United States warns of 'serious consequences' after Venezuela moves against Guaido

Wednesday, 30 Jan, 2019

At the announcement, nationals U.S. Treasure Secretary Steven Mnuchin said, as quoted by the BBC, the sanctions will involve withholding PDVSA's proceeds from crude oil sales to the United States, adding that the company could avoid being sanctioned if it recognized Guaido as the legitimate president of Venezuela.

"I have given specific instructions to the head of PDVSA to launch political and legal action, in U.S. and global courts, to defend the property and assets of Citgo", PDVSA's US-based subsidiary, Maduro said on state television.

Washington's tough sanctions against Venezuela came days after it recognized the opposition leader Juan Guaido as interim president of the Latin American country, denouncing incumbent President Nicolas Maduro who won the elections a year ago with over two thirds of the votes. The United States on Monday slapped sanctions on Venezuela's state-owned oil firm Petroleos de Venezuela, S.A., or known as PDVSA.

Ramping up the pressure, the U.S. State Department said on Tuesday it had certified Guaido's authority to control certain assets held by the Federal Reserve Bank of NY or any other U.S. -insured banks.

Maduro, in response, announced the severing of "diplomatic and political" ties with the United States.

The United States, Brazil, Canada, Colombia, Argentina, Peru, Ecuador and Paraguay have officially acknowledged Guaido as the legitimate interim head of Venezuela, while countries including Russian Federation and China back Maduro. Both countries have lent billions of dollars to Venezuela and are concerned about new stress on debt payments.

Russia, Belarus, Bolivia, Iran, Cuba, Nicaragua, El Salvador and Turkey voiced support for Maduro, while China called for resolving all differences peacefully and warned against foreign interference.

Mexico and Iraq are instead most likely to benefit in the race to replace Venezuela heavy crude imported for processing at refineries on the U.S. Gulf Coast, analysts at RBC Capital Markets said in a report. Representatives of the council gave no explanation for the note and didn't respond to questions about whether President Donald Trump would deploy the military to Venezuela's neighbour.

Maduro has accused the U.S. of leading an open coup against him to exploit Venezuela's oil reserves, the largest in the world.

Guaido said on Monday that the U.S. maneuver would stop Maduro from emptying the "coffers" if he is removed from office.

Western Canada is the third-largest supplier behind Mexico and Venezuela to the U.S. Gulf Coast region but it is "plagued by egress and policy challenges", RBC said.

PDVSA's US-based subsidiary Citgo will be able to continue operations, as long as its earnings are deposited into a blocked account in the United States.