By Canadian Press

US sanctions Russian oil trading firm for role in Venezuela

Feb 20, 2020 | 9:03 AM

WASHINGTON — The Trump administration announced sanctions Tuesday on a Russian state-controlled brokerage that has helped the Venezuelan government skirt an American oil embargo and enabled President Nicolas Maduro to keep his grip on power in the South American country.

Administration officials said Rosneft Trading S.A. and its president, Didier Casimiro, would be added to a financial blacklist in a move that is expected to largely freeze him and the company out of the global financial system.

The action is an unusually aggressive move against a company linked to the Russian state and a substantial escalation of a U.S.-led campaign that has failed to oust Maduro from power.

Secretary of State Mike Pompeo said Rosneft Trading is the primary broker for the sale and transportation of Venezuelan crude oil, which has been under sweeping U.S. sanctions since January 2019 as part of the pressure campaign against Maduro.

“Rosneft Trading has propped up the dictatorial Maduro, enabling his repression of the Venezuelan people,” he said in announcing the sanctions.

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Rosneft Trading, based in Switzerland, was created in 2011 to facilitate trades on behalf of the parent company, which has been under U.S. sanctions since 2014, said Elliott Abrams, the special U.S. envoy for Venezuela.

The brokerage has helped arrange sales of Venezuelan crude by deceiving customers, mostly in Asia, about the source of the oil with such tactics as changing the name of the tanker, Abrams said.

Rosneft spokesman Mikhail Leontyev called the sanctions “an absolute overreach” in comments to Russia’s Kommersant FM radio station. He said Rosneft and its subsidiaries have always acted “in strict accordance with the international law.”

Leontyev added that the company would study the sanctions order before deciding how to act.

Russian lawmaker Pavel Zavalny said the country would continue to co-operate with its ally Venezuela in the energy sector despite the U.S. sanctions. “One doesn’t abandon friends in need,” Zavalny said.

Venezuelan Foreign Minister Jorge Arreaza dismissed the new sanctions as “coercive unilateral measures” that violate the country’s rights under international law.

The U.S. and about 60 other countries say Maduro’s reelection in 2018 was not legitimate and have recognized opposition leader Juan Guaidó as interim president. The Venezuelan leader has held on with support from Russia and China.

President Donald Trump recently reaffirmed his support for Guaidó, recognizing him in the State of the Union address as Venezuela’s “true and legitimate” leader and calling Maduro a “tyrant.” He then welcomed the opposition leader to a coveted Oval Office meeting.

“Well, he’s the person that the country right now prefers and that’s what I go with,” Trump told reporters Tuesday before leaving for California. “We’ll see what happens.”

The gesture bolstered Guaidó as support back home fades a year after he rose to the centre of Venezuela’s tumultuous political landscape, vowing to oust Maduro and end the oil-rich nation’s political and financial crisis.

The U.S. is considering additional economic sanctions “in the coming weeks and months” aimed at further tightening economic pressure on the Maduro government, Abrams told reporters at the State Department.

Maduro has held on to power despite runaway hyperinflation, a massive exodus and shortages of food and medicine as well as the international pressure that has left his socialist administration isolated.

Venezuelan oil shipments dropped significantly last year because of U.S. sanctions but the country still managed to ship hundreds of thousands of barrels of crude last year with the help of Rosneft Trading.

Rosneft is now managing about two-thirds of Venezuela’s international oil trade as it was able to work around the American sanctions, said Francisco Rodríguez, an economics professor at the Stone Center for Latin American Studies at Tulane University.

“If these sanctions are effective in curtailing Rosneft’s activity with Venezuela, then this will have a very significant effect on the government’s ability to generate revenue and the government’s ability to pay for imports,” Rodríguez said.

While economic measures have so far failed to dislodge Maduro, Guaidó called the latest sanctions a “new victory!”

“Whoever supports the dictator, from whatever part of the world, will bear the consequences,” Guaidó tweeted. “Those who collaborate with democracy will be welcomed.”

Guaidó launched a campaign to oust Maduro a year ago but so far has failed to make it a reality. He has been unable to flip the military’s loyalty away from Maduro.

In recent months, the Venezuelans who had fervently supported Guaidó early on had stopped filling the streets for demonstrations, and Maduro has grown emboldened.

The action against Rosneft Trading and Casamiro means that any assets they have in the U.S. or in the control of U.S. financial institutions will be frozen. In addition, anyone doing business with them could face American sanctions.

Abrams said that would largely freeze the company and its president out of the global financial system because people will be reluctant to take the risk after a 90-day period to wind down any relationship.

Officials also said Trump approved the move. They said he has spoken with Russian President Vladimir Putin in the past about U.S. objections to his country’s support for Maduro.

Pompeo also discussed it with Foreign Minister Sergey Lavrov at a recent meeting.

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Associated Press writers Daria Litvinova in Moscow and Fabiola Sanchez and Scott Smith in Caracas, Venezuela, contributed to this report.

Ben Fox, The Associated Press