancing attempts.

Washington has also sanctioned PDVSA’s finance boss Simon Zerpa, meaning U.S. businesses are barred from dealing with him, and even Maduro himself in measures intended to punish the Venezuelan government for alleged corruption and rights abuses.

“I will be announcing Venezuela’s definitive response to the financial aggression we – and the international investors – have suffered from Donald Trump and (opposition leader) Julio Borges,” Maduro added in the speech on Thursday.

Borges, the head of the opposition-led congress whose role has been overridden by the Constituent Assembly, has been spearheading an opposition campaign for foreign financial institutions to put the squeeze on Venezuela’s government.

“Venezuela will take a position to defend the judicial and financial security of the republic and its investors or holders of financial instruments,” Maduro added.

BOND PRICES STABLE

Though Maduro gave no further details of what his government wanted to discuss with bondholders or where talks would be held, he did say 74 percent were American or Canadian.

Three bondholders consulted by Reuters said they had not received any formal approach to dialogue, though two said intermediaries for the government had been communicating with some investors informally.

“We didn’t receive an invitation or anything like that. Even if we had we don’t think we would take it too seriously,” said one portfolio manager at a large New York firm that owns Venezuelan debt, asking not to be named.

In trading on Friday, Venezuelan government and PDVSA bonds were little changed in price.

The OPEC nation of 30 million people is in the fourth year of a recession, with its population grappling with triple-digit inflation and shortages of food and medicine.

Critics say a long-failing socialist economic system is to blame for Venezuela’s financial troubles, while the government blames an alleged “economic war” by domestic foes and Washington.

International reserves stood at $9.873 billion on Wednesday, compared with nearly $30 billion five years ago, central bank data shows. They are at their lowest level since 1995.

Most of the country’s reserves are tied up in gold that cannot be used in financial transactions without going through a certification process in another country.

In another speech on Friday, Maduro said that Venezuela would begin selling its oil, gas, gold and “all products” in currencies other than the U.S. dollar, but gave no further details of the intended changes in export transactions.

(Additional reporting by Diego Ore and Andrew Cawthorne in Caracas, Davide Scigliuzzo in New York and Lesley Wroughton in Washington; Writing by Andrew Cawthorne; Editing by W Simon and Andrew Hay)

Venezuela’s monthly inflation rises to 34 percent: National Assembly

Venezuela's monthly inflation rises to 34 percent: National Assembly

By Girish Gupta and Corina Pons

CARACAS (Reuters) – Venezuela’s monthly inflation rate jumped to 33.8 percent in August, with food price rises reaching hyper-inflationary levels above 50 percent, the opposition-controlled National Assembly said on Thursday.

The government stopped releasing the data more than a year ago amid a deep economic crisis, but the National Assembly has published its own figures since January. They are generally in line with private economists’ estimates.

The latest month-on-month inflation figure was a jump from the 26 percent rise in prices reported in July.

In the first eight months of 2017, prices rose a cumulative 366.4 percent, according to the legislative body.

“Food is now in hyperinflation,” said opposition lawmaker Angel Alvarado, adding that the food sector had seen price rises of 51 percent in August.

Economists usually define hyperinflation as occurring when monthly rates exceed 50 percent.

Millions of Venezuelans are suffering from food and medicine shortages as the oil producer struggles with an economic crisis that spurred months of nationwide unrest earlier this year.

However, the protests have died down in recent weeks, with many in the opposition viewing them as fruitless after socialist President Nicolas Maduro’s government sidelined the National Assembly and created its own legislative superbody.

‘ECONOMIC WAR’

The country’s bolivar currency also weakened past 20,000 per dollar on the widely-used black market on Thursday for the first time. It has lost 95 percent of its value against the U.S. currency in the past year.

The value of $1,000 in local currency purchased when Maduro came to power in April 2013 would now be worth $1.20.

Maduro blames the crisis on the country’s opposition and the United States, whom he says are waging an “economic war” against his government.

Critics blame Maduro’s economic policies including a currency policy that pegs the bolivar at 10 per dollar at the strongest rate and the strict price controls which they say disincentivize production.

Opponents also point to a rapidly rising money supply. The country’s M2 figure is up 431 percent in the last year alone.

