On Monday night, the United States announced sweeping measures to freeze the assets of the Venezuelan government and bar commercial transactions with it.
“The United States is acting assertively to cut off [Nicolás] Maduro financially, and accelerate a peaceful democratic transition,” said national security adviser John Bolton on Tuesday to a conference on the Venezuelan crisis held in Lima, Peru.
Much of the press has gone immediately to the “e-word”: Venezuela, the headlines breathlessly announced, had been placed under a U.S. embargo. The e-word is prominent in the Wall Street Journal headline announcing the new sanctions, and echoed in every media account thereafter.
There’s just one problem: The measure is by no imaginable interpretation an “embargo.”
An embargo is a ban on trade with a particular country. Under an embargo, it’s illegal to sell goods or services to the target country. There’s exactly nothing about trade with Venezuela in the new U.S. measure, whose entire focus is on freezing Venezuelan government assets in the United States.
And to Venezuela watchers, talk of Venezuelan state assets in the United States means just one thing: Citgo.
Unbeknown to many Americans, Venezuela bought the then-Tulsa, Oklahoma-based refiner back in 1986. Venezuela wanted a reliable channel to refine and distribute its extra-heavy crude in the U.S. market, and owning a big downstream company in the United States made good strategic sense.
It’s just that a little over a decade after they bought Citgo, Hugo Chávez came to power, and the country set on a tragic trajectory that’s turned it into a byword for dysfunction these last few years.
The chaotic administration under Chávez would end up putting Venezuela’s control of Citgo in peril. And it would do so through a series of blunders that had nothing to do with Citgo, nothing to do with Donald Trump — and relate instead to one of the world’s largest gold deposits: a place called Las Cristinas in Venezuela’s remote southeast.
In 2002, Chávez signed an agreement to develop the Las Cristinas mine alongside a small Canadian mining company called Crystallex. But, as Chávez was wont to do, he changed his mind and announced plans to nationalize the mine in 2008. Crystallex wasn’t compensated, and an epic, decade-long court battle followed.
To make an excruciatingly long story short, the Canadians took the case to international arbitration, won, and then showed up in U.S. court to collect their $1.4 billion award. But, of course, the only hope they had of collecting their award was to seize Venezuelan property in the United States — which is where Citgo comes in.
At the end of last month, a U.S. Circuit Court of Appeals in Philadelphia upheld a lower-court order giving Crystallex control of Citgo.
Only by that time, the Venezuelan crisis had proceeded so far that the U.S. government no longer even recognized the chavista regime, now led by Nicolás Maduro, as legitimate. Instead, the United States and some 50 other countries recognize the opposition leader, Juan Guaidó, as the rightful president, even though he doesn’t control the actual government in Caracas.
Because it is still a U.S.-based company, Citgo is perhaps the most prominent asset Guaidó has access to. That made prospects that Venezuela would lose it — as a result of a Chávez blunder, no less! — entirely unacceptable.
Which is what Monday night’s asset freeze is actually all about: a desperate, last-ditch effort by the Trump administration to keep Guaidó and the opposition from losing any hope of controlling Citgo.
Whether this measure will survive the inevitable court challenges it will face from a (rightly) aggrieved Crystallex is open to question. U.S. law gives the president wide leeway on matters such as this. What should be clear is that saving Citgo — and not some kind of Cuban-style embargo — is what the White House had in mind with this latest asset freeze.
Which is what makes the headlines about an “embargo” so confusing — and such a propaganda boon for the loathsome regime in Caracas. It’s ironic. As the United States makes a final push to try to save Venezuela’s most valuable remaining asset abroad, Maduro gets to play the victim, waving around a copy of the Wall Street Journal as proof.
It’s not a great look.