The Trump administration on Monday barred Americans from a risky but potentially lucrative type of financial transaction with Venezuela’s state-owned companies as it condemned the reelection of President Nicolás Maduro as a sham.
An executive order signed by President Trump aims to further squeeze Maduro’s government by preventing corrupt officials from enriching themselves by selling off state assets at fire sale prices, administration officials said.
The order prohibits U.S. companies and individuals from purchasing Venezuela’s debt and money owed to government-owned businesses, often for pennies on the dollar.
A U.S. official said the measures close a set of loopholes, especially those involving debt owed to the government. The official said some Venezuelan officials were selling off accounts potentially worth large sums of money in the future for paltry amounts paid today.
“As the economy has plummeted, regime elites are seeing fewer and fewer opportunities to enrich themselves,” said the official, speaking on the condition of anonymity under White House rules. “We now are seeing, literally, smash-and-grab type of behavior by the regime. Anything that isn’t bolted down, they’re looking to sell off.”
This is the latest in a series of economic measures the administration has imposed against Venezuela, an oil-rich country whose economy has collapsed amid a harsh crackdown on government opponents. An estimated 1.5 million Venezuelans have fled the country, many to neighboring Colombia and Brazil.
The new prohibition came one day after Maduro won a second six-year term in an election marked by low voter turnout, allegations of fraud and a boycott called by the opposition.
In a conference call with reporters, senior administration officials struggled to explain why they consider Maduro’s election fraudulent even though Trump has offered congratulations to other elected authoritarian presidents, including Russia’s Vladimir Putin and Turkey’s Recep Tayyip Erdogan.
“The region has never seen a kleptocracy like this,” one official said. “We’ve never seen a country as wealthy in terms of its natural resources and human capital as Venezuela driven into such an economic death spiral so quickly, by such small groups of individuals determined to enrich themselves at the expense of millions of people.”
“This is a true catastrophe, in every sense of the word,” he added.
U.S. officials declined to say whether they intend to impose more sanctions against Venezuela. But Secretary of State Mike Pompeo assured Venezuelans that the United States “will take swift economic and diplomatic actions to support the restoration of their democracy.”
The steps by the United States could further complicate the already cumbersome process of trying to sell Venezuela’s biggest product: oil. Oil production is already dramatically falling in Venezuela, reaching levels not seen since 1950 because of a lack of maintenance and spare parts and a flight of expertise.
Following the election, a group of 14 nations in the region known as the Lima Group issued a condemnation, saying they would not recognize the vote.
The nations — including Brazil, Argentina, Panama and Canada — said they would move to reduce diplomatic relations. They also said they would work with financial institutions in their countries “to try not to grant” loans to the Venezuelan government, and to more aggressively search for illicit funds potentially stashed away by members of the Maduro administration.
Yet analysts called the moves mostly symbolic. They fell short of more drastic steps — for instance, travel bans for significant figures within the Venezuelan government and their families, some of whom live part time in countries across the region, including Mexico.
“Venezuela is in such bad shape that the government is already not getting loans.” said Dany Bahar, a Venezuelan economist and fellow at the Brookings Institution. “Not because of sanctions, but because it is already a bad risk.”