The exponential rise in M2 – the sum of cash, together with checking, savings, and other deposits – means an exponential rise in the amount of currency circulating.

Coupled with a decline in the output of goods and services, that has accelerated inflation.

(Writing by Girish Gupta; Editing by Paul Simao)

Venezuelan opposition pins hopes on elections as protests falter

FILE PHOTO: Opposition supporters clash with riot security forces while rallying against President Nicolas Maduro in Caracas, Venezuela, May 10, 2017. REUTERS/Marco Bello/FIle Photo

By Brian Ellsworth

CARACAS (Reuters) – Venezuela’s opposition is shifting its focus to forthcoming state elections as protests aimed at ousting President Nicolas Maduro have subsided following the installation of an all-powerful, pro-government legislative body.

Four months of violent demonstrations in which at least 125 people were killed have all but stopped due to fatigue among protesters and disillusionment at seeing the ruling Socialist Party cement vast powers despite the concerted opposition push.

Most opposition leaders say October’s elections for governors in all the country’s 23 states now represent the best means to keep pressuring Maduro, providing a chance to win some of the governorships at stake and an opportunity for a protest vote to demonstrate the president’s unpopularity.

The opposition, which boycotted the elections for the Constituent Assembly, accused electoral authorities of inflating turn-out figures for the July 30 vote.

There are few options available for adversaries of Maduro, who maintains control over the OPEC nation despite widespread public anger about triple-digit inflation and chronic shortages of basic goods.

“Venezuelans are fighting against a continued rupture of the constitutional order,” said opposition leader Henrique Capriles, who is governor of Miranda state but who is not running in next month’s election and who is barred from holding public office once his term expires.

Nevertheless he urged Venezuelans to vote in the elections.

“If you abstain, then it’s more difficult to bring about the political change that all Venezuelans want,” Capriles told reporters. Capriles has called his own barring from office – because of alleged irregularities in managing public funds – a Socialist Party move to sideline him.

Governorships provide little in the way of a platform to directly challenge Maduro. But they are coveted by politicians because they offer launching pads for political careers and the possibility to channel state resources toward political allies.

The opposition’s participation in next month’s poll ensures it will have witnesses at voting stations and at the election council headquarters. Opposition coalition leaders say that should allow them to quickly identify any attempt to alter results.

However, some who spent months on the streets with the encouragement of opposition leaders, especially young members of a self-styled “Resistance” movement, feel betrayed.

They say turning attention so quickly to the election legitimizes what they view as Maduro’s authoritarianism and insults the memory of slain protesters. They also see a contradiction with the opposition’s decision to boycott July’s vote for the Constituent Assembly.

Maduro pushed for the creation of the assembly, which is meant to rewrite the constitution but which has no formal check on its powers, saying it would restore stability to a country in turmoil over the widespread anti-government protests.

It has broadly supplanted the Congress, which the opposition won control of in a 2015 landslide vote.

Small opposition party Vente Venezuela and its founder Maria Corina Machado, who has a high profile in the media but limited influence, broke with the opposition’s Democratic Unity coalition over its decision to join next month’s vote.

CANDIDATES TO BE BARRED?

The main opposition parties have nominated candidates and opinion polls show that in a free and fair vote they would likely take a majority, compared to just three governorships they won in 2012.

But the Socialist Party-controlled Constituent Assembly may bar some of them from running or from holding office if they win.

Last week, the assembly said it would seek the prosecution of opposition leaders for treason for attempting to block international financing for Maduro’s government and for allegedly seeking a military intervention against him.

Government leaders say the end of the protests is evidence the Constituent Assembly has brought peace to the country. They add that the opposition’s decision to register candidates is a sign they believe in the electoral system despite their complaints of fraud.

“The Constituent Assembly has calmed the country,” said assembly president Delcy Rodriguez. “As soon as it was inaugurated, Venezuela returned to tranquility.”

Maduro says the country is a victim of an “economic war” by the opposition, and insists the assembly is a symbol of Venezuela’s vibrant democracy.

The opposition took to the streets in late March to protest a Supreme Court ruling that briefly allowed it to assume the powers of Congress, and maintained near daily rallies until the end of July.

By then, street mobilizations were in decline and what had initially been massive marches steadily gave way to violent clashes between security forces and small groups of hooded demonstrators throwing rocks and at times vandalizing property.

Recent opposition rallies have attracted only a few hundred people.

U.S. President Donald Trump has imposed sanctions on top ruling Socialist Party officials, in some cases for their participation in the Constituent Assembly, while the European Union and most Latin American nations condemned the body.

Maduro has acquired the reputation as a dictator around the world, said opposition leader Freddy Guevara in an interview in August broadcast on the Internet, adding that street protests were crucial in shifting public opinion.

“I’m convinced that we have to confront the dictatorship in any situation that we can,” said Guevara.

(Reporting by Brian Ellsworth; Editing by Andrew Cawthorne and Frances Kerry)

Venezuelan President Maduro will not go to U.N. rights forum

FILE PHOTO: Venezuela's President Nicolas Maduro speaks during a meeting at Miraflores Palace in Caracas, Venezuela August 25, 2017. Miraflores Palace/Handout via REUTERS

GENEVA (Reuters) – Venezuelan President Nicolas Maduro will not address the U.N. Human Rights Council next week, contrary to what had been announced, the United Nations and his country’s diplomatic mission said on Tuesday.

Maduro, accused of trampling on human rights and democracy in Venezuela, had been expected to address the opening day of a three-week United Nations Human Rights Council session on Sept. 11.

“The president is not coming,” a Venezuelan diplomat in Geneva told Reuters on Tuesday.

Rolando Gomez, Council spokesman, said in a statement: “Please note that per information the HRC Secretariat just received, President Maduro of Venezuela will not address the Human Rights Council.

“Instead, (Foreign) Minister (Jorge) Arreaza Montserrat has been scheduled to address the Council on the opening day of the session.”

In a report last week, the U.N. said that Venezuela’s security forces had committed extensive and apparently deliberate human rights violations in crushing anti-government protests and that democracy was “barely alive”.

The actions indicated “a policy to repress political dissent and instil fear”, the U.N. human rights office said in a report that called for further investigation and accountability.

Maduro, whose country is currently one of the Council’s 47 member states, addressed the Geneva forum in Nov. 2015.

(Reporting by Stephanie Nebehay; editing by Andrew Roche)

Sore at Macron’s ‘dictatorship’ criticism, Venezuela blasts France

Venezuela's President Nicolas Maduro speaks during a meeting at Miraflores Palace in Caracas, Venezuela August 25, 2017. Miraflores Palace/Handout via REUTERS

CARACAS (Reuters) – Venezuela accused France on Wednesday of joining an “imperialist” campaign after President Emmanuel Macron portrayed the widely criticized socialist government as dictatorial.

Adding to criticism from Washington, the United Nations and major Latin American nations, Macron on Tuesday called President Nicolas Maduro’s administration “a dictatorship trying to survive at the cost of unprecedented humanitarian distress.”

Many countries are outraged at the Venezuelan government’s overriding of the opposition-led congress, crackdown on protests, jailing of hundreds of foes and failure to allow the entry of foreign humanitarian aid to ease a severe economic crisis.

Authorities say local opposition leaders want to topple Maduro in a coup with U.S. support, but its new Constituent Assembly will guarantee peace.

“Comments like this are an attack on Venezuelan institutions and seem to form part of the permanent imperialist obsession with attacking our people,” the government said in a communique responding to Macron.

“The French head-of-state’s affirmations show a deep lack of knowledge of the reality of Venezuela, whose people live in complete peace,” the statement said.

It added that the assembly and upcoming state elections demonstrated the health of local democracy.

Leaders of the fractious opposition coalition boycotted the July 30 election of the assembly, branding it an affront to democracy.

They called for an early presidential election, which Maduro would likely lose as his popularity has sunk along with an economy blighted by triple-digit inflation and food shortages.

France’s foreign ministry on Wednesday reiterated Macron’s comments and said it was studying the best way to accompany all initiatives that would enable credible dialogue that included regional countries.

“It is up to the Venezuelan authorities to give quick pledges in terms of respecting rule of law and fundamental freedoms,” spokeswoman Agnes Romatet-Espagne told reporters in a daily briefing. “The European Union and France will evaluate their relationship with Venezuela on this basis.”

(Reporting by Andrew Cawthorne in Caracas, Sudip Kar-Gupta in Paris; Editing by Girish Gupta/W Simon/Ken Ferris)

U.N. cites systematic use of excessive force in Venezuela crackdown on dissent

Zeid Ra'ad Al Hussein, U.N. High Commissioner for Human Rights attends a news conference on Venezuela at the United Nations Office in Geneva, Switzerland August 30, 2017. REUTERS/Denis Balibouse

By Stephanie Nebehay

GENEVA (Reuters) – The United Nations on Wednesday said Venezuela’s security forces had committed extensive and apparently deliberate human rights violations in crushing anti-government protests.

The actions indicated “a policy to repress political dissent and instil fear”, the U.N. human rights office said in a report that called for further investigation.

It called on the government of President Nicolas Maduro to release arbitrarily detained demonstrators and to halt the unlawful use of military courts to try civilians.

More than 1,000 people were believed to remain in custody as of July 31, among more than 5,000 detained in street protests since April, it said. Detainees are often subjected to ill-treatment, in some documented cases amounting to torture.

“Credible and consistent accounts of victims and witnesses indicate that security forces systematically used excessive force to deter demonstrations, crush dissent and instill fear,” it said in a report following initial findings issued on Aug 8.

Security forces have used tear gas canisters, motorcycles, water cannons and live ammunition to disperse the protesters, it said.

Venezuelan security forces and pro-government groups are believed to be responsible for the deaths of 73 people since April, while responsibility for the remaining 51 deaths has not been determined, the U.N. report said.

The overall toll of 124 includes nine members of the security forces that the government says were killed through July and four people allegedly killed by protesters, it said.

Some protesters have resorted to violent means, ranging from rocks to sling shots, Molotov cocktails and homemade mortars in protests against Maduro and shortages of food and other basic goods, it said.

Maduro has said Venezuela was the victim of an “armed insurrection” by U.S.-backed opponents seeking to gain control of the OPEC country’s oil wealth.

But as the political crisis deepened, the use of force by security forces has progressively escalated, the report said.

“The generalized and systematic use of excessive force during demonstrations and the arbitrary detention of protesters and perceived political opponents indicate that these were not the illegal or rogue acts of isolated officials,” it said.

U.N. High Commissioner for Human Rights Zeid Ra’ad al-Hussein warned in a statement that amid the economic and social crises and rising political tensions, there was a “grave risk the situation in Venezuela will deteriorate further”.

The government must ensure that investigations begun by the state prosecutor Luisa Ortega — who was removed from her post this month after accusing Maduro of eroding democracy – continue and are scrupulously impartial, Zeid said.

Venezuela held nationwide armed forces exercises on Saturday, calling on civilians to join reserve units to defend against a possible attack after U.S. President Donald Trump warned that a “military option” was on the table for the crisis-hit country.

(Reporting by Stephanie Nebehay Editing by Jeremy Gaunt)

Trump slaps sanctions on Venezuela; Maduro sees effort to force default

Venezuela's President Nicolas Maduro speaks during a meeting at Miraflores Palace in Caracas, Venezuela August 25, 2017. Miraflores Palace/Handout via REUTERS ATTENTION EDITORS - THIS PICTURE WAS PROVIDED BY A THIRD PARTY.

By Alexandra Ulmer and David Lawder

CARACAS/WASHINGTON/ (Reuters) – U.S. President Donald Trump signed an executive order that prohibits dealings in new debt from the Venezuelan government or its state oil company on Friday in an effort to halt financing that the White House said fuels President Nicolas Maduro’s “dictatorship.”

Maduro, who has frequently blamed the United States for waging an “economic war” on Venezuela, said the United States was seeking to force Venezuela to default — but he said it would not succeed.

The order is Washington’s biggest sanctions blow to date against Maduro and is intended to punish his leftist government for what Trump has called an erosion of democracy in the oil-rich country, which is already reeling from an economic crisis.

It suggests a weakening in already strained relations between the two countries. Just three days ago, Maduro said the relations between Caracas and Washington were at their lowest point ever.

“All they’re trying to do to attack Venezuela is crazy,” said Maduro on a TV broadcast on Friday. “With the efforts of our people, it will fail and Venezuela will be stronger, more free, and more independent.”

Venezuela faces a severe recession with millions suffering food and medicine shortages and soaring inflation. The South American nation relies on oil for some 95 percent of export revenue.

Citgo Petroleum [PDVSAC.UL], the U.S. refiner of Venezuela’s ailing state-run oil company PDVSA, is “practically” being forced to close by the order, warned Maduro, adding that a preliminary analysis showed the sanctions would impede Venezuelan crude exports to the United States.

He said he was calling “urgent” meetings with U.S. clients of Venezuelan oil.

The new sanctions ban trade in any new issues of U.S.-dollar-denominated debt of the Venezuelan government and PDVSA [PDVSA.UL] because the ban applies to use of the U.S. financial system.

As a result, it will be it tricky for PDVSA to refinance its heavy debt burden. Investors had expected that PDVSA would seek to ease upcoming payments through such an operation, as it did last year, which usually requires that new bonds be issued.

Additional financial pressure on PDVSA could push the cash-strapped company closer to a possible default, or bolster its reliance on key allies China and Russia, which have already lent Caracas billions of dollars.

“They want us to fall into default,” said Maduro, adding that just under two-thirds of Venezuelan bond holders are in the United States.

Maduro insisted that Venezuela would continue paying its debts.

The decision also blocks Citgo Petroleum from sending dividends back to the South American nation, a senior official said, in a further blow to PDVSA’s coffers.

However, the order stops short of a major ban on crude trading that could have disrupted Venezuela’s oil industry and worsened the country’s faltering economy.

It also protects holders of most existing Venezuelan government and PDVSA bonds, who were relieved the sanctions did not go further. Venezuelan and PDVSA bonds were trading broadly higher on Friday afternoon.

“Maduro may no longer take advantage of the American financial system to facilitate the wholesale looting of the Venezuelan economy at the expense of the Venezuelan people,” U.S. Treasury Secretary Steven Mnuchin said on Friday.

Venezuela’s Oil Ministry and PDVSA did not immediately respond to a request for comment.

 

PDVSA UNDER PRESSURE

PDVSA, the financial engine of Maduro’s government, is already struggling due to low global oil prices, mismanagement, allegations of corruption and a brain drain.

Washington last month sanctioned PDVSA’s finance vice president, Simon Zerpa, complicating some of the company’s operations as Americans are now banned from doing business with him.

Trump has so far spared Venezuela from broader sanctions against its vital oil industry, but officials have said such actions are under consideration. The Republican president has also warned of a “military option” for Venezuela, although White House national security adviser H.R. McMaster said on Friday that no such actions are anticipated in the “near future.”

Venezuela has for months struggled to find financing because of PDVSA’s cash flow problems and corruption scandals have led institutions to tread cautiously, regardless of sanctions.

Russia and its state oil company Rosneft have emerged as an increasingly important source of financing for PDVSA, according to a Reuters report.

On at least two occasions, the Venezuelan government has used Russian cash to avoid imminent defaults on payments to bondholders, a high-level PDVSA official told Reuters.

“At this point our view is that the country can scrape by without defaulting this year, largely with the help of Chinese and Russian backing and by further squeezing imports. Next year is a tossup,” said Raul Gallegos, an analyst with the consultancy Control Risks.

However, China has grown reticent to extend further loans because of payment delays and corruption. Russia has been negotiating financing in exchange for oil assets in Venezuela, sources have told Reuters, but going forward it would be difficult for the OPEC member to provide enough assets to keep up loans destined for bond payments.

Venezuela’s government has around $2 billion in available cash to make $1.3 billion in bond payments by the end of the year and to cover the import of food and medicine, according to documents reviewed by Reuters.

 

(Reporting by David Lawder in Washington and Alexandra Ulmer in Caracas; Additional reporting by Deisy Buitrago, Girish Gupta, Eyanir Chinea, Corina Pons, Deisy Buitrago and Hugh Bronstein in Caracas, Marianna Parraga in Houston, Tim Ahmann and Ayesha Rascoe in Washington, Rodrigo Campos and Riham Alkousaa in New York; Writing by Alexandra Ulmer and Girish Gupta; Editing by Leslie Adler)